Exhibit 4
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FEDERATED DEPARTMENT STORES, INC.
and
STATE STREET BANK AND TRUST COMPANY
(successor to The First National Bank of Boston),
Trustee
FIFTH SUPPLEMENTAL TRUST INDENTURE
Dated as of October 6, 1995
Supplementing that certain
INDENTURE
Dated as of December 15, 1994
Authorizing the Issuance and Delivery of
Senior Securities
consisting of $400,000,000 aggregate principal amount of
8.125% Senior Notes due 2002
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Table of Contents
Page
RECITALS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
[Form of Face of Security] . . . . . . . . . . . . . . . . . . . . . . 2
[Form of Reverse of Security] . . . . . . . . . . . . . . . . . . . . . 3
ARTICLE I. ISSUANCE OF SENIOR NOTES. . . . . . . . . . . . . . . . . . 6
Section 1.1. Issuance of Senior Notes; Principal Amount;
Maturity. . . . . . . . . . . . . . . . . . . . . 6
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. . . . . . . . . . . . . . . . . . . . . 17
Section 3.1. Indebtedness. . . . . . . . . . . . . . . . . . . . 17
Section 3.2. Liens. . . . . . . . . . . . . . . . . . . . . . . . 18
Section 3.3. Restricted Payments. . . . . . . . . . . . . . . . . 18
Section 3.4. Change of Control. . . . . . . . . . . . . . . . . . 19
Section 3.5. Payment Restrictions Affecting Restricted
Subsidiaries. . . . . . . . . . . . . . . . . . . 20
Section 3.6. Issuance of Subsidiary Preferred Stock. . . . . . . 20
Section 3.7. Asset Sales. . . . . . . . . . . . . . . . . . . . . 20
Section 3.8. Transactions with Affiliates. . . . . . . . . . . . 22
Section 3.9. Sale and Leaseback Transactions. . . . . . . . . . . 22
Section 3.10. Merger and Certain Other Transactions. . . . . . . 22
Section 3.11. Permitting Unrestricted Subsidiaries to Become
Restricted Subsidiaries. . . . . . . . . . . . 22
Section 3.12. Payment Office. . . . . . . . . . . . . . . . . . . 23
ARTICLE IV. ADDITIONAL EVENTS OF DEFAULT. . . . . . . . . . . . . . . . 23
Section 4.1. Additional Events of Default. . . . . . . . . . . . 23
ARTICLE V. DEFEASANCE. . . . . . . . . . . . . . . . . . . . . . . . . 24
Section 5.1. Applicability of Article V of the Indenture. . . . . 24
ARTICLE VI. MISCELLANEOUS. . . . . . . . . . . . . . . . . . . . . . . 24
Section 6.1. Reference to and Effect on the Indenture. . . . . . 24
Section 6.2. Waiver of Certain Covenants. . . . . . . . . . . . . 25
Section 6.3. Supplemental Indenture May be Executed In
Counterparts. . . . . . . . . . . . . . . . . . . 25
Section 6.4. Effect of Headings. . . . . . . . . . . . . . . . . 26
FIFTH SUPPLEMENTAL INDENTURE, dated as of October 6, 1995,
between Federated Department Stores, Inc., a corporation duly organized and
existing under the laws of the State of Delaware (the "Company"), and State
Street Bank and Trust Company (successor to The First National Bank of
Boston), a trust company organized under the laws of the Commonwealth of
Massachusetts, 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 "8.125% Senior Notes due 2002" (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.
8.125% SENIOR NOTE DUE 2002
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 $____________ on
October 15, 2002, and to pay interest thereon from October 6, 1995 or from
the most recent Interest Payment Date to which interest has been paid or
duly provided for, semiannually on April 15 and October 15 of each year,
commencing on April 15, 1996, at the rate of 8.125% 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 April 1 or October 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.
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.
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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 State Street Bank and
Trust Company, 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 Security is one of the series designated
on the face hereof, limited in aggregate principal amount to $400,000,000.
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
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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 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
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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.
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 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx) 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 because 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.
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D. The Trustee's certificate of authentication shall be in
substantially the following form:
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Securities of the series designated therein
referred to in the within-mentioned Indenture.
STATE STREET BANK AND TRUST COMPANY,
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 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 October 6, 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,
7
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 $400,000,000 and shall mature on October 15, 2002.
Section 1.2. Interest on the Senior Notes; Payment of Interest.
(a) The Senior Notes shall bear interest at the rate of 8.125% per
annum from October 6, 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 April 1 or
October 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 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.
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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 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; (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 seven calendar 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)
9
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 of the Company ("Voting Stock");
(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, 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
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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 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 Company's 10% Senior Notes due 2001; (c)
the Company's 5% Convertible Subordinated Notes due 2003; (d) 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; (e) 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; (f) the outstanding principal amount of notes
issued pursuant to the Loan Agreement, dated as of May 26, 1994, by and
among Xxxxxx Xxxxx Co., Inc., PNC Bank Ohio, National Association, as
agent, and the financial institutions listed on the signature pages
thereof; (g) the Capital Lease Obligations of the Company and the
Restricted Subsidiaries existing on the date of the initial issuance of the
Senior Notes; (h) the outstanding principal amount of uncertificated
obligations of the Company owed to the Internal Revenue Service and other
taxing authorities; (i) the existing secured mortgage debt of the Macy's
Debtors assumed pursuant to the Plan; (j) the Note Override Agreement,
dated as of the Effective Date, by Kings Plaza Shopping Center of Avenue U,
Inc., as Issuer, and The Xxxx Xxxxxxx Mutual Life Insurance Company ("Xxxx
Xxxxxxx"), as Noteholder, and the Promissory Note, dated as of the
Effective Date, by Macy's Kings Plaza Real Estate, Inc., as Issuer, and
Xxxx Xxxxxxx, as Noteholder; and (k) the other secured Indebtedness of the
Company or secured or unsecured Indebtedness of the Restricted Subsidiaries
existing on the date of the initial issuance of the Senior Notes.
"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 Senior Notes has decreased by the
equivalent of one Full Rating Category, gradation within Full Rating
Categories (+ and - for S&P; and 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,
(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
11
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
Xxxxx'x.
"Investment Grade Status" exists as of a date and thereafter if
at such date the Debt Rating by both Xxxxx'x 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 Xxxxx'x Investors Service, or any successor to
the rating agency business thereof.
"Notice" means, with respect to an Offer to Purchase, a written
notice stating:
(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;
12
(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 (i) 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 (ii) 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, (A) the Company shall purchase Senior Notes having
an aggregate principal amount equal to the Purchase Amount and (B) the
particular Senior Notes (or portions thereof) 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.
13
"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
(j) 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 (j) 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 without limitation 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 of the initial issuance of Senior Notes 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 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; and (j) 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 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).
"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
14
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 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) and clauses (f) through (j) 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 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
15
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 X.X.
Xxxx & 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 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 Xxxxx'x
and S&P): (i) in the event the Senior Notes are rated Investment Grade by
Xxxxx'x 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 Xxxxx'x and S&P shall be below Investment Grade or
(ii) in the event the Senior Notes are rated below Investment Grade by both
Xxxxx'x 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
16
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 Xxxxx'x 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 XxXxxx-
Xxxx, 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 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., X.X. Xxxx 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
17
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 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 for so
long as any of the Senior Notes are Outstanding; provided, however, that
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 (j) 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) and clauses (h) through
(j) 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
18
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 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, 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
19
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) a Designated
Event and a Rating Decline in connection therewith after such time as the
Company shall have reached Investment Grade Status, 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 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.
20
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).
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
21
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 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.
22
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 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
23
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.
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 Subsidiary or, in related
events, any group of Subsidiaries which, if considered in the
aggregate, would be a Significant Subsidiary of the Company.
24
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.
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.
25
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.
26
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:
-------------------------
Name:
Title:
Attest:
-----------------------------------
Name:
Title:
STATE STREET BANK AND TRUST COMPANY,
as Trustee
By:
------------------------
Name:
Title:
Attest:
-----------------------------------
Name:
Title:
27
STATE OF OHIO )
) ss.:
COUNTY OF XXXXXXXX )
On this day of October, 1995, before me personally came
, to me known, who, being by me duly sworn, did depose and say that
he/she is a 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.
--------------------------
Notary Public
28
COMMONWEALTH OF MASSACHUSETTS)
) ss.:
COUNTY OF NORFOLK )
On this day of October, 1995, before me personally
came , to me known, who, being by me duly sworn, did depose
and say that he/she is a of STATE STREET BANK AND TRUST
COMPANY, 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.
--------------------------
Notary Public
29
Schedule I
Particular Terms of Senior Notes
Maturity: The Senior Notes will mature on October 15, 2002.
Interest: The interest rate per annum on the Senior Notes shall be 8.125%.
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.
