-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, TDJnU6v3b6F2OHrwLJPg4yWN9o/vU2hSqzVwS/8CJYdp9Qi2VxpVxiJLnyVnAp6v aXHaKhGlHztblmkpZxnj0g== 0000950134-96-003145.txt : 19960627 0000950134-96-003145.hdr.sgml : 19960627 ACCESSION NUMBER: 0000950134-96-003145 CONFORMED SUBMISSION TYPE: S-3 PUBLIC DOCUMENT COUNT: 6 FILED AS OF DATE: 19960626 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: PENNEY J C CO INC CENTRAL INDEX KEY: 0000077182 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-DEPARTMENT STORES [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: 333-06883 FILM NUMBER: 96586149 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 JUNE 26, 1996 REGISTRATION NO. 333- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 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 13-5583779 (STATE OF INCORPORATION) (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 BEING OFFERED PURSUANT TO DIVIDEND OR INTEREST REINVESTMENT PLANS, PLEASE CHECK THE FOLLOWING BOX. / / IF ANY OF THE SECURITIES BEING REGISTERED ON THIS FORM ARE TO BE 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/ IF THIS FORM IS FILED TO REGISTER ADDITIONAL SECURITIES FOR AN OFFERING PURSUANT TO RULE 462(B) UNDER THE SECURITIES ACT, PLEASE CHECK THE FOLLOWING BOX AND LIST THE SECURITIES ACT REGISTRATION STATEMENT NUMBER OF THE EARLIER EFFECTIVE REGISTRATION STATEMENT FOR THE SAME OFFERING. / / IF THIS FORM IS A POST-EFFECTIVE AMENDMENT FILED PURSUANT TO RULE 462(C) UNDER THE SECURITIES ACT, CHECK THE FOLLOWING BOX AND LIST THE SECURITIES ACT REGISTRATION STATEMENT NUMBER OF THE EARLIER EFFECTIVE REGISTRATION STATEMENT FOR THE SAME OFFERING. / / IF DELIVERY OF THE PROSPECTUS IS EXPECTED TO BE MADE PURSUANT TO RULE 434, PLEASE CHECK THE FOLLOWING BOX. / / ------------------------ CALCULATION OF REGISTRATION FEE - ------------------------------------------------------------------------- ================================================================================================ PROPOSED PROPOSED AMOUNT MAXIMUM MAXIMUM AMOUNT OF TITLE OF EACH CLASS OF TO BE OFFERING AGGREGATE REGISTRATION SECURITIES TO BE REGISTERED REGISTERED PRICE PER UNIT* OFFERING 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 JUNE 26, 1996 - -------------------------------------------------------------------------------- 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 , 1996 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, as amended ("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 (Citicorp 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. In addition, the Commission maintains a Web site (http://www.sec.gov) that contains reports, proxy and information statements, and other information regarding registrants that file electronically with the Commission. 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 part of a Registration Statement filed by the Company with the Commission under the Securities Act of 1933, as amended ("1933 Act"). 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 (i) its Annual Report on Form 10-K for the fiscal year ended January 27, 1996, (ii) the J. C. Penney Funding Corporation ("Funding Corporation") Annual Report on Form 10-K for such fiscal year, (iii) the Company's Quarterly Report on Form 10-Q for the thirteen weeks ended April 27, 1996, and (iv) Funding Corporation's Quarterly Report on Form 10-Q for the thirteen weeks ended April 27, 1996. The aforesaid reports have heretofore been filed by the Company and Funding Corporation with the Commission 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, INCLUDING ANY BENEFICIAL OWNER, TO WHOM THIS PROSPECTUS IS DELIVERED, UPON 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 UNLESS SUCH EXHIBITS ARE SPECIFICALLY INCORPORATED BY REFERENCE INTO SUCH DOCUMENTS). WRITTEN REQUESTS SHOULD BE DIRECTED TO: J. C. PENNEY COMPANY, INC., PUBLIC INFORMATION, P. O. BOX 10001, DALLAS, TEXAS 75301-4302. 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, Puerto Rico, Mexico and Chile. The major 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 ------------------------------------------- -------------- -------------- APR. 27 JAN. 27 JAN. 28 JAN. 29 JAN. 30 JAN. 25 1996 1996 1995 1994 1993 1992 ------- ------- ------- ------- -------------- -------------- Ratios of available income to fixed charges............... 3.6 3.7 5.1 4.9 3.8 2.1 Ratios of available income to combined fixed charges and preferred stock dividend requirement........... 3.3 3.4 4.5 4.3 3.4 1.8
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. 3 5 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 First Trust of California, National Association, Successor Trustee to Bank of America National Trust and Savings Association ("Trustee"). The Indenture in the form in which it was executed is incorporated by reference 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 4 6 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; 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 5 7 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 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 6 8 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 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) 7 9 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 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. 8 10 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. 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. 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 incorporated by reference 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 April 30, 1996, Mr. Lotter owned 31,591 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 April 30, 1996, he had outstanding options to purchase 73,540 shares of Common Stock. EXPERTS The financial statements and schedules as of January 27, 1996, January 28, 1995 and January 29, 1994, 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 27, 1996 and (b) Funding Corporation's Annual Report on Form 10-K for the fiscal year ended January 27, 1996 have been incorporated herein by reference in reliance upon the reports of KPMG Peat Marwick LLP, independent certified public accountants (which reports each dated February 22, 1996 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 LLP 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. 109, Accounting for Income Taxes, adopted by the Company in 1993, to the provisions of the Financial Accounting Standards Board's Statement of Financial Accounting Standards No. 115, Accounting for Certain Investments in Debt and Equity Securities, adopted by the Company in 1994, and to the provisions of the Financial Accounting Standards Board's Statement of Financial Accounting Standards No. 121, Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of, adopted by the Company in 1995. To the extent that KPMG Peat Marwick LLP 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 10 12 by them and any profit realized by them on resale of the Securities may be deemed to be underwriting discounts and commissions, under the 1933 Act. 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 1933 Act. 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.......................................... 100,000* Trustee's fees and expense............................................... 25,000* Accounting fees.......................................................... 30,000* Rating agency fees....................................................... 250,000* Miscellaneous expenses................................................... 42,758* ---------- Total............................................................... $1,000,000 ==========
- --------------- * 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 Bylaws 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 1933 Act 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 First Trust of California, National Association, Successor Trustee to Bank of America National Trust and Savings Association (filed as Exhibit 4(a) to the Registrant's Registration Statement on Form S-3, SEC File No. 33-53275, and incorporated herein by reference) (b) Forms of Debt Securities registered hereunder may include the following, among others: (i) Form of % Note Due (filed as Exhibit 4(b)(i) to the Registrant's Registration Statement on Form S-3, SEC File No. 33-53275, and incorporated herein by reference) (ii) Form of Zero Coupon Note Due (filed as Exhibit 4(b)(ii) to the Registrant's Registration Statement on Form S-3, SEC File No. 33-53275, and incorporated herein by reference) (iii) Form of % Debenture Due (Original Issue Discount) (filed as Exhibit 4(b)(iii) to the Registrant's Registration Statement on Form S-3, SEC File No. 33-53275, and incorporated herein by reference) (iv) Form of % Debenture Due (filed as Exhibit 4(b)(iv) to the Registrant's Registration Statement on Form S-3, SEC File No. 33-53275, and incorporated herein by reference) (v) Form of % Sinking Fund Debenture Due (filed as Exhibit 4(b)(v) to the Registrant's Registration Statement on Form S-3, SEC File No. 33-53275, and incorporated herein by reference) (vi) Form of Extendible Note (filed as Exhibit 4(b)(vi) to the Registrant's Registration Statement on Form S-3, SEC File No. 33-53275, and incorporated herein by reference) (vii) Form of Medium-Term Note, Series (Fixed Rate) (filed as Exhibit 4(b)(vii) to the Registrant's Registration Statement on Form S-3, SEC File No. 33-53275, and incorporated herein by reference) (viii) Form of Medium-Term Note, Series (Floating Rate) (filed as Exhibit 4(b)(viii) to the Registrant's Registration Statement on Form S-3, SEC File No. 33-53275, and incorporated herein by reference) (c) Form of proposed Warrant Agreement (including form of proposed Warrant Certificate) (filed as Exhibit 4(c) to the Registrant's Registration Statement on Form S-3, SEC File No. 33-53275, and incorporated herein by reference) 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 April 27, 1996, January 27, 1996, January 28, 1995, and January 29, 1994, for the 53 weeks ended January 30, 1993, and for the 52 weeks ended January 25, 1992, respectively, were filed as Exhibits 12 (a) and 12(b), respectively, to the Registrant's Quarterly Report on Form 10-Q for the 13 weeks ended April 27, 1996, and the Registrant's Annual Reports on Form 10-K for each of the years ended January 27, 1996, January 28, 1995, January 29, 1994, January 30, 1993, and January 25, 1992, respectively (SEC File No. 1-777), which Reports are incorporated herein by reference)
II-2 15 23(a) Consent of KPMG Peat Marwick LLP (b) Consent of C. R. Lotter (see Exhibit 5) 24 Powers of Attorney 25 Statement of Eligibility on Form T-1 of First Trust of California, National Association, as Successor Trustee under the Indenture pursuant to which the Debt Securities registered hereunder are to be issued 99 Form of Pricing Supplement (filed as Exhibit 99 to the Registrant's Registration Statement on Form S-3, SEC File No. 33-53275, and incorporated herein by reference)
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. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than a 20% change in the maximum aggregate offering price set forth in the "Calculation of Registration Fee" table in the effective 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, Form S-8 or Form F-3, and the information required to be included in a post-effective amendment by those paragraphs is contained in periodic reports filed with or furnished to the Commission 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. II-3 16 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 that 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-4 17 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 JUNE, 1996. J. C. PENNEY COMPANY, INC. By: /s/ D. A. MCKAY ------------------------------- D. A. MCKAY SENIOR VICE PRESIDENT AND CHIEF FINANCIAL OFFICER 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; - ----------------------------------------- Director June 26, 1996 W. R. HOWELL Vice Chairman of the Board and Chief Executive Officer (principal J. E. OESTERREICHER* executive officer); - ----------------------------------------- Director June 26, 1996 J. E. OESTERREICHER President and Chief W. B. TYGART* Operating Officer; - ----------------------------------------- Director June 26, 1996 W. B. TYGART Senior Vice President and Chief Financial /s/ D. A. MCKAY* Officer (principal - ----------------------------------------- financial officer) June 26, 1996 D. A. MCKAY Vice President and Controller W. J. ALCORN* (principal accounting - ----------------------------------------- officer) June 26, 1996 W. J. ALCORN M. A. BURNS* - ----------------------------------------- Director June 26, 1996 M. A. BURNS C. H. CHANDLER* - ----------------------------------------- Director June 26, 1996 C. H. CHANDLER V. E. JORDAN, JR.* - ----------------------------------------- Director June 26, 1996 V. E. JORDAN, JR. GEORGE NIGH* - ----------------------------------------- Director June 26, 1996 GEORGE NIGH
II-5 18
SIGNATURES TITLE DATE ---------- ----- ---- J. C. PFEIFFER* - ----------------------------------------- Director June 26, 1996 J. C. PFEIFFER A. W. RICHARDS* - ----------------------------------------- Director June 26, 1996 A. W. RICHARDS C. S. SANFORD, JR.* - ----------------------------------------- Director June 26, 1996 C. S. SANFORD, JR. R. G. TURNER* - ----------------------------------------- Director June 26, 1996 R. G. TURNER J. D. WILLIAMS* - ----------------------------------------- Director June 26, 1996 J. D. WILLIAMS *By: /s/ D. A. MCKAY ------------------------------------- D. A. MCKAY ATTORNEY-IN-FACT
COPIES OF POWERS OF ATTORNEY AUTHORIZING W. J. ALCORN, R. B. CAVANAUGH, C. R. LOTTER, AND D. A. MCKAY, AND EACH OF THEM, TO SIGN THIS REGISTRATION STATEMENT ON BEHALF OF THE ABOVE NAMED DIRECTORS AND OFFICERS, ARE BEING FILED WITH THE SECURITIES AND EXCHANGE COMMISSION SIMULTANEOUSLY HEREWITH. II-6 19 EXHIBIT INDEX
EXHIBIT NUMBER DESCRIPTION - -------- ----------- 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 First Trust of California, National Association, Successor Trustee to Bank of America National Trust and Savings Association (filed as Exhibit 4(a) to the Registrant's Registration Statement on Form S-3, SEC File No. 33-53275, and incorporated herein by reference) (b) Forms of Debt Securities registered hereunder may include the following, among others: (i) Form of % Note Due (filed as Exhibit 4(b)(i) to the Registrant's Registration Statement on Form S-3, SEC File No. 33-53275, and incorporated herein by reference) (ii) Form of Zero Coupon Note Due (filed as Exhibit 4(b)(ii) to the Registrant's Registration Statement on Form S-3, SEC File No. 33-53275, and incorporated herein by reference) (iii) Form of % Debenture Due (Original Issue Discount) (filed as Exhibit 4(b)(iii) to the Registrant's Registration Statement on Form S-3, SEC File No. 33-53275, and incorporated herein by reference) (iv) Form of % Debenture Due (filed as Exhibit 4(b)(iv) to the Registrant's Registration Statement on Form S-3, SEC File No. 33-53275, and incorporated herein by reference) (v) Form of % Sinking Fund Debenture Due (filed as Exhibit 4(b)(v) to the Registrant's Registration Statement on Form S-3, SEC File No. 33-53275, and incorporated herein by reference) (vi) Form of Extendible Note (filed as Exhibit 4(b)(vi) to the Registrant's Registration Statement on Form S-3, SEC File No. 33-53275, and incorporated herein by reference) (vii) Form of Medium-Term Note, Series (Fixed Rate) (filed as Exhibit 4(b)(vii) to the Registrant's Registration Statement on Form S-3, SEC File No. 33-53275, and incorporated herein by reference) (viii) Form of Medium-Term Note, Series (Floating Rate) (filed as Exhibit 4(b)(viii) to the Registrant's Registration Statement on Form S-3, SEC File No. 33-53275, and incorporated herein by reference) (c) Form of proposed Warrant Agreement (including form of proposed Warrant Certificate) (filed as Exhibit 4(c) to the Registrant's Registration Statement on Form S-3, SEC File No. 33-53275, and incorporated herein by reference) 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 April 27, 1996, January 27, 1996, January 28, 1995, and January 29, 1994, for the 53 weeks ended January 30, 1993, and for the 52 weeks ended January 25, 1992, respectively, were filed as Exhibits 12 (a) and 12(b), respectively, to the Registrant's Quarterly Report on Form 10-Q for the 13 weeks ended April 27, 1996, and the Registrant's Annual Reports on Form 10-K for each of the years ended January 27, 1996, January 28, 1995, January 29, 1994, January 30, 1993, and January 25, 1992, respectively (SEC File No. 1-777), which Reports are incorporated herein by reference) 23(a) Consent of KPMG Peat Marwick LLP (b) Consent of C. R. Lotter (see Exhibit 5)
20
EXHIBIT NUMBER DESCRIPTION - ------- ----------- 24 Powers of Attorney 25 Statement of Eligibility on Form T-1 of First Trust of California, National Association, as Successor Trustee under the Indenture pursuant to which the Debt Securities registered hereunder are to be issued 99 Form of Pricing Supplement (filed as Exhibit 99 to the Registrant's Registration Statement on Form S-3, SEC File No. 33-53275, and incorporated herein by reference)
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 _______ ___, 1996 CS First Boston Corporation Park Avenue Plaza New York, New York 10055. Merrill Lynch, Pierce, Fenner & Smith Incorporated North Tower, World Financial Center, New York, New York 10281-1310 Morgan Stanley & Co. Incorporated, 1221 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) 2 registered pursuant to such Registration Statement reduced by the aggregate amount of any other Registered Securities sold otherwise than pursuant to Section 3 or Section 11 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 First Trust of California, National Association, Successor Trustee to 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 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. 333-_____), 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, as amended ("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 2 3 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. (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 3 4 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 Day" 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 $1,000 or integral multiples 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 4 5 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 the Issuer, 6501 Legacy Drive, Plano, Texas, not later than 10:00 a.m., New York City time, on the date of 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 5 6 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 Securities Exchange Act of 1934, as amended ("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 proposes 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 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 6 7 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 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 of 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 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 7 8 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 obligations 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 of 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 8 9 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; (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 9 10 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 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 10 11 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 material breach or material 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 bylaws 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, the Vice Chairman of the Board, the President and Chief Operating Officer 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 11 12 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 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 LLP, 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 LLP 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 12 13 as amended or supplemented at each such time. Each such acceptance by the Issuer of an offer to purchase 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, Vice Chairman of the Board, the President and Chief Operating Officer 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 of such certificate, a 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 13 14 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 in all material respects 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 14 15 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 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 in all material respects 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), or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading, and will reimburse each Agent for any legal or 15 16 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 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 16 17 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 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. 17 18 (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 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 obligations 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. 18 19 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) 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 19 20 shall be deemed to have been duly given if mailed or transmitted by any standard form of telecommunication. Notices to CS First Boston Corporation shall be directed to it at Park Avenue Plaza, New York, New York 10055, Attention: Short and Medium-Term Finance Department, phone number (212) 909-2575, fax number (212) 318-1498; to Merrill Lynch & Co. shall be directed to it at Merrill Lynch, Pierce, Fenner & Smith Incorporated, North Tower, 10th Floor, World Financial Center, New York, New York 10281-1310, Attention: MTN Product Management, phone number (212) 449-7476, fax number (212) 449-2234; to Morgan Stanley & Co. Incorporated shall be directed to it at 1585 Broadway, 2nd Floor, New York, New York 10036, Attention: Manager - Continuously Offered Products, phone number (212) 761-2000, fax number (212) 761-0780, with a copy to 1585 Broadway, 34th Floor, New York, New York 10036 Attention: Peter Cooper, Investment Banking Information Center, phone number (212) 761-8385, fax number (212) 761-0260; and to J.P. Morgan Securities Inc. shall be directed to it at 60 Wall Street, New York, New York 10260, Attention: Medium Term Note Department, phone number (212) 648-0591, fax number (212) 648-5907; and notices to the Issuer shall be directed to it if by mail, to P.O. Box 10001, Dallas, Texas 75301-0001, 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 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. 20 21 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: 22 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
23 EXHIBIT B ADMINISTRATIVE PROCEDURES The Medium-Term Notes - Series A due nine months or more from their issue date ("Notes"), are to be offered on a continuing basis by J. C. Penney Company, Inc. ("Issuer"). CS First Boston Corporation, Merrill Lynch, Pierce, Fenner & Smith Incorporated, Morgan Stanley & Co. Incorporated and J. P. Morgan Securities Inc., 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 ______ __, 1996 ("Agency Agreement"), among the Issuer and the Agents and will be issued pursuant to an Indenture, dated as of April 1, 1994 (said Indenture, and all Indentures supplemental thereto, being hereinafter called the "Indenture"), between the Issuer and First Trust of California, National Association, Successor Trustee to Bank of America National Trust and Savings Association ("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 ______ __, 1996, 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 ______ __, 1996, 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 24 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 ("Certificated 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 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 made 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 25 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 ("Issue 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. 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 or more after its Issue Date. The minimum aggregate amount of Notes which may be offered to any purchaser will be $1,000 or any integral multiple 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 3 26 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 interest 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 applicable 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 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 4 27 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 5 28 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 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. 6 29 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. 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 7 30 The Issuer will cause 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 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 $1,000 or any integral multiple thereof, or, in the case of Foreign Currency Notes, in such minimum denomination, not less than the equivalent of $1,000 or any integral multiple 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. 8 31 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, 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"): 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. 9 32 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 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. 10 33 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' Certificate and 11 34 verification thereof, the Paying Agent will cause the Certificated Notes to be completed and authenticated and hold the Certificated Notes for delivery against payment. The Paying Agent will deliver the Certificated 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 Certificated 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 12 35 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. 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 ______ __, 1996, and a Medium-Term Note Certificate Agreement between the Paying Agent and DTC dated as of December 2, 1988, 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 $1,000 or any integral multiple 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. 13 36 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. 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 14 37 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 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 15 38 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 available 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 16 39 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 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 17 40 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. 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 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 (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 18 41 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: 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. 19 42 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. 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 Presenting 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 Presenting 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 20 43 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 designated account of J.C. Penney Company, Inc., at Chemical Bank, New York, New York (ABA No. 0210 00128). 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 cancelation 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 immediately reassigned. If withdrawal messages 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 21 44 Participants 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. 22 45 EXHIBIT C PURCHASE AGREEMENT , 1996 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 , 1996 (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. 46 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 in all material respects 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 47 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. 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: EX-5 3 OPINION OF C.R. LOTTER 1 [JC PENNEY LETTERHEAD] Exhibit 5 June 26, 1996 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, and its Bylaws, 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 First Trust of California, National Association, as Successor Trustee ("Trustee") to Bank of America National Trust and Savings Association, 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 general applicability relating to or affecting creditors' rights and to general equity principles. 2 (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 4 CONSENT OF KPMG PEAT MARWICK 1 Exhibit 23a CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS To the Board of Directors of 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. 109, Accounting for Income Taxes, in 1993, Statement of Financial Accounting Standards No. 115, Accounting for Certain Investments in Debt and Equity Securities, in 1994, and Statement of Financial Accounting Standards No. 121, Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of, in 1995. /S/ KPMG Peat Marwick LLP Dallas, Texas June 26, 1996 EX-24 5 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. ("Commission"), under the provisions of the Securities Act of 1933, as amended, 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, W. J. Alcorn, and R. B. Cavanaugh, 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 and all 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 14th day of February, 1996. /s/ W. R. Howell /s/ J. E. Oesterreicher - --------------------------------------- -------------------------------------------- W. R. Howell J. E. Oesterreicher Chairman of the Board; Vice Chairman of the Board Director and Chief Executive Officer (principal executive officer); Director /s/ W. B. Tygart /s/ D. A. McKay - --------------------------------------- --------------------------------------------- W. B. Tygart D. A. McKay President and Chief Operating Officer; Senior Vice President and Director Chief Financial Officer (principal financial officer) /s/ W. J. Alcorn - --------------------------------------- W. J. Alcorn Vice President and Controller (principal accounting officer)
2 /s/ M. A. Burns /s/ C. H. Chandler - --------------------------------------- --------------------------------------------- M. A. Burns C. H. Chandler Director Director /s/ V. E. Jordan, Jr. /s/ George Nigh - --------------------------------------- --------------------------------------------- V. E. Jordan, Jr. George Nigh Director Director /s/ J. C. Pfeiffer /s/ A. W. Richards - --------------------------------------- --------------------------------------------- J. C. Pfeiffer A. W. Richards Director Director /s/ C. S. Sanford, Jr. /s/ R. G. Turner - --------------------------------------- --------------------------------------------- C. S. Sanford, Jr. R. G. Turner Director Director /s/ J. D. Williams - --------------------------------------- J. D. Williams Director
EX-25 6 STATEMENT OF ELIGIBILITY ON FORM T-1 1 EXHIBIT 25 SECURITIES AND EXCHANGE COMMISSION WASHINGTON D.C. 20549 __________________________________ FORM T-1 STATEMENT OF ELIGIBILITY UNDER THE TRUST INDENTURE ACT OF 1939 OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE __________________________________ FIRST TRUST OF CALIFORNIA, NATIONAL ASSOCIATION (Exact name of trustee as specified in its charter) NOT APPLICABLE 94-3160100 (Jurisdiction of incorporation or (I.R.S. Employer organization if not a U.S. National Bank) Identification No.) 1 CALIFORNIA STREET, SUITE 400 SAN FRANCISCO, CALIFORNIA 94111 (Address of principal executive offices) (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 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. (b) Whether it is authorized to exercise corporate trust powers. Yes 2. AFFILIATIONS WITH THE OBLIGOR If the obligor is an affiliate of the Trustee, describe each such affiliation. None Items 3-15 are not applicable because to the best of the Trustee's knowledge the obligor is not in default under any Indenture for which the Trustee acts as Trustee. 16. LIST OF EXHIBITS List below all exhibits filed as a part of this statement of eligibility. Each of the exhibits listed below, other than Exhibit 6 and 7, are filed with Securities and Exchange Commission as exhibits to Statement of Eligibility under the Trust Indenture Act of 1939, as amended, in connection with the Registration Statement of Potlatch Corporation, File No. 33-50826, under the same exhibit number and are incorporated herein by reference. 1. Copy of Articles of Association. 2. Copy of Certificate of Authority to Commence Business. 3. Authorization of the Trustee to exercise corporate trust powers (included in Exhibits 1 and 2; no separate instrument). 4. Copy of existing By-Laws. 5. Copy of each Indenture referred to in Item 4. N/A. 6. The consents of the Trustee required by Section 321 (b) of the Act. 7. Copy of the latest report of condition of the Trustee published pursuant to law or the requirements of its supervising or examining authority. 3 SIGNATURE Pursuant to the requirements of the Trust Indenture Act of 1939, the Trustee, First Trust of California, National Association, an Association organized and existing under the laws of the United States, has duly caused this statement of eligibility to be signed on its behalf by the undersigned, thereunto duly authorized, and its seal to be hereunto affixed and attested, on the 26th day of June, 1996. FIRST TRUST OF CALIFORNIA, NATIONAL ASSOCIATION [SEAL] /s/ Gretchen L. Middents ------------------------ Gretchen L. Middents Assistant Vice President
/s/ William W. MacMillan - ------------------------ William W. MacMillan Assistant Secretary 4 EXHIBIT 6 CONSENT In accordance with Section 321(b) of the Trust Indenture Act of 1939, the undersigned, FIRST TRUST OF CALIFORNIA, NATIONAL ASSOCIATION hereby consents that reports of examination of the undersigned by Federal, State, Territorial or District authorities may be furnished by such authorities to the Securities and Exchange Commission upon its request therefor. Dated: June 26, 1996 FIRST TRUST OF CALIFORNIA, NATIONAL ASSOCIATION /s/ Gretchen L. Middents ------------------------ Gretchen L. Middents Assistant Vice President
5 FIRST TRUST OF CALIFORNIA, N.A. Call Date: 03/31/96 ST-BK:61431 FFIEC 033 101 CALIFORNIA STREET, SUITE 1150 VENDOR ID: D CERT: 33626 PAGE RC-1 SAN FRANCISCO, CA 94111 Transit Number: 91000020 Consolidated Report of Condition for Insured Commercial and State-Chartered Savings Banks for March 31, 1996 All schedules are to reported in thousands of dollars. Unless otherwise indicated, report the amount outstanding as of the last business day of the quarter. Schedule RC - Balance Sheet
C200<- Dollar Amounts in Thousands - ------------------------------------------------------------------------------------------------------------------------ ASSETS < 1. Cash and balances due from depository institutions (from schedule RC-A): RCON ---- a. Noninterest-bearing balances and currency and coin (1)____________________ 0081. . 46,512 1.a b. Interest-bearing balances (2)_____________________________________________ 0071. . 0 1.b 2. Securities: a. Held-to-maturity securities (from Schedule RC-B, column A)________________ 1754. . 0 2.a b. Available-for-sale securities (from Schedule RC-B, column D)______________ 1773. . 3,916 2.b 3. Federal funds sold and securities purchased under agreements to resell: a. Federal funds sold_________________________________________________________ 0276. . 0 3.a b. Securities purchased under agreements to resell____________________________ 0277. . 0 3.b 4. Loans and lease financing receivables: a. Loans and leases, net of unearned income RCON ---- (from Schedule RC-C)______________________ 2122 . . 0 . . . . . . 4.a b. LESS: Allowance for loan and lease losses_____ 3123 . . 0 . . . . . . 4.b c. LESS: Allocated transfer risk reserve__________ 3128 . . 0 . . . . . . 4.c d. Loans and leases, net of unearned income, allowance, and reserve (item 4.a minus 4.b and 4.c)_______________________ 2125. . 0 4.d 5. Trading assets________________________________________________________________ 3545. . 0 5. 6. Premises and fixed assets (including capitalized leases)_____________________ 2145. . 430 6. 7. Other real estate owned (from Schedule RC-M)_________________________________ 2150. . 0 7. 8. Investments in unconsolidated subsidiaries and associated companies (from Schedule RC-M)_______________________________________________________________ 2130. . 0 8. 9. Customers' liability to this bank on acceptances outstanding_________________ 2155. . 0 9. 10. Intangible assets (from Schedule RC-M)_______________________________________ 2143. . 85,164 10. 11. Other assets (from Schedule RC-F)____________________________________________ 2160. . 8,501 11. 12 Total assets (sum of items 1 through 11)______________________________________ 2170. . 144,523 12. - ----------- (1) Includes cash items in process of collection and unposted debits. (2) Includes time certificates of deposit not held for trading.
6 Schedule RC - Continued
Dollar Amounts in Thousands - ------------------------------------------------------------------------------------------------------------------------ LIABILITIES 13. Deposits: a. In domestic offices (sum of totals of RCON ---- columns A and C from Schedule RC-E)_________________________________ 2200. . 0 13.a RCON ---- (1) Noninterest-bearing (1)_______________________ 6631. . 0 . . . 13.a.1 (2) Interest-bearing______________________________ 6636. . 0 . . . 13.a.2 b. In foreign offices, Edge and Agreement subsidiaries, and IBF's______ . . . (1) Noninterest-bearing_____________________________________________ . . . (2) Interest-bearing________________________________________________ . . . 14. Federal funds purchased and securities sold under agreements to repurchase: a. Federal funds purchased______________________________________________ 0278. . 0 14.a b. Securities sold under agreements to repurchase_______________________ 0279. . 0 14.b 15. a. Demand Notes issued to the U.S. Treasury_____________________________ 2840. . 0 15.a b. Trading liabilities__________________________________________________ 3548. . 0 15.b 16. Other borrowed money: a. With a remaining maturity of one year or less________________________ 2332. . 345 16.a b. With a remaining maturity of more than one year______________________ 2333. . 0 16.b 17. Mortgage indebtedness and obligations under capitalized leases__________ 2910. . 0 17. 18. Bank's liability on acceptances executed and outstanding________________ 2920. . 0 18. 19. Subordinated notes and debentures_______________________________________ 3200. . 0 19. 20. Other liabilities (from Schedule RC-G)__________________________________ 2930. . 21,441 20. 21. Total liabilities (sum of items 13 through 20) _________________________ 2948. . 21,786 21. 22. Limited-life preferred stock and related surplus________________________ 3282. . 0 22. EQUITY CAPITAL 23. Perpetual preferred stock and related surplus___________________________ 3838. . 0 23. 24. Common stock____________________________________________________________ 3230. . 1,000 24. 25. Surplus(exclude all surplus related to preferred stock)_________________ 3839. . 126,260 25. 26. a. Undivided profits and capital reserve________________________________ 3632. . (4,523) 26.a b. Net unrealized holding gains (losses) on available-for-sale securities 8434. . 0 26.b 27. Cumulative foreign currency translation adjustments . . . 27. 28. Total equity capital (sum of items 23 through 27)_______________________ 3210 122,737 28. 29. Total liabilities, limited-life preferred stock, and equity capital (sum of items 21, 22, and 28)________________________________________________ 3300. . 144,523 29. Memorandum To be reported only with the March Report of Condition. 1. Indicate in the box at the right the number of the statement below that best describes the most comprehensive level of auditing work performed for the bank by independent external auditors as of any date during 1995____________________________________________________________________ 6724. . 2 M.1
1 = Independent audit of the bank conducted in accordance 4 = Directors' examination of the bank performed by other with generally accepted auditing standards by a certified external auditors (may be required by state chartering public accounting firm which submits a report on the bank authority) 2 = Independent audit of the bank's parent holding company 5 = Review of the bank's financial statements by external conducted in accordance with generally accepted auditing auditors standards by a certified public accounting firm which 6 = Compilation of the bank's financial statements by submits a report on the consolidated holding company (but external auditors not on the bank separately) 7 = Other audit procedures (excluding tax preparation work) 3 = Directors' examination of the bank conducted in accordance 8 = No external audit work with generally accepted auditing standards by a certified public accounting firm (may be required by state charter- ing authority)
# (1) Includes total demand deposits and noninterest-bearing time and savings deposits. -----END PRIVACY-ENHANCED MESSAGE-----