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EXHIBIT 1
[CONFORMED COPY]
X. X. XXXXXX COMPANY, INC.
UNDERWRITING AGREEMENT
February 20, 1997
CREDIT SUISSE FIRST BOSTON CORPORATION
XXXXXXX LYNCH, PIERCE, XXXXXX & XXXXX INCORPORATED
X.X. XXXXXX SECURITIES INC.
XXXXXX XXXXXXX & CO. INCORPORATED
c/o Credit Suisse First Boston Corporation
00 Xxxxxxx Xxxxxx
Xxx Xxxx, X.X. 00000
Dear Sirs:
1. Introductory. X. X. PENNEY COMPANY, INC., a Delaware corporation
("Company"), proposes to issue and sell the debt securities described in
Schedule B hereto (the "Debt Securities"). The Debt Securities will be issued
under an Indenture, dated as of April 1, 1994, between the Company and First
Trust of California, National Association, Successor Trustee to Bank of America
National Trust and Savings Association (the "Indenture"). The several
Underwriters set forth in Schedule A are hereinafter referred to as
"Underwriters".
2. Representations and Warranties of the Company. The Company represents
and warrants to, and agrees with the several Underwriters that:
(a) A registration statement (No. 333-06883), including a prospectus,
relating to the Debt Securities has been filed with the Securities and
Exchange Commission ("Commission") and has become effective. Such
registration statement, as amended to the date hereof (but excluding any
amendments relating to securities which are not covered by this Agreement),
is hereinafter referred to as the "Registration Statement", and the
prospectus contained in the Registration Statement, as amended and
supplemented by a Prospectus Supplement of even date herewith, including
all material incorporated by reference therein, as the "Prospectus".
(b) On the effective date of the Registration Statement, as referred
to in Section 2(a) hereof, the Registration Statement conformed in all
material respects to the requirements of the Securities Act of 1933
("Act"), the Trust Indenture Act of 1939 ("Trust Indenture Act"), and the
published rules and regulations ("Rules and Regulations") of the
Commission, and did not include any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary
to make the statements therein not misleading, and on the date hereof, the
Registration Statement and the Prospectus conform in all material respects
to the requirements of the Act, the Trust Indenture Act and the Rules and
Regulations and none of such documents includes any untrue statement of a
material fact or omits to state any material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, except that the
foregoing does not apply to (i) statements in or omissions from any of such
documents based upon written information furnished to the Company by an
Underwriter for use therein, or (ii) statements or omissions in that part
of the Registration Statement which constitutes the Statement of
Eligibility and Qualification under the Trust Indenture Act (Form T-1) of
the Trustee.
3. Purchase, Sale and Delivery of Debt Securities. On the basis of the
representations, warranties and agreements herein contained, but subject to the
terms and conditions herein set forth, the Company agrees to sell to the
Underwriters, and the Underwriters agree, severally and not jointly, to purchase
from the Company, at the purchase prices set forth in Schedule B hereto, plus
accrued interest, if any, from February 25, 1997 to the Closing Date as defined
below, the respective principal amounts of Debt Securities set forth in Schedule
A hereto.
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The Company will deliver the Debt Securities to the Underwriters, at the
office of The Chase Manhattan Bank, 000 Xxxx 00xx Xxxxxx, Xxxxxxxxx Xxxxx, Xxx
Xxxx, Xxx Xxxx 00000, Attention: Xxx Xxxxxxxx, against payment of the purchase
price by wire transfer to an account previously designated to Credit Suisse
First Boston Corporation ("Credit Suisse First Boston") by the Company at a bank
acceptable to Credit Suisse First Boston or by official bank check or checks in
federal reserve (same day) funds drawn to the order of the Company, at the
office of the Company, 0000 Xxxxxx Xxxxx, Xxxxx, Xxxxx 00000-0000, at 9:00 A.M.,
Dallas, Texas Time, on February 25, 1997 or at such other time not later than
seven full business days thereafter as you and the Company determine, such time
being herein referred to as the "Closing Date". The Debt Securities so to be
delivered will be, unless otherwise mutually agreed by the Underwriters and the
Company, in fully registered form, in such denominations and registered in such
names as the Underwriters request, and will be made available for checking and
packaging at the above office of The Chase Manhattan Bank, at least 24 hours
prior to the Closing Date.
4. Covenants of the Company. The Company covenants and agrees with the
several Underwriters that:
(a) The Company will advise the Underwriters promptly of any amendment
or supplementation of the Registration Statement or the Prospectus with
respect to the Debt Securities, and of the institution by the Commission of
any stop order proceedings in respect of the Registration Statement, and
will use its best efforts to prevent the issuance of any such stop order
and to obtain as soon as possible its lifting, if issued.
(b) If at any time when a prospectus relating to the Debt Securities
is required to be delivered under the Act any event occurs as a result of
which the Prospectus as then amended or supplemented with respect to such
Debt Securities would include an untrue statement of a material fact, or
omit to state any material fact required to be stated therein or necessary
to make the statements therein, in light of the circumstances under which
they were made, not misleading, or if it is necessary at any time to amend
or supplement the Registration Statement or the Prospectus to comply with
the Act, the Company promptly will prepare and file with the Commission an
amendment or supplement which will correct such statement or omission or
effect such compliance.
(c) Not later than 90 days after the end of the 12-month period
beginning at the end of the fiscal quarter of the Company during which the
Closing Date occurs, the Company will make generally available to its
securityholders an earnings statement covering such 12-month period which
will satisfy the provisions of Section 11(a) of the Act.
(d) The Company will furnish to the Underwriters copies of the
Registration Statement (one of which, to be delivered to counsel for the
Underwriters, will be signed and include all exhibits), the Prospectus and
supplements relating to the Debt Securities, in each case as soon as
available and in such quantities as the Underwriters reasonably request.
(e) The Company will use its best efforts to arrange for the
qualification of the Debt Securities for sale, and the determination of
their eligibility for investment, under the laws of such jurisdictions as
the Underwriters reasonably designate and will diligently endeavor to
continue such qualifications in effect so long as required for the
distribution of the Debt Securities; provided, however, that the Company
shall not be required to register or qualify, or to maintain qualification,
as a foreign corporation nor, except as to matters and transactions
relating to the offer or sale of the Debt Securities, consent to service of
process generally in any state.
(f) The Company will pay all expenses incident to the performance of
its obligations under this Agreement, and will reimburse the Underwriters
for any expenses (including fees and disbursements of counsel) incurred by
the Underwriters in connection with qualification of the Debt Securities
for sale, and determination of their eligibility for investment, under the
laws of such jurisdictions as the Underwriters reasonably designate and the
printing of memoranda relating thereto, for any fees charged by investment
rating agencies for the rating of the Debt Securities and for reasonable
expenses incurred in distributing preliminary prospectuses and the
Prospectus (including any amendments and supplements thereto) to the
Underwriters.
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(g) So long as any of the Debt Securities are outstanding, the Company
will furnish to the Underwriters (i) as soon as practicable after the end
of each fiscal year, a copy of its annual report to stockholders for such
year, (ii) as soon as available, a copy of each report or definitive proxy
statement of the Company filed with the Commission under the Securities
Exchange Act of 1934 or mailed to stockholders, and (iii) from time to
time, such other information concerning the Company as the Underwriters may
reasonably request.
5. Conditions of Obligations of the Underwriters. The obligations of the
Underwriters to purchase and pay for the Debt Securities will be subject to the
accuracy of the representations and warranties on the part of the Company
herein, to the accuracy of the statements of Company officers made pursuant to
the provisions hereof, to the performance by the Company of its obligations
hereunder and to the following additional conditions precedent:
(a) The Underwriters shall have received letters of KPMG Peat Marwick
LLP, Dallas, Texas, and KPMG Peat Marwick LLP, Tampa, Florida, each dated
the Closing Date, in form and substance satisfactory to them, with respect
to the financial statements and certain financial information contained in
or incorporated by reference into the Registration Statement and the
Prospectus. Such letters shall be in substantially the form, and contain
substantially the information, as those letters heretofore furnished by
KPMG Peat Marwick LLP in connection with other underwritten offerings by
the Company.
(b) Prior to the Closing Date, no stop order suspending the
effectiveness of the Registration Statement shall have been issued and no
proceedings for that purpose shall have been instituted, or to the
knowledge of the Company or the Underwriters, shall be contemplated by the
Commission.
(c) Subsequent to the execution and delivery of this Agreement, there
shall not have occurred any change, or any development involving a
prospective change, in or affecting particularly the business or properties
of the Company and its subsidiaries, taken as a whole, which, in the
judgment of a majority in interest of the Underwriters, materially impairs
the investment quality of the Debt Securities.
(d) The Underwriters shall have received an opinion of X. X. Xxxxxx,
General Counsel of the Company, dated the Closing Date, to the effect that:
(i) The Company has been duly incorporated and is validly existing
as a corporation in good standing under the laws of the State of
Delaware, with corporate power and authority to own its properties and
conduct its business as described in the Prospectus; and the Company is
duly qualified to do business as a foreign corporation in good standing
in all other jurisdictions in which it owns or leases substantial
properties or in which the conduct of its business requires such
qualification;
(ii) The Indenture has been duly authorized, executed and delivered
and has been duly qualified under the Trust Indenture Act; the Debt
Securities have been duly authorized, executed, authenticated, issued
and delivered and conform in all material respects to the description
thereof contained in the Prospectus; and the Indenture and the Debt
Securities constitute valid and legally binding obligations of the
Company, enforceable in accordance with their terms, subject to
bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium
and similar laws of general applicability relating to or affecting
creditors' rights and to general equity principles;
(iii) No consent, approval, authorization or order of, or filing
with, any governmental agency or body or any court is required for the
consummation of the transactions contemplated by this Agreement in
connection with the issuance or sale of the Debt Securities by the
Company, except such as have been obtained and made under the Act and
the Trust Indenture Act and such as may be required under state
securities laws;
(iv) The execution, delivery and performance of the Indenture and
this Agreement and the issuance and sale of the Debt Securities and
compliance with the terms and provisions thereof will not result in a
breach or violation of any of the terms and provisions of, or constitute
a default under, any statute, any rule, regulation or order of any
governmental agency or body or any court having jurisdiction over the
Company or any of its property or any agreement or instrument to which
the
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Company is a party or by which the Company is bound or to which any of
the property of the Company is subject, or the charter or bylaws of the
Company, and the Company has full power and authority to authorize,
issue and sell the Debt Securities as contemplated by this Agreement;
(v) The Registration Statement has become effective under the Act,
and, to the best of the knowledge of such counsel, no stop order
suspending the effectiveness of the Registration Statement has been
issued and no proceedings for that purpose have been instituted or are
pending under the Act; the Registration Statement and the Prospectus, as
of the date of this Agreement, comply as to form in all material
respects with the requirements of the Act, the Trust Indenture Act and
the Rules and Regulations; there has not been disclosed to such counsel
any information giving him reason to believe either that the
Registration Statement, as of such date, contained any untrue statement
of a material fact or omitted to state any material fact required to be
stated therein or necessary to make the statements therein not
misleading or that the Prospectus contains any untrue statement of a
material fact or omits to state a material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading; the
descriptions in the Registration Statement and the Prospectus of
statutes, legal and governmental proceedings and contracts and other
documents are accurate in all material respects and fairly present the
information required to be shown; and such counsel does not know of any
legal or governmental proceedings required to be described in the
Prospectus which are not described as required, nor of any contracts or
documents of a character required to be described in the Registration
Statement or the Prospectus or to be filed as exhibits to the
Registration Statement which are not described and filed as required; it
being understood that such counsel need express no opinion as to the
financial statements or other financial data contained in the
Registration Statement or the Prospectus; and
(vi) This Agreement has been duly authorized, executed and
delivered by the Company.
(e) The Underwriters shall have received from Xxxxx Xxxxxxxxxx,
counsel for the Underwriters, such opinion or opinions, dated the Closing
Date, with respect to such of the matters stated in paragraph (d) hereof
and other related matters as the Underwriters may reasonably require, and
the Company shall have furnished to such counsel such documents as they
reasonably request for the purpose of enabling them to pass upon such
matters.
(f) The Underwriters shall have received a certificate of the Chairman
of the Board and Chief Executive Officer or any Vice President and a
principal financial or accounting officer of the Company, dated the Closing
Date, in which such officers, to the best of their knowledge after
reasonable investigation, shall state that the representations and
warranties of the Company in this Agreement are true and correct, that the
Company has complied with all agreements and satisfied all conditions on
its part to be performed or satisfied hereunder at or prior to the Closing
Date, that no stop order suspending the effectiveness of the Registration
Statement has been issued and no proceedings for that purpose have been
instituted or are contemplated by the Commission, and that, subsequent to
the date of the most recent financial statements in the Prospectus, there
has been no material adverse change in the financial position or results of
operations of the Company and its subsidiaries, taken as a whole, except as
set forth or contemplated in the Prospectus or as described in such
certificate.
The Company will furnish the Underwriters with such conformed copies of
such opinions, certificates, letters and documents as the Underwriters
reasonably request.
6. Indemnification. (a) The Company will indemnify and hold harmless each
Underwriter and each person, if any, who controls any Underwriter within the
meaning of the Act against any losses, claims, damages or liabilities, joint or
several, to which such Underwriter or such controlling person may become
subject, under the Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon any
untrue statement or alleged untrue statement of any material fact contained in
the Registration Statement, the Prospectus or any amendment or supplement
thereto (excluding any amendments or supplements relating to securities which
are not covered by this Agreement), or arise out
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of or are based upon the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading; and will reimburse each Underwriter and each such controlling person
for any legal or other expenses reasonably incurred by such Underwriter or such
controlling person in connection with investigating or defending any such loss,
claim, damage, liability or action; provided, however, that the Company will not
be liable in any such case to the extent that any such loss, claim, damage or
liability arises out of or is based upon an untrue statement or alleged untrue
statement or omission or alleged omission made (i) in any of such documents in
reliance upon and in conformity with written information furnished to the
Company by any Underwriter for use therein, or (ii) in that part of the
Registration Statement constituting the Statement of Eligibility and
Qualification under the Trust Indenture Act (Form T-1) of the Trustee. This
indemnity agreement will be in addition to any liability which the Company may
otherwise have.
(b) Each Underwriter will indemnify and hold harmless the Company, each of
its directors, each of its officers who have signed the Registration Statement
and each person, if any, who controls the Company within the meaning of the Act,
against any losses, claims, damages or liabilities to which the Company or any
such director, officer or controlling person may become subject, under the Act
or otherwise, insofar as such losses, claims, damages or liabilities (or actions
in respect thereof) arise out of or are based upon any untrue statement or
alleged untrue statement of any material fact contained in the Registration
Statement, the Prospectus or any amendment or supplement thereto (excluding any
amendments or supplements relating to securities which are not covered by this
Agreement), or arise out of or are based upon the omission or alleged omission
to state therein a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they were
made, not misleading, in each case to the extent, but only to the extent, that
such untrue statement or alleged untrue statement or omission or alleged
omission was made in reliance upon and in conformity with written information
furnished to the Company by such Underwriter for use therein; and will reimburse
any legal or other expenses reasonably incurred by the Company or any such
director, officer or controlling person in connection with investigating or
defending any such loss, claim, damage, liability or action. This indemnity
agreement will be in addition to any liability which such Underwriter may
otherwise have.
(c) Promptly after receipt by an indemnified party under this Section of
notice of the commencement of any action, such indemnified party will, if a
claim in respect thereof is to be made against the indemnifying party under this
Section, notify the indemnifying party of the commencement thereof; but the
omission so to notify the indemnifying party will not relieve it from any
liability which it may have to any indemnified party otherwise than under this
Section. In case any such action is brought against any indemnified party, and
it notifies the indemnifying party of the commencement thereof, the indemnifying
party will be entitled to participate therein and, to the extent that it may
wish, jointly with any other indemnifying party similarly notified, to assume
the defense thereof, with counsel satisfactory to such indemnified party (who
shall not, except with the consent of the indemnified party, be counsel to the
indemnifying party), and after notice from the indemnifying party to such
indemnified party of its election so to assume the defense thereof, the
indemnifying party will not be liable to such indemnified party under this
Section for any legal or other expenses subsequently incurred by such
indemnified party in connection with the defense thereof other than reasonable
costs of investigation. The indemnifying party shall not be liable for any
settlement of any proceeding effected without its written consent but if settled
with such consent or if there has been a final judgment for the plaintiff, the
indemnifying party agrees to indemnify the indemnified party from and against
any loss or liability by reason of such settlement or judgment.
(d) If recovery is not available under the foregoing indemnification
provisions of this Section, for any reason other than as specified therein, the
parties entitled to indemnification by the terms thereof shall be entitled to
contribution for liabilities and expenses, except to the extent that
contribution is not permitted under Section 11(f) of the Act. In determining the
amount of contribution to which the respective parties are entitled, there shall
be considered the relative benefits received by each party from the offering of
the Debt Securities (taking into account the portion of the proceeds of the
offering realized by each), the parties' relative knowledge and access to
information concerning the matter with respect to which the claim was asserted,
the opportunity to correct and prevent any statement or omission and any other
equitable
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considerations appropriate under the circumstances. The Company and the
Underwriters agree that it would not be equitable if the amount of such
contribution were determined by pro rata or per capita allocation (even if the
Underwriters were treated as one entity for such purpose). No Underwriter or any
person controlling such Underwriter shall be obligated to make contribution
hereunder which in the aggregate exceeds the total public offering price of the
Debt Securities purchased by such Underwriter under this Agreement, less the
aggregate amount of any damages which such Underwriter and its controlling
persons have otherwise been required to pay in respect of the same claim or any
substantially similar claim. The Underwriters' obligations to contribute are
several in proportion to their respective underwriting obligations and not
joint.
7. Default of Underwriters. If any Underwriter or Underwriters default in
their obligations to purchase Debt Securities hereunder and the aggregate
principal amount of the Debt Securities which such defaulting Underwriter or
Underwriters agreed but failed to purchase does not exceed 10% of the total
principal amount of the Debt Securities, Credit Suisse First Boston may make
arrangements satisfactory to the Company for the purchase of such Debt
Securities by other persons, including any of the Underwriters, but if no such
arrangements are made by the Closing Date, the non-defaulting Underwriters shall
be obligated severally, in proportion to their respective commitments hereunder,
to purchase the Debt Securities which such defaulting Underwriters agreed but
failed to purchase. If any Underwriter or Underwriters so default and the
aggregate principal amount of Debt Securities with respect to which such default
or defaults occur is more than 10% of the total principal amount of the Debt
Securities and arrangements satisfactory to Credit Suisse First Boston and the
Company for the purchase of such Debt Securities by other persons are not made
within 36 hours after such default, this Agreement will terminate without
liability on the part of any non-defaulting Underwriter or the Company, except
as provided in Section 8 hereof. As used in this Agreement, the term
"Underwriter" includes any person substituted for an Underwriter under this
Section. Nothing herein will relieve a defaulting Underwriter from liability for
its default.
8. Survival of Certain Representations and Obligations. The respective
indemnities, agreements, representations, warranties, and other statements of
the Company and of the Underwriters set forth in or made pursuant to this
Agreement will remain in full force and effect, regardless of any investigation,
or statement as to the results thereof, made by or on behalf of any Underwriter
or the Company or any of its officers or directors or any controlling person,
and will survive delivery of and payment for the Debt Securities. If this
Agreement is terminated pursuant to Section 7 hereof or if for any reason the
purchase of the Debt Securities by the Underwriters pursuant to this Agreement
is not consummated, the Company shall remain responsible for the expenses to be
paid or reimbursed by it pursuant to Section 4 hereof and the respective
obligations of the Company and the Underwriters pursuant to Section 6 hereof
shall remain in effect. If for any reason, the purchase of the Debt Securities
by the Underwriters is not consummated other than because of the termination of
this Agreement pursuant to Section 7, the Company will reimburse the
Underwriters for all out-of-pocket expenses (including fees and disbursements of
counsel) incurred by them in connection with the offering of the Debt
Securities.
9. Notices. All communications hereunder will be in writing and if sent to
the Underwriters will be mailed, delivered or telegraphed and confirmed c/o
Credit Suisse First Boston, Attention: Investment Banking
Department -- Transactions Advisory Group to the address first above written and
if sent to the Company will be similarly sent, if by mail, to X.X. Xxx 00000,
Xxxxxx, Xxxxx 00000-0000 and if sent otherwise, to 0000 Xxxxxx Xxxxx, Xxxxx,
Xxxxx 00000-0000, Attention of the Secretary.
10. Successors. This Underwriting Agreement will inure to the benefit of
and be binding upon the parties hereto and their respective successors and the
officers and directors and controlling persons referred to in Section 6 hereof,
and no other person will have any right or obligation hereunder.
11. Representation of Underwriters. Credit Suisse First Boston, as
representative, will act for the several Underwriters in connection with the
offering of the Debt Securities, and any action under this Agreement taken by
the Underwriters jointly or by Credit Suisse First Boston will be binding upon
all the Underwriters.
12. Applicable Law. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of New York.
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If the foregoing is in accordance with your understanding of our agreement,
kindly sign and return to us the enclosed duplicate hereof, whereupon it will
become a binding agreement between the Company and the several Underwriters in
accordance with its terms.
Very truly yours,
X. X. XXXXXX COMPANY, INC.
By /s/ XXXXXX X. XXXXXXXXX
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Vice President and Treasurer
The foregoing Underwriting Agreement is hereby
confirmed and accepted as of the date first
above written.
CREDIT SUISSE FIRST BOSTON CORPORATION
XXXXXXX LYNCH, PIERCE, XXXXXX & XXXXX
INCORPORATED
X.X. XXXXXX SECURITIES INC.
XXXXXX XXXXXXX & CO. INCORPORATED
By CREDIT SUISSE FIRST BOSTON CORPORATION
By /s/ XXXXX XXXXXXX
-------------------------------------------------
Managing Director
Acting on behalf of itself and as representative of
the several Underwriters.
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SCHEDULE A
PRINCIPAL AMOUNT OF
7 5/8% DEBENTURES
UNDERWRITER DUE 2097
----------- -------------------
Credit Suisse First Boston Corporation...................... $125,000,000
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx Incorporated.......... 125,000,000
X.X. Xxxxxx Securities Inc. ................................ 125,000,000
Xxxxxx Xxxxxxx & Co. Incorporated........................... 125,000,000
------------
Total............................................. $500,000,000
============
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SCHEDULE B
DESCRIPTION OF DEBT SECURITIES
Title of Securities: 7 5/8% Debentures Due 2097
Aggregate Principal Amount: $500,000,000
Interest rate: 7 5/8% per annum commencing February 25, 1997
Interest payment dates: March 1 and September 1 commencing September 1, 1997
Maturity date: March 1, 2097, subject to a conditional right to shorten
the maturity upon the occurrence of certain tax events
Purchase price: 98.875%
Initial public offering price: 100%
Dealers' concession: .675%
Reallowance: .25%
Redemption: Redeemable in whole or in part, at the option of the
Company at any time, at a redemption price equal to the
greater of (i) 100% of principal amount and (ii) the sum of
the present values of the Remaining Scheduled Payments
discounted to the redemption date on a semiannual basis at
the Treasury Rate plus 20 basis points, together in either
case with accrued interest to the date of redemption.
Redeemable in whole (but not in part) upon the occurrence
of certain tax events, and under certain circumstances, at
a redemption price equal to the greater of (i) 100% of
principal amount and (ii) the sum of the present values of
the Remaining Scheduled Payments discounted to the
redemption date on a semiannual basis at the Treasury Rate
plus 40 basis points, together in either case with accrued
interest to the date of redemption.
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