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CONFORMED COPY
Federated Department Stores, Inc.
and
The First National Bank of Boston,
Trustee
Third Supplemental Trust Indenture
Dated as of January 23, 1995
Supplementing that certain
Indenture
Dated as of December 15, 1994
Authorizing the Issuance and Delivery of
Senior Securities
consisting of $450,000,000 aggregate principal amount of
10% Senior Notes due February 15, 2001
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Table of Contents
Page
Recitals ................................................................................................. 1
[Form of Face of Security] ............................................................................... 2
[Form of Reverse of Security] ............................................................................ 3
[Form of Trustee's Certificate of
Authentication for Senior Notes]
ARTICLE I. ISSUANCE OF SENIOR NOTES. ..................................................................... 7
Section 1.1. Issuance of Senior Notes; Principal Amount;
Maturity ...................................................................... 7
Section 1.2. Interest on the Senior Notes; Payment of
Interest ...................................................................... 7
ARTICLE II. CERTAIN DEFINITIONS. ......................................................................... 8
Section 2.1. Certain Definitions. .............................................................. 8
ARTICLE III. CERTAIN COVENANTS. .......................................................................... 20
Section 3.1. Indebtedness. ..................................................................... 20
Section 3.2. Liens. ............................................................................ 20
Section 3.3. Restricted Payments. .............................................................. 21
Section 3.4. Change of Control. ................................................................ 22
Section 3.5. Payment Restrictions Affecting Restricted
Subsidiaries .................................................................. 23
Section 3.6. Issuance of Subsidiary Preferred Stock. ........................................... 23
Section 3.7. Asset Sales. ...................................................................... 24
Section 3.8. Transactions with Affiliates. ..................................................... 25
Section 3.9. Sale and Leaseback Transactions. .................................................. 26
Section 3.10. Merger and Certain Other Transactions. ........................................... 26
Section 3.11. Permitting Unrestricted Subsidiaries to Become
Restricted SUBSIDIARIES. ...................................................... 26
Section 3.12. Payment Office. .................................................................. 27
ARTICLE IV. ADDITIONAL EVENTS OF DEFAULT. ................................................................ 27
Section 4.1. Additional Events of Default. ..................................................... 27
ARTICLE V. DEFEASANCE. ................................................................................... 28
Section 5.1. Applicability of Article V of the Indenture. ...................................... 28
ARTICLE VI. MISCELLANEOUS. ............................................................................... 29
Section 6.1. Reference to and Effect on the Indenture. ......................................... 29
Section 6.2. Waiver of Certain Covenants. ...................................................... 29
Section 6.3. Supplemental Indenture May be Executed In
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Page
Counterparts 29
Section 6.4. Effect of Headings 30
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THIRD SUPPLEMENTAL INDENTURE, dated as of January 23,
1995, between Federated Department Stores, Inc., a corporation duly organized
and existing under the laws of the State of Delaware (the "Company"), and
The First National Bank of Boston, a national banking association, organized
and existing under the laws of the United States of America, as Trustee
(the "Trustee"), supplementing that certain Indenture, dated as of December
15, 1994, between the Company and the Trustee (the "Indenture").
RECITALS
A. The Company has duly authorized the execution and
delivery of the Indenture to provide for the issuance from time to time of
its unsecured debentures, notes, or other evidences of indebtedness (the
"Securities"), to be issued in one or more series as provided for in the
Indenture.
B. The Indenture provides that the Securities of
each series shall be in substantially the form set forth in the
Indenture, or in such other form as may be established by or pursuant to a
Board Resolution or in one or more indentures supplemental thereto, in each
case with such appropriate insertions, omissions, substitutions, and other
variations as are required or permitted by the Indenture, and may have such
letters, numbers, or other marks of identification and such legends or
endorsements placed thereon as may be required to comply with the rules of
any securities exchange or as may, consistently herewith, be determined to be
required by the officers executing such Securities, as evidenced by their
execution thereof.
C. The Company and the Trustee have agreed that the
Company shall issue and deliver, and the Trustee shall authenticate,
Securities denominated "10% Senior Notes due February 15, 2001" (the "Senior
Notes") pursuant to the terms of this Supplemental Indenture and substantially
in the form set forth below, in each case with such appropriate insertions,
omissions, substitutions, and other variations as are required or permitted by
the Indenture and this Supplemental Indenture, and with such letters,
numbers, or other marks of identification and such legends or endorsements
placed thereon as may be required to comply with the rules of any securities
exchange or as may, consistently herewith, be determined by the officers
executing such Securities, as evidenced by their execution of such Securities.
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[Form of Face of Security]
This Security is a Global Security within the meaning of the Indenture
hereinafter referred to and is registered in the name of a Depositary or a
nominee thereof. This Security may not be transferred to, or registered, or
exchanged for Securities registered in the name of, any Person other than the
Depositary or a nominee thereof, and no such transfer may be registered,
except in the limited circumstances described in the Indenture. Every
Security authenticated and delivered upon registration of transfer of, or in
exchange for, or in lieu of, this Security shall be a Global Security subject
to the foregoing, except in such limited circumstances.
FEDERATED DEPARTMENT STORES, INC.
10% Senior Note due February 15, 2001
No. R- ________ $________
Federated Department Stores, Inc., a corporation duly
organized and existing under the laws of the State of Delaware
(hereinafter called the "Company", which term includes any successor Person
under the Indenture hereinafter referred to), for value received, hereby
promises to pay to Cede & Co., or registered assigns, the principal sum of
$450,000,000 on February 15, 2001, and to pay interest thereon from January
27, 1995 or from the most recent Interest Payment Date to which interest has
been paid or duly provided for, semiannually on February 15 and August 15 of
each year, commencing on August 15, 1995, at the rate of 10% per annum, until
the principal hereof is paid or made available for payment. The interest so
payable, and punctually paid or duly provided for, on any Interest Payment Date
shall, as provided in said Indenture, be paid to the Person in whose name
this Security (or one or more Predecessor Securities) is registered at the
close of business on the Regular Record Date for such interest, which shall be
the February 1 or August 1 (whether or not a Business Day), as the case may
be, next preceding such Interest Payment Date. Any such interest not so
punctually paid or duly provided for shall forthwith cease to be payable to
the Holder on such Regular Record Date and may either be paid to the Person in
whose name this Security (or one or more Predecessor Securities) is
registered at the close of business on a Special Record Date for the payment
of such Defaulted Interest to be fixed by the Trustee, notice whereof shall
be given to Holders of Securities of this series not less than 10 calendar
days prior to such Special Record Date, or be paid at any time in any
other lawful manner not inconsistent with the requirements of any
securities exchange on which the Securities of this series may be listed,
and upon such notice as may be required by such exchange, all as more
fully provided in said Indenture.
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Payment of the principal of and any such interest on this
Security shall be made at the office or agency of the Company maintained
for the purpose in New York, New York, in such coin or currency of the United
States of America as at the time of payment is legal tender for payment of
public and private debts; PROVIDED, HOWEVER, that at the option of the Company
payment of interest may be made by check mailed to the address of the Person
entitled thereto as such address appears in the Security Register.
REFERENCE IS HEREBY MADE TO THE FURTHER PROVISIONS SET FORTH
ON THE REVERSE HEREOF. SUCH PROVISIONS SHALL FOR ALL PURPOSES HAVE THE SAME
EFFECT AS THOUGH FULLY SET FORTH IN THIS PLACE.
This Security shall not be valid or become obligatory for any
purpose until the certificate of authentication herein has been signed
manually by the Trustee under said Indenture.
IN WITNESS WHEREOF, this instrument has been duly executed in
accordance with the Indenture.
FEDERATED DEPARTMENT STORES, INC.
Date Issued:__________ By:______________________________
Attest:
By:___________________
[Form of Reverse of Security]
FEDERATED DEPARTMENT STORES, INC.
This Security is one of a duly authorized issue of securities
of the Company (herein called the "Securities") issued and to be issued in
one or more series under an Indenture, dated as of December 15, 1994 (herein
called the "Indenture"), between the Company and The First National Bank of
Boston, as Trustee (herein called the "Trustee," which term includes any
successor trustee under the Indenture), to which Indenture and all indentures
supplemental thereto reference is hereby made for a statement of the
respective rights, limitations of rights, duties, and immunities thereunder
of the Company, the Trustee, and the Holders of the Securities and of the
terms upon which the Securities are, and are to be, authenticated and
delivered. This
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Security is one of the series designated on the face hereof, limited in
aggregate principal amount to $450,000,000.
Upon the occurrence of a Change of Control prior to such
time as the Company shall have reached Investment Grade Status or,
thereafter, upon the occurrence of a Designated Event with respect to the
Company and a Rating Decline in connection therewith, the Company is required
to offer to purchase the Securities at a purchase price equal to 101% of the
principal amount thereof, together in the case of any such purchase with
accrued and unpaid interest to the Purchase Date, but interest installments
with a Stated Maturity on or prior to such Purchase Date shall be payable to
the Holders of such Securities of record at the close of business on the
relevant Record Dates referred to on the face hereof, all as provided in the
Indenture.
In the event of the repurchase of this Security in part
only, a new Security or Securities of this series and of like tenor for the
portion hereof not so repurchased shall be issued in the name of the Holder
hereof upon the cancellation hereof.
The Indenture contains provisions for defeasance at any time
of (a) the entire indebtedness of this Security or (b) certain restrictive
covenants and Events of Default with respect to this Security, in each case
upon compliance with certain conditions set forth in the Indenture.
If an Event of Default with respect to Securities of
this series shall occur and be continuing, the principal of the Securities
of this series may be declared due and payable in the manner and with the
effect provided in the Indenture.
The Indenture permits, with certain exceptions as therein
provided, the amendment thereof and the modification of the rights and
obligations of the Company and the rights of the Holders of the Securities of
each series to be affected under the Indenture at any time by the Company and
the Trustee with the consent of the Holders of a majority in principal amount
of the Securities at the time Outstanding of each series to be affected.
The Indenture also contains provisions permitting the Holders of specified
percentages in principal amount of the Securities of each series at the time
Outstanding, on behalf of the Holders of all Securities of such series, to
waive compliance by the Company with certain provisions of the Indenture and
certain past defaults under the Indenture and their consequences. Any such
consent or waiver by the Holder of this Security shall be conclusive and
binding upon such Holder and upon all future Holders of this Security and of
any Security issued upon the registration of transfer hereof or in exchange
herefor or in lieu hereof, whether or not notation of such consent or waiver
is made upon this Security.
As provided in and subject to the provisions of the Indenture,
the Holder of this Security shall not have the right
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to institute any proceeding with respect to the Indenture or for the
appointment of a receiver or trustee or for any other remedy thereunder,
unless such Holder shall have previously given the Trustee written notice of
a continuing Event of Default with respect to the Securities of this series,
the Holders of not less than 25% in principal amount of the Securities of
this series at the time Outstanding shall have made written request to the
Trustee to institute proceedings in respect of such Event of Default as
Trustee and offered the Trustee reasonable indemnity, and the Trustee shall
not have received from the Holders of a majority in principal amount of
Securities of this series at the time Outstanding a direction inconsistent
with such request and shall have failed to institute such proceeding for 60
calendar days after receipt of such notice, request, and offer of indemnity.
The foregoing shall apply to any suit instituted by the Holder of this
Security for the enforcement of any payment of principal hereof or any premium
or interest hereon on or after the respective due dates expressed herein.
No reference herein to the Indenture and no provision of
this Security or of the Indenture shall alter or impair the obligation of
the Company, which is absolute and unconditional, to pay the principal of and
any premium and interest on this Security at the times, place, and rate, and
in the coin or currency, herein prescribed.
As provided in the Indenture and subject to certain
limitations therein set forth, the transfer of this Security is
registerable in the Security Register, upon surrender of this Security for
registration of transfer at the office or agency of the Company in any place
where the principal of and any premium and interest on this Security are
payable, duly endorsed by, or accompanied by a written instrument of transfer
in form satisfactory to the Company and the Security Registrar duly executed
by, the Holder hereof or his attorney duly authorized in writing, and
thereupon one or more new Securities of this series and of like tenor, of
authorized denominations and for the same aggregate principal amount, shall be
issued to the designated transferee or transferees.
The Securities of this series are issuable only in
registered form without coupons in denominations of $1,000 and integral
multiples thereof. As provided in the Indenture and subject to certain
limitations therein set forth, Securities of this series are exchangeable
for a like aggregate principal amount of Securities of this series and of
like tenor of a different authorized denomination, as requested by the Holder
surrendering the same.
No service charge shall be made for any such registration of
transfer or exchange, but the Company may require payment of a sum sufficient
to cover any tax or other governmental charge payable in connection therewith.
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Prior to due presentment of this Security for registration of
transfer, the Company, the Trustee, and any agent of the Company or the
Trustee may treat the Person in whose name this Security is registered as
the owner hereof for all purposes, whether or not this Security shall be
overdue, and neither the Company, the Trustee, nor any such agent shall be
affected by notice to the contrary.
Unless this Security is presented by an authorized
representative of The Depository Trust Company (55 Water Street, New York, New
York) to the Company or its agent for registration of transfer, exchange or
payment, and any Security issued upon registration of transfer of, or in
exchange for, or in lieu of, this Security is registered in the name of Cede &
Co. or such other name as requested by an authorized representative of The
Depository Trust Company and payment hereon is made to Cede & Co., ANY
TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY
PERSON IS WRONGFUL since the registered owner hereof, Cede & Co., has an
interest herein.
All terms used in this Security that are defined in the
Indenture shall have the respective meanings assigned to them in the
Indenture.
D. The Trustee's certificate of authentication shall be
in substantially the following form:
[Form of Trustee's Certificate of
Authentication for Senior Notes]
Trustee's Certificate of Authentication
This is one of the Securities of the series designated therein
referred to in the within-mentioned Indenture.
The First National Bank of
Boston, as Trustee
By:___________________________
Authorized Officer
E. All acts and things necessary to make the Senior
Notes, when the Senior Notes have been executed by the Company and
authenticated by the Trustee and delivered as provided in the Indenture
and this Supplemental Indenture, the valid, binding, and legal obligations
of the Company and to constitute these presents a valid indenture and
agreement according to its terms, have been done and performed, and the
execution and delivery by the Company of the Indenture and this Supplemental
Indenture and
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the issue hereunder of the Senior Notes have in all respects been duly
authorized; and the Company, in the exercise of legal right and power in it
vested, is executing and delivering the Indenture and this Supplemental
Indenture and proposes to make, execute, issue, and deliver the Senior Notes.
NOW, THEREFORE, THIS SUPPLEMENTAL INDENTURE WITNESSETH:
In order to declare the terms and conditions upon which the
Senior Notes are authenticated, issued, and delivered, and in consideration
of the premises and of the purchase and acceptance of the Senior Notes by
the Holders thereof, it is mutually agreed, for the equal and proportionate
benefit of the respective Holders from time to time of the Senior Notes, as
follows:
ARTICLE I. ISSUANCE OF SENIOR NOTES.
SECTION 1.1. ISSUANCE OF SENIOR NOTES; PRINCIPAL AMOUNT;
MATURITY.
(a) On January 27, 1995, the Company shall issue and
deliver to the Trustee, and the Trustee shall authenticate, Senior Notes
substantially in the form set forth above, in each case with such appropriate
insertions, omissions, substitutions, and other variations as are required or
permitted by the Indenture and this Supplemental Indenture, and with such
letters, numbers, or other marks of identification and such legends or
endorsements placed thereon as may be required to comply with the rules of any
securities exchange or as may, consistently herewith, be determined by the
officers executing such Senior Notes, as evidenced by their execution of such
Senior Notes.
(b) The Senior Notes shall be issued in the aggregate
principal amount of $450,000,000, and shall mature on February 15, 2001.
SECTION 1.2. INTEREST ON THE SENIOR NOTES; PAYMENT OF
INTEREST.
(a) The Senior Notes shall bear interest at the rate of
10% per annum from January 27, 1995, except in the case of Senior Notes
delivered pursuant to Sections 2.05 or 2.07 of the Indenture, which shall bear
interest from the last Interest Payment Date through which interest has been
paid.
(b) The interest so payable, and punctually paid or duly
provided for, on any Interest Payment Date shall, as provided in such
Indenture, be paid to the Person in whose name a Senior Note (or one or
more Predecessor Securities) is registered at the close of business on the
Regular Record Date for such interest, which shall be the February 1 or
August 1 (whether or not a Business Day), as the case may be, next preceding
such Interest Payment Date. Any such interest not so punctually paid
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or duly provided for shall forthwith cease to be payable to the Holder on
such Regular Record Date and may either be paid to the Person in whose name
the Senior Note (or one or more Predecessor Securities) is registered at the
close of business on a Special Record Date for the payment of such Defaulted
Interest to be fixed by the Trustee, notice whereof shall be given to Holders
of Securities of this series not less than 10 calendar days prior to such
Special Record Date, or be paid at any time in any other lawful manner
not inconsistent with the requirements of any securities exchange on which
the Securities of this series may be listed, and upon such notice as may be
required by such exchange, all as more fully provided in the Indenture.
(c) Payment of the principal of (and premium, if any)
and any such interest on the Senior Notes shall be made at the office or
agency of the Company maintained for the purpose in New York, New York, in
such coin or currency of the United States of America as at the time of
payment is legal tender for payment of public and private debts; PROVIDED,
HOWEVER, that at the option of the Company payment of interest may be made by
check mailed to the address of the Person entitled thereto as such address
appears in the Security Register.
ARTICLE II. CERTAIN DEFINITIONS.
SECTION 2.1. CERTAIN DEFINITIONS.
The terms defined in this Section 2.1 (except as herein
otherwise expressly provided or unless the context of this Supplemental
Indenture otherwise requires) for all purposes of this Supplemental Indenture
and of any indenture supplemental hereto have the respective meanings
specified in this Section 2.1. All accounting terms not otherwise defined
herein have the meanings assigned to them in accordance with GAAP. All other
terms used in this Supplemental Indenture that are defined in the Indenture or
the Trust Indenture Act, either directly or by reference therein (except as
herein otherwise expressly provided or unless the context of this Supplemental
Indenture otherwise requires), have the respective meanings assigned to such
terms in the Indenture or the Trust Indenture Act, as the case may be, as in
force at the date of this Supplemental Indenture as originally executed.
"Bank Facilities" means the Credit Agreement, dated as
of December 19, 1994, among the Company, certain financial institutions,
Citibank, N.A., as administrative agent, and Chemical Bank, as agent, as the
same may be amended, supplemented, or otherwise modified from time to time.
"Cash Equivalent" means: (a) obligations unconditionally
guaranteed as to principal and interest by the United States of America or
by any agency or authority controlled or supervised by and acting as an
instrumentality of the United
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States of America; (b) obligations (including, but not limited to, demand or
time deposits, bankers' acceptances and certificates of deposit) issued by a
depository institution or trust company or a wholly owned Subsidiary or
branch office of any depository institution or trust company, provided that
(i) such depository institution or trust company has, at the time of the
Company's or any Restricted Subsidiary's investment therein or contractual
commitment providing for such investment, capital, surplus or undivided
profits (as of the date of such institution's most recently published
financial statements) in excess of $100.0 million and (ii) the commercial
paper of such depository institution or trust company, at the time of the
Company's or any Restricted Subsidiary's investment therein or contractual
commitment providing for such investment, is rated at least A1 by S&P or
P-1 by Moody's; and (c) debt obligations (including, but not limited to,
commercial paper and medium term notes) issued or unconditionally
guaranteed as to principal and interest by any corporation, state or
municipal government or agency or instrumentality thereof, or foreign
sovereignty, if the commercial paper of such corporation, state or
municipal government or foreign sovereignty, at the time of the Company's
or any Restricted Subsidiary's investment therein or contractual commitment
providing for such investment, is rated at least A1 by S&P or P-1 by
Moody's; (d) repurchase obligations with a term of not more than 7 days for
underlying securities of the type described above entered into with a
depository institution or trust company meeting the qualifications described
in clause (b) above; and (e) Investments in money market or mutual funds that
invest predominantly in Cash Equivalents of the type described in clauses (a),
(b), (c) and (d) above; PROVIDED, HOWEVER, that, in the case of clauses (a)
through (c) above, each such investment has a maturity of one year or less from
the date of acquisition thereof.
"Change of Control" means the occurrence of any of the
following events: (a) any "Person" or "group" (as such terms are used in
Sections 13(d) and 14(d) of the Exchange Act) is or becomes the "beneficial
owner" (as defined in Rules 13d-3 and 13d-5 under the Exchange Act), directly
or indirectly, of more than 50% of the total voting power of all classes of
stock of the Company entitled to vote generally in the election of directors
("Voting Stock") of the Company; (b) the Company consolidates with, or merges
with or into, another Person or sells, assigns, conveys, transfers, leases,
or otherwise disposes of all or substantially all of its assets to any
person, or another Person consolidates with, or merges with or into, the
Company, in any such event pursuant to a transaction in which the outstanding
Voting Stock of the Company is converted into or exchanged for cash,
securities, or other property, other than any such transaction where (i) the
outstanding Voting Stock of the Company is converted into or exchanged for
(1) Voting Stock (other than redeemable Voting Stock) of the surviving or
transferee corporation, (2) cash, securities, and other property in an amount
that could be paid by the Company as a Restricted Payment,
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or (3) a combination thereof, and (ii) immediately after such transaction (A)
no "person" or "group" (as such terms are used in Sections 13(d) and 14(d) of
the Exchange Act) is or becomes the "beneficial owner" (as defined in Rules
13d-3 and 13d-5 under the Exchange Act), directly or indirectly, of more than
50% of the total Voting Stock of the Company and (B) the holders of equity
securities of the Company immediately prior to such transaction hold,
immediately following such transaction, a majority of the total Voting
Stock of the Person surviving such transaction, (c) during any consecutive
two-year period, individuals who at the beginning of such period constituted
the Board of Directors (together with any new directors whose election by
such Board of Directors or whose nomination for election by the stockholders
of the Company was approved by a vote of a majority of the directors then
still in office who were either directors at the beginning of such period or
whose election or nomination for election was previously so approved) cease for
any reason to constitute a majority of the Board of Directors then in office;
or (d) the dissolution or liquidation of the Company.
"Consolidated Net Worth" of the Company means the
stockholders' equity of the Company and its Subsidiaries, determined on a
consolidated basis in accordance with GAAP; provided that adjustments
following the date of this Supplemental Indenture to the accounting books and
records of the Company, in accordance with Accounting Principles Board
Opinions Nos. 16 and 17 (or successor opinions thereto) or otherwise,
resulting from the acquisition of control of the Company by another Person
shall not be given effect.
"Debt Rating" means the actual rating assigned to the Notes
by Moody's or S&P. The Company shall use its best efforts to cause both
Moody's and S&P to make a rating of the Senior Notes publicly available, but
in the event that either Moody's or S&P does not make a rating of the Senior
Notes publicly available, the Company shall select any other nationally
recognized securities rating agency ( a "Recognized Rating Agency") to make
such a rating. In such event, the terms "Moody's" and "S&P," as the case
may be, mean, for purposes of this definition, such other Recognized Rating
Agency.
"Designated Event" shall be deemed to have occurred at
such time as (a) a Change of Control occurs or (b) a Designated Restricted
Payment Event occurs.
"Designated Restricted Payment Event" means the (i)
declaration or payment of any dividend on, or the making of any
distribution on account of, the Company's capital stock or (ii) purchase,
redemption, or acquisition or retirement for value of any capital stock
(including any option, warrant, or right to purchase capital stock) of the
Company owned beneficially by a Person other than a wholly owned Subsidiary
of the Company, by the Company or any Subsidiary of the Company, directly or
indirectly, if, after giving effect to any such action set forth
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in clause (i) or (ii), the Consolidated Net Worth of the Company as at the
end of the last fiscal quarter for which consolidated financial statements
are available is less than $2,750.0 million.
"Effective Date" means December 19, 1994.
"Existing Indebtedness" means all indebtedness under or
evidenced by: (a) the Senior Notes; (b) the outstanding principal amount of
notes issued pursuant to the Loan Agreement, dated as of December 30, 1987,
by and among Allied Stores General Real Estate Company and certain of its
Subsidiaries and The Prudential Insurance Company of America; (c) the
outstanding principal amount of notes issued pursuant to the Mortgage Note
Agreement, dated as of the Effective Date, between Macy's Primary Real Estate,
Inc. and Federated Noteholding Corporation; (d) the outstanding principal
amount of notes issued pursuant to the Loan Agreement, dated as of May 26,
1994, by and among Joseph Horne Co., Inc., PNC Bank, Ohio, National
Association, as agent, and the financial institutions listed on the
signature pages thereof; (e) the Capital Lease Obligations of the Company
and the Restricted Subsidiaries existing on the date hereof; (f) the
outstanding principal amount of uncertificated obligations of the Company
owed to the Internal Revenue Service and other taxing authorities; (g) the
existing secured mortgage debt assumed pursuant to the Plan; (h) the Note
Override Agreement dated as of December 19, 1994, by Kings Plaza Shopping
Center of Avenue U, Inc., as Issuer, and The John Hancock Mutual Life
Insurance Company, as Noteholder and the Promissory Note, dated as of
December 19, 1994, by Macy's Kings Plaza Real Estate, Inc., as Issuer, and The
John Hancock Mutual Life Insurance Company, as Noteholder; and (i) the other
secured Indebtedness of the Company or secured or unsecured Indebtedness of the
Restricted Subsidiaries existing on the date hereof.
"Full Rating Category" means (i) with respect to S&P, any of
the following categories: BB, B, CCC, CC, and C, and (ii) with respect to
Moody's, any of the following categories: Ba, B, Caa, Ca, and C. In
determining whether the rating of the Notes has decreased by the equivalent of
one Full Rating Category, gradation within Full Rating Categories (+ and -
for S&P; 1, 2, and 3 for Moody's) shall be taken into account (e.g., with
respect to S&P, a decline in rating from BB+ to BB-, or from BB to B+, shall
constitute a decrease of less than one Full Rating Category).
"Interest Coverage Ratio" means the ratio of (a) the sum of
(i) net income (other than net income of any Restricted Subsidiary during a
period in which such Restricted Subsidiary is prohibited from paying dividends
pursuant to any provision referred to in clause (ii), (iii), or (iv) of
Section 3.5 hereof, (ii) net interest expense, (iii) cash dividends with
respect to redeemable preferred stock (to the extent deducted from net income
and not included in net interest expense in accordance with GAAP), (iv) income
tax expense, (v) depreciation expense,
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(vi) amortization expense, and (vii) the net amount, which may be less than
zero, of extraordinary and unusual losses minus extraordinary and unusual
gains of the Company and its Subsidiaries on a consolidated basis, to (b)
net interest expense, plus cash dividends with respect to redeemable
preferred stock (to the extent deducted from net income and not included in
net interest expense in accordance with GAAP), of the Company and its
Subsidiaries on a consolidated basis, all as determined in accordance with
GAAP (or, in respect of the net income of any Restricted Subsidiary for
purposes of the parenthetical in clause (a)(i) above, the normal accounting
practices of such Restricted Subsidiary as in effect from time to time) for
the four most recently completed fiscal quarters of the Company.
"Investment" means, with respect to any Person, any
direct or indirect loan or other extension of credit or capital
contribution to (by means of any transfer of cash or other property to others
or any payment for property or services for the account or use of others), or
any purchase or acquisition by such Person of any capital stock, bonds,
notes, debentures, or other securities or evidences of Indebtedness issued by
any other Person. The amount of any Investment shall be the original cost
thereof, plus the cost of all additions thereto, without any adjustments for
increases or decreases in value, write-ups, write-downs, or write-offs with
respect to such Investment.
"Investment Grade" means a rating of at least BBB- (or the
equivalent) or higher by S&P and Baa3 (or the equivalent) or higher by
Moody's.
"Investment Grade Status" exists as of a date and
thereafter if at such date the Debt Rating by both Moody's and S&P is
Investment Grade.
"Lien" means any mortgage, deed of trust, pledge,
hypothecation, assignment, deposit arrangement, encumbrance, lien (statutory
or other), security interest, or preference, priority, or other security
agreement or preferential arrangement of any kind or nature whatsoever
intended to assure payment of any Indebtedness or other obligation, including
without limitation any conditional sale, deferred purchase price, or other
title retention agreement, the interest of a lessor under a Capital Lease
Obligation, any financing lease having substantially the same economic effect
as any of the foregoing, and the filing, under the Uniform Commercial Code or
comparable law of any jurisdiction, of any financing statement naming the owner
of the asset to which such Lien relates as debtor.
"Moody's" means Moody's Investors Service, or any successor
to the rating agency business thereof.
"Notice" means, with respect to an Offer to Purchase, a
written notice stating:
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(a) the Section of this Supplemental Indenture pursuant
to which such Offer to Purchase is being made;
(b) the applicable Purchase Amount (including, if less
than all the Senior Notes, the calculation thereof pursuant to the
Section hereof requiring such Offer to Purchase);
(c) the applicable Purchase Date;
(d) the purchase price to be paid by the Company for
each $1,000 principal amount at maturity of Senior Notes accepted for
payment (as specified in this Supplemental Indenture);
(e) that the Holder of any Senior Note may tender for
purchase by the Company all or any portion of such Senior Note equal
to $1,000 principal amount or any integral multiple thereof;
(f) the place or places where Senior Notes are to be
surrendered for tender pursuant to such Offer to Purchase;
(g) any Senior Note not tendered or tendered but not
purchased by the Company pursuant to such Offer to Purchase shall
continue to accrue interest as set forth in such Senior Note and this
Supplemental Indenture;
(h) that on the Purchase Date the purchase price shall
become due and payable upon each Senior Note (or portion thereof)
selected for purchase pursuant to such Offer to Purchase and that
interest thereon shall cease to accrue on and after the Purchase
Date;
(i) that each Holder electing to tender a Senior Note
pursuant to such Offer to Purchase shall be required to surrender
such Senior Note at the place or places specified in the Notice prior
to the close of business on the fifth Business Day prior to the
Purchase Date (such Senior Note being, if the Company or the
Trustee so requires, duly endorsed by, or accompanied by a
written instrument of transfer in form satisfactory to the Company
and the Trustee duly executed by, the Holder thereof or its attorney
duly authorized in writing);
(j) that (a) if Senior Notes (or portions thereof) in
an aggregate principal amount less than or equal to the Purchase
Amount are duly tendered and not withdrawn pursuant to such Offer to
Purchase, the Company shall purchase all such Senior Notes and (b) if
Senior Notes in an aggregate principal amount in excess of the
Purchase Amount are duly tendered and not withdrawn pursuant to such
Offer to Purchase, (i) the Company shall purchase Senior Notes
having an aggregate principal amount equal to the Purchase Amount
and (ii) the particular Senior Notes (or portions thereof)
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to be purchased shall be selected by such method as the Trustee shall
deem fair and appropriate and which may provide for the selection for
purchase of portions (equal to $1,000 or an integral multiple of
$1,000) of the principal amount of Senior Notes of a denomination
larger than $1,000;
(k) that, in the case of any Holder whose Senior Note
is purchased only in part, the Company shall execute, and the
Trustee shall authenticate and deliver to the Holder of such Senior
Note without service charge, a new Senior Note or Senior Notes, of
any authorized denomination as requested by such Holder, in an
aggregate principal amount equal to and in exchange for the
unpurchased portion of the Senior Note so tendered; and
(l) any other information required by applicable law to
be included therein.
"Offer to Purchase" means an offer to purchase Senior Notes
pursuant to and in accordance with a Notice, in the aggregate Purchase
Amount, on the Purchase Date, and at the purchase price specified in such
Notice (as determined pursuant to this Supplemental Indenture). Any Offer
to Purchase shall remain open from the time of mailing of the Notice until
the Purchase Date, and shall be governed by and effected in accordance with,
and the Company and the Trustee shall perform their respective obligations
specified in, the Notice for such Offer to Purchase.
"Permitted Indebtedness" means: (a) Existing Indebtedness;
(b) Indebtedness under the Bank Facilities in an aggregate principal
amount at any one time not to exceed $2,800.0 million, less (i) principal
payments actually made by the Company on any term loan facility under such
Bank Facilities (other than principal payments made in connection with or
pursuant to a refinancing of the Bank Facilities in compliance with clause
(l) below) and (ii) any amounts by which any revolving credit facility
commitments under the Bank Facilities are permanently reduced (other than
permanent reductions made in connection with or pursuant to a refinancing of
the Bank Facilities in compliance with clause (l) below) except that under no
circumstances shall the total allowable indebtedness under this clause (b) be
less than $1,250.0 million (subject to increase from and after the date hereof
at a rate, compounded annually, equal to 3% per annum) if incurred for the
purpose of providing the Company and its Subsidiaries with working capital
including bankers' acceptances, letters of credit, and similar assurances of
payment whether as part of the Bank Facilities or otherwise; (c) Indebtedness
existing as of the date hereof of any Subsidiary of the Company engaged
primarily in the business of owning or leasing real property; (d) Indebtedness
incurred for the purpose of financing store construction and remodeling or
other capital expenditures; (e) unsecured Indebtedness among the Company and
its Subsidiaries; (f) Indebtedness in respect of the deferred
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purchase price of property or arising under any conditional sale or other
title retention agreement; (g) Indebtedness of a Person acquired by the
Company or a Subsidiary of the Company at the time of such acquisition; (h)
to the extent deemed to be "Indebtedness," obligations under swap agreements,
cap agreements, collar agreements, insurance arrangements, or any other
agreement or arrangement, in each case designed to provide protection
against fluctuations in interest rates, the cost of currency or the cost
of goods (other than inventory); (i) other Indebtedness in outstanding
amounts not to exceed $750.0 million in the aggregate incurred by the Company
and the Restricted Subsidiaries at any particular time; (j) the
uncertificated obligations of certain Subsidiaries of the Company owed to
certain former holders of prepetition unsecured claims against such
Subsidiaries or their predecessors due February 4, 1995; (k) the
indebtedness represented by the convertible notes issued and outstanding
pursuant to the Senior Convertible Discount Note Agreement, dated as of
February 5, 1992, among the Company, the holders of such Convertible Notes
listed on the signature pages thereto, Citibank, N.A., as Convertible Note
Agent, and The Sumitomo Bank, Limited, New York Branch, as Convertible Note
Co-Agent, and the Indenture, dated as of April 8, 1993, between the
Company and The First National Bank of Boston, as trustee; and (l)
Indebtedness incurred in connection with any extension, renewal, refinancing,
replacement, or refunding (including successive extensions, renewals,
refinancings, replacements, or refundings), in whole or in part, of any
Indebtedness of the Company or the Restricted Subsidiaries; PROVIDED,
HOWEVER, that: (i) the principal amount of the Indebtedness so incurred does
not exceed the sum of the principal amount of the Indebtedness so extended,
renewed, refinanced, replaced, or refunded, plus all interest accrued thereon
and all related fees and expenses (including any payments made in connection
with procuring any required lender or similar consents) and (ii) in the case
of the extension, renewal, refinancing, replacement, or refunding of the
Indebtedness referred to in clause (k) above, the Indebtedness so incurred
is pari passu with or subordinate to the Senior Notes.
"Permitted Investments" means: (a) Cash Equivalents; (b)
Investments in another Person, if as a result of such Investment (i) such
other Person becomes a Restricted Subsidiary of the Company or (ii) such other
Person is merged or consolidated with or into, or transfers or conveys all or
substantially all of its assets to, the Company or a Restricted Subsidiary of
the Company; (c) Investments in the Company or any Restricted Subsidiary of
the Company; (d) Investments represented by accounts receivable created or
acquired in the ordinary course of business, extensions of trade credit on
commercially reasonable terms in accordance with normal trade practices, or
liabilities to the Company or any Restricted Subsidiary represented by
customer credit card obligations; (e) commissions and advances to employees of
the Company and its Subsidiaries in the ordinary course of business; (f)
investments representing notes, securities or other instruments or obligations
acquired in
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connection with the sale of assets; (g) Investments in the form of the sale
(on a "true-sale" non-recourse basis) of receivables transferred from the
Company or any Restricted Subsidiary, or transfers of cash, to an Unrestricted
Subsidiary as a capital contribution or in exchange for Indebtedness of such
Unrestricted Subsidiary or cash; (h) Permitted Joint Venture Investments; (i)
Investments representing capital stock or obligations issued to the Company
or any Restricted Subsidiary in settlement of claims against any other Person
by reason of a composition or readjustment of debt or a reorganization of
any debtor of the Company or such Restricted Subsidiary; (j) loans or
advances to vendors in connection with in-store merchandising to be repaid
either on a lump-sum basis or over a period of time by the delivery of
merchandise; (k) loans or advances to sublessees in an aggregate amount
not to exceed $5 million at any time outstanding; (l) construction
advances to developers; (m) Investments in swap agreements, cap
agreements, collar agreements, insurance arrangements or any other
agreement or arrangement, in each case designed to provide protection
against fluctuations in interest rates, the cost of currency or the cost of
goods (other than inventory); and (n) other Investments not to exceed $200.0
million in the aggregate.
"Permitted Joint Venture Investments" means Investments in
joint ventures or other risk-sharing arrangements (which may include
investments in partnerships or corporations) the purpose of which is to
engage in the same or similar lines of business as the operating business
of the Company or a Restricted Subsidiary or in businesses consistent with the
fundamental nature of the operating business of the Company or a Restricted
Subsidiary or necessary or desirable to facilitate the opening business of
the Company or a Restricted Subsidiary and is a business or operation that
the Company or a Restricted Subsidiary could engage in directly under the
terms hereof and that constitute "Investments" solely due to the fact that
Persons other than the Company or a Restricted Subsidiary have an interest
in such business or operation; PROVIDED, HOWEVER, that the business of
such joint venture, partnership, or corporation is, by the terms of the
applicable joint venture agreement, partnership agreement, or corporate
charter, prohibited from the making of Investments other than Permitted
Investments to the extent the Company could make such Investments directly in
accordance with the terms hereof.
"Permitted Liens" means: (a) Liens (other than Liens on
inventory) securing Indebtedness referred to in any of clauses (a) through
(d), clauses (f) through (j) and clause (l) of the definition of "Permitted
Indebtedness"; (b) Liens incurred and pledges and deposits made in the
ordinary course of business in connection with liability insurance,
workers' compensation, unemployment insurance, old-age pensions, and other
social security benefits other than in respect of employee benefit plans
subject to the Employee Retirement Income Security Act of 1974, as amended; (c)
Liens securing performance, surety, and appeal
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bonds and other obligations of like nature incurred in the ordinary course of
business; (d) Liens on goods and documents securing trade letters of credit;
(e) Liens imposed by law, such as carriers', warehousemen's, mechanics',
materialmen's, and vendor's Liens, incurred in the ordinary course of business
and securing obligations which are not yet due or which are being contested
in good faith by appropriate proceedings; (f) Liens securing the payment of
taxes, assessments, and governmental charges or levies, either (i) not
delinquent or (ii) being contested in good faith by appropriate legal or
administrative proceedings and as to which adequate reserves shall have been
established on the books of the relevant Person in conformity with GAAP;
(g) zoning restrictions, easements, rights of way, reciprocal easement
agreements, operating agreements, covenants, conditions, or restrictions on
the use of any parcel of property that are routinely granted in real estate
transactions or do not interfere in any material respect with the ordinary
conduct of the business of the Company and its Subsidiaries or the value of
such property for the purpose of such business; (h) Liens on property existing
at the time such property is acquired; (i) purchase money Liens upon or in
any property acquired or held in the ordinary course of business to secure
Indebtedness incurred solely for the purpose of financing the acquisition of
such property; (j) Liens on the assets of any Subsidiary of the Company at the
time such Subsidiary is acquired; (k) Liens with respect to obligations in
outstanding amounts not to exceed $100.0 million at any particular time and
that (i) are not incurred in connection with the borrowing of money or
obtaining advances or credit (other than trade credit in the ordinary course of
business) and (ii) do not in the aggregate interfere in any material respect
with the ordinary conduct of the business of the Company and its
Subsidiaries; and (l) without limiting the ability of the Company or any
Restricted Subsidiary to create, incur, assume, or suffer to exist any Lien
otherwise permitted under any of the foregoing clauses, any extension,
renewal, or replacement, in whole or in part, of any Lien described in the
foregoing clauses; PROVIDED, HOWEVER, that any such extension, renewal, or
replacement Lien is limited to the property or assets covered by the Lien
extended, renewed, or replaced or substitute property or assets, the value of
which is determined by the Board of Directors of the Company to be not
materially greater than the value of the property or assets for which the
substitute property or assets are substituted.
"Plan" means the Amended Joint Plan of Reorganization of R.H.
Macy & Co., Inc. and Certain of its Subsidiaries.
"Purchase Amount" means the aggregate outstanding principal
amount of the Senior Notes required to be offered to be purchased by the
Company pursuant to an Offer to Purchase.
"Purchase Date" means, with respect to any Offer to Purchase,
a date specified by the Company in such Offer to Purchase not less than 30
calendar days or more than 60 calendar
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days after the date of the mailing of the Notice of such Offer to Purchase (or
such other time period as is necessary for the Offer to Purchase to remain
open for a sufficient period of time to comply with applicable securities
laws).
"Rating Decline" means the occurrence of the following on,
or within 90 calendar days after, the date of public disclosure of the
occurrence of a Designated Event (which period shall be extended, for a period
not to exceed 90 calendar days, so long as the Debt Rating is under publicly
announced consideration for possible downgrading by both Moody's and S&P):
(i) in the event the Senior Notes are rated Investment Grade by Moody's or
S&P on the earlier of the date immediately preceding the date of the public
disclosure of (w) the occurrence of a Designated Event or (x) (if
applicable) the intention of the Company to effect a Designated Event, the
Debt Rating by both Moody's and S&P shall be below Investment Grade; or (ii)
in the event the Senior Notes are rated below Investment Grade by both Moody's
and S&P on the earlier of the date immediately preceding the date of the
public disclosure of (y) the occurrence of a Designated Event or (z) (if
applicable) the intention of the Company to effect a Designated Event, the
Debt Rating by each of Moody's and S&P shall be decreased by at least one
Full Rating Category. In the event that either Moody's or S&P does not
make a rating of the Senior Notes publicly available, and the Company
selects a Recognized Rating Agency to make such a rating, (i) the terms
"Moody's" or "S&P," as the case may be, shall mean such other Recognized
Rating Agency; (ii) the term "Full Rating Category" shall mean, with respect
to such Recognized Rating Agency, the equivalent of any such category of S&P
or Moody's used by such Recognized Rating Agency; and (iii) the term
"Investment Grade" shall mean, with respect to such Recognized Rating Agency,
the equivalent of a rating of at least BBB- in the case of S&P and at least
Baa3 in the case of Moody's, used by such Recognized Rating Agency.
"Restricted Subsidiary" means any direct or indirect
subsidiary (as that term is defined in Regulation S-X promulgated by the
Securities and Exchange Commission) other than an Unrestricted Subsidiary.
"S&P" means Standard & Poor's Rating Group, a division of
McGraw-Hill, Inc., or any successor to the rating agency business thereof.
"Sale and Leaseback Transaction" means, with respect to any
Person, an arrangement with any bank, insurance company or other lender or
investor or to which such lender or investor is a party, providing for the
leasing pursuant to a Capital Lease by such Person or any Subsidiary of such
Person of any property or asset of such Person or such Subsidiary which has
been or is being sold or transferred by such Person or such Subsidiary to
such lender or investor or to any Person to whom funds have been
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or are to be advanced by such lender or investor on the security of such
property or asset.
"Senior Indebtedness" means any Indebtedness of the Company or
its Subsidiaries other than Subordinated Indebtedness.
"Significant Subsidiary" means any Subsidiary which accounts
for 10.0% or more of the total consolidated assets of the Company and its
Subsidiaries as of any date of determination or 10.0% or more of the total
consolidated revenues of the Company and its Subsidiaries for the most
recently concluded fiscal quarter.
"Subordinated Indebtedness" means any Indebtedness of the
Company which is expressly subordinated in right of payment to the Senior
Notes.
"Unrestricted Subsidiary" means (a) FDS National Bank, FACS
Group, Inc., Federated Credit Holdings Corporation, Prime Credit Card Master
Trust (to the extent that it is deemed to be a Subsidiary), Prime Receivables
Corporation, Seven Hills Funding Corporation, Ridge Capital Trust II (to the
extent that it is deemed to be a Subsidiary), Macy Financial, Inc., R.H.
Macy Overseas Finance, N.V., Macy Credit Corp., and Macy's Data and Credit
Services Corp., (b) any Subsidiary of the Company the primary business of
which consists of, and is restricted by the charter, partnership agreement,
or similar organizational document of such Subsidiary to, financing operations
on behalf of the Company and its Subsidiaries, and/or purchasing accounts
receivable or direct or indirect interests therein, and/or making loans
secured by accounts receivable or direct or indirect interests therein (and
business related to the foregoing), or which is otherwise primarily engaged
in, and restricted by its charter, partnership agreement, or similar
organizational document to, the business of a finance company (and business
related thereto), which, in accordance with the provisions of this
Supplemental Indenture, has been designated by Board Resolution as an
Unrestricted Subsidiary, in each case unless and until any of the Subsidiaries
of the Company referred to in the foregoing clauses (a) and (b) is, in
accordance with the provisions of this Supplemental Indenture, designated by a
Board Resolution as a Restricted Subsidiary, and (c) any Subsidiary of the
Company of which, in the case of a corporation, more than 50% of the issued and
outstanding capital stock having ordinary voting power to elect a majority of
the board of directors of such corporation (irrespective of whether at the
time capital stock of any other class or classes of such corporation has or
might have voting power upon the occurrence of any contingency), or, in the
case of any partnership or other legal entity, more than 50% of the ordinary
equity capital interests, is at the time directly or indirectly owned or
controlled by one or more Unrestricted Subsidiaries and the primary business
of which consists of, and is restricted by the charter, partnership
agreement or similar organizational document of such Subsidiary
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to, financing operations on behalf of the Company and its Subsidiaries,
and/or purchasing accounts receivable or direct or indirect interests therein,
and/or making loans secured by accounts receivable or direct or indirect
interests therein (and business related to the foregoing), or which is
otherwise primarily engaged in, and restricted by its charter, partnership
agreement or similar organizational document to, the business of a finance
company (and business related thereto).
ARTICLE III. CERTAIN COVENANTS.
The following covenants shall be applicable to the Company
unless and until the Company reaches Investment Grade Status. Upon reaching
Investment Grade Status, the Company shall be released from its
obligations to comply with each of the following restrictive covenants,
except for those set forth in Sections 3.2, 3.4, 3.9 (including the provisions
of the covenant set forth in Section 3.7 with respect to application of
proceeds) and 3.10. Nothing in this paragraph will, however, affect the
Company's obligations under any provision of the Indenture or, except for
Article III hereof, this Supplemental Indenture.
SECTION 3.1. INDEBTEDNESS.
The Company shall not directly or indirectly incur,
assume, guarantee, or otherwise become liable with respect to any
Indebtedness other than Permitted Indebtedness referred to in clauses (a)
through (c), clauses (e) and (f), and clauses (h) through (l) of the
definition thereof unless immediately thereafter the Interest Coverage Ratio
is 2.0 to 1.0 or greater, after giving effect, on a pro forma basis as if
incurred at the beginning of the applicable period, to the obligations of the
Company and the Restricted Subsidiaries in respect of such Indebtedness.
The Company shall not permit any Restricted Subsidiary
directly or indirectly to incur, assume, guarantee, or otherwise become liable
with respect to, any Indebtedness (A) other than Permitted Indebtedness
referred to in clauses (a) through (c), clauses (e) and (f), clauses (h)
through (j), and clause (l) of the definition thereof and (B) other than
Permitted Indebtedness referred to in clauses (d) and (g) of the definition
thereof, provided, in the case of Permitted Indebtedness incurred pursuant
to this clause (B), immediately thereafter the Interest Coverage Ratio is
2.0 to 1.0 or greater, after giving effect, on a pro forma basis as if
incurred at the beginning of the applicable period, to the obligations of the
Company and the Restricted Subsidiaries in respect of such Indebtedness.
SECTION 3.2. LIENS.
The Company shall not, and shall not permit any Restricted
Subsidiary to, create, incur, assume, or suffer to
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exist any Liens upon any of their respective assets, other than Permitted
Liens, unless the Senior Notes are secured by an equal and ratable Lien on
the same assets.
SECTION 3.3. RESTRICTED PAYMENTS.
The Company shall not, and shall not permit any Restricted
Subsidiary to, (a) declare or pay any dividend on, or make any other
distribution on account of, the Company's capital stock; (b) purchase, redeem,
or otherwise acquire or retire for value any capital stock (including any
option, warrant, or right to purchase capital stock) of the Company owned
beneficially by a Person other than a wholly owned Subsidiary of the Company;
(c) purchase, redeem, or otherwise acquire or retire for value the principal of
any Subordinated Indebtedness (other than the principal amount of notes
outstanding pursuant to the Loan Agreement, dated as of December 30, 1987,
by and among Allied Stores General Real Estate Company and certain of its
Subsidiaries and The Prudential Insurance Company of America, if deemed to be
subordinated by virtue of the Company's guaranty thereof) prior to the
scheduled maturity thereof other than pursuant to mandatory scheduled
redemptions or repayments; or (d) make any Investment other than Permitted
Investments (all such dividends, distributions, purchases, redemptions, or
Investments being collectively referred to as "Restricted Payments"); if, at
the time of such action, or after giving effect thereto: (i) an Event of
Default shall have occurred and is continuing; (ii) the Company could not
incur at least $1.00 of additional Indebtedness under the Interest Coverage
Ratio test in Section 3.1; or (iii) the cumulative amount of Restricted
Payments made subsequent to the Effective Date shall be greater than the sum
of: (A) 50% of the Company's cumulative consolidated net income (or a
negative amount equal to 100% of the Company's cumulative consolidated net
loss, if applicable) from January 29, 1995 through the end of the Company's
fiscal quarter next preceding the taking of such action; (B) 100% of the
aggregate net cash proceeds received by the Company from the issue or sale
of capital stock of the Company (other than redeemable capital stock),
including capital stock issued upon the conversion of convertible
Indebtedness issued on or after the Effective Date, in exchange for
outstanding Indebtedness, or from the exercise of options, warrants, or
rights to purchase capital stock of the Company to any Person other than to a
Subsidiary of the Company subsequent to the Effective Date (with the Company
being deemed, in the case of capital stock issued upon conversion or in
exchange for Indebtedness, to have received net cash proceeds equal to the
principal amount of the Indebtedness so converted or exchanged); and (C)
$250.0 million; PROVIDED, HOWEVER, that (1) the payment of any dividend within
60 calendar days after the date of declaration thereof, if such declaration
complied with the foregoing redemption, or other acquisition provisions on
the date of such declaration, (2) the purchase, redemption, or other
acquisition or retirement for value of any shares of capital stock of the
Company in exchange for, or out of the proceeds of,
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a substantially concurrent issue and sale (other than to a Restricted
Subsidiary) of other shares of capital stock (other than redeemable capital
stock) of the Company, (3) the redemption or other acquisition or
retirement for value prior to any scheduled maturity of any Subordinated
Indebtedness in exchange for, or out of the proceeds of, a substantially
concurrent issue and sale of (a) capital stock (other than redeemable
capital stock) of the Company or (b) Subordinated Indebtedness of the
Company, (4) any purchase, redemption, or other acquisition or retirement
for value of any capital stock (including any option, warrant, or right to
purchase capital stock) of the Company issued to any employee or director of
the Company pursuant to any employee benefit or similar plan, and (5) any
redemption of share purchase rights issued pursuant to the Rights Agreement
dated as of December 19, 1994, by and between the Company and The Bank of New
York, as Rights Agent (as the same may be amended from time to time), or any
similar successor replacement share purchase rights plan involving an
aggregate redemption price (A) for any one such redemption of less than $10.0
million and (B) for all such redemptions of not more than $20.0 million,
shall not be deemed to constitute "Restricted Payments" and shall not be
prohibited under this Section.
SECTION 3.4. CHANGE OF CONTROL.
Following (a) a Change of Control prior to such time as
the Company shall have reached Investment Grade Status or, (b) thereafter,
a Designated Event and a Rating Decline in connection therewith, the Company
shall offer to repurchase the Senior Notes pursuant to an Offer to Purchase
at a purchase price equal to 101% of the principal amount thereof, plus
accrued and unpaid interest to the date established for such repurchase.
Such Offer to Purchase shall be made by mailing of a Notice to the Trustee
and each Holder at the address appearing in the Security Register, by first
class mail, postage prepaid, by the Company or, at the Company's request, by
the Trustee in the name and at the expense of the Company, on a date selected
by the Company, which shall be not more than 60 calendar days following the
Change in Control or the later of (i) the Designated Event and (ii) the
Rating Decline, as the case may be. On the Purchase Date, the Company shall
(i) accept for payment the Senior Notes or portions thereof tendered
pursuant to the Offer to Purchase, (ii) deposit with the Paying Agent money
sufficient to pay the purchase price of all Senior Notes or portions thereof
so accepted, and (iii) deliver to the Trustee the Senior Notes so accepted.
The Paying Agent shall promptly mail to the Holders of Senior Notes such
accepted payment in an amount equal to the purchase price, and the Trustee
shall promptly authenticate and mail to each Holder at the address appearing
on the Security Register new Senior Notes equal in principal amount to any
unpurchased portion of the Senior Notes surrendered. Notwithstanding the
foregoing, if the Company effects Defeasance or Covenant Defeasance of the
Senior Notes as provided in Article V of the Indenture prior to the date
Notice of a Rating Decline
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in connection with a Designated Event is required, the Company shall not be
obligated to give such Notice or offer to repurchase the Senior Notes as a
result of such Designated Event and Rating Decline.
Acceptance of the Offer to Purchase by a Holder shall be
irrevocable (unless otherwise provided by law). The payment of accrued
interest as part of any repurchase price on any Purchase Date shall be
subject to the right of Holders of record on the relevant Regular Record
Date to receive interest due on an Interest Payment Date that is on or prior to
such Purchase Date.
If an Offer to Purchase Senior Notes is made, the Company
shall comply with all tender offer rules, including but not limited to Section
14(e) under the Exchange Act and Rule 14e-1 thereunder, to the extent
applicable to such Offer to Purchase.
SECTION 3.5. PAYMENT RESTRICTIONS AFFECTING RESTRICTED
SUBSIDIARIES.
The Company shall not, and shall not permit any Restricted
Subsidiary to, directly or indirectly, create or otherwise cause or suffer to
exist any contractual restriction on the ability of any Restricted
Subsidiary to (a) pay any dividend on, or make any other distribution on
account of, its capital stock or pay any Indebtedness owed to the Company
or a Restricted Subsidiary or (b) make loans or advances to the Company or a
Restricted Subsidiary, except for (i) restrictions existing as of the
Effective Date, (ii) restrictions in the documentation setting forth the terms
of or entered into in connection with any Permitted Indebtedness, (iii)
restrictions in the documentation setting forth the terms of or entered into
in connection with the sale of such Restricted Subsidiary to a third party,
(iv) restrictions applicable to a Person acquired by the Company or a
Subsidiary of the Company or designated as a Restricted Subsidiary, which exist
at the time of such acquisition or designation, or (v) other restrictions
arising in the ordinary course of business otherwise than in connection with
financing transactions.
SECTION 3.6. ISSUANCE OF SUBSIDIARY PREFERRED STOCK.
The Company shall not permit any Restricted Subsidiary to
issue any shares of preferred stock other than (a) preferred stock issued to
the Company or a wholly owned Subsidiary of the Company or (b) preferred
stock issued to any other Person if, after giving effect thereto on a pro
forma basis as if such preferred stock were issued at the beginning of the
applicable period, such Restricted Subsidiary could have incurred additional
Indebtedness in an amount equal to the aggregate liquidation value of such
preferred stock (assuming such Indebtedness were incurred to the Person(s) and
for the purposes to which and for which such preferred stock was issued).
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SECTION 3.7. ASSET SALES.
The Company shall not, and shall not permit any Restricted
Subsidiary to, consummate any sale of assets (other than sales of
inventories, goods, fixtures, and accounts receivable in the ordinary course
of business, and sales of assets to the Company or a wholly owned Subsidiary
of the Company) unless such sale is for fair market value and, in the case of
individual sales of assets for which the consideration received (including
liabilities assumed) is more than $25.0 million at least 75% of the
consideration therefor (other than liabilities assumed) consists of either
(a) any combination of cash, cash equivalents, or promissory notes secured
by letters of credit or similar assurances of payment issued by commercial
banks of recognized standing or (b) capital asset contributions or capital
expenditures made for or on behalf of the Company or a Subsidiary by a third
party. Asset sales not subject to Section 3.8 below shall be presumed to be
for fair market value if the consideration received is less than $25.0
million and shall be conclusively presumed to have been for fair market value
if the transaction is determined by the Board of Directors to be fair, from a
financial point of view, to the Company. To the extent that the aggregate
amount of cash proceeds (net of all legal, title, and recording tax expenses,
commissions, and other fees and expenses incurred, and all federal, state,
provincial, foreign, and local taxes and reserves required to be accrued as a
liability, as a consequence of such sales of assets, and net of all payments
made on any Indebtedness which is secured by such assets in accordance with
the terms of any Liens upon or with respect to such assets or which must by
the terms of such Lien, or in order to obtain a necessary consent to such
sale or by applicable law be repaid out of the proceeds from such sales of
assets, and net of all distributions and other payments made to minority
interest holders in Subsidiaries or joint ventures as a result of such sales
of assets) from such sales of assets that shall not have been reinvested in
the business of the Company or its Subsidiaries or used to reduce Senior
Indebtedness of the Company or its Subsidiaries within 12 months of the
receipt of such proceeds (with cash equivalents being deemed to be proceeds
upon receipt of such cash equivalents and cash payments under promissory
notes secured as aforesaid being deemed to be proceeds upon receipt of such
payments) shall exceed $100.0 million ("Excess Sale Proceeds") from time to
time, the Company shall offer to repurchase pursuant to an Offer to Purchase
Senior Notes with such Excess Sale Proceeds (on a pro rata basis with any
other Senior Indebtedness of the Company or its Subsidiaries required by the
terms of such Indebtedness to be repurchased with such Excess Sale Proceeds,
based on the principal amount of such Senior Indebtedness required to be
repurchased) at 100% of principal amount, plus accrued and unpaid interest,
and to pay related costs and expenses. Such Offer to Purchase shall be made
by mailing of a Notice to the Trustee and to each Holder at the address
appearing in the Security Register, by first class mail, postage prepaid, by
the Company or, at the Company's request, by
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the Trustee in the name and at the expense of the Company, on a date selected
by the Company not later than 12 months from the date such Offer to Purchase
is required to be made pursuant to the immediately preceding sentence. To the
extent that the aggregate purchase price for Senior Notes or other Senior
Indebtedness tendered pursuant to such offer to repurchase is less than the
aggregate purchase price offered in such offer, an amount of Excess Sale
Proceeds equal to such shortfall shall cease to be Excess Sale Proceeds and
may thereafter be used for general corporate purposes. On the Purchase Date,
the Company shall (i) accept for payment Senior Notes or portions thereof
tendered pursuant to the Offer to Purchase in an aggregate principal amount
equal to the Purchase Amount (selected by such method as the Trustee shall
deem fair and appropriate and which may provide for the selection for
purchase of portions (equal to $1,000 or an integral multiple of $1,000)
of the principal amount of Senior Notes of a denomination larger than
$1,000), (ii) deposit with the Paying Agent money sufficient to pay the
purchase price of all Senior Notes or portions thereof so accepted, and (iii)
deliver to the Trustee Senior Notes so accepted. The Paying Agent shall
promptly mail to the Holders of Senior Notes so accepted payment in an
amount equal to the purchase price, and the Trustee shall promptly
authenticate and mail to such Holders a new Senior Note equal in principal
amount to any unpurchased portion of each Senior Note surrendered.
Election of the Offer to Purchase by a Holder shall (unless
otherwise provided by law) be irrevocable. The payment of accrued interest as
part of any repurchase price on any Purchase Date shall be subject to the right
of Holders of record on the relevant Regular Record Date to receive interest
due on an Interest Payment Date that is on or prior to such Purchase Date.
If an Offer to Purchase Senior Notes is made, the Company
shall comply with all tender offer rules, including but not limited to Section
14(e) under the Exchange Act and Rule 14e-1 thereunder, to the extent
applicable to such Offer to Purchase.
SECTION 3.8. TRANSACTIONS WITH AFFILIATES.
The Company shall not, and shall not permit any Restricted
Subsidiary to, (a) sell, lease, transfer, or otherwise dispose of any of its
properties, assets, or securities to, (b) purchase any property, assets, or
securities from, or (c) enter into any contract or agreement with or for the
benefit of an Affiliate (as defined below) of the Company or a Subsidiary of
the Company (other than the Company or a wholly-owned Subsidiary of the
Company) (an "Affiliate Transaction") other than Affiliate Transactions in the
ordinary course of business which in the aggregate do not exceed (i) $25.0
million in any one Affiliate Transaction or series of related Affiliate
Transactions unless a majority of the disinterested members of the Board of
Directors determines that such Affiliate Transaction or series of Affiliate
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Transactions is on terms not less favorable to the Company or such
Restricted Subsidiary than those that would apply to an arms-length
transaction with an unaffiliated party and (ii) $100.0 million in any one
Affiliate Transaction or series of related Affiliate Transactions unless the
test set forth in clause (i) has been satisfied and the Board of Directors of
the Company shall have been advised by an independent financial advisor that,
in the opinion of such advisor, such Affiliate Transaction or series of
Affiliate Transactions is fair, from a financial point of view, to the
Company or such Restricted Subsidiary. Solely for purposes of this Section
3.8, the term "Affiliate" shall have the meaning set forth in Rule 405
promulgated by the Securities and Exchange Commission under the Securities
Act of 1933, as amended, PROVIDED, HOWEVER, that there shall be a rebuttable
presumption that any Person that holds more than 15% of the stock having
ordinary voting power of an entity is an "Affiliate" of such entity.
SECTION 3.9. SALE AND LEASEBACK TRANSACTIONS.
The Company shall not, and shall not permit any Restricted
Subsidiary to, enter into any Sale and Leaseback Transaction unless: (a) the
Capital Lease Obligation incurred in connection therewith complies with Section
3.1 and (b) the net cash proceeds therefrom are applied in compliance with
Section 3.7 and to the extent required by Section 3.7. If the Company
reaches Investment Grade Status, the provisions of clause (a) above shall not
apply thereafter.
SECTION 3.10. MERGER AND CERTAIN OTHER TRANSACTIONS.
In addition to the conditions set forth in Section 11.01 of
the Indenture, the Company, in a single transaction or through a series of
related transactions, shall not consolidate with or merge with or into any
other Person, or transfer (by lease, assignment, sale, or otherwise) all or
substantially all of its properties and assets to another Person unless
immediately after and giving effect to such transaction and the incurrence
of any Indebtedness to be incurred in connection therewith the Surviving
Person could incur $1.00 of additional Indebtedness under the Interest Coverage
Ratio test.
SECTION 3.11. PERMITTING UNRESTRICTED SUBSIDIARIES TO BECOME
RESTRICTED SUBSIDIARIES.
The Company shall not permit any Unrestricted Subsidiary to
be designated as a Restricted Subsidiary unless such Subsidiary has
outstanding no Indebtedness except such Indebtedness as the Company could
permit it to become liable for immediately after becoming a Restricted
Subsidiary and such Subsidiary is otherwise in compliance with all provisions
of the Indenture and this Supplemental Indenture that apply to Restricted
Subsidiaries.
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SECTION 3.12. PAYMENT OFFICE.
The Company shall cause a Payment Office for the Senior Notes
to be maintained at all times in New York, New York.
ARTICLE IV. ADDITIONAL EVENTS OF DEFAULT.
SECTION 4.1. ADDITIONAL EVENTS OF DEFAULT.
In addition to the Events of Default set forth in the
Indenture, the term "Event of Default," whenever used in the Indenture or this
Supplemental Indenture with respect to the Senior Notes, means any one of the
following events (whatever the reason for such Event of Default and whether
it may be voluntary or involuntary or be effected by operation of law or
pursuant to any judgment, decree, or order of any court or any order, rule, or
regulation of any administrative or governmental body):
(a) the failure to redeem the Senior Notes when
required pursuant to the terms and conditions thereof or to pay
the repurchase price for Senior Notes to be repurchased in accordance
with Section 3.4 or 3.7 of this Supplemental Indenture;
(b) any nonpayment at maturity or other default is
made under any agreement or instrument relating to any other
Indebtedness of the Company or any Restricted Subsidiary (the unpaid
principal amount of which is not less than $100.0 million), and, in
any such case, such default (i) continues beyond any period of
grace provided with respect thereto and (ii) results in such
Indebtedness becoming due prior to its stated maturity or occurs at
the final maturity of such Indebtedness; PROVIDED, HOWEVER, that,
subject to the provisions of Section 9.01 and 8.08 of the
Indenture, the Trustee shall not be deemed to have knowledge of
such nonpayment or other default unless either (1) a Responsible
Officer of the Trustee has actual knowledge of nonpayment or other
default or (2) the Trustee has received written notice thereof from
the Company, from any Holder, from the holder of any such
Indebtedness or from the trustee under the agreement or instrument,
relating to such Indebtedness;
(c) the entry of one or more judgments or orders
for the payment of money against the Company or any Restricted
Subsidiary, which judgments and orders create a liability of $100.0
million or more in excess of insured amounts and have not been
stayed (by appeal or otherwise), vacated, discharged, or otherwise
satisfied within 60 calendar days of the entry of such judgments and
orders; and
(d) Events of Default of the type and subject to the
conditions set forth in clauses (vi) and (vii) of Section 8.01(a) of
the Indenture in respect of any Significant
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Subsidiary or, in related events, any group of Subsidiaries which, if
considered in the aggregate, would be a Significant Subsidiary of the
Company.
ARTICLE V. DEFEASANCE.
SECTION 5.1. APPLICABILITY OF ARTICLE V OF THE INDENTURE.
(a) The Senior Notes shall be subject to Defeasance and
Covenant Defeasance as provided in Article V of the Indenture; PROVIDED,
HOWEVER, that no Defeasance or Covenant Defeasance shall be effective unless
and until:
(i) there shall have been delivered to
the Trustee the opinion of a nationally recognized independent
public accounting firm certifying the sufficiency of the amount of
the moneys, U.S. Government Obligations, or a combination thereof,
placed on deposit to pay, without regard to any reinvestment, the
principal of and any premium and interest on the Senior Notes on the
Stated Maturity thereof or on any earlier date on which the Senior
Notes shall be subject to redemption;
(ii) there shall have been delivered
to the Trustee the certificate of a Responsible Officer of the
Company certifying, on behalf of the Company, to the effect that such
Defeasance or Covenant Defeasance shall not result in a breach or
violation of, or constitute a default under, any agreement to which
the Company is a party or violate any law to which the Company is
subject; and
(iii) No Event of Default or event that
(after notice or lapse of time or both) would become an Event of
Default shall have occurred and be continuing at the time of such
deposit or, with regard to any Event of Default or any such event
specified in Sections 8.01(a)(vi) and (vii), at any time on or prior
to the 124th calendar day after the date of such deposit (it being
understood that this condition shall not be deemed satisfied until
after such 124th calendar day).
(b) Upon the exercise of the option provided in
Section 5.01 of the Indenture to have Section 5.03 of the Indenture
applied to the Outstanding Senior Notes, in addition to the obligations from
which the Company shall be released specified in the Indenture, the Company
shall be released from its obligations under Article III hereof.
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ARTICLE VI. MISCELLANEOUS.
SECTION 6.1. REFERENCE TO AND EFFECT ON THE INDENTURE.
This Supplemental Indenture shall be construed as
supplemental to the Indenture and all the terms and conditions of this
Supplemental Indenture shall be deemed to be part of the terms and
conditions of the Indenture. Except as set forth herein, the Indenture
heretofore executed and delivered is hereby (i) incorporated by reference
in this Supplemental Indenture and (ii) ratified, approved and confirmed.
SECTION 6.2. WAIVER OF CERTAIN COVENANTS.
The Company may omit in any particular instance to comply
with any term, provision, or condition set forth in Article III hereof if
the Holders of a majority in principal amount of the Outstanding Senior
Notes shall, by Act of such Holders, either waive such compliance in such
instance or generally waive compliance with such term, provision or condition,
but no such waiver shall extend to or affect such term, provision, or condition
except to the extent so expressly waived, and, until such waiver shall become
effective, the obligations of the Company and the duties of the Trustee in
respect of any such term, provision, or condition shall remain in full force
and effect.
SECTION 6.3. SUPPLEMENTAL INDENTURE MAY BE EXECUTED IN
COUNTERPARTS.
This instrument may be executed in any number of
counterparts, each of which shall be an original; but such counterparts shall
together constitute but one and the same instrument.
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SECTION 6.4. EFFECT OF HEADINGS.
The Article and Section headings herein are for convenience
only and shall not affect the construction hereof.
IN WITNESS WHEREOF, the parties hereto have caused this
Supplemental Indenture to be duly executed, and their respective corporate
seals to be hereunto affixed and attested, all as of the day and year first
above written.
[Seal] FEDERATED DEPARTMENT STORES, INC.
By: /s/Dennis J. Broderick
-------------------------------
Name: Dennis J. Broderick
Title: Senior Vice President
Attest:
/s/Gwyneth G. Stewart
- - -------------------------------
Name: Gwyneth G. Stewart
Title: Assistant Secretary
THE FIRST NATIONAL BANK OF BOSTON,
as Trustee
By: /s/Roland S. Gustafsen
-------------------------------
Name: Roland S. Gustafsen
Title: Senior Account Manager
Attest:
/s/Kelly K. Caldwell
- - ------------------------------
Name: Kelly K. Caldwell
Title: Assistant Cashier
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STATE OF OHIO )
) ss.:
COUNTY OF HAMILTON )
On this 25th day of January, 1995, before me personally came
Dennis J. Broderick, to me known, who, being by me duly sworn, did depose and
say that he/she is a Senior Vice President of Federated Department Stores,
Inc., one of the entities described in and which executed the above
instrument; that he/she knows the seal of said entity; that the seal or a
facsimile thereof affixed to said instrument is such seal; that it was so
affixed by authority of the Board of Directors of said entity, and that
he/she signed his/her name thereto by like authority.
In Witness Whereof, I have hereunto set my hand and affixed
my official seal the day and year in this certificate first above written.
/s/Carol S. Bruser (Heitfeld)
-----------------------------
Notary Public
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COMMONWEALTH OF MASSACHUSETTS )
) ss.:
COUNTY OF NORFOLK )
On this 25th day of January 1995, before me personally came
Roland S. Gustafsen, to me known, who, being by me duly sworn, did depose and
say that he/she is a Senior Account Manager of The First National Bank of
Boston, one of the entities described in and which executed the above
instrument; that he/she knows the seal of said entity; that the seal or a
facsimile thereof affixed to said instrument is such seal; that it was so
affixed by authority of the Board of Directors of said entity, and that
he/she signed his/her name thereto by like authority.
In Witness Whereof, I have hereunto set my hand and affixed
my official seal the day and year in this certificate first above written.
/s/B. L. May
----------------
Notary Public
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SCHEDULE I
PARTICULAR TERMS OF SENIOR NOTES
MATURITY: The Senior Notes will mature on February 15, 2001.
INTEREST: The interest rate per annum on the Senior Notes shall be 10%.
REDEMPTION: The Senior Notes will not be redeemable at the option of the
Company prior to maturity and are not subject to a sinking
fund.