EXHIBIT 10.8

 

 

 

 

 

COMMERCIAL PAPER DEALER AGREEMENT

[4(2) Program; Guaranteed]

 

among

 

Federated Retail Holdings, Inc., as Issuer,

Federated Department Stores, Inc., as Guarantor

and

J.P. Morgan Securities Inc., as Dealer

 

 

 

Concerning Notes to be issued pursuant to an Issuing and Paying Agent Agreement,
dated as of January 30, 1997, as amended by the letter agreement, dated August
30, 2005, between the Issuer and Citibank, N.A., as Issuing and Paying Agent

 

 

Dated as of August 30, 2005

Commercial Paper Dealer Agreement

[4(2) Program; Guaranteed]

This agreement (the "Agreement") sets forth the understandings among the Issuer,
the Guarantor and the Dealer, each named on the cover page hereof, in connection
with the issuance and sale by the Issuer of its short-term promissory notes (the
"Notes") through the Dealer.

The Guarantor has agreed unconditionally and irrevocably to guarantee payment in
full of the principal of and interest (if any) on all such Notes of the Issuer,
pursuant to a guarantee, dated the date hereof, in the form of Exhibit D hereto
(the "Guarantee").

Certain terms used in this Agreement are defined in Section 6 hereof.

The Addendum to this Agreement, and any Annexes or Exhibits described in this
Agreement or such Addendum, are hereby incorporated into this Agreement and made
fully a part hereof.

    Offers, Sales and Resales of Notes.
 1. While (i) the Issuer has and shall have no obligation to sell the Notes to
    the Dealer or to permit the Dealer to arrange any sale of the Notes for the
    account of the Issuer, and (ii) the Dealer has and shall have no obligation
    to purchase the Notes from the Issuer or to arrange any sale of the Notes
    for the account of the Issuer, the parties hereto agree that in any case
    where the Dealer purchases Notes from the Issuer, or arranges for the sale
    of Notes by the Issuer, such Notes will be purchased or sold by the Dealer
    in reliance on the representations, warranties, covenants and agreements of
    the Issuer and the Guarantor contained herein or made pursuant hereto and on
    the terms and conditions and in the manner provided herein.
 2. So long as this Agreement shall remain in effect, and in addition to the
    limitations contained in Section 1.7 hereof, neither the Issuer nor the
    Guarantor shall, without the consent of the Dealer, offer, solicit or accept
    offers to purchase, or sell, any Notes except (a) in transactions with one
    or more dealers which may from time to time after the date hereof become
    dealers with respect to the Notes by executing with the Issuer and the
    Guarantor one or more agreements which contain provisions substantially
    identical to those contained in Section 1 of this Agreement, of which the
    Issuer and the Guarantor hereby undertakes to provide the Dealer prompt
    notice or (b) in transactions with the other dealers listed on the Addendum
    hereto, which are executing agreements with the Issuer and the Guarantor
    which contain provisions substantially identical to Section 1 of this
    Agreement contemporaneously herewith. In no event shall the Issuer or the
    Guarantor offer, solicit or accept offers to purchase, or sell, any Notes
    directly on its own behalf in transactions with persons other than
    broker-dealers as specifically permitted in this Section 1.2.
 3. The Notes shall be in a minimum denomination of $250,000 or integral
    multiples of $1,000 in excess thereof, will bear such interest rates, if
    interest bearing, or will be sold at such discount from their face amounts,
    as shall be agreed upon by the Dealer and the Issuer, shall have a maturity
    not exceeding 397 days from the date of issuance and may have such terms as
    are specified in Exhibit C hereto or the Private Placement Memorandum. The
    Notes shall not contain any provision for extension, renewal or automatic
    "rollover."
 4. The authentication and issuance of, and payment for, the Notes shall be
    effected in accordance with the Issuing and Paying Agent Agreement, and the
    Notes shall be either individual physical certificates or book-entry notes
    evidenced by one or more master notes (each, a "Master Note") registered in
    the name of The Depository Trust Company ("DTC") or its nominee, in the form
    or forms annexed to the Issuing and Paying Agent Agreement.
 5. If the Issuer and the Dealer shall agree on the terms of the purchase of any
    Note by the Dealer or the sale of any Note arranged by the Dealer
    (including, but not limited to, agreement with respect to the date of issue,
    purchase price, principal amount, maturity and interest rate or interest
    rate index and margin (in the case of interest-bearing Notes) or discount
    thereof (in the case of Notes issued on a discount basis), and appropriate
    compensation for the Dealer's services hereunder) pursuant to this
    Agreement, the Issuer shall cause such Note to be issued and delivered in
    accordance with the terms of the Issuing and Paying Agent Agreement and
    payment for such Note shall be made by the purchaser thereof, either
    directly or through the Dealer, to the Issuing and Paying Agent, for the
    account of the Issuer. Except as otherwise agreed, in the event that the
    Dealer is acting as an agent and a purchaser shall either fail to accept
    delivery of or make payment for a Note on the date fixed for settlement, the
    Dealer shall promptly notify the Issuer, and if the Dealer has theretofore
    paid the Issuer for the Note, the Issuer will promptly return such funds to
    the Dealer against its return of the Note to the Issuer, in the case of a
    certificated Note, and upon notice of such failure in the case of a
    book-entry Note. If such failure occurred for any reason other than default
    by the Dealer, the Issuer and the Guarantor agree, jointly and severally, to
    reimburse the Dealer on an equitable basis for the Dealer's loss of the use
    of such funds for the period such funds were credited to the Issuer's
    account.
 6. The Dealer, the Issuer and the Guarantor hereby establish and agree to
    observe the following procedures in connection with offers, sales and
    subsequent resales or other transfers of the Notes:
     a. Offers and sales of the Notes by or through the Dealer shall be made
        only to: (i) investors reasonably believed by the Dealer to be Qualified
        Institutional Buyers, Institutional Accredited Investors or
        Sophisticated Individual Accredited Investors and (ii) non-bank
        fiduciaries or agents that will be purchasing Notes for one or more
        accounts, each of which is reasonably believed by the Dealer to be an
        Institutional Accredited Investor or Sophisticated Individual Accredited
        Investor.
     b. Resales and other transfers of the Notes by the holders thereof shall be
        made only in accordance with the restrictions in the legend described in
        clause (e) below.
     c. No general solicitation or general advertising shall be used in
        connection with the offering of the Notes. Without limiting the
        generality of the foregoing, without the prior written approval of the
        Dealer, neither the Issuer nor the Guarantor shall issue any press
        release or place or publish any "tombstone" or other advertisement
        relating to the Notes.
     d. No sale of Notes to any one purchaser shall be for less than $250,000
        principal or face amount, and no Note shall be issued in a smaller
        principal or face amount. If the purchaser is a non-bank fiduciary
        acting on behalf of others, each person for whom such purchaser is
        acting must purchase at least $250,000 principal or face amount of
        Notes.
     e. Offers and sales of the Notes by the Issuer through the Dealer acting as
        agent for the Issuer shall be made in accordance with Rule 506 under the
        Securities Act, and shall be subject to the restrictions described in
        the legend appearing on Exhibit A hereto. A legend substantially to the
        effect of such Exhibit A shall appear as part of the Private Placement
        Memorandum used in connection with offers and sales of Notes hereunder,
        as well as on each individual certificate representing a Note and each
        Master Note representing book-entry Notes offered and sold pursuant to
        this Agreement.
     f. The Dealer shall furnish or shall have furnished to each purchaser of
        Notes for which it has acted as the dealer a copy of the then-current
        Private Placement Memorandum unless such purchaser has previously
        received a copy of the Private Placement Memorandum as then in effect.
        The Private Placement Memorandum shall expressly state that any person
        to whom Notes are offered shall have an opportunity to ask questions of,
        and receive information from the Issuer, the Guarantor and the Dealer
        and shall provide the names, addresses and telephone numbers of the
        persons from whom information regarding the Issuer and the Guarantor may
        be obtained.
     g. The Issuer and the Guarantor, jointly and severally, agree for the
        benefit of the Dealer and each of the holders and prospective purchasers
        from time to time of the Notes that, if at any time neither the Issuer
        nor the Guarantor shall be subject to Section 13 or 15(d) of the
        Exchange Act, the Issuer and the Guarantor will furnish, upon request
        and at their expense, to the Dealer and to holders and prospective
        purchasers of Notes information required by Rule 144A(d)(4)(i) in
        compliance with Rule 144A(d).
     h. In the event that any Note offered or to be offered by the Dealer would
        be ineligible for resale under Rule 144A, the Issuer shall immediately
        notify the Dealer (by telephone, confirmed in writing) of such fact and
        shall promptly prepare and deliver to the Dealer an amendment or
        supplement to the Private Placement Memorandum describing the Notes that
        are ineligible, the reason for such ineligibility and any other relevant
        information relating thereto.
     i. The Issuer and the Guarantor represent that neither the Issuer nor the
        Guarantor is currently issuing commercial paper in the United States
        market in reliance upon the exemption provided by Section 3(a)(3) of the
        Securities Act. The Issuer and the Guarantor agree that, if the Issuer
        or the Guarantor shall issue commercial paper after the date hereof in
        reliance upon such exemption, (a) the proceeds from the sale of the
        Notes will be segregated from the proceeds of the sale of any such
        commercial paper by being placed in a separate account; (b) the Issuer
        and the Guarantor will institute appropriate corporate procedures to
        ensure that the offers and sales of notes issued by the Issuer or the
        Guarantor, as the case may be, pursuant to the Section 3(a)(3) exemption
        are not integrated with offerings and sales of Notes hereunder; and (c)
        the Issuer and the Guarantor will comply with each of the requirements
        of Section 3(a)(3) of the Securities Act in selling commercial paper or
        other short-term debt securities other than the Notes in the United
        States.
     j. The Issuer hereby agrees that, not later than 15 days after the first
        sale of Notes as contemplated by this Agreement, it will file with the
        SEC a notice on Form D in accordance with Rule 503 under the Securities
        Act and that it will thereafter file such amendments to such notice as
        Rule 503 may require.

 7. Each of the Issuer and the Guarantor hereby represents and warrants to the
    Dealer, in connection with offers, sales and resales of Notes, as follows:
     a. Except for offers and sales of Notes pursuant to the May Agreements or
        as permitted by Section 1.6(i), the Issuer and the Guarantor hereby
        confirm to the Dealer that within the preceding six months neither the
        Issuer nor the Guarantor nor any person other than the Dealer or the
        other dealers referred to in Section 1.2 hereof acting on behalf of the
        Issuer or the Guarantor has offered or sold any Notes, or any
        substantially similar security of the Issuer or the Guarantor
        (including, without limitation, medium-term notes issued by the Issuer
        or the Guarantor), to, or solicited offers to buy any such security
        from, any person other than the Dealer or the other dealers referred to
        in Section 1.2 hereof. The Issuer and the Guarantor also agree that
        (except as permitted by Section 1.6(i)), as long as the Notes are being
        offered for sale by the Dealer and the other dealers referred to in
        Section 1.2 hereof as contemplated hereby and until at least six months
        after the offer of Notes hereunder has been terminated, neither the
        Issuer nor the Guarantor nor any person other than the Dealer or the
        other dealers referred to in Section 1.2 hereof (except as contemplated
        by Section 1.2 hereof) will offer the Notes or any substantially similar
        security of the Issuer for sale to, or solicit offers to buy any such
        security from, any person other than the Dealer or the other dealers
        referred to in Section 1.2 hereof that would be integrated with the
        offering or sale of the Notes in a manner that would require
        registration of the Notes under the Securities Act, it being understood
        that such agreement is made with a view to bringing the offer and sale
        of the Notes within the exemption provided by Section 4(2) of the
        Securities Act and Rule 506 thereunder and shall survive any termination
        of this Agreement. Each of the Issuer and the Guarantor hereby
        represents and warrants that it has not taken or omitted to take, and
        will not take or omit to take, any action that would cause the offering
        and sale of Notes hereunder to be integrated with any other offering of
        securities in a manner that would require registration of the Notes
        under the Securities Act, whether such offering is made by the Issuer or
        the Guarantor or some other party or parties.
     b. In the event that the Dealer purchases Notes as principal and does not
        resell such Notes on the day of such purchase, to the extent necessary
        to comply with Regulation T and the interpretations thereunder, the
        Dealer will sell such Notes either (i) only to offerees it reasonably
        believes to be Qualified Institutional Buyers or to Qualified
        Institutional Buyers it reasonably believes are acting for other
        Qualified Institutional Buyers, in each case in accordance with Rule
        144A or (ii) in a manner which would not cause a violation of Regulation
        T and the interpretations thereunder.

Representations and Warranties of the Issuer and the Guarantor.

Each of the Issuer and the Guarantor represents and warrants as to itself that:

 1.  The Issuer is a corporation duly organized, validly existing and in good
     standing under the laws of the jurisdiction of its incorporation and has
     all the requisite power and authority to execute, deliver and perform its
     obligations under the Notes, this Agreement and the Issuing and Paying
     Agent Agreement.
 2.  The Guarantor is a corporation duly organized, validly existing and in good
     standing under the laws of the jurisdiction of its incorporation and has
     all the requisite power and authority to execute, deliver and perform its
     obligations under the Guarantee and this Agreement.
 3.  This Agreement and the IPA Letter Agreement have been duly authorized,
     executed and delivered by the Issuer and the Guarantor and this Agreement
     and the Issuing and Paying Agent Agreement constitute legal, valid and
     binding obligations of the Issuer and the Guarantor, as the case may be,
     enforceable against the Issuer and the Guarantor, as the case may be, in
     accordance with their terms, subject to applicable bankruptcy, insolvency
     and similar laws affecting creditors' rights generally, and subject, as to
     enforceability, to general principles of equity (regardless of whether
     enforcement is sought in a proceeding in equity or at law).
 4.  The Notes have been duly authorized, and when issued as provided in the
     Issuing and Paying Agent Agreement, will be duly and validly issued and
     will constitute legal, valid and binding obligations of the Issuer
     enforceable against the Issuer in accordance with their terms, subject to
     applicable bankruptcy, insolvency and similar laws affecting creditors'
     rights generally, and subject, as to enforceability, to general principles
     of equity (regardless of whether enforcement is sought in a proceeding in
     equity or at law).
 5.  The Guarantee has been duly authorized, and when the Notes have been issued
     as provided in the Issuing and Paying Agent Agreement, will be duly
     executed and delivered by the Guarantor and constitute the legal, valid and
     binding obligation of the Guarantor enforceable against the Guarantor in
     accordance with its terms subject to applicable bankruptcy, insolvency or
     similar laws affecting creditors' rights generally, and subject, as to
     enforceability, to general principles of equity (regardless of whether
     enforcement is sought in a proceeding in equity or at law).
 6.  The offer and sale of the Notes and the Guarantee in the manner
     contemplated hereby do not require registration of the Notes or the
     Guarantee under the Securities Act, pursuant to the exemption from
     registration contained in Section 4(2) thereof, and no indenture in respect
     of the Notes or the Guarantee is required to be qualified under the Trust
     Indenture Act of 1939, as amended.
 7.  The Notes and the Guarantee will rank at least pari passu with all other
     unsecured and unsubordinated indebtedness of the Issuer and the Guarantor,
     respectively.
 8.  Except as provided in Section 1.6(j) hereof, no consent or action of, or
     filing or registration with, any governmental or public regulatory body or
     authority, including the SEC, is required to authorize, or is otherwise
     required in connection with the execution, delivery or performance of, this
     Agreement, the Notes, the Guarantee or the Issuing and Paying Agent
     Agreement, except as may be required by the securities or Blue Sky laws of
     the various states in connection with the offer and sale of the Notes.
 9.  Neither the execution and delivery of this Agreement, the Guarantee and the
     Issuing and Paying Agent Agreement, nor the issuance of the Notes in
     accordance with the Issuing and Paying Agent Agreement, nor the fulfillment
     of or compliance with the terms and provisions hereof or thereof by the
     Issuer or the Guarantor, as the case may be, will (i) result in the
     creation or imposition of any mortgage, lien, charge or encumbrance of any
     nature whatsoever upon any of the properties or assets of the Issuer or the
     Guarantor, or (ii) violate or result in a breach or a default under any of
     the terms of the charter documents or by-laws of the Issuer or the
     Guarantor, any contract or instrument to which the Issuer or the Guarantor
     is a party or by which it or its property is bound, or any law or
     regulation, or any order, writ, injunction or decree of any court or
     government instrumentality, to which the Issuer or the Guarantor is subject
     or by which it or its property is bound, which breach or default might have
     a material adverse effect on the condition (financial or otherwise),
     operations or business prospects of the Issuer or the Guarantor or the
     ability of the Issuer or the Guarantor, as the case may be, to perform its
     obligations under this Agreement, the Notes, the Guarantee or the Issuing
     and Paying Agent Agreement.
 10. There is no litigation or governmental proceeding pending, or to the
     knowledge of the Issuer or the Guarantor threatened, against or affecting
     the Issuer or the Guarantor or any of their subsidiaries which might result
     in a material adverse change in the condition (financial or otherwise),
     operations or business prospects of the Issuer or the Guarantor or the
     ability of the Issuer or the Guarantor, as the case may be, to perform its
     obligations under this Agreement, the Notes, the Guarantee or the Issuing
     and Paying Agent Agreement.
 11. Neither the Issuer nor the Guarantor is an "investment company" within the
     meaning of the Investment Company Act of 1940, as amended.
 12. Neither the Private Placement Memorandum nor the Company Information
     contains any untrue statement of a material fact or omits to state a
     material fact required to be stated therein or necessary to make the
     statements therein, in light of the circumstances under which they were
     made, not misleading.
 13. Each (a) issuance of Notes by the Issuer hereunder and (b) amendment or
     supplement of the Private Placement Memorandum shall be deemed a
     representation and warranty by each of the Issuer and the Guarantor to the
     Dealer, as of the date thereof, that, both before and after giving effect
     to such issuance and after giving effect to such amendment or supplement,
     (i) the representations and warranties given by the Issuer and the
     Guarantor set forth in this Section 2 remain true and correct on and as of
     such date as if made on and as of such date, (ii) in the case of an
     issuance of Notes, the Notes being issued on such date have been duly and
     validly issued and constitute legal, valid and binding obligations of the
     Issuer, enforceable against the Issuer in accordance with their terms,
     subject to applicable bankruptcy, insolvency and similar laws affecting
     creditors' rights generally and subject, as to enforceability, to general
     principles of equity (regardless of whether enforcement is sought in a
     proceeding in equity or at law) and are guaranteed pursuant to the
     Guarantee, (iii) in the case of an issuance of Notes, since the date of the
     most recent Private Placement Memorandum, there has been no material
     adverse change in the condition (financial or otherwise), operations or
     business prospects of the Issuer or the Guarantor which has not been
     disclosed to the Dealer in writing and (iv) neither the Issuer nor the
     Guarantor, as the case may be, is in default of any of its obligations
     hereunder or under the Notes, the Guarantee or the Issuing and Paying Agent
     Agreement.

Covenants and Agreements of the Issuer and the Guarantor.

Each of the Issuer and the Guarantor covenants and agrees as to itself that:

 1. The Issuer will give the Dealer prompt notice (but in any event prior to any
    subsequent issuance of Notes hereunder) of any amendment to, modification of
    or waiver with respect to, the Notes, the Guarantee or the Issuing and
    Paying Agent Agreement, including a complete copy of any such amendment,
    modification or waiver.
 2. The Issuer and the Guarantor shall, whenever there shall occur any change in
    the condition (financial or otherwise), operations or business prospects of
    the Issuer or the Guarantor or any development or occurrence in relation to
    the Issuer or the Guarantor that would be material to holders of the Notes
    or potential holders of the Notes (including any downgrading or receipt of
    any notice of intended or potential downgrading or any review for potential
    change in the rating accorded any of the securities of the Issuer or the
    Guarantor by any nationally recognized statistical rating organization which
    has published a rating of the Notes), promptly, and in any event prior to
    any subsequent issuance of Notes hereunder, notify the Dealer (by telephone,
    confirmed in writing) of such change, development or occurrence.
 3. The Issuer and the Guarantor shall from time to time furnish to the Dealer
    such information as the Dealer may reasonably request, including, without
    limitation, any press releases or material provided by the Issuer or the
    Guarantor to any national securities exchange or rating agency, regarding
    (i) the operations and financial condition of the Issuer or the Guarantor,
    (ii) the due authorization and execution of the Notes and the Guarantee,
    (iii) the Issuer's ability to pay the Notes as they mature and (iv) the
    Guarantor's ability to fulfill its obligations under the Guarantee.
 4. The Issuer and the Guarantor will take all such action as the Dealer may
    reasonably request to ensure that each offer and each sale of the Notes will
    comply with any applicable state Blue Sky laws; provided, however, that
    neither the Issuer nor the Guarantor shall be obligated to file any general
    consent to service of process or to qualify as a foreign corporation in any
    jurisdiction in which it is not so qualified or subject itself to taxation
    in respect of doing business in any jurisdiction in which it is not
    otherwise so subject.
 5. Neither the Issuer nor the Guarantor, as the case may be, will be in default
    of any of its obligations hereunder or under the Notes, the Guarantee or the
    Issuing and Paying Agent Agreement, at any time that any of the Notes are
    outstanding.
 6. The Issuer shall not issue Notes hereunder until the Dealer shall have
    received (a) opinions of counsel to the Issuer and the Guarantor, addressed
    to the Dealer, satisfactory in form and substance to the Dealer, (b) a copy
    of the executed Issuing and Paying Agent Agreement as then in effect, (c) a
    copy of the executed Guarantee, (d) a copy of the resolutions adopted by the
    Boards of Directors of the Issuer and the Guarantor, satisfactory in form
    and substance to the Dealer and certified by the Secretary or similar
    officer of the Issuer or the Guarantor, as the case may be, authorizing
    execution and delivery by the Issuer or the Guarantor, as the case may be,
    of this Agreement, the Issuing and Paying Agent Agreement, the Guarantee and
    the Notes and consummation by the Issuer and the Guarantor of the
    transactions contemplated hereby and thereby, (e) prior to the issuance of
    any book-entry Notes represented by a master note registered in the name of
    DTC or its nominee, a copy of the executed Letter of Representations among
    the Issuer, the Guarantor, the Issuing and Paying Agent and DTC and of the
    executed master note, (f) prior to the issuance of any Notes in physical
    form, a copy of such form (unless attached to this Agreement or the Issuing
    and Paying Agent Agreement) and (g) such other certificates, opinions,
    letters and documents as the Dealer shall have reasonably requested.

Disclosure. The Private Placement Memorandum and its contents (other than the
Dealer Information) shall be the sole responsibility of the Issuer and the
Guarantor. The Private Placement Memorandum shall contain a statement expressly
offering an opportunity for each prospective purchaser to ask questions of, and
receive answers from, the Issuer and the Guarantor concerning the offering of
Notes and to obtain relevant additional information which the Issuer possesses
or can acquire without unreasonable effort or expense. Each of the Issuer and
the Guarantor agrees to promptly furnish the Dealer the Company Information as
it becomes available. Each of the Issuer and the Guarantor further agrees to
notify the Dealer promptly upon the occurrence of any event relating to or
affecting the Issuer or the Guarantor that would cause the Company Information
then in existence to include an untrue statement of a material fact or to omit
to state a material fact necessary in order to make the statements contained
therein, in light of the circumstances under which they are made, not
misleading.
 a. In the event that the Issuer or the Guarantor gives the Dealer notice
    pursuant to Section 4.3(a) and the Dealer notifies the Issuer that it then
    has Notes it is holding in inventory, the Issuer and the Guarantor agree
    promptly to supplement or amend the Private Placement Memorandum so that the
    Private Placement Memorandum, as amended or supplemented, shall not contain
    an untrue statement of a material fact or omit to state a material fact
    necessary in order to make the statements therein, in light of the
    circumstances under which they were made, not misleading, and the Issuer and
    the Guarantor shall make such supplement or amendment available to the
    Dealer.
 b. In the event that (i) the Issuer or the Guarantor gives the Dealer notice
    pursuant to Section 4.3(a), (ii) the Dealer does not notify the Issuer or
    the Guarantor that it is then holding Notes in inventory and (iii) the
    Issuer or the Guarantor chooses not to promptly amend or supplement the
    Private Placement Memorandum in the manner described in clause (b) above,
    then all solicitations and sales of Notes shall be suspended until such time
    as the Issuer and the Guarantor have so amended or supplemented the Private
    Placement Memorandum, and made such amendment or supplement available to the
    Dealer.

Indemnification and Contribution. The Issuer and the Guarantor, jointly and
severally, will indemnify and hold harmless the Dealer, each individual,
corporation, partnership, trust, association or other entity controlling the
Dealer, any affiliate of the Dealer or any such controlling entity and their
respective directors, officers, employees, partners, incorporators,
shareholders, servants, trustees and agents (hereinafter the "Indemnitees")
against any and all liabilities, penalties, suits, causes of action, losses,
damages, claims, costs and expenses (including, without limitation, fees and
disbursements of counsel) or judgments of whatever kind or nature (each a
"Claim"), imposed upon, incurred by or asserted against the Indemnitees arising
out of or based upon (i) any allegation that the Private Placement Memorandum,
the Company Information or any information provided by the Issuer or the
Guarantor to the Dealer included (as of any relevant time) or includes an untrue
statement of a material fact or omitted (as of any relevant time) or omits to
state any material fact necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading or (ii) arising out
of or based upon the breach by the Issuer or the Guarantor of any agreement,
covenant or representation made in or pursuant to this Agreement. This
indemnification shall not apply to the extent that the Claim arises out of or is
based upon Dealer Information. Provisions relating to claims made for
indemnification under this Section 5 are set forth in Exhibit B to this
Agreement. In order to provide for just and equitable contribution in
circumstances in which the indemnification provided for in this Section 5 is
held to be unavailable or insufficient to hold harmless the Indemnitees,
although applicable in accordance with the terms of this Section 5, the Issuer
and the Guarantor, jointly and severally, shall contribute to the aggregate
costs incurred by the Dealer in connection with any Claim in the proportion of
the respective economic interests of the Issuer, the Guarantor and the Dealer;
provided, however, that such contribution by the Issuer and the Guarantor shall
be in an amount such that the aggregate costs incurred by the Dealer do not
exceed the aggregate of the commissions and fees earned by the Dealer hereunder
with respect to the issue or issues of Notes to which such Claim relates. The
respective economic interests shall be calculated by reference to the aggregate
proceeds to the Issuer of the Notes issued hereunder and the aggregate
commissions and fees earned by the Dealer hereunder. Definitions. "Claim" shall
have the meaning set forth in Section 5.1. "Company Information" at any given
time shall mean the Private Placement Memorandum together with, to the extent
applicable, (i) the Guarantor's most recent report on Form 10-K filed with the
SEC and each report on Form 10-Q or 8-K filed by the Guarantor with the SEC
since the most recent Form 10-K, (ii) the Guarantor's most recent annual audited
financial statements and each interim financial statement or report prepared
subsequent thereto, if not included in item (i) above, (iii) the Guarantor's and
its affiliates' other publicly available recent reports, including, but not
limited to, any publicly available filings or reports provided to their
respective shareholders, (iv) any other information or disclosure prepared
pursuant to Section 4.3 hereof and (v) any information prepared or approved by
the Issuer or the Guarantor for dissemination to investors or potential
investors in the Notes. "Dealer Information" shall mean material concerning the
Dealer provided by the Dealer in writing expressly for inclusion in the Private
Placement Memorandum. "Exchange Act" shall mean the U.S. Securities Exchange Act
of 1934, as amended. "Indemnitee" shall have the meaning set forth in Section
5.1. "Institutional Accredited Investor" shall mean an institutional investor
that is an accredited investor within the meaning of Rule 501 under the
Securities Act and that has such knowledge and experience in financial and
business matters that it is capable of evaluating and bearing the economic risk
of an investment in the Notes, including, but not limited to, a bank, as defined
in Section 3(a)(2) of the Securities Act, or a savings and loan association or
other institution, as defined in Section 3(a)(5)(A) of the Securities Act,
whether acting in its individual or fiduciary capacity. "IPA Letter Agreement"
shall mean the letter agreement among the Issuer, the Guarantor and the Issuing
and Paying Agent, pursuant to which the Issuer was substituted for the Guarantor
in the Issuing and Paying Agent Agreement with the same effect as if the Issuer
had been named in the Issuing and Paying Agent Agreement as the "Company" party
thereto. "Issuing and Paying Agent Agreement" shall mean the issuing and paying
agent agreement described on the cover page of this Agreement, as such agreement
may be amended or supplemented from time to time. "Issuing and Paying Agent"
shall mean the party designated as such on the cover page of this Agreement, as
issuing and paying agent under the Issuing and Paying Agent Agreement, or any
successor thereto in accordance with the Issuing and Paying Agent Agreement.
"May Agreements" shall mean the Commercial Paper Dealer Agreements, dated July
2004, among the Issuer (f/k/a The May Department Stores Company, a New York
corporation), the Guarantor (as successor to The May Department Stores Company,
a Delaware corporation) and each of J.P. Morgan Securities Inc., Merrill Lynch
Money Markets, Incorporated, and Morgan Stanley & Co. Incorporated. "Non-bank
fiduciary or agent" shall mean a fiduciary or agent other than (a) a bank, as
defined in Section 3(a)(2) of the Securities Act, or (b) a savings and loan
association, as defined in Section 3(a)(5)(A) of the Securities Act. "Private
Placement Memorandum" shall mean offering materials prepared in accordance with
Section 4 (including materials referred to therein or incorporated by reference
therein, if any) provided to purchasers and prospective purchasers of the Notes,
and shall include amendments and supplements thereto which may be prepared from
time to time in accordance with this Agreement (other than any amendment or
supplement that has been completely superseded by a later amendment or
supplement). "Qualified Institutional Buyer" shall have the meaning assigned to
that term in Rule 144A under the Securities Act. "Rule 144A" shall mean Rule
144A under the Securities Act. "SEC" shall mean the U.S. Securities and Exchange
Commission. "Securities Act" shall mean the U.S. Securities Act of 1933, as
amended. "Sophisticated Individual Accredited Investor" shall mean an individual
who (a) is an accredited investor within the meaning of Regulation D under the
Securities Act and (b) based on his or her pre-existing relationship with the
Dealer, is reasonably believed by the Dealer to be a sophisticated investor (i)
possessing such knowledge and experience (or represented by a fiduciary or agent
possessing such knowledge and experience) in financial and business matters that
he or she is capable of evaluating and bearing the economic risk of an
investment in the Notes and (ii) having not less than $5 million in investments
(as defined, for purposes of this section, in Rule 2a51-1 under the Investment
Company Act of 1940, as amended). General Unless otherwise expressly provided
herein, all notices under this Agreement to parties hereto shall be in writing
and shall be effective when received at the address of the respective party set
forth in the Addendum to this Agreement. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York, without regard
to its conflict of laws provisions. Each of the Issuer and the Guarantor agrees
that any suit, action or proceeding brought by the Issuer or the Guarantor
against the Dealer in connection with or arising out of this Agreement or the
Notes or the offer and sale of the Notes shall be brought solely in the United
States federal courts located in the Borough of Manhattan or the courts of the
State of New York located in the Borough of Manhattan. EACH OF THE DEALER, THE
ISSUER AND THE GUARANTOR WAIVES ITS RIGHT TO TRIAL BY JURY IN ANY SUIT, ACTION
OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED
HEREBY. This Agreement may be terminated, at any time, by the Issuer, upon one
business day's prior notice to such effect to the Dealer, or by the Dealer upon
one business day's prior notice to such effect to the Issuer. Any such
termination, however, shall not affect the obligations of the Issuer and the
Guarantor under Sections 5 and 7.3 hereof or the respective representations,
warranties, agreements, covenants, rights or responsibilities of the parties
made or arising prior to the termination of this Agreement. This Agreement is
not assignable by any party hereto without the written consent of the other
parties; provided, however, that the Dealer may assign its rights and
obligations under this Agreement to any affiliate of the Dealer. This Agreement
may be signed in any number of counterparts, each of which shall be an original,
with the same effect as if the signatures thereto and hereto were upon the same
instrument. This Agreement is for the exclusive benefit of the parties hereto,
and their respective permitted successors and assigns hereunder, and shall not
be deemed to give any legal or equitable right, remedy or claim to any other
person whatsoever. No purchaser of any of the Notes from the Dealer shall be
deemed a successor or assign by reason merely of such purchase. The Issuer
acknowledges and agrees that (i) the purchase and sale, or placement, of the
Notes pursuant to this Agreement are arm's-length commercial transactions
between the Issuer, on the one hand, and the Dealer, on the other, (ii) in
connection therewith and with the process leading to such transactions the
Dealer is acting solely as a principal and not the agent (except to the extent
explicitly set forth herein) or fiduciary of the Issuer, (iii) the Dealer has
not assumed an advisory or fiduciary responsibility in favor of the Issuer with
respect to the offering contemplated hereby or the process leading thereto
(irrespective of whether the Dealer has advised or is currently advising the
Issuer on other matters) or any other obligation to the Issuer except the
obligations expressly set forth in this Agreement, and (iv) the Issuer has
consulted its own legal and financial advisors to the extent it deemed
appropriate. The Issuer agrees that it will not claim that the Dealer has
rendered advisory services of any nature or respect, or owes a fiduciary or
similar duty to the Issuer, in connection with such transactions or the process
leading thereto. Any review by the Dealer of the Issuer, the transactions
contemplated hereby or other matters relating to such transactions shall be
performed solely for the benefit of the Dealer and shall not be on behalf of the
Issuer. This Agreement supersedes all prior agreements and understandings
(whether written or oral) among the Issuer, the Guarantor and the Dealer, or any
of them, with respect to the subject matter hereof.

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
as of the date and year first above written.

Federated Retail Holdings, Inc., as Issuer

 

By:/s/ Dennis J. Broderick

Name: Dennis J. Broderick

Title: Senior Vice President

J.P. Morgan Securities Inc.,
as Dealer

By: /s/ Johanna C. Foley

Name: Johanna C. Foley

Title:____ Authorized Signatory

Federated Department Stores, Inc., as Guarantor

 

By:/s/ Karen M. Hoguet

Name: Karen M. Hoguet

Title: EVP and CFO

 

 

 

Addendum

The following additional clauses shall apply to the Agreement and be deemed a
part thereof.

1. The other dealers referred to in clause (b) of Section 1.2 of the Agreement
are Goldman, Sachs & Co. and Banc of America Securities LLC.

2. The addresses of the respective parties for purposes of notices under Section
7.1 are as follows:

For the Issuer:

Federated Retail Holdings, Inc.

Address:

7 West Seventh Street

 

Cincinnati, Ohio 45202

Attention:

Susan P. Storer

Telephone number:

513-579-7775

Fax number:

513-579-7393

   

For the Guarantor:

Federated Department Stores, Inc.

Address:

7 West Seventh Street

 

Cincinnati, Ohio 45202

Attention:

Susan P. Storer

Telephone number:

513-579-7775

Fax number:

513-579-7393

   

For the Dealer:

J.P. Morgan Securities Inc.

Address:

270 Park Avenue, 8th Floor

 

New York, New York 10017

Attention:

Short Term Fixed Income Division

Telephone number:

(212) 834-5543

Fax number:

(212) 834-6172

Exhibit A

Form of Legend for Private Placement Memorandum and Notes

THE NOTES AND THE GUARANTEE THEREOF HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR ANY OTHER APPLICABLE
SECURITIES LAW, AND OFFERS AND SALES THEREOF MAY BE MADE ONLY IN COMPLIANCE WITH
AN APPLICABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE ACT AND ANY
APPLICABLE STATE SECURITIES LAWS. BY ITS ACCEPTANCE OF A NOTE, THE PURCHASER
WILL BE DEEMED TO REPRESENT THAT (I) IT HAS BEEN AFFORDED AN OPPORTUNITY TO
INVESTIGATE MATTERS RELATING TO THE ISSUER, THE GUARANTOR, THE NOTES AND THE
GUARANTEE, (II) IT IS NOT ACQUIRING SUCH NOTE WITH A VIEW TO ANY DISTRIBUTION
THEREOF AND (III) IT IS EITHER (A)(1) AN INSTITUTIONAL INVESTOR OR SOPHISTICATED
INDIVIDUAL INVESTOR THAT IS AN ACCREDITED INVESTOR WITHIN THE MEANING OF RULE
501(a) UNDER THE ACT AND WHICH, IN THE CASE OF AN INDIVIDUAL, (i) POSSESSES SUCH
KNOWLEDGE AND EXPERIENCE IN FINANCIAL AND BUSINESS MATTERS THAT HE OR SHE IS
CAPABLE OF EVALUATING AND BEARING THE ECONOMIC RISK OF AN INVESTMENT IN THE
NOTES AND (ii) HAS NOT LESS THAN $5 MILLION IN INVESTMENTS (AN "INSTITUTIONAL
ACCREDITED INVESTOR" OR "SOPHISTICATED INDIVIDUAL ACCREDITED INVESTOR",
RESPECTIVELY) AND (2)(i) PURCHASING NOTES FOR ITS OWN ACCOUNT, (ii) A BANK (AS
DEFINED IN SECTION 3(a)(2) OF THE ACT) OR A SAVINGS AND LOAN ASSOCIATION OR
OTHER INSTITUTION (AS DEFINED IN SECTION 3(a)(5)(A) OF THE ACT) ACTING IN ITS
INDIVIDUAL OR FIDUCIARY CAPACITY OR (iii) A FIDUCIARY OR AGENT (OTHER THAN A
U.S. BANK OR SAVINGS AND LOAN ASSOCIATION) PURCHASING NOTES FOR ONE OR MORE
ACCOUNTS EACH OF WHICH ACCOUNTS IS SUCH AN INSTITUTIONAL ACCREDITED INVESTOR OR
SOPHISTICATED INDIVIDUAL ACCREDITED INVESTOR; OR (B) A QUALIFIED INSTITUTIONAL
BUYER ("QIB") WITHIN THE MEANING OF RULE 144A UNDER THE ACT THAT IS ACQUIRING
NOTES FOR ITS OWN ACCOUNT OR FOR ONE OR MORE ACCOUNTS, EACH OF WHICH ACCOUNTS IS
A QIB; AND THE PURCHASER ACKNOWLEDGES THAT IT IS AWARE THAT THE SELLER MAY RELY
UPON THE EXEMPTION FROM THE REGISTRATION PROVISIONS OF SECTION 5 OF THE ACT
PROVIDED BY RULE 144A. BY ITS ACCEPTANCE OF A NOTE, THE PURCHASER THEREOF SHALL
ALSO BE DEEMED TO AGREE THAT ANY RESALE OR OTHER TRANSFER THEREOF WILL BE MADE
ONLY (A) IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER THE ACT, EITHER (1) TO
THE ISSUER OR TO A PLACEMENT AGENT DESIGNATED BY THE ISSUER AS A PLACEMENT AGENT
FOR THE NOTES (COLLECTIVELY, THE "PLACEMENT AGENTS"), NONE OF WHICH SHALL HAVE
ANY OBLIGATION TO ACQUIRE SUCH NOTE, (2) THROUGH A PLACEMENT AGENT TO AN
INSTITUTIONAL ACCREDITED INVESTOR, SOPHISTICATED INDIVIDUAL ACCREDITED INVESTOR
OR A QIB, OR (3) TO A QIB IN A TRANSACTION THAT MEETS THE REQUIREMENTS OF RULE
144A AND (B) IN MINIMUM AMOUNTS OF $250,000.

Exhibit B

Further Provisions Relating to Indemnification

(a) The Issuer and the Guarantor, jointly and severally, agree to reimburse each
Indemnitee for all expenses (including reasonable fees and disbursements of
internal and external counsel) as they are incurred by it in connection with
investigating or defending any loss, claim, damage, liability or action in
respect of which indemnification may be sought under Section 5 of the Agreement
(whether or not it is a party to any such proceedings).

(b) Promptly after receipt by an Indemnitee of notice of the existence of a
Claim, such Indemnitee will, if a claim in respect thereof is to be made against
the Issuer or the Guarantor, notify the Issuer and the Guarantor in writing of
the existence thereof; provided that (i) the omission to so notify the Issuer or
the Guarantor will not relieve it from any liability which it may have hereunder
unless and except to the extent it did not otherwise learn of such Claim and
such failure results in the forfeiture by it of substantial rights and defenses,
and (ii) the omission to so notify the Issuer or the Guarantor will not relieve
it from liability which it may have to an Indemnitee otherwise than on account
of this indemnity agreement. In case any such Claim is made against any
Indemnitee and it notifies the Issuer and the Guarantor of the existence
thereof, the Issuer and the Guarantor will be entitled to participate therein,
and to the extent that it may elect by written notice delivered to the
Indemnitee, to assume the defense thereof, with counsel reasonably satisfactory
to such Indemnitee; provided that if the defendants in any such Claim include
both the Indemnitee and either the Issuer or the Guarantor or both, and the
Indemnitee shall have concluded that there may be legal defenses available to it
which are different from or additional to those available to the Issuer or the
Guarantor, the Issuer and the Guarantor shall not have the right to direct the
defense of such Claim on behalf of such Indemnitee, and the Indemnitee shall
have the right to select separate counsel to assert such legal defenses on
behalf of such Indemnitee. Upon receipt of notice from the Issuer or the
Guarantor to such Indemnitee of the election of the Issuer or the Guarantor to
assume the defense of such Claim and approval by the Indemnitee of counsel, the
Issuer and the Guarantor will not be liable to such Indemnitee for expenses
incurred thereafter by the Indemnitee in connection with the defense thereof
(other than reasonable costs of investigation) unless (i) the Indemnitee shall
have employed separate counsel in connection with the assertion of legal
defenses in accordance with the proviso to the next preceding sentence (it being
understood, however, that neither the Issuer nor the Guarantor shall be liable
for the expenses of more than one separate counsel (in addition to any local
counsel in the jurisdiction in which any Claim is brought), approved by the
Dealer, representing the Indemnitee who is party to such Claim), (ii) the Issuer
or the Guarantor shall not have employed counsel reasonably satisfactory to the
Indemnitee to represent the Indemnitee within a reasonable time after notice of
existence of the Claim or (iii) the Issuer or the Guarantor has authorized in
writing the employment of counsel for the Indemnitee. The indemnity,
reimbursement and contribution obligations of the Issuer and the Guarantor
hereunder shall be in addition to any other liability the Issuer or the
Guarantor may otherwise have to an Indemnitee and shall be binding upon and
inure to the benefit of any successors, assigns, heirs and personal
representatives of the Issuer, the Guarantor and any Indemnitee. Each of the
Issuer and the Guarantor agrees that without the Dealer's prior written consent,
it will not settle, compromise or consent to the entry of any judgment in any
Claim in respect of which indemnification may be sought under the
indemnification provision of the Agreement (whether or not the Dealer or any
other Indemnitee is an actual or potential party to such Claim), unless such
settlement, compromise or consent (i) includes an unconditional release of each
Indemnitee from all liability arising out of such Claim and (ii) does not
include a statement as to or an admission of fault, culpability or failure to
act, by or on behalf of any Indemnitee.

Exhibit C

Statement of Terms for Interest - Bearing Commercial Paper Notes of Federated
Retail Holdings, Inc.

THE PROVISIONS SET FORTH BELOW ARE QUALIFIED TO THE EXTENT APPLICABLE BY THE
TRANSACTION SPECIFIC [PRICING] [PRIVATE PLACEMENT MEMORANDUM] SUPPLEMENT (THE
"SUPPLEMENT") (IF ANY) SENT TO EACH PURCHASER AT THE TIME OF THE TRANSACTION.

1. General. (a) The obligations of the Issuer to which these terms apply (each a
"Note") are represented by one or more Master Notes (each, a "Master Note")
issued in the name of (or of a nominee for) The Depository Trust Company
("DTC"), which Master Note includes the terms and provisions for the Issuer's
Interest-Bearing Commercial Paper Notes that are set forth in this Statement of
Terms, since this Statement of Terms constitutes an integral part of the
Underlying Records as defined and referred to in the Master Note.

(b) "Business Day" means any day other than a Saturday or Sunday that is neither
a legal holiday nor a day on which banking institutions are authorized or
required by law, executive order or regulation to be closed in New York City
and, with respect to LIBOR Notes (as defined below) is also a London Business
Day. "London Business Day" means a day, other than a Saturday or Sunday, on
which dealings in deposits in U.S. dollars are transacted in the London
interbank market.

2. Interest. (a) Each Note will bear interest at a fixed rate (a "Fixed Rate
Note") or at a floating rate (a "Floating Rate Note").

(b) The Supplement sent to each holder of such Note will describe the following
terms: (i) whether such Note is a Fixed Rate Note or a Floating Rate Note and
whether such Note is an Original Issue Discount Note (as defined below); (ii)
the date on which such Note will be issued (the "Issue Date"); (iii) the Stated
Maturity Date (as defined below); (iv) if such Note is a Fixed Rate Note, the
rate per annum at which such Note will bear interest, if any, and the Interest
Payment Dates; (v) if such Note is a Floating Rate Note, the Base Rate, the
Index Maturity, the Interest Reset Dates, the Interest Payment Dates and the
Spread and/or Spread Multiplier, if any (all as defined below), and any other
terms relating to the particular method of calculating the interest rate for
such Note; and (vi) any other terms applicable specifically to such Note.
"Original Issue Discount Note" means a Note which has a stated redemption price
at the Stated Maturity Date that exceeds its Issue Price by more than a
specified de minimis amount and which the Supplement indicates will be an
"Original Issue Discount Note".

(c) Each Fixed Rate Note will bear interest from its Issue Date at the rate per
annum specified in the Supplement until the principal amount thereof is paid or
made available for payment. Interest on each Fixed Rate Note will be payable on
the dates specified in the Supplement (each an "Interest Payment Date" for a
Fixed Rate Note) and on the Maturity Date (as defined below). Interest on Fixed
Rate Notes will be computed on the basis of a 360-day year of twelve 30-day
months.

If any Interest Payment Date or the Maturity Date of a Fixed Rate Note falls on
a day that is not a Business Day, the required payment of principal, premium, if
any, and/or interest will be payable on the next succeeding Business Day, and no
additional interest will accrue in respect of the payment made on that next
succeeding Business Day.

(d) The interest rate on each Floating Rate Note for each Interest Reset Period
(as defined below) will be determined by reference to an interest rate basis (a
"Base Rate") plus or minus a number of basis points (one basis point equals
one-hundredth of a percentage point) (the "Spread"), if any, and/or multiplied
by a certain percentage (the "Spread Multiplier"), if any, until the principal
thereof is paid or made available for payment. The Supplement will designate
which of the following Base Rates is applicable to the related Floating Rate
Note: (a) the CD Rate (a "CD Rate Note"), (b) the Commercial Paper Rate (a
"Commercial Paper Rate Note"), (c) the Federal Funds Rate (a "Federal Funds Rate
Note"), (d) LIBOR (a "LIBOR Note"), (e) the Prime Rate (a "Prime Rate Note"),
(f) the Treasury Rate (a "Treasury Rate Note") or (g) such other Base Rate as
may be specified in such Supplement.

The rate of interest on each Floating Rate Note will be reset daily, weekly,
monthly, quarterly or semi-annually (the "Interest Reset Period"). The date or
dates on which interest will be reset (each an "Interest Reset Date") will be,
unless otherwise specified in the Supplement, in the case of Floating Rate Notes
which reset daily, each Business Day, in the case of Floating Rate Notes (other
than Treasury Rate Notes) that reset weekly, the Wednesday of each week; in the
case of Treasury Rate Notes that reset weekly, the Tuesday of each week; in the
case of Floating Rate Notes that reset monthly, the third Wednesday of each
month; in the case of Floating Rate Notes that reset quarterly, the third
Wednesday of March, June, September and December; and in the case of Floating
Rate Notes that reset semiannually, the third Wednesday of the two months
specified in the Supplement. If any Interest Reset Date for any Floating Rate
Note is not a Business Day, such Interest Reset Date will be postponed to the
next day that is a Business Day, except that in the case of a LIBOR Note, if
such Business Day is in the next succeeding calendar month, such Interest Reset
Date shall be the immediately preceding Business Day. Interest on each Floating
Rate Note will be payable monthly, quarterly or semiannually (the "Interest
Payment Period") and on the Maturity Date. Unless otherwise specified in the
Supplement, and except as provided below, the date or dates on which interest
will be payable (each an "Interest Payment Date" for a Floating Rate Note) will
be, in the case of Floating Rate Notes with a monthly Interest Payment Period,
on the third Wednesday of each month; in the case of Floating Rate Notes with a
quarterly Interest Payment Period, on the third Wednesday of March, June,
September and December; and in the case of Floating Rate Notes with a semiannual
Interest Payment Period, on the third Wednesday of the two months specified in
the Supplement. In addition, the Maturity Date will also be an Interest Payment
Date.

If any Interest Payment Date for any Floating Rate Note (other than an Interest
Payment Date occurring on the Maturity Date) would otherwise be a day that is
not a Business Day, such Interest Payment Date shall be postponed to the next
day that is a Business Day, except that in the case of a LIBOR Note, if such
Business Day is in the next succeeding calendar month, such Interest Payment
Date shall be the immediately preceding Business Day. If the Maturity Date of a
Floating Rate Note falls on a day that is not a Business Day, the payment of
principal and interest will be made on the next succeeding Business Day, and no
interest on such payment shall accrue for the period from and after such
maturity.

Interest payments on each Interest Payment Date for Floating Rate Notes will
include accrued interest from and including the Issue Date or from and including
the last date in respect of which interest has been paid, as the case may be,
to, but excluding, such Interest Payment Date. On the Maturity Date, the
interest payable on a Floating Rate Note will include interest accrued to, but
excluding, the Maturity Date. Accrued interest will be calculated by multiplying
the principal amount of a Floating Rate Note by an accrued interest factor. This
accrued interest factor will be computed by adding the interest factors
calculated for each day in the period for which accrued interest is being
calculated. The interest factor (expressed as a decimal) for each such day will
be computed by dividing the interest rate applicable to such day by 360, in the
cases where the Base Rate is the CD Rate, Commercial Paper Rate, Federal Funds
Rate, LIBOR or Prime Rate, or by the actual number of days in the year, in the
case where the Base Rate is the Treasury Rate. The interest rate in effect on
each day will be (i) if such day is an Interest Reset Date, the interest rate
with respect to the Interest Determination Date (as defined below) pertaining to
such Interest Reset Date, or (ii) if such day is not an Interest Reset Date, the
interest rate with respect to the Interest Determination Date pertaining to the
next preceding Interest Reset Date, subject in either case to any adjustment by
a Spread and/or a Spread Multiplier.

The "Interest Determination Date" where the Base Rate is the CD Rate or the
Commercial Paper Rate will be the second Business Day next preceding an Interest
Reset Date. The Interest Determination Date where the Base Rate is the Federal
Funds Rate or the Prime Rate will be the Business Day next preceding an Interest
Reset Date. The Interest Determination Date where the Base Rate is LIBOR will be
the second London Business Day next preceding an Interest Reset Date. The
Interest Determination Date where the Base Rate is the Treasury Rate will be the
day of the week in which such Interest Reset Date falls when Treasury Bills are
normally auctioned. Treasury Bills are normally sold at auction on Monday of
each week, unless that day is a legal holiday, in which case the auction is held
on the following Tuesday or the preceding Friday. If an auction is so held on
the preceding Friday, such Friday will be the Interest Determination Date
pertaining to the Interest Reset Date occurring in the next succeeding week.

The "Index Maturity" is the period to maturity of the instrument or obligation
from which the applicable Base Rate is calculated.

The "Calculation Date," where applicable, shall be the earlier of (i) the tenth
calendar day following the applicable Interest Determination Date or (ii) the
Business Day preceding the applicable Interest Payment Date or Maturity Date.

All times referred to herein reflect New York City time, unless otherwise
specified.

The Issuer shall specify in writing to the Issuing and Paying Agent which party
will be the calculation agent (the "Calculation Agent") with respect to the
Floating Rate Notes. The Calculation Agent will provide the interest rate then
in effect and, if determined, the interest rate which will become effective on
the next Interest Reset Date with respect to such Floating Rate Note to the
Issuing and Paying Agent as soon as the interest rate with respect to such
Floating Rate Note has been determined and as soon as practicable after any
change in such interest rate.

All percentages resulting from any calculation on Floating Rate Notes will be
rounded to the nearest one hundred-thousandth of a percentage point, with
five-one millionths of a percentage point rounded upwards. For example,
9.876545% (or .09876545) would be rounded to 9.87655% (or .0987655). All dollar
amounts used in or resulting from any calculation on Floating Rate Notes will be
rounded, in the case of U.S. dollars, to the nearest cent or, in the case of a
foreign currency, to the nearest unit (with one-half cent or unit being rounded
upwards).

CD Rate Notes

"CD Rate" means the rate on any Interest Determination Date for negotiable
certificates of deposit having the Index Maturity as published by the Board of
Governors of the Federal Reserve System (the "FRB") in "Statistical Release
H.15(519), Selected Interest Rates" or any successor publication of the FRB
("H.15(519)") under the heading "CDs (Secondary Market)".

If the above rate is not published in H.15(519) by 3:00 p.m. on the Calculation
Date, the CD Rate will be the rate on such Interest Determination Date set forth
in the daily update of H.15(519), available through the world wide website of
the FRB at http://www.federalreserve.gov/releases/h15/Update, or any successor
site or publication or other recognized electronic source used for the purpose
of displaying the applicable rate ("H.15 Daily Update") under the caption "CDs
(Secondary Market)".

If such rate is not published in either H.15(519) or H.15 Daily Update by 3:00
p.m. on the Calculation Date, the Calculation Agent will determine the CD Rate
to be the arithmetic mean of the secondary market offered rates as of 10:00 a.m.
on such Interest Determination Date of three leading nonbank dealers in
negotiable U.S. dollar certificates of deposit in New York City selected by the
Calculation Agent for negotiable U.S. dollar certificates of deposit of major
United States money center banks of the highest credit standing in the market
for negotiable certificates of deposit with a remaining maturity closest to the
Index Maturity in the denomination of $5,000,000.

If the dealers selected by the Calculation Agent are not quoting as set forth
above, the CD Rate will remain the CD Rate then in effect on such Interest
Determination Date.

Commercial Paper Rate Notes

"Commercial Paper Rate" means the Money Market Yield (calculated as described
below) of the rate on any Interest Determination Date for commercial paper
having the Index Maturity, as published in H.15(519) under the heading
"Commercial Paper-Nonfinancial".

If the above rate is not published in H.15(519) by 3:00 p.m. on the Calculation
Date, then the Commercial Paper Rate will be the Money Market Yield of the rate
on such Interest Determination Date for commercial paper of the Index Maturity
as published in H.15 Daily Update under the heading "Commercial
Paper-Nonfinancial".

If by 3:00 p.m. on such Calculation Date such rate is not published in either
H.15(519) or H.15 Daily Update, then the Calculation Agent will determine the
Commercial Paper Rate to be the Money Market Yield of the arithmetic mean of the
offered rates as of 11:00 a.m. on such Interest Determination Date of three
leading dealers of U.S. dollar commercial paper in New York City selected by the
Calculation Agent for commercial paper of the Index Maturity placed for an
industrial issuer whose bond rating is "AA," or the equivalent, from a
nationally recognized statistical rating organization.

If the dealers selected by the Calculation Agent are not quoting as mentioned
above, the Commercial Paper Rate with respect to such Interest Determination
Date will remain the Commercial Paper Rate then in effect on such Interest
Determination Date.

"Money Market Yield" will be a yield calculated in accordance with the following
formula:

D x 360
_______________

                                Money Market Yield     =                     x
100

360 - (D x M)

where "D" refers to the applicable per annum rate for commercial paper quoted on
a bank discount basis and expressed as a decimal and "M" refers to the actual
number of days in the interest period for which interest is being calculated.

Federal Funds Rate Notes

"Federal Funds Rate" means the rate on any Interest Determination Date for
federal funds as published in H.15(519) under the heading "Federal Funds
(Effective)" and displayed on Moneyline Telerate (or any successor service) on
page 120 (or any other page as may replace the specified page on that service)
("Telerate Page 120").

If the above rate does not appear on Telerate Page 120 or is not so published by
3:00 p.m. on the Calculation Date, the Federal Funds Rate will be the rate on
such Interest Determination Date as published in H.15 Daily Update under the
heading "Federal Funds/(Effective)".

If such rate is not published as described above by 3:00 p.m. on the Calculation
Date, the Calculation Agent will determine the Federal Funds Rate to be the
arithmetic mean of the rates for the last transaction in overnight U.S. dollar
federal funds arranged by each of three leading brokers of Federal Funds
transactions in New York City selected by the Calculation Agent prior to 9:00
a.m. on such Interest Determination Date.

If the brokers selected by the Calculation Agent are not quoting as mentioned
above, the Federal Funds Rate will remain the Federal Funds Rate then in effect
on such Interest Determination Date.

LIBOR Notes

The London Interbank offered rate ("LIBOR") means, with respect to any Interest
Determination Date, the rate for deposits in U.S. dollars having the Index
Maturity that appears on the Designated LIBOR Page as of 11:00 a.m. London time,
on such Interest Determination Date.

If no rate appears, LIBOR will be determined on the basis of the rates at
approximately 11:00 a.m., London time, on such Interest Determination Date at
which deposits in U.S. dollars are offered to prime banks in the London
interbank market by four major banks in such market selected by the Calculation
Agent for a term equal to the Index Maturity and in principal amount equal to an
amount that in the Calculation Agent's judgment is representative for a single
transaction in U.S. dollars in such market at such time (a "Representative
Amount"). The Calculation Agent will request the principal London office of each
of such banks to provide a quotation of its rate. If at least two such
quotations are provided, LIBOR will be the arithmetic mean of such quotations.
If fewer than two quotations are provided, LIBOR for such interest period will
be the arithmetic mean of the rates quoted at approximately 11:00 a.m., in New
York City, on such Interest Determination Date by three major banks in New York
City, selected by the Calculation Agent, for loans in U.S. dollars to leading
European banks, for a term equal to the Index Maturity and in a Representative
Amount; provided, however, that if fewer than three banks so selected by the
Calculation Agent are providing such quotations, the then existing LIBOR rate
will remain in effect for such Interest Payment Period.

"Designated LIBOR Page" means the display designated as page "3750" on Moneyline
Telerate (or such other page as may replace the 3750 page on that service or
such other service or services as may be nominated by the British Bankers'
Association for the purposes of displaying London interbank offered rates for
U.S. dollar deposits).

Prime Rate Notes

"Prime Rate" means the rate on any Interest Determination Date as published in
H.15(519) under the heading "Bank Prime Loan".

If the above rate is not published in H.15(519) prior to 3:00 p.m. on the
Calculation Date, then the Prime Rate will be the rate on such Interest
Determination Date as published in H.15 Daily Update opposite the caption "Bank
Prime Loan".

If the rate is not published prior to 3:00 p.m. on the Calculation Date in
either H.15(519) or H.15 Daily Update, then the Calculation Agent will determine
the Prime Rate to be the arithmetic mean of the rates of interest publicly
announced by each bank that appears on the Reuters Screen US PRIME1 Page (as
defined below) as such bank's prime rate or base lending rate as of 11:00 a.m.
on that Interest Determination Date.

If fewer than four such rates referred to above are so published by 3:00 p.m. on
the Calculation Date, the Calculation Agent will determine the Prime Rate to be
the arithmetic mean of the prime rates or base lending rates quoted on the basis
of the actual number of days in the year divided by 360 as of the close of
business on such Interest Determination Date by three major banks in New York
City selected by the Calculation Agent.

If the banks selected are not quoting as mentioned above, the Prime Rate will
remain the Prime Rate in effect on such Interest Determination Date.

"Reuters Screen US PRIME1 Page" means the display designated as page "US PRIME1"
on the Reuters Monitor Money Rates Service (or such other page as may replace
the US PRIME1 page on that service for the purpose of displaying prime rates or
base lending rates of major United States banks).

Treasury Rate Notes

"Treasury Rate" means:

(1) the rate from the auction held on the Interest Determination Date (the
"Auction") of direct obligations of the United States ("Treasury Bills") having
the Index Maturity specified in the Supplement under the caption "INVESTMENT
RATE" on the display on Moneyline Telerate (or any successor service) on page 56
(or any other page as may replace that page on that service) ("Telerate Page
56") or page 57 (or any other page as may replace that page on that service)
("Telerate Page 57"), or

(2) if the rate referred to in clause (1) is not so published by 3:00 p.m. on
the related Calculation Date, the Bond Equivalent Yield (as defined below) of
the rate for the applicable Treasury Bills as published in H.15 Daily Update,
under the caption "U.S. Government Securities/Treasury Bills/Auction High", or

(3) if the rate referred to in clause (2) is not so published by 3:00 p.m. on
the related Calculation Date, the Bond Equivalent Yield of the auction rate of
the applicable Treasury Bills as announced by the United States Department of
the Treasury, or

(4) if the rate referred to in clause (3) is not so announced by the United
States Department of the Treasury, or if the Auction is not held, the Bond
Equivalent Yield of the rate on the particular Interest Determination Date of
the applicable Treasury Bills as published in H.15(519) under the caption "U.S.
Government Securities/Treasury Bills/Secondary Market", or

(5) if the rate referred to in clause (4) is not so published by 3:00 p.m. on
the related Calculation Date, the rate on the particular Interest Determination
Date of the applicable Treasury Bills as published in H.15 Daily Update, under
the caption "U.S. Government Securities/Treasury Bills/Secondary Market", or

(6) if the rate referred to in clause (5) is not so published by 3:00 p.m. on
the related Calculation Date, the rate on the particular Interest Determination
Date calculated by the Calculation Agent as the Bond Equivalent Yield of the
arithmetic mean of the secondary market bid rates, as of approximately 3:30 p.m.
on that Interest Determination Date, of three primary United States government
securities dealers selected by the Calculation Agent for the issue of Treasury
Bills with a remaining maturity closest to the Index Maturity specified in the
Supplement, or

(7) if the dealers so selected by the Calculation Agent are not quoting as
mentioned in clause (6), the Treasury Rate in effect on the particular Interest
Determination Date.

"Bond Equivalent Yield" means a yield (expressed as a percentage) calculated in
accordance with the following formula:

D x N
_______________

                                Bond Equivalent Yield     =                    
x 100

360 - (D x M)

where "D" refers to the applicable per annum rate for Treasury Bills quoted on a
bank discount basis and expressed as a decimal, "N" refers to 365 or 366, as the
case may be, and "M" refers to the actual number of days in the applicable
Interest Reset Period.

3. Final Maturity. The Stated Maturity Date for any Note will be the date so
specified in the Supplement, which shall be no later than 397 days from the date
of issuance. On its Stated Maturity Date, or any date prior to the Stated
Maturity Date on which the particular Note becomes due and payable by the
declaration of acceleration, each such date being referred to as a Maturity
Date, the principal amount of each Note, together with accrued and unpaid
interest thereon, will be immediately due and payable.

4. Events of Default. The occurrence of any of the following shall constitute an
"Event of Default" with respect to a Note: (i) default in any payment of
principal of or interest on such Note (including on a redemption thereof); (ii)
the Issuer or the Guarantor makes any compromise arrangement with its creditors
generally including the entering into any form of moratorium with its creditors
generally; (iii) a court having jurisdiction shall enter a decree or order for
relief in respect of the Issuer or the Guarantor in an involuntary case under
any applicable bankruptcy, insolvency or other similar law now or hereafter in
effect, or there shall be appointed a receiver, administrator, liquidator,
custodian, trustee or sequestrator (or similar officer) with respect to the
whole or substantially the whole of the assets of the Issuer or the Guarantor
and any such decree, order or appointment is not removed, discharged or
withdrawn within 60 days thereafter; or (iv) the Issuer or the Guarantor shall
commence a voluntary case under any applicable bankruptcy, insolvency or other
similar law now or hereafter in effect, or consent to the entry of an order for
relief in an involuntary case under any such law, or consent to the appointment
of or taking possession by a receiver, administrator, liquidator, assignee,
custodian, trustee or sequestrator (or similar official), with respect to the
whole or substantially the whole of the assets of the Issuer or the Guarantor or
make any general assignment for the benefit of creditors. Upon the occurrence of
an Event of Default, the principal of each obligation evidenced by such Note
(together with interest accrued and unpaid thereon) shall become, without any
notice or demand, immediately due and payable.

5. Obligation Absolute. No provision of the Issuing and Paying Agent Agreement
under which the Notes are issued shall alter or impair the obligation of the
Issuer, which is absolute and unconditional, to pay the principal of and
interest on each Note at the times, place and rate, and in the coin or currency,
herein prescribed.

6. Supplement. Any term contained in the Supplement shall supercede any
conflicting term contained herein.

Exhibit D

Form of Guarantee

GUARANTEE

GUARANTEE, dated as of __________, ____, of Federated Department Stores, Inc., a
corporation organized under the laws of Delaware (the "Guarantor").

The Guarantor, for value received, hereby agrees as follows for the benefit of
the holders from time to time of the Notes hereinafter described:

1. The Guarantor irrevocably guarantees payment in full, as and when the same
becomes due and payable, of the principal of and interest, if any, on the
promissory notes (the "Notes") issued by Federated Retail Holdings, Inc., a New
York corporation and a wholly-owned subsidiary of the Guarantor (the "Issuer"),
from time to time pursuant to the Issuing and Paying Agent Agreement, dated as
of January 30, 1997, as amended by the letter agreement, dated _________, 2005,
as the same may be further amended, supplemented or modified from time to time,
between the Issuer and Citibank, N.A. (the "Agreement").

2. The Guarantor's obligations under this Guarantee shall be unconditional,
irrespective of the validity or enforceability of any provision of the Agreement
or the Notes.

3. This Guarantee is a guaranty of the due and punctual payment (and not merely
of collection) of the principal of and interest, if any, on the Notes by the
Issuer and shall remain in full force and effect until all amounts have been
validly, finally and irrevocably paid in full, and shall not be affected in any
way by any circumstance or condition whatsoever, including without limitation
(a) the absence of any action to obtain such amounts from the Issuer, (b) any
variation, extension, waiver, compromise or release of any or all of the
obligations of the Issuer under the Agreement of the Notes or of any collateral
security therefor or (c) any change in the existence or structure of, or the
bankruptcy or insolvency of, the Issuer or by any other circumstance (other than
by complete, irrevocable payment) that might otherwise constitute a legal or
equitable discharge or defense of a guarantor or surety. The Guarantor waives
all requirements as to diligence, presentment, demand for payment, protest and
notice of any kind with respect to the Agreement and the Notes.

4. In the event of a default in payment of principal of or interest on any
Notes, the holders of such Notes, may institute legal proceedings directly
against the Guarantor to enforce this Guarantee without first proceeding against
the Issuer.

5. This Guarantee shall remain in full force and effect or shall be reinstated
(as the case may be) if at any time any payment by the Issuer of the principal
of or interest, if any, on the Notes, in whole or in part, is rescinded or must
otherwise be returned by the holder upon the insolvency, bankruptcy or
reorganization of the Issuer or otherwise, all as though such payment had not
been made.

6. This Guarantee shall be governed by and construed in accordance with the laws
of the State of New York.

IN WITNESS WHEREOF, the Guarantor has caused this Guarantee to be duly executed
as of the day and year first above written.

Federated Department Stores, Inc.

 

 

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