-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, e3YC1C1FzbU2c+bjmlnKVt6icw6eLArTkcGHfHI0TgjiSNwrMJfhY3j0jxw1jEvo M/ErehNvtDgOW2O4zVlUnQ== 0000950134-94-000455.txt : 19940427 0000950134-94-000455.hdr.sgml : 19940427 ACCESSION NUMBER: 0000950134-94-000455 CONFORMED SUBMISSION TYPE: S-3 PUBLIC DOCUMENT COUNT: 17 FILED AS OF DATE: 19940426 FILER: COMPANY DATA: COMPANY CONFORMED NAME: PENNEY J C CO INC CENTRAL INDEX KEY: 0000077182 STANDARD INDUSTRIAL CLASSIFICATION: 5311 IRS NUMBER: 135583779 STATE OF INCORPORATION: DE FISCAL YEAR END: 0126 FILING VALUES: FORM TYPE: S-3 SEC ACT: 1933 Act SEC FILE NUMBER: 033-53275 FILM NUMBER: 94524341 BUSINESS ADDRESS: STREET 1: 6501 LEGACY DRIVE CITY: PLANO STATE: TX ZIP: 75024-3698 BUSINESS PHONE: 2144311000 S-3 1 FORM S-3 1 AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 26, 1994 REGISTRATION NO. 33- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ------------------------ FORM S-3 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 ------------------------ J. C. PENNEY COMPANY, INC. (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER) DELAWARE (STATE OF INCORPORATION) 13-5583779 (I.R.S. EMPLOYER IDENTIFICATION NO.) 6501 LEGACY DRIVE PLANO, TEXAS 75024-3698 (214) 431-1000 (ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES) ------------------------ C. R. LOTTER, ESQ. EXECUTIVE VICE PRESIDENT, SECRETARY AND GENERAL COUNSEL J. C. PENNEY COMPANY, INC. 6501 LEGACY DRIVE, PLANO, TEXAS 75024-3698 (214) 431-1000 (NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF AGENT FOR SERVICE) ------------------------ APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From time to time after the effective date of this Registration Statement. ------------------------ IF THE ONLY SECURITIES BEING REGISTERED ON THIS FORM ARE TO BE OFFERED PURSUANT TO DIVIDEND OR INTEREST REINVESTMENT PLANS, PLEASE CHECK THE FOLLOWING BOX. / / IF ANY OF THE SECURITIES BEING REGISTERED ON THIS FORM ARE BEING OFFERED ON A DELAYED OR CONTINUOUS BASIS PURSUANT TO RULE 415 UNDER THE SECURITIES ACT OF 1933, OTHER THAN SECURITIES OFFERED ONLY IN CONNECTION WITH DIVIDEND OR INTEREST REINVESTMENT PLANS, CHECK THE FOLLOWING BOX. /X/ ------------------------ CALCULATION OF REGISTRATION FEE - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- PROPOSED PROPOSED MAXIMUM MAXIMUM AMOUNT OFFERING AGGREGATE AMOUNT OF TITLE OF EACH CLASS OF SECURITIES TO BE PRICE PER OFFERING REGISTRATION TO BE REGISTERED REGISTERED UNIT* PRICE* FEE - ------------------------------------------------------------------------------------------------- Debt Securities and Warrants to Purchase Debt Securities....... $1,500,000,000** 100%*** $1,500,000,000 $517,242 - -------------------------------------------------------------------------------------------------
* Estimated solely for the purpose of determining the registration fee. ** In U.S. dollars or the equivalent thereof denominated in foreign currency or composite currencies such as the European Currency Unit ("ECU"). *** Exclusive of accrued interest, if any. The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 2 ******************************************************************************* * Information contained herein is subject to completion or amendment. A * * registration statement relating to these securities has been filed with the * * Securities and Exchange Commission. These securities may not be sold nor * * may offers to buy be accepted prior to the time the registration statement * * becomes effective. This prospectus shall not constitute an offer to sell or * * the solicitation of an offer to buy * * nor shall there be any sale of these securities in any State in which such * * offer, solicitation or sale would be unlawful prior to registration or * * qualification under the securities laws of any such State. * ******************************************************************************* SUBJECT TO COMPLETION, DATED APRIL 26, 1994 - -------------------------------------------------------------------------------- PROSPECTUS - -------------------------------------------------------------------------------- JCPenney J. C. PENNEY COMPANY, INC. DEBT SECURITIES AND WARRANTS TO PURCHASE DEBT SECURITIES ------------------------ J. C. Penney Company, Inc. ("Company") may offer from time to time in one or more series up to $1,500,000,000 (or the equivalent thereof denominated in foreign currency or composite currencies such as the European Currency Unit ("ECU")) aggregate principal amount of its senior debt securities consisting of unsecured debentures, notes and/or other evidences of indebtedness ("Debt Securities"), each series of which will be offered on terms to be determined at the time of sale. The Company from time to time may also offer Debt Securities with warrants ("Warrants") to purchase Debt Securities (Debt Securities and Warrants being hereinafter collectively called "Securities"). A Supplement to this Prospectus ("Prospectus Supplement") will be delivered together with this Prospectus in respect of any Debt Securities, including any related Warrants, then being offered and will set forth certain specific terms with respect to such Securities, which may include, among other items: - title; - authorized denominations; - aggregate principal amount; - initial public offering price; - maturity; - currency or currency unit in which the Debt Securities will be denominated; - rate or rates or formula to determine such rate or rates, and time or times of payment of interest, if any; - redemption and sinking fund terms, if any; - exercise prices and expiration dates of any Warrants; - listing, if any, on a securities exchange; - underwriter or underwriters, if any, respective amounts to be purchased by them, their compensation and the resulting net proceeds to the Company. Securities may be sold to underwriters for public offering pursuant to terms of offering fixed at the time of sale. In addition, Securities may be sold by the Company directly or through agents. See "Plan of Distribution". ------------------------ THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR AD- EQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. ------------------------ THE DATE OF THIS PROSPECTUS IS , 1994 3 NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS AND THE PROSPECTUS SUPPLEMENT IN CONNECTION WITH ANY OFFERING MADE THEREBY, AND IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR BY ANY UNDERWRITER, DEALER OR AGENT. THIS PROSPECTUS AND THE PROSPECTUS SUPPLEMENT DO NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY OF THE SECURITIES OFFERED THEREBY IN ANY JURISDICTION TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER IN SUCH JURISDICTION. NEITHER THE DELIVERY OF THIS PROSPECTUS AND THE PROSPECTUS SUPPLEMENT NOR ANY SALE MADE THEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THE INFORMATION THEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE THEREOF OR THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE SUCH DATE. AVAILABLE INFORMATION The Company is subject to the informational requirements of the Securities Exchange Act of 1934 ("1934 Act") and in accordance therewith, files reports, proxy statements and other information with the Securities and Exchange Commission ("Commission"). Such reports, proxy statements and other information can be inspected and copied at the public reference facilities maintained by the Commission at 450 Fifth Street, N. W., Room 1024, Washington, D. C. 20549; and at the Commission's Regional Offices in Chicago (Northwestern Atrium Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661) and New York (Seven World Trade Center, 13th Floor, New York, N.Y. 10048). Copies of such material can also be obtained from the Public Reference Section of the Commission at 450 Fifth Street, N. W., Washington, D. C. 20549 at prescribed rates. Reports, proxy statements and other information concerning the Company can also be inspected at the office of The New York Stock Exchange, Inc., 20 Broad Street, New York, New York 10005. This Prospectus constitutes a part of a Registration Statement filed by the Company with the Commission under the Securities Act of 1933. This Prospectus omits certain of the information contained in the Registration Statement, and reference is hereby made to the Registration Statement and to the exhibits relating thereto for further information with respect to the Company and the Securities offered pursuant hereto. Any statements contained herein concerning the provisions of any document are not necessarily complete, and in each instance, reference is made to the copy of such document filed as an exhibit to the Registration Statement or otherwise filed with the Commission. Each such statement is qualified in its entirety by such reference. INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE The Company incorporates herein by reference its Annual Report on Form 10-K for the fiscal year ended January 29, 1994, which incorporates by reference the J. C. Penney Funding Corporation ("Funding Corporation") Annual Report on Form 10-K for such fiscal year. The aforesaid Report has heretofore been filed by the Company with the Commission (File No. 1-777) pursuant to applicable provisions of the 1934 Act. All reports and any definitive proxy or information statements filed by the Company pursuant to Section 13(a), 13(c), 14 or 15(d) of the 1934 Act, subsequent to the date of this Prospectus and prior to the termination of the offering of the Securities, shall be deemed to be incorporated in this Prospectus by reference and to be a part hereof from the date of the filing of such documents. THE COMPANY WILL PROVIDE, WITHOUT CHARGE, TO EACH PERSON TO WHOM THIS PROSPECTUS IS DELIVERED, ON THE WRITTEN OR ORAL REQUEST OF ANY SUCH PERSON, A COPY OF ANY OR ALL OF THE DOCUMENTS WHICH HAVE BEEN OR MAY BE INCORPORATED HEREIN BY REFERENCE (OTHER THAN EXHIBITS TO SUCH DOCUMENTS). WRITTEN REQUESTS SHOULD BE DIRECTED TO: J. C. PENNEY COMPANY, INC., PUBLIC INFORMATION, P. O. BOX 10001, DALLAS, TEXAS 75301-2304. TELEPHONE REQUESTS SHOULD BE DIRECTED TO (214) 431-1488. 2 4 THE COMPANY The Company is a major retailer, with department stores in all 50 states and Puerto Rico. The dominant portion of the Company's business consists of providing merchandise and services to consumers through department stores that include catalog departments. The Company markets predominantly family apparel, shoes, jewelry, accessories and home furnishings. The Company finances a portion of its operations through Funding Corporation, a wholly-owned consolidated subsidiary. The Company was founded by James Cash Penney in 1902 and incorporated in Delaware in 1924. Its principal executive offices are located at 6501 Legacy Drive, Plano, Texas 75024-3698, and its telephone number is (214) 431-1000. As used in this Prospectus, except as otherwise indicated by the context, the term "Company" means J. C. Penney Company, Inc. and its consolidated subsidiaries. USE OF PROCEEDS The net proceeds to be received by the Company from the sale of the Securities will be used for general corporate purposes, which may include working capital, capital expenditures, repayment of borrowings and investments. Unless otherwise specified in the Prospectus Supplement accompanying this Prospectus, specific allocations of the proceeds will not have been made at the date of the Prospectus Supplement. Pending any specific application, the net proceeds may be initially invested in short term marketable securities or applied to the reduction of short term indebtedness. The Company or its subsidiaries may from time to time borrow additional funds or issue additional equity securities, as appropriate. The amounts, terms and timing of any such financings or issuances will depend upon a number of factors, including the operations of the Company and the condition of the financial markets. RATIOS OF AVAILABLE INCOME TO FIXED CHARGES FOR THE COMPANY AND ALL SUBSIDIARIES
52 WEEKS ENDED 53 WEEKS ENDED 52 WEEKS ENDED -------------- -------------- ------------------------------- JAN. 29 JAN. 30 JAN. 25 JAN. 26 JAN. 27 1994 1993 1992 1991 1990 -------------- -------------- ------- ------- ------- Ratios of available income to fixed charges............... 4.9 3.8 2.1 2.9 3.6 Ratios of available income to combined fixed charges and preferred stock dividend requirement................. 4.3 3.4 1.8 2.6 3.2
For purposes of computing the ratios of available income to fixed charges, available income is determined by adding fixed charges to income from continuing operations before income taxes and before capitalized interest. Fixed charges are interest expense and a portion of rental expense representative of interest. For purposes of computing the ratios of available income to combined fixed charges and preferred dividend requirement, fixed charges are further increased by the preferred stock dividend requirement. The interest cost of the LESOP notes guaranteed by the Company is not included in fixed charges. The Company believes that due to the seasonal nature of its business, ratios for a period other than a 52 or 53 week period are inappropriate. DESCRIPTION OF SECURITIES DEBT SECURITIES The Debt Securities are to be issued under an Indenture, dated as of April 1, 1994 (said Indenture being herein called the "Indenture"), between the Company and Bank of America National Trust and Savings Association, as Trustee ("Trustee"). A copy of the Indenture substantially in the form in which it is to be 3 5 executed is included as an exhibit to the Registration Statement of which this Prospectus forms a part. The following statements are subject to the detailed provisions of the Indenture, including the definitions therein of certain terms used herein without definition. Wherever particular provisions of the Indenture are referred to below, such provisions are incorporated by reference as a part of the statement made, and the statement is qualified in its entirety by such reference. GENERAL The Indenture does not limit the amount of Debt Securities which can be issued thereunder. Under the Indenture, Debt Securities may be issued in one or more series, each in an aggregate principal amount (in U. S. dollars or the equivalent thereof denominated in foreign currency or composite currencies such as the ECU) authorized by the Company prior to issuance. Reference is made to the Prospectus Supplement for certain specified terms with respect to the Debt Securities being offered hereby, including, but not limited to (1) the terms set forth on the cover page of this Prospectus; (2) the obligation, if any, of the Company to redeem or purchase the Debt Securities pursuant to any sinking fund or analogous provisions or at the option of the holder thereof and the period or periods within and the price or prices at which the Debt Securities will be redeemed or purchased, in whole or in part, pursuant to such obligation, and the other detailed terms and provisions of such obligation; (3) if the amount of payments of principal of or any premium or interest on any of the Debt Securities may be determined with reference to an index, the manner in which such amounts shall be determined; and (4) whether any of the Debt Securities shall be issuable in whole or in part in the form of one or more Global Securities (as described below) and, if so, the Depository for such Global Security or Securities, and the circumstances under which any such Global Security or Securities may be exchanged for Debt Securities registered in the name of, and any transfer of such Global Security or Securities may be registered to, a person other than such Depository or its nominee. The Debt Securities offered hereby will be unsecured and will rank pari passu with all other unsecured and unsubordinated indebtedness of the Company. Unless otherwise provided in the Prospectus Supplement, the Debt Securities will be issued only in registered form without coupons and may be issued (in the case of dollar denominated Debt Securities) in denominations of $1,000 and any integral multiple thereof. The Debt Securities of a series may be represented, in whole or in part, by one or more permanent Global Securities in a denomination or aggregate denominations equal to the portion of the aggregate principal amount of outstanding Debt Securities of the series to be represented by such Global Security or Securities. Any such Global Security deposited with a Depository or its nominee and bearing the legend required by the Indenture may not be surrendered for transfer or exchange except by the Depository for such Global Security or any nominee of such Depository, except if the Depository notifies the Company that it is unwilling or unable to continue as Depository, or the Depository ceases to be qualified as required by the Indenture, or the Company instructs the Trustee in accordance with the Indenture that such Global Security shall be so registrable and exchangeable, or there shall exist such other circumstances, if any, as may be specified in the applicable Prospectus Supplement. The specific terms of the depository arrangement with respect to any portion of a series of Debt Securities to be represented by one or more Global Securities will be described in the applicable Prospectus Supplement. Beneficial interests in Global Securities will only be evidenced by, and transfers thereof will only be effected through, records maintained by the Depository and the institutions that are participants in the Depository. At the option of the Holder, subject to the terms of the Indenture and the limitations applicable to Global Securities, Debt Securities of any series will be exchangeable for other Debt Securities of the same series of any authorized denominations and of a like aggregate principal amount and tenor. The Debt Securities may be transferred or exchanged without payment of any service charge, other than any tax or other governmental charge payable in connection therewith. (Article Two) The principal of (and premium, if any) and interest, if any, on the Debt Securities will be payable, and the transfer of the Debt Securities will be registrable, at the agency or agencies maintained by the Company; 4 6 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 it appears in the Security Register. (Sections 2.07 and 2.10) Some of the Debt Securities may be issued as discounted Debt Securities (bearing no interest or bearing interest at a rate which at the time of issuance is below market rate) to be sold at a substantial discount below their stated principal amount. Federal income tax consequences and other special considerations applicable to any such discounted Debt Securities will be described in the Prospectus Supplement relating thereto. Debt Securities may also be issued under the Indenture upon the exercise of Warrants. See "Warrants" below. RESTRICTIVE COVENANTS Limitations on Liens. The Indenture provides that the Company may not, nor may it permit any Restricted Subsidiary to, issue, assume or guarantee evidences of indebtedness for money borrowed which are secured by any mortgage, security interest, pledge or lien ("mortgage") of or upon any Principal Property or of or upon any shares of stock or evidences of indebtedness for borrowed money issued by any Restricted Subsidiary and owned by the Company or any Restricted Subsidiary, whether owned at the date of the Indenture or thereafter acquired, without effectively providing that the Principal Amount of the Debt Securities from time to time Outstanding shall be secured equally and ratably by such mortgage, except that this restriction will not apply to (1) mortgages on any property existing at the time of its acquisition; (2) mortgages on property of a corporation existing at the time such corporation is merged into or consolidated with, or disposes of substantially all its properties (or those of a division) to, the Company or a Restricted Subsidiary; (3) mortgages on property of a corporation existing at the time such corporation first becomes a Restricted Subsidiary; (4) mortgages securing indebtedness of a Restricted Subsidiary to the Company or to another Restricted Subsidiary; (5) mortgages to secure the cost of acquisition, construction, development or substantial repair, alteration or improvement of property if the commitment to extend the credit secured by any such mortgage is obtained within 12 months after the later of the completion or the placing in operation of the acquired, constructed, developed or substantially repaired, altered or improved property; (6) mortgages securing current indebtedness (as defined); or (7) any extension, renewal or replacement (or successive extensions, renewals or replacements), in whole or in part, of any mortgage referred to in clauses (1) through (6) provided, however, that the principal amount of indebtedness secured thereby and not otherwise authorized by said clauses (1) to (6), inclusive, shall not exceed the principal amount of indebtedness, plus any premium or fee payable in connection with any such extension, renewal or replacement, so secured at the time of such extension, renewal or replacement. However, the Company or any Restricted Subsidiary may issue, assume or guarantee indebtedness secured by mortgages which would otherwise be subject to the foregoing restriction in any aggregate amount which, together with all other such indebtedness outstanding, all attributable debt outstanding under the provisions described in the last sentence under Limitations on Sale and Lease-Back Transactions below and all Senior Funded Indebtedness issued, assumed or guaranteed by any Restricted Subsidiary, does not exceed 5% of Stockholders' Equity. (Section 5.08) Limitations on Sale and Lease-Back Transactions. The Indenture provides that neither the Company nor any Restricted Subsidiary may enter into any Sale and Lease-Back Transaction with respect to any Principal Property (except for transactions involving leases for a term, including renewals, of not more than three years and except for transactions between the Company and a Restricted Subsidiary or between Restricted Subsidiaries), if the purchaser's commitment is obtained more than 12 months after the later of the acquisition or completion or the placing in operation of such Principal Property or of such Principal Property as constructed or developed or substantially repaired, altered or improved. This restriction will not apply if either (a) the Company or such Restricted Subsidiary would be entitled pursuant to the provision described in the first sentence under Limitations on Liens above to issue, assume or guarantee debt secured by a mortgage on such Principal Property without equally and ratably securing the Debt Securities from time to time outstanding or (b) the Company applies within 180 days an amount equal to, in the case of a sale or transfer for cash, the net proceeds (not exceeding the net book value) and, otherwise, an amount equal to the fair value (as determined by its Board of Directors) of the Principal Property so leased to the retirement of Debt Securities or other Senior Funded Indebtedness of the Company or a Restricted Subsidiary, subject to 5 7 reduction as set forth in the Indenture in respect of Debt Securities and other Senior Funded Indebtedness retired during such 180-day period otherwise than pursuant to mandatory sinking fund or prepayment provisions and payments at maturity. The Company or any Restricted Subsidiary, however, may enter into a Sale and Lease-Back Transaction which would otherwise be subject to the foregoing restriction so as to create an aggregate amount of attributable debt (as defined) which, together with all other such attributable debt outstanding, all indebtedness outstanding under the provision described in the last sentence under Limitations on Liens above and all Senior Funded Indebtedness issued, assumed or guaranteed by any Restricted Subsidiary, does not exceed 5% of Stockholders' Equity. (Section 5.09) Waiver of Covenants. The Indenture provides that the Holders of a majority (unless a greater requirement with respect to any series of Debt Securities is specified for this purpose, in which case the requirement specified) in Principal Amount of the Outstanding Debt Securities of a particular series may waive compliance as to such series with certain covenants or conditions set forth in the Indenture, including those described above. (Section 5.10) Consolidation, Merger or Sale of Assets of the Company. The Indenture provides that the Company may not consolidate with or merge into any other corporation or sell its assets substantially as an entirety, unless (1) the corporation formed by such consolidation or into which the Company is merged or the Person which acquires its assets is a corporation organized in the United States and expressly assumes the due and punctual payment of the principal of (and premium, if any) and interest, if any, on all the Debt Securities and the performance of every covenant of the Indenture on the part of the Company, and (2) immediately after giving effect to such transaction, no Event of Default, and no event which, after notice or lapse of time, or both, would become an Event of Default, shall have happened and be continuing. Upon any such consolidation, merger or sale, the successor corporation formed by such consolidation or into which the Company is merged or to which such sale is made will succeed to, and be substituted for, the Company under the Indenture, and the predecessor corporation shall be released from all obligations and covenants under the Indenture and the Debt Securities. (Article Eleven) Unless otherwise provided in the Prospectus Supplement, the covenants contained in the Indenture and the Debt Securities would not necessarily afford Holders of the Debt Securities protection in the event of a highly leveraged or other transaction involving the Company that may adversely affect such Holders. DEFINITIONS "Principal Amount" means, when used with respect to any Debt Security, the amount of principal thereof that could then be declared due and payable as a result of an Event of Default with respect to such Debt Security. "Principal Property" means all real and tangible property owned by the Company or a Restricted Subsidiary constituting a part of any store, warehouse or distribution center located within the United States, exclusive of motor vehicles, mobile materials-handling equipment and other rolling stock, cash registers and other point of sale recording devices and related equipment, and data processing and other office equipment, provided the net book value of all real property (including leasehold improvements) and store fixtures constituting a part of such store, warehouse or distribution center exceeds 0.25% of Stockholders' Equity. "Restricted Subsidiary" means any Subsidiary (as defined) of the Company or of a Restricted Subsidiary which the Company designates as a Restricted Subsidiary, which designation shall not have been canceled. However, no subsidiary for which the designation of Restricted Subsidiary has been canceled may be redesignated as such if during any period following cancellation of its previous designation as a Restricted Subsidiary, such Subsidiary shall have entered into a Sale and Lease-Back Transaction which would have been prohibited had it been a Restricted Subsidiary at the time of such Transaction. "Senior Funded Indebtedness" of the Company means any Funded Indebtedness of the Company unless in any instruments evidencing or securing such Funded Indebtedness it is provided that such Funded Indebtedness is subordinate in right of payment to the Debt Securities to the extent provided in the Indenture. "Senior Funded Indebtedness" of a Restricted Subsidiary means Funded Indebtedness of the Restricted Subsidiary and the aggregate preference on involuntary liquidation of preferred stock of such Subsidiary. "Funded Indebtedness" of a corporation means the principal of (a) indebtedness for money borrowed or evidenced by an instrument given in connection with an acquisition which is not payable on demand and which matures, or which such 6 8 corporation has the right to renew or extend to a date, more than one year after the date of determination, (b) any indebtedness of others of the kinds described in the preceding clause (a) for the payment of which such corporation is responsible or liable as a guarantor or otherwise, and (c) amendments, renewals and refundings of any such indebtedness. For the purposes of the definition of "Funded Indebtedness", the term "principal" when used at any date with respect to any indebtedness means the amount of principal of such indebtedness that could be declared to be due and payable on that date pursuant to the terms of such indebtedness. "Stockholders' Equity" means the aggregate of (a) capital and reinvested earnings, after deducting the cost of shares of capital stock of the Company held in its treasury, of the Company and consolidated Subsidiaries plus (b) deferred tax effects. (Section 1.01) EVENTS OF DEFAULT, NOTICE AND WAIVER The Indenture provides that if an Event of Default shall have occurred and be continuing with respect to any series of Debt Securities at the time Outstanding, either the Trustee or the Holders of not less than 25% (unless a different percentage with respect to any series of Debt Securities is specified for this purpose, in which case the percentage specified) in Outstanding Principal Amount of such series may declare to be due and payable immediately the Principal Amount (or specified portion thereof) of such series, together with interest, if any, accrued thereon. (Section 7.02) The Indenture defines an Event of Default with respect to any series of Debt Securities as any one of the following events: (a) default for 30 days in payment of any interest due with respect to any Debt Security of such series; (b) default for 30 days in making any sinking fund payment due with respect to any Debt Security of such series; (c) default in payment of principal of (or premium, if any, on) any Debt Security of such series when due; (d) default for 90 days after notice to the Company by the Trustee or by Holders of not less than 25% in Principal Amount of the Debt Securities then Outstanding of such series in the performance of any other covenant for the benefit of such series; (e) certain events of bankruptcy, insolvency and reorganization; and (f) any additional event specified as an "Event of Default" for the benefit of such series. (Section 7.01) No Event of Default with respect to a particular series of Debt Securities issued under the Indenture necessarily constitutes an Event of Default with respect to any other series of Debt Securities issued thereunder. The Indenture provides that the Trustee will, within 90 days after the occurrence of a default, give to the Holders of the Debt Securities of each series as to which such default has occurred notice of such default known to it, unless cured or waived; provided that, except in the case of default in the payment of principal of (or premium, if any) or interest, if any, or in the payment of any sinking fund installment in respect of any of the Debt Securities, the Trustee will be protected in withholding such notice if it in good faith determines that the withholding of such notice is in the interests of the Holders of the series as to which such default has occurred. The term "default" for the purpose of this provision means any event which is, or after notice or lapse of time, or both, would become, an Event of Default. (Section 8.02) The Indenture contains a provision entitling the Trustee, subject to the duty of the Trustee during the continuance of an Event of Default to act with the required standard of care, to be indemnified by the Holders of Debt Securities before proceeding to exercise any right or power under the Indenture at the request of such Holders. (Section 8.03) The Indenture provides that the Holders of a majority (unless a greater requirement with respect to any series of Debt Securities is specified for this purpose, in which case the requirement specified) in Outstanding Principal Amount of a series of Debt Securities may, subject to certain exceptions, on behalf of the Holders of the Debt Securities of such series direct the time, method and place of conducting proceedings for remedies available to the Trustee, or exercising any trust or power conferred on the Trustee. (Section 7.12) The Indenture includes a covenant that the Company will file annually with the Trustee a certificate of no default, or specifying any default that exists. (Section 5.06) In certain cases, the Holders of a majority (unless a greater requirement with respect to any series of Debt Securities is specified for this purpose, in which case the requirement specified) in Outstanding Principal Amount of a series of Debt Securities may on behalf of the Holders of the Debt Securities of such series 7 9 rescind, as to such series, a declaration of acceleration or waive, as to such series, any past default or Event of Default relating to the Debt Securities of such series, except a default not theretofore cured in payment of the principal of (or premium, if any) or interest, if any, on any of such Debt Securities or in respect of a provision which under the Indenture cannot be modified or amended without the consent of the Holder of each Outstanding Debt Security of such series. (Sections 7.02 and 7.13) MODIFICATION OF THE INDENTURE The Indenture contains provisions permitting the Company and the Trustee, with the consent of the Holders of 66 2/3% (unless a different percentage with respect to any series of Debt Securities is specified for this purpose, in which case the percentage specified) in Principal Amount of the Outstanding Debt Securities of each series affected by such modification, to execute supplemental indentures adding any provisions to or changing or eliminating any provisions of the Indenture or modifying the rights of the Holders of such Debt Securities, except that no such supplemental indenture may, without the consent of all Holders of affected Debt Securities, (i) change the Stated Maturity of any Debt Security or reduce the principal payable at Stated Maturity or which could be declared due and payable prior thereto or change any redemption price thereof, (ii) reduce the rate of interest payable on any Debt Security, (iii) adversely affect the terms and provisions, if any, applicable to the conversion or exchange of any Debt Securities, (iv) reduce the aforesaid percentage of Debt Securities of any series or the percentage of Debt Securities of any series specified in Section 5.10 or 7.13, (v) change any place or the currency of payment of principal of (or premium, if any) or interest, if any, on any Debt Security, or (vi) impair the right to institute suit for the enforcement of any payment on or with respect to any Debt Security. (Section 10.02) SATISFACTION AND DISCHARGE PRIOR TO MATURITY The Company may elect to provide with respect to any series of Debt Securities that the Company may satisfy its obligations with respect to any payment of principal (and premium, if any) or interest due on such series of Debt Securities by depositing in trust with the Trustee money or U. S. Government Obligations or a combination thereof sufficient to make such payment when due. If such deposit is sufficient to make all payments of (1) interest on such series of Debt Securities prior to their redemption or maturity, as the case may be, and (2) principal of (and premium, if any) and interest on such series of Debt Securities when due upon redemption or at maturity, as the case may be, all the obligations of the Company under such series of Debt Securities and the Indenture as it relates to such series of Debt Securities will be discharged and terminated except as otherwise provided in the Indenture. "U. S. Government Obligations" are defined to mean (i) securities backed by the full faith and credit of the United States and (ii) depository receipts issued by a bank or trust company as custodian and evidencing ownership by the holders of such depository receipts of future payments of interest or principal, or both, on such securities backed by the full faith and credit of the United States held by such custodian. For United States income tax purposes, it is likely that any such deposit and discharge with respect to any Debt Securities will be treated as a taxable exchange of such Debt Securities for interests in the trust. In that event, a Holder will recognize gain or loss equal to the difference between the Holder's cost or other tax basis for the Debt Securities and the value of the Holder's interest in such trust; and thereafter will be required to include in income a share of the income, gain and loss of the trust. Purchasers of the Debt Securities should consult their own advisers with respect to the tax consequences to them of such deposit and discharge, including the applicability and effect of tax laws other than the United States income tax law. In addition, the Company may elect to provide with respect to any series of Debt Securities that the Company may be released from certain of its covenants upon the satisfaction of certain conditions applicable to the securities of such series. 8 10 CONCERNING THE TRUSTEE The Company and Funding Corporation maintain substantial lines of credit and have other customary banking relationships with Bank of America National Trust and Savings Association, the Trustee under the Indenture. WARRANTS The Company may issue with any Debt Securities being offered by it Warrants for the purchase of other Debt Securities. Each issue of Warrants will be issued under, and will be governed by, a Warrant Agreement ("Warrant Agreement"), to be entered into between the Company and a warrant agent ("Warrant Agent"), to be described in the Prospectus Supplement relating to the Debt Securities with which the Warrants are to be issued. A copy of the proposed Warrant Agreement, including the form of proposed Warrant Certificate representing the Warrants, substantially in the form in which it is to be executed, is included as an exhibit to the Registration Statement of which this Prospectus forms a part. The following summaries of certain provisions of the Warrant Agreement and Warrant Certificates do not purport to be complete and are subject to and qualified in their entirety by reference to all the provisions set forth in the Warrant Agreement and Warrant Certificates, respectively, including the definitions thereof of certain terms. Reference is made to the Prospectus Supplement relating to the Securities, the Warrant Agreement relating to the Warrants and the Warrant Certificates representing the Warrants for certain specific terms of the Warrants, which may include: (1) designation, aggregate principal amount and terms of the Debt Securities purchasable upon exercise of the Warrants; (2) designation and terms of any related Debt Securities with which the Warrants are issued and the number of Warrants issued with each such Debt Security; (3) date, if any, on and after which the Warrants and the related Debt Securities will be separately transferable; (4) principal amount of Debt Securities purchasable upon exercise of one Warrant and the price at which such principal amount of Debt Securities may be purchased upon such exercise; (5) date on which the right to exercise the Warrants shall commence ("Commencement Date") and date on which such right shall expire ("Expiration Date"); and (6) whether the Warrants represented by the Warrant Certificates will be issued in registered or bearer form. Warrant Certificates will be exchangeable for new Warrant Certificates of different denominations, and Warrants may be exercised, at the agency or agencies maintained for such purposes. Prior to the exercise of their Warrants, holders of Warrants will not have any of the rights of Holders of the Debt Securities purchasable upon such exercise and will not be entitled to payments of principal of (or premium, if any) or interest, if any, on the Debt Securities purchasable upon such exercise. Each Warrant will entitle the holder to purchase for cash such principal amount of Debt Securities at such exercise price as shall in each case be set forth, or be determinable as set forth, in the Prospectus Supplement relating to the Securities. Each Warrant may be exercised in whole but not in part at any time on and after the Commencement Date and up to the close of business on the Expiration Date set forth in the Prospectus Supplement relating to the Securities. After the close of business on the Expiration Date, unexercised Warrants will become void. The exercise price of the Warrants will be that price applicable on the date of receipt of payment therefor determined as set forth in the Prospectus Supplement relating to the Securities. Upon receipt of payment of the exercise price and the Warrant Certificate properly completed and duly executed at the agency or agencies maintained by the Company for such purpose, the Company will, as soon as practicable, forward the Debt Securities purchasable upon such exercise. If less than all of the Warrants represented by such Warrant Certificate are exercised, a new Warrant Certificate will be issued for the Warrants remaining unexercised. 9 11 VALIDITY OF SECURITIES The validity of the Securities will be passed upon for the Company by C. R. Lotter, Executive Vice President, Secretary and General Counsel of the Company, and for any underwriters, agents or purchasers by Sullivan & Cromwell, New York, New York. As of March 31, 1994, Mr. Lotter owned 31,241 shares of Common Stock and Common Stock voting equivalents of the Company, including shares credited to his accounts under the Company's Savings and Profit-Sharing Retirement Plan and Savings, Profit-Sharing and Stock Ownership Plan as of March 31, 1994. As of March 31, 1994, he had outstanding options to purchase 49,540 shares of Common Stock. EXPERTS The financial statements and schedules as of January 29, 1994, January 30, 1993 and January 25, 1992, and for each of the years then ended contained or incorporated by reference in (a) the Company's Annual Report on Form 10-K for the fiscal year ended January 29, 1994 and (b) Funding Corporation's Annual Report on Form 10-K for the fiscal year ended January 29, 1994 have been incorporated herein by reference in reliance upon the reports of KPMG Peat Marwick, independent certified public accountants (which reports each dated February 24, 1994 are incorporated herein by reference to the aforementioned Annual Reports on Form 10-K), and upon the authority of said firm as experts in accounting and auditing. The Independent Auditors' Reports of KPMG Peat Marwick covering the aforementioned consolidated financial statements and schedules of the Company refer to the provisions of the Financial Accounting Standards Board's Statement of Financial Accounting Standards No. 106, Employers' Accounting for Postretirement Benefits Other Than Pensions, adopted by the Company in 1991, and to the provisions of the Financial Accounting Standards Board's Statement of Financial Accounting Standards No. 109, Accounting for Income Taxes, adopted by the Company in 1993. To the extent that KPMG Peat Marwick audits and reports on financial statements of the Company and Funding Corporation issued at future dates, and consents to the use of their reports thereon, such financial statements also will be incorporated by reference herein in reliance upon their reports and said authority. PLAN OF DISTRIBUTION The Company may offer the Securities from time to time (i) through underwriters or dealers, (ii) directly to one or more institutional purchasers, or (iii) through agents. Sales of Securities through underwriters may be through underwriting syndicates led by one or more managing underwriters. The specific managing underwriter or underwriters which may act with respect to the offer and sale of any series of Securities are set forth on the cover of the Prospectus Supplement in respect of such series and the members of the underwriting syndicate, if any, are named in such Prospectus Supplement. Underwriters may offer and sell the Securities at a fixed price or prices, which may be changed, or from time to time at market prices prevailing at the time of sale, at prices related to such prevailing market prices or at negotiated prices. In connection with the sale of Securities, underwriters may be deemed to have received compensation from the Company in the form of underwriting discounts or commissions and may also receive commissions from purchasers of Securities for whom they may act as agents. Underwriters may sell Securities to or through dealers, and such dealers may receive compensation in the form of discounts, concessions or commissions from the underwriters and/or commissions from the purchasers for whom they may act as agents. Any underwriting compensation paid by the Company to underwriters or agents in connection with the offering of Securities, and any discounts, concessions or commissions allowed by underwriters to participating dealers, are set forth in the Prospectus Supplement. Underwriters, dealers and agents participating in the distribution of the Securities may be deemed to be underwriters, and any discounts and commissions received by them and any profit realized by them on resale of the Securities may be deemed to be underwriting discounts and commissions, under the Securities Act of 1933. 10 12 If so indicated in an applicable Prospectus Supplement, the Company will authorize underwriters, dealers or agents to solicit offers by certain institutions to purchase Securities from the Company pursuant to delayed delivery contracts. The Prospectus Supplement relating thereto will also set forth the price to be paid for Securities pursuant to such contracts, the commissions payable for solicitation of such contracts, the date or dates in the future for delivery of Securities pursuant to such contracts and any conditions to which such contracts will be subject. Underwriters, dealers and agents may be entitled, under agreements entered into with the Company, to indemnification against and contribution toward certain civil liabilities, including liabilities under the Securities Act of 1933. Underwriters and agents may engage in transactions with, or perform services for, the Company in the ordinary course of business. 11 13 PART II INFORMATION NOT REQUIRED IN PROSPECTUS ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION. Estimated expenses (exclusive of underwriting discounts and commissions) in connection with the issuance and distribution of the Securities registered hereunder. Securities and Exchange Commission registration fee....................... $517,242 "Blue Sky" expenses....................................................... 35,000* Printing and engraving expenses........................................... 90,000* Trustee's fees and expense................................................ 25,000* Accounting fees........................................................... 30,000* Rating agency fees........................................................ 210,000 Miscellaneous expenses.................................................... 15,000* Total................................................................ $922,242 -------- --------
- --------------- * Estimated ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS. Section 145 of the General Corporation Law of Delaware permits indemnification of the directors and officers of the Company involved in a civil or criminal action, suit or proceeding, including, under certain circumstances, suits by or in the right of the Company, for any expenses, including attorneys' fees, and (except in the case of suits by or in the right of the Company) any liabilities which they may have incurred in consequence of such action, suit or proceeding under the conditions stated in said Section. Article X of the Company's By-laws provides, in substance, for indemnification by the Company of its directors and officers in accordance with the provisions of the General Corporation Law of Delaware. The Company has entered into indemnification agreements with its current directors and certain of its current officers which generally provide for indemnification by the Company except as prohibited by applicable law. To provide some assurance of payment to the indemnitees of amounts to which they may become entitled pursuant to the aforesaid agreements, the Company has funded a trust. In addition, the Company has purchased insurance coverage under policies which insure the Company for amounts which the Company is required or permitted to pay as indemnification of directors and certain officers of the Company and its subsidiaries, and which insure directors and certain officers of the Company and its subsidiaries against certain liabilities which might be incurred by them in such capacities and for which they are not entitled to indemnification by the Company. Furthermore, the Company, as well as its directors and officers, may be entitled to indemnification by any underwriters named in the Prospectus Supplement against certain civil liabilities under the Securities Act of 1933, under agreements entered into between the Company and such underwriters. II-1 14 ITEM 16. EXHIBITS. 1(a) Form of proposed Underwriting Agreement (including form of proposed Delayed Delivery Contract) (filed as Exhibit 1 to Registrant's Registration Statement on Form S-3, SEC file No. 2-79577, and incorporated herein by reference) (b) Form of Proposed Agency Agreement 4(a) Indenture, dated as of April 1, 1994, between the Company and Bank of America National Trust and Savings Association, Trustee (b) Forms of Debt Securities registered hereunder may include the following, among others: (i) Form of % Note Due (ii) Form of Zero Coupon Note Due (iii) Form of % Debenture Due (Original Issue Discount) (iv) Form of % Debenture Due (v) Form of % Sinking Fund Debenture Due (vi) Form of Extendible Note (vii) Form of Medium-Term Note, Series (Fixed Rate) (viii) Form of Medium-Term Note, Series (Floating Rate) (c) Form of proposed Warrant Agreement (including form of proposed Warrant Certificate) 5 Opinion of C. R. Lotter with respect to the validity of the Securities 12 Computation of ratios (Computation of Ratios of Available Income to Combined Fixed Charges and Preferred Stock Dividend Requirement and Computation of Ratios of Available Income to Fixed Charges for the 52 weeks ended January 29, 1994, for the 53 weeks ended January 30, 1993, for the 52 weeks ended January 25, 1992, January 26, 1991, and January 27, 1990, respectively, were filed as Exhibit 12 (a) and 12(b) to Registrant's Annual Report on Form 10-K for the 52 weeks ended January 29, 1994 (SEC file number 1-777), which Reports are incorporated herein by reference) 23(a) Consent of KPMG Peat Marwick (b) Consent of C. R. Lotter (see Exhibit 5) 24 Powers of Attorney and related certified resolution 25 Statement of Eligibility and Qualification of Form T-1 of Bank of America National Trust and Savings Association as Trustee under the Indenture pursuant to which the Debt Securities registered hereunder are to be issued 99 Form of Pricing Supplement
ITEM 17. UNDERTAKINGS. The undersigned Registrant hereby undertakes: (1) to file, during any period in which offers or sales are being made, a post-effective amendment to this Registration Statement: (i) to include any prospectus required by Section 10(a)(3) of the Securities Act of 1933; (ii) to reflect in the prospectus any facts or events arising after the effective date of the Registration Statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the Registration Statement; (iii) to include any material information with respect to the plan of distribution not previously disclosed in the Registration Statement or any material change to such information in the Registration Statement; Provided, however, that paragraphs (1)(i) and (1)(ii) do not apply if the Registration Statement is on Form S-3, or Form S-8, and the information required to be included in a post-effective amendment by those II-2 15 paragraphs is contained in periodic reports filed by the Registrant pursuant to section 13 or section 15(d) of the Securities Exchange Act of 1934 that are incorporated by reference in the Registration Statement. (2) that, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new Registration Statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof; (3) to remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering. The undersigned Registrant hereby undertakes that, for purposes of determining any liability under the Securities Act of 1933, each filing of the Registrant's annual report pursuant to section 13(a) or section 15(d) of the Securities Exchange Act of 1934 (and, where applicable, each filing of an employee benefit plan's annual report pursuant to section 15(d) of the Securities Exchange Act of 1934) that is incorporated by reference in the Registration Statement shall be deemed to be a new Registration Statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the Registrant pursuant to the provisions described in Item 15 above, or otherwise, the Registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid by a director, officer or controlling person of the Registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue. II-3 16 SIGNATURES PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT CERTIFIES THAT IT HAS REASONABLE GROUNDS TO BELIEVE THAT IT MEETS ALL OF THE REQUIREMENTS FOR FILING ON FORM S-3 AND HAS DULY CAUSED THIS REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY OF PLANO AND STATE OF TEXAS, ON THE 26TH DAY OF APRIL, 1994. J. C. PENNEY COMPANY, INC. By: /s/ D. A. MCKAY D. A. MCKAY VICE PRESIDENT AND TREASURER PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS REGISTRATION STATEMENT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS IN THE CAPACITIES AND ON THE DATES INDICATED.
SIGNATURES TITLE DATE - ----------------------------------------------- --------------------- ------------------- W. R. HOWELL* Chairman of the Board W. R. HOWELL (principal executive officer); Director April 26, 1994 R. E. NORTHAM* Executive Vice President R. E. NORTHAM (principal financial officer) April 26, 1994 L. A. GISPANSKI* Vice President L. A. GISPANSKI and Controller (principal accounting officer) April 26, 1994 M. A. BURNS* Director April 26, 1994 M. A. BURNS C. H. CHANDLER* Director April 26, 1994 C. H. CHANDLER V. E. JORDAN, JR* Director April 26, 1994 V. E. JORDAN, JR. GEORGE NIGH* Director April 26, 1994 GEORGE NIGH J. C. PFEIFFER* Director April 26, 1994 J. C. PFEIFFER A. K. PYE* Director April 26, 1994 A. K. PYE
II-4 17
SIGNATURES TITLE DATE - ----------------------------------------------- --------------------- -------------------- C. S. SANFORD, JR.* Director April 26, 1994 C. S. SANFORD, JR. J. D. WILLIAMS* Director April 26, 1994 J. D. WILLIAMS BORIS YAVITZ* Director April 26, 1994 BORIS YAVITZ *By: /s/ D. A. MCKAY D. A. MCKAY ATTORNEY-IN-FACT
COPIES OF POWERS OF ATTORNEY AUTHORIZING L. A. GISPANSKI, C. R. LOTTER, D. A. MCKAY, AND R. E. NORTHAM, AND EACH OF THEM, TO SIGN THIS REGISTRATION STATEMENT ON BEHALF OF THE ABOVE NAMED DIRECTORS AND OFFICERS, AND A CERTIFIED COPY OF A RESOLUTION OF THE BOARD OF DIRECTORS OF THE REGISTRANT AUTHORIZING L. A. GISPANSKI, C. R. LOTTER, D. A. MCKAY, AND R. E. NORTHAM, AND EACH OF THEM, TO SIGN AS ATTORNEY-IN-FACT ON BEHALF OF THE REGISTRANT, ARE BEING FILED WITH THE SECURITIES AND EXCHANGE COMMISSION SIMULTANEOUSLY HEREWITH. II-5 EX-1.B 2 FORM OF PROPOSED AGENCY AGREEMENT 1 Exhibit 1(b) $1,500,000,000 J. C. PENNEY COMPANY, INC. Medium-Term Notes ----------------- AGENCY AGREEMENT ---------------- _______________, 1994 CS First Boston Corporation Park Avenue Plaza New York, New York 10055. Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated North Tower, World Financial Center, New York, New York 10291-1218. Morgan Stanley & Co. Incorporated, 1251 Avenue of the Americas, New York, New York 10020. J.P. Morgan Securities Inc. 60 Wall Street New York, New York 10260 Dear Sirs: 1. Introduction. J. C. PENNEY COMPANY, INC., a Delaware corporation ------------ ("Issuer"), confirms its agreement with each of you (individually, an "Agent" and collectively, "Agents") with respect to the issue and sale from time to time by the Issuer of its medium-term notes registered under the Registration Statement referred to in Section 2(a) (any such medium-term notes being hereinafter referred to as the "Securities", which expression shall, if the context so admits, include any permanent global Security), but the Issuer reserves the right to sell Securities on its own behalf directly or through affiliates, and upon notice to each of you, to enter into agreements substantially identical hereto with other agents. Securities may be sold pursuant to Section 3 of this Agreement or as contemplated by Section 11 of this Agreement in an aggregate amount not to exceed the amount of Registered Securities (as defined in Section 2(a) hereof) registered pursuant to such Registration Statement reduced by the aggregate amount of any other Registered Securities sold otherwise than pursuant to Section 3 of this Agreement. The Securities will be issued under an indenture, dated as of April 1, 1994 (said Indenture, and all indentures supplemental thereto, being hereinafter called the "Indenture"), between the Issuer and Bank of America National Trust and Savings Association, as trustee ("Trustee"). The Securities shall have the terms described in the Prospectus referred to in Section 2(a) as it may be amended or supplemented from time to time, including any 2 supplement to the Prospectus that sets forth only the terms of a particular issue of the Securities ("Pricing Supplement"). Securities will be issued, and the terms thereof established, from time to time by the Issuer in accordance with the Indenture and the Procedures (as defined in Section 3(d) hereof). 2. Representations and Warranties of the Issuer. The Issuer represents -------------------------------------------- and warrants to, and agrees with, each Agent as follows: (a) A Registration Statement (No. 33-_____), including a prospectus, relating to debt securities of the Issuer, including the Securities ("Registered Securities"), has been filed with the Securities and Exchange Commission ("Commission") and has become effective under the Securities Act of 1933 ("Act"). Such Registration Statement, as amended as of the Closing Date (as defined in Section 3(e) hereof), is hereinafter referred to as the "Registration Statement", and the prospectus included in such Registration Statement, as supplemented as of the Closing Date, including all material incorporated by reference therein, is hereinafter referred to as the "Prospectus". Any reference in this Agreement to amending or supplementing the Prospectus shall be deemed to include the filing of materials incorporated by reference in the Prospectus after the Closing Date and any reference in this Agreement to any amendment or supplement to the Prospectus shall be deemed to include any such materials incorporated by reference in the Prospectus after the Closing Date. (b) On the effective date of the Registration Statement relating to the Registered Securities, such Registration Statement conformed in all respects to the requirements of the Act, the Trust Indenture Act of 1939, as amended, ("Trust Indenture Act") and the rules and regulations of the Commission ("Rules and Regulations") 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 Closing Date, the Registration Statement and the Prospectus; and at each of the times of acceptance and of delivery referred to in Section 6(a) hereof and at each of the times of amendment or supplementing referred to in Section 6(b) hereof (the Closing Date and each such time being herein sometimes referred to as a "Representation Date"), the Registration Statement and the Prospectus as then amended or supplemented will conform in all respects to the requirements of the Act; the Trust Indenture Act and the Rules and Regulations, and neither of such documents will include any untrue statement of a material fact or will 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, except that the foregoing does not apply to statements in or omissions from any of such documents based upon (i) written information furnished to the Issuer by any Agent specifically for use therein or (ii) that part of the Registration Statement constituting the Statement of Eligibility and Qualification under the Trust Indenture Act (Form T-1) of the Trustee. 3. Appointment as Agents; Agreement of Agents; Solicitations as Agents. ------------------------------------------------------------------- (a) Subject to the terms and conditions stated herein, and subject to the right of the Issuer to sell Securities on its own behalf directly or through affiliates or through other agents, the Issuer hereby appoints each of the Agents as a non-exclusive agent of the Issuer for the purpose of soliciting or receiving offers to purchase the Securities from the Issuer by others. -2- 3 (b) On the basis of the representations and warranties contained herein, but subject to the terms and conditions herein set forth, each Agent agrees, as an agent of the Issuer, to use reasonable best efforts when requested by the Issuer to solicit offers to, purchase the Securities upon the terms and conditions set forth in the Prospectus, as from time to time amended or supplemented. Upon receipt of notice from the Issuer as contemplated by Section 4(b) hereof, each Agent shall promptly suspend its solicitation of offers to purchase Securities until such time as the Issuer shall have furnished it with an amendment or supplement to the Registration Statement or the Prospectus, as the case may be, contemplated by Section 4(b) and shall have advised such Agent that such solicitation may be resumed. The Issuer reserves the right in its sole discretion, to suspend solicitation of offers to purchase the Securities commencing at any time for any period of time or permanently. Upon receipt of at least one Business Day's prior notice from the Issuer, the Agents will immediately suspend solicitation of offers to purchase Securities from the Issuer until such time as the Issuer has advised the Agents that such solicitation may be resumed. For the purpose of the foregoing sentence, "Business Days" shall mean any day that is not a Saturday or Sunday, and that in The City of New York is not a day on which banking institutions generally are authorized or obligated by law or executive order to close. The Agents are authorized to solicit offers to purchase Securities as described in the Prospectus, as amended or supplemented, and only in a minimum aggregate amount of $100,000 with integral multiples of $1,000 in excess thereof (or the equivalent thereof in one or more currencies or currency units other than U.S. dollars). Each Agent shall communicate to the Issuer, orally or in writing, each reasonable offer to purchase Securities received by it as agent. The Issuer shall have the sole right to accept offers to purchase the Securities and may reject any such offer, in whole or in part. Each Agent shall have the right, in its discretion reasonably exercised, without notice to the Issuer, to reject any offer to purchase Securities received by it, in whole or in part, and any such rejection shall not be deemed a breach of its agreement contained herein. No Security which the Issuer has agreed to sell pursuant to this Agreement shall be deemed to have been purchased and paid for, or sold by the Issuer, until such Security shall have been delivered to the purchaser thereof against payment by such purchaser. (c) At the time of delivery of, and payment for, any Securities sold by the Issuer as a result of a solicitation made by, or offer to purchase received by, an Agent, the Issuer agrees to pay such Agent a commission in accordance with the schedule set forth in Exhibit A hereto. (d) Administrative procedures respecting the sale of Securities ("Procedures") shall be agreed upon from time to time by the Agents and the Issuer. The initial Procedures which are set forth in Exhibit B hereto, shall remain in effect until changed by agreement among the Issuer and the Agents. Each Agent and the Issuer agree to perform the respective duties and obligations specifically provided to be performed by each of them herein and in the Procedures. The Issuer will furnish to the Trustee a copy of the Procedures as from time to time in effect. (e) The documents required to be delivered by Section 5 hereof shall be delivered at the office of Issuer, 6501 Legacy Drive, Plano, Texas, not later than -3- 4 10:00 a.m., New York City time, on the date at this Agreement or at such later time as may be mutually agreed by the Issuer and the Agents, which in no event shall be later than the time at which the Agents commence solicitation of purchases of Securities hereunder, such time and date being herein called the "Closing Date". 4. Certain Agreements of the Issuer. The Issuer agrees with the -------------------------------- Agents that it will furnish to Sullivan & Cromwell, counsel for the Agents, one signed copy of the Registration Statement, including all exhibits, in the form it became effective and of all amendments thereto and that, in connection with each offering of Securities: (a) The Issuer will advise each Agent promptly of any proposal to amend or supplement the Registration Statement or the Prospectus and of the institution by the Commission of any stop order proceedings in respect of the Registration Statement or of any part thereof 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 Securities is required to be delivered under the Act and no suspension of solicitation of offers to purchase Securities pursuant to Section 3(b) or this Section 4(b) shall be in effect (any such time and any time when either any Agent shall own any Securities with the intention of reselling them or the Issuer has accepted an offer to purchase Securities but the related settlement has not occurred being referred to herein as a "Marketing Time"), any event occurs as a result of which the Prospectus as then amended or supplemented would include an untrue statement of a material fact or omit to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made when such Prospectus is delivered, not misleading, or if it is necessary at any such time to amend the Prospectus to comply with the Act, the Issuer will promptly notify each Agent to suspend solicitation of offers to purchase the Securities; and if the Issuer shall decide to amend or supplement the Registration Statement or the Prospectus, it will promptly advise each Agent by telephone (with confirmation in writing) and, subject to the provisions of subsection (a) of this Section, will promptly prepare and file with the Commission an amendment or supplement which will correct such statement or omission or an amendment which will effect such compliance Notwithstanding the foregoing, if, at the time any such event occurs or it becomes necessary to amend the Prospectus to comply with the Act, any Agent shall own any of the Securities with the intention of reselling them, or the Issuer has accepted an offer to purchase Securities but the related settlement has not occurred, the Issuer, subject to the provisions of subsection (a) of this Section, will promptly prepare and file with the Commission an amendment or supplement which will correct such statement or omission or an amendment which will effect such compliance. Neither the Agents' consent to, nor their delivery of, any such amendment or supplement shall constitute a waiver of any of the conditions set forth in Section 5. (c) The Issuer will file promptly all documents required to be filed with the Commission pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act. In addition, on or prior to the date on which the Issuer makes any announcement to the general public concerning earnings or concerning any other event which is required to be described, or which the Issuer prosposes to describe, in a document filed pursuant to the Exchange Act, the Issuer will furnish the information contained or to be contained in such announcement to each Agent, confirmed in writing and, subject to the provisions of subsections (a) and (b) of this Section, will cause the Prospectus to be amended or -4- 5 supplemented to reflect the information contained in such announcement The Issuer also will furnish each Agent with copies of all material press releases or announcements to the general public. The Issuer will immediately notify each Agent of any downgrading in the rating of any debt securities of the Issuer by any "nationally recognized statistical rating organization" (as defined for purposes of Rule 436(g) under the Act), with which the Company has an ongoing relationship, or any public announcement that any such organization has placed its rating of the Issuer's debt securities under surveillance or review (other than an announcement with positive implications of a possible upgrading) as soon as the Issuer learns of such downgrading or public announcement. (d) As soon as practicable, but not later than 16 months after the date of each acceptance by the Issuer of an offer to purchase Securities hereunder, the Issuer will make generally available to Its securityholders an earnings statement covering a period of at least 12 months beginning after the later of (i) the effective date of the registration statement relating to the Registered Securities, (ii) the effective date of the most recent post-effective amendment to the Registration Statement to become effective prior to the date of such acceptance and (iii) the date of the Issuer's most recent Annual Report on Form 10-K filed with the Commission prior to the date of such acceptance, which will satisfy the provisions of Section 11(a) of the Act. (e) The Issuer will furnish to each Agent copies of the Registration Statement, including all exhibits, the Prospectus and all amendments and supplements to such documents (including any Pricing Supplement), in each case as soon as available and in such quantities as are reasonably requested. (f) The Issuer will use its reasonable best efforts to arrange for the qualification of the Securities for sale, and the determination of their eligibility for investment, under the laws of such jurisdictions as the Agents reasonably designate and will in diligently endeavor to continue such qualifications in effect so long as required for the distribution of the Securities. (g) So long as any Securities are outstanding, the Issuer will furnish to the Agents, (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 practicable, a copy at each report or definitive proxy statement of the Issuer filed with the Commission under the Exchange Act or mailed to stockholders, and (iii) from time to time, such other information concerning the Issuer as the Agents may reasonably request. (h) The Issuer will pay all reasonable expenses incident to the performance of its obligations under this Agreement or any agreement contemplated by Section 11 hereof and will reimburse each Agent for any reasonable expenses (including reasonable fees and disbursements of counsel) incurred by it In connection with qualification of the Securities for sale, and determination of their eligibility for investment under the laws of such jurisdictions as such Agent may reasonably designate and the printing of memoranda relating thereto, for any fees charged by investment rating agencies for the rating of the Securities, for any filing fee of the National Association of Securities Dealers, Inc. relating to the Securities, for reasonable expenses incurred by each Agent in distributing the Prospectus and all supplements thereto (including any Pricing Supplement), any preliminary prospectuses and any preliminary prospectus supplements to such Agent and for each Agent's reasonable expenses (including the -5- 6 reasonable fees and disbursements of counsel to the Agents) incurred in connection with the establishment or maintenance of the program contemplated by this Agreement or otherwise in connection with the activities of the Agents under this Agreement (including any purchases of Notes by any Agent for resale as contemplated by Section 11). 5. Conditions of Obligations of the Agents. The obligation of --------------------------------------- each Agent under this Agreement at any time to solicit offers to purchase the Securities is subject to the accuracy, on the date hereof, on each Representation Date and on the date of each such solicitation, of the representations and warranties of the Issuer herein, to the accuracy, on each such date, of the statements of the Issuer's officers made pursuant to the provisions hereof, to the performance, on or prior to each such date, by the Issuer of its obligtions hereunder, and to each of the following additional conditions precedent: (a) The Prospectus, as amended or supplemented as of any Representation Date or date of such solicitation, as the case may be, shall have been filed with the Commission in accordance with the Rules and Regulations and no stop order suspending the effectiveness of the Registration Statement or of any part thereof shall have been issued and no proceedings for that purpose shall have been instituted or, to the knowledge of the Issuer or any Agent, shall be contemplated by the Commission. (b) Neither the Registration Statement nor the Prospectus, as amended or supplemented as of any Representation Date or date of such solicitation, as the case may be, shall contain any untrue statement of fact or omit to state a fact which is required to be stated therein or is necessary to make the statements therein not misleading, which, in the opinion of Sullivan & Cromwell or counsel of the Issuer, is material. (c) There shall not have occurred any change, or any development involving a prospective change, in or affecting particularly the business or properties of the Issuer and subsidiaries, taken as a whole, which, in the judgment at such Agent, materially impairs the investment quality of the Securities. (d) At the Closing Date, the Agents shall have received an opinion, dated the Closing Date, of C. R. Lotter, Executive Vice President, Secretary and General Counsel of the Issuer, to the effect that: (i) The Issuer 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 Issuer 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 by the Issuer and has been duly qualified under the Trust Indenture Act and constitutes a valid and legally binding obligation of the Issuer enforceable in accordance with its 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; -6- 7 (iii) The Securities have been duly authorized and established in conformity with the Indenture, and, when the terms of a particular Security and of its issuance and sale have been duly authorized and established by all necessary corporate action in conformity with the Indenture, and such Security has been duly completed, executed, authenticated and issued in accordance with the Indenture and delivered against payment as contemplated by this Agreement, such Security will constitute a valid and legally binding obligation of the Issuer enforceable in accordance with its 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, it being understood that such counsel may (a) assume that at the time of the issuance, sale and delivery of each Security the authorization of such series will not have been modified or rescinded and there will not have occurred any change in law affecting the validity, legally binding character or enforceability of such Security, (b) assume that neither the issuance, sale and delivery of any Security, nor any of the terms of such Security, nor compliance by the Issuer with such terms, will violate any applicable law, any agreement or instrument then binding upon the Issuer or any restriction imposed by any court or governmental body having jurisdiction over the Issuer, and (c) state that as of the date of such opinion a judgment for money in an action based on Securities denominated in foreign currencies or currency units in a Federal or State court in the United States ordinarily would be enforced in the United States only in United States dollars, and that the date used to determine the rate of conversion of the foreign currency or currency unit in which a particular Security is denominated into United States dollars will depend upon various factors, including which court renders the judgment; (iv) The Registration Statement has become effective under the Act, the Prospectus was filed with the Commission pursuant to the subparagraph of Rule 424(b) under the Act specified in such opinion on the date specified therein, and, to the best of the knowledge of such counsel, no stop order suspending the effectiveness of the Registration Statement or of any part thereof has been issued and no proceedings for that purpose have been instituted or are pending or contemplated under the Act, and the registration statement relating to the Registered Securities, as of its effective date, the Registration Statement and the Prospectus, as of the Closing Date, and any amendment or supplement thereto, as of its date, complied 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 that such Registration Statement as of its effective date, the Registration Statement or the Prospectus, as of the Closing Date, or any such amendment or supplement, as of its 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, 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 -7- 8 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; (v) 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 and sale of the Securities by the Issuer, 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 (it being understood that such counsel may assume with respect to each particular Security that the inclusion of any alternative or additional terms in such Security that are not currently specified in the forms of Securities examined by such counsel would not require the Issuer to obtain any regulatory consent, authorization or approval or make any regulatory filing in order for the Issuer to issue, sell and deliver such Security); (vi) The execution, delivery and performance of the Indenture, this Agreement and the issuance and sale of the 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 Issuer or any of its property or any agreement or instrument to which the Issuer is a party or by which the Issuer is bound or to which any of the property of the Issuer is subject, or the charter or by-laws of the Issuer, and the Issuer has full power and authority to authorize, issue and sell the Securities as contemplated by this Agreement (it being understood that such counsel may assume with respect to each particular Security that the inclusion of any alternative or additional terms in such Security that are not currently specified in the forms of Securities examined by such counsel will not cause the issuance, sale or delivery of such Security, the terms of such Security, or the compliance by the Company with such terms, to violate any of the court orders or laws specified in this paragraph or to result in a default under or a breach of any of the agreements specified in this paragraph); and (vii) This Agreement has been duly authorized, executed and delivered by the Issuer. (e) At the Closing Date, the Agents shall have received a certificate, dated the Closing Date, of the Chairman of the Board, any Vice Chairman of the Board, the President of JCPenney Stores & Catalog or any Vice President and a principal financial or accounting officer of the Issuer in which such officers, to the best of their knowledge after reasonable investigation, shall state that (i) the representations and warranties of the Issuer in this Agreement are true and correct, (ii) the Issuer 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, (iii) no stop order suspending the effectiveness of the Registration Statement or of any part thereof has been issued and no proceedings for that purpose have been instituted or are contemplated by the Commission, and (iv) 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 Issuer and its subsidiaries, taken as -8- 9 a whole, which materially impairs the investment quality of the Securities, except as set forth in or contemplated by the Prospectus or as described in such certificate. (f) At the Closing Date, the Agents shall have received a letter, dated the Closing Date, of KPMG Peat Marwick, in form and substance satisfactory to the Agents, with respect to financial statements and certain financial Information contained in or incorporated by reference in the Registration Statement and the Prospectus. Such letter shall be in substantially the form, and contain substantially the information, as those letters heretofore furnished by KPMG Peat Marwick in connection with underwritten offerings of the Issuer. (g) The Agents shall have received from Sullivan & Cromwell, counsel for the Agents, such opinion or opinions, dated the Closing Date, with respect to the incorporation of the issuer, the validity of the Securities, the Registration Statement, the Prospectus and to such of the matters stated in paragraph 5(d) above and other related matters as they may require, and the Issuer shall have furnished to such counsel such documents as they reasonably request for the purpose of enabling them to pass upon such matters. The Issuer will furnish the Agents with such conformed copies of such opinions, certificates, letters and documents as they reasonably request. 6. Additional Covenants of the Issuer. The Issuer agrees that: ---------------------------------- ---------------------- (a) Each acceptance by the Issuer of an offer for the purchase of Securities shall be deemed to be an affirmation that its representations and warranties contained in this Agreement are true and correct at the time of such acceptance and a covenant that such representations and warranties will be true and correct at the time of delivery to the purchaser of the Securities as though made at and as of each such time, it being understood that such representations and warranties shall relate to the Registration Statement and the Prospectus as amended or supplemented at each such time. Each such acceptance by the Issuer of an offer to purchase of Securities shall be deemed to constitute an additional representation, warranty and agreement by the Issuer that, as of the settlement date for the sale of such Securities, after giving effect to the issuance of such Securities, of any other Securities to be issued on or prior to such settlement date and of any other Registered Securities to be issued and sold by the Issuer on or prior to such settlement date, the aggregate amount of Registered Securities (including any Securities) which have been issued and sold by the Issuer will not exceed the amount of Registered Securities registered pursuant to the Registration Statement. (b) Each time that the Registration Statement or the Prospectus shall be amended or supplemented (other than by a Pricing Supplement), the Issuer shall, (A) concurrently with such amendment or supplement, if such amendment or supplement shall occur at a Marketing Time, or (B) immediately at the next Marketing Time if such amendment or supplement shall not occur at a Marketing Time, furnish the Agents with a certificate, dated the date of delivery thereof, of the Chairman of the Board, any Vice Chairman of the Board, the President of JCPenney Stores and Catalog or any Vice President and a principal financial or accounting officer of the Issuer, in form satisfactory to the Agents, to the effect that the statements contained in the certificate covering the matters set forth in Section 5(e) hereof which was last furnished to the Agents are true and correct at the time of such amendment or supplement, as though made at and as of such time or, in lieu at such certificate, a -9- 10 certificate of the same tenor as the certificate referred to in Section 5(e); provided, however, that any certificate furnished under this Section ----------------- 6(b) shall relate to the Registration Statement and the Prospectus as amended or supplemented at the time of delivery of such certificate and, in the case of the matters set forth in clause (ii) of Section 5(e), to the time of delivery of such certificate. (c) At each Representation Date referred to in Section 6(b), the Issuer shall, (A) concurrently if such Representation Date shall occur at a Marketing Time, or (B) immediately at the next Marketing Time if such Representation Date shall not occur at a Marketing Time, furnish the Agents with a written opinion or opinions, dated the date of such Representation Date, of counsel for the Issuer, in form satisfactory to the Agents, to the effect set forth in Section 5(d) hereof; provided, however, that to ----------------- the extent appropriate such opinion or opinions may reconfirm matters set forth in a prior opinion delivered under Section 5(d) or this Section 6(c); provided further, however, that any opinion or opinions furnished ------------------------- under this Section 6(c) shall relate to the Registration Statement and the Prospectus as amended or supplemented at such Representation Date and shall state that the Securities sold in the relevant Applicable Period (as defined below) have been duly executed, authenticated, issued and delivered and constitute valid and legally binding obligations of the Issuer enforceable in accordance with their terms, subject only to the exceptions set forth in clause (iii) of Section 5(d) hereof as to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws of general applicability relating to or affecting creditors' rights and to general equity principles, and conform to the description thereof contained in the Prospectus as amended or supplemented at the relevant settlement date or dates for the sale of such Securities. For the purpose of this Section 6(c), "Applicable Period" shall mean with respect to any opinion delivered on a Representation Date the period commencing on the date as of which the most recent prior opinion delivered under Section 5(d) or this Section 6(c) speaks and ending on such Representation Date. (d) At each Representation Date referred to in Section 6(b) on which the Registration Statement or the Prospectus shall be amended or supplemented to include additional financial information, the Issuer shall cause KPMG Peat Marwick, (A) concurrently if such Representation Date shall occur at a Marketing Time, or (B) immediately at the next Marketing Time if such Representation Date shall not occur at a Marketing Time, to furnish the Agents with a letter, addressed jointly to the Issuer and the Agents and dated the date of such Representation Date, in form and substance satisfactory to the Agents, to the effect set forth in Section 5(f) hereof; provided, however, that to the extent appropriate such letter ----------------- may reconfirm matters set forth in a prior letter delivered pursuant to Section 5(f) or this Section 6(d); provided further, however, that any ------------------------- letter furnished under this Section 6(d) shall relate to the Registration Statement and the Prospectus as amended or supplemented at such Representation Date, with such changes as may be necessary to reflect changes in the financial statements and other information derived from the accounting records of the Issuer. (e) On each settlement date for the sale of Securities, the Issuer shall, if reasonably requested by the Agent that solicited or received the offer to purchase any Securities being delivered on such settlement date, furnish such Agent with a written opinion or opinions, dated the date of delivery thereof, of counsel for the Issuer, in form satisfactory to such Agent, to the effect set forth in clauses (i), (ii) and (iii) of Section 5(d) hereof; provided, however, that any opinion furnished under ----------------- this Section 6(e) shall relate to the Prospectus as amended or supplemented at such -10- 11 settlement date and shall state that the Securities being sold by the Issuer on such settlement date, when delivered against payment therefor as contemplated by this Agreement, will have been duly executed, authenticated, issued and delivered and will constitute valid and legally binding obligations of the Issuer enforceable in accordance with their terms, subject only to the exceptions set forth in clause (iii) of Section 5(d) hereof as to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws of general applicability relating to or affecting creditors' rights and to general equity principles, and will conform to the description thereof contained in the Prospectus as amended or supplemented at such settlement date. (f) The Issuer agrees that any obligation of a person who has agreed to purchase Securities to make payment for and take delivery of such Securities shall be subject to (i) the accuracy, in all material respects, on the related settlement date fixed pursuant to the Procedures, of the Issuer's representation and warranty deemed to be made to the Agents pursuant to the last sentence of subsection (a) of this Section 6, and (ii) the satisfaction, on such settlement date, of each of the conditions set forth in Sections 5(a), (b) and (c), it being understood that under no circumstance shall any Agent have any duty or obligation to exercise the judgment permitted under Section 5(b) or (c) on behalf of any such person. 7. Indemnification and Contribution. -------------------------------- (a) The Issuer will indemnify and hold harmless each Agent against any losses, claims, damages or liabilities, joint or several, to which such Agent 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) 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, and will reimburse each Agent for any legal or other expenses reasonably incurred by such Agent in connection with investigating or defending any such loss, claim, damage, liability or action as such expenses are incurred; provided, however; ----------------- that the Issuer will not be liable to such Agent 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 Issuer by such Agent for use therein, or (ii) in that part of the Registration Statement constituting its Statement of Eligibility and Qualification under the Trust Indenture Act (Form T-1) of the Trustee. (b) Each Agent will indemnify and hold harmless the Issuer against any losses, claims, damages or liabilities to which the Issuer 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 the alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein 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 -11- 12 made in reliance upon and in conformity with written information furnished to the Issuer by such Agent for use therein, and will reimburse any legal or other expenses reasonably incurred by the Issuer in connection with investigating or defending any such loss, claim, damage, liability or action. (c) Promptly after receipt by an indemnified party under this Section 7 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 subsection (a) or (b) above, 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 subsection (a) or (b) above. 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 7 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 the indemnification provided for in this Section 7 is unavailable 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 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 considerations appropriate under the circumstances. The Issuer and the Agents 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 Agents were treated as one entity for such purpose). Notwithstanding the provisions of this subsection (d), no Agent shall be required to contribute any amount in excess of the amount by which the total price at which the Securities which are the subject of the action and which were distributed to the public through it pursuant to this Agreement or upon resale of Securities purchased by it from the Issuer exceeds the amount of any damages which such Agent has otherwise been required to pay in respect of the same claim or any substantially similar claim. The obligations of each Agent in this subsection (d) to contribute are several, in the same proportion which the amount of the Securities which are the subject of the action and which were distributed to the the public through such Agent pursuant to this Agreement bears to the total amount of such Securities distributed to the public through all of the Agents pursuant to this Agreement, and not joint. (e) The obligations of the Issuer under this Section 7 shall be in addition to any liability which the Issuer may otherwise have and shall extend, upon the same terms and conditions, to each person, if any, who controls each Agent within the meaning of the Act; and -12- 13 the obligations of each Agent under this Section 7 shall be in addition to any liability which each Agent may otherwise have and shall extend, upon the same terms and conditions, to each director of the Issuer, to each officer of the Issuer who has signed the Registration Statement and to each person, if any, who controls the Issuer within the meaning of the Act. 8. Status of Each Agent. In soliciting offers to purchase the Securities -------------------- from the Issuer pursuant to this Agreement and in assuming its other obligations hereunder (other than offers to purchase pursuant to Section 11), each Agent is acting individually and not jointly. Each Agent will make reasonable best efforts to assist the Issuer in obtaining performance by each purchaser whose offer to purchase Securities from the Issuer has been solicited by such Agent and accepted by the Issuer. If the Issuer shall default on its obligations to deliver Securities to a purchaser whose offer it has accepted, the Issuer (i) shall hold the Agents harmless against any loss, claim or damage arising from or as a result of such default by the Issuer, and (ii) in particular, shall pay to the Agents any commission to which they would be entitled in connection with such sale. 9. Survival of Certain Representations and Obligations. The respective --------------------------------------------------- indemnities, agreements, representations, warranties and other statements of the Issuer or its officers and of the agents 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 Agent, the Issuer or any of their respective representatives, officers or directors or any controlling person and will survive delivery of any payment for the Securities. If this Agreement is terminated pursuant to Section 10 or for any other reason, the Issuer shall remain responsible for the expenses to be paid or reimbursed by it pursuant to Section 4(h) and the obligations of the Issuer under Sections 4(d) and 4(g) and the respective obligations of the Issuer and the Agents pursuant to Section 7 shall remain in effect. In addition, if any such termination shall occur either (i) at a time when any Agent shall own any of the Securities with the intention of reselling them or (ii) after the Issuer has accepted an offer to purchase Securities and prior to the related settlement, the obigations of the Issuer under the second sentence of Section 4(b), under Section 4(a), 4(c), 4(e) and 4(f) and, in the case of a termination occurring as described in (ii) above, under Sections 3(c), 6(a), 6(e) and 6(f) and under the last sentence of Section 8, shall also remain in effect. 10. Termination. This Agreement may be terminated for any reason at any ----------- time by the Issuer as to any Agent or, in the case of an Agent by such Agent insofar as this Agreement relates to such Agent, upon the giving of one day's written notice of such termination to the other parties hereto. Any settlement with respect to Securities placed by an Agent occurring after termination of this Agreement shall be made in accordance with the Procedures and each Agent agrees, if requested by the Issuer, to take the steps therein provided to be taken by such Agent in connection with such settlement. 11. Purchases as Principal. From time to time, any Agent may agree with ---------------------- the Issuer to purchase Securities from the Issuer as principal and (unless the Issuer and such Agent may otherwise agree) such purchase shall be made in accordance with the terms of a separate agreement ("Purchase Agreement") in the form attached hereto as Exhibit C. A Purchase Agreement may also specify certain provisions relating to the reoffering of such Notes by such Agent. Whether or not the Issuer and an Agent execute and deliver an agreement in connection with any such sale and purchase, such sale and purchase shall, unless the Issuer and such Agent otherwise expressly agree in writing, be made pursuant to a Purchase Agreement in the form attached hereto as Exhibit C with such additional provisions relating to the terms of the Securities and of the purchase and sale (and, if applicable, resale) -13- 14 thereof as shall be set forth in the Purchase Information delivered pursuant to the Procedures, and such Agent's compensation shall, unless otherwise agreed between the Issuer and such Agent, be the amount thereof set forth in the Pricing Supplement. 12. Sales of Securities Denominated in a Currency other than U.S. Dollars --------------------------------------------------------------------- or of Indexed Securities. If at any time the Issuer with any of the Agents - ------------------------ shall determine to issue and sell Securities denominated in a currency other than U.S. dollars, which other currency may include a currency unit, or with respect to which an index is used to determine the amounts of payments of principal and any premium and interest, the Issuer and any such Agent may execute and deliver a supplement to this Agreement for the purpose of making any appropriate additions to and modifications of the terms of this Agreement (and the Procedures) applicable to such Securities and the offer and sale thereof. The Agents are authorized to solicit offers to purchase Securities with respect to which an index is used to determine the amounts of payments of principal and any premium and interest, and the Issuer shall agree to any sales of such Securities (whether offered on an agency or principal basis), only in a minimum aggregate amount of $2,500,000. 13. Notices. Except as otherwise provided herein, all notices and other ------- communications hereunder shall be in writing and shall be deemed to have been duly given if mailed or transmitted by any standard form of telecommunication. Notices to The First Boston Corporation shall be directed to it at Park Avenue Plaza, New York, New York 10055, Attention: Mr. Joseph Fashano, to Merrill Lynch & Co. shall be directed to it at Merrill Lynch, Pierce, Fenner & Smith Incorporated, Merrill Lynch World Headquarters, North Tower, 23rd Floor, World Financial Center, New York, New York 10281-1322, Attention: MTN Product Management, J. Patrick Hannon, phone number (212) 449-7582, fax number (212) 449-2234; to Morgan Stanley & Co. Incorporated shall be directed to it at 1221 Avenue of the Americas, New York, New York, 10020, Attention: Managing Director Debt Syndicate, phone number (212) 246-4289, fax number (212) 764-7490, with a copy to 1251 Avenue of the Americas, Attention: Manager, Credit Department, phone number (212) 703-4000, fax number (212) 703-4574; and to J.P. Morgan Securities Inc. shall be directed to it at 60 Wall Street, New York, New York 10260, Attention: , phone number , fax number ; and notices to the Issuer shall be directed to it if by mail, to P.O. Box 10001, Dallas, Texas 75265-9000, and if sent otherwise, to 6501 Legacy Drive, Plano, Texas 75024-3698, Attention: C.R. Lotter, Secretary; or in the case of any party hereto, to such other address or person as such party shall specify to each other party by a notice given in accordance with the provisions of this Section 13. Any such notice shall take effect at the time of receipt. 14. Successors. This Agreement will inure to the benefit of and be binding ---------- upon the parties hereto, their respective successors, the officers and directors and controlling persons referred to in Section 7 and, to the extent provided in Section 6(f), any person who has agreed to purchase Securities from the Issuer, and no other person will have any right or obligation hereunder. 15. Governing Law; Counterparts. This Agreement shall be governed by and ------------- ------------ construed in accordance with the laws of the State of New York. This Agreement may be -14- 15 executed in any number of counterparts, each of which shall be deemed to be an original, but all such executed counterparts shall together constitute one and the same Agreement. If the foregoing correctly sets forth our agreement, please indicate your acceptance hereof in the space provided for that purpose below. Very truly yours, J.C. PENNEY COMPANY, INC. By: --------------------------------------- Name: Title: CONFIRMED AND ACCEPTED, as of the date first above written: CS FIRST BOSTON CORPORATION By: --------------------------------- Name: Title: MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED By: --------------------------------- Name: Title: MORGAN STANLEY & CO. INCORPORATED By: --------------------------------- Name: Title: J.P. MORGAN SECURITIES INC. By: --------------------------------- Name: Title: -15- 16 EXHIBIT A The Issuer agrees to pay each Agent a commission equal to the following percentage of the principal amount of Securities sold to purchasers solicited by such Agent: Commission Rate (as a percentage of Term principal amount) ---- ------------------ 9 months to less than 12 months .125% 12 months to less than 18 months .150 18 months to less than 24 months .200 24 months to less than 30 months .250 30 months to less than 3 years .300 3 years to less than 4 years .350 4 years to less than 5 years .450 5 years to less than 7 years .500 7 years to less than 10 years .550 10 years to less than 20 years .600 20 years to 30 years .750 Greater than 30 years To be negotiated at time of trade 17 EXHIBIT B ADMINISTRATIVE PROCEDURES ------------------------- The Medium-Term Notes - Series A due from nine months to 30 years from their issue date ("Notes"), are to be offered on a continuing basis by J. C. Penney Company, Inc. ("Issuer"). CS First Boston, as agents (individually, an "Agent" and collectively, the "Agents"), have each agreed to use reasonable best efforts to solicit offers to purchase the Notes, but the Issuer reserves the right to sell the Notes on its own behalf directly or through affiliates and, upon notice to each Agent, to enter into agreements substantially identical to the Agency Agreement with other agents. The Agents will not be obligated to purchase Notes for their own account. The Notes are being sold pursuant to an Agency Agreement, dated September 16, 1991 ("Agency Agreement"), among the Issuer and the Agents and will be issued pursuant to an Indenture, dated as of April 1, 1994 as supplemented by a First Supplemental Indenture, dated as of March 15, 1983, a Second (said Indenture, and all Indentures supplemental thereto, being hereinafter called the "Indenture"), between the Issuer and Bank of America National Trust and Savings Association, as trustee ("Trustee"). In connection with certain procedures to be followed with respect to the settlement of sales of Notes as set forth in this Administrative Procedures, the Issuer has appointed Chemical Bank as its Issuing Agent. With respect to the Notes, Chemical Bank will also act as Paying Agent and Authenticating Agent under the Indenture and, as may be required, Calculation Agent and Exchange Rate Agent for the Issuer. All references herein to Chemical Bank, regardless of the capacity in which it is acting, will be to the "Paying Agent". The Notes will rank equally and ratably with all other unsecured and unsubordinated indebtedness of the Issuer and will have been registered under the Securities Act of 1933 ("Act"). For a description of the terms of the Notes and the offering and sale thereof, see the sections entitled "Description of Notes", "Special Provisions Relating to Foreign Currency Notes", "United States Taxation", "Plan of Distribution of Notes" and "Glossary" in the Prospectus Supplement relating to the Notes, dated , 1994, attached hereto and hereinafter referred to as the "Prospectus Supplement", and the sections entitled "Description of Securities" and "Plan of Distribution" in the Prospectus relating to the Notes, dated , 1994, attached hereto and hereinafter referred to as the "Prospectus". Defined terms used herein but not defined herein shall have the meanings assigned to them in the Agency Agreement, the Prospectus or the Prospectus Supplement. The Notes will be represented either by Global Notes delivered to The Depository Trust Company ("DTC") or its nominee and recorded in the book-entry system maintained by DTC or such nominee ("Book-Entry Notes") (it being understood that only each Global Note and not any such Book-Entry Note represented thereby constitutes a Security under the Indenture) or by certificates delivered to the Holders thereof or Persons designated by such Holders ("Certified Notes"). Notes for which interest is calculated on the basis of a fixed interest rate are referred to herein as "Fixed Rate Notes". Notes for which interest is calculated at a rate or rates determined by reference to an interest rate formula are referred to herein as "Floating Rate Notes". Notes which are issued at a price lower than the principal amount thereof and which provide that upon redemption or acceleration of the maturity thereof an amount less than the principal thereof shall become due and payable are referred to herein as "Original Issue Discount Notes". For special provisions relating to Original Issue Discount Notes and 18 other Notes issued at a discount for tax purposes, see the section entitled "United States Taxation -- Original Issue Discount" in the Prospectus Supplement. Unless otherwise indicated in the applicable Pricing Supplement, the Notes will be denominated in U.S. dollars and payments of principal of and any premium and interest on the Notes will be amde in U.S. dollars in the manner indicated in the Prospectus and the Prospectus Supplement. Notes denominated in one or more currencies or currency units other than U.S. dollars are referred to herein as "Foreign Currency Notes". For special provisions relating to Foreign Currency Notes, see the sections entitled "Special Provisions Relating to Foreign Currency Notes" in the Prospectus Supplement. Specific information concerning the foreign currency or currency unit in which a particular Foreign Currency Note is denominated, including historical exchange rates and a description of the currency and any exchange controls, shall be contained in a Pricing Supplement to the Prospectus Supplement reflecting the terms of such Note. Notes which provide that amounts payable by the Issuer in respect of principal of or any premium or interest on the Notes shall be determined by reference to the value, rate or price of one or more specified indices, are referred to herein as "Indexed Notes". Specific information pertaining to the method for determining the principal amounts payable, a historical comparison of the value, rate or price of the specified index, indices and the face amount of the Indexed Note and certain additional tax considerations will be described in the applicable Pricing Supplement. Administrative procedures and specific terms of the offering are explained below. Part I indicates procedures applicable to all Notes; Part II indicates specific procedures for Certificated Notes; and Part III indicates specific procedures for Book-Entry Notes. Administrative and record-keeping responsibilities will be handled by the Issuer. The Issuer will advise the Agents in writing of those persons handling administrative responsibilities with whom the Agents are to communicate regarding offers to purchase Notes and the details of their delivery. Except as otherwise specified, all time references herein shall be to New York City time on the date of the event, act or notice referred to in the particular provision. PART I: PROCEDURES APPLICABLE TO ALL NOTES ---------------------------------- Issue Date - ---------- Each Note will be dated the date of its authentication. Each Note will also bear an original issue date ("Issuer Date") which, with respect to any such Note (or portion thereof), shall mean the date of its original issuance and shall be specified therein. The Issue Date will remain the same for all Notes subsequently issued upon transfer, exchange or substitution of a Note, regardless of their dates of authentication. Price to Public - --------------- Except as otherwise specified in a Pricing Supplement, each Note will be issued at 100% of principal amount. 2 19 Maturities; Minimum Purchase - ---------------------------- Each Note will mature on a date, selected by the purchaser and agreed to by the Issuer, which will be at least nine months but not more than 30 years after its Issue Date. The minimum aggregate amount of Notes which may be offered to any purchaser will be $100,000 with integral multiples of $1,000 in excess thereof. Interest Payments - ----------------- Interest on each interest-bearing Note will be calculated and paid in the manner described in such Note, in the Prospectus Supplement and in the applicable Pricing Supplement. Unless otherwise set forth therein, interest on Fixed Rate Notes (including interest for partial periods) will be calculated on the basis of a 360-day year of twelve 30-day months and will not accrue on the 31st day of any month. Interest on Floating Rate Notes, except as otherwise set forth therein, will be calculated on the basis of actual days elapsed and a year of 360 days, except that in the case of a Floating Rate Note for which the Base Rate is the Treasury Rate, interest will be calculated on the basis of the actual number of days in the year. On the fifth Business Day immediately preceding each Interest Payment Date, the Paying Agent will furnish the Issuer with the total amount of interst payments (whether in U.S. dollars or other currencies or currency units) to be made on such Interest Payment Date. The Paying Agent will provide monthly, to the Issuer, a list of the principal and any premium and interest to be paid on Notes maturing in the next succeeding month. Except with respect to Book-Entry Notes, the Paying Agent will assume responsibility for withholding taxes on interest paid as required by law. Redemption/Repayment - -------------------- If indicated in the applicable Pricing Supplement, the Notes of a particular tenor will be subject to redemption in whole or in part (subject to applicable minimum denominations), at the option of the Issuer on and after an initial redemption date as set forth in the applicable Pricing Supplement and in the applicable Note. The redemption price will be set forth in the applicable Pricing Supplement and in the applicable Note. If indicated in the applicated Pricing Supplement, the Notes of a particular tenor will be subject to repayment at the option of the Holders thereof in accordance with the terms of the Notes on a repayment date as set forth in the applicable Pricing Supplement and in the applicable Note. The repayment date or dates and repayment price will be set forth in the applicable Pricing Supplement and in the applicable Note. Procedures for Establishing the Terms of the Notes - -------------------------------------------------- The Issuer and the Agents will discuss from time to time the rates to be borne by the Notes that may be sold as a result of the solicitation of offers by the Agents. Once any Agent has recorded any reasonable indication of interest in Notes upon certain terms, and 3 20 communicated with the Issuer, if the Issuer plans to accept an offer to purchase Notes upon such terms, it will prepare a Pricing Supplement to the Prospectus, as then amended or supplemented, reflecting the terms of such Notes and will arrange to have copies of the Pricing Supplement filed with, or transmitted by a means reasonably calculated to result in filing with, the Securities and Exchange Commission ("Commission") pursuant to Rule 424 under the Act. The Issuer will supply at least 10 copies of the Prospectus, as then amended or supplemented, and bearing such Pricing Supplement, to the Agent who presented the offer ("Presenting Agent"). No settlements with respect to Notes upon such terms may occur prior to such transmitting or filing and the Agents will not, prior to such transmitting or filing, mail confirmations to customers who have offered to purchase Notes upon such terms. After such transmitting or filing, sales, mailing of confirmations and settlements may occur with respect to Notes upon such terms, subject to the provisions of "Delivery of Prospectus" below. If the Issuer decides to post rates and a decision has been reached to change interest rates, the Issuer will promptly notify each Agent. Each Agent will immediately suspend solicitation of purchases. At that time, the Agents will recommend and the Issuer may establish rates to be so "posted". Following establishment of posted rates and prior to the transmitting or filing described in the preceding paragraph, the Agents may only record indications of interest in purchasing Notes at the posted rates. Once any Agent has recorded any indication of interest in Notes at the posted rates and communicated with the Issuer, if the Issuer plans to accept an offer at the posted rate, it will prepare a Pricing Supplement reflecting such posted rates and will arrange to have copies of the Pricing Supplement, filed with, or transmitted by means reasonably calculated to result in filing with, the Commission pursuant to Rule 424 and will supply at least 10 copies of the Prospectus, as then amended or supplemented, and bearing such Pricing Supplement, to the Presenting Agent. No settlements at the posted rates may occur prior to such transmitting or filing and the Agents will not, prior to such transmitting or filing, mail confirmations to customers who have offered to purchase Notes at the posted rates. After such transmitting or filing, sales, mailing of confirmations and settlements may resume, subject to the provisions of "Delivery of Prospectus" below. Outdated Pricing Supplements, and copies of the Prospectus to which they are attached (other than those retained for files), will be destroyed. Suspension of Solicitation: Amendment or Supplement - ---------------------------------------------------- As provided in the Agency Agreement, the Issuer may instruct the Agents to suspend solicitation of offers to purchase at any time, and upon receipt of such instruction from the Issuer, the Agents will each immediately suspend solicitation until such time as the issuer has advised them that solicitation of offers to purchase may be resumed. If the Agents receive the notice from the Issuer contemplated by Section 3(b) or 4(b) of the Agency Agreement, they will immediately suspend solicitation and will only resume solicitation as provided in the Agency Agreement. If the Issuer is required, pursuant to Section 4(b) of the Agency Agreement, to prepare an amendment or supplement, it will promptly furnish each Agent with the proposed amendment or supplement; if the Issuer decides to amend or supplement the Registration Statement or the Prospectus relating to the Notes, it will promptly advise each Agent and will furnish each Agent with the proposed amendment or supplement in accordance with the terms of the Agency Agreement. The 4 21 Issuer will file such amendment or supplement with the Commission, provide the Agents with copies of any such amendment or supplement, confirm to the Agents that such amendment or supplement has been filed with the Commission and advise the Agents that solicitation may be resumed. Any such suspension shall not affect the Issuer's obligations under the Agency Agreement; and in the event that at the time the Issuer suspends solicitation of offers to purchase there shall be any offers already accepted by the Issuer outstanding for settlement, the Issuer will have the sole responsibility for fulfilling such obligations. The Issuer will in addition promptly advise the Presenting Agent and the Paying Agent if such offers are not to be settled and if copies of the Prospectus as in effect at the time of the suspension may not be delivered in connection with the settlement of such offers. Acceptance of Offers - -------------------- Each Agent will promptly advise the Issuer, orally or in writing, of each reasonable offer to purchase Notes received by it. Each Agent may, in its discretion reasonably exercised, without notice to the Issuer, reject any offer received by it, in whole or in part. The Issuer will have the sole right to accept offers to purchase Notes and may in its discretion reject any such offer, in whole or in part. If the Issuer accepts or rejects an offer, in whole or in part, the Issuer will promptly so notify the Presenting Agent. Confirmation - ------------ For each accepted offer, the Presenting Agent will issue a confirmation to the purchaser, with a separate confirmation to the Issuer, setting forth the Purchase Information (as defined under II below with respect to Certificated Notes and III below with respect to Book-Entry Notes) and delivery and payment instructions; provided, however, that, in the case of the confirmation issued ----------------- to the purchaser, no confirmation shall be delivered to the purchaser prior to the delivery of the Prospectus referred to below. Determination of Settlement Date - -------------------------------- The receipt of immediately available funds by the Issuer in payment for a Note and (i) in the case of Certificated Notes, the authentication and issuance of such Note and (ii) in the case of Book-Entry Notes, entry by the Presenting Agent of a DTC Same-Day Funds Settlement System ("SDFS") deliver order through DTC's Participant Terminal System to credit such Note to the account of a Participant purchasing, or acting for the purchase of, such Note, shall, with respect to such Note, constitute "settlement". All offers accepted by the Issuer will be settled on the fifth Business Day next succeeding the date of acceptance unless otherwise agreed by the purchaser and the Issuer. The settlement date shall be specified upon receipt of an offer to purchase. No later than 11:00 a.m., on the settlement date, the Issuer will instruct the Paying Agent to authenticate and deliver the Notes no later than 2:15 p.m. on the settlement date. 5 22 Delivery of Prospectus - ---------------------- A copy of the Prospectus as most recently amended or supplemented on the date of delivery thereof (except as provided below) must be delivered by the Presenting Agent to a purchaser prior to or together with the earlier of the delivery of (i) the written confirmation provided for above, and (ii) any Note purchased by such purchaser. (For this purpose, entry of an SDFS deliver order through DTC's Participant Terminal System to credit a Note to the account of a Participant purchasing, or acting for the purchaser of, a Note shall be deemed to constitute delivery of such Note.) Subject to the foregoing, it is anticipated that delivery of the Prospectus, confirmation and Notes to the purchaser will be made simultaneously at settlement. The Issuer shall ensure that the Presenting Agent receives copies of the Prospectus and each amendment or supplement thereto (including appropriate Pricing Supplements) in such quantities and within such time limits as will enable the Presenting Agent to deliver such confirmation or Note to a purchaser as contemplated by these procedures and in compliance with the first sentence of this paragraph. If, since the date of acceptance of a purchaser's offer, the Prospectus shall have been supplemented solely to reflect any sale of Notes on terms different from those agreed to between the Issuer and such purchaser or a change in posted rates not applicable to such purchaser, such purchaser shall not receive the Prospectus as supplemented by such new supplement, but shall receive the Prospectus as supplemented to reflect the terms of the Notes being purchased by such purchaser and otherwise as most recently amended or supplemented on the date of delivery of the Prospectus. Authenticity of Signatures - -------------------------- The Issuer will caused the Paying Agent to furnish the Agents from time to time with the specimen signatures of each of the Paying Agent's officers, employees or agents who have been authorized by the Paying Agent to authenticate Notes, but no Agent will have any obligation or liability to the Issuer or the Paying Agent in respect of the authenticity of the signature of any officer, employee or agent of the Issuer or the Paying Agent on any Certificated Note or Global Note (as defined in Part III), unless the Agent knows or has reason to believe that such signature may not be authentic. Business Day - ------------ "Business Day" means any day which is not a Saturday or Sunday and is not a day on which banking institutions are generally authorized or obligated by law or executive order to close in The City of New York and, with respect to LIBOR notes, a London Banking Day. "London Market Day" means any day on which dealings in deposits in U.S. Dollars are transacted in the London interbank market. Paying Agent Not to Risk Funds - ------------------------------ Nothing herein shall be deemed to require the Paying Agent to risk or expend its own funds in connection with any payment made to the Issuer, the Agents, DTC or any Noteholder, it being understood by all parties that payments made by the Paying Agent to the 6 23 Issuer, the Agents, DTC or any Holder of a Note shall be made only to the extent that funds are provided to the Paying Agent for such purpose. PART II: ADMINISTRATIVE PROCEDURES FOR CERTIFICATED NOTES ------------------------------------------------ Form and Denominations - ---------------------- The Certificated Notes shall be issued only in fully registered form in denominations of $100,000 with integral multiples of $1,000 in excess thereof, or, in the case of Foreign Currency Notes, in such minimum denomination, not less than the equivalent of $100,000 with integral multiples of $1,000 in excess thereof, and such greater denomination or denominations in excess thereof, as shall be set forth in the applicable Pricing Supplement. However, Notes with respect to which an index is used to determine the amounts of payments of principal and any premium and interest shall be issued only in a minimum aggregate amount of $2,500,000. Transfers and Exchanges - ----------------------- A Certificated Note may be presented for transfer or exchange at the office of Chemical Bank, Room 234 North Building, Corporate Trust Security Window, 55 Water Street, New York, New York 10041, or by mail to Chemical Bank Debt Operations Department, JAF Building, P.O. Box 2862, GPO Station, New York 10016-2862 or such other place or transfer agent as the Issuer may designate ("Transfer Agent"). Certificated Notes will be exchangeable for other Certificated Notes of any authorized denominations and of like tenor and in a like aggregate principal amount, upon surrender of the Certificated Notes to be exchanged at the corporate trust office of the Transfer Agent. Certificated Notes will not be exchangeable for Book-Entry Notes. Payment at Maturity - ------------------- Upon presentation of each Certificated Note at Maturity, the Paying Agent will pay the principal amount thereof, together with any premium and accrued interest due at Maturity. Such payment will be made in immediately available funds, provided that the Certificated Note is presented in time for the Paying -------- Agent to make payment in such funds in accordance with its normal procedures. The Issuer will provide the Paying Agent with funds available for immediate use for such purpose. Certificated Notes presented at Maturity will be canceled by the Paying Agent as provided in the Indenture. For special provisions relating to Foreign Currency Notes, see the section entitled "Special Provisions Relating to Foreign Currency Notes" in the Prospectus Supplement. Details for Settlement - ---------------------- For each offer for Certificated Notes accepted by the Issuer, the Presenting Agent shall communicate to the Issuer no later than 11:00 a.m. on the first Business Day after the sale date (or on the sale date if such sale is to be settled within one business day) by telephone, telex, facsimile transmission or other acceptable means, the following information ("Purchase Information"): 7 24 1. Exact name in which the Note or Notes are to be registered ("Registered Owner"). 2. Exact address of Registered Owner and, if different, the address for delivery, notices and payment of principal and any premium and interest. 3. Taxpayer identification number of Registered Owner. 4. Principal amount of each Note in authorized denominations to be delivered to registered owner. 5. In the case of Fixed Rate Notes, the interest rate of each Note; in the case of Floating Rate Notes, the interest rate formula, the Spread or Spread Multiplier (if any), the maximum or minimum interest rate limitation (if any), the Calculation Agent, the Calculation Dates, the Initial Interest Rate, the Interest Payment Dates, the Regular Record Dates, the Index Maturity, the Interest Determination Dates and the Interest Reset Dates, in each case, to the extent applicable with respect to each note. 6. Stated Maturity of each Note. 7. Redemption and/or repayment provisions, if any, of each Note. 8. Trade date of each Note. 9. Settlement date (Issue Date) of each Note. 10. Presenting Agent's commission (to be paid in the form of a discount from the proceeds remitted to the Issuer upon settlement). 11. Price. 12. Net Proceeds to Issuer. 13. Currency or currency unit in which each Note is to be denominated and exchange rate applicable to purchase Foreign Currency Notes to be paid for in U.S. dollars. 14. Any additional applicable terms of each Note. The Issue Date of, and the settlement date for, Certificated Notes will be the same. Before accepting any offer to purchase Certificated Notes to be settled in less than 8 25 three Business Days, the Issuer shall verify that the Paying Agent will have adequate time to prepare and authenticate the Notes. If the initial interest rate for a Floating Rate Certificated Note has not been determined at the time that the foregoing procedure is completed, the procedures described in the following two paragraphs shall be completed as soon as such rate has been determined but no later than 12:00 noon, on the Business Day before the settlement date. Immediately after receiving the details for each offer for Certificated Notes from the Presenting Agent and in any event no later than 12:00 noon on the first Business Day after the sale date (or on the sale date if such sale is to be settled within one Business Day), the Issuer will, if accepting the offer, after recording the details and any necessary calculations, communicate the Purchase Information by telephone, telex, facsimile transmission or other acceptable means, to the Paying Agent. Each such instruction given by the Issuer to the Paying Agent shall constitute a continuing representation and warranty by the Issuer to the Paying Agent and the Agents that (i) the issuance and delivery of such Notes have been duly and validly authorized by the Issuer and (ii) such Notes, when completed, authenticated and delivered, shall constitute the valid and legally binding obligation of the Issuer. The Paying Agent will assign to and enter on each Note a transaction number. At such time as the Issuer may determine, but in any event sufficiently in advance of an issuance to allow the Paying Agent time to process the Notes, the Issuer will deliver to the Paying Agent a pre-printed four-ply packet (or such other packet as may be agreed upon between the parties) for such Certificated Notes, which packet will contain the following documents in forms that have been approved by the Issuer, the Agents and the Paying Agent: 1. Certificated Note with customer confirmation. 2. Stub One - For the Paying Agent. 3. Stub Two - For the Presenting Agent. 4. Stub Three - For the Issuer. The Paying Agent will complete such Certificated Note and will authenticate such Certificated Note and deliver it (with the confirmation) and the Stubs One and Two to such Presenting Agent, and such Agent will acknowledge receipt of the Note by stamping or otherwise marking Stub One and returning it to the Paying Agent. The Paying Agent will send Stub Three to the Issuer by first-class mail or such other means as may be agreed upon by these parties. Settlement; Note Deliveries and Cash Payment - -------------------------------------------- At such time as the Issuer may determine, but in any event sufficiently in advance of an issuance to allow the Paying Agent time to process the Notes, the Issuer will deliver to the Paying Agent a supply of duly executed Certificated Notes with pre-printed control numbers adequate to implement the program. Upon the receipt of appropriate documentation and instructions from the Issuer in accordance with the applicable Officers' 9 26 Certificate and verification thereof, the Paying Agent will cause the Certificated Notes to be completed and authenticated and hold the Certified Notes for delivery against payment. The Paying Agent will deliver the Certified Notes, in accordance with instructions from the Issuer, to the Presenting Agent for the benefit of the purchaser only against receipt. The Presenting Agent will acknowledge receipt of the Notes through a broker's receipt. Delivery of the Certified Notes by the Paying Agent will be made only against such acknowledgement of receipt from the Presenting Agent. Upon the Presenting Agent's determination that such Notes have been authenticated, delivered and completed as aforesaid, the Presenting Agent will make, or cause to be made, payment to the Issuer at such account of the Issuer as the Issuer may specify in writing, in immediately available funds, of an amount equal to the principal amount of such Notes, less the applicable commission. If the Presenting Agent in any instance advances its own funds, the Issuer shall not use any of the proceeds of such sale to acquire securities. The Presenting Agent will deliver the Notes (with the written confirmation provided for above) to the purchaser thereof against payment therefor by such purchaser in immediately available funds. Delivery of any confirmation or Note will be made in compliance with "Delivery of Prospectus" in Part I above. Fails - ----- In the event that a purchaser shall fail to accept delivery of and make payment for a Certificated Note on the settlement date, the Presenting Agent will notify the Paying Agent and the Issuer, by telephone, confirmed in writing. If such Certificated Note has been delivered to the Presenting Agent, the Presenting Agent shall return such Note to the Paying Agent. If funds have been advanced for the purchase of such Note, the Paying Agent will, immediately upon receipt of such Note, debit the account of the Issuer for the amount so advanced and the Paying Agent shall refund to the Presenting Agent the payment previously made by the Presenting Agent in immediately available funds. Such payments will be made on the settlement date, if possible, and in any event not later than the Business Day following the settlement date. If the fail shall have occurred for any reason other than the Presenting Agent's gross negligence or willful misconduct, including but not limited to the failure of the Presenting Agent to provide the Purchase Information to the Issuer or to provide a confirmation to the purchaser, the Issuer will reimburse the Presenting Agent on an equitable basis for its loss of the use of funds during the period when the funds were credited to the account of the Issuer, or for any other cost or expense; and in no event shall the Issuer be obligated to pay any Commission, as contemplated by the Agency Agreement, with respect to any fail. Immediately upon receipt of the Certificated Note in respect of which the fail occurred, the Paying Agent will make appropriate entries in its records to reflect the fact that the Note was never issued and the Note will be canceled and disposed of as provided in the Indenture. 10 27 PART III: ADMINISTRATIVE PROCEDURES FOR BOOK-ENTRY NOTES ---------------------------------------------- In connection with the qualification of the Book-Entry Notes for eligibility in the book-entry system maintained by DTC, the Paying Agent will perform the custodial, document control and administrative functions described below, in accordance with its obligations under a Letter of Representations ("Letter") from the Issuer and the Paying Agent to DTC dated as of , 1994, and a Medium-Term Note Certificate Agreement between the Paying Agent and DTC dated as of , 1994, and its obligations as a participant in DTC, including "SDFS". Form, Denominations and Registration - ------------------------------------ All Book-Entry Notes of the same tenor and having the same Issue Date, will be represented initially by a single note (a "Global Note") in fully registered form without coupons. Book-Entry Notes will represent Notes denominated in U.S. dollars. Global Notes will be issued in denominations of $100,000 with integral multiples of $1,000 in excess thereof. However, Notes with respect to which an index is used to determine the amounts of payments of principal and any premium and interest shall be issued only in a minimum aggregate amount of $2,500,000. Each Global Note will be registered in the name of Cede & Co., as nominee for DTC, on the Security Register maintained under the Indenture. The beneficial owner of a Book-Entry Note (or one or more indirect participants in DTC designated by such owner) will designate one or more participants in DTC (with respect to such Note, the "Participants") to act as agent or agents for such owner in connection with the book-entry system maintained by DTC, and DTC will record in book-entry form, in accordance with instructions provided by such Participants, a credit balance with respect to such Book-Entry Note in the account of such Participants. The ownership interest of such beneficial owner in such Book-Entry Note will be recorded through the records of such Participants or through the separate records of such Participants and one or more indirect participants in DTC. CUSIP Numbers - ------------- The Issuer has arranged with the CUSIP Service Bureau of Standard & Poor's Corporation ("CUSIP Service Bureau") for the reservation of a series of CUSIP numbers (including tranche numbers), such series consisting of approximately 900 CUSIP numbers and relating to Global Notes representing Book-Entry Notes. The Issuer has obtained from the CUSIP Service Bureau a written list of such reserved CUSIP numbers and has delivered it to DTC and the Paying Agent. The Paying Agent will assign CUSIP numbers serially to Global Notes as described below under "Details for Settlement". DTC will notify the CUSIP Service Bureau periodically of the CUSIP numbers that the Paying Agent has assigned to Global Notes. The Paying Agent will notify the Issuer at the time when fewer than 100 of the reserved CUSIP numbers remain unassigned to the Global Notes; and the Issuer will reserve an additional 900 CUSIP numbers for assignment to Global Notes representing Book-Entry Notes. Upon obtaining such additional CUSIP numbers, the Issuer shall deliver a list of such additional CUSIP numbers to DTC. 11 28 Transfers and Exchanges for the Purpose of Consolidation - -------------------------------------------------------- Transfers of a Book-Entry Note will be accomplished by book entries made by DTC and, in turn, by Participants (and, in certain cases, one or more indirect participants in DTC) acting on behalf of beneficial transferors and transferees of such Book-Entry Note. The Paying Agent may upon notice to the Issuer deliver to DTC and the CUSIP Service Bureau at any time a written notice (a copy of which shall be attached to the Global Note resulting from such exchange) specifying (i) the CUSIP numbers of two or more outstanding Global Notes that represent Book-Entry Notes of the same tenor and having the same Issue Date, and for which interest (if any) has been paid to the same date, (ii) a date occurring at least thirty days after such written notice is delivered and at least thirty days before the next Interest Payment Date (if any) for such Notes, on which such Global Notes shall be exchanged for a single replacement Global Note and (iii) a new CUSIP number to be assigned to such replacement Global Note. Upon receipt of such a notice, DTC will send to its Participants (including the Paying Agent) a written notice to the effect that such exchange will occur on such date. Prior to the specified exchange date, the Paying Agent will deliver to the CUSIP Service Bureau a written notice setting forth such exchange date and the new CUSIP number and stating that, as of such exchange date, the CUSIP numbers of the Global Notes to be exchanged will no longer be valid. On the specified exchange date, the Paying Agent will exchange such Global Notes for a single Global Note bearing the new CUSIP number and the CUSIP numbers of the exchanged Global Notes will, in accordance with CUSIP Service Bureau procedures, be canceled and not immediately reassigned. Notice of Interest Payment Dates and Regular Record Dates - --------------------------------------------------------- To the extent then known, on the first Business Day of March, June, September and December of each year, the Paying Agent will deliver to the Issuer and DTC a written list of Record Dates and Interest Payment Dates that will occur with respect to Floating Rate Book-Entry Notes during the six-month period beginning on such first Business Day. Payments of Principal and Interest - ---------------------------------- (a) Payments of Interest Only. Promptly after each Regular Record Date ------------------------- (as defined in the Note), the Paying Agent will deliver to the Issuer and DTC a written notice specifying by CUSIP number the amount of interest to be paid on each Global Note on the following Interest Payment Date (other than an interest Payment Date coinciding with Maturity) and the total of such amounts. The Issuer will confirm with the Paying Agent the amount payable on each Global Note on such Interest Payment Date. DTC will confirm the amount payable on each Global Note on such Interest Payment Date by reference to the daily or weekly bond reports published by Standard & Poor's Corporation. The Issuer will pay to the Paying Agent the total amount of interest due on such Interest Payment Date (other than at Maturity), and the Paying Agent will pay such amount to DTC at the times and in the manner set forth below under "Manner of Payment". (b) Payments at Stated Maturity. On or about the first Business Day of --------------------------- each month, the Paying Agent will deliver to the Issuer and DTC a written list of principal and interest to be paid on each Global Note maturing in the following month. The Issuer, the 12 29 Paying Agent and DTC will confirm the amounts of such principal and interest payments with respect to each such Global Note on or about the fifth Business Day preceding the Stated Maturity of such Global Note. The Issuer will pay to the Paying Agent, as the paying agent, the principal amount of such Global Note, together with interest due at such Stated Maturity. Upon surrender of a Global Note, the Paying Agent will pay such amounts to DTC at the times and in the manner set forth below under "Manner of Payment". If any Stated Maturity of a Global Note representing Book-Entry Notes is not a Business Day, the payment due on such day shall be made on the next succeeding Business Day and no interest shall accrue on such payment for the period from and after such Stated Maturity. Promptly after payment to DTC of the principal and any interest due at the Stated Maturity of such Global Note, the Paying Agent will cancel such Global Note and return such Global Note to the Issuer in accordance with the terms of the Indenture. (c) Payment upon Redemption. The Paying Agent will comply with the terms ----------------------- of the Letter with regard to redemptions or repayments of the Book-Entry Notes. In the case of Book-Entry Notes stated by their terms to be redeemable prior to Stated Maturity, at least 60 calendar days before the date fixed for redemption ("Redemption Date"), the Issuer shall notify the Paying Agent of the Issuer's election to redeem such Book-Entry Notes in whole or in part and the principal amount of such Book-Entry Notes to be so redeemed. At least 30 calendar days but not more than 60 calendar days prior to the Redemption Date, the Paying Agent shall notify DTC of the Issuer's election to redeem such Book-Entry Notes. The Paying Agent shall notify the Issuer and DTC of the CUSIP numbers of the particular Global Notes representing such Book-Entry Notes to be redeemed either in whole or in part. The Issuer, the Paying Agent and DTC will confirm the amounts of such principal and any premium and interest payable with respect to each such Book-Entry Notes on or about the fifth Business Day preceding the Redemption Date of such Book-Entry Notes. The Issuer will pay the Paying Agent, in accordance with the terms of the Indenture, the amount necessary to redeem each such Book-Entry Note or the applicable portion of each such Book-Entry Note. The Paying Agent will pay such amount to DTC at the times and in the manner set forth herein. Promptly after payment to DTC of the amount due on the Redemption Date for such Book-Entry Note, the Paying Agent shall cancel any such Book-Entry Note redeemed in whole and shall deliver it to the Issuer with an appropriate debit advice. If a Global Note is to be redeemed in part, the Paying Agent will cancel such Global Note and issue a Global Note which shall represent the remaining portion of such Global Note and shall bear the CUSIP number of the canceled Global Note. (d) Manner of Payment. The total amount of any principal and interest due ----------------- on Global Notes on any Interest Payment Date or at Maturity shall be paid by the Issuer to the Paying Agent in immediately available funds on such date. The Issuer will make such payment on such Notes by wire transfer to the Paying Agent. The Issuer will confirm instructions regarding payment in writing to the Paying Agent. Prior to 10:00 a.m. on each date of maturity of a Book-Entry Note or as soon as possible thereafter, the Paying Agent will pay by separate wire transfer (using Fedwire message entry instructions in a form previously specified by DTC) to an account at the Federal Reserve Bank of New York previously specified by DTC in funds avaiable for immediate use by DTC, each payment of principal (together with interest thereon) due at maturity on Book-Entry Notes. On each Interest Payment Date, interest payment shall be made to DTC in same day funds in accordance with existing arrangements between the Paying Agent and DTC. Thereafter, on each such date, DTC will pay, in accordance with its SDFS operating procedures then in effect, such amounts in funds available for immediate use to the respective Participants in whose names the Book-Entry 13 30 Notes represented by such Global Notes are recorded in the book-entry system maintained by DTC. NEITHER THE ISSUER NOR THE PAYING AGENT SHALL HAVE ANY DIRECT RESPONSIBILITY OR LIABILITY FOR THE PAYMENT BY DTC TO SUCH PARTICIPANTS OF THE PRINCIPAL OF AND ANY PREMIUM OR INTEREST ON THE BOOK-ENTRY NOTES. (e) Withholding Taxes. The amount of any taxes required under applicable ----------------- law to be withheld from any interest payment on a Book-Entry Note will be determined and withheld by the Participant, indirect participant in DTC or other person responsible for forwarding payments and materials directly to the beneficial owner of such Note. Details for Settlement - ---------------------- For each offer for Book-Entry Notes accepted by the Issuer, and which are to be represented by one Global Note, the Presenting Agent shall communicate to the Issuer no later than 11:00 a.m. on the first Business Day after the sale date (or on the sale date if such sale is to be settled within one Business Day), by telephone, telex, facsimile transmission or other acceptable means, the following information ("Purchase Information"): 1. Statement that these Book-Entry Notes will be represented by a Global Note registered in the name of Cede & Co. 2. Exact address of Participant with respect to each Book-Entry Note and, if different, the address for delivery, notices and payment of principal and any premium and interest. 3. Principal amount of each Book-Entry Note. 4. Principal amount of Global Note representing all Book-Entry Notes. 5. Stated Maturity of the Notes. 6. In the case of Fixed Rate Notes, the interest rate of the Notes; in the case of Floating Rate Notes, the interest rate formula, the Spread or Spread Multiplier (if any), the maximum or minimum interest rate limitation (if any), the Calculation Agent, the Calculation Dates, the Initial Interest Rate, the Interest Payment Dates, the Regular Record Dates, the Index Maturity, the Interest Determination Dates and the Interest Reset Dates, in each case, to the extent applicable with respect to the Notes. 7. Redemption and/or repayment provisions, if any, of the Notes. 8. Trade date of the Notes. 14 31 9. Settlement date (Issue Date) of the Notes. 10. Presenting Agent's commission (to be paid in the form of a discount from the proceeds remitted to the Issuer upon settlement). 11. Price. 12. Net Proceeds to Company. 13. Currency or currency unit in which the Notes are to be denominated and exchange rate applicable to purchase Foreign Currency Notes payable in U.S. dollars. 14. Any additional applicable terms of the Notes. The Issue Date of, and the settlement date for, Book-Entry Notes will be the same. Before accepting any offer to purchase Book-Entry Notes to be settled in less than three Business Days, the Issuer shall verify that the Paying Agent will have adequate time to prepare and authenticate the Global Note(s) which shall represent such Book-Entry Notes. If the initial interest rate for a Floating Rate Book-Entry has not been determined at the time that the foregoing procedure is completed, the procedures described in the following two paragraphs shall be completed as soon as such rate has been determined but no later than 12:00 noon (with respect to the next following paragraph) and 2:00 p.m. (with respect to the second following paragraph), as the case may be, on the Business Day before the settlement date. Immediately after receiving the details for each offer for Book-Entry Notes from the Presenting Agent and in any event no later than 12:00 noon on the first Business Day after the sale date (or on the sale date if such sale is to be settled within one Business Day), the Issuer will, if accepting the offer, after recording the details and any necessary calculations, communicate the Purchase Information by telephone, telex, facsimile transmission or other acceptable means, to the Paying Agent. Each such instruction given by the Issuer to the Paying Agent shall constitute a continuing representation and warranty by the Issuer to the Paying Agent and the Agents that (i) the issuance and delivery of such Global Note representing such Book-Entry Notes has been duly and validly authorized by the Issuer and (ii) such Global Note, when completed, authenticated and delivered, shall constitute the valid and legally binding obligation of the Issuer. Immediately after receiving the Purchase Information from the Issuer and in any event no later than 2:00 p.m. on the first Business Day after the sale date (or on the sale date if such sale is to be settled within one Business Day), the Paying Agent will assign a CUSIP number to the Global Note representing such Book-Entry Notes and will telephone the Issuer and advise the Issuer of such CUSIP number and, as soon thereafter as practicable, the Issuer shall notify the Agent of such CUSIP number. The Paying Agent will enter a pending deposit message through DTC's Participant Terminal System, providing the following settlement information to DTC (which shall route such information to Standard & Poor's Corporation) and the Presenting Agent: 15 32 1. The applicable Purchase information. 2. Initial Interest Payment Date for the Book-Entry Notes represented by such Global Note, number of days by which such date succeeds the Regular Record Date which shall be the Regular Record Date (as defined in the Note), and, if known, the amount of interest payable on such Interest Payment Date per $1,000 principal amount of Book-Entry Notes. 3. Identification as either a Fixed Rate Note or a Floating Rate Note. 4. CUSIP number of the Global Note representing such Book-Entry Note(s). 5. Whether such Global Note will represent any other Book-Entry Note(s) (to the extent known at such time). 6. Interest payment periods. 7. Numbers of the participant accounts maintained by DTC on behalf of the Paying Agent and the Agents. Standard & Poor's Corporation will use the information received in the pending deposit message to include the amount of any interest payable and certain other information regarding the related Global Note in the appropriate daily or weekly bond report published by Standard & Poor's Corporation. Settlement; Global Note Delivery and Cash Payment - ------------------------------------------------- The Issuer will deliver to the Paying Agent at the commencement of the program and from time to time thereafter a supply of duly executed Global Notes with pre-printed control numbers adequate to implement the program. Upon the receipt of appropriate documentation and instructions from the Issuer in accordance with the applicable Officers' Certificate and verification thereof, the Paying Agent will cause a Global Note to be completed and authenticated no later than 9:00 a.m. on the Settlement Date, and hold such Global Note for delivery against payment. Prior to 10:00 a.m. on the Settlement Date, DTC will credit such Note to the Paying Agent's participant account at DTC. At or prior to 2:00 p.m. on the Settlement Date, the Paying Agent will enter an SDFS deliver order through DTC's Participant Terminal System instructing DTC to (i) debit such Global Note to the Paying Agent's participant account and credit such Global Note to the Presenting Agent's participant account and (ii) debit the Presenting Agent's settlement account and credit the Paying Agent's settlement account for an amount equal to the price of such Global Note less such Agent's commission (in accordance with SDFS operating procedures in effect on the Settlement Date). The entry of such a deliver order shall constitute a representation and warranty by the Paying Agent to DTC that (i) the Global Note representing such Book-Entry Note(s) has been executed, delivered and authenticated and (ii) the Paying Agent is holding such Global Note pursuant to the Medium-Term Note Certificate Agreement between the Paying Agent and DTC. 16 33 Simultaneously with the giving of such instructions by the Paying Agent, the Presenting Agent will enter an SDFS deliver order through DTC's participant Terminal System instructing DTC (i) to debit such Global Note to the Paying Agent's participant account and credit the underlying Book-Entry Notes to the Participant accounts of the Participants with respect to such Global Note and (ii) to debit the settlement accounts of such Participants with respect to the underlying Book-Entry Notes and credit the settlement account of such Paying Agent for an amount equal to the price of such Global Note (in accordance with SDFS operating procedures in effect on the Settlement Date). Transfers of funds will take place on or prior to 4:45 p.m. on the Settlement Date, subject to extension in accordance with any extension of Fedwire closing deadlines and in the other events specified in the SDFS operating procedures in effect on the Settlement Date. The Paying Agent, upon confirming receipt of such funds, will wire transfer the amount transferred to the Paying Agent, in funds available for immediate use, for the account of J.C. Penney Company, Inc., to account no. at Chemical Bank, New York, New York (ABA No. ). Fails - ----- If settlement of a Book-Entry Note is rescheduled or canceled, the Issuer shall notify the Paying Agent, and upon receipt of such notice, the Paying Agent will deliver to DTC, through DTC's Participant Terminal System, a cancellation message to such effect by no later than 2:00 p.m., on the Business Day immediately preceding the scheduled Settlement Date. If the Paying Agent has not entered an SDFS deliver order with respect to a Book-Entry Note, then upon written request (which may be evidenced by telecopy transmission) of the Issuer, the Paying Agent shall deliver to DTC, through DTC's Participant Terminal System, as soon as practicable, but no later than 2:00 p.m. on any Business Day, a withdrawal message instructing DTC to debit such Book-Entry Note to the Paying Agent's participant account. DTC will process the withdrawal message, provided that the Paying Agent's participant account contains a principal amount of the Global Note representing such Book-Entry Note that is at least equal to the principal amount to be debited. If withdrawal messages are processed with respect to all the Book-Entry Notes represented by a Global Note, the Paying Agent will mark such Global Note "canceled", make appropriate entries in the Paying Agent's records and send such canceled Global Note to the Issuer. The CUSIP number assigned to such Global Note shall, in accordance with CUSIP Service Bureau procedures, be canceled and not immediatly reassigned. If withdrawal mesaages are processed with respect to one or more, but not all, of the Book-Entry Notes represented by a Global Note, the Paying Agent will exchange such Global Note for two Global Notes, one of which shall represent such Book-Entry Notes and shall be canceled immediately after issuance and the other of which shall represent the remaining Book-Entry Notes previously represented by the surrendered Global Note and shall bear the CUSIP number of the surrendered Global Note. If the purchase price for any Book-Entry Note is not timely paid to the Participants with respect to such Note by the beneficial purchaser thereof (or a person, including an indirect participant in DTC, acting on behalf of such purchaser), such Participants 17 34 and, in turn, the Presenting Agent may enter an SDFS deliver order through DTC's Participant Terminal System debiting such Book-Entry Note to such Agent's participant account and crediting such Book-Entry Note to the participant account of the Paying Agent and shall notify the Paying Agent and the Issuer thereof. Thereafter, the Paying Agent, (i) will immediately notify the Issuer, once the Paying Agent has confirmed that such Book-Entry Note has been credited to its participant account, and the Issuer shall immediately transfer by Fedwire (in immediately available funds) to the Presenting Agent an amount equal to the price of such Book-Entry Note which was previously sent by wire transfer to the account of the Issuer maintained at Chemical Bank, and (ii) the Paying Agent will deliver the withdrawal message and take the related actions described in the preceding paragraph. Such debits and credits will be made on the Settlement Date, if possible, and in any event not later than 5:00 p.m. on the following Business Day. If the fail shall have occurred for any reason other than the Presenting Agent's gross negligence or willful misconduct, including but not limited to failure of the Presenting Agent to provide the Purchase Information to the Issuer or to provide a confirmation to the purchaser, the Issuer will reimburse the Presenting Agent on an equitable basis for its loss of the use of funds during the period when the funds were credited to the account of the Issuer, or for any other cost or expense; and in no event shall the Issuer be obligated to pay any Commission, as contemplated by the Agency Agreement, with respect to any fail. Notwithstanding the foregoing, upon any failure to settle with respect to a Book-Entry Note, DTC may take any actions in accordance with its SDFS operating procedures then in effect. In the event of a failure to settle with respect to one or more, but not all, of the Book-Entry Notes to have been represented by a Global Note, the Paying Agent will provide for the authentication and issuance of a Global Note representing the other Book-Entry Notes to have been represented by such Global Note and will make appropriate entries in its records. 18 35 EXHIBIT C PURCHASE AGREEMENT , 1994 J.C. Penney Company, Inc. 6501 Legacy Drive Plano, Texas 75024-3698 Attention: Treasurer The undersigned agrees to purchase the following principal amount of the Securities described in the Agency Agreement dated ___________, 1994 (the "Agency Agreement"): Principal Amount $______________________ Interest Rate ________% Maturity Date _________________, 19__ Discount ________% of Principal Amount Price to be paid to Issuer ((in immediately available funds)) $______________________ ((in New York Clearing House (next day) funds) Commission to Agent $______________________ Settlement Date _______________________ Except as otherwise expressly provided herein, all terms used herein which are defined in the Agency Agreement shall have the same meanings as in the Agency Agreement. The terms Agent and Agents, as used in the Agency Agreement, shall be deemed to refer only to the undersigned for purposes of this Agreement. This Agreement incorporates by reference all of the provisions of the Agency Agreement (including any Amendment entered into pursuant thereto by the Issuer and the undersigned Agent, to the extent applicable), except provisions of the Agency Agreement relating specifically to solicitation by the Agents, as agents, and except that (i) the phrase "jointly with any other indemnifying party similarly notified" in Section 7(c) and the last sentence of Section 7(d) shall not be applicable; and (ii) the term "this Agreement", as used in Section 7(d) of the Agency Agreement, shall be deemed to refer to this Agreement (and not the Agency Agreement) except that in the fifth sentence such term shall be deemed to refer to the Agency Agreement. You and we agree to perform, to the extent applicable, our respective duties and obligations specifically provided to be performed by each of us in the Procedures. 36 Our obligation to purchase Securities hereunder is subject to the accuracy on the above Settlement Date of your representations and warranties contained in Section 2 of the Agency Agreement (it being understood that such representations and warranties shall be deemed to be made as of the date of this Purchase Agreement and references to the Registration Statement and Prospectus shall be deemed to relate to the Registration Statement and the Prospectus as amended as of the date hereof and as of such Settlement Date) and to your performance and observance of all covenants and agreements contained in Sections 4 and 6 thereof. Our obligation hereunder is also subject to the following conditions: (a) the satisfaction, at such Settlement Date, of each of the conditions set forth in subsections (a) and (b) and (d) through (g) of Section 5 of the Agency Agreement (it being understood that each document so required to be delivered shall be dated such Settlement Date and that each such condition and the statements contained in each such document that relate to the Registration Statement or the Prospectus shall be deemed to relate to the Registration Statement or the Prospectus, as the case may be, as amended or supplemented as of the date hereof and at the time of settlement on such Settlement Date and except that the opinion described in Section 5(d) shall be modified so as to state that the Securities being sold on such Settlement Date, when delivered against payment therefor as provided in this Agreement, will have been duly executed, authenticated, issued and delivered and will constitute valid and legally binding obligations of the Issuer enforceable in accordance with their terms, subject only to the exceptions set forth in clause (iii) of Section 5(d) of the Agency Agreement, and will conform to the description thereof contained in the Prospectus as amended or supplemented at such Settlement Date; (b) there shall not have occurred any change, or any development involving a prospective change, in or affecting particularly the business or properties of the Issuer and its subsidiaries, taken as a whole, which, in our judgment, materially impairs the investment quality of the Securities; and (c) (such other conditions as may be agreed upon among the parties.) In further consideration of our agreement hereunder, you agree that between the date hereof and the above Settlement Date, you will not offer or sell, or enter into any agreement to sell, any debt securities of the Issuer in the United States, other than sales of Securities, borrowings under your revolving credit agreements and lines of credit, the private placement of securities and issuances of your commercial paper. If for any reason our purchase of the above Securities is not consummated, you shall remain responsible for the reasonable expenses to be paid or reimbursed by you pursuant to Section 4 of the Agency Agreement and the respective obligations of you and the undersigned pursuant to Section 7 shall remain in effect. If for any reason the purchase by the undersigned of the above Securities is not consummated other than because of a default by the undersigned or a failure to satisfy a condition set forth in clause (iii), (iv) or (v) of paragraph (b) above, you shall reimburse us, severally, for all out-of-pocket expenses reasonably incurred by us in connection with the offering of the above Securities and not otherwise required to be reimbursed pursuant to Section 4 of the Agency Agreement. 2 37 This Agreement shall be governed by and construed in accordance with the laws of the State of New York. This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original, but all such executed counterparts shall together constitute one and the same Agreement. {INSERT NAME OF PURCHASER} By: ------------------------------------ Name: Title: CONFIRMED AND ACCEPTED, as of the date first above written: J. C. Penney Company, Inc. By: -------------------------------- Name: Title: 3 EX-4.A 3 INDENTURE 1 ================================================================================ J. C. PENNEY COMPANY, INC. AND BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION Trustee ____________ INDENTURE Dated as of April 1, 1994 ____________ ================================================================================ 2 J. C. PENNEY COMPANY, INC. Reconciliation and tie between Trust Indenture Act of 1939 and Indenture, dated as of April 1, 1994
Reflected in Indenture ---------------------------------------------- Section Page ------- ---- TIA Section 310(a)(1) . . . . . . . . . . . 8.09 54 (a)(2) . . . . . . . . . . . 8.09 54 (a)(3) . . . . . . . . . . . Not Applicable (a)(4) . . . . . . . . . . . Not Applicable (b) . . . . . . . . . . . 8.08 53 Section 311(a) . . . . . . . . . . . 8.13 57 (b) . . . . . . . . . . . 8.13 57 Section 312(a) . . . . . . . . . . . 6.01 39 . . . . . . . . . . . 6.02(a) 40 (b) . . . . . . . . . . . 6.02(b) 40 (c) . . . . . . . . . . . 6.02(b) 40 Section 313(a) . . . . . . . . . . . 6.03 40 (b) . . . . . . . . . . . 6.03 40 (c) . . . . . . . . . . . 6.03 40 (d) . . . . . . . . . . . 6.03 40 Section 314(a) . . . . . . . . . . . 6.04 40 (a)(4) . . . . . . . . . . . 5.06 36 (b) . . . . . . . . . . . Not Applicable (c)(1) . . . . . . . . . . . 1.02 11 (c)(2) . . . . . . . . . . . 1.02 11 (c)(3) . . . . . . . . . . . Not Applicable (d) . . . . . . . . . . . Not Applicable (e) . . . . . . . . . . . 1.02 11 Section 315(a) . . . . . . . . . . . 8.01 50 (b) . . . . . . . . . . . 8.02 51 (c) . . . . . . . . . . . 8.01 50 (d) . . . . . . . . . . . 8.01 50 (e) . . . . . . . . . . . 7.14 50 Section 316(a)(1)(A) . . . . . . . . . . . 7.12 48 (a)(1)(B) . . . . . . . . . . . 7.02 43 . . . . . . . . . . . 7.13 49 (a)(2) . . . . . . . . . . . Not Applicable (b) . . . . . . . . . . . 7.08 47 Section 317(a)(1) . . . . . . . . . . . 7.03 44 (a)(2) . . . . . . . . . . . 7.04 45 (b) . . . . . . . . . . . 5.03 34 Section 318(a) . . . . . . . . . . . 1.07 14 - --------------------
Note: This reconciliation and tie shall not, for any purpose, be deemed to be part of this Indenture. 3 TABLE OF CONTENTS*
Page RECITALS OF THE COMPANY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 ARTICLE ONE DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION SECTION 1.01. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 Affiliate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 Authenticating Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 Authorized Newspaper . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 Bankruptcy Code . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 Board of Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 Board Resolution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Business Day . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Commission . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Company Request and Company Order . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Covenant Defeasance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Currency or Money . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Currency Indexed Note . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Defaulted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Defaulted Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 Defeasance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 Depository . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 Dollars or $ . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 Exchange Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 Funded Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 Global Security . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 Indenture . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 Indexed Security . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 Interest Payment Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 Investment Company Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 Maturity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 Non-Restricted Subsidiary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 Notice of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 Officers' Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
__________________________________ *This Table of Contents is not part of the Indenture. -i- 4 Opinion of Counsel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 Original Issue Discount Security . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 Outstanding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 Paying Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 Periodic Offering . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 Person . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 Place of Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 Predecessor Security . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 Principal Amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 Principal Corporate Trust Office . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 Principal Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 Redemption Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 Redemption Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 Regular Record Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 Responsible Officer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 Restricted Subsidiary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 Sale and Lease-Back Transaction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 Security . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 Securities Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 Securityholder or Holder . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 Security Register . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 Security Registrar . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 Senior Funded Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 Special Record Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 Stated Maturity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 Stockholders' Equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 Subordinated Funded Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 Subsidiary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 Trust Indenture Act or TIA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 U.S. Government Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 SECTION 1.02. Compliance Certificates and Opinions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 SECTION 1.03. Form of Documents Delivered to Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 SECTION 1.04. Acts of Securityholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 SECTION 1.05. Notices, etc., to Trustee and Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 SECTION 1.06. Notices to Securityholders; Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 SECTION 1.07. Conflict with Trust Indenture Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 SECTION 1.08. Effect of Headings and Table of Contents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 SECTION 1.09. Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 SECTION 1.10. Separability Clause . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 SECTION 1.11. Benefits of Indenture . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 SECTION 1.12. Legal Holidays . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 SECTION 1.13. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
-ii- 5 ARTICLE TWO ISSUANCE OF SECURITIES IN SERIES; FORMS; OTHER PROVISIONS RELATING TO SECURITIES SECTION 2.01. Amount Unlimited; Issuance in Series . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 SECTION 2.02. Forms Generally . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 SECTION 2.03. Forms of Trustee's Certificate of Authentication . . . . . . . . . . . . . . . . . . . . . . . . 20 SECTION 2.04. Currency; Denominations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 SECTION 2.05. Date, Execution, Authentication and Delivery . . . . . . . . . . . . . . . . . . . . . . . . . . 21 SECTION 2.06. Temporary Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22 SECTION 2.07. Registration, Registration of Transfer and Exchange . . . . . . . . . . . . . . . . . . . . . . 22 SECTION 2.08 Mutilated, Destroyed, Lost and Stolen Securities . . . . . . . . . . . . . . . . . . . . . . . . 24 SECTION 2.09. Payment of Interest; Interest Rights Preserved . . . . . . . . . . . . . . . . . . . . . . . . . 25 SECTION 2.10. Place of Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26 SECTION 2.11. Persons Deemed Owners . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26 SECTION 2.12. Cancellation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27 SECTION 2.13. Computation of Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27 SECTION 2.14. Form of Legend for Global Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27 SECTION 2.15. Payment to be in Proper Currency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28 ARTICLE THREE ISSUE OF SECURITIES SECTION 3.01. Authentication and Delivery of Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . 28 SECTION 3.02. Documents Required for Issuance of Series of Securities . . . . . . . . . . . . . . . . . . . . 28 ARTICLE FOUR REDEMPTION OF SECURITIES SECTION 4.01. Right of Redemption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30 SECTION 4.02. Applicability of Article . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30 SECTION 4.03. Election to Redeem; Notice to Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30 SECTION 4.04. Selection of Securities to Be Redeemed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30 SECTION 4.05. Notice of Redemption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31 SECTION 4.06. Deposit of Redemption Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32 SECTION 4.07. Securities Payable on Redemption Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32 SECTION 4.08. Securities Redeemed in Part . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33 ARTICLE FIVE COVENANTS SECTION 5.01. Payment of Principal, Premium and Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . 33 SECTION 5.02. Maintenance of Agency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33 SECTION 5.03. Money for Security Payments to Be Held in Trust . . . . . . . . . . . . . . . . . . . . . . . . 34
-iii- 6 SECTION 5.04. Payment of Taxes and Other Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35 SECTION 5.05. Maintenance of Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35 SECTION 5.06. Statement as to Compliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36 SECTION 5.07. Corporate Existence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36 SECTION 5.08. Limitations on Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36 SECTION 5.09. Limitations on Sale and Lease-Back Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . 38 SECTION 5.10. Waiver of Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39 ARTICLE SIX SECURITYHOLDERS LISTS AND REPORTS BY TRUSTEE AND COMPANY SECTION 6.01. Company to Furnish Trustee Name and Addresses of Securityholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39 SECTION 6.02. Preservation of Information; Communications to Securityholders . . . . . . . . . . . . . . . . . . . . 40 SECTION 6.03. Reports by Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40 SECTION 6.04. Reports by Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40 ARTICLE SEVEN REMEDIES SECTION 7.01. Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41 SECTION 7.02. Acceleration of Maturity; Rescission and Annulment . . . . . . . . . . . . . . . . . . . . . . . . . . 43 SECTION 7.03. Collection of Indebtedness and Suits for Enforcement by Trustee . . . . . . . . . . . . . . . . . . . 44 SECTION 7.04. Trustee May File Proofs of Claim . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45 SECTION 7.05. Trustee May Enforce Claims without Possession of Securities . . . . . . . . . . . . . . . . . . . . . 46 SECTION 7.06. Application of Money Collected . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46 SECTION 7.07. Limitation on Suits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46 SECTION 7.08. Unconditional Right of Securityholders to Receive Principal, Premium and Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47 SECTION 7.09. Restoration of Rights and Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47 SECTION 7.10. Rights and Remedies Cumulative . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48 SECTION 7.11. Delay or Omission Not Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48 SECTION 7.12. Control by Securityholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48 SECTION 7.13. Waiver of Past Defaults . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49 SECTION 7.14. Undertaking for Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50 SECTION 7.15. Waiver of Stay or Extension Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50 ARTICLE EIGHT THE TRUSTEE SECTION 8.01. Certain Duties and Responsibilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50 SECTION 8.02. Notice of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51 SECTION 8.03. Certain Rights of Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51 SECTION 8.04. Not Responsible for Recitals or Issuance of Securities . . . . . . . . . . . . . . . . . . . . . . . . 52
-iv- 7 SECTION 8.05. May Hold Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52 SECTION 8.06. Money Held in Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52 SECTION 8.07. Compensation and Reimbursement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53 SECTION 8.08. Disqualified; Conflicting Interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53 SECTION 8.09. Corporate Trustee Required; Eligibility . . . . . . . . . . . . . . . . . . . . . . . . . . 54 SECTION 8.10. Resignation and Removal; Appointment of Successor . . . . . . . . . . . . . . . . . . . . . 54 SECTION 8.11. Acceptance of Appointment by Successor . . . . . . . . . . . . . . . . . . . . . . . . . . . 55 SECTION 8.12. Merger, Conversion, Consolidation or Succession to Business of Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57 SECTION 8.13. Preferential Collection of Claims against Company . . . . . . . . . . . . . . . . . . . . . 57 SECTION 8.14. Authenticating Agents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57 ARTICLE NINE SECURITYHOLDERS' MEETINGS SECTION 9.01. Purposes of Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58 SECTION 9.02. Call of Meetings by Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59 SECTION 9.03. Call of Meetings by Company or Securityholders . . . . . . . . . . . . . . . . . . . . . . . 59 SECTION 9.04. Qualifications for Voting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59 SECTION 9.05. Regulations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60 SECTION 9.06. Voting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60 SECTION 9.07. Action by Securityholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61 ARTICLE TEN SUPPLEMENTAL INDENTURES SECTION 10.01. Supplemental Indentures without Consent of Securityholders . . . . . . . . . . . . . . . . 61 SECTION 10.02. Supplemental Indentures with Consent of Securityholders . . . . . . . . . . . . . . . . . . 62 SECTION 10.03. Execution of Supplemental Indentures . . . . . . . . . . . . . . . . . . . . . . . . . . . 64 SECTION 10.04. Effect of Supplemental Indentures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64 SECTION 10.05. Conformity with Trust Indenture Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64 SECTION 10.06. Reference in Securities to Supplemental Indentures . . . . . . . . . . . . . . . . . . . . 64 SECTION 10.07. Notice of Supplemental Indentures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64 ARTICLE ELEVEN CONSOLIDATION, MERGER, CONVEYANCE OR TRANSFER SECTION 11.01. Company May Consolidate, etc., Only on Certain Terms . . . . . . . . . . . . . . . . . . . 65 SECTION 11.02. Successor Corporation Substituted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
-v- 8 ARTICLE TWELVE SATISFACTION AND DISCHARGE SECTION 12.01. Satisfaction and Discharge of Indenture . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66 SECTION 12.02. Application of Trust Money . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67 ARTICLE THIRTEEN IMMUNITY OF INCORPORATORS, STOCKHOLDERS, OFFICERS AND DIRECTORS SECTION 13.01. Exemption from Individual Liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67 ARTICLE FOURTEEN DEFEASANCE AND COVENANT DEFEASANCE SECTION 14.01. Company's Option to Effect Defeasance or Covenant Defeasance . . . . . . . . . . . . . . . . . . . . 68 SECTION 14.02. Defeasance and Discharge . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68 SECTION 14.03. Covenant Defeasance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69 SECTION 14.04. Conditions to Defeasance or Covenant Defeasance . . . . . . . . . . . . . . . . . . . . . . . . . . . 69 SECTION 14.05. Deposited Money and U.S. Government Obligations to Be Held in Trust; Miscellaneous Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . 70 SECTION 14.06. Reinstatement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71 ARTICLE FIFTEEN MISCELLANEOUS SECTION 15.01. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
-vi- 9 THIS INDENTURE is entered into as of April 1, 1994, between J. C. PENNEY COMPANY, INC., a Delaware corporation (hereinafter called the "Company"), having its principal executive office located at 6501 Legacy Drive, Plano, Texas 75024-3698 and BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, organized and existing as a national banking association under the laws of the United States of America (hereinafter called the "Trustee"), having its corporate trust office in the City of Los Angeles, State of California. RECITALS OF THE COMPANY The Company has duly authorized the execution and delivery of this Indenture to provide for the issuance from time to time of its unsecured debentures, notes or other evidences of indebtedness (herein called the "Securities"). The Securities are unlimited as to principal amount, may bear such rates of interest, mature at such time or times, be issued in one or more series and have such other provisions as may hereafter be established under this Indenture. All things necessary to make this Indenture a valid agreement of the Company, in accordance with its terms, have been done. This Indenture is subject to the provisions of the Trust Indenture Act of 1939, as amended, and the rules and regulations of the Securities and Exchange Commission promulgated thereunder that are required to be part of this Indenture and, to the extent applicable, shall be governed by such provisions. NOW, THEREFORE, THIS INDENTURE WITNESSETH: For and in consideration of the premises and the purchase of the Securities by the holders thereof, the Company and the Trustee mutually covenant and agree, for the equal and proportionate benefit of the respective holders from time to time of the Securities, as follows: ARTICLE ONE DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION SECTION 1.01. Definitions. For all purposes of this Indenture, except as otherwise expressly provided or unless the context otherwise requires: (1) all references in this instrument to designated "Articles", "Sections" and other subdivisions are to the designated Articles, Sections and other subdivisions of this Indenture; 10 (2) the words "herein", "hereof" and "hereunder" and other words of similar import refer to this Indenture as a whole and not to any particular Article, Section or other subdivision; (3) the terms defined in this Article have the meanings assigned to them in this Article and include the plural as well as the singular; (4) all other terms used herein which are defined in the Trust Indenture Act, either directly or by reference therein, have the meanings assigned to them therein; and (5) all accounting terms not otherwise defined herein have the meanings assigned to them in accordance with generally accepted accounting practices. Certain terms, used principally in Article Eight, are defined in that Article. "Act" when used with respect to any Securityholder has the meaning specified in Section 1.04. "Affiliate" of any specified Person means any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified Person. For the purposes of this definition, "control" when used with respect to any specified Person means the power to direct the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise; and the terms "controlling" and "controlled" have meanings correlative to the foregoing. "Authenticating Agent" means any Person that may be appointed as Authenticating Agent in accordance with Section 8.14 to authenticate Securities of one or more series. "Authorized Newspaper" means a newspaper, in an official language of the place of publication or in the English language, customarily published on each day that is a Business Day in the place of publication, whether or not published on days that are Legal Holidays in the place of publication, and of general circulation in each place in connection with which the term is used or in the financial community of each such place. Whenever successive publications are required to be made in Authorized Newspapers, the successive publications may be made in the same or in different newspapers in the same city meeting the foregoing requirements and in each case on any day that is a Business Day in the place of publication. "Bankruptcy Code" means Title 11 of the United States Code. "Board of Directors" means either the board of directors of the Company or any duly authorized committee of that board. -2- 11 "Board Resolution" means a copy of one or more resolutions, certified by the Secretary or an Assistant Secretary of the Company to have been duly adopted by the Board of Directors and to be in full force and effect on the date of such certification, delivered to the Trustee. "Business Day" means each day which is neither a Saturday, Sunday nor other day on which banking institutions in the pertinent Place of Payment are authorized or obligated by law or executive order to remain closed. "Commission" means the Securities and Exchange Commission, as from time to time constituted, created under the Securities Exchange Act of 1934, or if at any time after the execution of this instrument such Commission is not existing and performing the duties now assigned to it under the Trust Indenture Act, then the body performing such duties on such date. "Company" means the Person named as the "Company" in the first paragraph of this instrument until a successor Person shall have become such pursuant to the applicable provisions of this Indenture, and thereafter "Company" shall mean such successor Person. "Company Request" and "Company Order" mean, respectively, a written request or order signed in the name of the Company by its Chairman of the Board, a Vice Chairman of the Board, a President or a Vice President, and by a Treasurer, an Assistant Treasurer, a Controller, an Assistant Controller, a Secretary, or an Assistant Secretary, and delivered to the Trustee. "Covenant Defeasance" has the meaning specified in Section 14.03. "Currency" or "Money", with respect to any payment, deposit or other transfer in respect of the principal of or any premium or interest on any Security, means the unit or units of legal tender for the payment of public and private debts (or any composite thereof) in which such payment, deposit or other transfer is required to be made by or pursuant to the terms hereof and, with respect to any other payment, deposit or transfer pursuant to or contemplated by the terms hereof, means Dollars. "Currency Indexed Note" means any Security with the amount of principal payments determined by reference to an index Currency. "Defaulted" means, when used with respect to any series of Securities, a series of Securities with respect to which an Event of Default shall have occurred and be continuing, but only if, in the case of the Events of Default referred to in Section 7.01(1), (2), (3), (4), (5) and (6), such Event of Default has occurred with respect to Securities of such series, and only if, in the case of an Event of Default referred to in Section 7.01(7), the written notice referred to in Section 7.01(7) has been given by the Trustee or by the Holders of at least 25% in Principal Amount of the Outstanding Securities of such series of Securities. -3- 12 "Defaulted Interest" has the meaning specified in Section 2.09. "Defeasance" has the meaning specified in Section 14.02. "Depository" means, with respect to the Securities of any series issuable or issued in whole or in part in the form of one or more Global Securities, the clearing agency registered under the Exchange Act specified for that purpose, with respect to the Securities of such series. If at any time there is more than one such Person, "Depository" shall mean, with respect to any Securities, the qualifying entity which has been appointed with respect to such Securities. "Dollars" or "$" means a dollar or other equivalent unit of legal tender for payment of public or private debts in the United States. "Event of Default" has the meaning specified in Section 7.01. "Exchange Act" means the Securities Exchange Act of 1934 and any statute successor thereto, in each case as amended from time to time. "Funded Indebtedness" of a corporation means the principal of (a) all indebtedness created, incurred or assumed by such corporation (including the Securities in the case of the Company) which by its terms is not payable on demand and which matures by its terms, or which by its terms such corporation has the right at its option to renew or extend to a date, more than one year after the date of determination, whether outstanding on the date of execution of this Indenture or thereafter created, incurred or assumed, and which is (i) for money borrowed or (ii) evidenced by a note or similar instrument given in connection with the acquisition of any business, properties or assets, including securities, (b) any indebtedness of others of the kinds described in the preceding clause (a) for the payment of which such corporation is responsible or liable as guarantor or otherwise and (c) amendments, renewals and refundings of any such indebtedness; provided, however, that such term shall not include any obligations under leases or any guarantees of obligations of others under leases. It is understood that for the purposes of this definition the term "principal" when used at any date with respect to any indebtedness shall mean the amount of principal of such indebtedness that could be declared due and payable on that date pursuant to the terms of such indebtedness. "Global Security" means a Security bearing the legend required by Section 2.14 evidencing all or part of a series of Securities, issued to the Depository for such series or its nominee and registered in the name of such Depository or nominee. "Indenture" means this instrument as originally executed and as it may from time to time be supplemented or amended by one or more indentures supplemental hereto entered into pursuant to the applicable provisions hereof, including, for all purposes of this instrument and any such supplemental indenture, the provisions of the Trust Indenture Act -4- 13 that are deemed to be a part of and govern this instrument and any such supplemental indenture, respectively. The term "Indenture" shall also include the terms of particular series of Securities established as contemplated by Section 2.01. "Indexed Security" means a Security the terms of which provide that the principal amount thereof payable at Stated Maturity may be more or less than the principal face amount thereof at original issuance. "Interest Payment Date" when used with respect to any Security means the Stated Maturity of an installment of interest on such Security. "Investment Company Act" means the Investment Company Act of 1940 and any statute successor thereto, in each case as amended from time to time. "Maturity" when used with respect to any Security means the date on which the principal of such Security or an installment of principal becomes due and payable as herein or in such Security provided, whether at the Stated Maturity or by declaration of acceleration, call for redemption or otherwise. "Non-Restricted Subsidiary" means any Subsidiary except a Restricted Subsidiary. "Notice of Default" means a written notice of the kind specified in Section 7.01(5) or 7.01(7). "Officers' Certificate" means a certificate signed by the Chairman of the Board, any Vice Chairman of the Board, President or Vice President of the Company, and by the Treasurer, an Assistant Treasurer, the Controller, an Assistant Controller, the Secretary or an Assistant Secretary of the Company, and delivered to the Trustee. "Opinion of Counsel" means a written opinion of counsel who may (except as otherwise expressly provided in this Indenture) be counsel for the Company. "Original Issue Discount Security" means a Security issued pursuant to this Indenture which provides for an amount less than the principal face amount thereof to be declared due and payable upon acceleration pursuant to Section 7.02. "Outstanding" when used with respect to Securities means, as of the date of determination, all Securities theretofore authenticated and delivered under this Indenture, other than: (a) Securities theretofore canceled by the Trustee or delivered to the Trustee for cancellation; -5- 14 (b) Securities for whose payment or redemption money in the necessary amount has been theretofore deposited with the Trustee or any Paying Agent (other than the Company) in trust, or set aside and segregated in trust by the Company (if the Company shall act as its own Paying Agent), for the Holders of such Securities, provided that, if such Securities are to be redeemed, notice of such redemption has been duly given pursuant to this Indenture or provision therefor satisfactory to the Trustee has been made; (c) Securities as to which the Company has effected Defeasance pursuant to Section 14.02; and (d) Securities which have been paid pursuant to Section 2.08 or in exchange for or in lieu of which other Securities have been authenticated and delivered pursuant to this Indenture, other than any such Securities in respect of which there shall have been presented to the Trustee proof satisfactory to it that such Securities are held by a bona fide purchaser in whose hands such Securities are valid obligations of the Company; provided, however, that in determining whether the Holders of the requisite Principal Amount of Securities Outstanding have given any request, demand, authorization, direction, notice, consent or waiver hereunder, or are present at a meeting of Securityholders for quorum purposes, (i) the principal amount of an Original Issue Discount Security that may be counted in making such determination and that shall be deemed to be Outstanding for such purposes shall be equal to the amount of the principal thereof that pursuant to the terms of such Original Issue Discount Security would be declared (or shall have been declared to be) due and payable upon a declaration of acceleration thereof pursuant to Section 7.02 at the time of such determination, and (ii) the principal amount of any Indexed Security that may be counted in making such determination and that shall be deemed outstanding for such purpose shall be equal to the principal face amount of such Indexed Security at original issuance, unless otherwise provided in or pursuant to this Indenture. Securities owned by the Company or any other obligor upon the Securities or any Affiliate of the Company or such other obligor shall be disregarded and deemed not to be Outstanding, except that, in determining whether the Trustee shall be protected in relying upon any such request, demand, authorization, direction, notice, consent or waiver, only Securities which the Trustee knows to be so owned shall be so disregarded. Securities so owned which have been pledged in good faith may be regarded as Outstanding if the pledgee establishes to the satisfaction of the Trustee the pledgee's right so to act with respect to such Securities and that the pledgee is not the Company or any other obligor upon the Securities or any Affiliate of the Company or such other obligor. "Paying Agent" means any Person authorized by the Company to pay the principal of (and premium, if any) or interest, if any, on any Securities on behalf of the Company. -6- 15 "Periodic Offering" means an offering of Securities of a series from time to time the specific terms of which Securities, including without limitation the rate or rates of interest (or formula for determining the rate or rates of interest), if any, thereon, the Stated Maturity or Maturities thereof and the redemption provisions, if any, with respect thereto, are to be determined by the Company or its agents upon the issuance of such Securities. "Person" means any individual, corporation, partnership, joint venture, association, joint-stock company, trust, unincorporated organization or government or any agency or political subdivision thereof. "Place of Payment", when used with respect to the Securities of any series, means the place or places where the principal of (and premium, if any) and/or interest on the Securities of that series are payable, where Securities of that series may be surrendered for registration of transfer or exchange and where notices and demands to or upon the Company in respect of the Securities of that series and this Indenture may be served. "Predecessor Security" of any particular Security means every previous Security evidencing all or a portion of the same debt as that evidenced by such particular Security, and, for the purposes of this definition, any Security authenticated and delivered under Section 2.08 in exchange for or in lieu of a mutilated, destroyed, lost, or stolen Security shall be deemed to evidence the same debt as the mutilated, destroyed, lost or stolen Security. "Principal Amount" means, when used with respect to any Security, the amount of principal of such Security that could then be declared due and payable pursuant to Section 7.02 if such Security were then a Defaulted Security. "Principal Corporate Trust Office" means the office of the Trustee at which at any particular time its corporate trust business shall be administered. "Principal Property" means all real property and tangible personal property owned by the Company or a Restricted Subsidiary constituting a part of any store, warehouse or distribution center located within one of the 50 states of the United States or the District of Columbia, exclusive of motor vehicles, mobile materials-handling equipment and other rolling stock, cash registers and other point of sale recording devices and related equipment, and data processing and other office equipment; provided, however, that such term shall not include any such property constituting a part of any such store, warehouse or distribution center unless the net book value of all real property (including leasehold improvements) and store fixtures constituting a part of such store, warehouse or distribution center exceeds 0.25% of Stockholders' Equity. "Redemption Date" when used with respect to any Security to be redeemed means the date fixed for such redemption pursuant to this Indenture. -7- 16 "Redemption Price" when used with respect to any Security to be redeemed means the price at which it is to be redeemed pursuant to this Indenture. "Regular Record Date" for interest payable on a Security on any Interest Payment Date on the Securities of any series means the close of business on the date specified as such pursuant to this Indenture. "Responsible Officer" when used with respect to the Trustee means the chairman or any vice chairman of the board of directors, the chairman or any vice chairman of the executive committee of the board of directors, the president, any vice president, any assistant vice president, the secretary, any assistant secretary, the treasurer, any assistant treasurer, the cashier, any assistant cashier, any trust officer or assistant trust officer, the controller or any assistant controller or any other officer of the Trustee customarily performing functions similar to those performed by any of the above designated officers and also means, with respect to a particular corporate trust matter, any other officer to whom such matter is referred because of his knowledge of and familiarity with the particular subject. "Restricted Subsidiary" means any Subsidiary of the Company or of a Restricted Subsidiary which the Company shall, by an Officers' Certificate, have designated as a Restricted Subsidiary and the designation of which as a Restricted Subsidiary shall not have been canceled by an Officers' Certificate. Any such designation or cancellation of such designation may be made more than once with respect to any Subsidiary; provided, however, that no Subsidiary which has previously been a Restricted Subsidiary shall be redesignated a Restricted Subsidiary if during any period following cancellation of its previous designation as a Restricted Subsidiary such Subsidiary shall have entered into a Sale and Lease-Back Transaction which would have been prohibited under Section 5.09(a) had such Subsidiary been a Restricted Subsidiary at the time of such Transaction. "Sale and Lease-Back Transaction" of a corporation means any arrangement whereby (a) property has been or is to be sold or transferred by such corporation to any Person with the intention on the part of such corporation of taking back a lease of such property pursuant to which the rental payments are calculated to amortize the purchase price of such property substantially over the useful life of such property and (b) such property is in fact so leased by such corporation. "Security" has the meaning stated in the first recital of this Indenture and more particularly means any unsecured evidence of indebtedness authenticated and delivered under this Indenture; provided, however, that if at any time there is more than one Person acting as Trustee under this Indenture, "Securities" with respect to the Indenture as to which such Person is Trustee shall have the meaning stated in the first recital of this Indenture and shall more particularly mean Securities authenticated and delivered under this Indenture, exclusive, however, of Securities of any series as to which such Person is not Trustee. -8- 17 "Securities Act" means the Securities Act of 1933 and any statute successor thereto, in each case as amended from time to time. "Securityholder" or "Holder" when used with respect to any Security means the Person in whose name such Security is registered in the Security Register. "Security Register" has the meaning specified in Section 2.07. "Security Registrar" means the Person who keeps the Security Register specified in Section 2.07. "Senior Funded Indebtedness" of the Company means any Funded Indebtedness of the Company unless in any instrument or instruments evidencing or securing such Funded Indebtedness or pursuant to which the same is outstanding, or in any amendment, renewal, extension or refunding of such Funded Indebtedness, it is provided that such Funded Indebtedness is subordinate in right of payment to the Securities (a) in the event of any dissolution or winding-up or total or partial liquidation or reorganization of the Company, whether voluntary or involuntary, or any bankruptcy, insolvency, receivership or similar proceedings relative to the Company, (b) in the event that any Subordinated Funded Indebtedness of the Company is declared due and payable before its expressed maturity because of the occurrence of an event of default with respect to such Subordinated Funded Indebtedness and (c) in the event of any default in the payment of principal (including any required prepayments or amortization) of or interest on any Senior Funded Indebtedness of the Company. "Senior Funded Indebtedness" of a Restricted Subsidiary means any Funded Indebtedness of such Restricted Subsidiary and the aggregate preference on involuntary liquidation of any class of stock of such Restricted Subsidiary ranking, either as to payment of dividends or distribution of assets, prior to any other class of stock of such Restricted Subsidiary. "Special Record Date" for the payment of any Defaulted Interest means the date fixed by the Trustee pursuant to Section 2.09. "Stated Maturity" when used with respect to any Security, or any installment of principal thereof or interest thereon, means the date specified in such Security as the fixed date on which the principal of such Security, or such installment of principal or interest, is due and payable. "Stockholders' Equity" means the sum, as at the close of a monthly accounting period (selected by the Company) ending within 65 days next preceding the date of determination, of (a) the aggregate of capital, capital stock, capital surplus, capital in excess of par value of stock, reinvested earnings, earned surplus and net income retained for use in the business (however the foregoing may be designated), after deducting the cost of shares of capital stock of the Company held in its treasury, of the Company and consolidated Subsidiaries, determined in accordance with generally accepted accounting practices applied -9- 18 on the basis used in reports from time to time to stockholders of the Company, plus (b) the amount reflected in such determination as deferred tax effects. "Subordinated Funded Indebtedness" of the Company means Funded Indebtedness of the Company which is not Senior Funded Indebtedness. "Subsidiary" means (a) any corporation of which the Company, directly or indirectly, owns more than 50% of the outstanding stock, which at the time shall have by the terms thereof ordinary voting power to elect directors of such corporation, irrespective of whether or not at the time stock of any other class or classes of such corporation shall have or might have voting power by reason of the happening of any contingency, or (b) any such corporation of which such percentage of shares of outstanding stock of the character described in the foregoing clause (a) shall at the time be owned, directly or indirectly, by the Company and one or more Subsidiaries as defined in the foregoing clause (a) or by one or more such Subsidiaries. "Trustee" means the Person named as the "Trustee" in the first paragraph of this instrument until a successor Trustee shall have become such with respect to one or more series of Securities pursuant to the applicable provisions of this Indenture, and thereafter "Trustee" shall mean or include each Person who is then a Trustee hereunder, and if at any time there is more than one such Person, "Trustee" shall mean each such Person and as used with respect to the Securities of any series shall mean the Trustee with respect to Securities of that series. "Trust Indenture Act" or "TIA" means the Trust Indenture Act of 1939, as in force at the date as of which this instrument was executed; provided, however, that in the event the Trust Indenture Act of 1939 is amended after such date, "Trust Indenture Act" means, to the extent required by any such amendment, the Trust Indenture Act of 1939 as so amended. "U.S. Government Obligations" means securities which are (1) direct obligations of the United States of America for the payment of which its full faith and credit is pledged, or (2) obligations of a Person controlled or supervised by and acting as an agency or instrumentality of the United States of America, provided that the payment of such obligations is unconditionally -------- guaranteed as a full faith and credit obligation by the United States of America. The term "U.S. Government Obligations" shall also include depository receipts issued by a bank or trust company as custodian and evidencing ownership by the holders of such depository receipts of future payments of interest or principal, or both, on U.S. Government Obligations, as defined above, held by such custodian, provided that except as required by law, no -------- deduction may be made by the custodian from the amount payable to the holder of any such depository receipt from the amount received by the custodian in respect of any such payment of interest or principal. -10- 19 SECTION 1.02. Compliance Certificates and Opinions. Upon any application or request by the Company to the Trustee to take any action under any provision of this Indenture, the Company shall furnish to the Trustee an Officers' Certificate stating that all conditions precedent, if any, provided for in this Indenture relating to the proposed action have been complied with and an Opinion of Counsel stating that, in the opinion of such counsel, all such conditions precedent, if any, have been complied with, except that in the case of any such application or request as to which the furnishing of such documents or any of them is specifically required by any provision of this Indenture relating to such particular application or request, no additional certificate or opinion need be furnished. Every certificate or opinion with respect to compliance with a condition or covenant provided for in this Indenture (except for the Officer's Certificate required by Section 5.06) shall include: (1) a statement that each individual signing such certificate or opinion has read such covenant or condition and the definitions herein relating thereto; (2) a brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions contained in such certificate or opinion are based; (3) a statement that, in the opinion of each such individual, he has made such examination or investigation as is necessary to enable him to express an informed opinion as to whether or not such covenant or condition has been complied with; and (4) a statement as to whether, in the opinion of each such individual, such condition or covenant has been complied with. SECTION 1.03. Form of Documents Delivered to Trustee. In any case where several matters are required to be certified by, or covered by an opinion of, any specified Person, it is not necessary that all such matters be certified by, or covered by the opinion of, only one such Person, or that they be so certified or covered by only one document, but one such Person may certify or give an opinion with respect to some matters and one or more other such Persons as to other matters, and any such Person may certify or give an opinion as to such matters in one or several documents. Any certificate or opinion of an officer of the Company may be based, insofar as it relates to legal matters, upon a certificate or opinion of, or representations by, counsel, unless such officer knows, or in the exercise of reasonable care should know, that the certificate or opinion or representations with respect to the matters upon which his -11- 20 certificate or opinion is based are erroneous. Any such certificate or Opinion of Counsel may be based, insofar as it relates to factual matters, upon a certificate or opinion of, or representations by, an officer or officers of the Company stating that the information with respect to such factual matters is in the possession of the Company, unless such counsel knows, or in the exercise of reasonable care should know, that the certificate or opinion or representations with respect to such matters are erroneous. Where any Person is required to make, give or execute two or more applications, requests, consents, certificates, statements, opinions or other instruments under this Indenture, they may, but need not, be consolidated and form one instrument. SECTION 1.04. Acts of Securityholders. (a) Any request, demand, authorization, direction, notice, consent, waiver or other action provided or permitted by this Indenture to be given or taken by Securityholders may be embodied in and evidenced by one or more instruments of substantially similar tenor signed by such Securityholders in person or by agent duly appointed in writing; and, except as herein otherwise expressly provided, such action shall become effective when such instrument or instruments are delivered to the Trustee, and, where it is hereby expressly required, to the Company. Such instrument or instruments (and the action embodied therein and evidenced thereby) are herein sometimes referred to as the "Act" of the Securityholders signing such instrument or instruments. Proof of execution of any such instrument or of a writing appointing any such agent shall be sufficient for any purpose of this Indenture and (subject to Section 8.01) conclusive in favor of the Trustee and the Company, if made in the manner provided in this Section. Without limiting the generality of this Section 1.04, unless otherwise provided in or pursuant to this Indenture, a Holder, including a Depository or its nominee that is a Holder of a Global Security, may make, give or take, by a proxy, or proxies, duly appointed in writing, any request, demand, authorization, direction, notice, consent, waiver or other action provided in or pursuant to this Indenture to be made, given or taken by Holders, and a Depository or its nominee that is a Holder of a Global Security may provide its proxy or proxies to the beneficial owners of interests in any such Global Security through such Depository's standing instructions and customary practices. (b) The fact and date of the execution by any Person of any such instrument or writing may be proved by the affidavit of a witness of such execution or by a certificate of a notary public or other officer authorized by law to take acknowledgments of deeds, certifying that the individual signing such instrument or writing acknowledged to him the execution thereof. Where such execution is by a Person acting in a capacity other than such Person's individual capacity, such certificate or affidavit shall also constitute sufficient proof of the authority of the Person executing the same. The fact and date of the execution of any such instrument or writing, or the authority of the Person executing the same, may also be proved in any other manner which the Trustee deems sufficient. -12- 21 (c) The ownership of Securities shall be proved by the Security Register. (d) Any request, demand, authorization, direction, notice, consent, waiver or other action by the Holder of any Security shall bind every future Holder of the same Security and the Holder of every Security issued upon the registration of transfer thereof or in exchange therefor or in lieu thereof, in respect of anything done, omitted or suffered to be done by the Trustee or the Company in reliance thereon, whether or not notation of such action is made upon such Security. (e) The Company may set any day as a record date for the purpose of determining the Holders of Outstanding Securities of any series entitled to give or take any request, demand, authorization, direction, notice, consent, waiver or other action, provided or permitted by this Indenture to be given or taken by Holders of Securities of such series. With regard to any record date set pursuant to this paragraph, the Holders of Outstanding Securities of the relevant series on such record date (or their duly appointed agents), and only such Persons, shall be entitled to give or take the relevant action, whether or not such Holders remain Holders after such record date. With regard to any action that may be given or taken hereunder only by Holders of a requisite Principal Amount of Outstanding Securities of any series (or their duly appointed agents) and for which a record date is set pursuant to this paragraph, the Company may, at its option, set an expiration date after which no such action purported to be given or taken by any Holder shall be effective hereunder unless given or taken on or prior to such expiration date by Holders of the requisite Principal Amount of Outstanding Securities of such series on such record date (or their duly appointed agents). On or prior to any expiration date set pursuant to this paragraph, the Company may, on one or more occasions at its option, extend such date to any later date. Notwithstanding the foregoing, the Company shall not set a record date for, and the provisions of this paragraph shall not apply with respect to, any action to be given or taken by Holders pursuant to Section 7.01, 7.02 or 7.12. Without limiting the foregoing, a Holder entitled hereunder to give or take any action hereunder with regard to any particular Security may do so with regard to all or any part of the Principal Amount of such Security or by one or more duly appointed agents each of which may do so pursuant to such appointment with regard to all or any part of such Principal Amount. SECTION 1.05. Notices, etc., to Trustee and Company. Any request, demand, authorization, direction, notice, consent, waiver or Act of Securityholders or other document provided or permitted by this Indenture to be made upon, given or furnished to, or filed with, (1) the Trustee by any Securityholder or by the Company shall be sufficient for every purpose hereunder if made, given, furnished or filed in writing to or with the Trustee at its Principal Corporate Trust Office, or -13- 22 (2) the Company by the Trustee or by any Securityholder shall be sufficient for every purpose hereunder (except as provided in Section 7.01(5) and (7)) if in writing and mailed, first-class, postage prepaid, to the Company addressed to the attention of its Treasurer at the address of its principal office specified in the first paragraph of this Indenture or at any other address previously furnished in writing to the Trustee by the Company. SECTION 1.06. Notices to Securityholders; Waiver. Where this Indenture provides for notice to Securityholders of any event, such notice shall be sufficiently given (unless otherwise herein expressly provided) if in writing and mailed, first-class, postage prepaid, to each Securityholder affected by such event, at his address as it appears in the Security Register, not later than the latest date, and not earlier than the earliest date, prescribed for the giving of such notice. In any case where notice to Securityholders is given by mail, neither the failure to mail such notice, nor any defect in any notice so mailed, to any particular Securityholder shall affect the sufficiency of such notice with respect to other Securityholders. Any notice which is mailed in the manner herein provided shall be conclusively presumed to have been duly given or provided. In case, by reason of the suspension of publication of any Authorized Newspaper or the suspension of regular mail service, or by reason of any other cause, it shall be impractical to make publication of any notice in an Authorized Newspaper or Authorized Newspapers or to give such notice by mail as required by this Indenture, then such method of publication or notification as shall be made with the approval of the Trustee shall constitute a sufficient publication or notification for every purpose hereunder. Where this Indenture provides for notice in any manner, such notice may be waived in writing by the Person entitled to receive such notice, either before or after the event, and such waiver shall be the equivalent of such notice. Waivers of notice by Securityholders shall be filed with the Trustee, but such filing shall not be a condition precedent to the validity of any action taken in reliance upon such waiver. SECTION 1.07. Conflict with Trust Indenture Act. If any provision hereof limits, qualifies or conflicts with a provision of the TIA which is required to be included in this Indenture by any of the provisions of the TIA, such required provision of the TIA shall control. If any provision of this Indenture modifies or excludes any provision of the TIA that may be so modified or excluded, the provision of the TIA shall be deemed to apply to this Indenture as so modified or shall be excluded, as the case may be. -14- 23 SECTION 1.08. Effect of Headings and Table of Contents. The Article and Section headings herein and the Table of Contents are for convenience only and shall not affect the construction hereof. SECTION 1.09. Successors and Assigns. All covenants and agreements in this Indenture by the Company shall bind its successors and assigns, whether so expressed or not. SECTION 1.10. Separability Clause. In case any provision in this Indenture or in any of the Securities shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby. SECTION 1.11. Benefits of Indenture. Nothing in this Indenture or in the Securities, express or implied, shall give to any Person, other than the parties hereto and their successors hereunder and the Securityholders, any benefit or any legal or equitable right, remedy or claim under this Indenture. SECTION 1.12. Legal Holidays. In any case where the date of any Interest Payment Date or Redemption Date or the Stated Maturity of any Security or any date on which any Defaulted Interest is proposed to be paid or the last day on which a Securityholder has the right to convert or exchange his Security at a particular conversion or exchange price shall not be a Business Day, then (notwithstanding any other provision of the Securities or this Indenture, other than a provision in any Security that specifically states that such provision shall apply in lieu of this Section) payment of the principal of (and premium, if any) or interest on, or conversion or exchange of, such Security need not be made on such date, but may be made on the next succeeding Business Day with the same force and effect as if made on the nominal date of any such Interest Payment Date or Redemption Date or Stated Maturity or on such date on which Defaulted Interest is proposed to be paid or on such last day for conversion or exchange, and no interest shall accrue for the period from and after any such nominal date. SECTION 1.13. Governing Law. This Indenture and the Securities shall be construed in accordance with and governed by the internal laws (and not the law of conflicts) of the State of New York applicable to agreements made or instruments entered into and, in each case, performed in said state. -15- 24 ARTICLE TWO ISSUANCE OF SECURITIES IN SERIES; FORMS; OTHER PROVISIONS RELATING TO SECURITIES SECTION 2.01. Amount Unlimited; Issuance in Series. The aggregate principal amount of Securities which may be authenticated and delivered under this Indenture is unlimited. The Securities issued hereunder may be issued in one or more series. The Securities of each series may bear such designations, which may or may not include the term "Security", and may have such terms, respectively (including, without limitation, additional covenants and changes in or eliminations of covenants set forth in this Indenture), as shall be approved prior to the authentication thereof by or pursuant to a Board Resolution; provided, however, that no Securities of any series shall be senior in right of payment to any Securities of any other series and the Securities of each series shall rank equally and pari passu with all other unsecured and unsubordinated debt of the Company. With respect to any Securities to be authenticated and delivered hereunder, there shall be established in or pursuant to a Board Resolution and, subject to Section 3.02, set forth, or determined in the manner provided, in an Officers' Certificate, or established in one or more indentures supplemental hereto, prior to the issuance of Securities of any series, (1) the title of the Securities of the series (which shall distinguish the Securities of the series from Securities of any other series); (2) any limit upon the aggregate principal amount of the Securities of the series which may be authenticated and delivered under this Indenture (except for Securities authenticated and delivered upon registration or transfer of, or in exchange for, or in lieu of, other Securities of such series pursuant to Section 2.06, 2.07, 2.08, 10.06 or 4.08 and except for any Securities which, pursuant to Section 2.05 are deemed never to have been authenticated and delivered hereunder); (3) the Person to whom any interest on a Security of the series shall be payable, if other than the Person in whose name that Security (or one or more Predecessor Securities) is registered at the close of business on the Regular Record Date for such interest; (4) the date or dates, or the method or methods, if any, by which such date or dates shall be determined, on which the principal of such Securities is payable; -16- 25 (5) the rate or rates at which any Securities of the series shall bear interest, if any, or the method or methods, if any, by which such rate or rates are to be determined, the date or dates, if any, from which such interest shall accrue or the method or methods, if any, by which such date or dates are to be determined, the Interest Payment Dates, if any, on which such interest shall be payable and the Regular Record Date, if any, for the interest payable on any Interest Payment Date, and the basis upon which interest shall be calculated if other than that of a 360-day year of twelve 30-day months; (6) the place or places where the principal of (and premium, if any) and interest on Securities of the series shall be payable, any Securities of the series may be surrendered for registration of transfer or exchange and notices and demands to or upon the Company with respect to the Securities of the series and this Indenture may be served; (7) whether any of such Securities are to be redeemable at the option of the Company and, if so, the period or periods within which, the price or prices at which and the terms and conditions upon which any Securities of the series may be redeemed, in whole or in part, at the option of the Company, and, if other than by a Board Resolution, the manner in which any election by the Company to redeem the Securities shall be evidenced; (8) whether the Company is obligated to redeem, purchase or repay any Securities of the series pursuant to any sinking fund or analogous provisions or at the option of the Holder thereof and, if so, the period or periods within which, the price or prices at which and the terms and conditions upon which any Securities of the series shall be redeemed, purchased or repaid, in whole or in part, pursuant to such obligation and any provisions for the remarketing of any Securities of the series so redeemed or purchased; (9) the denominations in which any Securities of the series shall be issuable if other than denominations of $1,000 and any integral multiple thereof; (10) whether the amount of payments of principal of or any premium or interest on any Securities of the series may be determined with reference to an index, formula or other method (which index, formula or method or methods may be based, without limitation, on one or more Currencies, commodities, equity indices or other indices), and if so, the terms and conditions upon which and the manner in which such amounts shall be determined and paid or payable; (11) if other than the currency of the United States of America, the currency, currencies or currency units in which the principal of or any premium or interest on any Securities of the series shall be payable and the manner of determining the equivalent thereof in the currency of the United States of America -17- 26 for any purpose, including for purposes of the definition of "Outstanding" in Section 1.01; (12) if the principal of or any premium or interest on any Securities of the series is to be payable, at the election of the Company or the Holder thereof, in one or more currencies or currency units other than that or those in which such Securities are stated to be payable, the currency, currencies or currency units in which the principal of or any premium or interest on such Securities as to which such election is made shall be payable, the periods within which and the terms and conditions upon which such election is to be made and the amount so payable (or the manner in which such amount shall be determined); (13) if other than the entire principal amount thereof, the portion of the principal amount of any Securities of the series which shall be payable upon declaration of acceleration of the Maturity thereof pursuant to Section 7.02 or the method by which such portion is to be determined; (14) if the principal amount payable at the Stated Maturity of any Securities of the series will not be determinable as of any one or more dates prior to the Stated Maturity, the amount which shall be deemed to be the principal amount of such Securities as of any such date for any purpose thereunder or hereunder, including the principal amount thereof which shall be due and payable upon any Maturity other than the Stated Maturity or which shall be deemed to be Outstanding as of any date prior to the Stated Maturity (or, in any such case, the manner in which such amount deemed to be the principal amount shall be determined); (15) if applicable, that the Securities of the series, in whole or any specified part, shall be defeasible pursuant to Section 14.02 or Section 14.03 or both such Sections and, if other than by a Board Resolution, the manner in which any election by the Company to defease such Securities shall be evidenced; (16) if there is more than one Trustee, the identity of the Trustee and, if not the Trustee, the identity of each Security Registrar, Paying Agent or Authenticating Agent with respect to such Securities; (17) any deletions from, modifications of or additions to the Events of Default or covenants of the Company with respect to any Securities of the series, whether or not such Events of Default or covenants are consistent with the Events of Default or covenants set forth herein; (18) whether the Securities of the series shall be issued in whole or in part in the form of one or more Global Securities and, if so, (a) the Depository with respect to such Global Security or Securities, (b) the form of any legend or legends -18- 27 which shall be borne by any such Global Security in addition to or in lieu of that set forth in Section 2.14, and (c) the circumstances under which any such Global Security may be exchanged for Securities registered in the name of, and any transfer of such Global Security may be registered to, a Person other than such Depository or its nominee, if other than as set forth in Section 2.07; (19) if any Securities of the series are to be issuable upon the exercise of warrants, this shall be so established and (if established by Board Resolution) so set forth, as well as the time, manner and place for such Securities to be authenticated and delivered; (20) if less than all of the Holders of Securities or any series of Securities may consent on behalf of all of such Holders to the postponement of any interest payment as permitted pursuant to Section 316(a)(2) of the TIA, such lesser percentage; and (21) any other terms of any Securities of the series which the Company may establish in accordance with the terms of this Indenture. All Securities of any one series shall be substantially identical except as to currency of payments due thereunder, denomination and the rate or rates of interest, if any, and Maturity, the date from which interest, if any, shall accrue and except as may otherwise be provided by the Company in or pursuant to the Board Resolution and set forth in the Officers' Certificate or in any indenture or indentures supplemental hereto pertaining to such series of Securities. All Securities of any one series need not be issued at the same time and, unless otherwise so provided by the Company, a series may be reopened for issuances of additional Securities of such series or to establish additional terms of such series of Securities, provided that such additional terms do not have a material adverse effect on the interests of the Holders of Securities of such Series. SECTION 2.02. Forms Generally. The form of each series of Securities shall be substantially the form for such series approved by or pursuant to such Board Resolution, and each Security of such series shall be in substantially the form so approved; provided, however, that a Board Resolution authorizing the issuance of Securities may elect to treat as a single series such Securities as those commonly known as medium-term notes, which may be issued from time to time in one or more approved forms with particular Securities of the series having financial terms determined pursuant to such Board Resolution at or about the time of their issuance, and in such case the form for any particular Security of such series and for any Security issued in exchange or transfer of all or part of such particular Security shall be whichever of the approved forms for such series was authorized for such particular Security. Any Securities 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 -19- 28 securities exchange on which such Securities may be listed, or as may, consistently herewith, be determined by the officers executing such Securities, as evidenced by their execution of such Securities. Any portion of the text of any Security may be set forth on the reverse thereof, with an appropriate reference thereto on the face of the Security. Each definitive Security shall be printed, lithographed or engraved or produced by any combination of these methods on steel engraved borders or may be produced in any other manner, all as determined by the officers executing such Security, as evidenced by their execution of such Security. SECTION 2.03. Forms of Trustee's Certificate of Authentication. The Trustee's certificate of authentication shall be substantially in either of the following forms: (FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION) CERTIFICATE OF AUTHENTICATION This is one of the Securities of the series designated therein referred to in the within-mentioned Indenture. _____________________________, as Trustee By __________________________ Authorized Officer (FORM OF ALTERNATE CERTIFICATE OF AUTHENTICATION) CERTIFICATE OF AUTHENTICATION This is one of the Securities of the series designated therein referred to in the within-mentioned Indenture. _____________________________, as Trustee By __________________________ (Authenticating Agent) By __________________________ Authorized Officer -20- 29 SECTION 2.04. Currency; Denominations. Unless otherwise provided in or pursuant to this Indenture, the principal of, any premium and interest on the Securities of any series shall be payable in Dollars. Unless otherwise provided with respect to a series of Securities by or pursuant to the Board Resolution authorizing such series, the Securities of each series denominated in Dollars shall be issuable as a registered Security without coupons in the denomination of $1,000 or any integral multiple thereof. Securities not denominated in Dollars shall be issuable in such denominations as are established with respect to such Securities in or pursuant to this Indenture. SECTION 2.05. Date, Execution, Authentication and Delivery. Except as otherwise provided with respect to a series of Securities by or pursuant to the Board Resolution authorizing such series, the Securities of all series shall be dated the dates of their respective dates of authentication. Except as otherwise provided with respect to a series of Securities by or pursuant to the Board Resolution authorizing such series, the Securities of all series shall be executed on behalf of the Company by its Chairman of the Board, one of its Vice Chairmen of the Board, its President or one of its Vice Presidents and attested by its Secretary or one of its Assistant Secretaries. The signatures of any or all of these officers on the Securities may be manual or facsimile. Securities bearing the manual or facsimile signatures of individuals who were at any time the proper officers of the Company shall bind the Company, notwithstanding that such individuals or any of them have ceased to hold such offices prior to the authentication and delivery of such Securities or did not hold such offices at the date of such Securities. No Security shall be entitled to any benefit under this Indenture or be valid or obligatory for any purpose, unless there appears on such Security a certificate of authentication substantially in one of the forms provided for herein manually executed by the Trustee or on its behalf as provided in Section 8.14, and such certificate upon any Security shall be conclusive evidence, and the only evidence, that such Security has been duly authenticated and delivered hereunder. Notwithstanding the foregoing, if any Security shall have been authenticated and delivered hereunder but never issued and sold by the Company, and the Company shall deliver such Security to the Trustee for cancellation as provided in Section 2.12, for all purposes of this Indenture such Security shall be deemed never to have been authenticated and delivered hereunder and shall never be entitled to the benefits of this Indenture. -21- 30 SECTION 2.06. Temporary Securities. Pending the preparation of definitive Securities of any series, the Company may execute, and upon Company Order the Trustee shall authenticate and deliver, temporary Securities which may be printed, lithographed, typewritten, mimeographed or otherwise produced in any authorized denomination, substantially of the tenor of the definitive Securities in lieu of which they are issued and with such appropriate insertions, omissions, substitutions and other variations as the officers executing such Securities may determine, as evidenced by their execution of such Securities. Except in the case of temporary Securities in global form, which can be exchanged in accordance with the provisions thereof, if temporary Securities of any series are issued, the Company will cause definitive Securities of that series to be prepared without unreasonable delay. After the preparation of definitive Securities of such series, the temporary Securities of such series shall be exchangeable for definitive Securities of such series upon surrender of the temporary Securities of such series at the office or at any agency of the Company in a Place of Payment for that series, without charge to the Holder. Upon surrender for cancellation of any one or more temporary Securities of any series, the Company shall execute and the Trustee shall authenticate and deliver in exchange therefor a like principal amount of definitive Securities of the same series and tenor and date of maturity and of authorized denominations. Until so exchanged, the temporary Securities of any series shall in all respects be entitled to the same benefits under this Indenture as definitive Securities of such series and tenor. SECTION 2.07. Registration, Registration of Transfer and Exchange. The Company shall keep or cause to be kept a register or registers (hereinafter sometimes referred to as the "Security Register") in which, subject to such reasonable regulations as it may prescribe, the Company shall provide for the registration of Securities and the registration of transfers of Securities. Any such register shall be in written form or in any other form capable of being converted into written form within a reasonable time. At all reasonable times the information contained in such register or registers shall be available for inspection by the Trustee at the office or agency to be maintained by the Company as provided in Section 5.02. Upon surrender for registration of transfer of any Security of any series at any office or agency of the Company in any Place of Payment for such series, the Company shall execute, and the Trustee shall authenticate and deliver, in the name of the designated transferee or transferees and in authorized denominations, one or more new Securities of the same series and date of maturity and of like tenor and aggregate principal amount. At the option of the Holder, Securities of any series may be exchanged for a like aggregate principal amount of other Securities of the same series, in authorized denominations and date of maturity and tenor, upon surrender of the Securities to be exchanged at -22- 31 any such office or agency. Whenever any Securities are so surrendered for exchange, the Company shall execute, and the Trustee shall authenticate and deliver, the Securities which the Securityholder making the exchange is entitled to receive. All Securities issued upon any registration of transfer or exchange of Securities shall be the valid obligations of the Company evidencing the same debt, and entitled to the same benefits under this Indenture, as the Securities surrendered upon such registration of transfer or exchange. Every Security presented or surrendered for registration of transfer or for exchange shall (if so required by the Company or the Trustee) be duly endorsed, or be accompanied by a written instrument of transfer in form satisfactory to the Company and the Security Registrar (if other than the Company) duly executed, by the Holder thereof or his attorney duly authorized in writing. No service charge shall be made for any registration of transfer or exchange of Securities, but the Company may require payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in connection with any registration of transfer or exchange of Securities, other than exchanges pursuant to Section 2.06, 4.08, or 10.06 not involving any transfer. The Company may but shall not be required (i) to issue, register the transfer of or exchange any Securities of a particular series during a period beginning at the opening of business 15 days before the day of the mailing of a notice of redemption of Securities of such series selected for redemption under Section 4.04 and ending at the close of business on the day of such mailing, (ii) to register the transfer of or exchange any Security so selected for redemption in whole or in part, except the unredeemed portion of any Security being redeemed in part, or (iii) to issue, register the transfer of or exchange any Security that, in accordance with its terms, has been surrendered for payment at the option of the Holder, except the portion, if any, of such Security not to be so paid. Each Global Security authenticated under this Indenture shall be registered in the name of the Depository designated for such Global Security or a nominee thereof and delivered to such Depository or a nominee thereof or custodian therefor, and each such Global Security shall constitute a single Security for all purposes of this Indenture. Any exchange of a Global Security for other Securities may be made in whole or in part, and all Securities issued in exchange for a Global Security or any portion thereof shall be registered in such names as the Depository for such Global Security shall direct. Notwithstanding any other provision in this Indenture, no Global Security may be transferred to, or registered or exchanged for Securities registered in the name of, any Person other than the Depository for such Global Security or any nominee thereof, and no such transfer may be registered, unless (1) such Depository (A) notifies the Company that -23- 32 it is unwilling or unable to continue as Depository for such Global Security or (B) ceases to be a clearing agency registered under the Exchange Act, (2) the Company executes and delivers to the Trustee a Company Order that such Global Security shall be so transferable, registrable and exchangeable, and such transfers shall be registrable, or (3) there shall have occurred and be continuing an Event of Default with respect to the Securities evidenced by such Global Security. Notwithstanding any other provision in this Indenture, a Global Security to which the restriction set forth in the preceding sentence shall have ceased to apply may be transferred only to, and may be registered and exchanged for Securities registered only in the name or names of, such Person or Persons as the Depository for such Global Security shall have directed and no transfer thereof other than such a transfer may be registered. Every Security authenticated and delivered upon registration of transfer, or in exchange for or in lieu, of a Global Security to which the restriction set forth in the first sentence of the preceding paragraph shall apply, whether pursuant to this Section, Sections 2.06, 2.08, 4.08 or 10.06 or otherwise, shall be authenticated and delivered in the form of, and shall be, a Global Security unless such Security is registered in the name of a Person other than the Depository for such Global Security or a nominee thereof. SECTION 2.08 Mutilated, Destroyed, Lost and Stolen Securities. If (i) any mutilated Security is surrendered to the Trustee, or if the Company and the Trustee receive evidence to their satisfaction of the destruction, loss or theft of any Security, and (ii) there is delivered to the Company and the Trustee such security or indemnity as may be required by them to save each of them and any agent of either of them harmless, then, in the absence of notice to the Company or the Trustee that such Security has been acquired by a bona fide purchaser, the Company shall execute and upon its request the Trustee shall authenticate and deliver, in exchange for or in lieu of any such mutilated, destroyed, lost or stolen Security, a new Security of the same series, date of maturity and principal amount and of like tenor, bearing a number not contemporaneously outstanding. In case any such mutilated, destroyed, lost or stolen Security has become or is about to become due and payable, the Company in its discretion may, instead of issuing a new Security, pay such Security. Upon the issuance of any new Security under this Section, the Company may require the payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in relation thereto and any other expenses (including the fees and expenses of the Trustee) connected therewith. Every new Security of any series issued pursuant to this Section in lieu of any mutilated, destroyed, lost or stolen Security shall constitute an original additional contractual obligation of the Company, whether or not the mutilated, destroyed, lost or -24- 33 stolen Security shall be at any time enforceable by anyone, and shall be entitled to all the benefits of this Indenture equally and proportionately with any and all other Securities of the same series duly issued hereunder. The provisions of this Section as amended or supplemented pursuant to this Indenture with respect to particular Securities or generally, shall be exclusive and shall preclude (to the extent lawful) all other rights and remedies with respect to the replacement or payment of mutilated, destroyed, lost or stolen Securities. SECTION 2.09. Payment of Interest; Interest Rights Preserved. Except as otherwise provided with respect to a series of Securities by or pursuant to the Board Resolution authorizing such series, interest on each Security which is payable, and is punctually paid or duly provided for, on any Interest Payment Date shall be paid to the Person in whose name that Security (or one or more Predecessor Securities) is registered at the close of business on the Regular Record Date for such Interest Payment Date. Except as otherwise provided with respect to a series of Securities by or pursuant to the Board Resolution authorizing such series, all interest on each Security which is payable, but is not punctually paid or duly provided for, on any Interest Payment Date (herein called "Defaulted Interest") shall forthwith cease to be payable to the registered Holder on the relevant Regular Record Date by virtue of having been such Holder; and such Defaulted Interest may be paid by the Company, at its election in each case, as provided in Clause (1) or Clause (2) below: (1) The Company may elect to make payment of any Defaulted Interest to the Person in whose name the Security of such series (or a Predecessor Security) is registered at the close of business on a Special Record Date for the payment of such Defaulted Interest, which shall be fixed in the following manner. The Company shall notify the Trustee in writing of the amount of Defaulted Interest proposed to be paid on each Security of such series and the date of the proposed payment, and at the same time the Company shall deposit with the Trustee an amount of money equal to the aggregate amount proposed to be paid in respect of such Defaulted Interest or shall make arrangements satisfactory to the Trustee for such deposit prior to the date of the proposed payment, such money when deposited to be held in trust for the benefit of the Persons entitled to such Defaulted Interest as in this Clause provided. Thereupon the Trustee shall fix a Special Record Date for the payment of such Defaulted Interest which shall be not more than 15 nor less than 10 days prior to the date of the proposed payment and not less than 10 days after the receipt by the Trustee of the notice of the proposed payment. The Trustee shall promptly notify the Company of such Special Record Date and, in the name and at the expense of the Company, shall cause notice of the proposed payment of such Defaulted Interest and the Special Record Date therefor to be mailed, first- -25- 34 class, postage prepaid, to each holder of a Security of such series in respect of which such Defaulted Interest is payable at such Holder's address as it appears in the Security Register, not less than 10 days prior to such Special Record Date. The Trustee may, in its discretion, in the name and at the expense of the Company, cause a similar notice to be published at least once in an Authorized Newspaper in each Place of Payment, but such publication shall not be a condition precedent to the establishment of such Special Record Date. Notice of the proposed payment of such Defaulted Interest and the Special Record Date therefor having been mailed as aforesaid, such Defaulted Interest shall be paid to the Persons in whose names the Securities of such series in respect of which such Defaulted Interest is payable (or their respective Predecessor Securities) are registered at the close of business on such Special Record Date and shall no longer be payable pursuant to the following Clause (2). (2) The Company may make payment of any Defaulted Interest on the Securities of any series in any other lawful manner not inconsistent with the applicable requirements of any securities exchange on which the Securities may be listed, and upon such notice as may be required by such exchange, if, after notice given by the Company to the Trustee of the proposed payment pursuant to this Clause, such manner of payment shall be deemed practicable by the Trustee. Subject to the foregoing provisions of this Section, and except as otherwise provided with respect to a series of Securities by or pursuant to the Board Resolution authorizing such series, each Security delivered under this Indenture upon registration of transfer of, or in exchange for, or in lieu of, any other Security shall carry the rights to interest accrued and unpaid, and to accrue, which were carried by such other Security. SECTION 2.10. Place of Payment. The principal and the Redemption Price of, and interest, if any, on, each Security shall be payable at the agency or agencies maintained by the Company for such purposes at each Place of Payment which shall be designated by the Company by written notice to the Trustee; provided, however, that at the option of the Company payment of interest may be made by check mailed by first class mail to the address of the Person entitled thereto at such address as shall appear in the Security Register. SECTION 2.11. Persons Deemed Owners. Prior to due presentment for registration of transfer of any Security, the Company, the Trustee and any agent of the Company or the Trustee may treat the Person in whose name any Security is registered as the absolute owner of such Security for the purpose of receiving payment of principal of (and premium, if any), and (subject to Section 2.09) interest, if any, on, such Security and for all other purposes whatsoever, whether or not -26- 35 such Security be overdue, and neither the Company, the Trustee nor any agent of the Company or the Trustee shall be affected by notice to the contrary. No Person entitled to any beneficial interest in any Global Security held on its behalf by a Depository or its nominee shall, as such, have any rights under this Indenture with respect to such Global Security, and such Depository or its nominee may be treated by the Company, the Trustee, and any agent of the Company or the Trustee as the owner of such Global Security for all purposes whatsoever. None of the Company, the Trustee, any Paying Agent or the Security Registrar will have any responsibility or liability for any aspect of the records relating to or payments made on account of beneficial ownership interests of a Global Security or for maintaining, supervising or reviewing any records relating to such beneficial ownership interests. SECTION 2.12. Cancellation. Except as otherwise provided with respect to a series of Securities by or pursuant to the Board Resolution authorizing such series, each Security surrendered for payment, registration of transfer, conversion, exchange, redemption or for credit against any sinking fund payment shall, if surrendered to any Person other than the Trustee, be delivered to the Trustee and any such Security, as well as Securities surrendered directly to the Trustee for any such purpose, shall be promptly canceled by it. The Company may at any time deliver to the Trustee for cancellation any Securities previously authenticated and delivered hereunder which the Company may have acquired in any manner whatsoever, and may deliver to the Trustee (or any other Person for delivery to the Trustee) for cancellation any Securities previously authenticated hereunder which the Company has not issued and sold and all Securities so delivered shall be promptly canceled by the Trustee. No Securities shall be authenticated in lieu of or in exchange for any Securities canceled as provided in this Section, except as expressly permitted by this Indenture. All canceled Securities held by the Trustee shall be disposed of as directed by a Company Order. SECTION 2.13. Computation of Interest. Except as otherwise specified as contemplated by Section 2.01 for Securities of any series, interest on the Securities of each series shall be computed on the basis of a 360-day year of twelve 30-day months. SECTION 2.14. Form of Legend for Global Securities. Every Global Security authenticated and delivered hereunder shall bear a legend in substantially the following form: This Security is a Global Security within the meaning of the Indenture hereinafter referred to and is registered in the name of a Depository or a nominee of a Depository. This Security is exchangeable for Securities -27- 36 registered in the name of a Person other than the Depository or its nominee only in the limited circumstances described in the Indenture and no transfer of this Security (other than a transfer of this Security as a whole by the Depository to a nominee of the Depository or by a nominee of the Depository to the Depository or another nominee of the Depository) may be registered except in such limited circumstances. SECTION 2.15. Payment to be in Proper Currency. In the case of any Securities of any series denominated in any Currency other than Dollars, except as otherwise provided therein, the obligation of the Company to make any payment of principal, premium or interest thereon shall not be discharged or satisfied by any tender by the Company, or recovery by the Trustee, in any currency other than such Currency, except to the extent that such tender or recovery shall result in the Trustee timely holding the full amount of such Currency then due and payable. If any such tender or recovery is in a currency other than the denominated Currency, the Trustee may take such actions as it considers appropriate to exchange such currency for the denominated Currency. The costs and risks of any such exchange, including without limitation the risks of delay and exchange rate fluctuation, shall be borne by the Company, the Company shall remain fully liable for any shortfall or delinquency in the full amount of such Currency then due and payable, and in no circumstances shall the Trustee be liable therefor except in the case of its negligence or willful misconduct. ARTICLE THREE ISSUE OF SECURITIES SECTION 3.01. Authentication and Delivery of Securities. Securities may be authenticated and delivered under this Indenture as permitted by the provisions of Sections 2.06, 2.07, 2.08, 3.02, 4.08 and 10.06. SECTION 3.02. Documents Required for Issuance of Series of Securities. At any time, or from time to time after the execution and delivery of this Indenture, Securities may be executed by the Company and delivered to the Trustee for authentication upon original issue, and shall be authenticated by the Trustee and delivered by it as provided in the Company Order referred to below, upon receipt by the Trustee of the following: (a) a Company Order, (b) a Board Resolution authorizing the execution, authentication and delivery of Securities, and specifying the series, maturity or (if Securities of such -28- 37 series are of serial maturities) maturities, and principal amount of such Securities to be authenticated and delivered, (c) in case the Securities to be authenticated and delivered are of a series none of the Securities of which has been previously authenticated by the Trustee, the Board Resolution by or pursuant to which the terms and the form of the Securities of such series shall have been approved, (d) either (i) a certificate or other official document evidencing the due authorization, approval or consent of any governmental body or bodies at the time having jurisdiction in the premises, together with an Opinion of Counsel that the Trustee is entitled to rely thereon and that the authorization, approval or consent of no other governmental body is required, or (ii) an Opinion of Counsel that no authorization, approval or consent of any governmental body is required, (e) an Opinion of Counsel that all instruments furnished the Trustee conform to the requirements of this Indenture and constitute sufficient authority hereunder for the Trustee to authenticate and deliver the Securities then applied for; that all conditions precedent provided for in this Indenture relating to the authentication and delivery of such Securities have been complied with and the Company is duly entitled to the authentication and delivery of such Securities in accordance with the provisions of this Indenture; that all laws and requirements with respect to the execution and delivery by the Company of such Securities have been complied with; that the Company has corporate power to issue such Securities and has duly taken all necessary corporate action for those purposes; that such Securities, when issued, will be the valid, legal and binding obligations of the Company; and that such Securities, when issued, will be entitled to the benefits of this Indenture, and (f) an Officers' Certificate stating that the Company is not in default under this Indenture and that the issuance of the additional Securities applied for will not result in any breach of any of the terms, conditions or provisions of, or constitute a default under, the Company's certificate of incorporation or by-laws or any indenture, mortgage, deed of trust or other agreement or instrument to which the Company is a party or by which it is bound, or any order of any court or administrative agency entered in any proceeding to which the Company is a party or by which it may be bound or to which it may be subject; and that all conditions precedent provided for in this Indenture relating to the authentication and delivery of such Securities have been complied with. If all the Securities of any series are not to be issued at one time, it shall not be necessary to deliver an Opinion of Counsel and an Officers' Certificate at the time of issuance of each Security, but such opinion and certificate, with appropriate modifications, shall be delivered at or before the time of issuance of the first Security of such series. After -29- 38 any such first delivery, any separate request by the Company that the Trustee authenticate Securities of such series for original issue will be deemed to be a certification by the Company that all conditions precedent provided for in this Indenture relating to authentication and delivery of such Securities continue to have been complied with. The Trustee shall not be required to authenticate or to cause an Authenticating Agent to authenticate any Securities if the issue of such Securities pursuant to this Indenture will affect the Trustee's own rights, duties or immunities under the Securities and this Indenture or otherwise in a manner which is not reasonably acceptable to the Trustee or if the Trustee, being advised by counsel, determines that such action may not lawfully be taken. ARTICLE FOUR REDEMPTION OF SECURITIES SECTION 4.01. Right of Redemption. With respect to any series of Securities, the Company may reserve the right to redeem and pay prior to Stated Maturity all or any part of such Securities at such time or times and from time to time as may be permitted or required by the terms of the Securities of such series. SECTION 4.02. Applicability of Article. Redemption of all or any part of the Securities of any series at the election of the Company or otherwise, as permitted or required by the terms of the Securities of such series, shall be made in accordance with such terms and this Article. SECTION 4.03. Election to Redeem; Notice to Trustee. The election of the Company to redeem all or any part of the Securities of any series pursuant to the terms of the Securities of such series shall be evidenced by a Board Resolution. In case of any redemption at the election of the Company of less than all the Securities of any series, the Company shall, at least 60 days prior to the Redemption Date fixed by the Company (unless a shorter notice shall be satisfactory to the Trustee in its sole discretion), notify the Trustee of such Redemption Date and of the principal amount of Securities of such series to be redeemed. SECTION 4.04. Selection of Securities to Be Redeemed. If less than all the Securities of any series are to be redeemed (unless all the Securities of such series and of a specified tenor are to be redeemed or unless such redemption affects only a single Security), the particular Securities of such series to be -30- 39 redeemed shall be selected not more than 60 days prior to the Redemption Date by the Company, or, if the Company shall so designate, by the Trustee, from the Outstanding Securities of such series not previously called for redemption, by a method which shall be fair and appropriate in accordance with methods generally used at the time of selection by fiduciaries in similar circumstances and which may provide for the selection for redemption of portions of the principal of Securities of such series of a denomination larger than the authorized minimum denomination of the Securities of such series. The portions of the principal of Securities so selected for partial redemption shall be equal to such minimum denomination or an integral multiple thereof. Unless the Company shall have designated the Trustee to select the Securities to be redeemed, the Company shall promptly notify the Trustee by an Officers' Certificate of the Securities selected for redemption and, in the case of any Security selected for partial redemption, the principal amount thereof to be redeemed, and the Trustee may conclusively rely upon such Officers' Certificate in connection with the selection of such Securities for redemption. If the Trustee is designated to select the Securities to be redeemed, the Trustee shall promptly notify the Company and the Security Registrar (if other than itself) in writing of the Securities selected for redemption. For all purposes of this Indenture, unless the context otherwise requires, all provisions relating to the redemption of Securities shall relate, in the case of any Securities redeemed or to be redeemed only in part, to the portion of the principal of such Securities which has been or is to be redeemed. SECTION 4.05. Notice of Redemption. Except as otherwise provided with respect to a series of Securities by or pursuant to the Board Resolution authorizing such series, notice of redemption shall be given by first-class mail, postage prepaid, mailed not less than 30 nor more than 60 days prior to the Redemption Date, to the Holder of each Security to be redeemed, at such Holder's address appearing in the Security Register. Any notice that is mailed to the Holder of any Securities in the manner herein provided shall be conclusively presumed to have been duly given, whether or not such Holder receives the notice. All notices of redemption shall state: (1) the Redemption Date, (2) the Redemption Price, (3) if less than all the Outstanding Securities of like tenor of any series are to be redeemed, the identification (and, in the case of partial redemption, the -31- 40 respective principal amounts) of the Securities of such series to be redeemed from the Holders to whom the notice is given, (4) that on the Redemption Date the Redemption Price will become due and payable upon each such Security to be redeemed, and, if applicable, that interest thereon, if any, shall cease to accrue on and after said date, (5) if applicable, the current conversion or exchange price and the date on which the right to convert or exchange such Securities or portions thereof into shares of stock or other securities into which they are convertible or exchangeable will expire, (6) the place or places where such Securities maturing after the Redemption Date, are to be surrendered for payment of the Redemption Price and any accrued interest pertaining thereto, and (7) if such be the case, that such Securities are to be redeemed through operation of a mandatory or optional sinking fund. Notice of redemption of Securities to be redeemed at the election of the Company shall be given by the Company or, on Company Request, by the Trustee in the name and at the expense of the Company. SECTION 4.06. Deposit of Redemption Price. Prior to any Redemption Date, the Company shall deposit with the Trustee or with a Paying Agent (or, if the Company is acting as its own Paying Agent, segregate and hold in trust as provided in Section 5.03) an amount of money sufficient to pay the Redemption Price of, and (except if the Redemption Date shall be an Interest Payment Date) any interest on all the Securities or portions thereof which are to be redeemed on that date. SECTION 4.07. Securities Payable on Redemption Date. Notice of redemption having been given as aforesaid, the Securities so to be redeemed shall, on the Redemption Date, become due and payable at the Redemption Price therein specified and on such date (unless the Company shall default in the payment of the Redemption Price and accrued interest) such Securities shall cease to bear interest. Upon surrender of such Securities for redemption in accordance with such notice, such Securities shall be paid by the Company at the Redemption Price, together with accrued interest to the Redemption Date. Installments of interest whose Stated Maturity is on or prior to the Redemption Date shall be payable to the Holders of such Securities, or one or more Predecessor Securities, registered as such at the close of business on the relevant Regular Record Dates according to their terms and the provisions of Section 2.09, except as otherwise provided in this Indenture with respect to such Securities. -32- 41 If any Security called for redemption shall not be so paid upon surrender thereof for redemption, the principal (and premium, if any) shall, until paid, bear interest from the Redemption Date at the rate specified by the terms of such Security. SECTION 4.08. Securities Redeemed in Part. Any Security which is to be redeemed only in part shall be surrendered at an agency of the Company in a Place of Payment (with, if the Company or the Trustee so requires, due endorsement by, or a written instrument of transfer in form satisfactory to the Company and the Trustee duly executed by, the Holder thereof or his attorney duly authorized in writing) and the Company shall execute, and the Trustee shall authenticate and deliver to the Holder of such Security without service charge, a new Security or Securities, of the same series and date of maturity and of like tenor, of any authorized denominations as requested by such Holder, in aggregate principal amount equal to and in exchange for the unredeemed portion of the principal of the Security so surrendered. If a Global Security is so surrendered, such new Security so issued shall be a new Global Security in a denomination equal to the unredeemed portion of the principal of the Global Security so surrendered. ARTICLE FIVE COVENANTS SECTION 5.01. Payment of Principal, Premium and Interest. The Company will duly and punctually pay the principal of (and premium, if any) and interest, if any, on the Securities in accordance with the terms of the Securities and this Indenture. SECTION 5.02. Maintenance of Agency. The Company will maintain in each Place of Payment for any series of Securities an office or agency where Securities of that series may be presented or surrendered for payment, where Securities of that series may be surrendered for registration of transfer or exchange or conversion and where notices and demands to or upon the Company in respect of the Securities of that series and this Indenture may be served. The Company will give prompt written notice to the Trustee of the location, and of any change in the location, of such office or agency. If at any time the Company shall fail to maintain any such required office or agency or shall fail to furnish the Trustee with the address thereof, such presentations, surrenders, notices and demands may be made or served at the Principal Corporate Trust Office of the Trustee and during the continuance of such failure on the Company's part, the Company hereby appoints the Trustee as its agent to receive all such presentations, surrenders, notices and demands. -33- 42 The Company may also from time to time designate one or more other offices or agencies where the Securities of one or more series may be presented or surrendered for any or all such purposes and may from time to time rescind such designations; provided, however, that no such designation or rescission shall in any manner relieve the Company of its obligation to maintain an office or agency in each Place of Payment for Securities of any series for such purposes. The Company will give prompt written notice to the Trustee of any such designation or rescission and of any change in the location of any such other office or agency. SECTION 5.03. Money for Security Payments to Be Held in Trust. (a) The Company agrees (1) if the Company shall at any time act as its own Paying Agent with respect to any series of Securities, it will, on or before each due date of the principal of (and premium, if any) or interest, if any, on any of the Securities of that series, segregate and hold in trust for the benefit of the Persons entitled thereto a sum sufficient to pay the principal (and premium, if any) or interest, if any, so becoming due until such sums shall be paid to such Persons or otherwise disposed of as herein provided, and will promptly notify the Trustee of its action or failure so to act; and (2) whenever the Company shall have one or more Paying Agents for any series of Securities, it will, prior to each due date of the principal of (and premium, if any) or interest, if any, on any Securities of that series, deposit with a Paying Agent a sum sufficient to pay the principal (and premium, if any) or interest, if any, so becoming due, such sum to be held in trust for the benefit of the Persons entitled to such principal, premium or interest, and (unless such Paying Agent is the Trustee) the Company will promptly notify the Trustee of its action or failure so to act. (b) The Company will cause each Paying Agent for any series of Securities other than the Trustee to execute and deliver to the Trustee an instrument in which such Paying Agent shall agree with the Trustee subject to the provisions of this Section, that such Paying Agent will (1) hold all sums held by it for the payment of the principal of (and premium, if any) or interest, if any, on Securities of that series in trust for the benefit of the Persons entitled thereto until such sums shall be paid to such Persons or otherwise disposed of as herein provided; (2) give the Trustee notice of any default by the Company (or any other obligor upon the Securities of that series) in the making of any payment of principal (and premium, if any) or interest, if any on the Securities of that series; and -34- 43 (3) at any time during the continuance of any such default, upon the written request of the Trustee, forthwith pay to the Trustee all sums so held in trust by such Paying Agent for payment in respect of the Securities of that series. (c) The Company may at any time, for the purpose of obtaining the satisfaction and discharge of this Indenture or for any other purpose, pay, or by Company Order direct any Paying Agent to pay, to the Trustee all sums held in trust by the Company or such Paying Agent, such sums to be held by the Trustee upon the same trusts as those upon which such sums were held by the Company or such Paying Agent; and, upon such payment by any Paying Agent to the Trustee, such Paying Agent shall be released from all further liability with respect to such money. (d) Any money deposited with the Trustee or any Paying Agent, or then held by the Company, in trust for the payment of the principal of (and premium, if any) or interest on any Security of any series and remaining unclaimed for two years after such principal (and premium, if any) or interest has become due and payable shall be paid to the Company, or (if then held by the Company) shall be discharged from such trust; and the Holder of such Security shall thereafter, as an unsecured general creditor, look only to the Company for payment thereof, and all liability of the Trustee or such Paying Agent with respect to such trust money, and all liability of the Company as trustee thereof, shall thereupon cease; provided, however, that the Trustee or such Paying Agent, before being required to make any such repayment, may at the expense of the Company cause to be published once, in an Authorized Newspaper in each Place of Payment, notice that such money remains unclaimed and that, after a date specified therein, which shall not be less than 30 days from the date of such publication, any unclaimed balance of such money then remaining will be repaid to the Company. SECTION 5.04. Payment of Taxes and Other Claims. The Company will pay or discharge or cause to be paid or discharged, before the same shall become delinquent, (1) all taxes, assessments and governmental charges levied or imposed upon it or upon its income, profits or property, and (2) all lawful claims for labor, materials and supplies which, if unpaid, might by law become a lien upon its property; provided, however, that the Company shall not be required to pay or discharge or cause to be paid or discharged any such tax, assessment, charge or claim whose amount, applicability or validity is being contested in good faith by appropriate proceedings. SECTION 5.05. Maintenance of Properties. The Company will cause all its properties used or useful in the conduct of its business to be maintained and kept in good condition, repair and working order and supplied with all necessary equipment and will cause to be made all necessary repairs, renewals, replacements, betterments and improvements thereof, all as in the judgment of the Company may be necessary so that the business carried on in connection therewith may -35- 44 be properly and advantageously conducted at all times; provided, however, that nothing in this Section shall prevent the Company from discontinuing the operation and maintenance of any of its properties no longer deemed useful in the conduct of the business of the Company. SECTION 5.06. Statement as to Compliance. The Company will deliver to the Trustee, within 120 days after the end of each fiscal year of the Company, an Officers' Certificate stating, as to each signer thereof (one of which must be the principal executive, financial or accounting officer of the Company), that (1) a review of the activities of the Company during such year and of its performance under this Indenture has been made under his or her supervision, and (2) to the best of his or her knowledge, based on such review, the Company has fulfilled all its obligations under this Indenture throughout such year, or, if there has been a default in the fulfillment of any such obligation, specifying each such default known to him or her and the nature and status thereof. SECTION 5.07. Corporate Existence. Subject to Article Eleven, the Company will do, or cause to be done, all things necessary to preserve and keep in full force and effect its corporate existence. SECTION 5.08. Limitations on Liens. (a) The Company will not, and will not permit any Restricted Subsidiary to, issue, assume or guarantee any notes, bonds, debentures or other similar evidences of indebtedness for money borrowed (herein referred to as "indebtedness") secured by any mortgage, security interest, pledge or lien (herein referred to as "mortgage") of or upon any Principal Property, or shares of capital stock or evidences of indebtedness for borrowed money issued by any Restricted Subsidiary and owned by the Company or any Restricted Subsidiary, whether owned at the date of this Indenture or thereafter acquired, without making effective provision, and the Company in each case will make or cause to be made effective provision, whereby the Principal Amount of all of the Securities from time to time Outstanding shall be secured by such mortgage equally and ratably with any and all other indebtedness thereby secured, so long as such indebtedness shall be so secured; provided, however, that the foregoing restriction shall not apply to indebtedness secured by any of the following: (1) mortgages on any property existing at the time of acquisition thereof; -36- 45 (2) mortgages on property of a corporation existing at the time such corporation is merged into or consolidated with the Company or a Restricted Subsidiary or at the time of a sale, lease or other disposition of the properties of such corporation (or a division thereof) as an entirety or substantially as an entirety to the Company or a Restricted Subsidiary, provided that such mortgage as a result of such merger, consolidation, sale, lease or other disposition is not extended to property owned by the Company or such Restricted Subsidiary immediately prior thereto; (3) mortgages on property of a corporation existing at the time such corporation becomes a Restricted Subsidiary; (4) mortgages securing indebtedness of a Restricted Subsidiary to the Company or to another Restricted Subsidiary; (5) mortgages on property to secure all or part of the cost of acquiring, substantially repairing or altering, constructing, developing or substantially improving such property, or to secure indebtedness incurred to provide funds for any such purpose or for reimbursement of funds previously expended for any such purpose, provided the commitment of the creditor to extend the credit secured by any such mortgage shall have been obtained not later than twelve months after the later of (a) the completion of the acquisition, substantial repair or alteration, construction, development or substantial improvement of such property or (b) the placing in operation of such property or of such property as so substantially repaired or altered, constructed, developed or substantially improved; (6) mortgages securing indebtedness payable on demand or not more than one year after the date as of which the determination is made (excluding any indebtedness renewable or extendable at the option of the debtor for a period or periods ending more than one year after the date as of which such determination is made), which indebtedness in accordance with generally accepted accounting practices would be included among current liabilities; or (7) any extension, renewal or replacement (or successive extensions, renewals or replacements), in whole or in part, of any mortgage referred to in the foregoing clauses (1) to (6), inclusive; provided, however, that the principal amount of indebtedness secured thereby and not otherwise authorized by said clauses (1) to (6), inclusive, shall not exceed the principal amount of indebtedness, plus any premium or fee payable in connection with any such extension, renewal or replacement, so secured at the time of such extension, renewal or replacement. (b) Notwithstanding the provisions of Section 5.08(a), the Company or any Restricted Subsidiary may issue, assume or guarantee indebtedness secured by mortgages which would otherwise be subject to the restrictions of Section 5.08(a) in an aggregate -37- 46 amount which, together with all attributable debt outstanding pursuant to Section 5.09(b), all Senior Funded Indebtedness issued, assumed or guaranteed by any Restricted Subsidiary and all indebtedness outstanding pursuant to this Section 5.08(b), does not exceed 5% of Stockholders' Equity. SECTION 5.09. Limitations on Sale and Lease-Back Transactions. (a) The Company will not, nor will it permit any Restricted Subsidiary to, enter into any Sale and Lease-Back Transaction with respect to any Principal Property (except for a transaction providing for a lease for a term, including any renewal thereof, of not more than three years and except for a transaction between the Company and a Restricted Subsidiary or between Restricted Subsidiaries), if the commitment by or on behalf of the purchaser is obtained more than twelve months after the later of (i) the completion of the acquisition, substantial repair or alteration, construction, development or substantial improvement of such Principal Property or (ii) the placing in operation of such Principal Property or of such Principal Property as so substantially repaired or altered, constructed, developed or substantially improved, unless either (x) the Company or such Restricted Subsidiary would be entitled pursuant to Section 5.08(a) to issue, assume or guarantee debt secured by a mortgage on such Principal Property or (y) the Company shall apply or cause to be applied, in the case of a sale or transfer for cash, an amount equal to the net proceeds thereof (but not in excess of the net book value of such Principal Property at the date of such sale or transfer) and, in the case of a sale or transfer otherwise than for cash, an amount equal to the fair value (as determined by the Board of Directors) of the Principal Property so leased to the retirement, within 180 days after the effective date of such Sale and Lease-Back Transaction, of Securities or other Senior Funded Indebtedness of the Company or a Restricted Subsidiary; provided, however, that any such retirement of Securities shall be in accordance with Article Four and any other terms and provisions of this Indenture and the Securities applicable to optional redemption of Securities and provided, further, that the amount to be applied to such retirement of Securities or other Senior Funded Indebtedness shall be reduced by an amount equal to the sum of (A) an amount equal to the applicable Redemption Price with respect to Securities delivered within 180 days after the effective date of such Sale and Lease-Back Transaction to the Trustee for retirement and cancellation and (B) the principal amount, plus any premium or fee paid in connection with any redemption in accordance with the terms, of other Senior Funded Indebtedness voluntarily retired by the Company within such 180-day period, excluding in each case retirements pursuant to mandatory sinking fund or prepayment provisions and payments at maturity. It is understood that retirement of Securities pursuant to this Section shall not be deemed to be a redemption subject to any limitation contained in this Indenture or the terms of such Securities with respect to such Securities on the right to redeem such Securities from, or in anticipation of, moneys borrowed at an interest cost less than a specified rate per annum. (b) Notwithstanding the provisions of Section 5.09(a), the Company or any Restricted Subsidiary may enter into a Sale and Lease-Back Transaction which would -38- 47 otherwise be subject to the restrictions of Section 5.09(a) so as to create an aggregate amount of attributable debt, as hereinafter defined, which, together with all indebtedness outstanding pursuant to Section 5.08(b), all Senior Funded Indebtedness issued, assumed or guaranteed by any Restricted Subsidiary and all attributable debt outstanding pursuant to this Section 5.09(b), does not exceed 5% of Stockholders' Equity. "Attributable debt" in respect of any Sale and Lease-Back Transaction means, as of the time of the determination, the lesser of (i) the sale price of the Principal Property so leased multiplied by a fraction the numerator of which is the remaining portion of the base term of the lease included in such transaction and the denominator of which is the base term of such lease, and (ii) the total obligation (discounted to present value at the highest rate of interest specified by the terms of any series of Securities then Outstanding compounded semiannually) of the lessee for rental payments (other than amounts required to be paid on account of property taxes as well as maintenance, repairs, insurance, water rates and other items which do not constitute payments for property rights) during the remaining portion of the base term of the lease included in such transaction. SECTION 5.10. Waiver of Covenants. The Company may omit in any particular instance to comply with any covenant or condition set forth in Sections 5.04, 5.05, 5.08 and 5.09, inclusive, with respect to the Securities of any series, if before or after the time for such compliance the Holders of a majority (unless, with respect to any series of Securities, a requirement greater than a majority is specified for the purpose of this Section by or pursuant to the Board Resolution authorizing such series, in which case the greater requirement so specified) in Principal Amount of the Securities of such series at the time Outstanding shall either waive such compliance in such instance or generally waive compliance with such covenant or condition, but no such waiver shall extend to or affect such covenant 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 covenant or condition shall remain in full force and effect. ARTICLE SIX SECURITYHOLDERS LISTS AND REPORTS BY TRUSTEE AND COMPANY SECTION 6.01. Company to Furnish Trustee Name and Addresses of Securityholders. The Company will furnish or cause to be furnished to the Trustee, semiannually, not more than 15 days after each June 15 and December 15 in each year beginning after the first issue of Securities under this Indenture, and at such other times as the Trustee may request in writing, within 30 days after receipt by the Company of any such request, a list in such form as the Trustee may reasonably require of the names and addresses of the Holders of Securities of each series as of a date not more than 15 days prior to the time -39- 48 such information is furnished; provided, however, that in case and so long as the Trustee is the Security Registrar, no such list shall be required to be furnished. SECTION 6.02. Preservation of Information; Communications to Securityholders. (a) The Trustee shall preserve, in as current a form as is reasonably practicable, the names and addresses of Holders of Securities contained in the most recent list furnished to the Trustee as provided in Section 6.01 and the names and addresses of Holders of Securities received by the Trustee in its capacity as Security Registrar, if so acting. The Trustee may destroy any list furnished to it as provided in Section 6.01 upon receipt of a new list so furnished. (b) Every Holder of the Securities, by receiving and holding the same, agrees with the Company and the Trustee that neither the Company nor the Trustee shall be held accountable by reason of the disclosure of any such information as to the names and addresses of the Holders of Securities in accordance with Section 312 of the Trust Indenture Act, regardless of the source from which such information was derived, and that the Trustee shall not be held accountable by reason of mailing any material pursuant to a request made under Section 312 of the Trust Indenture Act. SECTION 6.03. Reports by Trustee. The term "reporting date", as used in this Section, shall be February 1, commencing with February 1, of the year following the first issue of any Securities under this Indenture. Within 60 days after the reporting date in each year, or at any other times as may be required by the Trust Indenture Act, the Trustee shall transmit by mail to all Securityholders, as their names and addresses appear in the Security Register, such reports concerning the Trustee and its actions under this Indenture as may be required pursuant to the Trust Indenture Act dated as of such reporting date or at any other times as may be required by the Trust Indenture Act. A copy of each such report shall, at the time of such transmission to Securityholders, be filed by the Trustee with each securities exchange upon which Securities are listed, and also with the Commission. The Company will notify the Trustee when Securities are listed on any securities exchange. SECTION 6.04. Reports by Company. The Company will file with the Trustee and the Commission and transmit to Holders, such information, documents and other reports as may be required pursuant to the Trust Indenture Act at the times and in the manner required by the Trust Indenture Act. -40- 49 ARTICLE SEVEN REMEDIES SECTION 7.01. Events of Default. "Event of Default", wherever used herein with respect to Securities of any series, means any one of the following events (whatever the reason for such Event of Default and whether it shall 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); (1) default in the payment of any interest upon any Security of that series when the same becomes due and payable, and continuance of such default for a period of 30 days; or (2) default in making any mandatory or optional sinking fund payment on any Security of that series when the same becomes due and payable, and continuance of such default for a period of 30 days; or (3) default in the payment of the principal of (or premium, if any, on) any Security of that series at its Maturity, except any Maturity occurring by reason of a call for redemption through a mandatory or optional sinking fund; or (4) default in the performance, or breach, of any covenant of the Company contained in Section 7.03; or (5) default in the performance, or breach, of any covenant of the Company contained in Section 5.01, 5.03(a)(1) or (2), and continuance of such default or breach for a period of 90 days after there has been given, by registered or certified mail, to the Company by the Trustee or to the Company and the Trustee by the Holders of at least 25% in Principal Amount of the Securities then Outstanding which were issued as part of the same series as any Security or Securities with respect to which such default occurred, a written notice specifying such default or breach and requiring it to be remedied and stating that such notice is a "Notice of Default" hereunder; or (6) any event specified as an "Event of Default" pursuant to Section 2.01 or in any supplemental indenture relating to, or in the terms of, any Securities; or (7) default in the performance, or breach, of any covenant or warranty of the Company in this Indenture (other than a covenant or warranty a default in whose performance or whose breach is elsewhere in this Section specifically dealt with or which has expressly been included in this Indenture solely for the benefit -41- 50 of a series of one or more Securities other than that series), and continuance of such default or breach for a period of 90 days after there has been given, by registered or certified mail, to the Company by the Trustee or to the Company and the Trustee by the Holders of at least 25% in Principal Amount of the Outstanding Securities of that series of Securities, a written notice specifying such default or breach and requiring it to be remedied and stating that such notice is a "Notice of Default" hereunder; or (8) the entry of an order for relief in respect of any petition filed against the Company under the Bankruptcy Code, or the entry of a decree or order by a court having competent jurisdiction in the premises in respect of any petition filed or action taken against the Company looking to reorganization, arrangement, composition, readjustment, liquidation, dissolution or similar relief under any other present or future Federal or State statute, law or regulation, resulting in the appointment of a receiver, liquidator, assignee, trustee, custodian, sequestrator or other similar official of the Company or of any substantial part of its property, or resulting in the winding-up or liquidation of its affairs, all without the consent or acquiescence of the Company, and the continuance of any such decree or order is unstayed and in effect for a period of 60 consecutive days; or (9) the filing of a petition for relief under the Bankruptcy Code by the Company, or the consent, acquiescence or taking of any action by the Company in support of a petition filed by or against it looking to reorganization, arrangement, composition, readjustment, liquidation, dissolution or similar relief under any other present or future Federal or State statute, law or regulation, or the appointment, with the consent of the Company, of any receiver, liquidator, assignee, trustee, custodian, sequestrator or other similar official of the Company or of any substantial part of its property, or the making by it of an assignment for the benefit of creditors, or the admission by it in writing of its inability to pay its debts generally as they become due, or the taking of corporate action by the Company in furtherance of any such action. Upon receipt by the Trustee of any Notice of Default pursuant to this Section 7.01 with respect to Securities of any series, a record date shall automatically and without any other action by any Person be set for the purpose of determining the Holders of Outstanding Securities of such series entitled to join in such Notice of Default, which record date shall be the close of business on the day the Trustee receives such Notice of Default. The Holders of Outstanding Securities of such series on such record date (or their duly appointed agents), and only such Persons, shall be entitled to join in such Notice of Default, whether or not such Holders remain Holders after such record date; provided that, unless such Notice of Default shall have become effective -------- by virtue of Holders of the requisite Principal Amount of Outstanding Securities of such series on such record date (or their duly appointed agents) having joined therein on or prior to the 90th day after such -42- 51 record date, such Notice of Default shall automatically and without any action by any Person be canceled and of no further effect. SECTION 7.02. Acceleration of Maturity; Rescission and Annulment. If an Event of Default with respect to Securities of any series at the time Outstanding occurs and is continuing then, and in every such case, the Trustee or the Holders of not less than 25% (unless a different percentage with respect to any series of Securities is specified for the purpose of this paragraph by or pursuant to the Board Resolution authorizing such series, in which case the percentage specified) in Principal Amount of the Outstanding Securities of a Defaulted series of Securities may declare so much of the principal of all of the Securities of such series as may, in accordance with the terms thereof, be declared to be due and payable upon the occurrence and continuation of an Event of Default to be immediately due and payable, by a notice in writing to the Company (and to the Trustee if given by Securityholders of a Defaulted series of Securities), and upon any such declaration such principal (or specified portion thereof), together with interest accrued thereon, shall become immediately due and payable. At any time after such a declaration of acceleration with respect to Securities of any series has been made and before a judgment or decree for payment of the money due has been obtained by the Trustee as hereinafter in this Article provided, the Holders of a majority (unless, with respect to any series of Securities, a requirement greater than a majority is specified for the purpose of this paragraph by or pursuant to the Board Resolution authorizing such series, in which case the greater requirement so specified) in Principal Amount of the Outstanding Securities of such Defaulted series, by written notice to the Company and the Trustee, may rescind and annul, as to such series, such declaration and its consequences if (1) the Company has paid or deposited with the Trustee a sum sufficient to pay (A) all overdue installments of interest on all the Securities of such Defaulted series, (B) the principal of (and premium, if any, on) any Securities of such Defaulted series which have become due otherwise than by such declaration of acceleration, and interest thereon after the date such principal became due at the rate or rates specified by the terms of such Securities, (C) to the extent that payment of such interest is legally enforceable, interest upon overdue interest at the rate or rates specified by the terms of the Securities of such Defaulted series, and -43- 52 (D) all sums paid or advanced by the Trustee hereunder and the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel; and (2) all Events of Default by virtue of which such series of Securities is Defaulted, other than the non-payment of the principal of Securities of that series which have become due solely by such acceleration, have been cured or waived as provided in Section 7.13. No such rescission shall affect any subsequent default or impair any right consequent thereon. Upon receipt by the Trustee of any declaration of acceleration, or any rescission and annulment of any such declaration, pursuant to this Section 7.02 with respect to Securities of any series, a record date shall automatically and without any other action by any Person be set for the purpose of determining the Holders of Outstanding Securities of such series entitled to join in such declaration, or rescission and annulment, as the case may be, which record date shall be the close of business on the day the Trustee receives such declaration, or rescission and annulment, as the case may be. The Holders of Outstanding Securities of such series on such record date (or their duly appointed agents), and only such Persons, shall be entitled to join in such declaration, or rescission and annulment, as the case may be, whether or not such Holders remain Holders after such record date; provided that, unless such -------- declaration, or rescission and annulment, as the case may be, shall have become effective by virtue of Holders of the requisite Principal Amount of Outstanding Securities of such series on such record date (or their duly appointed agents) having joined therein on or prior to the 90th day after such record date, such declaration, or rescission and annulment, as the case may be, shall automatically and without any action by any Person be canceled and of no further effect. SECTION 7.03. Collection of Indebtedness and Suits for Enforcement by Trustee. The Company covenants, but only for the benefit of the Holders of the Securities of the series with respect to which such default exists, that if (1) default is made in the payment of any installment of interest on any Security of such series when such interest becomes due and payable, and such default continues for a period of 30 days, or (2) default is made in any mandatory or optional sinking fund payment in respect of any Security of such series, when the same becomes due and payable, and such default continues for a period of 30 days, or (3) default is made in the payment of the principal of (or premium, if any, on) any Security of such series at the Maturity thereof, except any Maturity -44- 53 occurring by reason of a call for redemption through a mandatory or optional sinking fund, the Company will, upon demand of the Trustee, pay to it, for the benefit of the Holders of the Securities of such series, the whole amount then due and payable on such Securities for principal (and premium, if any) and interest, and (to the extent that payment of such interest shall be legally enforceable) with interest upon the overdue principal (and premium, if any) and upon overdue installments of interest, at the rate of interest specified by the terms of such Securities; and, in addition thereto, such further amount as shall be sufficient to cover the costs and expenses of collection, including the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel. If the Company fails to pay such amounts forthwith upon such demand, the Trustee, in its own name and as trustee of an express trust, may institute a judicial proceeding for the collection of the sums so due and unpaid, and may prosecute such proceeding to judgment or final decree, and may enforce the same against the Company or any other obligor upon the Securities of such series and collect the moneys adjudged or decreed to be payable in the manner provided by law out of the property of the Company or any other obligor upon such Securities, wherever situated. If an Event of Default with respect to Securities of any series occurs and is continuing, the Trustee may in its discretion proceed to protect and enforce its rights and the rights of the Holders of the Securities of any Defaulted series of Securities by such appropriate judicial proceedings as the Trustee shall deem most effectual to protect and enforce any such rights, whether for the specific enforcement of any covenant or agreement in this Indenture or in aid of the exercise of any power granted herein, or to enforce any other proper remedy. SECTION 7.04. Trustee May File Proofs of Claim. In case of any judicial proceeding relative to the Company (or any other obligor upon the Securities), its property or its creditors, the Trustee shall be entitled and empowered, by intervention in such proceeding or otherwise, to take any and all actions authorized under the Trust Indenture Act in order to have claims of the Holders and the Trustee allowed in any such proceeding. In particular, the Trustee shall be authorized to collect and receive any moneys or other property payable or deliverable on any such claims and to distribute the same; and any custodian, receiver, assignee, trustee, liquidator, sequestrator or other similar official in any such judicial proceeding is hereby authorized by each Holder to make such payments to the Trustee and, in the event that the Trustee shall consent to the making of such payments directly to the Holders, to pay to the Trustee any amount due it for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, and any other amounts due the Trustee under Section 8.07. -45- 54 No provision of this Indenture shall be deemed to authorize the Trustee to authorize or consent to or accept or adopt on behalf of any Holder any plan of reorganization, arrangement, adjustment or composition affecting the Securities or the rights of any Holder thereof or to authorize the Trustee to vote in respect of the claim of any Holder in any such proceeding; provided, however, that the Trustee may, on behalf of the Holders, vote for the election of a trustee in bankruptcy or similar official and be a member of a creditors' or other similar committee. SECTION 7.05. Trustee May Enforce Claims without Possession of Securities. All rights of action and claims under this Indenture or the Securities may be prosecuted and enforced by the Trustee without the possession of any of the Securities or the production thereof in any proceeding relating thereto, and any such proceeding instituted by the Trustee shall be brought in its own name as trustee of an express trust, and any recovery of judgment shall, after provision for the payment of the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, be for the ratable benefit of the Holders of the Securities in respect of which such judgment has been recovered. SECTION 7.06. Application of Money Collected. Any money collected by the Trustee pursuant to this Article shall be applied in the following order, at the date or dates fixed by the Trustee, and, in case of the distribution of such money on account of principal (or premium, if any) or interest, upon presentation of the Securities of the Defaulted series, and the notation thereon of the payment if only partially paid and upon surrender thereof if fully paid: FIRST: To the payment of all amounts due the Trustee under Section 8.07; SECOND: To the payment of the amounts then due and unpaid upon the Securities of the Defaulted series for principal (and premium, if any) and interest, if any, in respect of which or for the benefit of which such money has been collected, ratably, without preference or priority of any kind, according to the amounts due and payable on such Securities, for principal (and premium, if any) and interest, respectively; and THIRD: The balance, if any, to the Person or Persons entitled thereto. SECTION 7.07. Limitation on Suits. No Holder of any Security of any series shall have any right to institute any proceeding, judicial or otherwise, with respect to this Indenture, or for the appointment of a receiver or trustee, or for any other remedy hereunder, unless -46- 55 (1) such Holder is the Holder of a Security of a Defaulted series and has previously given written notice to the Trustee of a continuing Event of Default by virtue of which such series is Defaulted; (2) the Holders of not less than 25% (unless a different percentage with respect to any series of Securities is specified for the purpose of this Section by or pursuant to the Board Resolution authorizing such series, in which case the percentage so specified) in Principal Amount of the Outstanding Securities of such series shall have made written request to the Trustee to institute proceedings in respect of such Event of Default in its own name as Trustee hereunder; (3) such Holder or Holders have offered to the Trustee reasonable indemnity against the costs, expenses and liabilities to be incurred in compliance with such request; (4) the Trustee for 60 days after its receipt of such notice, request and offer of indemnity has failed to institute any such proceeding; and (5) no direction inconsistent with such written request has been given to the Trustee during such 60-day period by the Holders of a majority in Principal Amount of the Outstanding Securities of such series; it being understood and intended that no one or more Holders of Securities of a Defaulted series shall have any right in any manner whatever by virtue of, or by availing of, any provision of this Indenture to affect, disturb or prejudice the rights of any other Holders of Securities of such series or to obtain or to seek to obtain priority or preference over any other such Holders or to enforce any right under this Indenture, except in the manner herein provided and for the equal and ratable benefit of all the Holders of the Securities of such series. SECTION 7.08. Unconditional Right of Securityholders to Receive Principal, Premium and Interest. Notwithstanding any other provision in this Indenture, the Holder of any Security shall have the right, which is absolute and unconditional, to receive payment of the principal of (and premium, if any) and (subject to Section 2.09) interest, if any, on such Security on the respective Stated Maturities expressed in such Security (or, in the case of redemption, on the Redemption Date) and to institute suit for the enforcement of any such payment, and such right shall not be impaired without the consent of such Holder. SECTION 7.09. Restoration of Rights and Remedies. If the Trustee or any Securityholder has instituted any proceeding to enforce any right or remedy under this Indenture and such proceeding has been discontinued or -47- 56 abandoned for any reason, or has been determined adversely to the Trustee or to such Securityholder, then and in every such case the Company, the Trustee, such Securityholder and all Holders of other Securities of such series shall, subject to any determination in such proceeding, be restored severally and respectively to their former positions hereunder, and thereafter all rights and remedies of the Trustee and such Securityholders shall continue as though no such proceeding had been instituted. SECTION 7.10. Rights and Remedies Cumulative. Except as otherwise provided with respect to the replacement or payment of mutilated, destroyed, lost or stolen Securities in the last paragraph of Section 2.08, no right or remedy herein conferred upon or reserved to the Trustee or the Securityholders is intended to be exclusive of any other right or remedy, and every right and remedy shall, to the extent permitted by law, be cumulative and in addition to every other right and remedy given hereunder or now or hereafter existing at law or in equity or otherwise. The assertion or employment of any right or remedy hereunder, or otherwise, shall not prevent the concurrent assertion or employment of any other appropriate right or remedy. SECTION 7.11. Delay or Omission Not Waiver. No delay or omission of the Trustee or of any Holder of any Security to exercise any right or remedy accruing upon any Event of Default shall impair any such right or remedy or constitute a waiver of any such Event of Default or an acquiescence therein. Every right and remedy given by this Article or by law to the Trustee or to the Securityholders may be exercised from time to time, and as often as may be deemed expedient, by the Trustee or by the Securityholders, as the case may be. SECTION 7.12. Control by Securityholders. The Holders of a majority (unless, with respect to any series of Securities, a requirement greater than a majority is specified for the purpose of this Section by or pursuant to the Board Resolution authorizing such series, in which case the greater requirement so specified) in Principal Amount of the Outstanding Securities of a Defaulted series shall have the right to direct the time, method and place of conducting any proceeding for any remedy available to the Trustee, or exercising any trust or power conferred on the Trustee, with respect to the Securities of such series, provided that -------- (1) such direction shall not be in conflict with any rule of law or with this Indenture, (2) subject to the provisions of Section 8.01, the Trustee shall have the right to decline to follow any such direction if the Trustee in good faith shall, by a Responsible Officer or Officers of the Trustee, determine that the proceeding so directed would be unjustly prejudicial to the Holders of the Securities of such series -48- 57 not joining in any such direction or would involve the Trustee in personal liability, and (3) the Trustee may take any other action deemed proper by the Trustee which is not inconsistent with such direction. Upon receipt by the Trustee of any such direction with respect to Securities of any series, a record date shall automatically and without any other action by any Person be set for determining the Holders of Outstanding Securities of such series entitled to join in such direction, which record date shall be the close of business on the day the Trustee receives such direction. The Holders of Outstanding Securities of such series on such record date (or their duly appointed agents), and only such Persons, shall be entitled to join in such direction, whether or not such Holders remain Holders after such record date; provided that, unless such direction shall have become effective by -------- virtue of Holders of the requisite Principal Amount of Outstanding Securities of such series on such record date (or their duly appointed agents) having joined therein on or prior to the 90th day after such record date, such direction shall automatically and without any action by any Person be canceled and of no further effect. SECTION 7.13. Waiver of Past Defaults. The Holders of a majority (unless, with respect to any series of Securities, a requirement greater than a majority is specified for the purpose of this Section by or pursuant to the Board Resolution authorizing such series, in which case the greater requirement so specified) in Principal Amount of the Outstanding Securities of a Defaulted series may on behalf of the Holders of all the Securities of such series waive, as to such series, any past default hereunder and its consequences by virtue of which such series is, or with notice or lapse of time or both would be, Defaulted, except a default not theretofore cured (1) in the payment of the principal of (or premium, if any) or interest, if any, on any Security of such series, or (2) in respect of a covenant or provision hereof which under Article Ten cannot be modified or amended without the consent of the Holder of each Outstanding Security of such series affected. Upon any such waiver, such default shall, as to such series, cease to exist, and any Event of Default arising therefrom shall, as to such series, be deemed to have been cured, for every purpose of this Indenture; but no such waiver shall extend to any subsequent or other default or impair any right consequent thereon. -49- 58 SECTION 7.14. Undertaking for Costs. All parties to this Indenture agree, and each Holder of any Security by such Holder's acceptance thereof shall be deemed to have agreed, that any court may in its discretion require, in any suit for the enforcement of any right or remedy under this Indenture, or in any suit against the Trustee for any action taken or omitted by it as Trustee, the filing by any party litigant in such suit of an undertaking to pay the costs of such suit, and that such court may in its discretion assess reasonable costs, including reasonable attorneys' fees, against any party litigant in such suit, having due regard to the merits and good faith of the claims or defenses made by such party litigant; but the provisions of this Section shall not apply to any suit instituted by the Trustee, to any suit instituted by any Securityholder, or group of Securityholders, holding in the aggregate more than 10% in principal amount of the Outstanding Securities of any series, or to any suit instituted by any Securityholder for the enforcement of the payment of the principal of (or premium, if any) or interest, if any, on any Security on or after the respective Stated Maturity or Maturities expressed in such Security (or, in the case of redemption, on or after the Redemption Date) and provided that neither this Section nor the Trust Indenture Act shall be deemed to authorize any court to require such an undertaking or to make such an assessment in any suit instituted by the Company. SECTION 7.15. Waiver of Stay or Extension Laws. The Company covenants (to the extent that it may lawfully do so) that it will not at any time insist upon, or plead, or in any manner whatsoever claim or take the benefit or advantage of, any stay or extension law wherever enacted, now or at any time hereafter in force, which may affect the covenants or the performance of this Indenture; and the Company (to the extent that it may lawfully do so) hereby expressly waives all benefit or advantage of any such law and covenants that it will not hinder, delay or impede the execution of any power herein granted to the Trustee, but will suffer and permit the execution of every such power as though no such law had been enacted. ARTICLE EIGHT THE TRUSTEE SECTION 8.01. Certain Duties and Responsibilities. The duties and responsibilities of the Trustee shall be as provided by the Trust Indenture Act. Notwithstanding the foregoing, no provision of this Indenture shall require the Trustee to expend or risk its own funds or otherwise incur any financial liability in the performance of any of its duties hereunder, or in the exercise of any of its rights or powers, if it shall have reasonable grounds for believing that repayment of such funds or adequate indemnity against such risk or liability is not reasonably assured to it. Whether or not therein expressly so provided, every provision of this Indenture relating to the conduct or -50- 59 affecting the liability of or affording protection to the Trustee shall be subject to the provisions of this Section. SECTION 8.02. Notice of Default. If a default occurs hereunder with respect to Securities of any series, the Trustee shall give the Holders of Securities of such series notice of such default as and to the extent provided by the TIA; provided, however, that in the case of any default of the character specified in Section 7.01(5) or (7) no such notice to Securityholders shall be given until at least 60 days after the occurrence thereof. For the purpose of this Section, the term "default" means any event which is, or after notice or lapse of time, or both, would become, an Event of Default. SECTION 8.03. Certain Rights of Trustee. Subject to the provisions of Section 8.01 and Sections 315(a) through 315(d) of the TIA: (a) the Trustee may rely and shall be protected in acting or refraining from acting upon any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture, note or other paper or document believed by it to be genuine and to have been signed or presented by the proper party or parties; (b) any request or direction of the Company mentioned herein shall be sufficiently evidenced by a Company Request or Company Order and any resolution of the Board of Directors shall be sufficiently evidenced by a Board Resolution; (c) whenever in the administration of this Indenture the Trustee shall deem it desirable that a matter be proved or established prior to taking, suffering or omitting any action hereunder, the Trustee (unless other evidence be herein specifically prescribed) may, in the absence of bad faith on its part, rely upon an Officers' Certificate; (d) the Trustee may consult with counsel and the written advice of such counsel or any Opinion of Counsel shall be full and complete authorization and protection in respect of any action taken, suffered or omitted by it hereunder in good faith and in reliance thereon; (e) the Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Indenture at the request or direction of any of the Securityholders pursuant to this Indenture, unless such Securityholders shall have offered to the Trustee reasonable security or indemnity against the costs, expenses and liabilities which might be incurred by it in compliance with such request or direction; -51- 60 (f) the Trustee shall not be bound to make any investigation into the facts or matters stated in any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture, note or other evidence of indebtedness or other paper or document, but the Trustee, in its discretion, may make such further inquiry or investigation into such facts or matters as it may see fit, and, if the Trustee shall determine to make such further inquiry or investigation, it shall be entitled to examine the books, records and premises of the Company, personally or by agent or attorney; and (g) the Trustee may execute any of the trusts or powers hereunder or perform any duties hereunder either directly or by or through agents or attorneys and the Trustee shall not be responsible for any misconduct or negligence on the part of any agent or attorney appointed with due care by it hereunder. SECTION 8.04. Not Responsible for Recitals or Issuance of Securities. The recitals contained herein and in the Securities, except the certificates of authentication, shall be taken as the statements of the Company, and the Trustee assumes no responsibility for their correctness. The Trustee makes no representations as to the validity or sufficiency of this Indenture or of the Securities. The Trustee shall not be accountable for the use or application by the Company of Securities or the proceeds thereof. SECTION 8.05. May Hold Securities. The Trustee, any Authenticating Agent, any Paying Agent, any Security Registrar or any other agent of the Company, in its individual or any other capacity, may become the owner or pledgee of Securities and, subject to Section 8.08 and 8.13, may otherwise deal with the Company with the same rights it would have if it were not Trustee, Authenticating Agent, Paying Agent, Security Registrar or such other agent. SECTION 8.06. Money Held in Trust. Money held by the Trustee in trust hereunder need not be segregated from other funds except to the extent required by law. The Trustee shall be under no liability for interest on any money received by it hereunder except as otherwise agreed with the Company. -52- 61 SECTION 8.07. Compensation and Reimbursement. The Company agrees (1) to pay to the Trustee from time to time reasonable compensation for all services rendered by it hereunder (which compensation shall not be limited by any provision of law in regard to the compensation of a trustee of an express trust); (2) except as otherwise expressly provided herein, to reimburse the Trustee upon its request for all reasonable expenses, disbursements and advances incurred or made by the Trustee in accordance with any provision of this Indenture (including the reasonable compensation and the expenses and disbursements of its agents and counsel), except any such expense, disbursement or advance as may be attributable to its negligence or bad faith; and (3) to indemnify the Trustee for, and to hold it harmless against, any loss, liability or expense incurred without negligence or bad faith on its part, arising out of or in connection with the acceptance or administration of the trust or trusts hereunder, including the costs and expenses of defending itself against any claim or liability in connection with the exercise or performance of any of its powers or duties hereunder. As security for the performance of the obligations of the Company under this Section the Trustee shall have a lien prior to the Securities of any series upon all property and funds held or collected by the Trustee as such, except funds held in trust for the payment of principal of (and premium, if any) or interest, if any, on the Securities. SECTION 8.08. Disqualification; Conflicting Interests. (a) If the Trustee has or shall acquire any conflicting interest, as defined in this Section, with respect to the Securities of any series, it shall, within 90 days after ascertaining that it has such conflicting interest, either eliminate such conflicting interest or resign in the manner and with the effect hereinafter specified in this Article. (b) In the event that the Trustee shall fail to comply with the provisions of Subsection (a) of this Section with respect to the Securities of any series, the Trustee shall, within 10 days after the expiration of such 90-day period, transmit by mail to all Holders of Securities of that series, as their names and addresses appear in the Security Register, notice of such failure. (c) For the purposes of this Section, the Trustee shall be deemed to have a conflicting interest with respect to the Securities of any series if the Trustee has or acquires a conflicting interest as described in Section 310(b) of the Trust Indenture Act. -53- 62 SECTION 8.09. Corporate Trustee Required; Eligibility. There shall at all times be a Trustee hereunder with respect to the Securities of each series, which may be a Trustee hereunder for Securities of one or more other series, shall be eligible to act under Section 310(a)(1) of the TIA and shall have a combined capital and surplus (computed in accordance with Section 310(a)(2) of the TIA) of at least $50,000,000. If at any time a Trustee shall cease to be eligible in accordance with the provisions of this Section, it shall resign immediately in the manner and with the effect hereinafter specified in this Article. SECTION 8.10. Resignation and Removal; Appointment of Successor. (a) No resignation or removal of the Trustee and no appointment of a successor Trustee pursuant to this Article shall become effective until the acceptance of appointment by the successor Trustee under Section 8.11. (b) The Trustee may resign subject to the provisions of Section 310 of the TIA at any time with respect to the Securities of one or more series by giving written notice thereof to the Company. If an instrument of acceptance by a successor Trustee shall not have been delivered to the Trustee within 30 days after the giving of such notice of resignation, the resigning Trustee may petition any court of competent jurisdiction for the appointment of a successor Trustee with respect to the Securities of such series. (c) The Trustee may be removed at any time with respect to the Securities of any series by Act of the Holders of a majority in Principal Amount of the Outstanding Securities of such series, delivered to the Trustee and to the Company. (d) If at any time: (1) the Trustee shall fail to comply with Section 8.08(a) after written request therefor by the Company or by any Securityholder who has been a bona fide Holder of a Security for at least six months, or (2) the Trustee shall cease to be eligible under Section 8.09 and shall fail to resign after written request therefor by the Company or by any such Securityholder, or (3) the Trustee shall become incapable of acting or shall be adjudged a bankrupt or insolvent or a receiver of the Trustee or of its property shall be appointed or any public officer shall take charge or control of the Trustee or of its property or affairs for the purpose of rehabilitation, conservation or liquidation, then, in any such case, (i) the Company by a Board Resolution may remove the Trustee with respect to all Securities, or (ii) subject to Section 7.14, any Securityholder who has -54- 63 been a bona fide Holder of a Security for at least six months may, on behalf of himself and all others similarly situated, petition any court of competent jurisdiction for the removal of the Trustee with respect to all Securities and the appointment of a successor Trustee or Trustees. (e) If the Trustee shall resign, be removed or become incapable of acting, or if a vacancy shall occur in the office of Trustee for any cause, with respect to the Securities of one or more series, the Company, by a Board Resolution, shall promptly appoint a successor Trustee or Trustees with respect to the Securities of that or those series (it being understood that any such successor Trustee may be appointed with respect to the Securities of one or more or all of such series and that at any time there shall be only one Trustee with respect to the Securities of any particular series) and shall comply with the applicable requirements of Section 8.11. If, within one year after such resignation, removal or incapability, or the occurrence of such vacancy, a successor Trustee with respect to the Securities of any series shall be appointed by Act of the Holders of a majority in Principal Amount of the Outstanding Securities of such series delivered to the Company and the retiring Trustee, the successor Trustee so appointed shall, forthwith upon its acceptance of such appointment in accordance with the applicable requirements of Section 8.11, become the successor Trustee with respect to the Securities of such series and to that extent supersede the successor Trustee appointed by the Company. If no successor Trustee with respect to the Securities of any series shall have been so appointed by the Company or the Securityholders and accepted appointment in the manner required by Section 8.11, any Securityholder who has been a bona fide Holder of a Security of such series for at least six months may, on behalf of himself and all others similarly situated, petition any court of competent jurisdiction for the appointment of a successor Trustee with respect to the Securities of such series. (f) The Company shall give notice of each resignation and each removal of the Trustee with respect to the Securities of any series and each appointment of a successor Trustee with respect to the Securities of any series to the Holders of Securities of such series in the manner provided in Section 1.06. Each notice shall include the name of the successor Trustee with respect to the Securities of such series and the address of its Principal Corporate Trust Office. SECTION 8.11. Acceptance of Appointment by Successor. (a) In case of the appointment of a successor Trustee with respect to all Securities, such successor Trustee so appointed shall execute, acknowledge and deliver to the Company and to the retiring Trustee an instrument accepting such appointment, and thereupon the resignation or removal of the retiring Trustee shall become effective and such successor Trustee, without any further act, deed or conveyance, shall become vested with all the rights, powers, trusts and duties of the retiring Trustee; but, on request of the Company or the successor Trustee, such retiring Trustee shall, upon payment of its charges, execute and deliver an instrument transferring to such successor Trustee all the rights, -55- 64 powers and trusts of the retiring Trustee, and shall duly assign, transfer and deliver to such successor Trustee all property and money held by such retiring Trustee hereunder, subject nevertheless to its lien, if any, provided for in Section 8.07. (b) In case of the appointment hereunder of a successor Trustee with respect to the Securities of one or more (but not all) series, the Company, the retiring Trustee and each successor Trustee with respect to the Securities of one or more series shall execute and deliver an indenture supplemental hereto wherein each successor Trustee shall accept such appointment and which (1) shall contain such provisions as shall be necessary or desirable to transfer and confirm to, and to vest in, each successor Trustee all the rights, powers, trusts and duties of the retiring Trustee with respect to the Securities of that or those series to which the appointment of such successor Trustee relates, (2) if the retiring Trustee is not retiring with respect to all Securities, shall contain such provisions as shall be deemed necessary or desirable to confirm that all the rights, powers, trusts and duties of the retiring Trustee with respect to the Securities of that or those series as to which the retiring Trustee is not retiring shall continue to be vested in the retiring Trustee, and (3) shall add to or change any of the provisions of this Indenture as shall be necessary to provide for or facilitate the administration of the trusts hereunder by more than one Trustee, it being understood that nothing herein or in such supplemental indenture shall constitute such Trustees co-trustees of the same trust and that each such Trustee shall be trustee of a trust or trusts hereunder separate and apart from any trust or trusts hereunder administered by any other such Trustee; and upon the execution and delivery of such supplemental indenture the resignation or removal of the retiring Trustee shall become effective to the extent provided therein and each such successor Trustee, without any further act, deed or conveyance, shall become vested with all the rights, powers, trusts and duties of the retiring Trustee with respect to the Securities of that or those series to which the appointment of such successor Trustee relates; but, on request of the Company or any successor Trustee, such retiring Trustee shall (subject to its lien, if any, provided for in Section 8.07) duly assign, transfer and deliver to such successor Trustee all property and money held by such retiring Trustee hereunder with respect to the Securities of that or those series to which the appointment of such successor Trustee relates. (c) Upon request of any such successor Trustee, the Company shall execute any and all instruments for more fully and certainly vesting in and confirming to such successor Trustee all such rights, powers and trusts referred to in Subsection (a) or (b) of this Section, as the case may be. (d) No successor Trustee shall accept its appointment unless at the time of such acceptance such successor Trustee shall be qualified and eligible under this Article. -56- 65 SECTION 8.12. Merger, Conversion, Consolidation or Succession to Business of Trustee. Any corporation into which the Trustee may be merged or converted or with which it may be consolidated, or any corporation resulting from any merger, conversion or consolidation to which the Trustee shall be a party, or any corporation succeeding to all or substantially all of the corporate trust business of the Trustee, shall be the successor of the Trustee hereunder, provided that such corporation shall be otherwise qualified and eligible under - -------- this Article, without the execution or filing of any paper or any further act on the part of any of the parties hereto. In case any Securities shall have been authenticated, but not delivered, by the Trustee then in office, any successor by merger, conversion or consolidation to such authenticating Trustee may adopt such authentication and deliver the Securities so authenticated with the same effect as if such successor Trustee had itself authenticated such Securities. SECTION 8.13. Preferential Collection of Claims against Company. If the Trustee shall be or shall become a creditor, directly or indirectly, secured or unsecured, of the Company the Trustee shall be subject to the provisions of Section 311 of the Trust Indenture Act regarding the collection of claims against the Company. SECTION 8.14. Authenticating Agents. The Trustee, from time to time upon receipt of a Company Request, shall promptly appoint one or more Authenticating Agents with power to act on its behalf and subject to its direction in the authentication and delivery of Securities of one or more series and in connection with registrations of transfers and exchanges of Securities of such series as fully for all intents and purposes as though each Authenticating Agent had been expressly authorized to authenticate and deliver such Securities. For all purposes of this Indenture, the authentication and delivery of Securities by any Authenticating Agent pursuant to this Section shall be deemed to be the authentication and delivery of such Securities "by the Trustee." Any Authenticating Agent shall be acceptable to the Company and shall at all times be a corporation organized and doing business under the laws of the United States of America or of any State and authorized under such laws to act as authenticating agent, with a combined capital and surplus (computed in accordance with Section 310(a)(2) of the TIA) of at least $5,000,000 and subject to supervision or examination by Federal or State authority. If at any time an Authenticating Agent shall cease to be eligible in accordance with the provisions of this Section, it shall resign immediately in the manner and with the effect specified in this Section. Any corporation into which any Authenticating Agent may be merged or converted or with which it may be consolidated, or any corporation resulting from any merger, conversion or consolidation to which any Authenticating Agent shall be a party, or any corporation succeeding to all or substantially all the corporate trust business of any -57- 66 Authenticating Agent, shall be the successor of such Authenticating Agent hereunder, if such successor corporation is otherwise eligible under this Section, without the execution or filing of any paper or any further act on the part of the Trustee, the Company or the Authenticating Agent or such successor corporation. Any Authenticating Agent may at any time resign by giving written notice of resignation to the Trustee and to the Company. The Trustee may at any time and shall, upon receipt of a Company Request, terminate the agency of any Authenticating Agent by giving written notice of termination to such Authenticating Agent and to the Company. Upon receiving such a notice of resignation or upon such a termination, or in case at any time any Authenticating Agent shall cease to be eligible under this Section, the Trustee, upon receipt of a Company Request, shall promptly appoint a successor Authenticating Agent acceptable to the Company and shall give notice of such appointment in the manner provided in Section 1.06 to the Holders of Securities of the series with respect to which such Authenticating Agent will serve, and shall publish notice of such appointment at least once in an Authorized Newspaper in the place where such successor Authenticating Agent has its principal office. Any successor Authenticating Agent upon acceptance of its appointment hereunder shall become vested with all the rights, powers and duties of its predecessor hereunder, with like effect as if originally named as an Authenticating Agent. No successor Authenticating Agent shall be appointed unless eligible under the provisions of this Section. The provisions of Sections 2.11, 8.04 and 8.05 shall be applicable to any Authenticating Agent. The Company agrees to pay to each Authenticating Agent from time to time reasonable compensation for its services. ARTICLE NINE SECURITYHOLDERS' MEETINGS SECTION 9.01. Purposes of Meetings. A meeting of the Holders of one or more series of the Securities may be called at any time and from time to time pursuant to the provisions of this Article Nine for any of the following purposes: (1) to give any notice to the Company or to the Trustee, or to give any directions to the Trustee, or to waive any default hereunder and its consequences, or to take any other action authorized to be taken by Securityholders pursuant to any of the provisions of Article Seven; -58- 67 (2) to remove the Trustee and appoint a successor pursuant to the provisions of Article Eight; (3) to consent to the execution of an indenture or indentures supplemental hereto pursuant to the provisions of Section 10.02; or (4) to take any other action authorized to be taken by or on behalf of the holders of a specified aggregate Principal Amount of the Outstanding Securities of any series under any other provision of this Indenture or under applicable law. SECTION 9.02. Call of Meetings by Trustee. The Trustee may at any time call a meeting of Securityholders to take any action specified in Section 9.01, to be held at such time and at such place in the Borough of Manhattan, The City of New York, State of New York, as the Trustee shall determine. Notice of every meeting of the Securityholders, setting forth the time and place of such meeting and in general terms the action proposed to be taken at such meeting, shall be mailed to holders of the Securities of all series that may be affected by the action proposed to be taken at the meeting at their addresses as they shall appear in the Security Register. Such notice shall be mailed not less than 20 nor more than 90 days prior to the date fixed for the meeting. SECTION 9.03. Call of Meetings by Company or Securityholders. In case at any time the Company, pursuant to a Board Resolution, or the holders of at least 10% in aggregate Principal Amount of the Securities then Outstanding of all series that may be affected by the action proposed to be taken at the meeting, shall have requested the Trustee to call a meeting of Securityholders of all series that may be so affected by written request setting forth in reasonable detail the action proposed to be taken at the meeting, and the Trustee shall not have mailed the notice of such meeting within 20 days after receipt of such request, then the Company or such Securityholders may determine the time and the place in said Borough of Manhattan for such meeting and may call such meeting to take any action authorized in Section 9.01, by mailing notice thereof as provided in Section 9.02. SECTION 9.04. Qualifications for Voting. To be entitled to vote at any meeting of Securityholders a Person shall (a) be a Holder of one or more Securities of a series affected by the action proposed to be taken at the meeting or (b) be a Person appointed by an instrument in writing as proxy by a holder of one or more such Securities. The only Persons who shall be entitled to be present or to speak at any meeting of Securityholders shall be the Persons entitled to vote at such meeting and their counsel and any representatives of the Trustee and its counsel and any representatives of the Company and its counsel. -59- 68 SECTION 9.05. Regulations. Notwithstanding any other provisions of this Indenture, the Trustee may make such reasonable regulations as it may deem advisable for any meeting of Securityholders, in regard to proof of the holding of Securities and of the appointment of proxies, and in regard to the appointment and duties of inspectors of votes, the submission and examination of proxies, certificates and other evidence of the meeting as it shall think fit. The Trustee shall, by an instrument in writing, appoint a temporary chairman of the meeting, unless the meeting shall have been called by the Company or by Securityholders, as provided in Section 9.03, in which case the Company or the Securityholders calling the meeting, as the case may be, shall in like manner appoint a temporary chairman. A permanent chairman and a permanent secretary of the meeting shall be elected by vote of a majority in aggregate Principal Amount of the Securities represented at the meeting and entitled to vote. At any meeting each Securityholder of a series or proxy shall be entitled to one vote for each principal amount constituting the authorized minimum denomination of Securities of such series held or represented by him; provided, however, that no vote shall be cast or counted at any meeting in respect of any Security challenged as not Outstanding and ruled by the chairman of the meeting to be not Outstanding. The chairman of the meeting shall have no right to vote other than by virtue of Securities of such series held by him or instruments in writing as aforesaid duly designating him as the Person to vote on behalf of other Securityholders of such series. Any meeting of Securityholders duly called pursuant to the provisions of Section 9.02 or 9.03 may be adjourned from time to time, and the meeting may be held as so adjourned without further notice. At any meeting of Securityholders, the presence of Persons holding or representing Securities in an aggregate Principal Amount sufficient to take action upon the business for the transaction of which such meeting was called shall be necessary to constitute a quorum; but, if less than a quorum be present, the Persons holding or representing a majority in aggregate Principal Amount of the Securities represented at the meeting and entitled to vote may adjourn such meeting with the same effect, for all intents and purposes, as though a quorum had been present. SECTION 9.06. Voting. The vote upon any resolution submitted to any meeting of Securityholders of a series shall be by written ballots on which shall be subscribed the signatures of the holders of Securities of such series or of their representatives by proxy and the serial number or numbers of the Securities of such series held or represented by them. The permanent chairman of the meeting shall appoint two inspectors of votes who shall count all votes cast at the meeting for or against any resolution and who shall make and file with the secretary of the meeting their verified written reports in duplicate of all votes cast at the meeting. A record in duplicate of the proceedings of each meeting of Securityholders shall be prepared by the secretary of the meeting and there shall be attached to said record the original reports of the inspectors of votes on any vote by ballot taken thereat and affidavits -60- 69 by one or more Persons having knowledge of the facts setting forth a copy of the notice of the meeting and showing that said notice was mailed as provided in Section 9.02. The record shall show the serial numbers of the Securities voting in favor of or against any resolution. The record shall be signed and verified by the affidavits of the permanent chairman and secretary of the meeting and one of the duplicates shall be delivered to the Company and the other to the Trustee to be preserved by the Trustee. Any record so signed and verified shall be conclusive evidence of the matters therein stated. SECTION 9.07. Action by Securityholders. Whenever in this Indenture it is provided that the Holders of a specified percentage in aggregate Principal Amount of the Securities of any series may take any action (including the making of any demand or request, the giving of any notice, consent or waiver or the taking of any other action), the fact that at the time of taking any such action the Holders of such specified percentage have joined therein may be evidenced (a) by any Act of such Securityholders pursuant to Section 1.04, or (b) by the record of such Securityholders voting in favor thereof at any meeting of such Securityholders duly called and held in accordance with the provisions of Article Nine, or (c) by a combination of such Act and any such record of such a meeting of such Securityholders. ARTICLE TEN SUPPLEMENTAL INDENTURES SECTION 10.01. Supplemental Indentures without Consent of Securityholders. Without the consent of the Holders of any Securities, the Company, when authorized by a Board Resolution, and the Trustee, at any time and from time to time, may enter into one or more indentures supplemental hereto, for any of the following purposes: (1) to evidence the succession of another Person to the Company, and the assumption by any such successor of the covenants of the Company herein and in the Securities; or (2) to add to the covenants of the Company, for the benefit of the Holders of the Securities of any one or more series of Securities (and if such covenants are to be for the benefit of less than all series of Securities, stating that such covenants are expressly being included solely for the benefit of such series), or to surrender any right or power herein conferred upon the Company; or (3) to cure any ambiguity, to correct or supplement any provision herein which may be inconsistent with any other provision herein, or to make any other -61- 70 provisions with respect to matters or questions arising under this Indenture which shall not be inconsistent with the provisions of this Indenture, provided that such action shall not adversely affect the -------- interest of any of the Holders of the Securities of any series in any material respect; or (4) to modify, eliminate or add to the provisions of this Indenture to such extent as shall be necessary to effect the qualification of this Indenture under TIA, or under any similar Federal statute hereafter enacted, and to add to this Indenture such other provisions as may be expressly permitted by TIA, excluding, however, the provisions referred to in Section 316(a)(2) of TIA or any corresponding provision in any similar Federal statute hereafter enacted; or (5) to provide for the issuance under this Indenture of Securities in the form only of an entry or entries in the Security Register and without delivery thereof in any form (including all appropriate notification and publication and other provisions), and to provide for exchangeability of such Securities with the Securities of the same series issued hereunder; or (6) to set forth the forms or terms (including, without limitation, additional covenants and changes in or eliminations of covenants previously set forth in this Indenture) of any one or more series of Securities not previously issued; or (7) to change or eliminate any of the provisions of this Indenture in respect of one or more series of Securities, provided that -------- any such change or elimination shall become effective only when there is no Security Outstanding of any series authorized prior to the execution of such supplemental indenture which is entitled to the benefit of such provision; or (8) to evidence and provide for the acceptance, of appointment hereunder by a successor Trustee with respect to the Securities of one or more series and to add to or change any of the provisions of this Indenture as shall be necessary to provide for or facilitate the administration of the trusts hereunder by more than one Trustee, pursuant to the requirements of Section 8.11(b). SECTION 10.02. Supplemental Indentures with Consent of Securityholders. With the consent of the Holders of not less than 66 2/3% (unless a different percentage with respect to any series of Securities is specified for the purpose of this Section 10.02 by or pursuant to the Board Resolution authorizing such series, in which case, as to such series, the percentage so specified) in Principal Amount of the Outstanding Securities of each series to be affected, in each case by Act of said Holders delivered to the Company and the Trustee, the Company, when authorized by a Board Resolution, and the Trustee may enter into an indenture or indentures supplemental hereto for the purpose of adding any provisions to or changing in any manner or eliminating any of the provisions -62- 71 of this Indenture or of modifying in any manner the rights of the Holders of such Securities under this Indenture; provided, however, that no such supplemental indenture shall, without the consent of the Holder of each Outstanding Security affected thereby, (1) change the Stated Maturity of the principal of, or any installment of principal of or interest (unless otherwise provided with respect to such Security pursuant to Section 2.01(20)), if any, on, any Security, or reduce the principal thereof payable at Stated Maturity or the rate of interest, if any, thereon, or change any Redemption Price, or reduce the amount of principal of any Security that may at any time be declared to be due and payable pursuant to Section 7.02, or change any Place of Payment where, or the coin or currency in which, any Security or any premium or interest thereon is payable, or impair the right to institute suit for the enforcement of any such payment on or after the Stated Maturity thereof (or, in the case of redemption, on or after the Redemption Date), or alter adversely the terms and provisions, if any, applicable to conversion or exchange of any Securities; or (2) reduce the percentage in Principal Amount of the Outstanding Securities of any series, the consent of whose Holders is required for any such supplemental indenture or the consent of whose Holders is required for any waiver of compliance with certain provisions of this Indenture or certain defaults hereunder and their consequences provided for in this Indenture; or (3) modify any of the provisions of this Section, Section 5.10 or 7.13, except to increase any such percentage or to provide that certain other provisions of this Indenture cannot be modified or waived without the consent of the Holder of each Outstanding Security affected thereby; provided, however, that this clause shall not be deemed to require the consent of any Holder with respect to changes in the references to "the Trustee" and concomitant changes in this Section, or the deletion of this proviso, in accordance with the requirements of Sections 8.11(b) and 10.01(8). A supplemental indenture which changes or eliminates any covenant or other provision of this Indenture which has expressly been included solely for the benefit of one or more particular series of Securities, or which modifies the rights of the Holders of Securities of such series with respect to such covenant or other provision, shall be deemed not to affect the rights under this Indenture of the Holders of Securities of any other series. It shall not be necessary for an Act of Securityholders under this Section to approve the particular form of any proposed supplemental indenture, but it shall be sufficient if such Act shall approve the substance thereof. -63- 72 SECTION 10.03. Execution of Supplemental Indentures. In executing, or accepting the additional trusts created by, any supplemental indenture permitted by this Article or the modifications thereby of the trusts created by this Indenture, the Trustee shall be entitled to receive, and (subject to Section 8.01) shall be fully protected in relying upon, an Opinion of Counsel stating that the execution of such supplemental indenture is authorized or permitted by and complies with this Indenture. The Trustee may, but shall not (except to the extent required in the case of a supplemental indenture entered into under Section 10.01(4) be obligated to, enter into any such supplemental indenture which affects the Trustee's own rights, duties or immunities under this Indenture or otherwise. SECTION 10.04. Effect of Supplemental Indentures. Upon the execution of any supplemental indenture under this Article, this Indenture shall be modified in accordance therewith, and such supplemental indenture shall form a part of this Indenture for all purposes; and every Holder of Securities theretofore or thereafter authenticated and delivered hereunder shall be bound thereby. SECTION 10.05. Conformity with Trust Indenture Act. Every supplemental indenture executed pursuant to this Article shall conform to the requirements of the Trust Indenture Act. SECTION 10.06. Reference in Securities to Supplemental Indentures. Securities of any series authenticated and delivered after the execution of any supplemental indenture pursuant to this Article may, and shall, if required by the Trustee, bear a notation in form approved by the Trustee as to any matter provided for in such supplemental indenture. If the Company shall so determine, new Securities of any series so modified as to conform, in the opinion of the Trustee and the Board of Directors, to any such supplemental indenture may be prepared and executed by the Company and authenticated and delivered by the Trustee in exchange for Outstanding Securities of such series. SECTION 10.07. Notice of Supplemental Indentures. Promptly after the execution by the Company and the Trustee of any supplemental indenture pursuant to the provisions of Section 10.02, the Company shall give notice thereof to the Holders of each Outstanding Security of any series so affected, pursuant to Section 1.06, setting forth in general terms the substance of such supplemental indenture. Any failure of the Company to give such notice, or any defect therein, shall not, in any way, impair or affect the validity of any such supplemental indenture. -64- 73 ARTICLE ELEVEN CONSOLIDATION, MERGER, CONVEYANCE OR TRANSFER SECTION 11.01. Company May Consolidate, etc., Only on Certain Terms. The Company shall not consolidate with or merge into any other corporation or convey or transfer its properties and assets substantially as an entirety to any Person, unless (1) the corporation formed by such consolidation or into which the Company is merged or the Person which acquires by conveyance or transfer the properties and assets of the Company substantially as an entirety shall be a corporation organized and existing under the laws of the United States of America or any State or the District of Columbia, and shall expressly assume, by an indenture supplemental hereto, executed and delivered to the Trustee, the due and punctual payment of the principal of (and premium, if any) and interest, if any, on all the Securities and the performance or observance of every covenant of this Indenture on the part of the Company to be performed or observed; (2) immediately after giving effect to such transaction, no Event of Default, and no event which, after notice or lapse of time, or both, would become an Event of Default, shall have happened and be continuing; and (3) the Company has delivered to the Trustee an Officers' Certificate and an Opinion of Counsel each stating that such consolidation, merger, conveyance or transfer and such supplemental indenture comply with this Article and that all conditions precedent herein provided for relating to such transaction have been complied with. SECTION 11.02. Successor Corporation Substituted. Upon any consolidation or merger, or any conveyance or transfer of the properties and assets of the Company substantially as an entirety in accordance with Section 11.01, the successor corporation formed by such consolidation or into which the Company is merged or to which such conveyance or transfer is made shall succeed to, and be substituted for, and may exercise every right and power of, the Company under this Indenture with the same effect as if such successor corporation had been named as the Company herein and thereafter the predecessor corporation shall be released from all obligations and covenants under this Indenture and the Securities. In the event of any such conveyance or transfer, the Company as the predecessor corporation may be dissolved, wound up and liquidated at any time thereafter. -65- 74 ARTICLE TWELVE SATISFACTION AND DISCHARGE SECTION 12.01. Satisfaction and Discharge of Indenture. This Indenture shall upon Company Request cease to be of further effect (except as to any surviving rights of registration of transfer, exchange or conversion of Securities herein expressly provided for and any rights to receive payments of interest thereon), and the Trustee, on demand of and at the expense of the Company, shall execute proper instruments acknowledging satisfaction and discharge of this Indenture, when (1) either (A) all Securities theretofore authenticated and delivered (other than (i) Securities which have been destroyed, lost or stolen and which have been replaced or paid as provided in Section 2.08, and (ii) Securities for whose payment money has theretofore been (aa) deposited in trust or segregated and held in trust by the Company and thereafter repaid to the Company or discharged from such trust, as provided in Section 5.03(d) or (bb) paid to any State or the District of Columbia pursuant to its unclaimed property or similar laws) have been delivered to the Trustee for cancellation; or (B) all such Securities not theretofore delivered to the Trustee for cancellation (i) have become due and payable, or (ii) will become due and payable at their Stated Maturity within one year, or (iii) are to be called for redemption within one year under arrangements satisfactory to the Trustee for the giving of notice of redemption by the Trustee in the name, and at the expense, of the Company, and the Company, in the case of (i), (ii) or (iii) above, has deposited or caused to be deposited with the Trustee, as trust funds in trust for the purpose, money in an amount in the currency in which such Securities are payable, sufficient to pay and discharge the entire indebtedness on such Securities not theretofore delivered to the Trustee for cancellation, for principal (and premium, if any) and interest, if any, to the date of such -66- 75 deposit (in the case of Securities which have become due and payable), or to the Stated Maturity or Redemption Date, as the case may be; (2) the Company has paid or caused to be paid all other sums payable hereunder by the Company; and (3) the Company has delivered to the Trustee an Officers' Certificate and an Opinion of Counsel each stating that all conditions precedent herein provided for relating to the satisfaction and discharge of this Indenture have been complied with. Notwithstanding the satisfaction and discharge of this Indenture, the obligations of the Company to the Trustee under Section 8.07, the obligations of the Trustee to any Authenticating Agent under Section 8.14 and, if money shall have been deposited with the Trustee pursuant to subclause (B) of Clause (1) of this Section, the obligations of the Trustee under Section 12.02 and the last paragraph of Section 5.03 shall survive. SECTION 12.02. Application of Trust Money. Subject to the provisions of the last paragraph of Section 5.03, all money deposited with the Trustee pursuant to Section 12.01 shall be held in trust and applied by it, in accordance with the provisions of the Securities and this Indenture, to the payment, either directly or through any Paying Agent (including the Company acting as its own Paying Agent), as the Trustee may determine, to the Persons entitled thereto, of the principal (and premium, if any) and interest, if any, for whose payment such money has been deposited with the Trustee; but such money need not be segregated from other funds except to the extent required by law. ARTICLE THIRTEEN IMMUNITY OF INCORPORATORS, STOCKHOLDERS, OFFICERS AND DIRECTORS SECTION 13.01. Exemption from Individual Liability. No recourse under or upon any obligation, covenant or agreement of this Indenture, or of any Security, or for any claim based thereon or otherwise in respect thereof, shall be had against any incorporator, stockholder, officer or director, as such, past, present or future, of the Company or of any successor corporation, either directly or through the Company, whether by virtue of any constitution, statute or rule of law, or by the enforcement of any assessment or penalty or otherwise; it being expressly understood that this Indenture and the obligations issued hereunder are solely corporate obligations of the Company, and that no such personal liability whatever shall attach to, or is or shall be incurred by, the incorporators, stockholders, officers or directors, as such, of the Company or of any successor corporation, or any of them, because of the creation of the -67- 76 indebtedness hereby authorized, or under or by reason of the obligations, covenants or agreements contained in this Indenture or in any of the Securities or implied therefrom; and that any and all such personal liability, either at common law or in equity or by constitution or statute, of, and any and all such rights and claims against, every such incorporator, stockholder, officer or director, as such, because of the creation of the indebtedness hereby authorized, or under or by reason of the obligations, covenants or agreements contained in this Indenture or in any of the Securities or implied therefrom, are hereby expressly waived and released as a condition of, and as a consideration for, the execution of this Indenture and the issuance of the Securities. ARTICLE FOURTEEN DEFEASANCE AND COVENANT DEFEASANCE SECTION 14.01. Company's Option to Effect Defeasance or Covenant Defeasance. The Company may elect, at its option at any time, to have Section 14.02 or Section 14.03 applied to any Securities or any series of Securities, as the case may be, if so provided with respect to the Securities of any series pursuant to Section 2.01, upon compliance with the conditions set forth in this Article. Any such election shall be evidenced by a Board Resolution or in another manner specified as contemplated by Section 2.01 for such Securities. SECTION 14.02. Defeasance and Discharge. Upon the Company's exercise of its option to have this Section applied to any Securities or any series of Securities, as the case may be, the Company shall be deemed to have been fully discharged from all or any specified portion of its obligations with respect to such Securities as provided in this Section on and after the date the conditions set forth in Section 14.04 are satisfied (hereinafter called "Defeasance"). For this purpose, such Defeasance means that the Company shall be deemed to have paid and discharged the entire indebtedness represented by such Securities or, at the Company's option, any specified payment obligation and to have satisfied all its other obligations under such Securities and this Indenture insofar as such Securities are concerned (and the Trustee, at the expense of the Company, shall execute proper instruments acknowledging the same), subject to the following which shall survive until otherwise terminated or discharged hereunder: (1) the rights of Holders of such Securities to receive, solely from the trust fund described in Section 14.04 and as more fully set forth in such Section, payments in respect of all or any defeased portion of the principal of and any premium and/or interest on such Securities when payments are due, (2) the Company's obligations with respect to such Securities under Sections 2.06, 2.07, 2.08, 5.02 and 5.03, (3) the rights, powers, trusts, duties and immunities of the Trustee hereunder, and (4) this Article. Subject to compliance with this Article, the Company may exercise its option, if any, to have this -68- 77 Section applied to any Securities notwithstanding the prior exercise of its option, if any, to have Section 14.03 applied to such Securities. SECTION 14.03. Covenant Defeasance. Upon the Company's exercise of its option, if any, to have this Section applied to any Securities or any series of Securities, as the case may be, (1) the Company shall be released from any of its obligations under Sections 5.08 and 5.09, and any covenants provided pursuant to Section 2.01(17), 10.01(2) or 10.01(6) for the benefit of the Holders of such Securities, (2) the occurrence of any event specified in Section 7.01(7) (with respect to Sections 5.08 and 5.09, and any such covenants provided pursuant to Sections 2.01(17), 10.01(2) or 10.01(6)) and 7.01(6) shall be deemed not to be or result in an Event of Default, in each case with respect to such Securities as provided in this Section 14.03 on and after the date the conditions set forth in Section 14.04 are satisfied (hereinafter called "Covenant Defeasance"). For this purpose, such Covenant Defeasance means that, with respect to such Securities, the Company may omit to comply with and shall have no liability in respect of any term, condition or limitation set forth in any such specified Section (to the extent so specified in the case of Section 7.01(7)), whether directly or indirectly by reason of any reference elsewhere herein to any such Section or by reason of any reference in any such Section to any other provision herein or in any other document, but the remainder of this Indenture and such Securities shall be unaffected thereby. SECTION 14.04. Conditions to Defeasance or Covenant Defeasance. The following shall be the conditions to the application of Section 14.02 or Section 14.03 to any Securities or any series of Securities, as the case may be: (1) In the event of an election to have Section 14.02 apply to any Securities or any series of Securities, as the case may be, the Company shall have deposited or caused to be deposited with the Trustee (or another trustee which satisfies the requirements contemplated by Section 8.09 and agrees to comply with the provisions of this Article applicable to it) as trust funds in trust for the purpose of making the following payments, specifically pledged as security for, and dedicated solely to, the benefit of the Holders of such Securities, (A) money in an amount, or (B) U.S. Government Obligations which through the scheduled payment of principal and interest in respect thereof in accordance with their terms will provide, not later than one day before the due date of any payment, money in an amount, or (C) a combination thereof, in each case sufficient to pay and discharge, and which shall be applied by the Trustee (or any such other qualifying trustee) to pay and discharge, all or any specific portion of the principal of and any premium and interest on such Securities on the respective Interest Payment Date and/or Stated Maturities, in accordance with the terms of this Indenture and such Securities. -69- 78 (2) In the event of an election to have Section 14.02 apply to any Securities or any series of Securities, as the case may be, the Company shall have advised the Trustee in writing of the payment or payments of the Securities of any series to which such deposit is to be applied. (3) Such Defeasance or Covenant Defeasance shall not cause the Trustee to have a conflicting interest within the meaning of the Trust Indenture Act (assuming all Securities are in default within the meaning of such Act). (4) Such Defeasance or Covenant Defeasance shall not result in the trust arising from any such deposit constituting an investment company within the meaning of the Investment Company Act unless such trust shall be registered under such Act or exempt from registration thereunder. (5) In the event of an election to have Section 14.03 apply to any Securities or any series of Securities, as the case may be, the Company shall satisfy all terms and conditions which shall be imposed as conditions to the application of Section 14.03 to such Securities in connection with the provisions regarding Section 14.03 adopted by the Company with respect to such Securities pursuant to Section 2.01. SECTION 14.05. Deposited Money and U.S. Government Obligations to Be Held in Trust; Miscellaneous Provisions. The Trustee shall, subject to the provisions of the Indenture, hold in trust any money and U.S. Government Obligations deposited with the Trustee pursuant to Section 14.04(1), and any money received by the Trustee as payment of principal or interest in respect of such U.S. Government Obligations, and shall apply all such money, in accordance with the provisions of the Securities and the Indenture, to the payment, to the Persons entitled thereto, of the principal (and premium, if any) and interest for whose payment such deposit (including any money to be received by the Trustee as principal or interest in respect of such U.S. Government Obligations) was made with the Trustee; provided, however, that, if the Trustee shall at any time hold in trust - -------- ------- pursuant to this Section, as a result of a deposit made pursuant to this Article, any money in excess of the amount required to make the payments to which such deposit (including any money to be received by the Trustee as principal or interest in respect of any U.S. Government Obligations included within such deposit) was to be applied, the Trustee shall, upon Company Request, pay to the Company such excess money. The Company shall pay and indemnify the Trustee against any tax, fee or other charge imposed on or assessed against the U.S. Government Obligations deposited pursuant to Section 14.04 or the principal and interest received in respect thereof other than any such tax, fee or other charge which by law is for the account of the Holders of Outstanding Securities. -70- 79 SECTION 14.06. Reinstatement. If the Trustee or the Paying Agent is unable to apply any money in accordance with this Article with respect to any Securities by reason of any order or judgment of any court or governmental authority enjoining, restraining or otherwise prohibiting such application, then the obligations under this Indenture and such Securities from which the Company has been discharged or released pursuant to Section 14.02 or 14.03 shall be revived and reinstated as though no deposit had occurred pursuant to this Article with respect to such Securities, until such time as the Trustee or Paying Agent is permitted to apply all money held in trust pursuant to Section 14.05 with respect to such Securities in accordance with this Article; provided, however, that if the ----------------- Company makes any payment of principal of or any premium or interest on any such Security following such reinstatement of its obligations, the Company shall be subrogated to the rights (if any) of the Holders of such Securities to receive such payment from the money so held in trust. ARTICLE FIFTEEN MISCELLANEOUS SECTION 15.01. Counterparts. This Indenture 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. (Remainder of page intentionally left blank) -71- 80 Bank of America National Trust and Savings Association hereby accepts the trusts in this Indenture declared and provided, upon the terms and conditions hereinabove set forth. IN WITNESS WHEREOF, the parties hereto have caused this 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. J. C. PENNEY COMPANY, INC. By_________________________________ Attest: ___________________________ BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION By_________________________________ Attest: __________________________ -72- 81 STATE OF TEXAS ) ) ss.: COUNTY OF COLLIN ) On this ________ day of ____________________, 1994, before me personally came ___________________________, to me known, who, being by me duly sworn, did depose and say that he resides at ______________________________; that he is a _________________________ of J. C. Penney Company, Inc., one of the corporations described in and which executed the foregoing instrument; that he knows the corporate seal of said corporation; that the seal affixed to said instrument is said corporate seal; that it was so affixed by authority of the Board of Directors of said corporation; and that he signed his name thereto by like authority. _________________________________ Notary Public STATE OF CALIFORNIA ) ) ss.: COUNTY OF LOS ANGELES ) On this ________ day of ____________________, 1994, before me personally came ___________________________, to me known, who, being by me duly sworn, did depose and say that he resides at ______________________________; that he is a _________________________ of Bank of America National Trust and Savings Association, a national banking association described in and which executed the foregoing instrument; that he knows the corporate seal of said association; that the seal affixed to said instrument is said corporate seal; that it was so affixed by authority of the Board of Directors of said corporation; and that he signed his name thereto by like authority. _________________________________ Notary Public -73- EX-4.B.I 4 FORM OF NOTE 1 Exhibit 4(b)(i) (FORM OF FACE OF NOTE) $........... No........... J. C. PENNEY COMPANY, INC. % Note Due J. C. Penney Company, Inc., a Delaware Corporation (hereinafter called the Company), for value received, promises to pay to or registered assigns, the principal sum of Dollars, on ,and to pay interest on said principal sum, semi(annually on (and ) of each year, at the rate of % per annum, from the (or the , as the case may be,) next preceding the date of this Note to which interest has been paid or duly provided for, unless the date hereof is a date to which interest has been paid or duly provided for, in which case from the date of this Note, or unless no interest has been paid on the Notes, in which case from ,until the principal hereof becomes due and payable, and at such rate on any overdue principal and (to the extent that the payment of such interest shall be legally enforceable) on any overdue instalment of interest. Notwithstanding the foregoing, when there is no existing default in the payment of interest on the Notes, if the date hereof is after a Regular Record Date, which shall be the close of business on (or ) (whether or not a Business Day) (, as the case may be,) next preceding an Interest Payment Date, and before the next succeeding Interest Payment Date, this Note shall bear interest from such Interest Payment Date; provided, however, that if the Company shall default in the payment of interest due on such Interest Payment Date, then this Note shall bear interest from the next preceding Interest Payment Date to which interest has been paid or duly provided for, or if no interest has been paid on the Notes, from . The interest so payable, and punctually paid or duly provided for, on any Interest Payment Date will, as provided in the Indenture, be paid to the Person in whose name this Note (or one or more Predecessor Notes) is registered at the Regular Record Date for such Interest Payment Date. The principal of (and premium, if any) and interest on this Note are payable 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, at the agency or agencies maintained by the Company for such purpose; 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 shall appear in the Security Register. Any interest not punctually paid or duly provided for shall be payable as provided in the Indenture. Reference is made to the further provisions of this Note set forth on the reverse hereof, which shall have the same effect as though fully set forth at this place. Unless one of the certificates of authentication hereon has been executed by or on behalf of the Trustee by manual signature, this Note shall not be 2 2 entitled to any benefit under the Indenture, or be valid or obligatory for any purpose. IN WITNESS WHEREOF, J. C. Penney Company, Inc. has caused the execution hereof in its corporate name by its duly authorized officers. J. C. PENNEY COMPANY, INC. By.............................. CHAIRMAN OF THE BOARD By.............................. SECRETARY (FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION) CERTIFICATE OF AUTHENTICATION This is one of the % Notes Due referred to in the within-mentioned Indenture. ,AS TRUSTEE By.............................. Authorized Officer (FORM OF ALTERNATE CERTIFICATE OF AUTHENTICATION) CERTIFICATE OF AUTHENTICATION This is one of the % Notes Due referred to in the within-mentioned Indenture. ,AS TRUSTEE By.............................. Authenticating Agent By.............................. Authorized Officer 3 (FORM OF REVERSE OF NOTE) J. C. PENNEY COMPANY, INC. % Note Due This Note is one of a duly authorized issue of unsecured debentures, notes or other evidences of indebtedness of Company (herein called the "Securities") of the series hereinafter specified, all issued and to be issued under an Indenture dated as of April 1, 1994 (herein called the "Indenture"), between the Company and Bank of America National Trust and Savings Association, 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 thereunder of the Company, the Trustee and the Holders of the Securities, and the terms upon which the Securities are, and are to be, authenticated and delivered. The Securities, which are unlimited in aggregate principal amount, may be issued in one or more series, which different series may be issued in various aggregate principal amounts, may mature at different times, may bear interest (if any) at different rates, may be subject to different redemption provisions (if any), may be subject to different sinking, purchase or analogous funds (if any), may be subject to different covenants and Events of Default and may otherwise vary as in the Indenture provided. This Note is one of a series of the Securities designated as the % Notes Due (herein called the "Notes"), limited in aggregate principal amount to $ . On and after ,the Notes may be redeemed, at the option of the Company, as a whole or from time to time in part, on any date prior to Stated Maturity, upon not less than 30 nor more than 60 days' prior notice given as provided in the Indenture, at (insert Redemption Price or table) together with accrued interest to the Redemption Date. As provided in the Indenture and subject to certain limitations therein set forth, the transfer of this Note may be registered on the Security Register, upon surrender of this Note for registration of transfer at one of the agencies maintained by the Company for such purpose, duly endorsed by, or accompanied by a written instrument of transfer in form satisfactory to the Company and the Security Registrar (if other than the Company) duly executed by, the Holder hereof or his attorney duly authorized in writing, and thereupon one or more new Notes, of authorized denominations and for the same aggregate principal amount, will be issued to the designated transferee or transferees. The Notes are issuable only as registered Notes without coupons in the denominations of $ and any integral multiple thereof. As provided in the Indenture, Notes are exchangeable for a like aggregate principal amount of Notes of different authorized denominations, as requested by the Holder surrendering the same. No service charge will 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. 4 2 Prior to due presentment for registration of transfer of this Note, the Company, the Trustee and any agent of the Company or the Trustee may treat the Person in whose name this Note is registered as the absolute owner hereof for the purpose of receiving payment as herein provided and for all other purposes, whether or not this Note be overdue, and neither the Company, the Trustee nor any such agent shall be affected by notice to the contrary. (Additional covenants, terms or provisions, if any, to be inserted here as well as any changes in covenants, terms or provisions contained in the Indenture.) If an Event of Default with respect to the Notes shall occur and be continuing, the principal of all the Notes 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 any series under the Indenture at any time by the Company with the consent of the Holders of 66 2/3% (unless a different percentage is specified with respect to any series of Securities, in which case, as to such series, the percentage so specified) in aggregate principal amount of the Outstanding Securities of each series affected by any such amendment or modification. The Indenture also contains provisions permitting the Holders of specified percentages in aggregate principal amount of the Notes at the time Outstanding, on behalf of the Holders of all the Notes, 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 Note shall be conclusive and binding upon such Holder and upon all future Holders of this Note and of any Note 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 Note. No reference herein to the Indenture and no provision of this Note or of the Indenture shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal of (and premium, if any) and interest on this Note at the times, places and rate, and in the coin or currency, herein prescribed. No recourse shall be had for the payment of the principal of (or premium, if any) or interest on this Note, or for any claim based hereon, or otherwise in respect hereof, or based on or in respect of the Indenture or any indenture supplemental thereto, against any incorporator, stockholder, officer or director, as such, past, present or future, of the Company or any successor corporation, whether by virtue of any constitution, statute or rule of law, or by the enforcement of any assessment or penalty or otherwise, all such liability being, by the acceptance hereof and as part of the consideration for the issue hereof, expressly waived and released. All terms used in this Note which are defined in the Indenture shall have the meanings assigned to them in the Indenture. EX-4.B.II 5 FORM OF ZERO COUPON NOTE 1 Exhibit 4(b)(ii) (FORM OF FACE OF NOTE) For purposes of Section 1273 of the Internal Revenue Code of 1986, as amended, the issue price of this Note is % of its principal amount and the issue date is $............ No........... J. C. PENNEY COMPANY, INC. Zero Coupon Note Due J. C. Penney Company, Inc., a Delaware Corporation (hereinafter called the Company), for value received, promises to pay to or registered assigns, the principle sum of Dollars, on . The principal of this Note shall not bear interest except in the case of a default in payment of principal upon acceleration, redemption or Stated Maturity and in such case the overdue principal of this Note shall bear interest at the rate of % per annum (to the extent that the payment of such interest shall be legally enforceable), which shall accrue from the date of such default in payment to the date payment of such principal has been made or duly provided for. The principal of and any such interest on this Note are payable 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, at the agency or agencies maintained by the Company for such purpose. Reference is made to the further provisions of this Note set forth on the reverse hereof, which shall have the same effect as though fully set forth at this place. Unless one of the certificates of authentication hereon has been executed by or on behalf of the Trustee by manual signature, this Note shall not be entitled to any benefit under the Indenture, or be valid or obligatory for any purpose. IN WITNESS WHEREOF, J. C. Penney Company, Inc. has caused the execution hereof in its corporate name by its duly authorized officers. J. C. PENNY COMPANY,INC. By............................. CHAIRMAN OF THE BOARD By............................. SECRETARY 2 2 (FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION) CERTIFICATE OF AUTHENTICATION This is one of the Zero Coupon Notes Due referred to in the within-mentioned Indenture. ,AS TRUSTEE By.............................. Authorized Officer (FORM OF ALTERNATE CERTIFICATE OF AUTHENTICATION) CERTIFICATE OF AUTHENTICATION This is one of the Zero Coupon Notes Due referred to in the within-mentioned Indenture. ,AS TRUSTEE By.............................. Authenticating Agent By.............................. Authorized Officer 3 (FORM OF REVERSE OF NOTE) J. C. PENNEY COMPANY, INC. Zero Coupon Note Due This Note is one of a duly authorized issue of unsecured debentures, notes or other evidences of indebtedness of the Company (herein called the "Securities") of the series hereinafter specified, all issued and to be issued under an Indenture dated as of April 1, 1994 (herein called the "Indenture"), between the Company and Bank of America National Trust and Savings Association, 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 thereunder of the Company, the Trustee and the Holders of the Securities, and the terms upon which the Securities are, and are to be, authenticated and delivered. The Securities, which are unlimited in aggregate principal amount, may be issued in one or more series, which different series may be issued in various aggregate principal amounts, may mature at different times, may bear interest (if any) at different rates, may be subject to different redemption provisions (if any), may be subject to different sinking, purchase or analogous funds (if any), may be subject to different covenants and Events of Default and may otherwise vary as in the Indenture provided. This Note is one of a series of the Securities designated as the Zero Coupon Notes Due (herein called the "Notes"), limited in aggregate principal amount to $ at Stated Maturity. If an Event of Default with respect to the Notes shall occur and be continuing, the Trustee or the Holders of not less than 25% in principal amount of the Notes Outstanding may declare to be due and payable immediately in the manner and with the effect provided in the Indenture an amount of principal equal to the sum of (i) the initial public offering price of the Notes, (ii) the aggregate of the portions of the original issue discount which shall be added cumulatively each (and ), computed as provided in the Indenture, and (iii) accrued amortization of original issue discount from the preceding (or ) to the date of declaration. Upon payment of this amount, all of the Company's obligations in respect of the payment of the principal of the Notes shall terminate. The Notes may be redeemed at any time, at the option of the Company, as a whole or from time to time in part, upon not less than 30 nor more than 60 days' prior notice given as provided in the Indenture, at the Redemption Price of 100% of the principal amount thereof at Stated Maturity, without premium. As provided in the Indenture and subject to certain limitations therein set forth, the transfer of this Note may be registered on the Security Register, upon surrender of this Note for registration of transfer at one of the agencies maintained by the Company for such purpose, duly endorsed by, or accompanied by a written instrument of transfer in form satisfactory to the Company and the Security Registrar (if other than the Company) duly executed by, the Holder hereof or his attorney duly authorized in writing, 4 2 and thereupon one or more new Notes, of authorized denominations and for the same aggregate principal amount, will be issued to the designated transferee or transferees. The Notes are issuable only as registered Notes without coupons in the denominations of $ and any integral multiple thereof. As provided in the Indenture, Notes are exchangeable for a like aggregate principal amount of Notes of different authorized denominations, as requested by the Holder surrendering the same. No service charge will 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 for registration of transfer of this Note, the Company, the Trustee and any agent of the Company or the Trustee may treat the Person in whose name this Note is registered as the absolute owner hereof for the purpose of receiving payment as herein provided and for all other purposes, whether or not this Note be overdue, and neither the Company, the Trustee nor any such agent shall be affected by notice to the contrary. (Additional covenants, terms or provisions, if any, to be inserted here as well as any changes in covenants, terms or provisions contained 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 any series under the Indenture at any time by the Company with the consent of the Holders of 66 2/3% (unless a different percentage is specified with respect to any series of Securities, in which case, as to such series, the percentage so specified) in aggregate principal amount of the Outstanding Securities of each series affected by any such amendment or modification. The Indenture also contains provisions permitting the Holders of specified percentages in aggregate principal amount of the Notes at the time Outstanding, on behalf of the Holders of all the Notes, 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 Note shall be conclusive and binding upon such Holder and upon all future Holders of this Note and of any Note 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 Note. No reference herein to the Indenture and no provision of this Note or of the Indenture shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal of and interest, if any, on this Note at the times, places and rate, and in the coin or currency, herein prescribed. No recourse shall be had for the payment of the principal of or the interest, if any, on this Note, or for any claim based hereon, or otherwise in 5 3 respect hereof, or based on or in respect of the Indenture or any indenture supplemental thereto, against any incorporator, stockholder, officer or director, as such, past, present or future, of the Company or any successor corporation, whether by virtue of any constitution, statute or rule of law, or by the enforcement of any assessment or penalty or otherwise, all such liability being, by the acceptance hereof and as part of the consideration for the issue hereof, expressly waived and released. All terms used in this Note which are defined in the Indenture shall have the meanings assigned to them in the Indenture. EX-4.B.III 6 FORM OF DEBENTURE (ORIGINAL ISSUE) 1 Exhibit 4(b)(iii) (FORM OF FACE OF DEBENTURE) For purposes of Section 1273 of the Internal Revenue Code of 1986, as amended, the issue price of this Debenture is % of its principal amount and the issue date is $.......... No........... J. C. PENNEY COMPANY, INC. % Debenture Due J. C. Penney Company, Inc., a Delaware Corporation (hereinafter called the Company), for value received, promises to pay to or registered assigns, the principal sum of Dollars, on , and to pay interest on said principal sum, (semi)annually on (and ) of each year, at the rate of % per annum, from the (or the , as the case may be,) next preceding the date of this Debenture to which interest has been paid or duly provided for, unless the date hereof is a date to which interest has been paid or duly provided for, in which case from the date of this Debenture, or unless no interest has been paid on the Debentures, in which case from , until the principal hereof becomes due and payable, and at the rate of % per annum on any overdue principal and on any overdue instalment of interest (to the extent that the payment of such interest shall be legally enforceable). Notwithstanding the foregoing, when there is no existing default in the payment of interest on the Debentures, if the date hereof is after a Regular Record Date, which shall be the close of business on (or ) (whether or not a Business Day)(, as the case may be,) next preceding an Interest Payment Date, and before the next succeeding Interest Payment Date, this Debenture shall bear interest from such Interest Payment Date; provided, however, that if the Company shall default in the payment of interest due on such Interest Payment Date, then this Debenture shall bear interest from the next preceding Interest Payment Date to which interest has been paid or duly provided for, or if no interest has been paid on the Debentures, from . The interest so payable, and punctually paid or duly provided for, on any Interest Payment Date will, as provided in the Indenture, be paid to the Person in whose name this Debenture (or one or more Predecessor Debentures) is registered at the Regular Record Date for such Interest Payment Date. The principal of and interest on this Debenture are payable 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, at the agency or agencies maintained by the Company for such purpose; 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 shall appear in the Security Register. Any interest not punctually paid or duly provided for shall be payable as provided in the Indenture. 2 2 Reference is made to the further provisions of this Debenture set forth on the reverse hereof, which shall have the same effect as though fully set forth at this place. Unless one of the certificates of authentication hereon has been executed by or on behalf of the Trustee by manual signature, this Debenture shall not be entitled to any benefit under the Indenture, or be valid or obligatory for any purpose. IN WITNESS WHEREOF, J. C. Penney Company, Inc. has caused the execution hereof in its corporate name by its duly authorized officers. J. C. PENNEY COMPANY, INC. By.............................. CHAIRMAN OF THE BOARD By.............................. SECRETARY (FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION) CERTIFICATE OF AUTHENTICATION This is one of the % Debentures Due referred to in the within-mentioned Indenture. ,AS TRUSTEE By.............................. Authorized Officer (FORM OF ALTERNATE CERTIFICATE OF AUTHENTICATION) CERTIFICATE OF AUTHENTICATION This is one of the % Debentures Due referred to in the within-mentioned Indenture. ,AS TRUSTEE By.............................. Authenticating Agent By.............................. Authorized Officer 3 (FORM OF REVERSE OF DEBENTURE) J. C. PENNEY COMPANY, INC. % Debenture Due This Debenture is one of a duly authorized issue of unsecured debentures, notes or other evidences of indebtedness of the Company (herein called the "Securities") of the series hereinafter specified, all issued and to be issued under an Indenture dated as of April 1, 1994 (herein called the "Indenture"), between the Company and Bank of America National Trust and Savings Association, 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 the statement of the respective rights thereunder of the Company, the Trustee and the Holders of the Securities and the terms upon which the Securities are, and are to be, authenticated and delivered. The Securities, which are unlimited in aggregate principal amount, may be issued in one or more series, which different series may be issued in various aggregate principal amounts, may mature at different times, may bear interest (if any) at different rates, may be subject to different redemption provisions (if any), may be subject to different sinking, purchase or analogous funds (if any), may be subjected to different covenants and Events of Default and may otherwise vary as in the Indenture provided. This Debenture is one of a series of the Securities designated as the % Debenture Due (herein called the "Debentures"), limited in aggregate principal amount to $ at State Maturity. If an Event of Default with respect to the Debentures shall occur and be continuing, the Trustee or the Holders of not less than 25% in principal amount of the Debentures Outstanding may declare to be due and payable immediately in the manner and with the effect provided in the Indenture an amount of principal equal to the sum of (i) the initial public offering price of the Debentures, (ii) the aggregate of the portions of the original issue discount which shall be added cumulatively each (and ), computed as provided in the Indenture, and (iii) accrued amortization of original issue discount from the preceding (or ), to the date of declaration, together with accrued interest to the date of declaration. Upon payment of this amount, all of the Company's obligations in respect of the payment of the principal of the Debentures and such accrued interest shall terminate. The Debentures may be redeemed at any time, at the option of the Company, as a whole or from time to time in part, upon not less than 30 nor more than 60 days' prior notice given as provided in the Indenture, at (insert Redemption Price or table) together with accrued interest to the Redemption Date. As provided in the Indenture and subject to certain limitations therein set forth, the transfer of this Debenture may be registered on the Security Register, upon surrender of this Debenture for registration of transfer at one of the agencies maintained by the Company for such purpose, duly endorsed by, or accompanied by a written instrument of transfer in form satisfactory to the Company and the Security Registrar (if other than the Company) 4 2 duly executed by, the Holder hereof or his attorney duly authorized in writing, and thereupon one or more new Debentures, of authorized denominations and for the same aggregate principal, will be issued to the designated transferee or transferees. The Debentures are issuable only as registered Debentures without coupons in the denominations of $ and any integral multiple thereof. As provided in the Indenture, Debentures are exchangeable for a like aggregate principal amount of Debentures of different authorized denominations, as requested by the Holder surrendering the same. No service charge will 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 for registration of transfer of this Debenture, the Company, the Trustee and any agent of the Company or the Trustee may treat the Person in whose name this Debenture is registered as the absolute owner hereof for the purpose of receiving payment as herein provided and for all other purposes, whether or not this Debenture be overdue, and neither the company, the Trustee nor any such agent shall be affected by notice to the contrary. (Additional covenants, terms or provisions, if any, to be inserted here as well as any changes in covenants, terms or provisions contained 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 any series under the Indenture at any time by the Company with the consent of the Holders of 66 2/3% (unless a different percentage is specified with respect to any series of Securities, in which case, as to such series, the percentage so specified) in aggregate principal amount of the Outstanding Securities of each series affected by any such amendment or modification. The Indenture also contains provisions permitting the Holders of specified percentages in aggregate principal amount of the Debentures at the time Outstanding, on behalf of the Holders of all the Debentures, 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 Debenture shall be conclusive and binding upon such Holder and upon all future Holders of this Debenture and of any Debenture 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 Debenture. No reference herein to the Indenture and no provision of this Debenture or of the Indenture shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal of and interest, if any, on this Debenture at the times, places and rate, and in the coin or currency, herein prescribed. 5 3 No recourse shall be had for the payment of the principal of or the interest, if any, on this Debenture, or for any claim based hereon, or otherwise in respect hereof, or based on or in respect of the Indenture or any indenture supplemental thereto, against any incorporator, stockholder, officer or director, as such, past, present or future, of the Company or any successor corporation, whether by virtue of any constitution, statute or rule of law, or by the enforcement of any assessment or penalty or otherwise, au such liability being, by the acceptance hereof and as part of the consideration for the issue hereof, expressly waived and released. All terms used in this Debenture which are defined in the Indenture shall have the meanings assigned to them in the Indenture. EX-4.B.IV 7 FORM OF DEBENTURE 1 Exhibit 4(b)(iv) (FORM OF FACE OF DEBENTURE) $.......... $.......... J. C. PENNEY COMPANY, INC. % Debenture Due J. C. Penney Company, Inc., a delaware Corporation (hereinafter called the Company), for value received, promises to pay to or registered assigns, the principal sum of Dollars, on , and to pay interest on said principal sum, (semi)annually on (and ) of each year, at the rate of % per annum, from the (or the , as the case may be,) next preceding the date of this Debenture to which interest has been paid or duly provided for, in which case from the date to this Debenture, or unless no interest has been paid on the Debentures, in which case form , until the principal hereof becomes due and payable, and at such rate on any overdue principal and (to the extent that the payment of such interest shall be legally enforceable) on any overdue instalment of interest. Notwithstanding the foregoing, when there is no existing default in the payment of interest on the Debentures, if the date hereof is after a Regular Record Date, which shall be the close of business on (or )(whether or not a Business Day)(as the case may be,) next preceding an Interest Payment Date, and before the next succeeding Interest Payment Date, this Debenture shall bear interest from such Interest Payment Date; provided, however, that if the Company shall default in the payment of interest due on such Interest Payment date, then this Debenture shall bear interest from the next preceding Interest Payment Date to which interest has been paid or duly provided for, or if no interest has been paid on the debentures, from . The interest so payable, and punctually paid or duly provided for, on any Interest Payment Date will, as provided in the Indenture, be paid to the Person in whose name this Debenture (or on or more Predecessor Debentures) is registered at the Regular Record Date for such Interest Payment Date. The principal of (and premium, if any) and interest on this Debenture are payable in such coin or currency of the United States of America as at the time of payment is legal tender form payment of public and private debts, at the agency or agencies maintained by the company for such purpose; 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 shall appear in the Security Register. Any interest not punctually paid or duly provided for shall be payable as provided in the Indenture. Reference is made to the further provisions of this Debenture set forth on the reverse hereof, which shall have the same effect as though fully set forth at this place. Unless one of the certificates of authentication hereon has been executed by or on behalf of the Trustee by manual signature, this Debenture shall not 2 2 be entitled to any benefit under the Indenture, or be valid or obligatory for any purpose. IN WITNESS WHEREOF, J. C. Penney Company, Inc. has caused the execution hereof in its corporate name by its duly authorized officers. J. C. PENNEY COMPANY, INC. By.............................. CHAIRMAN OF THE BOARD By.............................. SECRETARY (FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION) CERTIFICATE OF AUTHENTICATION This is one of the % Debenture Due referred to in the within-mentioned Indenture. ,AS TRUSTEE By.............................. Authorized Officer (FORM OF ALTERNATE CERTIFICATE OF AUTHENTICATION) CERTIFICATE OF AUTHENTICATION This is one of the % Dentures Due referred to in the within-mentioned Indenture. ,AS TRUSTEE By.............................. Authenticating Agent By.............................. Authorized Officer 3 (FORM OF REVERSE OF DEBENTURE) J. C. PENNEY COMPANY, INC. % Debenture Due This Debenture is one of a duly authorized issue of unsecured debentures, notes or other evidences of indebtedness of the Company (herein called the "Securities") of the series hereinafter specified, all issued and to be issued under an Indenture dated as of April 1, 1994 (herein called the "Indenture"), between the Company and Band of America National Trust and Savings Association, 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 the statement of the respective rights thereunder of the Company, the Trustee and the Holders of the Securities and the terms upon which the Securities are, and are to be, authenticated and delivered. The Securities, which are unlimited in aggregate principal amount, may be issued in one or more series, which different series may be issued in various aggregate principal amounts, may mature at different times, may bear interest (if any) at different rates, may be subject to different redemption provisions (if any), may be subject to different sinking, purchase or analogous funds (if any), may be subjected to different covenants and Events of Default and may otherwise vary as in the Indenture provided. This Debenture is one of a series of the Securities designated as the % Debenture Due (herein called the "Debentures"), limited in aggregate principal amount to $ . On and after ,the Debentures may be redeemed, at the option of the Company, as a whole or from time to time in part, on any date prior to Stated Maturity, upon not less than 30 nor more than 60 days' prior notice given as provided in the Indenture, at (insert Redemption Price or table) together with accrued interest to the Redemption Date. As provided in the Indenture and subject to certain limitations therein set forth, the transfer of this Debenture may be registered on the Security Register, upon surrender of this Debenture for registration of transfer at one of the agencies maintained by the Company for such purpose, duly endorsed by, or accompanied by a written instrument of transfer in form satisfactory to the Company and the Security Registrar (if other than the Company) duly executed by, the Holder hereof or his attorney duly authorized in writing, and thereupon one or more new Debentures, of authorized denominations and for the same aggregate principal, will issued to the designated transferee or transferees. The Debentures are issuable only as registered Debentures without coupons in the denominations of $ and any integral multiple thereof. As provided in the Indenture, Debentures are exchangeable for a like aggregate principal amount of Debentures of different authorized denominations, as requested by the Holder surrendering the same. No service charge will 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. 4 2 Prior to due presentment for registration of transfer of this Debenture, the Company, the Trustee and any agent of the Company or the Trustee may treat the Person in whose name this Debenture is registered as the absolute owner hereof for the purpose of receiving payment as herein provided and for all other purposes, whether or not this Debenture be overdue, and neither the company, the Trustee nor any such agent shall be affected by notice to the contrary. (Additional covenants, terms or provisions, if any, to be inserted here as well as any changes in covenants, terms or provisions contained in the Indenture.) In an Event of Default with respect to the Debentures shall occur and be continuing, the principal of all the Debentures 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 any series under the Indenture at any time by the Company with the consent of the Holders of 66 2/3% (unless a different percentage is specified with respect to any series of Securities, in which case, as to such series, the percentage so specified) in aggregate principal amount of the Outstanding Securities of each series affected by any such amendment or modification. The Indenture also contains provisions permitting the Holders of specified percentages in aggregate principal amount of the Debentures at the time Outstanding, on behalf of the Holders of all the Debentures, 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 Debenture shall be conclusive and binding upon such Holder and upon all future Holders of this Debenture and of any Debenture 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 Debenture. No reference herein to the Indenture and no provision of this Debenture or of the Indenture shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal of (and premium, if any) and interest, on this Debenture at the times, places and rate, and in the coin or currency, herein prescribed. No recourse shall be had for the payment of the principal of or the interest, if any, on this Debenture, or for any claim based hereon, or otherwise in respect hereof, or based on or in respect of the Indenture or any indenture supplemental thereto, against any incorporator, stockholder, officer or director, as such, past, present or future, of the Company or any successor corporation, whether by virtue of any constitution, statute or rule of law, or by the enforcement of any assessment or penalty or otherwise, all such liability being, by the acceptance hereof and as part of the consideration for the issue hereof, expressly waived and released. All terms used in this Debenture which are defined in the Indenture shall have the meanings assigned to them in the Indenture. EX-4.B.V 8 FORM OF SINKING FUND DEBENTURE 1 Exhibit 4(b)(v) (FORM OF FACE OF DEBENTURE) $...... No....... J.C. PENNEY COMPANY, INC. % Sinking Fund Debenture Due J.C. Penney Company, Inc., a Delaware Corporation (hereinafter called the Company), for value received, promises to pay to or registered assigns, the principal sum of Dollars, on and to pay interest on said principal sum, (semi)annually on (and ) of each year, at the rate of % per annum, from the (or the , as the case may be,) next preceding the date of this Debenture to which interest has been paid or duly provided for, unless the date hereof is a date to which interest has been paid or duly provided for, in which case from the date of this Debenture, or unless no interest has been paid on the Debentures, in which case from , until the principal hereof becomes due and payable, and at such rate on any overdue principal and premium and (to the extent that the payment of such interest shall be legally enforceable) on any overdue instalment of interest. Notwithstanding the foregoing, when there is no existing default in the payment of interest on the Debentures, if the date hereof is after a Regular Record Date, which shall be the close of business on (or ) (whether or not a Business Day), (as the case may be,) next preceding an Interest Payment Date, and before the next succeeding Interest Payment Date, this Debenture shall bear interest from such Interest Payment Date; provided, however, that if the Company shall default in the payment of interest due on such Interest Payment Date, then this Debenture shall bear interest from the next preceding Interest Payment Date to which interest has been paid or duly provided for, or if no interest has been paid on the Debentures, from . The interest so payable, and punctually paid or duly provided for, on any Interest Payment Date will, as provided in the Indenture, be paid to the Person in whose name this Debenture (or one or more Predecessor Debentures) is registered at the Regular Record Date for such Interest Payment Date. The principal of (and premium, if any) and interest on this Debenture are payable 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, at the agency or agencies maintained by the Company for such purpose; 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 shall appear in the Security Register. Any interest not punctually paid or duly provided for shall be payable as provided in the Indenture. Reference is made to the further provisions of this Debenture set forth on the reverse hereof, which shall have the same effect as though fully set forth at this place. 2 2 Unless one of the certificates of authentication hereon has been executed by or on behalf of the Trustee by manual signature, this Debenture shall not be entitled to any benefit under the Indenture, or be valid or obligatory for any purpose. IN WITNESS WHEREOF, J. C. Penney Company, Inc. has caused the execution hereof in its corporate name by its duly authorized officers. J.C. PENNEY COMPANY, INC. By.............................. CHAIRMAN OF THE BOARD By.............................. SECRETARY (FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION) CERTIFICATE OF AUTHENTICATION This is one of the % Sinking Fund Debentures Due referred to in the within-mentioned Indenture. AS TRUSTEE By.............................. Authorized Officer 3 3 (FORM OF ALTERNATE CERTIFICATE OF AUTHENTICATION) CERTIFICATE OF AUTHENICATION This is one of the % Sinking Fund Debentures Due referred to in the within-mentioned Indenture. AS TRUSTEE By.............................. Authenticating Agent By.............................. Authorized Officer 4 (FORM OF REVERSE OF DEBENTURE) J. C. PENNEY COMPANY, INC. % Sinking Fund Debenture Due This Debenture is one of a duly authorized issue of unsecured debentures, notes or other evidences of indebtedness of the Company (herein called the "Securities") of the series hereinafter specified, all issued and to be issued under an Indenture dated as of April 1, 1994 (herein called the "Indenture"), between the Company and Bank of America National Trust and Savings Association, 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 thereunder of the Company, the Trustee and the Holders of the Securities, and the terms upon which the Securities are, and are to be, authenticated and delivered. The Securities, which are unlimited in aggregate principal amount, may be issued in one or more series, which different series may be issued in various aggregate principal amounts, may mature at different times, may bear interest (if any) at different rates, may be subject to different redemption provisions (if any), may be subject to different sinking, purchase or analogous funds (if any), may be subject to different covenants and Events of Default and may otherwise vary as in the Indenture provided. This Debenture is one of a series of the Securities designated as the % Sinking Fund Debentures Due (herein called the "Debentures"), limited in aggregate principal amount to $ . The Debentures may be redeemed, at the option of the Company, as a whole or from time to time in part, on any date prior to Stated Maturity, upon not less than 30 nor more than 60 days' prior notice given as provided in the Indenture, at the following Redemption Prices, expressed in percentages of the principal amount, together with accrued interest to the Redemption Date: Percentage Percentage Year of Principal Year of Principal Beginning Amount Beginning Amount - --------- ------------ --------- ------------ and at 100% of the principal amount if redeemed on and after ;provided, however, that Debentures may not be so redeemed prior to , directly or indirectly from, or in anticipation of, moneys borrowed at an interest cost (calculated in accordance with generally accepted financial practice) of less than % per annum. 5 2 The Debentures are also subject to redemption through the operation of the Mandatory and Optional Sinking Funds provided in the Indenture, on and on each thereafter to and including on notice as set forth above, at a Sinking Fund Redemption Price equal to 100% of the principal amount thereof, together with accrued interest to the Redemption Date. As provided in the Indenture and subject to certain limitations therein set forth, the transfer of this Debenture may be registered on the Security Register, upon surrender of this Debenture for registration of transfer at one of the agencies maintained by the Company for such purpose, duly endorsed by, or accompanied by a written instrument of transfer in form satisfactory to the Company and the Security Registrar (if other than the Company) duly executed by, the Holder hereof or his attorney duly authorized in writing, and thereupon one or more new Debentures, of authorized denominations and for the same aggregate principal amount, will be issued to the designated transferee or transferees. The Debentures are issuable only as registered Debentures without coupons in the denminations of $ and any integral multiple thereof. As provided in the Indenture, Debentures are exchangeable for a like aggregate principal amount of Debentures of different authorized denominations, as requested by the Holder surrendering the same. No service charge will 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 for registration of transfer of this Debenture, the Company, the Trustee and any agent of the Company or the Trustee may treat the Person in whose name this Debenture is registered as the absolute owner hereof for the purpose of receiving payment as herein provided and for all other purposes, whether or not this Debenture be overdue, and neither the Company, the Trustee nor any such agent shall be affected by notice to the contrary. (Additional covenants, terms or provisions, if any, to be inserted here as well as any changes in covenants, terms or provisions contained in the Indenture.) If an Event of Default with respect to the Debentures shall occur and be continuing, the principal of all the Debentures 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 any series under the Indenture at any time by the Company with the consent of the Holders of 66 2/3% (unless a different percentage is specified with respect to any series of Securities, in which case, as to such series, the percentage so specified) in aggregate principal amount of the Outstanding Securities of each series 6 3 affected by any such amendment or modification. The Indenture also contains provisions permitting the Holders of specified percentages in aggregate principal amount of the Debentures at the time Outstanding, on behalf of the Holders of all the Debentures, 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 Debenture shall be conclusive and binding upon such Holder and upon all future Holders of this Debenture and of any Debenture 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 Debenture. No reference herein to the Indenture and no provision of this Debenture or of the Indenture shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal of (and premium, if any) and interest on this Debenture at the times, places and rate, and in the coin or currency, herein prescribed. No recourse shall be had for the payment of the principal of (or premium, if any) or interest on this Debenture, or for any claim based hereon, or otherwise in respect hereof, or based on or in respect of the Indenture or any indenture supplemental thereto, against any incorporator, stockholder, officer or director, as such, past, present or future, of the Company or any successor corporation, whether by virtue of any constitution, statute or rule of law, or by the enforcement of any assessment or penalty or otherwise, all such liability being, by the acceptance hereof and as part of the consideration for the issue hereof, expressly waived and released. All terms used in this Debenture which are defined in the Indenture shall have the meanings assigned to them in the Indenture. EX-4.B.VI 9 FORM OF EXTENDIBLE NOTE 1 Exhibit 4(b)(vi) (FORM OF FACE OF NOTE) $.......... No........... J.C. PENNEY COMPANY, INC. Extendible Note J. C. Penney Company, Inc., a Delaware Corporation (hereinafter called the Company), for value received, promises to pay to or registered assigns, the principal sum of Dollars, on , or on such earlier date as the principal hereof may become due in accordance with the terms hereof, and to pay interest on said principal sum, (semi)annually on (and ) of each year, at the rate per annum from time to time in effect as described below, from the (or the , as the case may be,) next preceding the date of this Note to which interest has been paid or duly provided for, unless the date hereof is a date to which interest has been paid or duly provided for, in which case from the date of this Note, or unless no interest has been paid on the Notes, in which case from , until the principal hereof becomes due and payable, and on any overdue principal and (to the extent that the payment of such interest shall be legally enforceable) on any overdue instalment of interest at the rate borne by this Note during the Interest Period (as hereinafter defined) in which such principal or interest, as the case may be, became due and payable. Notwithstanding the foregoing, when there is no existing default in the payment of interest on the Notes, if the date hereof is after a Regular Record Date, which shall be the close of business on (or ) (whether or not a Business Day)(, as the case may be,) next preceding an Interest Payment Date, and before the next succeeding Interest Payment Date, this Note shall bear interest from such Interest Payment Date; provided, however, that if the Company shall default in the payment of interest due on such Interest Payment Date, then this Note shall bear interest from the next preceding Interest Payment Date to which interest has been paid or duly provided for, or if no interest has been paid on the Notes, from . The interest so payable, and punctually paid or duly provided for, on any Interest Payment Date will, as provided in the Indenture, be paid to the Person in whose name this Note (or one or more Predecessor Notes) is registered at the Regular Record Date for such Interest Payment Date. The principal of and interest on this Note are payable 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, at the agency or agencies maintained by the Company for such purpose; 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 shall appear in the Security Register. Any interest not punctually paid or duly provided for shall be payable as provided in the Indenture. Interest on this Note is payable at the rate of % per annum from through , and thereafter at an interest rate 2 2 per annum for an Interest Period (as hereinafter defined) determined by the Company as hereinafter provided. The period during which any particular rate of interest shall apply is herein called an "Interest Period" (with the initial Interest Period ending ). Prior to the end of each Interest Period, the Company shall (unless it has theretofore given notice of redemption of all the Notes as hereinafter provided) give notice as hereinafter provided ("Interest Period Notice") of the next Interest Period (which shall end on a selected by the Company but not later than ) and of the rate of interest to be borne by the Notes during such Interest Period or of the formula, if any, by which the rate of interest to be borne by the Notes during such Interest Period will be set (such rate to be determined not later than Business Days prior to the commencement of such Interest Period). The Company will give each Interest Period Notice to the Trustee not later than Business Days prior to the end of the then current Interest Period, and the Trustee will cause such Interest Period Notice to be mailed to each Holder not later than Business Days prior to the end of the then-current Interest Period. The Company will cause notice of the determination of any interest rate pursuant to a formula established by the Company for an Interest Period to be enclosed with the interest checks mailed to Holders for the period ending on the following such determination. If the Company fails to give timely notice of the next succeeding Interest Period or of the applicable rate or formula therefor, then such Interest Period will be until of the year immediately following, and the applicable rate of interest or formula therefor will be the same as that for the then-current Interest Period. Thereafter, the determination of the Interest Period and rate of interest shall be made in the manner hereinabove provided. The Notes are subject to redemption (or, at the option of the Company, purchase), at the option of the Holders thereof, on and on in any subsequent year (up to and including ) corresponding to the end of an Interest Period, at a price equal to % of the principal amount thereof, together with interest payable thereon to the date of redemption or purchase. The Notes are also subject to redemption at the option of the Company, as described on the reverse side hereof. Reference is made to the further provisions of this Note set forth on the reverse hereof, which shall have the same effect as though fully set forth at this place. Unless one of the certificates of authentication hereon has been executed by or on behalf of the Trustee by manual signature, this Note shall not be entitled to any benefit under the Indenture, or be valid or obligatory for any purpose. 3 3 IN WITNESS WHEREOF, J. C. Penney Company, Inc. has caused the execution hereof in its corporate name by its duly authorized officers. J.C. PENNEY COMPANY, INC. By............................. CHAIRMAN OF THE BOARD By.............................. SECRETARY 4 4 (FORM OF TRUSTEE'S CERTIFICATE OF AUTHENICATION) CERTIFICATE OF AUTHENICATION This is one of the Extendible Notes referred to in the within-mentioned Indenture. AS TRUSTEE By............................. Authorized Officer (FORM OF ALTERNATE CERTIFICATE OF AUTHENICATION) CERTIFICATE OF AUTHENTICATION This is one of the Extendible Notes referred to in the within-mentioned Indenture. AS TRUSTEE BY.............................. Authenticating Agent By.............................. Authorized Officer 5 (FORM OF REVERSE OF NOTE) J. C. PENNEY COMPANY, INC. Extendible Note This Note is one of a duly authorized issue of unsecured debentures, notes or other evidences of indebtedness of the Company (herein called the "Securities") of the series hereinafter specified, all issued and to be issued under an Indenture dated as of April 1, 1994 (herein called the "Indenture"), between the Company and Bank of America National Trust and Savings Association, 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 thereunder of the Company, the Trustee and the Holders of the Securities, and the terms upon which the Securities are, and are to be, authenticated and delivered. The Securities, which are unlimited in aggregate principal amount, may be issued in one or more series, which different series may be issued in various aggregate principal amounts, may mature at different times, may bear interest (if any) at different rates, may be subject to different redemption provisions (if any), may be subject to different sinking, purchase or analogous funds (if any), may be subject to different covenants and Events of Default and may otherwise vary as in the Indenture provided. This Note is one of a series of the Securities designated as the Extendible Notes (herein called the "Notes"), limited in aggregate principal amount to $ . The Notes may be redeemed, at the option of the Company, as a whole or from time to time in part, on any date on or after and on or prior to at 100% of the principal amount thereof together with accrued interest to the Redemption Date. Thereafter, the Notes may be redeemed on any corresponding to the end of an Interest Period and at such other times during an Interest Period and at such price or prices as shall be established by the Company by notice not later than Business Days prior to the end of the then-current Interest Period; provided, however, that the price at which the Notes may be so redeemed shall not be less than 100% of their principal amount together with accrued interest to the Redemption Date. Notice of such redemption terms during an Interest Period shall be given by the Company to the Trustee and shall be mailed to each Holder with the notice establishing such Interest Period. If the Company fails to give timely notice of the redemption terms for an Interest Period, the Notes shall be redeemable at the option of the Company during such Interest Period only on the at the end thereof, at 100% of their principal amount together with accrued interest to the Redemption Date. The Notes, if redeemed in part, will be redeemed in integral multiples of $ , provided that any Notes to be redeemed in part will remain outstanding in a principal amount of at least $ . The Notes may be redeemed upon not less than 30 nor more than 60 days' prior notice given as provided in the Indenture. 6 2 The Notes are subject to redemption (or, at the option of the Company, purchase) as a whole, or from time to time in part, on and on in any subsequent year (up to and including ) corresponding to the end of an Interest Period, provided that the principal amount of each Note which is redeemed or purchased is equal to $ or an integral multiple thereof and the principal amount of each such Note which remains outstanding is at least $ , at the option of the Holders thereof at 100% of their principal amount, together with accrued interest to the date of redemption or purchase. In order for a Note to be so redeemed or purchased, the Company must receive at one of the agencies designated by the Company for such purpose, not less than Business Days, but not earlier than the, prior to the end of an Interest Period, (i) the Note with the form entitled "Option to Elect Redemption" on the reverse of the Note duly completed, or (ii) a telegram, telex, facsimile transmission or letter from a member of a national securities exchange or the National Association of Securities Dealers, Inc. or a commercial bank or trust company in the United States of America setting forth the name of the Holder of the Note, the principal amount of the Note, the amount of the Note to be redeemed or purchased, a statement that the option to elect redemption is being made thereby and a guarantee that the Note to be redeemed or purchased with the form entitled "Option to Elect Redemption" on the reverse of the Note duly completed will be received by the Company not later than Business Days after the date of such telegram, telex, facsimile transmission or letter, and the Note with such form duly completed is received by the Company by such Business Day. Any such notice received by the Company not less than Business Days prior to the end of an Interest Period shall be irrevocable. All questions as to the validity, eligibility (including time of receipt) and acceptance of any Notes for redemption will be determined by the Company, whose determination shall be final and binding. All Notes redeemed by the Company at the option of the Holders or at the option of the Company shall be surrendered to the Trustee for cancelation and may not be reissued or resold. Any Notes purchased at the option of the Company in lieu of redemption, upon election by the Holders to have their Notes redeemed as described herein, may be reissued from time to time by the Company subject to compliance with applicable laws (including without limitation Federal and State securities laws). As provided in the Indenture and subject to certain limitations therein set forth, the transfer of this Note may be registered on the Security Register, upon surrender of this Note for registration of transfer at one of the agencies maintained by the Company for such purpose, duly endorsed by, or accompanied by a written instrument of transfer in form satisfactory to the Company and the Security Registrar (if other than Company) duly executed by, the Holder hereof or his attorney duly authorized in writing, and thereupon one or more new Notes, of authorized denominations and for the same aggregate principal amount, will be issued to the designated transferee or transferees. 7 3 The Notes are issuable only as registered Notes without coupons in the denominations of $ and any integral multiple thereof. As provided in the Indenture, Notes are is exchangeable for a like aggregate principal amount of Notes of different authorized denominations, as requested by the Holder surrendering the same. No service charge will 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 for registration of transfer of this Note, the Company, the Trustee and any agent of the Company or the Trustee may treat the Person in whose name this Note is registered as the absolute owner hereof for the purpose of receiving payment as herein provided and for all other purposes, whether or not this Note be overdue, and neither the Company, the Trustee nor any such agent shall be affected by notice to the contrary. (Additional covenants, terms or provisions, if any, to be inserted here as well as any changes in covenants, terms or provisions contained in the Indenture.) If an Event of Default with respect to the Notes shall occur and be continuing, the principal of all the Notes 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 any series under the Indenture at any time by the Company with the consent of the Holders of 66 2/3% (unless a different percentage is specified with respect to any series of Securities, in which case, as to such series, the percentage so specified) in aggregate principal amount of the Outstanding Securities of each series affected by any such amendment or modification. The Indenture also contains provisions permitting the Holders of specified percentages in aggregate principal amount of the Notes at the time Outstanding, on behalf of the Holders of all the Notes, 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 Note shall be conclusive and binding upon such Holder and upon all future Holders of this Note and of any Note 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 Note. No reference herein to the Indenture and no provision of this Note or of the Indenture shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal of (and premium, if any) and interest on this Note at the times, places and rate, and in the coin or currency, herein prescribed. 8 4 No recourse shall be had for the payment of the principal of (or premium, if any) or interest on this Note, or for any claim based hereon, or otherwise in respect hereof, or based on or in respect of the Indenture or any indenture supplemental thereto, against any incorporator, stockholder, officer or director, as such, past, present or future, of the Company or any successor corporation, whether by virtue of any constitution, statute or rule of law, or by the enforcement of any assessment or penalty or otherwise, all such liability being, by the acceptance hereof and as part of the consideration for the issue hereof, expressly waived and released. All terms used in this Note which are defined in the Indenture shall have the meanings assigned to them in the Indenture. EX-4.B.VII 10 FORM OF MEDIUM-TERM NOTE (FIXED RATE) 1 - -------------------------------------------------------------------------------- Exhibit 4(b)(vii) Draft 4/22/94 (Form of Face of Security) REGISTERED REGISTERED J. C. PENNEY COMPANY, INC. MEDIUM-TERM NOTE, SERIES____ CUSIP NO.__________ (Fixed Rate) UNDER TREASURY REGULATIONS, IT IS POSSIBLE THAT SECURITIES WHICH ARE NOT ISSUED AT A DISCOUNT BUT WHICH ARE ISSUED BETWEEN A RECORD DATE AND THE RELATED INTEREST PAYMENT DATE WOULD BE TREATED AS ISSUED AT AN ORIGINAL ISSUE DISCOUNT BECAUSE INTEREST IS NOT PAID AT FIXED PERIODIC INTERVALS AT A FIXED RATE DURING THE ENTIRE TERM OF SUCH SECURITIES, WITH THE CONSEQUENCE THAT HOLDERS (INCLUDING CASH BASIS HOLDERS) WOULD BE REQUIRED TO REPORT INTEREST IN RESPECT OF SUCH A SECURITY ON A CONSTANT YIELD ACCRUAL BASIS FOR UNITED STATES FEDERAL INCOME TAX PURPOSES. (Insert if a Security is to be a Global Security - This Note is a Global Security within the meaning of the Indenture hereinafter referred to and is registered in the name of the Depository (as defined below) or a nominee of the Depository. This Global Security is exchangeable for Notes registered in the name of a Person other than the Depository or its nominee only in the limited circumstances described in the Indenture, and no transfer of this Note (other than a transfer of this Note as a whole by the Depository to a nominee of the Depository or by a nominee of the Depository to the Depository or another nominee of the Depository) may be registered except in such limited circumstances. Unless this Certificate is presented by an authorized representative of The Depository Trust Company (55 Water Street, New York, New York) (the "Depository") to the Issuer or its agent for registration of transfer, exchange or payment, and any certificate issued is registered in the name of Cede & Co. or such other name as requested by an authorized representative of the Depository and any payment hereon is made to Cede & Co., ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL since the registered owner hereof, Cede & Co., has an interest herein.) PRINCIPAL AMOUNT AND CURRENCY OR CURRENCY UNIT: DENOMINATIONS (IF OTHER THAN U.S. DOLLARS OR THE U.S. DOLLAR DENOMINATIONS SET FORTH ON THE REVERSE): OPTION TO RECEIVE PAYMENTS IN PAYING AGENT: SPECIFIED CURRENCY: YES: ___ NO: ___ EXCHANGE RATE AGENT: ISSUE DATE: STATED MATURITY OF SECURITY: INTEREST RATE: COMPUTATION PERIOD: INTEREST PAYMENT DATE(S): REGULAR RECORD DATE(S): REDEMPTION DATE(S): REDEMPTION PERCENTAGE(S): 2 REDEMPTION DATE(S) REDEMPTION PERCENTAGE(S) (OPTION OF HOLDER): (OPTION OF HOLDER): NOTICE PERIOD: ORIGINAL ISSUE DISCOUNT SECURITY: If applicable, the following will be completed solely for the purpose of applying the United States federal income tax original issue discount ("OID") rules: TOTAL AMOUNT OF OID: YIELD TO MATURITY: INITIAL ACCRUAL PERIOD OID: OTHER PROVISIONS: 3 J. C. PENNEY COMPANY, INC., a corporation duly organized under the laws of the State of Delaware (herein called the "Company", which term includes any successor Person under the Indenture hereinafter referred to), for value received, hereby promises to pay to (INSERT IF THE SECURITY IS TO BE A GLOBAL SECURITY - CEDE & Co., as nominee for the Depository) ________________________________________________________________________________ __, or registered assigns, the principal amount specified above (any currency or currency unit other than U.S. dollars being hereinafter referred to as a "Specified Currency") on the Stated Maturity specified above and to pay interest thereon (computed, unless a different Computation Period is specified above, on the basis of a 360-day year of twelve 30-day months) from and including the Issue Date specified above (the "Issue Date") or from and including the most recent Interest Payment Date to and for which interest on this Security (or any Predecessor Security) has been paid or duly provided to, but excluding, the Interest Payment Date, on the Interest Payment Date(s) specified above in each year (each an "Interest Payment Date") and at Maturity, at the rate per annum equal to the Interest Rate specified above, until the principal hereof is paid or duly made available for payment; provided, however, that, unless the Holder hereof is entitled to make, and has made, a Specified Currency Payment Election (as hereinafter defined) with respect to one or more such payments, the Company will make all such payments in U.S. dollars in amounts determined as set forth on the reverse hereof. The interest so payable, and punctually paid or duly provided for, on any Interest Payment Date will, as provided in such 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 fifteenth day next preceding such Interest Payment Date, unless a different Regular Record Date is specified above (the "Regular Record Date"); provided, however, that interest payable at Maturity will be payable to the person to whom principal shall be payable; and provided, further, that if the Issue Date is after a Regular Record Date and before the next succeeding Interest Payment Date the first payment of interest shall be payable on the second Interest Payment Date following the Issue Date 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 immediately preceding such Interest Payment Date. Any such interest which is payable, but not so punctually paid or duly provided for, on any Interest Payment Date will forthwith cease to be payable to the Holder on such Regular Record Date and such Defaulted Interest 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 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 this Security 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 premium, if any) and interest on this Security will be made at the principal office of the Paying Agent at________ __________________________________________ or such other office or agency of the Company maintained by it for that purpose in the Borough of Manhattan, The City of 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 payment of the principal of (and premium, if any) and interest on this Security due will be made in immediately available funds at such Paying Agent's office or such other office or agency if this Security is presented to the Paying Agent in time for the Paying Agent to make such payments in such funds in accordance with its normal procedures; and provided, further, that, at the option of the Company, payment of interest (other than interest payable at Maturity) may be made by check mailed to the address of the Holder as such address shall appear in the Security Register; and provided, further, that if this Security is denominated in a Specified Currency, the Holder hereof is entitled to make, and has made, a Specified Currency Payment Election with respect to such payments, the Exchange Rate Agent is able to convert such payments as provided below and the Specified Currency is not unavailable due to the imposition of exchange controls or other circumstances beyond the control of the Company, then (i) the payment of interest on this Security will be made in the Specified Currency (or, if such Specified -3- 4 Currency is not at the time of such payment legal tender for the payment of public and private debts, in such other coin or currency of the country which issued such Specified Currency as at the time of such payment is legal tender for the payment of such debts) by check drawn upon a bank office located outside the United States and mailed to the address of the Person entitled thereto as such address shall appear in the Security Register, and (ii) the payment of principal (and premium, if any) and interest due at Maturity will be made in such Specified Currency (or, if applicable, such other coin or currency) by wire transfer of immediately available funds to an account maintained by the Holder hereof with a bank office located in the country which issued the Specified Currency upon presentation of this Security to the Paying Agent in time for such wire transfer to be made by the Paying Agent in accordance with its normal procedures. Unless otherwise specified above, if this Security is denominated in a Specified Currency the Holder hereof may elect to receive payments of principal of (and premium, if any) and interest in such Specified Currency (a "Specified Currency Payment Election") by delivery of a written request (including, in the case of an election with respect to payments at Maturity, appropriate wire transfer instructions) to the Paying Agent at its principal office referred to above on or prior to the relevant Regular Record Date or the sixteenth day prior to Maturity, as the case may be. Such request shall be in writing (mailed, hand delivered or by facsimile transmission). A Holder of a Foreign Currency Security may elect to receive payment in the Specified Currency for all principal (and premium, if any) and interest payments and need not file a separate election for each payment. Such election will remain in effect until revoked by written notice to the Paying Agent, but written notice of any such revocation must be received by the Paying Agent on or prior to the relevant Regular Record Date or the sixteenth day prior to Maturity, as the case may be. Reference is hereby made to the further provisions of this Security set forth on the reverse hereof, which further provisions shall for all purposes have the same effect as if set forth at this place. -4- 5 Unless the certificate of authentication hereon has been executed by the Paying Agent (as Authenticating Agent) referred to on the reverse hereof by the manual signature of an authorized signatory, this Security shall not be entitled to any benefit under the Indenture or be valid or obligatory for any purpose. IN WITNESS WHEREOF, the Company has caused this instrument to be duly executed by manual or facsimile signature under its corporate seal. J. C. PENNEY COMPANY, INC. By____________________________ Name: Title: (CORPORATE SEAL) Attest: _________________________________ Dated:_____________________, 199_ This is one of the Securities of the Series designated above referred to in the within-mentioned Indenture ALTERNATE CERTIFICATE OF CERTIFICATE OF AUTHENTICATION OR AUTHENTICATION as Trustee as Trustee By______________________________ By____________________________ Authorized Signatory as Authenticating Agent By____________________________ Authorized Officer Dated: _________________, 199_ -5- 6 (Form of Reverse of Security) This Security is one of a duly authorized issue of securities of the Company (the "Securities") issued and to be issued in one or more series under the Indenture, dated as of April 1, 1994 ("Indenture"), between the Company and Bank of America National Trust and Savings Association, 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, the Paying Agent 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 to an aggregate principal amount not to exceed $1,500,000,000 (or if Securities of this series are to be Original Issue Discount Securities or are to be denominated in one or more Specified Currencies or with the amount payable in respect of principal of or any premium or interest to be determined by reference to the value, rate or price of one or more specified indices ("Indexed Securities"), such principal amount as shall result in an aggregate initial offering price of Securities equivalent to not more than $1,500,000,000), which amount may be increased at the option of the Company if in the future it determines that it may wish to sell additional Securities. Except as may be otherwise stated on the face hereof, the Securities of this series are issuable only as registered Securities, without coupons, in denominations of $100,000 with integral multiples of $1,000 in excess thereof (or in the case of Securities denominated in a Specified Currency, in such minimum denomination not less than the equivalent of $100,000 in such Specified Currency on the basis of the noon buying rate for cable transfers in The City of New York as certified for customs purposes by (or, if not so certified, as otherwise determined by) the Federal Reserve Bank of New York (the "Market Exchange Rate") for such Specified Currency on the date the Company agrees to issue such Security, and such greater denomination or denominations as shall be set forth on the face thereof). The Securities of this series may be issued from time to time in various principal amounts and currencies or currency units, may mature at different times, may bear interest at different rates, may be subject to different redemption provisions, if any, and may otherwise vary. 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. The Securities are general, direct, unconditional and unsecured obligations of the Company. If this Security is designated on the face hereof as an Original Issue Discount Security, then, notwithstanding anything to the contrary contained in this Security, upon the redemption or acceleration of Maturity of this Security there shall be payable, in lieu of the principal amount due at the Stated Maturity hereof, as specified on the face hereof, an amount equal to the Amortized Face Amount of this Security. The "Amortized Face Amount" shall be the amount equal to (a) the issue price of this Security (as defined below), plus (b) that portion of the difference between the issue price and the principal amount of this Security that has been amortized at the Stated Yield (as defined below) of this Security (computed in accordance with generally accepted United States bond yield computation principles) at the date as of which the Amortized Face Amount is calculated, but in no event shall the Amortized Face Amount exceed the principal amount of this Security due at the Stated Maturity hereof. As used in the previous sentence "issue price" means the principal amount due at the Stated Maturity hereof less the Total Amount of OID of this Security specified on the face hereof and the "Stated Yield" means the Yield to Maturity specified on the face hereof (or if not so specified, the yield to maturity compounded semi-annually and computed in accordance with generally accepted -6- 7 United States bond yield computation principles) for the period from the Issue Date to the Stated Maturity on the basis of the issue price and such principal amount. If this Security is denominated in a Specified Currency, unless the Holder hereof is entitled to make, and has made, a Specified Currency Payment Election with respect to such payments as provided on the face hereof, the Holder of this Security shall receive payments of principal (and premium, if any) and interest in U.S. dollars at an exchange rate based on the highest bid quotation in The City of New York received by the Exchange Rate Agent (who, unless otherwise specified on the face hereof, shall be the Paying Agent) at approximately _____ a.m., New York City time, on the second Market Day with respect to this Security preceding the applicable payment date from three recognized foreign exchange dealers (one of which may be the Exchange Rate Agent) selected by the Exchange Rate Agent and approved by the Company for the purchase by the quoting dealer of the Specified Currency for U.S. dollars for settlement on such payment date in the aggregate amount of such Specified Currency payable to all Holders of Securities of this series denominated in such Specified Currency and scheduled to receive U.S. dollar payment on such payment date and at which the applicable dealer commits to execute a contract. "Market Day" means (i) with respect to any Security of this series denominated in U.S. dollars, any day that is a Business Day in The City of New York, and (ii) with respect to any Security of this series denominated in a Specified Currency, any Business Day in The City of New York that is also a Business Day in the capital city of the country of the Specified Currency or, with respect to a Security of this series denominated in European Currency Units, in Brussels. All currency exchange costs incurred by the Company in converting a Specified Currency into U.S. dollars in order to make payments hereon will be borne by the Holder of this Security by deductions from such payments. If such bid quotations are not available, or if a Specified Currency Payment Election has been made with respect to such payments, payments will be made in the Specified Currency (or, if such Specified Currency is not at the time of such payment legal tender for the payment of public and private debts, such other coin or currency of the country which issued such Specified Currency as at the time of such payment is legal tender for the payment of such debts); provided, however, that if such Specified Currency (or, if applicable, such other coin or currency) is unavailable due to the imposition of exchange controls or other circumstances beyond the Company's control, the Company will be entitled to make payments in U.S. dollars on the basis of the Market Exchange Rate for such Specified Currency (or, if applicable, such other coin or currency) on the second Market Day prior to such payment or, if such Market Exchange Rate is not then available, on the basis of the most recently available Market Exchange Rate or as otherwise indicated hereon. (INSERT SINKING FUND PROVISIONS, IF APPLICABLE) If one or more Redemption Dates (or ranges of Redemption Dates) is specified on the face hereof, this Security is subject to redemption upon not less than 30 days' notice by mail, on any such date (or during any such range), as a whole or from time to time in part, at the election of the Company, at a Redemption Price determined as provided in the next succeeding sentence, together with accrued interest to the Redemption Date, but interest instalments whose Stated Maturity is on or prior to the Redemption Date will be payable to the Holder hereof (or one or more Predecessor Securities) of record at the close of business on the Regular Record Dates referred to on the face hereof, all as provided in the Indenture. If applicable, the "Redemption Price" for any such redemption shall be the amount determined by multiplying the Redemption Percentage specified on the face hereof with respect to the relevant Redemption Date (or range of such dates), by the portion of the principal amount hereof (or, if this Security is an Original Issue Discount Security, the portion of the Amortized Face Amount hereof) to be redeemed; provided, however, that in no event shall the Redemption Price be less than 100% of the portion of the principal amount hereof (or, if this Security is an Original Issue Discount Security, the portion of the Amortized Face Amount hereof) to be redeemed. -7- 8 If one or more Redemption Dates (Option of Holder) (or ranges of such dates) is specified on the face hereof, this Security is subject to redemption on any such date (or during any such range) or, if such date is not a Market Day, on the first Market Day following such date, as a whole or from time to time in part, at the election of the Holder hereof, at a Redemption Price determined as provided in the fifth succeeding sentence together with accrued interest to the Redemption Date, but interest instalments whose Stated Maturity is on or prior to the Redemption Date will be payable to the Holder hereof of record at the close of business on the Regular Record Date referred to on the face hereof, all as provided in the Indenture. Such election shall be effected by the Holder hereof delivering to the Company at the principal office of the Paying Agent at _____________________________________________ not less than 30 nor more than 60 days prior to the date on which this Security is to be redeemed, or during such other Notice Period specified on the face hereof, a notice requesting such redemption in the form described below and specifying the date upon which this Security is to be redeemed. Any notice given by a Holder pursuant to this paragraph shall consist of either (i) this Security with the form entitled "Option to Elect Redemption" set forth at the end of this Security duly completed or (ii) a telegram, facsimile transmission or a letter from a member of a national securities exchange, or the National Association of Securities Dealers, Inc. or a commercial bank or trust company in the United States setting forth the name of the Holder hereof, the principal amount of this Security, the principal amount of this Security to be redeemed, the certificate number or a description of the terms of this Security, a statement that the option to elect redemption is being exercised thereby and a guarantee that this Security, together with the duly completed form entitled "Option to Elect Redemption" below, will be received by the Paying Agent not later than the fifth Business Day after the date of such telegram, facsimile transmission or letter; provided, however, that, unless otherwise agreed, such telegram, facsimile transmission or letter shall only be effective if this Security and form duly completed are received by the Paying Agent by such fifth Business Day. Exercise of the redemption option by the Holder hereof will be irrevocable. If applicable, the "Redemption Price" for any such redemption shall be determined by multiplying the Redemption Percentage (Option of Holder) specified on the face hereof with respect to the relevant Redemption Date (Option of Holder) (or range of such dates) by the portion of the principal amount hereof (or, if this Security is an Original Issue Discount Security, the portion of the Amortized Face Amount hereof) to be redeemed, together with interest accrued thereon to the Redemption Date; provided, however, that in no event shall the Redemption Price be less than 100% of the portion of the principal amount hereof (or, if this Security is an Original Issue Discount Security, the portion of the Amortized Face Amount hereof) to be redeemed. Notice of redemption having been given as aforesaid, this Security (or the portion of the principal amount hereof so to be redeemed) shall, on the Redemption Date, become due and payable at the Redemption Price herein specified, and from and after such date (unless the Company shall default in the payment of the Redemption Price and accrued interest) shall cease to bear interest. In the case of any partial redemption at the election of the Company of Securities of this series, the Securities of a particular tenor to be redeemed shall be selected by the Paying Agent not more than 60 days prior to the Redemption Date by such method as the Paying Agent shall deem fair and appropriate and which may provide for the selection for redemption of portions of the principal amount of Securities. In the event of any redemption of this Security in part only, a new Security or Securities of this series of like tenor for the unredeemed portion hereof will be issued in the name of the Holder hereof upon the cancellation hereof, provided that such unredeemed portion shall not be less than the minimum denomination of this Security. The Indenture contains provisions for defeasance and covenant defeasance at any time of the entire indebtedness on this Security upon compliance by the Company with certain conditions set forth therein. If an Event of Default with respect to the Securities of this series shall occur and be continuing, the principal of the Securities of this series (or, in the case of Original Issue Discount Securities the -8- 9 Amortized Face Amount thereof) may be declared due and payable in the manner and with the effect provided in the Indenture. Upon payment (i) of the amount of principal so declared due and payable and (ii) of interest on any overdue principal and overdue interest (in each case to the extent that the payment of such interest shall be legally enforceable), all of the Company's obligations in respect of the payment of the principal of and interest, if any, on the Securities of this series shall terminate. 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 66 2/3% 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 therefor or in lieu hereof, whether or not notation of such consent or waiver is made upon this Security. No reference herein to the Indenture and no provision of this Security or of the Indenture shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal of (and premium, if any) 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 registrable 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 premium, if any) 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 or her 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, will be issued to the designated transferee or transferees. As provided in the Indenture and subject to certain limitations therein set forth, the 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. In the event of any redemption at the election of the Company, neither the Trustee nor the Paying Agent shall be required to (i) issue, register the transfer of or exchange Securities of this series of like tenor during a period beginning at the opening of business 15 days before any selection of Securities of this series to be redeemed and ending at the close of business on the day of mailing of the relevant notice of redemption, nor (ii) register the transfer of or exchange any Security, or portion thereof, called for redemption, except the unredeemed portion of any Security being redeemed in part. Following the exercise of a redemption option by the Holder hereof, neither the Trustee nor the Paying Agent shall be required to issue, register the transfer of or exchange that portion of this Security with respect to which such option has been exercised. 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. The Notes of this series may be issued in the form of one or more Global Securities to The Depository Trust Company as depository for the Global Securities of this series (the "Depository") or -9- 10 its nominee and registered in the name of the Depository or such nominee. If the face of this Security contains a legend indicating that this Security is a Global Security so registered, the transfer and exchange hereof is subject to the additional limitations set forth in such legend. Prior to due presentment of this Security for registration of transfer, the Company, the Trustee, the Paying Agent and any agent of the Company, the Trustee or the Paying Agent may treat the Person in whose name this Security is registered as the owner hereof for all purposes, whether or not this Security is overdue, and neither the Company, the Trustee, the Paying Agent nor any such agent shall be affected by notice to the contrary. Any funds deposited with the Paying Agent and remaining unclaimed for two years after the date upon which the last payment of principal or interest on any Note to which such deposit relates shall have become due and payable, shall be repaid to the Company by the Paying Agent on demand, and the holder of any Note to which such deposit related entitled to receive payment shall thereafter look only to the Company for the payment thereof and all liability of the Paying Agent with respect to such money shall thereupon cease. All terms used in this Security which are defined in the Indenture shall have the meanings assigned to them in the Indenture. -10- 11 _________________________ ABBREVIATIONS The following abbreviations, when used in the inscription on the face of this instrument, shall be construed as though they were written out in full according to applicable laws or regulations. TEN COM - as tenants in common TEN ENT - as tenants by the entireties JT TEN - as joint tenants with right of survivorship and not as tenants in common UNIF GIFT MIN ACT - ______________ Custodian ________________ (Custodian) (Minor) Under Uniform Gifts to Minors Act (___________) (State) Additional abbreviations may also be used though not in the above list. _________________________ FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and transfer(s) unto ________________________________________________________________________________ (PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER OF ASSIGNEE) ________________________________________________________________________________ (PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS INCLUDING POSTAL ZIP CODE OF ASSIGNEE) ________________________________________________________________________________ ________________________________________________________________________________ the within Note and all rights thereunder, hereby irrevocably constituting and appointing ______________________________________________________________ attorney to transfer said Note on the books of the Company, with full power of substitution in the premises. Dated:__________________ X_______________________________ NOTICE: The signature to this assignment must correspond with the name as written upon the face of the within instrument in every particular, without alteration or enlargement or any change whatever. -11- 12 OPTION TO ELECT REDEMPTION The undersigned hereby irrevocably requests and instructs J. C. Penney Company, Inc. to redeem the within Security (or portion thereof specified below) pursuant to its terms at the Redemption Price, to the undersigned at ________________________________________________________________________________ (PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS INCLUDING POSTAL ZIP CODE OF THE UNDERSIGNED) ________________________________________________________________________________ ________________________________________________________________________________ If less than the entire principal amount of the within Security is to be redeemed, specify the portion thereof which the Holder elects to have redeemed: __________________________________________________________________________; and specify the denomination or denominations (which shall not be less than the minimum authorized denomination) of the Securities to be issued to the Holder for the portion of the within Security not being redeemed (in the absence of any such specification, one such Security will be issued for the portion not being redeemed): _______________________________________________________________________________. Dated:_____________ ______________________________ NOTICE: This signature on this Option to Elect Redemption must correspond with the name as written upon the face of the within instrument in every particular without alteration or enlargement. -12- EX-4.B.VII 11 FORM OF MEDIUM-TERM NOTE (FLOATING RATE) 1 Exhibit 4(b)(viii) Draft 4/22/94 (Form of Face of Security) REGISTERED REGISTERED J. C. PENNEY COMPANY, INC. MEDIUM-TERM NOTE, SERIES___ CUSIP ______ (Floating Rate) UNDER TREASURY REGULATIONS, IT IS POSSIBLE THAT SECURITIES WHICH ARE NOT ISSUED AT A DISCOUNT BUT WHICH ARE ISSUED BETWEEN A RECORD DATE AND THE RELATED INTEREST PAYMENT DATE WOULD BE TREATED AS ISSUED AT AN ORIGINAL ISSUE DISCOUNT BECAUSE INTEREST IS NOT PAID AT FIXED PERIODIC INTERVALS AT A FIXED RATE DURING THE ENTIRE TERM OF SUCH SECURITIES, WITH THE CONSEQUENCE THAT HOLDERS (INCLUDING CASH BASIS HOLDERS) WOULD BE REQUIRED TO REPORT INTEREST IN RESPECT OF SUCH A SECURITY ON A CONSTANT YIELD ACCRUAL BASIS FOR UNITED STATES FEDERAL INCOME TAX PURPOSES. (INSERT IF THE SECURITY IS TO BE A GLOBAL SECURITY -- This Note is a Global Security within the meaning of the Indenture hereinafter referred to and is registered in the name of the Depository (as defined below) or a nominee of the Depository. This Global Security is exchangeable for Notes registered in the name of a Person other than the Depository or its nominee only in the limited circumstances described in the Indenture, and no transfer of this Note (other than a transfer of this Note as a whole by the Depository to a nominee of the Depository or by a nominee of the Depository to the Depository or another nominee of the Depository) may be registered except in such limited circumstances. Unless this Certificate is presented by an authorized representative of The Depository Trust Company (55 Water Street, New York, New York) (the "Depository") to the Issuer or its agent for registration of transfer, exchange or payment, and any certificate issued is registered in the name of Cede & Co. or such other name as requested by an authorized representative of the Depository and any payment hereon is made to Cede & Co., ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL since the registered owner hereof, Cede & Co., has an interest herein.) PRINCIPAL AMOUNT AND CURRENCY OR CURRENCY UNIT: DENOMINATIONS (IF OTHER THAN U.S. DOLLARS OR THE U.S. DOLLAR DENOMINATIONS SET FORTH ON THE REVERSE): OPTION TO RECEIVE PAYMENT PAYING AGENT: IN SPECIFIED CURRENCY: YES: ___ NO: ___ EXCHANGE RATE AGENT: ISSUE DATE: STATED MATURITY OF SECURITY: INTEREST RATE BASIS: COMPUTATION PERIOD: 2 INTEREST PAYMENT DATE(S): REGULAR RECORD DATE(S): INDEX MATURITY: SPREAD (PLUS OR MINUS): INITIAL INTEREST RATE: SPREAD MULTIPLIER: MAXIMUM INTEREST RATE: MINIMUM INTEREST RATE: INTEREST PAYMENT PERIOD INTEREST PAYMENT MONTH(S): (monthly, quarterly, semi-annually or annually): INTEREST RESET PERIOD INTEREST RESET MONTH(S): (daily, weekly, monthly, quarterly, semi-annually or annually): INTEREST DETERMINATION DATE(S): CALCULATION DATE: CALCULATION AGENT: INTEREST RESET DATE(S): REDEMPTION DATE(S): REDEMPTION PERCENTAGE(S): REDEMPTION DATE(S) REDEMPTION PERCENTAGE(S) (OPTION OF HOLDER): (OPTION OF HOLDER): NOTICE PERIOD: -2- 3 ORIGINAL ISSUE DISCOUNT SECURITY: If applicable, the following will be completed solely for the purpose of applying the United States federal income tax original issue discount ("OID") rules: TOTAL AMOUNT OF OID: YIELD TO MATURITY: INITIAL ACCRUAL PERIOD OID: OTHER PROVISIONS: J. C. PENNEY COMPANY, INC., a corporation duly organized under the laws of the State of Delaware (herein called the "Company", which term includes any successor Person under the Indenture hereinafter referred to), for value received, hereby promises to pay to (INSERT IF THE SECURITY IS TO BE A GLOBAL SECURITY -- CEDE & Co., as nominee for the Depository) (_____________________ _____________________________________________________), or registered assigns, the principal amount specified above (any currency or currency unit other than U.S. dollars being hereinafter referred to as a "Specified Currency") on the Stated Maturity specified above and to pay interest thereon, from and including the Issue Date specified above (the "Issue Date") or from and including the most recent Interest Payment Date to and for which interest on this Security (or any Predecessor Security) has been paid or duly provided to, but excluding, the Interest Payment Date (as hereinafter defined) (or, if the Interest Reset Period specified above (the "Interest Reset Period") is (daily or) weekly, from and including the Issue Date or from and including the day following the most recent Regular Record Date with respect to and for which interest has been paid or duly provided, as the case may be, to, but excluding, the day following the Regular Record Date immediately preceding such Interest Payment Date), at a rate per annum equal to the Initial Interest Rate specified above (the "Initial Interest Rate") until the first Interest Reset Date (as defined on the reverse hereof) following the Issue Date and thereafter at a rate determined in accordance with the provisions on the reverse hereof under the heading "Determination of Commercial Paper Rate", "Determination of Prime Rate", "Determination of CD Rate", "Determination of Federal Funds Effective Rate", "Determination of LIBOR" or "Determination of Treasury Rate", (or other rate) depending upon whether the Interest Rate Basis specified above is Commercial Paper Rate, Prime Rate, CD Rate, Federal Funds Effective Rate, LIBOR or Treasury Rate (or other rate) until the principal hereof is paid or duly made available for payment; provided, however, that, unless the Holder hereof is entitled to make, and has made, a Specified Currency Payment Election (as hereinafter defined) with respect to one or more such payments, the Company will make all such payments in respect of this Security in U.S. dollars in amounts determined as set forth on the reverse hereof. Such interest shall be payable by the Company monthly, quarterly, semi-annually or annually as specified above under "Interest Payment Period" and, unless otherwise specified above under "Interest Payment Date(s)", such interest shall be payable by the Company on the third Wednesday of the month or months specified above under "Interest Payment Month(s)" in each year (or if any such day is not a Market Day (as defined on the reverse hereof) with respect to this Security, on the next succeeding Market Day with respect to this Security or, if the Interest Rate Basis specified above is LIBOR and the next succeeding such Market Day falls in the next calendar month, the next preceding such Market Day) (each date so specified above or, if none is so specified, determined as herein provided, an "Interest Payment Date") and at Maturity. The -3- 4 interest so payable, and punctually paid or duly provided for, on any such Interest Payment Date will 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 fifteenth day (whether or not a Market Day) next preceding such Interest Payment Date, unless a different Regular Record Date is specified above (the "Regular Record Date"); provided, however, that interest payable at Maturity will be payable to the Person to whom principal shall be payable; and provided, further, that if the Issue Date is after a Regular Record Date and before the next succeeding Interest Payment Date the first payment of interest shall be payable on the second Interest Payment Date following the Issue Date 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 immediately preceding such Interest Payment Date. Any such interest which is payable, but not so punctually paid or duly provided for, on any Interest Payment Date will forthwith cease to be payable to the Holder on such Regular Record Date and such Defaulted Interest 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 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 this Security 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 premium, if any) or interest on this Security will be made at the principal office of the Paying Agent at _________ ______________ , or such other office or agency of the Company maintained by it for that purpose in the Borough of Manhattan, The City of 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 payment of the principal of (and premium, if any) and interest on this Security due will be made in immediately available funds at such Paying Agent's office or such other office or agency if this Security is presented to the Paying Agent in time for the Paying Agent to make such payments in accordance with its normal procedures; and provided, further, that at the option of the Company payment of interest (other than interest payable at Maturity) may be made by check and mailed to the address of the Holder as such address shall appear in the Security Register; and provided, further, that if this Security is denominated in a Specified Currency, the Holder hereof is entitled to make, and has made, a Specified Currency Payment Election with respect to such payments, the Exchange Rate Agent is able to convert such payments as provided below and the Specified Currency is not unavailable due to the imposition of exchange controls or other circumstances beyond the control of the Company, then (i) the payment of interest on this Security will be made in the Specified Currency (or, if such Specified Currency is not at the time of such payment legal tender for the payment of public and private debts, in such other coin or currency of the country which issued such Specified Currency as at the time of such payment is legal tender for the payment of such debts) by check drawn upon a bank office located outside the United States and mailed to the address of the Person entitled thereto as such address shall appear in the Security Register, and (ii) payment of principal (and premium, if any) and interest due at Maturity will be made in such Specified Currency (or, if applicable, such other coin or currency) by wire transfer of immediately available funds to an account maintained by the Holder hereof with a bank office located in the country which issued the Specified Currency upon presentation of this Security to the Paying Agent in time for such wire transfer to be made by the Paying Agent in accordance with its normal procedures. Unless otherwise specified above, if this Security is denominated in a Specified Currency, the Holder hereof may elect to receive payments of principal of (and premium, if any) and interest on this Security in such Specified Currency (a "Specified Currency Payment Election") by delivery of a written request (including, in the case of an election with respect to payments at Maturity, appropriate wire transfer instructions) to the Paying Agent at its principal office referred to above on or prior to the relevant Regular Record Date or the sixteenth day prior to Maturity, as the case may be. Such request shall be in writing (mailed, hand -4- 5 delivered or by facsimile transmission). A Holder of a Foreign Currency Security may elect to receive payment in the Specified Currency for all principal (and premium, if any) and interest payments and need not file a separate election for each payment. Such election will remain in effect until revoked by written notice to the Paying Agent, but written notice of any such revocation must be received by the Paying Agent on or prior to the relevant Regular Record Date or the sixteenth day prior to Maturity, as the case may be. Reference is hereby made to the further provisions of this Security set forth on the reverse hereof, which further provisions shall for all purposes have the same effect as if set forth at this place. Unless the certificate of authentication hereon has been executed by the Paying Agent (as Authenticating Agent) referred to on the reverse hereof by the manual signature of an authorized signatory, this Security shall not be entitled to any benefit under the Indenture or be valid or obligatory for any purpose. IN WITNESS WHEREOF, the Company has caused this instrument to be duly executed by manual or facsimile signature under its corporate seal. J. C. PENNEY COMPANY, INC. (CORPORATE SEAL) By______________________________ Name: Title: Attest: ____________________________________ Dated: ____________________, 199___ -5- 6 This is one of the Securities of the Series referred to in the within-mentioned Indenture ALTERNATE CERTIFICATE OF CERTIFICATE OF AUTHENTICATION OR AUTHENTICATION , as Trustee , as Trustee By______________________________ By CHEMICAL BANK, Authorized Signatory as Authenticating Agent By _________________________ Authorized Officer -6- 7 (Form of Reverse of Security) This Security is one of a duly authorized issue of securities of the Company ("Securities") issued and to be issued in one or more series under the Indenture, dated as of April 1, 1994 ("Indenture"), between the Company and Bank of America National Trust and Savings Association, 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, the Paying Agent 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 to an aggregate principal amount not to exceed $1,500,000,000 (or, if Securities of this series are to be Original Issue Discount Securities or are to be denominated in one or more Specified Currencies or with the amount payable in respect of principal of or any premium or interest to be determined by reference to the value, rate or price of one or more specified indices ("Indexed Securities"), such principal amount as shall result in an aggregate initial offering price of Securities equivalent to no more than $1,500,000,000), which amount may be increased at the option of the Company if in the future it determines that it may wish to sell additional Securities. Except as otherwise may be stated on the face hereof, the Securities of this series are issuable only as registered Securities, without coupons, in denominations of $100,000 with integral multiples of $1,000 in excess thereof (or in the case of Securities denominated in a Specified Currency, in such minimum denomination not less than the equivalent of $100,000 in such Specified Currency on the basis of the noon buying rate for cable transfers in The City of New York as certified for customs purposes by (or, if not so certified, as otherwise determined by) the Federal Reserve Bank of New York (the "Market Exchange Rate") for such Specified Currency on the date the Company agrees to issue such Security and such greater denomination or denominations as shall be set forth on the face thereof). The Securities of this series may be issued from time to time in various principal amounts and currencies or currency units, may mature at different times, may bear interest at different rates, may be subject to different redemption provisions, if any, and may otherwise vary. 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. The Securities are general, direct, unconditional and unsecured obligations of the Company. Accrued interest hereon shall be calculated by multiplying the principal amount specified on the face hereof by an accrued interest factor. Such accrued interest factor shall be computed by adding the interest factor calculated for each day in the period for which accrued interest is being calculated. The interest factor (expressed as a decimal rounded upwards, if necessary, as described below) for each such day shall be computed by dividing the interest rate (expressed as a decimal rounded upwards, if necessary, as described below) applicable to such day by 360, if the Interest Rate Basis specified on the face hereof is the Commercial Paper Rate, Prime Rate, CD Rate, Federal Funds Effective Rate or LIBOR, by the actual number of days in the year (365 or 366, as the case may be) if the Interest Rate Basis specified on the face hereof is the Treasury Rate, or by the number of days in the Computation Period specified on the face hereof. Except as otherwise provided herein, all percentages resulting from any calculation with respect to this Security will be rounded, if necessary, to the nearest one-hundred thousandth of a percentage point, with five one-millionths of a percentage point rounded upwards (e.g., 9.876545% (or .09876545) being rounded to 9.87655% (or .0987655) and 9.876544% (or .09876544) being rounded to 9.87654% (or .0987654)), and all dollar amounts and all amounts in Specified Currencies used in or resulting from such calculations will be rounded to the -7- 8 nearest cent, or, if this Security is a Foreign Currency Security, the nearest unit, respectively (with one-half cent and one-half unit being rounded upwards). The rate of interest on this Security will be reset daily, weekly, monthly, quarterly, semi-annually or annually, as specified on the face hereof under Interest Reset Period (each date upon which interest is so reset as provided below being hereinafter referred to as an "Interest Reset Date"), and the interest rate in effect on any day shall be (a) if such day is an Interest Reset Date, the interest rate for such Interest Reset Date or (b) if such day is not an Interest Reset Date the interest rate for the immediately preceding Interest Reset Date; provided, however, that (i) the interest rate in effect from the Issue Date of this Security (or one or more Predecessor Securities) to but excluding the first Interest Reset Date will be the Initial Interest Rate and (ii) the interest rate in effect for the ten calendar days immediately prior to Maturity of this Security will be that in effect on the tenth calendar day preceding such Maturity. Notwithstanding the foregoing, the interest rate hereon shall not be greater than the Maximum Interest Rate, if any, or less than the Minimum Interest Rate, if any, specified on the face hereof and in no event shall be higher than the maximum rate permitted by New York law, as the same may be modified by United States law of general application. Unless otherwise specified on the face hereof and except as provided in the next succeeding sentence, the Interest Reset Date with respect to this Security will be, if the Interest Reset Period specified on the face hereof is daily, each Market Day (as defined below); if the Interest Reset Period specified on the face hereof is weekly (unless the Interest Rate Basis specified on the face hereof is the Treasury Rate), the Wednesday of each week; if the Interest Reset Period specified on the face hereof is weekly and the Interest Rate Basis specified on the face hereof is the Treasury Rate, except as otherwise provided below, the Tuesday of each week; if the Interest Reset Period specified on the face hereof is monthly, the third Wednesday of each month; if the Interest Reset Period specified on the face hereof is quarterly, the third Wednesday of each March, June, September and December; if the Interest Reset Period specified on the face hereof is semi-annually, the third Wednesday of two months in each year specified under "Interest Reset Month(s)" on the face hereof; and if the Interest Reset Period specified on the face hereof is annually, the third Wednesday of the month in each year specified under "Interest Reset Month(s)" on the face hereof. If, pursuant to the preceding sentence, any Interest Reset Date would otherwise be a day that is not a Market Day with respect to this Security, the Interest Reset Date shall be the next succeeding day that is a Market Day with respect to this Security, except that if the Interest Rate Basis specified on the face hereof is LIBOR and the next succeeding Market Day falls in the next succeeding calendar month, such Interest Reset Date shall be the immediately preceding Market Day. Subject to applicable provisions of law and except as specified herein, on each Interest Reset Date the rate of interest on this Security shall be the rate determined in accordance with the provisions of the applicable heading below. "Market Day" means (i) with respect to any Security of this series denominated in U.S. dollars the rate of interest on which is determined other than in accordance with the provisions of the heading "Determination of LIBOR" above, any day that is a Business Day in The City of New York, (ii) with respect to any Security of this series denominated in U.S. dollars, the rate of interest on which is determined in accordance with the provisions of the heading "Determination of LIBOR" above, any Business Day in The City of New York on which dealings in deposits in U.S. dollars are transacted in the London interbank market and (iii) with respect to any Security of this series denominated in a Specified Currency, any Business Day in The City of New York that is also a Business Day in the capital city of the country of the Specified Currency or, with respect to a Security of this series denominated in European Currency Units, in Brussels. Determination of Commercial Paper Rate. If the Interest Rate Basis specified on the face hereof is the Commercial Paper Rate, the interest rate with respect to this Security for any Interest Reset Date shall equal (a) the Money Market Yield (calculated as described below) of the rate on the second Market Day with respect to this Security immediately preceding such Interest Reset Date (the -8- 9 "Commercial Paper Interest Determination Date") for commercial paper having the Index Maturity specified on the face hereof, (i) as published in "Statistical Release H.15(519), Selected Interest Rates", or any successor publication published by the Board of Governors of the Federal Reserve System ("H.15(519)"), under the heading "Commercial Paper", or (ii) if such rate is not so published prior to 9:00 a.m., New York City time, on the Calculation Date pertaining to such Commercial Paper Interest Determination Date, then as published in "Composite 3:30 p.m. Quotations for U.S. Government Securities", or any successor publication published by the Federal Reserve Bank of New York ("Composite Quotations"), under the heading "Commercial Paper", or (b) if such rate is not published in either H.15(519) or Composite Quotations by 3:00 p.m., New York City time, on such Calculation Date, the Money Market Yield of the arithmetic mean, as calculated by the Calculation Agent on such Calculation Date, of the offered rates, as of 11:00 a.m., New York City time, on such Commercial Paper Interest Determination Date, of three leading dealers of commercial paper in The City of New York selected by the Calculation Agent for commercial paper having the Index Maturity specified on the face hereof placed for an industrial issuer whose bond rating is "AA", or the equivalent, from a nationally recognized rating agency, in each of the above cases adjusted by the addition or subtraction of the Spread, if any, specified on the face hereof, or by multiplication by the Spread Multiplier, if any, specified on the face hereof; provided, however, that if such dealers selected as aforesaid by the Calculation Agent are not quoting as mentioned in this sentence, the Commercial Paper Rate shall be the Commercial Paper Rate in effect on such Commercial Paper Interest Determination Date. "Money Market Yield" shall be a yield (expressed as a percentage rounded upwards, if necessary, to the next higher one- hundred thousandth of a percentage point), calculated in accordance with the following formula: D x 360 Money Market Yield = -------------------- X 100, 360 - (D x M) where "D" refers to the per annum rate for commercial paper quoted on a bank discount basis and expressed as a decimal; and "M" refers to the actual number of days in the interest period for which interest is being calculated. Determination of Prime Rate. If the Interest Rate Basis specified on the face hereof is the Prime Rate, the Interest Rate with respect to any Prime Rate, the Interest Rate with respect to this Security for any Interest Reset Date shall equal (a) the rate on the second Market Day with respect to this Security immediately preceding such Interest Reset Date (the "Prime Rate Interest Determination Date") as published in H.15(519) under the heading "Bank Prime Loan"; (b) if such rate is not so published prior to 9:00 a.m., New York City time, on the Calculation Date pertaining to such Prime Rate Interest Determination Date, the arithmetic mean, as calculated by the Calculation Agent on such Calculation Date, of the rates of interest publicly announced by each bank that appears on the Reuters Screen NYMF Page (or such other equivalent page appearing on another service mutually agreed upon between the Calculation Agent and the Issuer) as such bank's prime rate or base lending rate as in effect for that Prime Rate Interest Determination Date, (c) if fewer than four such rates but more than one such rate appear on the Reuters Screen NYMF Page for that Prime Rate Interest Determination Date, the Prime Rate will be the arithmetic mean, as calculated by the Calculation Agent, of the prime rates quoted on the basis of the actual number of days in the year divided by a 360-day year as of the close of business on such Prime Rate Interest Determination Date by four major money center banks in The city of New York selected by the Calculation Agent, and (d) if fewer than two quotations are provided, the Prime Rate shall be determined on the basis of the rates furnished in The City of New York by the appropriate number of substitute banks or trust companies organized and doing business under the laws of the United States, or any State thereof, having total equity capital of at least $500 million and being subject to supervision or examination by Federal or State authority, -9- 10 selected by the Calculation Agent to provide such rate or rates in each of the above cases adjusted by the addition or subtraction of the Spread, if any, specified on the face hereof, or by multiplication of the Spread Multiplier, if any, specified on the face hereof; provided, however, that if the banks selected as aforesaid are not quoting as mentioned in this sentence, the Prime Rate will be the Prime Rate in effect on such Prime Rate Interest Determination Date. Determination of CD Rate. If the Interest Rate Basis specified on the face hereof is the CD Rate, the Interest Rate with respect to any Interest Reset Date shall equal (a) the rate on the second Market Day with respect to this Security immediately preceding such Interest Reset Date (the "CD Rate Interest Determination Date") for negotiable certificates of deposit having the Index Maturity specified on the face hereof, (i) as published in H.15(519) under the heading "CDs (Secondary Market)", or (ii) such rate is not published prior to 3:00 p.m., New York City time, on the Calculation Date pertaining to such CD Rate Interest Determination Date, then as published in Composite Quotations under the heading "Certificates of Deposit", or (b) if such rate is not yet published in either H.15(519) or Composite Quotations by 3:00 p.m., New York City time, on such Calculation Date the arithmetic mean, as calculated by the Calculation Agent, of the secondary market offered rates, as of 10:00 a.m., New York City time, on such CD Rate Interest Determination Date, of three leading nonbank dealers of negotiable U.S. dollar certificates of deposit in The City of New York selected by the Calculation Agent for negotiable certificates of deposit of major United States money market banks with a remaining maturity closest to the Index Maturity specified on the face hereof in a denomination of $5,000,000 in each of the above cases adjusted by the addition or subtraction of the Spread, if any, specified on the fact hereof, or by multiplication of the Spread Multiplier, if any, specified on the face hereof; provided, however, that if the dealers selected as aforesaid by the Calculation Agent are not quoting as mentioned in this sentence, the CD Rate will be the CD Rate in effect on such CD Rate Interest Determination Date. Determination of Federal Funds Effective Rate. If the Interest Rate Basis specified on the face hereof is the Federal Funds Effective Rate, the interest rate with respect to this Security for any Interest Reset Date shall equal (a) the rate on the second Market Day with respect to this Security immediately preceding such Interest Reset Date (the "Federal Funds Effective Interest Determination Date") for Federal Funds having the Index Maturity specified on the face hereof (i) as published in H.15(519) under the heading "Federal Funds (Effective)" or (ii) if such rate is not so published prior to 3:00 p.m., New York City time, on the Calculation Date pertaining to such Federal Funds Effective Interest Determination Date, then as published in Composite Quotations under the heading "Federal Funds/Effective Rate" or (b) if by 3:00 p.m., New York City time, on such Calculation Date such rate is not yet published in either H.15(519) or Composite Quotations, the arithmetic mean, as calculated by the Calculation Agent on such Calculation Date, of the rates, as of 11:00 a.m., New York City time, on such Federal Funds Effective Interest Determination Date, for the last transaction in overnight Federal Funds arranged by three leading brokers of Federal Funds transactions in The City of New York selected by the Calculation Agent, in each of the above cases adjusted by the addition or subtraction of the Spread, if any, specified on the face hereof, or by multiplication by the Spread Multiplier, if any, specified on the fact hereof; provided, however, that if the brokers selected as aforesaid by the Calculation Agent are not quoting as mentioned in this sentence, the Federal Funds Effective Rate will be the Federal Funds Effective Rate in effect on such Federal Funds Effective Interest Determination Date. Determination of LIBOR. If the Interest Rate Basis specified on the face hereof is LIBOR, the interest rate with respect to this Security for any Interest Reset Date shall be determined by the Calculation Agent in accordance with the following provisions: -10- 11 (i) On the second London Market Day prior to such Interest Reset Date (a "LIBOR Interest Determination Date"), the Calculation Agent will determine LIBOR on the basis of the arithmetic mean of the offered rates for deposits of not less than U.S.$1,000,000 having the Index Maturity specified on the face hereof, commencing on the second London Market Day (as defined below) immediately following such LIBOR Interest Determination Date, which appear on the display designated as page "LIBOR" on the Reuters Monitor Money Rates Service (or such other page as may replace the LIBO page on that service or any other service mutually agreed upon between the Calculation Agent and the Issuer for the purpose of displaying London interbank offered rates of major banks) (the "Reuters Screen LIBO Page") as of 11:00 a.m., London time, on that LIBOR Interest Determination Date, adjusted by the addition or subtraction of the Spread, if any, specified on the face hereof, or by multiplication by the Spread Multiplier, if any, specified on the face hereof; provided, however, that if fewer than two such offered rates so appear, LIBOR for such LIBOR Interest Determination Date will be determined as described in (ii) below. (ii) If on any LIBOR Interest Determination Date fewer than two offered rates appear on the Reuters Screen LIBO Page, LIBOR will be determined on the basis of the rates at approximately 11:00 a.m., London time, on such LIBOR Interest Determination Date at which deposits in U.S. dollars having the Index Maturity specified on the face hereof are offered to prime banks in the London Interbank Market by four major banks selected by the Calculation Agent commencing on the second London Market Day immediately following such LIBOR Interest Determination Date, and in a principal amount equal to an amount of not less than U.S.$1,000,000 that in the Calculation Agent's judgment is representative for a single transaction in such market at such time. The Calculation Agent will request the principal London office of each such bank to provide a quotation of its rate. If at least two such quotations are provided, LIBOR for such LIBOR Interest Determination Date will be the arithmetic mean, as calculated by the Calculation Agent, of such quotations, adjusted by the addition or subtraction of the Spread, if any, specified on the face hereof, or by multiplication by the Spread Multiplier, if any, specified on the face hereof. If fewer than two quotations are provided, LIBOR for such LIBOR Interest Determination Date will be the arithmetic mean, as calculated by the Calculation Agent, of the rates quoted at approximately 11:00 a.m., New York City time, on such LIBOR Interest Determination Date by three major banks in The City of New York, selected by the Calculation Agent, for loans in U.S. dollars to leading European banks, having the Index Maturity specified on the face hereof, commencing on the second London Market Day immediately following such LIBOR Interest Determination Date, and in a principal amount equal to an amount of not less than U.S.$1,000,000 that in the Calculation Agent's judgment is representative for a single transaction in such market at such time, adjusted by the addition or subtraction of the Spread, if any, specified on the face hereof, or by multiplication by the Spread Multiplier, if any, specified on the face hereof; provided, however, that if the banks selected as aforesaid by the Calculation Agent are not quoting as mentioned in this sentence, LIBOR will be the LIBOR in effect on such LIBOR Interest Determination Date. "London Market Day" means any day on which deposits in U.S. dollars are transacted in the London interbank market. Determination of Treasury Rate. If the Interest Rate Basis specified on the face hereof is the Treasury Rate, the interest rate with respect to this Security for any Interest Reset Date shall equal (a) the rate for the most recent auction of direct obligations of the United States ("Treasury bills") having the Index Maturity specified on the face hereof as published in H.15(519) under the heading "U.S. -11- 12 Government Securities - auction average (investment)" on the Treasury Interest Determination Date (as defined below) or (b) if such rate is not so published by 3:00 p.m., New York City time, on the Calculation Date pertaining to such Treasury Interest Determination Date, the auction average rate (expressed as bond equivalent on the basis of a year of 365 or 366 days, as applicable, and applied on a daily basis) for such auction as otherwise announced by the United States Department of the Treasury or (c) in the event that the results of the auction of Treasury bills having the Index Maturity specified on the face hereof are not published or reported as provided in (a) or (b) above by 3:00 p.m., New York City time, on such Calculation Date or if no such auction is held in a particular week, the yield to maturity (expressed as a bond equivalent on the basis of a year of 365 or 366 days, as applicable, and applied on a daily basis) of the arithmetic mean, as calculated by the Calculation Agent on such Calculation Date, of the secondary market bid rates as of approximately 3:30 p.m., New York City time, on such Treasury Interest Determination Date, of three leading primary United States government securities dealers selected by the Calculation Agent for the issue of Treasury bills with a remaining maturity closest to the Index Maturity specified on the face hereof, in each of the above cases adjusted by the addition or subtraction of the Spread, if any, specified on the face hereof, or by multiplication by the Spread Multiplier, if any, specified on the face hereof; provided, however, that if such dealers selected as aforesaid by the Calculation Agent are not quoting as mentioned in this sentence, the Treasury Rate shall be the Treasury Rate on such Treasury Interest Determination Date. The "Treasury Interest Determination Date" pertaining to an Interest Reset Date will be the day on which Treasury bills are auctioned for the week in which such Interest Reset Date falls, or if no auction is held for such week, the Monday of such week (or if Monday is a legal holiday, the next succeeding Market Day) and the Interest Reset Date will be the Market Day immediately following such Treasury Interest Determination Date. Treasury bills are usually sold at auction on Monday of each week, unless that day is a legal holiday, in which case the auction is usually held on the following Tuesday, except that such auction may be held on the preceding Friday. If an auction is held for such week on Monday or the preceding Friday, such Monday or preceding Friday shall be the Treasury Interest Determination Date for such week, and the Interest Reset Date for such week shall be the Tuesday of such week (or, if such Tuesday is not a Market Day, the next succeeding Market Day). If the auction for such week is held on any day of such week other than Monday, then such date shall be the Treasury Interest Determination Date and the Interest Reset Date for such week shall be the next succeeding Market Day. (INSERT OTHER INTEREST RATE BASIS PROVISIONS, IF APPLICABLE) Unless otherwise specified on the face hereof, the Calculation Date pertaining (i) to any Commercial Paper Rate Interest Determination Date, CD Rate Interest Determination Date, Treasury Interest Determination Date or Federal Funds Effective Rate Interest Determination Date, as the case may be, shall be the tenth day after such interest determination date or, if any such day is not a Market Day with respect to this Security, the next succeeding Market Day and (ii) to any Prime Rate Interest Determination Date or LIBOR Interest Determination Date shall be such LIBOR Interest Determination Date. The Calculation Agent shall calculate the interest rate hereon in accordance with the foregoing on or before each Calculation Date. At the request of the Holder hereof, the Calculation Agent will provide to the Holder hereof the interest rate hereon then in effect and, if determined, the interest rate which will become effective as of the next Interest Reset Date. Unless otherwise specified on the face hereof, the Calculation Agent shall be the Paying Agent. If this Security is designated on the face hereof as an Original Issue Discount Security, then, notwithstanding anything to the contrary contained in this Security, upon the redemption or acceleration of Maturity of this Security there shall be payable, in lieu of the principal amount due at the Stated Maturity hereof, as specified on the face hereof, an amount equal to the Amortized Face -12- 13 Amount of this Security. The "Amortized Face Amount" shall be the amount equal to (a) the issue price of this Security (as defined below), plus (b) that portion of the difference between the issue price and the principal amount of this Security that has been amortized at the Stated Yield (as defined below) of this Security (computed in accordance with generally accepted United States bond yield computation principles) at the date as of which the Amortized Face Amount is calculated, but in no event shall the Amortized Face Amount exceed the principal amount of this Security due at the Stated Maturity hereof. As used in the previous sentence "issue price" means the principal amount due at the Stated Maturity hereof less the Total Amount of OID specified on the face hereof and the "Stated Yield" means the Yield to Maturity specified on the face hereof (or if not so specified, the yield to maturity compounded semi-annually and computed in accordance with generally accepted United States bond yield computation principles) for the period from the Issue Date to the Stated Maturity on the basis of the issue price and such principal amount. If this Security is denominated in a Specified Currency, unless the Holder hereof is entitled to make, and has made, a Specified Currency Payment Election with respect to such payments as provided on the face hereof, the Holder of this Security shall receive payments of principal (and premium, if any) and interest in U.S. dollars at an exchange rate based on the highest bid quotation in The City of New York received by the Exchange Rate Agent (who, unless otherwise specified on the face hereof, shall be the Paying Agent) at approximately 11:00 a.m., New York City time, on the second Market Day with respect to this Security preceding the applicable payment date from three recognized foreign exchange dealers (one of which may be the Exchange Rate Agent) selected by the Exchange Rate Agent and approved by the Company for the purchase by the quoting dealer of the Specified Currency for U.S. dollars for settlement on such payment date in the aggregate amount of such Specified Currency payable to all Holders of Securities of this series denominated in such Specified Currency and scheduled to receive U.S. dollar payment on such payment date and at which the applicable dealer commits to execute a contract. All currency exchange costs incurred by the Company in converting a Specified Currency into U.S. dollars in order to make payments hereon will be borne by the Holder of this Security by deductions from such payments. If such bid quotations are not available, or if a Specified Currency Payment Election has been made with respect to such payments, payments will be made in the Specified Currency (or, if such Specified Currency is not at the time of such payment legal tender for the payment of public and private debts, such other coin or currency of the country which issued such Specified Currency as at the time of such payment is legal tender for the payment of such debts); provided, however, that if such Specified Currency (or, if applicable, such other coin or currency) is unavailable due to the imposition of exchange controls or other circumstances beyond the Company's control, the Company will be entitled to make payments in U.S. dollars on the basis of the Market Exchange Rate for such specified currency (or, if applicable, such other coin or currency) on the second Market Day prior to such payment or, if such Market Exchange Rate is not then available, on the basis of the most recently available Market Exchange Rate or as otherwise indicated hereon. (INSERT SINKING FUND PROVISIONS, IF APPLICABLE) If one or more Redemption Dates (or ranges of Redemption Dates) is specified on the face hereof, this Security is subject to redemption upon not less than 30 days' notice by mail, on any such date (or during any such range), as a whole or from time to time in part, at the election of the Company, at a Redemption Price determined as provided in the next succeeding sentence, together with accrued interest to the Redemption Date, but interest instalments whose Stated Maturity is on or prior to the Redemption Date will be payable to the Holder hereof (or one or more Predecessor Securities) of record at the close of business on the Regular Record Dates referred to on the face hereof, all as provided in the Indenture. If applicable, the "Redemption Price" for any such redemption shall be the amount determined by multiplying the Redemption Percentage specified on the face hereof with respect to the relevant Redemption Date (or range of such dates) by the portion of the -13- 14 principal amount hereof (or, if this Security is an Original Issue Discount Security, the portion of the Amortized Face Amount hereof) to be redeemed; provided, however, that in no event shall the Redemption Price be less than 100% of the portion of the principal amount hereof (or, if this Security is an Original Issue Discount Security, the portion of the Amortized Face Amount hereof) to be redeemed. Notice of redemption having been given as aforesaid, this Security (or the portion of the principal amount hereof so to be redeemed) shall, on the Redemption Date, become due and payable at the Redemption Price herein specified, and from and after such date (unless the Company shall default in the payment of the Redemption Price and accrued interest) shall cease to bear interest. In the case of any partial redemption at the election of the Company of Securities of this series, the Securities of a particular tenor to be redeemed shall be selected by the Paying Agent not more than 60 days prior to the Redemption Date by such method as the Paying Agent shall deem fair and appropriate and which may provide for the selection for redemption of portions of the principal amount of Securities. In the event of any redemption of this Security in part only, a new Security or Securities of this series of like tenor for the unredeemed portion hereof will be issued in the name of the Holder hereof upon the cancellation hereof, provided that such unredeemed portion shall not be less than the minimum denomination of this Security. If one or more Redemption Dates (Option of Holder) (or ranges of such dates) is specified on the face hereof, this Security is subject to redemption on any such date (or during any such range) or, if such date is not a Market Day, on the first Market Day following such date, as a whole or from time to time in part, at the election of the Holder hereof at a Redemption Price determined as provided in the fifth succeeding sentence together with accrued interest thereon to the Redemption Date, but interest instalments whose Stated Maturity is on or prior to the Redemption Date will be payable to the Holder hereof of record at the close of business on the Regular Record Date referred to on the face hereof, all as provided in the Indenture. Such election shall be effected by the Holder hereof delivering to the Company at the principal office of the Paying Agent at ___________________ not less than 30 nor more than 60 days prior to the date on which this Security is to be redeemed, or during such other Notice Period specified on the face hereof, a notice requesting such redemption in the form described below and specifying the date upon which this Security is to be redeemed. Any notice given by a Holder pursuant to this paragraph shall consist of either (i) this Security with the form entitled "Option to Elect Redemption" set forth of the end of this Security duly completed or (ii) a telegram, facsimile transmission or a letter from a member of a national securities exchange, or the National Association of Securities Dealers, Inc. or a commercial bank or trust company in the United States setting forth the name of the Holder hereof, the principal amount of this Security, the principal amount of this Security to be redeemed, the certificate number or a description of the terms of this Security, a statement that the option to elect redemption is being exercised thereby and a guarantee that this Security, together with the duly completed form entitled "Option to Elect Redemption" below, will be received by the Paying Agent not later than the fifth Business Day after the date of such telegram, facsimile transmission or letter; provided, however, that, unless otherwise agreed, such telegram, facsimile transmission or letter shall only be effective if this Security and form duly completed are received by the Paying Agent by such fifth Business Day. Exercise of the redemption option by the Holder hereof will be irrevocable. If applicable, the "Redemption Price" for any such redemption shall be the amount determined by multiplying the Redemption Percentage (Option of Holder), specified on the face hereof with respect to the relevant Redemption Date (Option of Holder) (or range of such dates) by the portion of the principal amount hereof (or, if this Security is an Original Issue Discount Security, the portion of the Amortized Face Amount hereof) to be redeemed, together with the interest accrued thereon to the Redemption Date; provided, however, that in no event shall the Redemption Price be less than 100% of the portion of the principal amount hereof (or, if this Security is an Original Issue Discount Security, the portion of the Amortized Face Amount hereof) to be redeemed. -14- 15 The Indenture contains provisions for defeasance and covenant defeasance at any time of the entire indebtedness on this Security upon compliance by the Company with certain conditions set forth therein. If an Event of Default with respect to the Securities of this series shall occur and be continuing, the principal of the Securities of this series (or, in the case of Original Issue Discount Securities, the Amortized Face Amount thereof) may be declared due and payable in the manner and with the effect provided in the Indenture. Upon payment (i) of the amount of principal so declared due and payable and (ii) of interest on any overdue principal and overdue interest (in each case to the extent that the payment of such interest shall be legally enforceable), all of the Company's obligations in respect of the payment of the principal of the interest, if any, on the Securities of this series shall terminate. 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 66 2/3% 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. No reference herein to the Indenture and no provision of this Security or of the Indenture shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal of (and premium, if any) 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 registrable 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 premium, if any) 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 or her 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, will be issued to the designated transferee or transferees. As provided in the Indenture and subject to certain limitations therein set forth, the 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. In the event of any redemption at the election of the Company, neither the Trustee nor the Paying Agent shall be required to (i) issue, register the transfer of or exchange Securities of this series during a period beginning at the opening of business 15 days before any selection of Securities of this series to be redeemed and ending at the close of business on the day of mailing of the relevant notice of redemption, nor (ii) register the transfer of or exchange any Security, or portion thereof, called for redemption, except the unredeemed portion of any Security being redeemed in part. Following the exercise of any redemption option by the Holder hereof, neither the Trustee nor the Paying Agent shall be required to issue, register the transfer of or exchange that portion of this Security with respect to which such option has been exercised. -15- 16 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. The Notes of this series may be issued in the form of one or more Global Securities to The Depository Trust Company as depository for the Global Securities of this series (the "Depository") or its nominee and registered in the name of the Depository or such nominee. If the face of this Security contains a legend indicating that this Security is a Global Security so registered, the transfer and exchange hereof is subject to the additional limitations set forth in such legend. Prior to due presentment of this Security for registration of transfer, the Company, the Trustee, the Paying Agent and any agent of the Company, the Trustee or the Paying Agent may treat the Person in whose name this Security is registered as the owner hereof for all purposes, whether or not this Security is overdue, and neither the Company, the Trustee, the Paying Agent nor any such agent shall be affected by notice to the contrary. Any funds deposited with the Paying Agent and remaining unclaimed for two years after the date upon which the last payment of principal or interest on any Note to which such deposit relates shall have become due and payable, shall be repaid to the Company by the Paying Agent on demand, and the holder of any Note to which such deposit related entitled to receive payment shall thereafter look only to the Company for the payment thereof and all liability of the Paying Agent with respect to such money shall thereupon cease. All terms used in this Security which are defined in the Indenture shall have the meanings assigned to them in the Indenture. __________________ ABBREVIATIONS The following abbreviations, when used in the inscription on the face of this instrument, shall be construed as though they were written out in full according to applicable laws or regulations. TEN COM - as tenants in common TEN ENT - as tenants by the entireties JT TEN - as joint tenants with right of survivorship and not as tenants in common UNIF GIFT MIN ACT - ______________ Custodian ________________ (Custodian) (Minor) Under Uniform Gifts to Minors Act (___________) (State) Additional abbreviations may also be used though not in the above list. __________________ -16- 17 FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and transfer(s) unto ________________________________________________________________________________ PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER OF ASSIGNEE: ________________________________________________________________________________ (PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS INCLUDING POSTAL ZIP CODE OF ASSIGNEE) ________________________________________________________________________________ ________________________________________________________________________________ the within Note and all rights thereunder, hereby irrevocably constituting and appointing _________________________________________________________________ attorney to transfer said Note on the books of the Company, with full power of substitution in the premises. Dated:__________________________ X________________________________________ NOTICE: The signature to this assignment must correspond with the name as written upon the face of the within instrument in every particular, without alteration or enlargement or any change whatever. -17- 18 OPTION TO ELECT REDEMPTION The undersigned hereby irrevocably requests and instructs J. C. Penney Company, Inc. to redeem the within Security (or portion thereof specified below) pursuant to its terms at the Redemption Price, to the undersigned at ________________________________________________________________________________ (PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS INCLUDING POSTAL ZIP CODE OF THE UNDERSIGNED) ________________________________________________________________________________ ________________________________________________________________________________ If less than the entire principal amount of the within Security is to be redeemed, specify the portion thereof which the Holder elects to have redeemed: __________________________________________________________________________; and specify the denomination or denominations (which shall not be less than the minimum authorized denomination) of the Securities to be issued to the Holder for the portion of the within Security not being redeemed (in the absence of any such specification, one such Security will be issued for the portion not being redeemed): _______________________________________________________________________________. Dated:___________________ _____________________________________________ NOTICE: This signature on this Option to Elect Redemption must correspond with the name as written upon the face of the within instrument in every particular without alteration or enlargement. -18- EX-4.C 12 FORM OF PROPOSED WARRANT AGREEMENT 1 EXHIBIT 4(c) ================================================================================ J. C. PENNEY COMPANY, INC. AND AS WARRANT AGENT ---------------- WARRANT AGREEMENT Dated as of ..................... ---------------- ================================================================================ 2 TABLE OF CONTENTS*
Page ---- Parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 Recitals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 ARTICLE I. ISSUANCE OF WARRANTS AND EXECUTION AND DELIVERY OF WARRANT CERTIFICATES SECTION 1.01. Issuance of Warrants . . . . . . . . . . . . . . . . . . . . . . . . . . 1 SECTION 1.02. Execution and Delivery of Warrant Certificates . . . . . . . . . . . . . 1 SECTION 1.03. Issuance of Warrant Certificates . . . . . . . . . . . . . . . . . . . . 2 ARTICLE II. WARRANT PRICE, DURATION AND EXERCISE OF WARRANTS SECTION 2.01. Warrant Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 SECTION 2.02. Duration of Warrants . . . . . . . . . . . . . . . . . . . . . . . . . . 3 SECTION 2.03. Exercise of Warrants . . . . . . . . . . . . . . . . . . . . . . . . . . 3 ARTICLE III. OTHER PROVISIONS RELATING TO RIGHTS OF HOLDERS OF WARRANT CERTIFICATES SECTION 3.01. No Rights as Warrant Debt Securityholders Conferred by Warrants or Warrant Certificates . . . . . . . . . . . . . . . . . . . . . . . . . 3 SECTION 3.02. Lost, Stolen, Destroyed or Mutilated Warrant Certificates . . . . . . . . 4 SECTION 3.03. Holder of Warrant Certificate May Enforce Rights . . . . . . . . . . . . 4 ARTICLE IV. EXCHANGE AND TRANSFER OF WARRANT CERTIFICATES SECTION 4.01. Exchange and Transfer of Warrant Certificates . . . . . . . . . . . . . . 4 SECTION 4.02. Treatment of Holders of Warrant Certificates . . . . . . . . . . . . . . 5 SECTION 4.03. Cancelation of Warrant Certificates . . . . . . . . . . . . . . . . . . . 5 ARTICLE V. CONCERNING THE WARRANT AGENT SECTION 5.01. Warrant Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 SECTION 5.02. Conditions of Warrant Agent's Obligations . . . . . . . . . . . . . . . . 6 SECTION 5.03. Resignation and Appointment of Successor . . . . . . . . . . . . . . . . 7 SECTION 5.04. Payment of Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
- ------------------ * The Table of Contents is not a part of the Warrant Agreement. 3 ARTICLE VI. MISCELLANEOUS SECTION 6.01. Amendment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 SECTION 6.02. Notices and Demands to the Company and Warrant Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 SECTION 6.03. Addresses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 SECTION 6.04. Applicable Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 SECTION 6.05. Delivery of Prospectus . . . . . . . . . . . . . . . . . . . . . . . . . 8 SECTION 6.06. Obtaining of Governmental Approvals . . . . . . . . . . . . . . . . . . . 8 SECTION 6.07. Persons Having Rights under Warrant Agreement . . . . . . . . . . . . . . 9 SECTION 6.08. Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 SECTION 6.09. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 SECTION 6.10. Inspection of Agreement . . . . . . . . . . . . . . . . . . . . . . . . . 9 TESTIMONIUM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 EXHIBIT A--Form of Warrant Certificate
4 THIS WARRANT AGREEMENT dated as of ..................................., between J. C. Penney Company, Inc., a corporation duly organized and existing under the laws of the State of Delaware ("Company") and ........................ ......, .........., as Warrant Agent ("Warrant Agent"). WHEREAS, the Company has entered into an Indenture dated as of April 1, 1994 ("Indenture"), with Bank of America National Trust and Savings Association, as Trustee ("Trustee"), providing for the issuance from time to time of its unsecured debentures, notes or other evidences of indebtedness ("Debt Securities"), to be issued in one or more series as provided in the Indenture; and WHEREAS, the Company proposes to sell (title of Debt Securities being offered) ("Offered Debt Securities") with warrant certificates evidencing one or more warrants ("Warrants" or, individually a "Warrant") representing the right to purchase (title of Debt Securities purchasable through exercise of Warrants) (the "Warrant Debt Securities"), such warrant certificates and other warrant certificates issued pursuant to this Agreement being herein called the "Warrant Certificates"; and WHEREAS, the Company desires the Warrant Agent to act on behalf of the Company in connection with the issuance, exchange, exercise and replacement of the Warrant Certificates, and in this Agreement wishes to set forth, among other things, the form and provisions of the Warrant Certificates and the terms and conditions on which they may be issued, exchanged, exercised and replaced; NOW THEREFORE, in consideration of the premises and of the mutual agreements herein contained, the parties hereto agree as follows: ARTICLE I. ISSUANCE OF WARRANTS AND EXECUTION AND DELIVERY OF WARRANT CERTIFICATES SECTION 1.01. Issuance of Warrants. Warrants shall be (initially) issued in connection with the issuance of the Offered Debt Securities (but shall be separately transferable) on and after ............., 19.... ("Detachable Date") (and shall not be separately transferable). Warrant Certificates shall be--initially-issued in units with the Offered Debt Securities and each Warrant Certificate included in such a unit shall evidence .... Warrants for each $............. principal amount of Offered Debt Securities included in such unit. SECTION 1.02. Execution and Delivery of Warrant Certificates. Each Warrant Certificate, whenever issued, shall be in (bearer) (registered) form substantially in the form set forth in Exhibit A hereto, shall be dated ............. and may have such letters, numbers or other marks of identification or designation and such legends or endorsements printed, lithographed or engraved thereon as the officers of the Company executing the same may approve (execution thereof to be conclusive evidence of such approval) and as are not inconsistent with the provisions of this Agreement, or as may be required to comply with any law or with any rule or regulation made pursuant thereto or with any rule or regulation of any stock exchange on which the Warrant Certificates may be listed, or to conform to usage. The Warrant Certificates shall be signed on behalf of the Company by its Chairman of the Board, a Vice Chairman of the Board, President or any Vice President and its Secretary or any of its Assistant Secretaries. Such signatures may be manual or facsimile signatures of the present or any future such authorized officers and may be imprinted or otherwise reproduced on the Warrant Certificates. No Warrant Certificate shall be valid for any purpose, and no Warrant evidenced thereby shall be exercisable, until such Warrant Certificate has been countersigned by the manual signature of an authorized representative of the Warrant Agent. Such signature upon any Warrant Certificate executed by the Company shall be conclusive evidence that the Warrant Certificate so countersigned has been duly issued hereunder. 1 5 In case any officer of the Company who shall have signed any of the Warrant Certificates either manually or by facsimile signature shall cease to be such officer before the Warrant Certificates so signed shall have been countersigned and delivered by the Warrant Agent, such Warrant Certificates, nevertheless, may be countersigned and delivered as though the person who signed such Warrant Certificates has not ceased to be such officer of the Company; and any Warrant Certificate may be signed on behalf of the Company by such persons as, at the actual date of the execution of such Warrant Certificate, shall be the proper officers of the Company, although at the date of the execution of this Agreement any such person was not such officer. (If bearer Warrants--The term "holder" or "holder of a Warrant Certificate" as used herein shall mean (If Debt Securities with Warrants which are not immediately detachable--prior to the Detachable Date, the registered owner of the Offered Debt Security to which such Warrant Certificate was initially attached, and after such Detachable Date) the bearer of such Warrant Certificate.) (If registered Warrants--The term "holder" or "holder of a Warrant Certificate" as used herein shall mean any person in whose name at the time any Warrant Certificate shall be registered upon the books to be maintained by or on behalf of the Warrant Agent for that purpose (If Debt Securities with Warrants which are not immediately detachable--or upon the register of the Offered Debt Securities prior to the Detachable Date. The Company will, or will cause the registrar of the Offered Debt Securities to, make available at all times to the Warrant Agent such information as to holders of the Offered Debt Securities with Warrants as may be necessary to keep the records maintained by or on behalf of the Warrant Agent up to date.)) SECTION 1.03. Issuance of Warrant Certificates. Warrant Certificates evidencing the right to purchase an aggregate principal amount not exceeding $............. aggregate principal amount of Warrant Debt Securities (except as provided in Sections 2.03(c), 3.02 and 4.01) may be executed by the Company and delivered to the Warrant Agent upon the execution of this Warrant Agreement or from time to time thereafter. The Warrant Agent shall, upon receipt of Warrant Certificates duly executed on behalf of the Company, countersign Warrant Certificates evidencing Warrants representing the right to purchase up to $............. aggregate principal amount of Warrant Debt Securities and shall deliver such Warrant Certificates to or upon the order of the Company. Subsequent to such original issuance of the Warrant Certificates, the Warrant Agent shall countersign a Warrant Certificate only if the Warrant Certificate is issued in exchange or substitution for one or more previously countersigned Warrant Certificates (If registered Warrants--or in connection with their transfer), as hereinafter provided. ARTICLE II. WARRANT PRICE, DURATION AND EXERCISE OF WARRANTS SECTION 2.01. Warrant Price*. (On .............., 19...., the exercise price of each Warrant is $.............. During the period from .............., 19...., through and including ............., 19...., the exercise price of each Warrant will be $............. plus (accrued amortization of the original issue discount) (accrued interest) from ............., 19..... On ............., 19...., the exercise price of each Warrant will be $.............. During the period from ............., 19.... through and including .............., 19...., the exercise price of each Warrant will be $............. plus (accrued amortization of the original issue discount) (accrued interest) from .............., 19.... (In each case, the original issue discount will be amortized at a ....% annual rate, computed on a (semiannual) (annual) basis using a 360-day year consisting of twelve 30-day months). Such purchase price of Warrant Debt Securities is referred to in this Agreement as "the Warrant Price." (The original issue discount for $1,000 principal amount of Warrant Debt Securities is $..............) - ------------------ * Complete and modify the provisions of this Section as appropriate to reflect the exact terms of the Offered Warrants and the Warrant Debt Securities. 2 6 SECTION 2.02. Duration of Warrants. Each Warrant evidenced by a Warrant Certificate may be exercised in whole at any time, as specified herein, on or after (the date thereof) (............., 19....) and at or before the close of business on .............., 19.... ("Expiration Date"). Each Warrant not exercised at or before the close of business on the Expiration Date shall become void, and all rights of the holder of the Warrant Certificate evidencing such Warrant and under this Agreement shall cease. SECTION 2.03. Exercise of Warrants. (a) During the period specified in Section 2.02, any whole number of Warrants, if the Warrant Certificate evidencing the same shall have been countersigned by the Warrant Agent, may be exercised by providing certain information set forth on the reverse side of the Warrant Certificate and by paying in full, in lawful money of the United States of America, (in cash or by certified check or official bank check or by bank wire transfer) (by bank wire transfer), in each case in (immediately available) funds, the Warrant Price for each Warrant exercised, to (...................... ................................ ) at (......................................) (or ..................................), provided that such exercise is subject to receipt within five business days of such (payment) (wire transfer) by ...................... of the Warrant Certificate with the form of election to purchase Warrant Debt Securities set forth on the reverse side of the Warrant Certificate properly completed and duly executed. The date on which payment in full of the Warrant Price is received by ...................... shall, subject to receipt of the Warrant Certificate as aforesaid, be deemed to be the date on which the Warrant is exercised. (b) ...................... shall, from time to time, as promptly as practicable, advise the Trustee or any Authenticating Agent under the Indenture of (i) the number of Warrants exercised in accordance with the terms and conditions of this Agreement and the Warrant Certificates, (ii) the instructions of each holder of the Warrant Certificates evidencing such Warrants with respect to delivery of the Warrant Debt Securities to which such holder is entitled upon such exercise, (iii) delivery of Warrant Certificates evidencing the balance, if any, of the Warrants remaining after such exercise, and (iv) such other information as the Trustee or any Authenticating Agent shall reasonably require. (c) As soon as practicable after the exercise of any Warrant or Warrants, the Company shall issue, pursuant to the Indenture, in authorized denominations to or upon the order of the holder of the Warrant Certificate evidencing such Warrant or Warrants, the Warrant Debt Security or Warrant Debt Securities to which such holder is entitled, in fully registered form, registered in such name or names as may be directed by such holder; and if fewer than all of the Warrants evidenced by such Warrant Certificate were exercised, the Company shall execute, and the Warrant Agent shall countersign and deliver, a new Warrant Certificate evidencing the number of Warrants remaining unexercised. (d) The Company shall not be required to pay any stamp or other tax or other governmental charge required to be paid in connection with any transfer involved in the issue of the Warrant Debt Securities; and in the event that any such transfer is involved, the Company shall not be required to issue or deliver any Warrant Debt Securities until such tax or other charge shall have been paid or it has been established to the Company's satisfaction that no such tax or other charge is due. ARTICLE III. OTHER PROVISIONS RELATING TO RIGHTS OF HOLDERS OF WARRANT CERTIFICATES SECTION 3.01. No Rights as Warrant Debt Securityholders Conferred by Warrants or Warrant Certificates. No Warrant Certificate or Warrant evidenced thereby shall entitle the holder thereof to any of the rights of a holder of the Warrant Debt Securities, including, without limitation, the right to receive payment of the principal of (and premium, if any) or interest, if any, on the Warrant Debt Securities or to enforce any of the covenants in the Indenture. 3 7 SECTION 3.02. Lost, Stolen, Destroyed or Mutilated Warrant Certificates. Upon receipt by the Company and the Warrant Agent of evidence satisfactory to them of the ownership of and the loss, theft, destruction or mutilation of any Warrant Certificate and of such security or indemnity as may be required by them to save each of them harmless and, in the case of mutilation, upon surrender thereof to the Warrant Agent for cancelation, then, in the absence of notice to the Company or the Warrant Agent that such Warrant Certificate has been acquired by a bona fide purchaser, the Company shall execute, and upon its request the Warrant Agent shall countersign and deliver, in exchange for or in lieu of the lost, stolen, destroyed or mutilated Warrant Certificate, a new Warrant Certificate of the same tenor and evidencing a like number of Warrants. Upon the issuance of any new Warrant Certificate under this Section, the Company may require the payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in relation thereto and any other expenses (including the fees and expenses of the Warrant Agent) in connection therewith. Every substitute Warrant Certificate executed and delivered pursuant to this Section in lieu of any lost, stolen or destroyed Warrant Certificate shall represent an additional contractual obligation of the Company, whether or not the lost, stolen or destroyed Warrant Certificate shall be at any time enforceable by anyone, and shall be entitled to the benefits of this Agreement equally and proportionately with any and all other Warrant Certificates duly executed and delivered hereunder. The provisions of this Section are exclusive and shall preclude (to the extent lawful) all other rights and remedies with respect to the replacement of lost, stolen, destroyed or mutilated Warrant Certificates. SECTION 3.03. Holder of Warrant Certificate May Enforce Rights. Notwithstanding any of the provisions of this Agreement, any holder of a Warrant Certificate, without the consent of the Warrant Agent, the Trustee, any Authenticating Agent, the holder of any Warrant Debt Securities or the holder of any other Warrant Certificate, may, on his own behalf and for his own benefit, enforce, and may institute and maintain any suit, action or proceeding against the Company suitable to enforce, his right to exercise the Warrant or Warrants evidenced by his Warrant Certificate in the manner provided in his Warrant Certificate and in this Agreement. ARTICLE IV. EXCHANGE AND TRANSFER OF WARRANT CERTIFICATES SECTION 4.01. Exchange and Transfer of Warrant Certificates. (If Offered Debt Securities with Warrants which are immediately detachable--Upon) (If Offered Debt Securities with Warrants which are not immediately detachable-- Prior to the Detachable Date a Warrant Certificate may be exchanged or transferred only together with the Offered Debt Security to which the Warrant Certificate was initially attached, and only for the purpose of effecting or in conjunction with an exchange or transfer of such Offered Debt Security. On or prior to the Detachable Date, each transfer of the Offered Debt Security shall operate also to transfer the related Warrant Certificates. After the Detachable Date upon) surrender at ...................... (or .....................), Warrant Certificates may be exchanged for other Warrant Certificates in denominations evidencing Warrants, each Warrant entitling the holder thereof to purchase $............. principal amount of Warrant Debt Securities at the Warrant Price (If registered Warrants--or may be transferred in whole or in part) (If bearer or registered Warrants--; provided that such other Warrant Certificates evidence the same aggregate number of Warrants as the Warrant Certificates so surrendered.) (If registered Warrants--The Warrant Agent shall keep or cause to be kept books in which, subject to such reasonable regulations as it may prescribe, there shall be registered Warrant Certificates in accordance with Section 1.02 and transfers of outstanding Warrant Certificates, upon surrender of the Warrant Certificates to the Warrant Agent or ............ ........... for transfer, properly endorsed or accompanied by appropriate instruments of transfer and written instructions for transfer, all in form satisfactory to the Company and the Warrant Agent or ......................., as the case may be.) No service charge shall be made for any exchange (or transfer) of Warrant Certificates, 4 8 but the Company may require payment of a sum sufficient to cover any stamp or other tax or governmental charge that may be imposed in connection with any such exchange (or transfer). Whenever any Warrant Certificates are so surrendered for exchange (or transfer) the Warrant Agent shall countersign and deliver or cause to be delivered to the person or persons entitled thereto a Warrant Certificate or Warrant Certificates duly authorized and executed by the Company. No exchange (or transfer) shall be effected which will result in the issuance of a Warrant Certificate evidencing a fraction of a Warrant or a number of full Warrants and a fraction of a Warrant. All Warrant Certificates issued upon any exchange (or transfer) of Warrant Certificates shall be the valid obligations of the Company, evidencing the same obligations, and entitled to the same benefits under this Agreement, as the Warrant Certificates surrendered for such exchange--or transfer. SECTION 4.02. Treatment of Holders of Warrant Certificates. ((If Offered Debt Securities with bearer Warrants which are not immediately detachable--Subject to Section 4.01, each) (If Offered Debt Securities with bearer Warrants which are immediately detachable--Each) Warrant Certificate shall be transferable by delivery and shall be deemed negotiable and the bearer of each Warrant Certificate may be treated by the Company, the Warrant Agent, any agent of the Warrant Agent and all other persons dealing with such bearer as the absolute owner thereof for any purpose and as the person entitled to exercise the rights represented by the Warrants evidenced thereby, any notice to the contrary notwithstanding.) (If registered Warrants--Every holder of a Warrant Certificate, by accepting the same, consents and agrees with the Company, the Warrant Agent and any agent of the Warrant Agent that until the Warrant Certificate is transferred on the books maintained for registration of Warrants in accordance with Section 4.02 (or the register of the Offered Debt Securities prior to the Detachable Date), the Company, the Warrant Agent and any agent of the Warrant Agent may treat the registered holder as the absolute owner thereof for any purpose and as the person entitled to exercise the rights represented by the Warrants evidenced thereby, any notice to the contrary notwithstanding.) SECTION 4.03. Cancelation of Warrant Certificates. Any Warrant Certificate surrendered for exchange (, transfer) or exercise of the Warrants evidenced thereby shall, if surrendered to the Company or any agent of the Warrant Agent, be delivered to the Warrant Agent, and all Warrant Certificates surrendered or so delivered to the Warrant Agent shall be promptly canceled by the Warrant Agent and shall not be reissued and, except as expressly permitted by this Agreement, no Warrant Certificate shall be issued hereunder in exchange or in lieu thereof. The Warrant Agent shall deliver to the Company from time to time or otherwise dispose of canceled Warrant Certificates in a manner satisfactory to the Company. ARTICLE V. CONCERNING THE WARRANT AGENT SECTION 5.01. Warrant Agent. The Company hereby appoints ............. ............................................ as Warrant Agent of the Company in respect of the Warrants and the Warrant Certificates upon the terms and subject to the conditions herein set forth; and ............................... .................. hereby accepts such appointment. The Warrant Agent shall have the powers and authority granted to and conferred upon it in the Warrant Certificates and hereby and such further powers and authority to act on behalf of the Company as the Company may hereafter grant to or confer upon it. All of the terms and provisions with respect to such powers and authority contained in the Warrant Certificates are subject to and governed by the terms and provisions hereof. The Warrant Agent, from time to time upon receipt of a request of the Company, shall promptly appoint one or more agents with power to act on its behalf and subject to its direction in the countersigning and delivery of Warrant Certificates and in connection with registrations of transfers and exchanges of Warrant Certificates as fully to all intents and purposes as though each such agent had been expressly authorized to countersign and deliver such Warrant Certificates, and in connection with 5 9 the exercise of Warrants. For all purposes of this Agreement, the countersignature and delivery of Warrant Certificates by any such agent pursuant to this Section shall be deemed to be the countersignature and delivery of such Warrant Certificates "by the Warrant Agent." SECTION 5.02. Conditions of Warrant Agent's Obligations. The Warrant Agent accepts its obligations herein set forth upon the terms and conditions hereof, including the following, to all of which the Company agrees and to all of which the rights hereunder of the holders from time to time of the Warrant Certificates shall be subject: (a) Compensation and Indemnification. The Company agrees promptly to pay the Warrant Agent (including any agent appointed pursuant to Section 5.01) the compensation to be agreed upon with the Company for all services rendered by the Warrant Agent and to reimburse the Warrant Agent for reasonable out-of-pocket expenses (including counsel fees) incurred by the Warrant Agent in connection with the services rendered hereunder by the Warrant Agent. The Company also agrees to indemnify the Warrant Agent for, and to hold it harmless against, any loss, liability or expense incurred without negligence or bad faith on the part of the Warrant Agent, arising out of or in connection with its acting as Warrant Agent hereunder, as well as the costs and expenses of defending against any claim of liability in the premises. (b) Agent for the Company. In acting under this Warrant Agreement and in connection with the Warrant Certificates, the Warrant Agent is acting solely as agent of the Company and does not assume any obligation or relationship of agency or trust for or with any of the owners or holders of the Warrant Certificates. (c) Counsel. The Warrant Agent may consult with counsel satisfactory to it, and the advice of such counsel shall be full and complete authorization and protection in respect of any action taken, suffered or omitted by it hereunder in good faith and in accordance with the advice of such counsel. (d) Documents. The Warrant Agent shall be protected and shall incur no liability for or in respect of any action taken or thing suffered by it in reliance upon any Warrant Certificates, notice, direction, consent, certificate, affidavit, statement or other paper or document reasonably believed by it to be genuine and to have been presented or signed by the proper parties. (e) Certain Transactions. The Warrant Agent, and its officers, directors and employees, may become the owner of, or acquire any interest in, any Warrant Certificates, with the same rights that it or they would have if it were not the Warrant Agent hereunder, and, to the extent permitted by applicable law, it or they may engage or be interested in any financial or other transaction with the Company and may act on, or as depositary, trustee or agent for, any committee or body of holders of Warrant Debt Securities or other obligations of the Company as freely as if it were not the Warrant Agent hereunder. (f) No Liability for Interest. The Warrant Agent shall not have any liability for interest on any monies at any time received by it pursuant to any of the provisions of this Agreement or of the Warrant Certificates. (g) No Liability for Invalidity. The Warrant Agent shall not incur any liability with respect to the validity of this Agreement or any of the Warrant Certificates. (h) No Responsibility for Representations. The Warrant Agent shall not be responsible for any of the recitals or representations herein or in the Warrant Certificates contained (except as to the Warrant Agent's countersignature thereon), all of which are made solely by the Company. (i) No Implied Obligations. The Warrant Agent shall be obligated to perform such duties as are herein and in the Warrant Certificates specifically set forth and no implied duties or obligations shall be read into this Agreement or the Warrant Certificates against the Warrant 6 10 Agent. The Warrant Agent shall not be under any obligation to take any action hereunder which may tend to involve it in any expense or liability, the payment of which within a reasonable time is not, in its reasonable opinion, assured to it. The Warrant Agent shall not be accountable or under any duty or responsibility for the use by the Company of any of the Warrant Certificates authenticated by the Warrant Agent and delivered by it to the Company pursuant to this Agreement or for the application by the Company of the proceeds of the Warrant Certificates. The Warrant Agent shall have no duty or responsibility in case of any default by the Company in the performance of its covenants or agreements contained herein or in the Warrant Certificates or in the case of the receipt of any written demand from a holder of a Warrant Certificate with respect to such default, including, without limiting the generality of the foregoing, any duty or responsibility to initiate or attempt to initiate any proceedings at law or otherwise or, except as provided in Section 6.02 hereof, to make any demand upon the Company. SECTION 5.03. Resignation and Appointment of Successor. (a) The Company agrees, for the benefit of the holders from time to time of the Warrant Certificates, that there shall at all times be a Warrant Agent hereunder until all the Warrant Certificates are no longer exercisable. (b) The Warrant Agent may at any time resign as such agent by giving written notice to the Company of such intention on its part, specifying the date on which its desired resignation shall become effective; provided that such date shall not be less than three months after the date on which such notice is given unless the Company agrees to accept less notice. The Warrant Agent hereunder may be removed at any time by the filing with it of an instrument in writing signed by or on behalf of the Company and specifying such removal and the date when it shall become effective. Such resignation or removal shall take effect upon the appointment by the Company, as hereinafter provided, of a successor Warrant Agent (which shall be a corporation organized and doing business under the laws of the United States of America or of any State and authorized under such laws to act as warrant agent) and the acceptance of such appointment by such successor Warrant Agent. The obligation of the Company under Section 5.02(a) shall continue to the extent set forth therein notwithstanding the resignation or removal of the Warrant Agent. (c) In case at any time the Warrant Agent shall resign, or shall be removed, or shall become incapable of acting, or shall be adjudged a bankrupt or insolvent, or shall file a petition seeking relief under Title 11 of the United States Code, as now constituted or hereafter amended, or under any other applicable Federal or State bankruptcy law or similar law or make an assignment for the benefit of its creditors or consent to the appointment of a receiver or custodian of all or any substantial part of its property, or shall admit in writing its inability to pay or meet its debts as they mature, or if a receiver or custodian of it or of all or any substantial part of its property shall be appointed, or if an order of any court shall be entered for relief against it under the provisions of Title 11 of the United States Code, as now constituted or hereafter amended, or under any other applicable Federal or State bankruptcy or similar law, or if any public officer shall have taken charge or control of the Warrant Agent or of its property or affairs, for the purpose of rehabilitation, conservation or liquidation, a successor Warrant Agent, qualified as aforesaid, shall be appointed by the Company by an instrument in writing, filed with the successor Warrant Agent. Upon the appointment as aforesaid of a successor Warrant Agent and acceptance by the successor Warrant Agent of such appointment, the Warrant Agent so superseded shall cease to be Warrant Agent hereunder. (d) Any successor Warrant Agent appointed hereunder shall execute, acknowledge and deliver to its predecessor and to the Company an instrument accepting such appointment hereunder, and thereupon such successor Warrant Agent, without any further act, deed or conveyance, shall become vested with all the authority, rights, powers, trusts, immunities, duties and obligations of such predecessor with like effect as if originally named as Warrant Agent hereunder, and such predecessor, upon payment of its charges and disbursements then unpaid, shall thereupon become obligated to transfer, deliver and pay over, and such successor Warrant Agent shall be entitled to receive, all monies, securities and other property on deposit with or held by such predecessor, as Warrant Agent hereunder. 7 11 (e) Any corporation into which the Warrant Agent hereunder may be merged or converted or any corporation with which the Warrant Agent may be consolidated, or any corporation resulting from any merger, conversion or consolidation to which the Warrant Agent shall be a party, or any corporation to which the Warrant Agent shall sell or otherwise transfer all or substantially all the assets and business of the Warrant Agent, provided that it shall be qualified as aforesaid, shall be the successor Warrant Agent under this Agreement without the execution or filing of any paper or any further act on the part of any of the parties hereto. SECTION 5.04. Payment of Taxes. The Company will pay all stamp and other duties, if any, to which, under the laws of the United States of America or any State, this Agreement or the original issuance of the Warrant Certificates may be subject. ARTICLE VI. MISCELLANEOUS Section 6.01. Amendment. This Agreement may be amended by the parties hereto, without the consent of the holder of any Warrant Certificate, for the purpose of curing any ambiguity, or of curing, correcting or supplementing any defective provision contained herein, or making any other provisions with respect to matters or questions arising under this Agreement as the Company and the Warrant Agent may deem necessary or desirable; provided that such action shall not adversely affect the interests of the holders of the Warrant Certificates. SECTION 6.02. Notices and Demands to the Company and Warrant Agent. If the Warrant Agent shall receive any notice or demand addressed to the Company by the holder of a Warrant Certificate pursuant to the provisions of the Warrant Certificates, the Warrant Agent shall promptly forward such notice or demand to the Company. SECTION 6.03. Addresses. Any communications from the Company to the Warrant Agent with respect to this Agreement shall be addressed to ............ ................................................................... and any communications from the Warrant Agent to the Company with respect to this Agreement shall be addressed to J. C. Penney Company, Inc., 6501 Legacy Drive, Plano, Texas 75024-3698, Attention: Treasurer (or such other address as shall be specified in writing by the Warrant Agent or by the Company). SECTION 6.04. Applicable Law. The validity, interpretation and performance of this Agreement and each Warrant Certificate issued hereunder and of the respective terms and provisions thereof shall be governed by the laws of the State of New York. SECTION 6.05. Delivery of Prospectus. The Company will furnish to the Warrant Agent or any agent appointed by it in accordance with Section 5.01 sufficient copies of a prospectus and prospectus supplement, as the case may be, relating to the Warrant Debt Securities deliverable upon exercise of Warrants for delivery thereof to the holders of the Warrant Certificate evidencing such Warrants, prior to or concurrently with the delivery of the Warrant Debt Securities issued upon such exercise. SECTION 6.06. Obtaining of Governmental Approvals. The Company will from time to time take all action which may be necessary to obtain and keep effective any and all permits, consents and approvals of governmental agencies and authorities and securities acts filings under United States Federal and State laws (including without limitation the maintenance of the effectiveness of a registration statement in respect of the Warrants and Warrant Debt Securities under the Securities Act of 1933), which may be or become requisite in connection with the issuance, sale, transfer and delivery of the Warrant Certificates, the exercise of the Warrants and the issuance, sale, transfer and delivery of the Warrant Debt Securities issued upon exercise of the Warrants. 8 12 SECTION 6.07. Persons Having Rights under Warrant Agreement. Nothing in this Agreement expressed or implied and nothing that may be inferred from any of the provisions hereof is intended, or shall be construed, to confer upon, or give to, any person or corporation other than the Company, the Warrant Agent and its agents and the holders of the Warrant Certificates any right, remedy or claim under or by reason of this Agreement or of any covenant, condition, stipulation, promise or agreement hereof; and all covenants, conditions, stipulations, promises and agreements in this Agreement contained shall be for the sole and exclusive benefit of the Company and the Warrant Agent and its agents and their successors and of the holders of the Warrant Certificates. SECTION 6.08. Headings. The descriptive headings of the several Articles and Sections of this Agreement are inserted for convenience only and shall not control or affect the meaning or construction of any of the provisions hereof. SECTION 6.09. Counterparts. This Agreement may be executed in any number of counterparts, each of which so executed shall be deemed to be an original; but such counterparts shall together constitute but one and the same instrument. SECTION 6.10. Inspection of Agreement. A copy of this Agreement shall be available at all reasonable times at the principal office of the Warrant Agent at ....................... and at the main office of the Company, 6501 Legacy Drive, Plano, Texas 75024-3698, for inspection by the holder of any Warrant Certificate. The Warrant Agent or the Company may require such holder to submit his Warrant Certificate for inspection by it. IN WITNESS WHEREOF, J. C. Penney Company, Inc. has caused this Agreement to be signed by one of its duly authorized officers, and its corporate seal to be affixed hereunto, and the same to be attested by its Secretary or one of its Assistant Secretaries; and ............................. .................. has caused this Agreement to be signed by one of its duly authorized officers, and its corporate seal to be affixed hereunto, and the same to be attested by ......................., all as of the day and year first above written. J. C. PENNEY COMPANY, INC. BY ..................................... Attest: ................................. ..................................... By ..................................... Attest: ................................. 9 13 EXHIBIT A (FORM OF WARRANT CERTIFICATE) (FRONT FACE OF WARRANT CERTIFICATE) (Form of Legend if Debt Securities with Warrants Prior to ............ this Warrant cannot be which are not immediately detachable: transferred or exchanged unless attached to a (Title of Debt Securities).) (Form of Legend if Warrants are not immediately Prior to ............ this Warrant cannot be exercisable: exercised in whole or in part.)
EXERCISABLE ONLY IF COUNTERSIGNED BY OR ON BEHALF OF THE WARRANT AGENT WARRANT CERTIFICATE REPRESENTING WARRANTS TO PURCHASE (Title of Warrant Debt Securities) as described herein. J. C. PENNEY COMPANY, INC. PURCHASE WARRANT FOR (TITLE OF WARRANT DEBT SECURITIES) VOID AFTER THE CLOSE OF BUSINESS ON .............., 19.... (No.) ............. Warrants This certifies that (the bearer is the) (............. or registered assigns is the registered) owner of the above indicated number of Warrants, each Warrant entitling such-bearer-owner-to purchase, at any time (after the close of business on ............., 19.... and) on or before the close of business on .............., 19...., $............. principal amount of (title of Warrant Debt Securities) ("Warrant Debt Securities"), of J. C. Penney Company, Inc. ("Company"), issued and to be issued under the Indenture (as hereinafter defined), on the following basis:* (On .............., 19...., the exercise price of each Warrant is $.............; during the period from .............., 19...., through and including .............., 19...., the exercise price of each Warrant will be $............. plus-accrued amortization of the original issue discount-accrued interest-from .............., 19....; on .............., 19.... the exercise price of each Warrant will be $.............; during the period from .............., 19...., through and including .............., 19...., the exercise price of each Warrant will be $............. plus-accrued amortization of the original issue discount-accrued interest-from .............., 19....; (in each case, the original issue discount will be amortized at a ....% annual rate computed on a-semiannual-annual-basis, using a 360-day year consisting of twelve 30-day months) ("Warrant Price"). (The original issue discount for each $............. principal amount of Warrant Debt Securities is $..............) The (bearer) (registered owner) may exercise the Warrants evidenced hereby by paying in full, in lawful money of the United States of America, (in cash or by certified check or official bank check or by bank wire transfer) (by bank wire transfer), in each case in (immediately available) funds, the Warrant Price for each Warrant exercised to .................. (or .............) and by surrendering this Warrant Certificate within five business days of such payment, with the purchase form on the back hereof properly completed and duly executed, at the office of ............. (or ................................,) currently at the address specified on the reverse hereof and upon compliance with and subject to the conditions set forth herein and in the Warrant Agreement (as hereinafter defined). - ------------------ * Complete and modify the following provisions as appropriate to reflect the exact terms of the Offered Warrants and the Warrant Debt Securities. A-1 14 Any whole number of Warrants evidenced by this Warrant Certificate may be exercised to purchase Warrant Debt Securities in registered form in denominations of $............. and any integral multiples thereof. Upon any exercise of fewer than all of the Warrants evidenced by this Warrant Certificate, there shall be issued to the (bearer) (registered owner) hereof a new Warrant Certificate evidencing the number of Warrants remaining unexercised. This Warrant Certificate is issued under and in accordance with the Warrant Agreement dated as of .............., 19.... ("Warrant Agreement"), between the Company and ............. ("Warrant Agent") and is subject to the terms and provisions contained in the Warrant Agreement, to all of which terms and provisions the (bearer) (registered owner) of this Warrant Certificate consents by acceptance hereof. Copies of the Warrant Agreement are on file at the principal office of the Warrant Agent at ............. and the main office of the Company, 6501 Legacy Drive, Plano Texas 75024-3698. The Warrant Debt Securities to be issued and delivered upon the exercise of the Warrants evidenced by this Warrant Certificate will be issued under and in accordance with an Indenture dated as of April 1, 1994 ("Indenture"), between the Company and Bank of America National Trust and Savings Association, as Trustee, and will be subject to the terms and provisions contained in the Indenture. Copies of the Indenture, including the form of the Warrant Debt Securities, are on file at the corporate trust office of said Trustee at ...................... (and at ..................). (If Offered Debt Securities with bearer Warrants which are not immediately detachable--Prior to ..........., 19.... this Warrant Certificate may be exchanged or transferred only together with the (title of Offered Debt Securities) ("Offered Debt Securities") to which this Warrant Certificate was initially attached, and only for the purpose of effecting or in conjunction with an exchange or transfer of such Offered Debt Security. After such date, this (If Offered Debt Securities with bearer Warrants which are immediately detachable--This) Warrant Certificate, and all rights hereunder may be transferred by delivery and the Company and the Warrant Agent and its agents may treat the bearer hereof as the owner for all purposes.) (If Offered Debt Securities with registered Warrants which are not immediately detachable--Prior to .............., 19.... this Warrant Certificate may be exchanged or transferred only together with the (title of Offered Debt Securities) ("Offered Debt Securities") to which this Warrant Certificate was initially attached, and only for the purpose of effecting or in conjunction with an exchange or transfer of such Offered Debt Security. After such date, this (If Offered Debt Securities with registered Warrants which are immediately detachable--This) Warrant Certificate may be transferred when surrendered at the office of ...................... (or ............. ) by the registered owner or his assigns, in person or by an attorney duly authorized in writing, in the manner and subject to the limitations provided in the Warrant Agreement.) (If Offered Debt Securities with Warrants which are not immediately detachable--Except as provided in the immediately proceeding paragraph, after) (If Offered Debt Securities with Warrants which are immediately detachable After) countersignature by or on behalf of the Warrant Agent and prior to the expiration of this Warrant Certificate, this Warrant Certificate may be exchanged at the office of .................... (or ....................) for Warrant Certificates representing the same aggregate number of Warrants. This Warrant Certificate shall not entitle the (bearer) (registered owner) hereof to any of the rights of a holder of the Warrant Debt Securities, including, without limitation, the right to receive payment of the principal of (and premium, if any) or interest, if any, on the Warrant Debt Securities or to enforce any of the covenants of the Indenture. A-2 15 This Warrant Certificate shall not be valid or obligatory for any purpose until countersigned by or behalf of the Warrant Agent. Dated as of .............., 19.... J. C. PENNEY COMPANY, INC. By ..................................... Attest: By ............................... Countersigned by or on behalf of: ........................................ As Warrant Agent By ..................................... Authorized Signature A-3 16 (BACK FACE OF WARRANT CERTIFICATE) (INSTRUCTIONS FOR EXERCISE OF WARRANT) To exercise the Warrants represented hereby, the Warrantholder should pay (in cash or by certified check or official bank check or by bank wire transfer) (by bank wire transfer), in each case in (immediately available) funds, the Warrant Price in full for Warrants exercised to (................... .........) (or .............), which payment should specify the name of the Warrantholder and the number of Warrants exercised by such Warrantholder. In addition, the Warrantholder should complete the information required below and present in person or mail by registered mail this Warrant Certificate to ...... .............. (or ............) at the address set forth below. This Warrant Certificate, completed and duly executed, must be received by ................. ........... (or .............) within five business days of the payment. (FORM OF ELECTION TO PURCHASE) (TO BE EXECUTED UPON EXERCISE OF WARRANT.) The undersigned hereby irrevocably elects to exercise .... Warrants, represented by this Warrant Certificate, to purchase $............. principal amount of the (title of Warrant Debt Securities) ("Warrant Debt Securities") of J. C. Penney Company, Inc. and represents that he has tendered payment for such Warrant Debt Securities (in cash or by certified check or official bank check or by bank wire transfer) (by bank wire transfer), in each case in (immediately available) funds to the order of J. C. Penney Company, Inc., c/o ...................... (or .....................), in the amount of $......... in accordance with the terms hereof. The undersigned requests that said principal amount of Warrant Debt Securities be in fully registered form, in such authorized denominations, registered in such names and delivered, all as specified in accordance with the instructions set forth below. If said principal amount of Warrant Debt Securities is less than all of the Warrant Debt Securities purchasable hereunder, the undersigned requests that a new Warrant Certificate representing the remaining balance of the Warrants evidenced hereby be issued and delivered to the undersigned unless otherwise specified in the instructions below. Dated: Name ................................... (Please Print) ..................................... (Insert Social Security or Other Identifying Number of Holder) Address ................................ ................................ Signature .............................. This Warrant may be exercised at the following addresses: (Instructions as to form and delivery of Warrant Debt Securities and/or Warrant Certificates) A-4 EX-5 13 OPINION OF C.R. LOTTER 1 Exhibit 5 April 26, 1994 Board of Directors J. C. Penney Company, Inc. 6501 Legacy Drive Plano, Texas 75024-3698 Dear Sirs: As General Counsel of J. C. Penney Company, Inc., a Delaware corporation ("Company"), I am familiar with the Restated Certificate of Incorporation of the Company, as amended, and its By-laws, as amended. I am also familiar with the corporate proceedings heretofore taken and the additional proceedings proposed to be taken in connection with the issuance and sale from time to time of up to $1,500,000,000 aggregate principal amount of debt securities ("Debt Securities") issuable under an Indenture dated as of April 1, 1994 ("Indenture") between the Company and Bank of America National Trust and Savings Association, Trustee ("Trustee"), each series of which will be offered on terms to be determined at the time of sale. The Debt Securities may be offered with warrants ("Warrants") to purchase Debt Securities, any such Warrants to be issued pursuant to a warrant agreement ("Warrant Agreement") to be entered between the Company and a warrant agent ("Warrant Agent") (Debt Securities and Warrants being collectively called "Securities"). I have examined the Registration Statement on Form S-3 in the form being filed by the Company with the Securities and Exchange Commission on this date, for the registration under the Securities Act of 1933, as amended, of the Securities for an offering to be made on a continuous or delayed basis pursuant to the provisions of Rule 415. I have also examined such other documents and records as I have deemed appropriate for the purpose of this opinion. Based upon the foregoing, I am of the opinion as follows: (i) The execution and delivery of the Indenture has been validly authorized, and the Indenture constitutes a valid and binding obligation of the Company in accordance with its terms except as the same may be limited by bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws of 2 general applicability relating to or affecting creditors' rights and to general equity principles. (ii) Subject to the proposed additional proceedings being taken as now contemplated by the Company prior to the issuance of the Debt Securities, when the Debt Securities, including the Debt Securities issuable upon due exercise of the Warrants in accordance with the terms of the Warrant Agreement, have been duly executed on behalf of the Company, authenticated by or on behalf of the Trustee, issued and sold as described in the Registration Statement, including the Prospectus and Prospectus Supplement relating thereto, and delivered by the Company in accordance with the Indenture, such Debt Securities will constitute valid and binding obligations of the Company in accordance with their respective terms and the terms of the Indenture except as limited by bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws of general applicability relating to or affecting creditors' rights and to general equity principles. (iii) Subject to the proposed additional proceedings being taken as now contemplated by the Company prior to the issuance of the Warrants, and to the due execution and delivery of the Warrant Agreement relating to the Warrants to be issued, when the warrant certificates evidencing such Warrants ("Warrant Certificates") shall have been duly executed on behalf of the Company and countersigned by the Warrant Agent, issued and sold as described in the Registration Statement, including the Prospectus and Prospectus Supplement relating thereto, and such Warrant Certificates shall have been delivered by the Company in accordance with the Warrant Agreement, the Warrant Certificates will constitute valid and binding obligations of the Company in accordance with their respective terms and the terms of the Warrant Agreement except as limited by bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws of general applicability relating to or affecting the enforcement of creditors' rights and to general equity principles. I hereby consent to the reference to me under the heading "Validity of Securities" in the Prospectus included in said Registration Statement and to the filing of this opinion as an exhibit to said Registration Statement. Very truly yours, /s/ C. R. Lotter - ------------------------ C. R. Lotter General Counsel EX-23.A 14 CONSENT OF KPMG PEAT MARWICK 1 EXHIBIT 23(a) CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS To the Stockholders and Board of Directors J. C. PENNEY COMPANY, INC. We consent to the use of our reports incorporated herein by reference and to the reference to our firm under the heading "Experts" in the prospectus. Our reports refer to the adoption of the Financial Accounting Standards Board's Statement of Financial Accounting Standards No. 106, Employers' Accounting --------------------- for Postretirement Benefits Other Than Pensions, in 1991, and to the adoption - ----------------------------------------------- of the Financial Accounting Standards Board's Statement of Financial Accounting Standards No. 109, Accounting for Income Taxes, in 1993. --------------------------- /s/ KPMG PEAT MARWICK ----------------------------- KPMG PEAT MARWICK Dallas, Texas April 25, 1994 EX-24 15 POWERS OF ATTORNEY 1 Exhibit 24 POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that each of the undersigned directors and officers of J. C. PENNEY COMPANY, INC., a Delaware corporation ("Company"), which will file with the Securities and Exchange Commission, Washington, D.C., under the provisions of the Securities Act of 1933, a Registration Statement on Form S-3 (or any appropriate form then in effect) for the registration of the Company's debt securities (which may include debt securities, together with warrants or other rights to purchase or otherwise acquire debt securities), hereby constitutes and appoints C. R. Lotter, D. A. McKay, and R. E. Northam, and each of them, his or her true and lawful attorneys-in-fact and agents, with full power to each of them to act without the others, for him or her and in his or her name, place, and stead, in any and all capacities, to sign said Registration Statement and Prospectus and Prospectus Supplements, which are about to be filed, and any and all subsequent amendments thereto (including, without limitation, any post-effective amendments thereto ("Registration Statement")) and to file said Registration Statement so signed, with all exhibits thereto, and any and all documents in connection therewith, and to appear before the Commission in connection with any matter relating to said Registration Statement, hereby granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform any and all acts and things requisite and necessary to be done in and about the premises as fully and to all intents and purposes as he or she might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or any of them, may lawfully do or cause to be done by virtue hereof. IN WITNESS WHEREOF, the undersigned have executed this Power of Attorney as of the 9th day of March, 1994. /s/ W. R. Howell /s/ R. E. Northam - ------------------------------ -------------------------------- W. R. Howell R. E. Northam Chairman of the Board Executive Vice President and (principal executive officer); Chief Financial Officer Director (principal financial officer) /s/ L. A. Gispanski -------------------------------- L. A. Gispanski Vice President and Controller (principal accounting officer)
2 /s/ M. A. Burns /s/ A. K. Pye - ------------------------------ --------------------------- M. A. Burns A. K. Pye Director Director /s/ C. H. Chandler /s/ C. S. Sanford, Jr. - ------------------------------ --------------------------- C. H. Chandler C. S. Sanford, Jr. Director Director /s/ V. E. Jordan, Jr. /s/ J. D. Williams - ------------------------------ --------------------------- V. E. Jordan, Jr. J. D. Williams Director Director /s/ George Nigh /s/ Boris Yavitz - ------------------------------ --------------------------- George Nigh Boris Yavitz Director Director /s/ J. C. Pfeiffer - ------------------------------ J. C. Pfeiffer Director
3 J. C. PENNEY COMPANY, INC. CERTIFICATE OF ASSISTANT SECRETARY I, T. M. Comerford, an Assistant Secretary of J. C. PENNEY COMPANY, INC., a Delaware corporation ("Company"), DO HEREBY CERTIFY that attached hereto as Exhibit A is a true and correct copy of a resolution duly adopted by the Board of Directors of the Company at a meeting duly called and held on March 9, 1994, at which a quorum was present and acting throughout, and said resolution has not been modified or rescinded but remains in full force and effect on the date hereof. IN WITNESS WHEREOF, I have hereunto affixed my signature and the corporate seal of the Company this 25th day of April, 1994. /s/ T. M. COMERFORD Assistant Secretary [SEAL] 4 EXHIBIT A RESOLVED that in connection with the issuance and sale in the international capital markets or in the United States, or in a combination of both, of Securities registered with the Securities and Exchange Commission, L. A. Gispanski, C. R. Lotter, D. A. McKay, and R. E. Northam be, and each of them, with full power to act without the others, hereby is, appointed as the attorney for the Company, with full power of substitution and resubstitution, for and in the name, place, and stead of the Company, to sign and file a Registration Statement on Form S-3 (or any appropriate form then in effect), as approved by the Special Finance Comittee, for the registration under the 1933 Act of such Securities, and any and all subsequent amendments (including, without limitation, any and all post-effective amendments) to said Registration Statement, and any and all applications and other documents to be filed with the Securities and Exchange Commission pertaining to such Securities, or said Registration Statement, and with full power and authority to do and perform any and all things whatsoever requisite and necessary to be done in the premises, hereby ratifying and approving the acts of said attorney or any such substitute; that C. R. Lotter be, and he hereby is, appointed agent for service of process in connection with said Registration Statement and any amendments thereto; and that the officers of the Company be, and each of them hereby is, authorized in the name and on behalf of the Company, to execute a power of attorney evidencing the foregoing appointment; EX-25 16 FORM T-1 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ______________________ FORM T-1 STATEMENT OF ELIGIBILITY AND QUALIFICATION UNDER THE TRUST INDENTURE ACT OF 1939 OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE ______________________ BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION (EXACT NAME OF TRUSTEE AS SPECIFIED IN ITS CHARTER) 94-1687665 (STATE OF INCORPORATION (I.R.S. EMPLOYER IF NOT A NATIONAL BANK) IDENTIFICATION NO.) LOS ANGELES HEADQUARTERS: 333 SOUTH BEAUDRY AVENUE 90017 LOS ANGELES, CALIFORNIA (ZIP CODE) HEAD OFFICE: 555 CALIFORNIA STREET 94120 SAN FRANCISCO, CALIFORNIA (ZIP CODE) ______________________ J.C. PENNEY COMPANY, INC. (EXACT NAME OF OBLIGOR AS SPECIFIED IN ITS CHARTER) DELAWARE 13-5583779 (STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.) 6501 LEGACY DRIVE PLANO, TEXAS 75024-3698 (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE) ______________________ DEBT SECURITIES (TITLE OF THE INDENTURE SECURITIES) ================================================================================ 2 FORM T-1 1. GENERAL INFORMATION. Furnish the following information as to the trustee: (a) Name and address of each examining or supervising authority to which it is subject. Comptroller of the Currency Washington, D.C. Federal Deposit Insurance Corporation Washington, D.C. Federal Reserve Bank of San Francisco (Twelfth District) San Francisco, California Board of Governors of the Federal Reserve System Washington, D.C. (b) Whether it is authorized to exercise corporate trust powers. Yes. 2. AFFILIATIONS WITH OBLIGOR AND UNDERWRITERS. If the obligor or any underwriter for the obligor is an affiliate of the trustee, describe each affiliation. None. In answering this item the trustee has relied in part on information furnished by the obligor and the underwriters, and the trustee disclaims responsibility for the accuracy or completeness of such information. Trustee has also examined its own books and records for the purpose of answering this item. -2- 3 16. LIST OF EXHIBITS List below all exhibits filed as a part of this statement of eligibility and qualification. EXHIBIT A Articles of Association of Bank of America National Trust and Savings Association (formerly Bank of Italy). By-Laws of Bank of America National Trust and Savings Association. *EXHIBIT B Copy of Charter under date of March 1, 1927 authorizing Bank of Italy National Trust and Savings Association to commence business of banking. *EXHIBIT C Copy of authorization of the Federal Reserve Board issued under date of November 1, 1930, granting Bank of America National Trust and Savings Association the right to act in a fiduciary capacity. *EXHIBIT D Certificate issued by the Comptroller of the Currency under date of November 1, 1930 evidencing consolidation of Bank of Italy National Trust and Savings Association and Bank of America of California under the corporate title of Bank of America National Trust and Savings Association. *EXHIBIT E Copy of Charter under date of March 31, 1969, authorizing B.A. National Bank to commence business of banking. *EXHIBIT F Copy of certificate issued by the Comptroller of the Currency under date of April 1, 1969, evidencing the merger of Bank of America National Trust and Savings Association into B.A. National Bank under the title "Bank of America National Trust and Savings Association". -3- 4 *EXHIBIT G A copy of the approval for "Bank of America National Trust and Savings Association" to operate the presently existing branches of Bank of America National Trust and Savings Association. EXHIBIT H Consent of Bank of America National Trust and Savings Association required by Section 321 (b) of the Act. EXHIBIT I Copy of the latest Report of Condition at the close of business on December 31, 1993 of the Trustee published in response to call made by Comptroller of Currency. EXHIBIT J A copy of any order pursuant to which the foreign trustee is authorized to act as sole trustee under indentures qualified or to be qualified under the Act. (Not Applicable) EXHIBIT K Foreign trustees are required to furnish a consent to service of process (see Rule 10a-4 under the Act). (Not Applicable) *Exhibits prefaced by this designation are filed with Securities and Exchange Commission as exhibits to Statement of Eligibility and Qualification under the Trust Indenture Act of 1939, as amended, in connection with the Registration Statement of Borden Inc., File No. 2-50369, under the same exhibit number and are incorporated herein by reference. -4- 5 SIGNATURES Pursuant to the requirements of the Trust Indenture Act of 1939, as amended, the Trustee, Bank of America National Trust and Savings Association, a corporation organized and existing under the laws of the United States of America, has duly caused this statement of eligibility and qualification to be signed on its behalf by the undersigned, thereunto duly authorized, and its seal to be hereunto affixed and attested, all in the City and County of Los Angeles, State of California, on the 25th day of April, 1994 . BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION By:_________________________________ A. Soderholm Vice President (Name and Title) Attest:____________________________ M. Lee Assistant Secretary 6 ARTICLES OF ASSOCIATION AND BYLAWS ______________________________ BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION ARTICLES: LAST AMENDED JUNE 23, 1992 BYLAWS: LAST AMENDED OCTOBER 4, 1993 7 INDEX
Page ---- Articles of Association 1 - ----------------------- By-laws - ------- Article I Offices 4 Article II Meetings of Shareholders 4 Article III Directors 6 Article IV Meetings of the Board of Directors 7 Article V Committees 9 Article VI Advisory Directors and 14 Advisory Boards Article VII Officers 15 Article VIII Capital Stock--Certificates 17 of Stock Article IX Indemnification 19 Article X Emergency 21 Article XI Miscellaneous 22
-i- 8 ARTICLES OF ASSOCIATION OF BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION FIRST. The title of the Association shall be "Bank of America National Trust and Savings Association." SECOND. The places where the banking houses and offices of the Association shall be located and its operations of discount and deposit carried on, and its general business conducted, shall be in the State of California, its Head Office being in the City and County of San Francisco, State of California, with such branches as may be authorized and established. The Board of Directors shall have the power to move any of the branches of the Association from one location to another as may be authorized by law or regulation, or to discontinue the operations of any of such branches. The Head Office of the Association and any of its branches may, pursuant to appropriate action taken by the Directors, be moved from one location to another, as may be authorized by law or regulation of the Comptroller of the Currency, and without action by the shareholders. THIRD. BOARD OF DIRECTORS. The Board of Directors shall consist of such number of directors, not less than five nor more than twenty-five, as shall be determined from time to time by resolution of the Board of Directors or by the shareholders at any annual or special meeting. A director of the Association shall not be personally liable to the Association or its shareholders for monetary damages for breach of fiduciary duty as a director, except for liability (i) for any breach of the director's duty of loyalty to the Association or its shareholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) for willful or negligent violation of Sections 56 or 60 of Title 12 of the United States Code, or (iv) for any transaction from which the director derives any improper personal benefit. Any repeal or modification of the foregoing sentence shall not result in any liability for a director with respect to any action or omission occurring prior to such repeal or modification. FOURTH. The regular annual meeting of the shareholders of the Association shall be held in the city of its Head Office on such date as shall be from time to time established by bylaws duly adopted by the Association. At such meeting a Board of Directors shall be elected, but if no election shall be held on that day, it may be held at any regular adjournment thereof or at a subsequent special meeting called in accordance with the provisions of the laws of the United States. 9 FIFTH. The amount of authorized capital stock of the Association shall be $700,000,000, divided into 35,000,000 shares of common stock at the par value of twenty dollars ($20.00) each. The said capital stock may be increased or decreased from time to time in accordance with the provisions of the banking laws of the United States. In the event of an increase in said capital stock by the sale of additional shares thereof, except such sale as shall be made under the terms of any Stock Options Plan for officers and employees which shall have been approved by the shareholders, each shareholder shall be entitled to subscribe for such additional shares in proportion to the number of shares of said capital stock owned by him of record on such date before the stock is increased as may be reasonably fixed by the Board of Directors or the shareholders. SIXTH. (a) OFFICERS. -- The Board of Directors shall designate and elect a Director to be Chairman of the Board, who shall perform such duties as may be designated by the Board. The Board shall elect one of its members President of the Association and may elect one or more of its members Vice-Chairman or Vice-Chairmen of the Board. The Directors shall have power to elect one or more Vice Presidents who shall be authorized, in the absence or inability of the President from any cause, to perform all acts and duties pertaining to the office of President except such as the President only is authorized by law to perform; and to elect or appoint a Cashier, a Secretary, and such other officers and clerks as may be required to transact the business of the Association; and to fix the salaries to be paid to them and to continue them in office or to dismiss them as in the opinion of a majority of the Board the interests of the Association may demand. (b) POWERS OF BOARD OF DIRECTORS. -- The Board of Directors shall have the power to define the duties of the officers and clerks of the Association, to require bonds from them and to fix the penalty thereof; to regulate the manner in which election of Directors shall be held, and to appoint judges of the elections; subject to the approval of the Comptroller of the Currency and such other approvals as may be required by law, to issue capital notes, capital debentures or similar instruments in such amounts and under such terms and conditions as they may deem proper; to make all bylaws that it may be proper for them to make, not inconsistent with law and these Articles of Association, for the general regulation of the business of the Association and the management of its affairs; and generally to do and perform all acts that it may be legal for a Board of Directors to do and perform according to law and within the limits of these Articles of Association. SEVENTH. The corporate existence of the Association shall continue until terminated in accordance with the laws of the United States. 10 EIGHTH. AMENDMENTS TO ARTICLES OF ASSOCIATION AND SPECIAL MEETINGS OF SHAREHOLDERS. Except as otherwise specifically provided by these Articles of Association or by statute, these Articles of Association may be amended at any regular or special meeting of shareholders by a majority of the votes to which the holders of the shares of capital stock at the time outstanding are entitled. Except as otherwise specifically provided by statute, special meetings of the shareholders may be called for any purpose at any time by the Board of Directors or by the holders of at least ten percent of the then outstanding shares of any class. Every such special meeting shall be called by mailing, not less than ten days before the time fixed for the meeting, to all shareholders of record entitled to act and vote at such meeting at their respective addresses as shown on the books of the Association, a notice stating the purpose of the meeting. Such notice may be waived in writing. 11 BYLAWS OF BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION ARTICLE I OFFICES Section 1. OFFICES. The Bank may have offices at such places where the Bank is permitted by law to have offices as the Board of Directors may from time to time determine or the business of the Bank may require. ARTICLE II MEETINGS OF SHAREHOLDERS Section 1. PLACE OF MEETING. The regular annual meeting of the shareholders of the Bank shall be held in the City of San Francisco, State of California at such place therein as shall be designated in the notice of meeting or at such other place either within or without the State of California as shall be designated in the notice of meeting. Special meetings of the shareholders of the Bank shall be held at such place as may be fixed from time to time by the Board of Directors and stated in the notice of the meeting. Section 2. ANNUAL MEETINGS. The annual meeting of the shareholders for the election of Directors and for the transaction of such other business as may come before the meeting shall be held on the Thursday in May immediately preceding the federal observance of the Memorial Day Holiday of each year at such time as may be designated by the Board of Directors. If, for any reason, an election of directors is not made on that day, the Board of Directors shall order the election to be held on some subsequent day, as soon thereafter as practicable, according to the provisions of law; and notice thereof shall be given in the manner herein provided for the annual meeting. All elections shall be held according to such regulations as may be prescribed by the Board of Directors, not inconsistent with the provisions of the National Banking Laws, the Articles of Association of the Bank, and these By-laws. Section 3. NOTICE OF ANNUAL MEETING. Written notice of the annual meeting stating the place, date and hour of the meeting shall be given to each shareholder entitled to vote at such meeting not less than ten nor more than sixty days before the date of the meeting. 12 Section 4. NOMINATIONS. Nominations for election to the Board of Directors may be made by the Board of Directors or by any shareholder entitled to vote for the election of Directors. Nominations other than those made by or on behalf of the existing management of the Bank, shall be made in writing and shall include the following information to the extent known to the nominating shareholder: (1) Name and address of each proposed nominee; (2) The principal occupation of each proposed nominee; (3) The total number of shares that, to the knowledge of the nominating shareholder, will be voted for each proposed nominee; (4) The name and residence address of the nominating shareholder; and (5) The number of shares owned by the nominating shareholder. Such nominations shall be delivered or mailed to the President of the Bank and to the Comptroller of the Currency, Washington, D.C., not less than fourteen days nor more than fifty days prior to any meeting of stockholders called for the election of Directors, provided however, that if less than twenty-one days' notice of the meeting is given to shareholders, such nomination shall be mailed or delivered to the President of the Bank and to the Comptroller of the Currency not later than the close of business on the seventh day following the day on which the notice of meeting was mailed. Nominations not made in accordance herewith may, in his or her discretion, be disregarded by the Chairman of the meeting, and upon his or her instructions, the vote tellers may disregard all votes cast for each such nominee. Section 5. SPECIAL MEETINGS. Special meetings of the shareholders, for any purpose or purposes, unless otherwise prescribed by statute or by the Articles of Association, may be called by the Chairman of the Board or the President and shall be called by the Chairman of the Board or the President or Secretary at the request in writing of a majority of the Board of Directors, or at the request in writing of shareholders owning a majority in amount of the entire capital stock of the Bank issued and outstanding and entitled to vote. Such request shall state the purpose or purposes of the proposed meeting. Section 6. NOTICE OF SPECIAL MEETING. Written notice of a special meeting stating the place, date and hour of the meeting and the purpose or purposes for which the meeting is called, shall be given not less than ten nor more than fifty days before the date of the meeting, to each shareholder entitled to vote at such meeting. Section 7. BUSINESS. Business transacted at any special meeting of shareholders shall be limited to the purposes stated in the notice of the meeting or in a duly executed waiver of notice. 13 Section 8. QUORUM AND ADJOURNMENT. The holders of a majority of the stock issued and outstanding and entitled to vote thereat, present in person or represented by proxy, shall constitute a quorum at all meetings of the shareholders for the transaction of business except as otherwise provided by statute or by the Articles of Association. If, however, such quorum shall not be present or represented at any meeting of the shareholders, the shareholders entitled to vote thereat, present in person or represented by proxy, shall have power to adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present or represented. At such adjourned meeting at which a quorum shall be present or represented any business may be transacted which might have been transacted at the meeting as originally notified. If the adjournment is for more than thirty days, or if after the adjournment a new record date is fixed for the adjourned meeting, a notice of the adjourned meeting shall be given to each shareholder of record entitled to vote at the meeting. Section 9. ORGANIZATION. At every meeting of the shareholders, the Chairman of the Board shall preside. In the absence of such officer, any other officer of the rank of President, Vice Chairman of the Board, Vice Chairman, Executive Vice President or Senior Vice President, or in the absence of all such officers a presiding officer chosen by a majority vote of the shareholders present in person or by proxy and entitled to vote thereat shall call such meeting to order and preside. The Secretary, or in his or her absence, the appointee of the presiding officer of the meeting shall act as Secretary at the meetings. Section 10. VOTING. A majority of the votes cast shall decide every question or matter submitted to the shareholders at any meeting, unless otherwise provided by law or by the Articles of Association. Shareholders may vote at any meeting of the shareholders by proxies duly authorized in writing, but no officer, clerk, teller or bookkeeper of the Bank shall act as proxy. Proxies shall be valid only for one meeting, to be specified therein, and any adjournment of such meeting. Proxies shall be dated and shall be filed with the records of the meeting. ARTICLE III DIRECTORS Section 1. NUMBER, ELECTION AND TERM. The Board of Directors of the Bank shall consist of not less than five nor more than twenty-five Directors, as shall be determined from time to time by resolution of a majority of the full Board or by resolution of the shareholders at any annual or special meeting; provided, however, that a majority of the full Board may not increase the number of Directors to a number which (i) exceeds by more than two the number of Directors last elected by shareholders where such number was fifteen or less, or (ii) exceeds by more than four the number of 14 Directors last elected by shareholders where such number was sixteen or more, but in no event shall the number of Directors exceed twenty-five. Each Director shall take and subscribe his or her Oath of Office before entering upon the duties of a Director. Each Director shall be a shareholder of BankAmerica Corporation, if and to the extent required by law. The Directors shall be elected at the annual meeting of shareholders, except as provided in Section 2 of this Article III, and each Director shall hold office until his or her successor is elected and qualified or until his or her earlier removal. Section 2. VACANCIES AND NEWLY CREATED DIRECTORSHIPS. Vacancies and newly created directorships resulting from any increase in the authorized number of Directors may be filled by a majority of the Directors then in office, though less than a quorum, or by a sole remaining Director, and the Directors so chosen shall hold office until the next annual election and until their successors are duly elected and shall qualify or until their earlier resignations or removals. If there are no Directors in office, then an election of Directors may be held in the manner provided by statute. Section 3. RESIGNATIONS. Any Director of the Bank may resign at any time by giving written notice to the Chairman of the Board or President or to the Secretary of the Bank. The resignation of any Director shall take effect at the date of receipt of such notice or at any later date specified therein; and unless otherwise specified therein the acceptance of such resignation by the Board of Directors shall not be necessary to make it effective. Section 4. GENERAL POWERS. The business of the Bank shall be managed by or under the direction of its Board of Directors which may exercise all such powers of the Bank and do all such lawful acts and things as are not by statute or by the Articles of Association or by these By-laws directed or required to be exercised or done by the shareholders. Section 5. COMPENSATION OF DIRECTORS, OFFICERS AND EMPLOYEES. Fees and expenses payable to Directors shall be in such amounts as shall be determined by the Board of Directors, except that no Director of the Bank who receives any salary as an officer or employee thereof shall receive any per diem or other compensation for attending any meeting of the Board of Directors or of the Executive Committee or of any other committee. The Board of Directors shall have power to fix the compensation of all officers and employees of the Bank. ARTICLE IV MEETINGS OF THE BOARD OF DIRECTORS Section 1. PLACE OF MEETINGS. The Board of Directors of the Bank 15 may hold meetings, both regular and special, either within or without the State of California. Section 2. ORGANIZATIONAL MEETING. The Board of Directors shall meet for the purpose of organization, the election of officers and the transaction of other business, on the same day as each annual meeting of shareholders at such place as may be designated by the presiding officer of such meeting, or as may be otherwise provided by vote of the shareholders at such meeting. Notice of such meeting shall not be necessary. Section 3. REGULAR MEETINGS. Regular meetings of the Board of Directors may be held without notice at such time and at such place as shall from time to time be determined by the Board. Section 4. SPECIAL MEETINGS. Special meetings of the Board may be called by the Chairman of the Board or a Vice Chairman of the Board or the President on two days' notice to each Director, either personally or by mail or by telegram; special meetings shall be called by the Chairman of the Board or a Vice Chairman of the Board or President or Secretary in like manner and on like notice on the written request of any three Directors. Section 5. QUORUM. At all meetings of the Board a majority of the Directors shall constitute a quorum for the transaction of business and the act of a majority of the Directors present at any meeting at which there is a quorum shall be the act of the Board of Directors, except as may be otherwise specifically provided by statute or by the Articles of Association. If a quorum shall not be present at any meeting of the Board of Directors the Directors present thereat may adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present. Section 6. ACTION BY WRITTEN CONSENT. Unless otherwise restricted by the Articles of Association or these By-laws, any action required or permitted to be taken at any meeting of the Board of Directors or of any committee thereof may be taken without a meeting, if all members of the Board or committee, as the case may be, consent thereto in writing. The written consents shall be filed with the minutes of proceedings of the Board or committee. Section 7. TELEPHONE PARTICIPATION IN MEETINGS. Members of the Board of Directors or any committees thereof may participate in a meeting of the Board of Directors or of such committees by means of conference telephone or other communications equipment by means of which all persons participating can hear each other, and such participation shall constitute presence in person at such meeting. 16 ARTICLE V COMMITTEES Section 1. EXECUTIVE COMMITTEE. During the intervals between meetings of the Board, all power and authority of the Board regarding the management of the business and affairs of the Bank shall be exercised by the Executive Committee, except that the committee shall have no power: (a) To amend the Articles of Association or the By-laws of the Bank. (b) To recommend to the shareholders of the Bank the sale, lease or exchange of all or substantially all of the Bank's property and assets. (c) To adopt an agreement of merger or consolidation. (d) To recommend to the shareholders of the Bank the dissolution of the Bank or a revocation of a dissolution. (e) To declare a dividend. (f) To authorize the issuance of stock. (g) To appoint or remove the Chairman of the Board or the President of the Bank. The committee shall consist of such Directors as the Board may from time to time appoint by resolution passed by a majority of the whole Board. Section 2. MANAGING COMMITTEE. During intervals between meetings of the Executive Committee, the Managing Committee shall exercise the power and authority of the Executive Committee. The committee shall consist of such Directors or officers as the Board may from time to time appoint by resolution passed by a majority of the whole Board. Section 3. AUDITING AND EXAMINING COMMITTEE. The Auditing and Examining Committee shall provide assistance to the Board in meeting its responsibilities regarding the adequacy of internal controls, the quality and integrity of regulatory and financial accounting and reporting and the effectiveness of internal and external auditing of the Bank and its subsidiaries. The committee shall take appropriate action to encourage free and open communication among the Board, the independent accountants, and the officers of the Bank responsible for internal audit, credit examination, regulatory and financial accounting and reporting and the internal accounting controls of the Bank. In carrying out its duties, the committee shall review reports of regulatory examinations of the Bank, and management letters and other assessments of the adequacy of internal accounting controls from the independent accountants and from the internal auditors, together with any 17 proposed response by management of the Bank; monitor the general condition of the Bank's credit exposure and deposit concentration; review the adequacy of the Bank's controls of regulatory and financial accounting and reporting; recommend to the Board the firm to be employed by the Bank as its independent accountants, review and make recommendations to the Board regarding the terms and scope of such firm's engagement, and monitor its performance and independence; review the Bank's principal periodic financial reports to the public and to regulatory agencies; review the application of significant accounting policies to such reports; review significant new or proposed accounting policy or reporting issues; and review unused Bank properties and plans for their future use. The committee shall annually review and approve the scope of the auditing and credit examination functions of the Bank and shall monitor their performance. The committee shall also review the adequacy of the oversight by the boards of directors of the Bank's subsidiaries over the auditing and credit examination functions in such subsidiaries and may inquire into such matters and review such reports and other documents regarding the subsidiaries as it deems appropriate. The committee may employ independent accountants, outside counsel and other experts as it deems necessary, and shall have all additional powers necessary to carry out the foregoing functions and such other functions as may be assigned by the Board from time to time. The committee shall consist of such members as the Board may from time to time appoint by resolution passed by a majority of the whole Board. At least two members of the committee shall have significant executive, professional, educational, or regulatory experience in financial, auditing, accounting, or banking matters as shall be determined by the Board. No member of the committee shall be, or shall have been within one year prior to serving as a member of the committee, an officer or employee of the Bank, BankAmerica Corporation or any of their subsidiaries or affiliates, and no member shall have any relationship that, in the opinion of the Board, would interfere with the member's exercise of independent judgment as a member of the committee, including any significant direct or indirect credit or other relationships with the Bank, the termination of which likely would materially and adversely affect the Bank's financial condition or results of operations. Section 4. EXECUTIVE PERSONNEL AND COMPENSATION COMMITTEE. The Executive Personnel and Compensation Committee shall have responsibility for, and shall review and approve, the overall compensation programs for the Bank's Managing Committee and such other members of the senior management of the Bank as determined by the committee from time to time by resolution. The committee shall also advise management regarding executive succession planning and the selection, development and performance of the 18 Bank's Managing Committee and senior management as determined by the committee from time to time. The committee shall have all additional powers necessary to carry out its responsibilities and such other duties as may be assigned by the Board from time to time. The committee shall consist of such Directors as the Board may from time to time appoint by resolution passed by a majority of the whole Board. No member of the committee shall be an active officer of the Bank or any of its subsidiaries, and no member shall have any relationship that, in the opinion of the Board, would interfere with the member's exercise of independent judgment as a member of the committee. In taking actions with respect to compensation of members of senior management as determined from time to time by BankAmerica Corporation, the committee shall take into account the recommendations of the Executive Personnel and Compensation Committee of BankAmerica Corporation (BAC committee). If the committee disagrees with any such recommendation, the committee shall consult with the BAC committee before taking any action. Section 5. NOMINATING COMMITTEE. The Nominating Committee shall recommend to the Board criteria for the selection of candidates to serve on the Board; evaluate all proposed candidates; recommend to the Board nominees to fill vacancies on the Board; and recommend to the Board prior to the annual meeting of shareholders a slate of nominees for election to the Board by the shareholders of the Bank at the annual meeting. The committee may also review and make recommendations to the Executive Committee or the Board with respect to the Bank's overall compensation program for Directors, including salary, perquisites, deferred compensation plans, stock or stock option plans or other incentive plans, and retirement plans. In carrying out its duties the committee shall seek possible candidates for the Board and otherwise aid in attracting qualified candidates to the Board. The committee shall be available to the Chairman of the Board or President and other members of the Board for consultation concerning candidates for the Board. The committee shall periodically review, assess and make recommendations to the Board with regard to the size and composition of the Board. The committee shall have all additional powers necessary to carry out its responsibilities and such other duties as may be assigned by the Board from time to time. The committee shall consist of such Directors as the Board may from time to time appoint by resolution passed by a majority of the whole Board. No member of the committee shall be an active officer of the Bank, BankAmerica Corporation or any of their subsidiaries and no member shall have 19 any relationship that, in the opinion of the Board, would interfere with the member's exercise of independent judgment as a member of the committee. Section 6. PUBLIC POLICY COMMITTEE. The Public Policy Committee shall advise and make recommendations to the Board and management of the Bank concerning matters of public and social policy. The committee shall identify and monitor the social, political and environmental trends and issues that could affect the Bank's or its subsidiaries' performance and the related interests of employees, shareholders, customers, and the general public; evaluate and advise the Board and management on long range plans and programs for adjusting operations to those trends and issues; provide Community Reinvestment Act (CRA) oversight to ensure that the CRA activities of the Bank reflect the Bank's commitment to outstanding performance; and recommend to the Board and management, as appropriate, action on specific public policy issues, and advise the Board and management as to the committee's evaluation of related policies, practices and procedures. The committee shall have all additional powers necessary to carry out its responsibilities and such other duties as may be assigned by the Board from time to time. The committee shall consist of such Directors as the Board may from time to time appoint by resolution passed by a majority of the whole Board. Section 7. TRUST AUDIT COMMITTEE. The Trust Audit Committee is responsible for discharging the duties of the board with respect to audits of the fiduciary activities of the Bank. At least once during each calendar year and within 15 months of the last such audit, the Committee shall direct that suitable audits be made by auditors responsible only to the board of directors, and at such time shall ascertain whether fiduciary powers have been administered according to law, Part 9 of the Regulations of the Comptroller of the Currency, and sound fiduciary principles. The Committee shall be comprised of directors, exclusive of active officers of the Bank or members of the trust committee designated by the board. The Committee shall review regulatory reports of examination, internal audits, and reports from the Bank's independent auditors with respect to the Bank's fiduciary activities; and, shall monitor the internal fiduciary audit function and perform such other duties which the Board may assign from time to time. In discharging its duties, the Committee may rely on the evaluations, conclusions and reports of internal and external auditors and legal counsel utilized by it in the performance or review of audit functions. At least annually, the Trust Audit Committee shall make a report to the Board of Directors of the audits and examination, action(s) taken thereon, and recommendations with respect to the fiduciary activities. Section 8. OTHER COMMITTEES. The Board may by resolution passed by a majority of the whole Board, designate one or more other committees, each committee to consist of such members as the Board determines. The Board may designate one or more persons as alternate members of any such committee who 20 may replace any absent or disqualified member at any meeting of the committee. Any such committee shall have and may exercise such powers as may be specified in the resolution creating such committee. Each committee shall have such name as may be determined from time to time by the Board. The Board may change the members of any committee, fill vacancies and discharge any committee, with or without cause, at any time. Section 9. MEETING REQUIREMENTS. The Board shall designate one member of each committee to serve as chairman of the committee. Except as otherwise stated in these By-laws or a resolution of the Board, a number equal to a majority of the members of a committee shall be deemed to constitute a quorum for actions of the committee. If a quorum is not present at any meeting of a committee, the committee members present may adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present. Except as otherwise stated in these By-laws or in a resolution of the Board, the vote of a majority of the members of a committee present at a meeting at which a quorum is present shall be necessary for action to be taken by the committee, and each committee shall hold regular and special meetings at times and places and upon notice as the committee may determine. In the absence of any other notice requirements, meetings of a committee may be called by the chairman of the committee or the Secretary, and must be called by the chairman of the committee or the Secretary upon the request of any two members of the committee, on at least 24 hours' notice to each committee member before the hour appointed for holding such meeting. Notice shall be given personally, or by leaving the notice at the member's place of business or residence, or by mailing the notice in San Francisco or Los Angeles, with the postage thereon fully prepaid, addressed to the member at his or her last known place of business or residence, or by telegraphing or telecopying the notice to the member at his or her last known place of business or residence. The method of notice of a special meeting shall be entered in the minutes of the special meeting, and the approval of the minutes at any subsequent meeting of the committee shall be conclusive upon the question of service. Section 10. ACTION BY WRITTEN CONSENT. Unless otherwise restricted by these By-laws, any action required or permitted to be taken at any meeting of any committee may be taken without a meeting, if all members of the committee consent to the action in writing. The written consents shall be filed in the minute book of the committee. Section 11. TELEPHONE PARTICIPATION IN MEETINGS. Members of a committee may participate in a meeting of the committee by means of conference telephone or other communications equipment by means of which all persons participating can hear each other, and such participation shall constitute presence in person at the meeting. Section 12. SUBCOMMITTEES. Except as otherwise stated in these By-laws or a resolution of the Board, each committee may appoint and discharge subcommittees and may delegate to such subcommittees any of the power and 21 authority of the committee, subject to such restrictions as the committee may determine. The committee may authorize such subcommittees to appoint their own subcommittees and to delegate any of their power and authority. Each subcommittee shall have such members as the committee shall appoint, provided that at least one member of the committee shall be a member of the subcommittee. The name of each subcommittee shall be determined by the committee or subcommittee which appoints it. Each committee and subcommittee may designate one or more Directors or officers as alternate members of any subcommittee, who may replace any specified or unspecified member who is absent or disqualified at any meeting of the subcommittee. Subcommittees shall be subject to the same procedural requirements as the committee or subcommittee which appointed it, including but not limited to the requirements set forth in this Article V for notices, quorums, action by written consent, and telephone participation in meetings. Each subcommittee shall report its actions at the next practicable meeting of the committee or subcommittee for its review and any action it deems appropriate. Section 13. REPORTS TO THE BOARD. Except as otherwise stated in these By-laws or a resolution of the Board, each committee shall keep minutes of its proceedings and shall report its actions and, at least on a quarterly basis, the actions of its subcommittees at the next practicable Board meeting for its review and any action it deems appropriate. Any action of the Board with respect to the report shall be recorded in the minutes of the meeting of the Board, as well as in the minute book of the committee. ARTICLE VI ADVISORY DIRECTORS AND ADVISORY BOARDS Section 1. ADVISORY DIRECTORS. The Board of Directors may appoint such number of Advisory Directors as shall be determined by the Board from time to time. Such Advisory Directors shall serve at the pleasure of the Board of Directors and shall have such rights and functions as the Board shall determine. Advisory Directors shall receive such compensation for their services as may be fixed by the Board. No Advisory Director who receives a salary as an officer or employee of the Bank shall receive compensation for attending any meeting of the Board of Directors or of any committee of the Board. Section 2. REGIONAL BOARDS. The Board of Directors may, in its discretion, create regional Boards to be composed of such persons and to consist of such number of members as the Board of Directors may appoint, and to serve for such territory as the Board of Directors may designate. Such regional Boards and the members thereof shall serve at the pleasure of the Board of Directors and shall have such rights and functions, and receive such compensation, as may be fixed by the Board. 22 Section 3. ADVISORY BOARDS. Whenever, in the opinion of the Board of Directors, it shall be deemed advisable to have an Advisory Board for any branch or group of branches of the Bank, the Board of Directors may appoint an Advisory Board for such branch or group of branches, to be composed of such persons and to consist of such number as the Board of Directors may appoint and designate, and to have such rights and functions, and receive such compensation, as may be fixed by the Board of Directors. The Board of Directors may by resolution delegate the powers given it by this Section 3 of Article VI to the Executive Committee, such powers, if so delegated to the Executive Committee, to be exercised by it subject to the approval of the Board of Directors. Such Advisory Boards and the members thereof shall serve at the pleasure of the Board of Directors. ARTICLE VII OFFICERS Section 1. NUMBER AND TITLES. The officers of the Bank may be, and to the extent required by law shall include: a Chairman of the Board, a President, one or more Vice Chairmen of the Board, one or more Vice Chairmen, one or more Executive Vice Presidents, one or more Senior Vice Presidents, one or more Regional Vice Presidents, one or more Vice Presidents, one or more Assistant Vice Presidents, a Cashier, one or more Assistant Cashiers, a Secretary, one or more Assistant Secretaries, a Treasurer, one or more Assistant Treasurers, and such other officers as the Board may from time to time by resolution create (the officer titles referenced in such resolutions being deemed included in these By-laws and incorporated herein by reference as though set forth fully herein), or as may be appointed in accordance with Section 2 of this Article. The persons with officer titles listed above or referenced in the resolutions referred to above, or titles created in accordance with Section 2 of this Article and referenced in the resolutions referred to above or listed above, shall be officers of the Bank. The Secretary or the executive officer of the Bank's human resources or personnel function or the delegates of either shall maintain or cause to be maintained a current list of authorized officer titles. The Board of Directors shall approve the list of authorized officer titles at least annually. The Board of Directors shall designate one officer of the Bank as the Chief Executive Officer and may in its discretion confer additional functional titles, including but not limited to Chief Operating Officer and Chief Financial Officer. The President shall be a member of the Board of Directors. Section 2. APPOINTMENT, TERM OF OFFICE. The officers shall be appointed by the Board of Directors and shall hold office at the pleasure of the Board. Notwithstanding anything to the contrary in these By-laws contained, the Chairman of the Board, the President, any Vice Chairman of the 23 Board, any Vice Chairman, any Executive Vice President or the executive officer of the Bank's human resources or personnel function or any delegate of any of such officers may, in the interim between meetings of the Board of Directors, make appointments pro-tem to any office listed in Section 1 of this Article or in the resolutions referred to in Section 1, other than the following: Chairman of the Board, Chief Executive Officer, President, Chief Operating Officer, Chief Financial Officer, Vice Chairman of the Board, Vice Chairman, Executive Vice President, Senior Vice President, Regional Vice President, Vice President, Cashier, Treasurer and Secretary. Such pro-tem appointments may be made for the purpose of filling a vacancy or increasing the number of officers, such appointees pro-tem to hold office until the next succeeding regular meeting of the Board of Directors or until the earlier revocation of such appointment. All pro-tem appointees shall hold office at the pleasure of the Board of Directors which may in its discretion approve, confirm, or revoke any such pro-tem appointments. Upon any such approval or confirmation, such persons shall hold office at the pleasure of the Board. Section 3. COMPENSATION. The compensation of all officers and other employees of the Bank shall be fixed by the Board of Directors or by a committee appointed or officers designated for that purpose or in accordance with procedures established by the Bank's human resources or personnel function. Section 4. AUTHORITY, DUTIES, FIDELITY BOND. One person may hold more than one office, except that the offices of Chairman of the Board and Secretary or President and Secretary and the offices of President and Cashier may not be held by the same person. When the signature or approval of two officers is required, a person holding two offices shall act only as one signer or approver. The duties and authority of the officers of the Bank, other than as set forth in these By-laws, may be prescribed and established by the Board of Directors or the Executive Committee. Each officer shall perform the duties imposed upon the officer by law, these By-laws, the Board of Directors and the Executive Committee. Except as otherwise set forth in these By-laws or by the Board of Directors or the Executive Committee, each officer shall have such authority and duties as usually are incident to the title and office held. The Board of Directors shall provide for such bond and fidelity insurance covering the officers of the Bank and for the faithful and honest discharge of their duties as they may determine. Section 5. THE CHAIRMAN OF THE BOARD. The Chairman of the Board shall preside at all meetings of the shareholders and the Board of Directors and shall have such other duties and authority as are set forth in these By-laws or may be assigned by the Board of Directors. Section 6. THE VICE CHAIRMEN OF THE BOARD. The Board of Directors may appoint one or more Vice Chairmen of the Board. Each Vice Chairman of the Board shall have such duties and authority as may be assigned by the Board of Directors or by the officer to whom such Vice Chairman of the Board reports. If more than one Vice Chairman of the Board is appointed, the Board 24 may designate one such Vice Chairman of the Board as Senior Vice Chairman of the Board. Section 7. THE PRESIDENT. The President shall have such duties and authority as are set forth in these By-laws or may be assigned by the Board of Directors or by the Chairman of the Board. Section 8. THE VICE CHAIRMEN. The Board of Directors may appoint one or more Vice Chairmen. Each Vice Chairman shall have such duties and authority as may be assigned by the Board of Directors or by the officer to whom such Vice Chairman reports. Section 9. THE VICE PRESIDENTS. The Board of Directors may appoint one or more Vice Presidents. The Board of Directors may create categories of Vice Presidents, including but not limited to Executive Vice Presidents, Senior Vice Presidents, Regional Vice Presidents and Assistant Vice Presidents. The Board of Directors, the Chairman of the Board or the President may designate seniority of ranking among categories of Vice Presidents. Each Vice President shall have such duties and authority as may be assigned by the Board of Directors or by the officer to whom such Vice President reports. Section 10. THE SECRETARY. The Secretary shall have charge and custody of the corporate seal, records and Minute Books of the Bank, shall keep correct written minutes of all meetings of shareholders and Directors, and shall give or cause to be given notice of all meetings of the shareholders and of the Board of Directors in accordance with these By-laws and as required by law. The duties of the Secretary may be performed by any Assistant Secretary. Section 11. THE CHIEF EXECUTIVE OFFICER. The Chief Executive Officer shall have general executive supervision of the business and affairs of the Bank. Section 12. THE CHIEF OPERATING OFFICER. The Chief Operating Officer shall have such duties and authority as may be assigned by the Chief Executive Officer to whom the Chief Operating Officer shall report. Section 13. THE CHIEF FINANCIAL OFFICER. The Chief Financial Officer shall be the principal financial officer of the Bank. ARTICLE VIII CAPITAL STOCK--CERTIFICATES OF STOCK Section 1. CERTIFICATES, TRANSFER AGENTS AND REGISTRARS. Every holder of stock in the Bank shall be entitled to have a certificate, signed 25 by, or in the name of the Bank by, the Chairman of the Board, or the President, or a Vice Chairman of the Board, or a Vice Chairman or a Vice President, and by the Treasurer or an Assistant Treasurer, or the Secretary or an Assistant Secretary of the Bank, certifying the number of shares owned by such shareholder. Where a certificate is countersigned by a transfer agent other than the Bank or its employee, or by a registrar other than the Bank or its employee, the signatures of the officers of the Bank may be facsimiles. In case any officer, transfer agent or registrar who has signed or whose facsimile signature has been placed upon a certificate shall have ceased to be such officer, transfer agent or registrar before such certificate is issued, it may be issued by the Bank with the same effect as if he or she were such officer, transfer agent or registrar at the date of issue. Section 2. LOST, STOLEN, MUTILATED OR DESTROYED CERTIFICATES. The Board of Directors, a committee of the Board or an officer of the Bank may direct a new certificate or certificates to be issued in place of any certificate or certificates theretofore issued by the Bank alleged to have been lost, stolen, mutilated or destroyed, upon the making of an affidavit of that fact by the person claiming the certificate of stock to be lost, stolen, mutilated or destroyed. When authorizing such issue of a new certificate or certificates, the Board of Directors, a committee of the Board or an officer of the Bank may, as a matter of discretion and as a condition precedent to the issuance thereof, require the owner of such lost, stolen, mutilated or destroyed certificate or certificates, or such owner's legal representative, to advertise the same in such manner as shall be required and give the Bank a bond in such sum as may be directed as indemnity against any claim that may be made against the Bank with respect to the certificate alleged to have been lost, stolen, mutilated or destroyed. Section 3. TRANSFERS OF STOCK. Upon surrender to the Bank or the transfer agent of the Bank of a certificate for shares duly endorsed or accompanied by proper evidence of succession, assignment or authority to transfer, it shall be the duty of the Bank to issue a new certificate to the person entitled thereto, cancel the old certificate and record the transaction upon its books. Section 4. REGISTERED SHAREHOLDERS. The Bank shall be entitled to recognize the exclusive right of a person registered on its books as the owner of shares to receive dividends and to vote as such owner, and to hold liable for calls and assessments a person registered on its books as the owner of shares, and shall not be bound to recognize any equitable or other claim to or interest in such share or shares on the part of any other person, whether or not it shall have express or other notice thereof, except as otherwise provided by law. Section 5. DIVIDENDS. Dividends upon the capital stock of the Bank, subject to the provisions of the Articles of Association and the national banking laws, may be declared by the Board of Directors at any regular or special meeting. Dividends may be paid in cash, in property, or in shares of 26 the capital stock, subject to the provisions of the Articles of Association and the national banking laws. ARTICLE IX INDEMNIFICATION Section 1. RIGHT TO INDEMNIFICATION. Except as provided in Section 4, below, each person who was or is made a party or is threatened to be made a party to or is involved in any action, suit or proceeding, whether civil, criminal, administrative or investigative (hereinafter a "proceeding"), by reason of the fact that such person, or another person of whom such person is the legal representative, is or was a Director, officer, or employee of the Bank or is or was serving at the request of the Bank as a director, officer, or employee of, or in some other representative capacity for, another corporation or a partnership, joint venture, trust or other enterprise, including service with respect to employee benefit plans, whether the basis of such proceeding is alleged action in an official capacity as a Director, officer, or employee or in any other capacity while serving as a Director, officer, or employee, shall be indemnified and held harmless by the Bank to the fullest extent authorized by the Delaware General Corporation Law, as the same exists or may hereafter be amended, against all expense, liability and loss (including attorneys' fees, judgments, fines, ERISA excise taxes or penalties and amounts to be paid in settlement) reasonably incurred or suffered by such person in connection therewith and such indemnification shall continue as to a person who has ceased to be a Director, officer, or employee and shall inure to the benefit of such person's heirs, executors and administrators; provided, however, that except as provided in Section 2 hereof with respect to proceedings seeking to enforce rights to indemnification, the Bank shall indemnify any such person seeking indemnification in connection with a proceeding (or part thereof) initiated by such person only if such proceeding (or part thereof) was authorized by the Board of Directors of the Bank. The right to indemnification conferred in this Article shall be a contract right and shall include the right to be paid by the Bank the expenses incurred in defending any such proceeding in advance of its final disposition; provided, however, that, if the Delaware General Corporation Law so requires, the payment of such expenses incurred by a Director or officer in such person's capacity as a Director or officer (and not in any other capacity in which service was or is rendered by such person while a Director or officer, including, without limitation, service to an employee benefit plan) in advance of the final disposition of a proceeding, shall be made only upon delivery to the Bank of an undertaking, by or on behalf of such Director or officer, to repay all amounts so advanced if it shall ultimately be determined that such Director or officer is not entitled to be indemnified under this Article or otherwise. Section 2. RIGHT OF CLAIMANT TO BRING SUIT. If a claim under Section 1 of this Article is not paid in full by the Bank within ninety days 27 after a written claim has been received by the Bank, the claimant may at any time thereafter bring suit against the Bank to recover the unpaid amount of the claim and, if successful in whole or in part, the claimant shall be entitled to be paid also the expense of prosecuting such claim. It shall be a defense to any such action (other than an action brought to enforce a claim for expenses incurred in defending any proceeding in advance of its final disposition where the required undertaking, if any is required, has been tendered to the Bank) that the claimant has not met the standards of conduct which make it permissible under the Delaware General Corporation Law for the Bank to indemnify the claimant for the amount claimed, but the burden of proving such defense shall be on the Bank. Neither the failure of the Bank (including its Board of Directors, independent legal counsel, or its shareholders) to have made a determination prior to the commencement of such action that indemnification of the claimant is proper in the circumstances because the claimant has met the applicable standard of conduct set forth in the Delaware General Corporation Law, nor an actual determination by the Bank (including its Board of Directors, independent legal counsel, or its shareholders) that the claimant has not met such applicable standard of conduct, shall be a defense to the action or create a presumption that the claimant has not met the applicable standard of conduct. Section 3. NON-EXCLUSIVITY OF RIGHTS. The right to indemnification and the payment of expenses incurred in defending a proceeding in advance of its final disposition conferred in this Article shall not be exclusive of any other right which any person may have or hereafter acquire under any statute, provision of the Articles of Association, By-law, agreement, vote of shareholders or disinterested Directors or otherwise. Section 4. LIMITATIONS. The Bank shall not indemnify its Directors, officers, or employees against expenses, penalties, or other payments incurred in an administrative proceeding or action instituted by an appropriate bank regulatory agency acting in its regulatory capacity, which proceeding or action results in a final order assessing civil money penalties or requiring affirmative action by an individual or individuals in the form of payments to the Bank. Section 5. INSURANCE. The Bank may maintain insurance, at its expense, to protect itself and any Director, officer, or employee of the Bank serving in any capacity on behalf of the Bank or at its request for any other entity to the fullest extent authorized by the Delaware General Corporation Law, as the same exists or may hereafter be amended, whether or not the Bank would have the power to indemnify such person against such expense, liability or loss under the Delaware General Corporation Law. Any insurance purchased by the Bank must exclude from coverage any formal order assessing civil money penalties against a Director, officer, or employee of the Bank. 28 ARTICLE X EMERGENCY Section 1. APPLICATION. This Article shall operate during any emergency resulting from any disaster or other emergency condition when a quorum of the Board of Directors or a Board committee cannot readily be convened. Section 2. MEETINGS OF BOARD OR COMMITTEE. A meeting of the Board of Directors or Board committee may be called by any officer or Director by giving notice to the Directors or committee members who can be reached by any means the person calling the meeting deems feasible. Section 3. CONDUCT OF BUSINESS. During any emergency, the quorum requirements for all meetings of the Board of Directors and any Board committee shall be one-fourth of the members. (a) If no Board of Directors meeting can be held because a quorum cannot be assembled, then those Directors who can assemble may, by majority vote, reduce the Board of Directors to not less than five Directors and may elect emergency Directors. (b) If only one Director can be found, then that Director may appoint emergency Directors. (c) If no Director can be found, then the Chief Executive Officer or Acting Chief Executive Officer may appoint emergency Directors. Section 4. SUCCESSION. During any emergency when the Chief Executive Officer becomes incapacitated, cannot be located, or otherwise is unable to perform his or her duties, succession to the powers of the Chief Executive Officer as Acting Chief Executive Officer shall occur in the following order: Chairman of the Board, President, Vice Chairman of the Board, Vice Chairman, any member of Managing Committee, Cashier. Priority within rank shall be set by seniority in the ranking office. If seniority in office dates from the same day, then seniority based on total length of service shall be determinative. 29 Notwithstanding the foregoing, the Board of Directors during an emergency may appoint or replace any Acting Chief Executive Officer, or may change the priority of succession, as the Board determines. Section 5. AUTHORITY. During any emergency the Chief Executive Officer or Acting Chief Executive Officer shall have all authority that officer deems necessary to protect the interests of the Bank, may appoint emergency officers, and may delegate authority to them. Section 6. NO LIABILITY. No officer, Director or employee acting in accordance with any emergency By-laws or resolutions shall be liable except for willful misconduct. Section 7. EFFECT ON BY-LAWS. To the extent not inconsistent with this emergency By-law, the By-laws of the Bank shall remain in effect during any emergency. Upon termination of the emergency, this By-law shall cease to be operative and authority to act as an officer or Director shall be determined by the other By-laws, except that Directors and officers elected or appointed pursuant to this By-law shall remain Directors or officers to the extent that vacancies have been caused by death or incapacity of regular Directors or officers until their successors are appointed or elected. Section 8. TERMINATION OF EMERGENCY. Any emergency condition which causes this By-law to become operative shall be deemed terminated whenever one of the following conditions is met: (a) The Directors and emergency Directors determine by majority vote at a meeting that the emergency condition is over; or (b) A majority of the Directors elected or appointed pursuant to the regular By-laws holds a meeting and determines the emergency condition is over. ARTICLE XI MISCELLANEOUS Section 1. MINUTE BOOK. The organization papers of the Bank, the returns of the judges of election, and the proceedings of all regular and special meetings of the Directors and of the shareholders shall be recorded in the Minute Book and the minutes of each meeting shall be signed by the Secretary and approved by the Presiding Officer. There shall also be noted by the Secretary and recorded in the Minute Book the receipt by the Board of reports of all committees of the Board of Directors and said reports shall be preserved by the Secretary but need not be recorded in the Minute Book unless especially ordered by the Board of Directors. 30 Section 2. CONVEYANCE OF REAL PROPERTY, TRANSFER OF PERSONAL PROPERTY, AND EXECUTION AND DELIVERY OF DEEDS, LEASES, CONTRACTS, ETC. Authority to convey real property, transfer personal property, sign, execute and deliver deeds, leases, contracts, notes, negotiable instruments, agreements and all other written instruments and documents for and on behalf of the Bank, other than as set forth in these By-laws or as prescribed by law, shall be prescribed by resolutions adopted by the Board of Directors of the Bank from time to time. Section 3. SEAL. In the execution on behalf of the Bank of any instrument, document, writing, notice or paper, it shall not be necessary to affix the corporate seal of the Bank thereon, and any such instrument, document, writing, notice or paper when executed without said seal affixed thereon shall be of the same force and effect and as binding on the Bank as if said corporate seal had been affixed thereon in each instance. Section 4. WAIVER OF NOTICE. Whenever any notice whatever is required to be given by law or by these By-laws or the Articles of Association, a waiver thereof in writing, signed by the person or persons entitled to said notice, whether before or after the time stated therein, shall be deemed equivalent thereto. Section 5. AMENDMENTS. These By-laws may be altered or repealed at any regular meeting of the shareholders or of the Board of Directors or at any special meeting of the shareholders or of the Board of Directors if notice of such alteration or repeal be contained in the notice of such special meeting. Section 6. FISCAL YEAR. The fiscal year of the Bank shall be the calendar year. 31 CERTIFICATION I, Cheryl Sorokin, Secretary of Bank of America National Trust and Savings Association, a national banking association organized and existing under and by virtue of the laws of the United States of America and having its principal place of business in the City and County of San Francisco in the State of California, certify that the foregoing pages 1 to 3 inclusive constitute a true and correct copy of the Articles of Association of Bank of America National Trust and Savings Association, as amended and as they now exist, and that the foregoing pages 4 to 23 inclusive constitute a true and correct copy of the Bylaws of Bank of America Trust and Savings Association, as amended and as they now exist. Dated: April 25, 1994 /s/ CHERYL SOROKIN Secretary BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION 32 The undersigned, as Trustee or prospective Trustee under the Indenture of J.C. Penney Company, Inc., Issuer, dated as of April 1, 1994, does hereby consent that reports of examinations by Federal, State, Territorial, or District authorities may be furnished by such authorities to the Securities and Exchange Commission upon its request, in accordance with and to the extent prescribed under Section 321 of the Trust Indenture Act of 1939. BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION By:_________________________________ A. Soderholm Vice President (Name and Title) Attest:____________________________ M. Lee Assistant Secretary EXHIBIT "H" 33 EXHIBIT I REPORT OF CONDITION Consolidating domestic and foreign subsidiaries of the BANK OF AMERICA NT&SA of San Francisco in the State of California, at the close of business on December 31, 1993 published in response to call made by Comptroller of the Currency, under Title 12, United States Code, Section 161.
Charter number 13044 - National Bank Region Number 14. Dollar Amounts --------------- STATEMENT OF RESOURCES AND LIABILITIES In Thousands --------------- Cash and balances due from depository institutions : Noninterest-bearing balances and currency and coin.......................................... $7,653,000 Interest-bearing balances .................................................................. 2,956,000 Securities: a. Held-to-maturity securities.............................................................. 8,196,000 b. Available-for-sale securities............................................................ Federal funds sold and securities purchased under agreements to resell in domestic offices of the bank and of its Edge and Agreement subsidiaries, and in IBFs: Federal funds sold ......................................................................... 3,644,000 Securities purchased under agreements to resell ............................................ 649,000 Loans and lease financing receivables: Loans and leases, net of unearned income ..................................... $99,417,000 Less: Allowance for loan and lease losses .................................... 2,541,000 Less: Allocated transfer risk reserve......................................... 0 ------------ Loans and leases, net of unearned income, allowance, and reserve ........................... 96,876,000 Assets held in trading accounts .............................................................. 6,208,000 Premises and fixed assets (including capitalized leases) ..................................... 2,686,000 Other real estate owned ...................................................................... 436,000 Investments in unconsolidated subsidiaries and associated companies .......................... 330,000 Customers' liability to this bank on acceptances outstanding ................................. 735,000 Intangible assets ............................................................................ 2,501,000 Other assets ................................................................................. 3,823,000 ------------ Total Assets.................................................................................. $136,693,000 ============ Deposits: In domestic offices .......................................................... $83,916,000 Noninterest-bearing ....................................................... $24,658,000 Interest-bearing .......................................................... 59,258,000 ----------- In foreign offices, Edge and Agreement subsidiaries, and IBFs ................ 22,453,000 Noninterest-bearing ....................................................... $1,303,000 Interest-bearing .......................................................... 21,150,000 ---------- Federal funds purchased and securities sold under agreements to repurchase in domestic offices of the bank and of its Edge and Agreement subsidiaries, and in IBFs: Federal funds purchased .................................................................... 2,453,000 Securities sold under agreements to repurchase.............................................. 842,000 Demand notes issued to the U. S. Treasury .................................................... 1,000 Other borrowed money: a. With original maturity of one year or less............................................... b. With original maturity of more than one year............................................. 5,396,000 Mortgage indebtedness and obligations under capitalized leases ............................... 42,000 Bank's liability on acceptances executed and outstanding ..................................... 735,000 Subordinated notes and debentures............................................................. 4,163,000 Other liabilities ............................................................................ 4,993,000 ------------- Total liabilities ............................................................................ 124,994,000 ------------- Common stock ................................................................................. 616,000 Surplus (exclude all surplus related to preferred stock)...................................... 5,373,000 Undivided profits and capital reserves ....................................................... 5,808,000 Net unrealized holding gains (losses) on available-for-sale securities........................ 0 Cumulative foreign currency translation adjustments .......................................... (98,000) ------------- Total equity capital ......................................................................... 11,699,000 ------------- Total liabilities and equity capital ......................................................... $136,693,000 =============
I, Joseph B. Tharp, Executive Vice President and Financial Controller of the above-named bank do hereby declare that this Report of Condition is true and correct to the best knowledge and belief. Joseph B. Tharp February 14, 1994 We, the undersigned directors, attest to the correctness of this statement of resources and liabilities. We declare that it has been examined by us, and to the best of our knowledge and belief has been prepared in conformance with the instructions and is true and correct. Richard M. Rosenberg ) C. R. Dahl) Directors Lewis W. Coleman ) 34 Charter No. 13044 -- National Bank Region Number 14 REPORT OF CONDITION CONSOLIDATING DOMESTIC AND FOREIGN SUBSIDIARIES OF BANK OF AMERICA NT & SA OF SAN FRANCISCO IN THE STATE OF CALIFORNIA At the close of business on December 31, 1993 published in response to call made by Comptroller of the Currency, under title 12, United States Code, Section 161.
ASSETS ($ In Thousands) ----------------- Cash and balances due from depository institutions : Noninterest-bearing balances and currency and coin.......................................... $7,653,000 Interest-bearing balances .................................................................. 2,956,000 Securities: a. Held-to-maturity securities.............................................................. 8,196,000 b. Available-for-sale securities............................................................ Federal funds sold and securities purchased under agreements to resell in domestic offices of the bank and of its Edge and Agreement subsidiaries, and in IBFs: Federal funds sold ......................................................................... 3,644,000 Securities purchased under agreements to resell............................................. 649,000 Loans and lease financing receivables: Loans and leases, net of unearned income ..................................... $99,417,000 Less: Allowance for loan and lease losses .................................... 2,541,000 Less: Allocated transfer risk reserve......................................... 0 ------------ Loans and leases, net of unearned income, allowance, and reserve ........................... 96,876,000 Assets held in trading accounts .............................................................. 6,208,000 Premises and fixed assets (including capitalized leases) ..................................... 2,686,000 Other real estate owned ...................................................................... 436,000 Investments in unconsolidated subsidiaries and associated companies .......................... 330,000 Customers' liability to this bank on acceptances outstanding ................................. 735,000 Intangible assets............................................................................. 2,501,000 Other assets ................................................................................. 3,823,000 ------------ Total assets.................................................................................. $136,693,000 ============ LIABILITIES Deposits: In domestic offices .......................................................... $83,916,000 Noninterest-bearing ....................................................... $24,658,000 Interest-bearing .......................................................... 59,258,000 ----------- In foreign offices, Edge and Agreement subsidiaries, and IBFs ................ 22,453,000 Noninterest-bearing ....................................................... $1,303,000 Interest-bearing .......................................................... 21,150,000 ----------- Federal funds purchased and securities sold under agreements to repurchase in domestic offices of the bank and of its Edge and Agreement subsidiaries, and in IBFs: Federal funds purchased .................................................................... 2,453,000 Securities sold under agreements to repurchase ............................................. 842,000 Demand notes issued to the U. S. Treasury .................................................... 1,000 Trading liabilities........................................................................... Other borrowed money: a. With original maturity of one year or less............................................... b. With original maturity of more than one year............................................. 5,396,000 Mortgage indebtedness and obligations under capitalized leases ............................... 42,000 Bank's liability on acceptances executed and outstanding ..................................... 735,000 Subordinated notes and debentures ............................................................ 4,163,000 Other liabilities ............................................................................ 4,993,000 ------------- Total liabilities............................................................................. 124,994,000 ------------- EQUITY CAPITAL Common stock ................................................................................. 616,000 Surplus (exclude all surplus related to preferred stock)...................................... 5,373,000 Undivided profits and capital reserves ....................................................... 5,808,000 Net unrealized gains (losses) on available-for-sale securities................................ 0 Cumulative foreign currency translation adjustments .......................................... (98,000) ------------- Total equity capital.......................................................................... 11,699,000 ------------- Total liabilities and equity capital.......................................................... $136,693,000 =============
I, Joseph B. Tharp, Executive Vice President and Financial Controller of the above-named bank do hereby declare that this Report of Condition is true and correct to the best of my knowledge and belief. Joseph B. Tharp February 14, 1994 We, the undersigned directors, attest to the correctness of this statement of resources and liabilities. We declare that it has been examined by us, and to the best of our knowledge and belief has been prepared in conformance with the instructions and is true and correct. Richard M. Rosenberg ) C. R. Dahl ) Directors Lewis W. Coleman ) EX-99 17 FORM OF PRICING SUPPLEMENT 1 Exhibit 99 Registration Statement No. ________ PRICING SUPPLEMENT NO. Dated , 19 (To Prospectus Dated , 19 and Prospectus Supplement Dated , 19 ) U.S. $___________ (Principal Amount) JCPENNEY Medium-Term Notes, Series __ Due from Nine Months or more from Date of Issue / / Book Entry Note / / Fixed Rate / / Certificated Note / / Floating Rate Trade Date: ________________________________ Issue Price (As a Percentage of Principal Amount): _________________________________________________ Date of Issue: _____________________________ Interest Payment Date(s): _______________________ Maturity Date: _____________________________ Fixed Interest Rate/Initial Interest Rate: _________________________________________________ Agent's Commission: _______________________ Net Proceeds to Issuer: _________________________
If Floating Rate indicate: / / Commercial Paper Rate Note, / / Prime Rate Note, / / LIBOR Note, / / Federal Funds Effective Rate Note, / / CD Rate Note, / / Treasury Rate Note or / / Other _____ and complete the following: Interest Reset Dates: ______________________ Spread: _________________________________________ Interest Payment Period: ___________________ Spread Multiplier: ______________________________ Interest Reset Period: _____________________ Maximum Interest Rate, if any: __________________ Interest Determination Dates: ______________ Minimum Interest Rate, if any: __________________ Index Maturity: ___________________________ Calculation Dates: ______________________________ Calculation Agent: ______________________________
Redemption Information: ________________________________________________________ If Note is denominated in a currency or currency unit other than U.S. dollars, see attachment. Debt Securities, including Medium-Term Notes, Series A, may be issued by the Company in an aggregate principal amount of up to U.S. $1,500,000,000 or the equivalent in foreign currency or foreign currency units. To date, including this offering, an aggregate of U.S. $-0-, or the equivalent in foreign currency or foreign currency units of Medium-Term Notes, Series A, and all other Debt Securities, has been issued. 2 Attachment to Pricing Supplement No. _________ Specified Currency or Currency Units: __________________________________________ Payment by holder of purchase price in: / / the Specified Currency or / / U.S. dollars Exchange rate applicable to purchase price if payable in U.S. dollars of non-U.S. dollar denominated Note: U.S. $1.00 = __________ Payments to the holder of principal, premium, if any, and interest in U.S. dollars (with an election by the holder to receive payments in the Specified Currency) _______ or such payments only in the Specified Currency (with no election by the holder to receive payments in U.S. dollars) ________ Additional Terms: (Include specific information concerning foreign currency or currency unit, if any, in which a particular Note is denominated, including historical exchange rates, authorized denominations and a description of the currency and any exchange controls.) -----END PRIVACY-ENHANCED MESSAGE-----