FEDERATED DEPARTMENT STORES INC, T-3, 1994-11-23

FEDERATED DEPARTMENT STORES INC
T-3, 1994-11-23
DEPARTMENT STORES

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM T-3

APPLICATION FOR QUALIFICATION OF INDENTURE
UNDER THE TRUST INDENTURE ACT OF 1939

Federated Department Stores, Inc.
(Name of Applicant)

1440 Broadway
New York, New York 10018
(212) 840-1440

(Address of Principal Executive Offices)

SECURITIES TO BE ISSUED UNDER THE INDENTURE TO BE QUALIFIED

TITLE OF CLASS AMOUNT
-------------- ------
Series A Senior Notes Due 1999 $385,000,000
Series B Senior Notes Due 2002 $288,800,000
Series C Senior Notes Due 2005 $288,800,000

Approximate date of proposed public offering:

Upon consummation of the Debtors' plan of
reorganization discussed herein.

Name and address of agent for service:

Federated Department Stores, Inc.
7 West Seventh Street
Cincinnati, Ohio 45202
(513) 579-7000
Attn: Ronald W. Tysoe,
Vice Chairman and Chief Financial Officer

With a copy to:

Robert A. Profusek, Esq.
Jones, Day, Reavis & Pogue
599 Lexington Avenue
New York, New York 10022
(212) 326-3939

The applicant hereby amends this application for qualification on such date or
dates as may be necessary to delay its effectiveness until (i) the 20th day
after the filing of a further amendment which specifically states that it shall
supersede this amendment or (ii) such date as the Commission, acting pursuant to
Section 307(c) of the Trust Indenture Act of 1939, as amended (the "Act"), may
determine upon written request of the applicant.

<PAGE>

GENERAL

ITEM 1. General Information. Furnish the following information as to the
-------------------
applicant:

(a) Form of organization: A corporation

(b) State or other sovereign power under the laws of which organized:
Delaware

ITEM 2. Securities Act exemption applicable. State briefly the facts relied
-----------------------------------
upon as a basis for the claim that registration of the indenture
securities under the Securities Act of 1933 is not required.

Federated proposes not to register the Series A Senior Notes due 1999,
Series B Senior Notes due 2002 or Series C Senior Notes due 2005 (the "Notes")
under the Securities Act of 1933 (the "Securities Act") in reliance upon the
exemption from section 5 of the Securities Act contained in section 1145(a)(1)
of the United States Bankruptcy Code (the "Bankruptcy Code") applicable to the
offer or sale under a Chapter 11 reorganization plan, by an entity that is not
an underwriter as defined in section 1145(b) of the Bankruptcy Code, of a
security of a debtor in exchange for a claim against such debtor.

On January 27, 1992, R.H. Macy & Co., Inc. ("Macy's") commenced a
reorganization case by filing a voluntary petition for relief under Chapter 11,
Title 11 of the Bankruptcy Code in the U.S. Bankruptcy Court for the Southern
District of New York (the "Bankruptcy Court"), Case No. 92 B 40477. On October
21, 1994, Macy's and Federated filed with the Bankruptcy Court the Second
Amended Joint Plan of Reorganization of Macy's and Certain of Its Subsidiaries,
which is incorporated herein by reference in Exhibit T3E hereto. The Second
Amended Plan of Reorganization (the "Plan") is expected to be confirmed by the
Bankruptcy Court on December 8, 1994. It is anticipated that Macy's will emerge
from bankruptcy on a date subsequent to December 8, 1994 to be set in December,
1994 (the "Effective Date"), and will consummate the Plan as soon as is
practicable thereafter.

Upon consummation of and pursuant to the Plan, Federated and Macy's
will merge (the "Federated/Macy's Merger") and the surviving corporation in such
merger (the "Combined Company") will issue approximately $962,600,000 in
aggregate principal amount of Notes which, together with other securities to be
issued by the Combined Company, will be exchanged for certain claims as set
forth in the Plan.

Capitalized terms used but not otherwise defined herein shall have the
meanings given to them in the Plan.

Explanatory Note: Upon the effectiveness of the Plan and the
----------------
consummation of the Federated/Macy's Merger, (i) the stockholders of Federated
immediately prior to the Federated/Macy's Merger will become stockholders of the
Combined Company without exchanging their stock certificates or taking any other
action, (ii) all of the capital stock of Macy's (including all options,
warrants, or other rights to purchase any such capital stock) issued and
outstanding or held in Macy's treasury or by any subsidiary of Macy's will be
canceled and retired pursuant to the Plan and no consideration will be paid or
delivered with respect thereto, without any action on the part of Macy's, the
Combined Company, the holders of the capital stock of Macy's, or any other
entity, (iv) all debt securities of Macy's will be discharged pursuant to the
Plan, (iv) the certificate of incorporation and by-laws of the Combined Company
will be replaced with the certificate of incorporation and by-laws set forth at
Exhibits T3A(2) and T3B(2) hereto, respectively, and (iii) except as set forth
in response to Item 4 hereof, all directors and executive officers of Federated
will continue as the directors and executive officers of the Combined Company.

<PAGE>

Accordingly, the information set forth herein and included in the Exhibits
hereto relates to Federated and the Combined Company.

AFFILIATIONS

ITEM 3. Affiliates. Furnish a list or diagram of all affiliates of the
----------
applicant and indicate the respective percentage of voting securities
or other bases of control.

Stockholders
------------

The following table sets forth the number of shares and percentage of
outstanding shares of Federated Common Stock beneficially owned (or deemed to be
beneficially owned pursuant to SEC rules) by each person known to Federated to
own 5 percent or more of the outstanding Federated Common Stock as of November
21, 1994.

Number of Percentage of
--------- -------------
Name and Address Shares Total
---------------- ------ -----

Ark Asset Management Co., Inc. (1) . . . 6,774,000 5.40%
One New York Plaza
New York, NY 10004

FMR Corp. (2) . . . . . . . . . . . . . . 15,519,662 12.16%
82 Devonshire Street
Boston, MA 02109
Mellon Bank Corporation and certain of its
subsidiaries (3) . . . . . . . . . . . . 11,037,000 8.73%
One Mellon Bank Center
Pittsburgh, PA 15258

(1) According to information set forth in a Schedule 13G, dated February 7,
1994, filed with the SEC by Ark Asset Management Co., Inc. ("Ark"), Ark was
the beneficial owner of 6,774,000 shares of Federated Common Stock
(approximately 5.40% of the total number of shares of Federated Common
Stock outstanding) as of December 31, 1993.

(2) According to information set forth in a Schedule 13G, dated October 7,
1994, filed with the SEC by FMR Corp. ("FMR"), FMR was the beneficial owner
of 15,519,662 shares of Federated Common Stock (approximately 12.16% of the
total number of shares of Federated Common Stock outstanding) as of
September 30, 1994. According to the FMR Schedule 13G, of those 15,519,662
shares, 14,744,967 shares (approximately 11.56% of the total number of
shares outstanding) as of September 30, 1994 were beneficially owned by
Fidelity Management & Research Company, a wholly owned subsidiary of FMR,
as a result of acting as investment advisor to several investment
companies. The FMR Schedule 13G also disclosed that Edward C. Johnson 3d,
Chairman of FMR, beneficially owns 24.9% of the outstanding voting common
stock of FMR and that Mr. Johnson and various trusts for the benefit of
Johnson family members, through their ownership of FMR's voting common
stock, form a controlling group with respect to FMR.

<PAGE>

the Plan is not reduced on account of an election by Federated or the
Combined Company to increase the amount of cash to be distributed to
certain holders of Claims and (ii) that the average market price per share
of Federated Common Stock, determined in accordance with the Plan for
purposes of calculating the number of shares of New Combined Company Common
Stock that will be issuable pursuant to the Plan, is $21.00.

(3) According to information set forth in a Schedule 13G, dated February 11,
1994, filed with the SEC by Mellon Bank Corporation and certain of its
subsidiaries (collectively, "Mellon"), Mellon was the beneficial owner of
11,037,000 shares of Federated Common Stock (approximately 8.73% of the
total number of shares of Federated Common Stock outstanding) as of
December 31, 1993.

The Federated/Macy's Merger Agreement provides that, at the Effective
Time of the Federated/Macy's Merger, (i) the stockholders of Federated
immediately prior to the Federated/Macy's Merger will become stockholders of the
Combined Company without exchanging their stock certificates or taking any other
action, and (ii) all of the capital stock of Macy's (including all options,
warrants, or other rights to purchase any such capital stock) issued and
outstanding or held in Macy's treasury or by any subsidiary of Macy's will be
canceled and retired pursuant to the Plan and no consideration will be paid or
delivered with respect thereto, without any action on the part of Macy's, the
Combined Company, the holders of the capital stock of Macy's, or any other
entity.

In addition, at the Effective Time of the Federated/Macy's Merger,
shares of New Combined Company Common Stock will be issued pursuant to the Plan.
Federated is unable to determine the number and percentage of shares of New
Combined Company Common Stock that will be beneficially owned by particular
persons upon the completion of the Federated/Macy's Merger because, among other
things, the number of shares of New Combined Company Common Stock issuable
pursuant to the Plan is based upon a formula.

Subsidiaries
------------

Subsidiaries of Federated prior to consummation of the Plan are set
forth below. Federated owns 100% of the voting securities of each subsidiary
listed below, except as indicated below.

Allied Mortgage Financing Corp.
Allied Stores General Real Estate Company
Jordan Servicenter, Inc.
Saramaas Realty Corp.
Stern's-Echelon, Inc.
Stern's-Granite Run, Inc.
Stern's-Moorestown, Inc.
Seven West Seventh, Inc.
Allied Stores International, Inc.
Allied Stores International Sales Company, Inc.
Allied Stores Marketing Corp.
BFC Real Estate Company
Astoria Realty, Inc.
Auburndale Realty, Inc.
Douglaston Plaza, Inc.
Jor-Mar, Inc.
FACS Group, Inc.

<PAGE>

FDS National Bank
Federated Claims Services Group, Inc.
Federated Corporate Services, Inc.
Federated Credit Holdings Corporation
Prime Receivables Corporation
Seven Hills Funding Corporation
Federated Department Stores Insurance Company, Ltd. (99% owned)
Federated Noteholding Corporation
Federated Real Estate, Inc.
A&S Real Estate, Inc.
Bloomingdale's Real Estate, Inc.
Burdine's Real Estate, Inc.
Burdine's Main Store Real Estate, Inc.
Lazarus Real Estate, Inc.
Rich's Real Estate, Inc.
Rich's Main Store Real Estate, Inc.
Federated Stores Realty, Inc.
Federated Retail Holdings, Inc.
Abraham & Straus, Inc.
Bloomingdale's By Mail Ltd.
Bloomingdale's, Inc.
Burdines, Inc.
22 East Advertising Agency, Inc.
22 East Realty Corporation
Jordan Marsh Stores Corporation
Lazarus PA, Inc.
Home North Development Corporation
Rich's Department Stores, Inc.
Stern's Department Stores, Inc.
The Bon, Inc.
Tukwila Warehousing Services Corporation
Federated Systems Group, Inc.
Jordan Marsh Insurance Agency, Inc.

Subsidiaries of Macy's prior to consummation of the Plan are set forth
below. Macy's owns 100% of the voting securities of each subsidiary listed
below, except as indicated below.

Bullock's, Inc.
Bullock's Properties Corp.
Bullock's Properties Corp. II
Bullock's Properties Corp. III
Bullock's Specialty Stores, Inc.
Bullock's-Wilshire, Inc.
CalVal Realty Corp.
Cowie & Company, Limited
Delphis Corporation
Executive Placement Consultants, Inc.
Finite Limited (50% owned; other 50% owned by
Cowie & Company, Limited)
Garage Park Corp.
Housgalleria Properties Corp.

<PAGE>

I. Magnin, Inc.
I. Magnin Properties Corp.
I. Magnin Properties Corp. II
Pasadena Properties Corp.
Kings Plaza Shopping Center of Avenue U, Inc.
U & F Realty Corp. (50% owned)
L & K Properties Corp.
Lenox Properties Corp.
Macobb Properties Corp.
Macy Credit Corp. (approximately 99.74% owned; approximately .26% is
owned in the aggregate by Macy's Northeast, Inc., Macy's
California, Inc., Macy's South, Inc., Bullock's, Inc. and I.
Magnin, Inc.)
Macy Financial, Inc.
R. H. Macy Overseas Finance N.V.
Macy Receivables Funding Corp.
Macy Receivables Master Servicing Corp.
Macy's California, Inc.
Bird Cage Properties Corp.
Calcove Realty Corp.
Concord Properties Corp.
Eastridge Properties Corp.
Macy's Nevada Properties Corp.
MOA Rest, Inc.
Montcal Properties Corp.
Pleasanton Properties Corp.
Sacprop
Sanstoff East Properties Corp.
Santa Rosa Properties Corp.
Serramonte Building Corp.
Stanshop Properties
Stockton Properties Corp.
Sunsac Properties Corp.
Sun TownCenter Properties Corp.
3240 Properties Corp.
Val-Fair Shopping Center
Macy's Data and Credit Services Corp.
Macy's Northeast, Inc.
Bamdel Castle Properties Corp.
Bamproperties Corp.
Bamrest Del, Inc.
Bamrest NJ, Inc.
Bamrest Penn Inc.
Brooksmith Properties Corp.
Brunswick Properties Corp.
Cherry Hill Properties Corp.
Colonie Properties Corp.
Deptbam Properties Corp.
Edwood Properties Corp.
Fieldgren Realty Corp.
Hunt Valley Properties Corp.
J. N. A. Properties Corp.
Livingston Properties Corp.
Macy N. R. Properties Corp.

<PAGE>

Macy Specialty Stores, Inc.
Macy's Northeast Properties Corp.
Marley Properties Corp.
Marymarsh Properties Corp.
Massapequa Properties Corp.
Nanuet Properties Corp.
N. B. Properties Corp.
New Haven Properties Corp.
Owings Mills Properties Corp.
OxVal Properties Corp.
Quakerbam Properties Corp.
R. H. M. Properties Corp.
Rockprop Corp.
Shop 34 Advertising, Inc.
Springpenn Properties Corp.
Stamford Properties Corp.
Tombam Properties Corp.
White Plains Properties Corp.
Willowbrook Properties Corp.
W. P. Properties Corp.
Macy's South, Inc.
Atmain Properties Corp.
Carcone Parking, Inc.
Davrest Ga., Inc.
Esplanade Properties Corp.
Mac Fla Rest, Inc.
Macy's Poydras Properties Corp.
Northlake Properties Corp.
Rest Tex, Inc. (49% owned)
Macy Special Real Estate Capital Corp.
MCC Special Corp.
MCO, Inc.
MHL Properties Corp. of Massachusetts
Nasstock, Inc.
Paramustock, Inc.
R. H. Macy China, Ltd.
R. H. Macy (France) S.A.R.L. (99.5% owned;
other .5% owned by Cowie & Company, Limited)
R. H. Macy Holdings (HK), Ltd.
R. H. Macy Warehouse (HK), Ltd.
Riverchase Properties Corp.
Sabugo Limited (50% owned; other 50% owned by
Cowie & Company, Limited)
Sacvent Corp.
Sacvent Garage
Waltwhit Properties Corp.
Wise Chat Limited (50% owned; other 50%
owned by Cowie & Company, Limited)

Upon consummation of the Plan, each of the subsidiaries of Federated and
Macy's set forth above will be a subsidiary of the Combined Company.

<PAGE>

MANAGEMENT AND CONTROL

ITEM 4. Directors and executive officers. List the names and complete mailing
--------------------------------
addresses of all directors and executive officers of the applicant and
all persons chosen to become directors or executive officers.
Indicate all offices with the applicant held or to be held by each
person named.

The name, mailing address and office currently held by all directors
and executive officers of Federated are provided below.

NAME ADDRESS OFFICE
---- ------- ------

Allen Questrom Federated Department Director
Stores, Inc. Chairman of the
1440 Broadway Board and Chief
New York, NY 10018 Executive Officer

Robert A. Charpie Chairman Director
Ampersand Ventures
55 Williams Street,
Suite 240
Wellesley, MA 02181

Lyle Everingham Post Office Box 54889 Director
Cincinnati, OH 45254

Meyer Feldberg Dean Director
Columbia University
School of Business
101 Uris Hall
New York, NY 10027

Earl G. Graves, President and Chief Director
Sr. Executive Officer
Earl G. Graves Limited
130 Fifth Avenue
New York, NY 10011

George V. Grune Chairman Director
The Reader's Digest
Association, Inc.
Pleasantville, NY
10570-7000

G. William Miller Chairman Director
G. William Miller &
Co. Inc.
1215 19th Street, N.W.
Washington, DC 20036

Joseph Neubauer Chairman and Chief Director
Executive Officer
The ARA Group, Inc.
1101 Market Street
Philadelphia, PA 19107

<PAGE>

Ronald W. Tysoe Federated Department Director
Stores, Inc. Vice Chairman and
7 West Seventh Street Chief Financial
Cincinnati, OH 45202 Officer

Karl M. von der Advisory Director Director
Heyden The Clipper Group
12 East 49th Street,
30th Floor
New York, NY 10017

Marna C. Miller, Anderson & Director
Whittington Sherrerd
100 Front Street
West Conshohocken, PA
19428

James M. Federated Department Director
Zimmerman Stores, Inc. President and Chief
7 West Seventh Street Operating Officer
Cincinnati, OH 45202

Thomas G. Cody Federated Department Executive Vice
Stores, Inc. President, Law and
7 West Seventh Street Human Resources
Cincinnati, OH 45202

John E. Brown Federated Department Senior Vice
Stores, Inc. President and
7 West Seventh Street Controller
Cincinnati, OH 45202

Dennis J. Federated Department Senior Vice
Broderick Stores, Inc. President, General
7 West Seventh Street Counsel and
Cincinnati, OH 45202 Secretary

Karen M. Hoguet Federated Department Senior Vice
Stores, Inc. President and
7 West Seventh Street Treasurer
Cincinnati, OH 45202

The name, mailing address and office currently held by all directors
Macy's who will continue as directors of the Combined Company are provided
below.

NAME ADDRESS OFFICE
---- ------- ------
Myron E. Ullman, 1440 Broadway Director
III (1) New York, NY 10018 Deputy Chairman

Gertrude G. R.H. Macy & Co., Inc. Director
Michelson 151 West 34th Street
New York, NY 10001

Laurence A. Tisch Chairman Director
CBS, Inc.
51 West 52nd Street,
35th Floor
New York, NY 10019

<PAGE>

Paul Van Orden 570 Lexington Avenue, Director
39th Floor
New York, NY 10021

(1) Myron E. Ullman, III has announced his intention to resign as Deputy
Chairman of the Combined Company effective January 31, 1995. It is
anticipated, however, that Mr. Ullman will remain a director of the
Combined Company through the 1995 annual meeting of stockholders the
Combined Company.

ITEM 5. Principal owners of voting securities. Furnish the following
-------------------------------------
information as to each person owning 10 percent or more of the voting
securities of the applicant.

The following table sets forth the name and complete mailing address,
title of class of shares owned, amount of shares owned and percentage of voting
securities owned (or deemed to be beneficially owned pursuant to SEC rules) by
each person known to Federated to own 10 percent or more of the outstanding
voting securities of Federated as of November 21, 1994.

COL. A COL. B. COL. C. COL. D.
NAME AND COMPLETE MAILING TITLE OF CLASS AMOUNT OWNED PERCENTAGE OF
ADDRESS OWNED VOTING
SECURITIES
OWNED

FMR Corp. (1) Federated 15,519,662 12.16%
82 Devonshire Street Common Stock
Boston, MA 02109

(1) According to information set forth in a Schedule 13G, dated October 7,
1994, filed with the SEC by FMR Corp. ("FMR"), FMR was the beneficial owner
of 15,519,662 shares of Federated Common Stock (approximately 12.16% of the
total number of shares of Federated Common Stock outstanding) as of
September 30, 1994. According to the FMR Schedule 13G, of those 15,519,662
shares, 14,744,967 shares (approximately 11.56% of the total number of
shares outstanding) as of September 30, 1994 were beneficially owned by
Fidelity Management & Research Company, a wholly owned subsidiary of FMR,
as a result of acting as investment advisor to several investment
companies. The FMR Schedule 13G also disclosed that Edward C. Johnson 3d,
Chairman of FMR, beneficially owns 24.9% of the outstanding voting common
stock of FMR and that Mr. Johnson and various trusts for the benefit of
Johnson family members, through their ownership of FMR's voting common
stock, form a controlling group with respect to FMR.

Based upon the aggregate amount of claims against the Macy's Debtors held
by funds managed by FMR as of August 31, 1994, such funds would receive, on
a fully diluted basis, approximately 7.07% of the New Combined Company
Common Stock to be distributed pursuant to the Plan, assuming that the
number of shares of New Combined Company Common Stock issuable pursuant to
the Plan is not reduced on account of an election by Federated or the
Combined Company to increase the amount of cash to be distributed to
certain holders of Claims and that the average market price per share of
Federated Common Stock, determined in accordance with the Plan for purposes
of calculating the number of shares of New Combined Company Common Stock
that will be issuable pursuant to the Plan, is $21.00.

<PAGE>

Combined Company without exchanging their stock certificates or taking any other
action, and (ii) all of the capital stock of Macy's (including all options,
warrants, or other rights to purchase any such capital stock) issued and
outstanding or held in Macy's treasury or by any subsidiary of Macy's will be
canceled and retired pursuant to the Plan and no consideration will be paid or
delivered with respect thereto, without any action on the part of Macy's, the
Combined Company, the holders of the capital stock of Macy's, or any other
entity.

UNDERWRITERS

ITEM 6. Underwriters. Give the name and complete mailing address of (a) each
------------
person who, within three years prior to the date hereof, acted as an
underwriter of any securities of the obligor outstanding on the date
hereof, and (b) each proposed principal underwriter of the Notes and
as to each person specified in (a), the title of each class of
securities underwritten.

(a) None.

(b) None.

CAPITAL SECURITIES

ITEM 7. Capitalization.
--------------

(a) Furnish the following information as to each authorized class of
securities of the applicant.

Upon consummation of the Plan, the authorized and issued securities of
the Combined Company will be as follows:

COL. A COL. B COL. C
TITLE OF CLASS AMOUNT AUTHORIZED AMOUNT OUTSTANDING

New Common Stock 500,000,000 shares 126,753,094 shares
(1)(2)(3)

New Preferred Stock 125,000,000 shares 0 shares

Series A Senior $385,000,000 $385,000,000
Notes

Series B Senior $288,800,000 $288,800,000
Notes

Series C Senior $288,800,000 $288,800,000
Notes

Series A Secured $472,810,000 $280,700,000
Notes (4)

<PAGE>

Senior Convertible
Discount Notes (5) $307,400,000 $307,400,000

(1) Approximately 126,753,094 shares of Federated Common Stock were outstanding
as of November 21, 1994. At the Effective Time of the Federated/Macy's
Merger, each such outstanding share will be exchanged for one share of New
Combined Company Common Stock, and additional shares of New Combined
Company Common Stock will be issued pursuant to the Plan. Federated is
unable to determine the exact number of shares of New Combined Company
Common Stock that will be outstanding upon the completion of the
Federated/Macy's Merger because, among other things, the number of shares
of New Combined Company Common Stock issuable pursuant to the Plan is based
upon a formula.

(2) Each share of New Combined Company Common Stock issued prior to the earlier
of the occurrence of one of certain change of control events or the tenth
anniversary of the Effective Date will be accompanied by one New Combined
Share Purchase Right issued pursuant to a share purchase rights agreement
to be entered into between the Combined Company and a transfer agent. Each
New Combined Company Share Purchase Right will entitle the registered
holder thereof to purchase from the Combined Company (i) one one-hundredth
of a share of Series A Junior Participating Preferred Stock, par value $.01
per share, of the Combined Company, at a price of $62.50 per one one-
hundredth of the Series A Preferred Share, subject to adjustment, or, (ii)
under certain circumstances, that number of shares of common stock (or an
economically equivalent security or securities) of the other person a party
to the related change of control event that would have a market value of
two times the exercise price of the New Combined Company Share Purchase
Right, at the then current exercise price of the New Combined Company Share
Purchase Right. Until a New Combined Company Share Purchase Right is
exercised, the holder thereof, as such, will have no rights as a preferred
stockholder of the Combined Company, including the right to vote.

(3) In addition to the securities set forth above, upon the consummation of the
Plan, the Combined Company will have outstanding Federated's existing
Series A Warrants and Series B Warrants and New Series C Warrants and New
Series D Warrants. The existing Series A Warrants and Series B Warrants
will, from and after the Effective Date, entitle the holder thereof to
acquire one share of New Combined Company Common Stock (subject to
adjustment) at an exercise price of (i) $23.88 per share in the case of the
Series A Warrants, which expire February 15, 1996, or (ii) $33.43 per share
in the case of the Series B Warrants, which expire February 15, 2000. The
Combined Company will be obligated to issue up to approximately 5,200,000
shares of New Combined Company Common Stock upon the exercise of some or
all of the outstanding Series A Warrants and Series B Warrants. The New
Series C Warrants will be exercisable during the five-year period following
the Effective Date, and entitle the holder to purchase one share of New
Common Stock at a price equal to 130% of the average of the intraday high
and low average sales prices on the New York Stock Exchange of the
Federated Common Stock for the 30 consecutive trading days ending on the
sixth trading day prior to the Effective Date. The New Series D Warrants
will be exercisable during the seven-year period following the Effective
Date, and entitle the holder to purchase one share of New Common Stock at a
price equal to 150% of the average of the intraday high and low average
sales prices on the New York Stock Exchange of the Federated Common Stock
for the 30 consecutive trading days ending on the sixth trading day prior
to the Effective Date. The number and kind of shares purchasable upon the
exercise of the New Warrants will be subject to adjustment in certain
circumstances. The number of shares of New Combined Company Common Stock
potentially issuable upon the exercise of New Warrants, and the exercise
price payable in connection therewith, is not presently determinable.

<PAGE>

(4) The Series A Secured Notes may be prepaid in full with the proceeds of a
bank borrowing upon consummation of the Plan.

(5) The Combined Company may become obligated to issue up to 8,600,000 shares
of New Combined Company Common Stock upon the conversion of Federated's
Senior Convertible Discount Notes.

(b) Give a brief outline of the voting rights of each class of voting
securities referred to in paragraph (a) above.

New Common Stock

The holders of New Common Stock will be entitled to one vote for each
share held of record on all matters submitted to a vote of the stockholders
pursuant to the By-laws and Restated Certificate of Incorporation of the
Combined Company.

New Preferred Stock

The holders of particular series of New Preferred Stock will have the
voting rights, if any, determined by the Board of Directors of the Combined
Company prior to the issuance of such series of New Preferred Stock.

Other Securities

Holders of the other securities listed above will not have voting
rights.

INDENTURE SECURITIES

ITEM 8. Analysis of indenture provisions. Insert the analysis of indenture
--------------------------------
provisions required under section 305(a)(2) of the Act.

The following statements are summaries of certain provisions of the
Notes and the indenture (including the relevant supplemental indentures) under
which the Notes are to be issued (collectively, the "Indenture"), and are
subject to and qualified in their entirety by reference to all provisions of the
Indenture (Exhibits T3C(1) through T3C(4)).

Authentication and Delivery of Securities

The Notes will be issued under an Indenture between the Combined
Company and The First National Bank of Boston, as Trustee (the "Trustee"). At
the Combined Company's request, the Trustee will authenticate and deliver the
Notes to the holders of allowed claims and interests or a distribution agent on
their behalf. Since the Notes will be issued in satisfaction of claims against
Macy's in accordance with the Plan, and not for cash, there will be no proceeds
from the original issue of the Notes.

Events of Default, Notice, Waiver

The following are "Events of Default" with respect to each series of
Notes: (i) failure to pay principal of or premium, if any, on any Note of such
series when due; (ii) failure to redeem or repurchase any Notes of such series
when required pursuant to the Indenture; (iii) failure to pay any interest on
any Note of such series when due, which failure continues for 30 days; (iv)
failure to perform any other covenant of the Combined Company in the Indenture
(other than a covenant included in the Indenture solely for the benefit of a
series of Notes other than such series), which failure continues for 60 days
after written notice; (v) any nonpayment at maturity or other default (beyond

<PAGE>

any applicable grace period) under any agreement or instrument relating to any
other indebtedness for borrowed money of the Combined Company the principal
amount of which is not less than $50.0 million, which default results in the
acceleration of the maturity of such indebtedness prior to its stated maturity
or occurs at the final maturity thereof; (vi) certain events of bankruptcy,
insolvency, or reorganization of the Combined Company or any significant
subsidiary of the Company or any group of subsidiaries of the Combined Company
that, if considered in the aggregate, would be a significant subsidiary; and
(vii) the entry of any final judgment(s) or order(s) against the Combined
Company or any of its subsidiaries in excess of $50.0 million individually or in
the aggregate (not covered in full by insurance) that is not paid, discharged,
or otherwise stayed for 60 days. The Trustee will be required to, within 90
days after the occurrence of a default in respect of any series of Notes, give
to the holders of Notes of such series notice of all such uncured defaults known
to it (except that, in the case of a default in the performance of any covenant
of the character contemplated in clause (iii) of the preceding sentence, no such
notice to holders of the Notes of such series will be given until at least 30
days after the occurrence thereof); provided, however, that, except in the case
of a default of the character contemplated in clause (i) or (ii) of the
preceding sentence, the Trustee may withhold such notice if and so long as it in
good faith determines that the withholding of such notice is in the interests of
the holders of the Notes of such series.

If an Event of Default with respect to a series of Notes issued under
the Indenture occurs and is continuing, either the Trustee or the holders of at
least 25% in principal amount of the Notes of such series by notice as provided
in the Indenture may declare the principal amount of all Notes of such series to
be due and payable immediately. However, at any time after a declaration of
acceleration with respect to Notes of any series has been made, but before a
judgment or decree based on such acceleration has been obtained, the holders of
a majority in principal amount of the Notes of such series may, under certain
circumstances, rescind and annul such acceleration. For information as to
waiver of defaults, see "-- Modification and Waiver" below.

The Indenture will provide that, subject to the duty of the Trustee
thereunder during an Event of Default to act with the required standard of care,
such Trustee will be under no obligation to exercise any of its rights or powers
under the Indenture at the request or direction of any of the holders, unless
such holders will have offered to the Trustee reasonable security or indemnity.
Subject to certain provisions, including those requiring security or
indemnification of the Trustee, the holders of a majority in principal amount of
the Notes of any series will have the right to direct the time, method, and
place of conducting any proceeding for any remedy available to the Trustee, or
exercising any trust or power conferred on the Trustee, with respect to the
Notes of such series.

No holder of a Note of any series will have any right to institute any
proceeding with respect to the Indenture or for any remedy thereunder, unless
such holder will have previously given to the Trustee written notice of a
continuing Event of Default and unless also the holders of at least 25% in
aggregate principal amount of the outstanding Notes of the same series shall
have made written request, and offered reasonable security or indemnity, to the
Trustee to institute such proceeding as trustee, and the Trustee shall not have
received from the holders of a majority in aggregate principal amount of the
outstanding Notes of such series a direction inconsistent with such request and
shall have failed to institute such proceeding within 60 days. However, such
limitations will not apply to a suit instituted by a holder of a Note for
enforcement of payment of the principal of and interest on such Note on or after
the respective due dates expressed in such Note.

<PAGE>

Satisfaction and Discharge

The Combined Company, at its option, may satisfy and discharge the
Indenture (except for certain obligations of the Combined Company and the
Trustee, including the obligations to apply money held in trust) when (i) either
(a) all Notes previously authenticated and delivered (other than (1) Notes that
were destroyed, lost, or stolen and that have been replaced or paid, and (2)
Notes for the payment of which money has been deposited in trust or segregated
and held in trust by the Combined Company and thereafter repaid to the Combined
Company or discharged from such trust) have been delivered to the Trustee for
cancellation, or (b) all such Notes not theretofore delivered to the Trustee for
cancellation (1) have become due and payable, (2) will become due and payable at
their stated maturity within one year, or (3) are to be called for redemption
within one year under arrangements satisfactory to the Trustee for the giving of
notice of redemption by the Trustee in the name and at the expense of the
Combined Company, and the Combined Company has deposited or caused to be
deposited with the Trustee as trust funds in trust for such purpose an amount
sufficient to pay and discharge the entire indebtedness on such Notes not
previously delivered to the Trustee for cancellation, for principal and any
premium and interest to the date of such deposit (in the case of Notes that have
become due and payable) or to the stated maturity or redemption date, as the
case may be, (ii) the Combined Company has paid or caused to be paid all other
sums payable under the Indenture by the Combined Company, and (iii) the Combined
Company has delivered to the Trustee an officer's certificate and an opinion of
counsel, each to the effect that all conditions precedent relating to the
satisfaction and discharge of the Indenture have been satisfied.

Defeasance

The Combined Company, at its option, (i) will be deemed to have been
discharged from its obligations with respect to the Notes of a particular series
issued under the Indenture (except for certain obligations, including
obligations to register the transfer or exchange of Notes of such series, to
replace destroyed, stolen, lost, or mutilated Notes of such series, and to
maintain an office or agency in respect of the Notes and hold moneys for payment
in trust) or (ii) will be released from its obligations to comply with the
restrictive covenants set forth in the Indenture with respect to the Notes of
such series, and the occurrence of an event described in clause (iii) under
"Events of Default" above with respect to any defeased covenant and clause (iv)
of the "Events of Default" above will no longer be an Event of Default if, in
either case, the Combined Company irrevocably deposits with the Trustee, in
trust, money or direct obligations of the United States of America for the
payment of which the full faith and credit of the United States of America is
pledged or obligations of an agency or instrumentality of the United States of
America the payment of which is unconditionally guaranteed as a full faith and
credit obligation by the United States of America, that, in either case, are not
callable at the issuer's option ("U.S. Government Obligations") that through the
payment of interest thereon and principal thereof in accordance with their terms
will provide money in an amount sufficient to pay all the principal of and any
interest on the Notes of such series on the dates such payments are due in
accordance with the terms of such Notes. Such defeasance may be effected only
if, among other things, (a) no Event of Default or event that, with the giving
of notice or lapse of time, or both, would become an Event of Default under the
Indenture shall have occurred and be continuing on the date of such deposit, (b)
no Event of Default described under clause (v) under "Events of Default" above
or event that with the giving of notice or lapse of time, or both, would become
an Event of Default described under such clause (v) shall have occurred and be
continuing at any time on or prior to the 124th day following such date of
deposit, (c) in the event of defeasance under clause (i) above, the Combined
Company shall have delivered an opinion of counsel stating that (1) the Combined
Company has received from, or there has been published by the Internal Revenue
Service, a ruling, or (2) since the date of the Indenture there has been a

<PAGE>

change in applicable federal law, in either case to the effect that, among other
things, the holders of the applicable Notes will not recognize gain or loss for
United States federal income tax purposes as a result of such deposit or
defeasance and will be subject to United States federal income tax in the same
manner as if such defeasance had not occurred, (d) in the event of defeasance
under clause (ii) above, the Combined Company shall have delivered an opinion of
counsel to the effect that, among other things, the holders of the applicable
Notes should not recognize gain or loss for United States federal income tax
purposes as a result of such deposit or defeasance and shall be subject to
United States federal income tax in the same manner as if such defeasance had
not occurred, (e) the Combined Company shall have delivered to the Trustee an
opinion of a nationally recognized independent public accounting firm certifying
the sufficiency of the amount of any U.S. Government Obligations placed on
deposit to pay, without regard to any reinvestment of any accrued interest,
principal, interest, and premium, if any, on the Notes no later than one day
prior to when due, and (f) such defeasance will not result in a breach or
violation of, or constitute a default under, any other agreement to which the
Combined Company is a party or violate any law to which the Combined Company is
subject. In the event the Combined Company fails to comply with its remaining
obligations under the Indenture after a defeasance of such Indenture with
respect to the Notes of any series as described under clause (ii) above and the
Notes of such series are declared due and payable because of the occurrence of
any undefeased Event of Default, the amount of money and U.S. Government
Obligations on deposit with the Trustee may be insufficient to pay amounts due
on the Notes of such series at the time of the acceleration resulting from such
Event of Default. However, the Combined Company will remain liable in respect
of such payments.

Evidence of Compliance with Conditions and Covenants

The Combined Company will be required to furnish to the Trustee
annually a statement as to the performance by the Combined Company of its
obligations under the Indenture and as to any default in such performance. In
addition, the Combined Company will be required to provide the Trustee with
notice of any uncured Event of Default within 10 days after any responsible
officer of the Combined Company becomes aware of or receives actual notice of
the occurrence thereof.

Modification and Waiver

Modifications and amendments of the Indenture may be made by the
Combined Company and the Trustee with the consent of the holders of not less
than a majority in aggregate principal amount of the Notes of each series
affected thereby, except that no such modification or amendment may, without the
consent of the holder of each Note affected thereby: (i) change the stated
maturity of, or any installment of principal of, or interest on, any Note; (ii)
reduce the principal amount of, the rate of interest on, or the premium, if any,
payable upon the redemption of, any Note; (iii) change the place or currency of
payment of principal of, or premium, if any, or interest on any Note; (iv)
impair the right to institute suit for the enforcement of any payment on or with
respect to any Note on or after the stated maturity thereof; or (v) reduce the
percentage in principal amount of Notes of any series, the consent of the
holders of which is required for modification or amendment of the Indenture or
for waiver of compliance with certain provisions of the Indenture or for waiver
of certain defaults.

The holders of at least a majority in aggregate principal amount of
the Notes of any series may on behalf of the holders of all Notes of such series
waive, insofar as such series is concerned, compliance by the Combined Company
with certain covenants of the Indenture. The holders of not less than a
majority in principal amount of the Notes of any series may, on behalf of the
holders of all Notes of such series, waive any past default under the Indenture

<PAGE>

with respect to such series, except a default in the payment of the principal
of, or premium, if any, or interest on, any Note of such series or in respect of
a provision that under the Indenture cannot be modified or amended without the
consent of the holder of each Note of such series affected.

ITEM 9. Other obligors. Give the name and complete mailing address of any
--------------
person, other than the applicant, who is an obligor under the
indenture securities.

None.

Contents of application for qualification.
- -----------------------------------------

This application for qualification comprises:

(a) Pages numbered 1 to 19, consecutively.

(b) The following exhibits:

T3A(1) Certificate of Incorporation of Federated Department Stores,
Inc. as in effect on the date of this filing (incorporated
by reference to Exhibit 3.1 of Federated's Registration
Statement on Form 10, filed November 27, 1991, as amended
(the "Form 10") and Certificate of Designations of Series A
Junior Participating Preferred Stockof the Company
(incorporated by reference to Exhibit 3.1.1 of the Form 10)

T3A(2) Form of Restated Certificate of Incorporation of the
Combined Company effective upon consummation of the Plan

T3B(1) By-Laws of Federated as in effect on the date of the
filing of this application (incorporated by reference
to Exhibit 3.2 of the Form 10)

T3B(2) Form of By-Laws of the Combined Company effective upon
consummation of the Plan

T3C(1) Form of Indenture with respect to the Notes, between
the Combined Company and The First National Bank of
Boston, as Trustee

T3C(2) Form of Supplemental Indenture with respect to the
Series A Senior Notes due 1999, the Series B Senior
Notes due 2002 and the Series C Notes due 2005, between
the Combined Company and The First National Bank of
Boston, as Trustee

T3D Not applicable

T3E(1) Disclosure Statement Pursuant to Section 1125 of the
Bankruptcy Code for the Second Amended Joint Plan of
Reorganization of R. H. Macy & Co., Inc. and Certain of
Its Subsidiaries (incorporated by reference to Exhibit
99.1 to Federated's Current Report on Form 8-K filed
with the Commission on October 21, 1994)

<PAGE>

T3E(2) Second Amended Joint Plan of Reorganization of Macy's
and Certain of Its Subsidiaries

T3F Cross Reference Sheet showing the location in the Indenture
of provisions inserted therein pursuant to Section 310
through 318(a), inclusive, of the Trust Indenture Act of
1939, as amended and supplemented.

T3G The statement of eligibility and qualification on Form T-1
of The First National Bank of Boston, as Trustee under the
Indenture to be qualified with respect to the Notes.

<PAGE>

SIGNATURE

Pursuant to the requirements of the Trust Indenture Act of 1939, as
amended, the applicant, Federated Department Stores, Inc., a corporation
organized and existing under the laws of the State of Delaware, has duly caused
this application to be signed on its behalf by the undersigned, thereunto duly
authorized, and its seal to be hereunto affixed and attested, all in the city of
New York, and State of New York, on the 23rd day of November, 1994.

(SEAL)
FEDERATED DEPARTMENT STORES, INC.

By: /s/ Ronald W. Tysoe
-------------------------------
Name: Ronald W. Tysoe
Title: Vice Chairman and Chief
Financial Officer

Attest /s/ Dennis J. Broderick
--------------------------
Name: Dennis J. Broderick
Title: Secretary

<PAGE>

EXHIBIT INDEX

Certain of the exhibits to this application, indicated by an
asterisk, are hereby incorporated by reference to other documents on file with
the Securities and Exchange Commission with which they are physically filed, to
be a part hereof as of their respective dates.

EXHIBIT SEQUENTIALLY
-------
NO. TITLE NUMBERED PAGE
--- ----- -------------

*T3A(1) Certificate of Incorporation of Federated
Department Stores, Inc. as in effect on the
date of this filing (incorporated by
reference to Exhibit 3.1 of Federated's
Registration Statement on Form 10, filed
November 27, 1991, as amended (the "Form
10") and Certificate of Designations of
Series A Junior Participating Preferred
Stockof the Company (incorporated by
reference to Exhibit 3.1.1 of the Form 10)

T3A(2) Form of Restated Certificate of
Incorporation of the Combined Company
effective upon consummation of the Plan
*T3B(1) By-Laws of Federated as in effect on the
date of the filing of this application
(incorporated by reference to Exhibit 3.2 of
the Form 10)

T3B(2) Form of By-Laws of the Combined Company
effective upon consummation of the Plan
T3C(1) Form of Indenture with respect to the Notes,
between the Combined Company and The First
National Bank of Boston, as Trustee

T3C(2) Form of Supplemental Indenture with respect
to the Series A Senior Notes due 1999, the
Series B Senior Notes due 2002 and the
Series C Notes due 2005, between the
Combined Company and The First National Bank
of Boston, as Trustee

*T3E(1) Disclosure Statement Pursuant to Section
1125 of the Bankruptcy Code for the Second
Amended Joint Plan of Reorganization of R.
H. Macy & Co., Inc. and Certain of Its
Subsidiaries (incorporated by reference to
Exhibit 99.1 to Federated's Current Report
on Form 8-K filed with the Commission on
October 21, 1994)
T3E(2) Second Amended Joint Plan of Reorganization
of Macy's and Certain of Its Subsidiaries

T3F Cross Reference Sheet showing the location
in the Indenture of provisions inserted
therein pursuant to Section 310 through
318(a), inclusive, of the Trust Indenture
Act of 1939, as amended and supplemented

T3G The statement of eligibility and qualification
on Form T-1 of The First National Bank of
Boston, as Trustee under the Indenture to be
qualified with respect to the Notes.

Exhibit T3A(2)

RESTATED CERTIFICATE OF INCORPORATION
OF
R. H. MACY & CO., INC.

FIRST. The name of the corporation is Federated Department
Stores, Inc. (the "Company").

SECOND. The address of the Company's registered office in
the State of Delaware is 1209 Orange Street, City of Wilmington,
County of New Castle, Delaware 19801. The name of the Company's
registered agent at such address is The Corporation Trust
Company.

THIRD. The purpose of the Company is to engage in any
lawful act or activity for which corporations may be organized
under the General Corporation Law of the State of Delaware.

FOURTH. Section 1. Authorized Capital Stock. The Company
is authorized to issue two classes of capital stock, designated
Common Stock and Preferred Stock. The total number of shares of
capital stock that the Company is authorized to issue is
625,000,000 shares, consisting of 500,000,000 shares of Common
Stock, par value $0.01 per share, and 125,000,000 shares of
Preferred Stock, par value $0.01 per share.

Section 2. Preferred Stock. The Preferred Stock may be
issued in one or more series. The Board of Directors of the
Company (the "Board") is hereby authorized to issue the shares of
Preferred Stock in such series and to fix from time to time
before issuance the number of shares to be included in any such
series and the designation, relative powers, preferences, and
rights and qualifications, limitations, or restrictions of all
shares of such series. The authority of the Board with respect
to each such series will include, without limiting the generality
of the foregoing, the determination of any or all of the
following:

(a) the number of shares of any series and the
designation to distinguish the shares of such series from
the shares of all other series;

(b) the voting powers, if any, and whether such voting
powers are full or limited in such series;

<PAGE>

(d) whether dividends, if any, will be cumulative or
noncumulative, the dividend rate of such series, and the
dates and preferences of dividends on such series;

(e) the rights of such series upon the voluntary or
involuntary dissolution of, or upon any distribution of the
assets of, the Company;

(f) the provisions, if any, pursuant to which the
shares of such series are convertible into, or exchangeable
for, shares of any other class or classes or of any other
series of the same or any other class or classes of stock,
or any other security, of the Company or any other
corporation or other entity, and the price or prices or the
rates of exchange applicable thereto;

(g) the right, if any, to subscribe for or to purchase
any securities of the Company or any other corporation or
other entity;

(h) the provisions, if any, of a sinking fund
applicable to such series; and

(i) any other relative, participating, optional, or
other special powers, preferences, rights, qualifications,
limitations, or restrictions thereof;

all as may be determined from time to time by the Board and
stated in the resolution or resolutions providing for the
issuance of such Preferred Stock (collectively, a "Preferred
Stock Designation").

Section 3. Common Stock. Except as may otherwise be
provided in a Preferred Stock Designation, the holders of Common
Stock will be entitled to one vote on each matter submitted to a
vote at a meeting of stockholders for each share of Common Stock
held of record by such holder as of the record date for such
meeting.

FIFTH. The Board may make, amend, and repeal the By-Laws of
the Company. Any By-Law made by the Board under the powers
conferred hereby may be amended or repealed by the Board (except
as specified in any such By-Law so made or amended) or by the
stockholders in the manner provided in the By-Laws of the
Company. Notwithstanding the foregoing and anything contained in
this Certificate of Incorporation to the contrary, By-Laws 1,
3(a), 8, 10, 11, 12, 13, and 38 may not be amended or repealed by
the stockholders, and no provision inconsistent therewith may be
adopted by the stockholders, without the affirmative vote of the
holders of at least 80% of the Voting Stock, voting together as a
single class; provided, however, that if any such proposed
-------- -------
amendment or repeal or adoption of an inconsistent provision is
approved by the affirmative vote of the holders of a majority,

<PAGE>

but less than 80%, of the Voting Stock, voting together as a
single class, such proposed amendment, repeal, or adoption of an
inconsistent provision will become effective 12 months after such
approval. The Company may in its By-Laws confer powers upon the
Board in addition to the foregoing and in addition to the powers
and authorities expressly conferred upon the Board by applicable
law. For the purposes of this Certificate of Incorporation,
"Voting Stock" means stock of the Company of any class or series
entitled to vote generally in the election of Directors.
Notwithstanding anything contained in this Certificate of
Incorporation to the contrary, the affirmative vote of the
holders of at least 80% of the Voting Stock, voting together as a
single class, is required to amend or repeal, or to adopt any
provisions inconsistent with, this Article Fifth.

SIXTH. Subject to the rights of the holders of any series
of Preferred Stock:

(a) any action required or permitted to be taken by
the stockholders of the Company must be effected at a duly
called annual or special meeting of stockholders of the
Company and may not be effected by any consent in writing of
such stockholders; and

(b) special meetings of stockholders of the Company
may be called only by (i) the Chairman of the Board (the
"Chairman"), (ii) the Secretary of the Company (the
"Secretary") within 10 calendar days after receipt of the
written request of a majority of the total number of
Directors that the Company would have if there were no
vacancies (the "Whole Board"), and (iii) as provided in
By-Law 3.

At any annual meeting or special meeting of stockholders of the
Company, only such business will be conducted or considered as
has been brought before such meeting in the manner provided in
the By-Laws of the Company. Notwithstanding anything contained
in this Certificate of Incorporation to the contrary, the
affirmative vote of the holders of at least 80% of the Voting
Stock, voting together as a single class, will be required to
amend or repeal, or adopt any provision inconsistent with, this
Article Sixth; provided, however, that if any proposed amendment
-------- -------
or repeal of, or adoption of provision inconsistent with, clause
(b) of the first sentence of this Article Sixth is approved by
the affirmative vote of the holders of a majority, but less than
80%, of the Voting Stock, voting together as a single class, such
proposed amendment, repeal, or adoption of an inconsistent
provision will become effective 12 months after such approval.

SEVENTH. Section 1. Number, Election, and Terms of
Directors. Subject to the rights, if any, of the holders of any
series of Preferred Stock to elect additional Directors under
circumstances specified in a Preferred Stock Designation, the

<PAGE>

number of the Directors of the Company will not be less than
three nor more than 16 and will be fixed from time to time in the
manner described in the By-Laws of the Company. The Directors,
other than those who may be elected by the holders of any series
of Preferred Stock, will be classified with respect to the time
for which they severally hold office into three classes, as
nearly equal in number as possible, designated Class I, Class II,
and Class III. At any meeting of stockholders at which Directors
are to be elected, the number of Directors elected may not exceed
the greatest number of Directors then in office in any class of
Directors. The Directors first appointed to Class I will hold
office for a term expiring at the annual meeting of stockholders
to be held in 1995; the Directors first appointed to Class II
will hold office for a term expiring at the annual meeting of
stockholders to be held in 1996; and the Directors first
appointed to Class III will hold office for a term expiring at
the annual meeting of stockholders to be held in 1997, with the
members of each class to hold office until their successors are
elected and qualified. At each succeeding annual meeting of the
stockholders of the Company, the successors of the class of
Directors whose terms expire at that meeting will be elected by
plurality vote of all votes cast at such meeting to hold office
for a term expiring at the annual meeting of stockholders held in
the third year following the year of their election. Subject to
the rights, if any, of the holders of any series of Preferred
Stock to elect additional Directors under circumstances specified
in a Preferred Stock Designation, Directors may be elected by the
stockholders only at an annual meeting of stockholders. Election
of Directors of the Company need not be by written ballot unless
requested by the Chairman or by the holders of a majority of the
Voting Stock present in person or represented by proxy at a
meeting of the stockholders at which Directors are to be elected.

Section 2. Nomination of Director Candidates. Advance
notice of stockholder nominations for the election of Directors
must be given in the manner provided in the By-Laws of the
Company.

Section 3. Newly Created Directorships and Vacancies.
Subject to the rights, if any, of the holders of any series of
Preferred Stock to elect additional Directors under circumstances
specified in a Preferred Stock Designation, newly created
directorships resulting from any increase in the number of
Directors and any vacancies on the Board resulting from death,
resignation, disqualification, removal, or other cause will be
filled solely by the affirmative vote of a majority of the
remaining Directors then in office, even though less than a
quorum of the Board, or by a sole remaining Director. Any
Director elected in accordance with the preceding sentence will
hold office for the remainder of the full term of the class of
Directors in which the new directorship was created or the
vacancy occurred and until such Director's successor has been
elected and qualified. No decrease in the number of Directors

<PAGE>

constituting the Board may shorten the term of any incumbent
Director.

Section 4. Removal. Subject to the rights, if any, of the
holders of any series of Preferred Stock to elect additional
Directors under circumstances specified in a Preferred Stock
Designation, any Director may be removed from office by the
stockholders only for cause and only in the manner provided in
this Section 4. At any annual meeting or special meeting of the
stockholders, the notice of which states that the removal of a
Director or Directors is among the purposes of the meeting, the
affirmative vote of the holders of at least 80% of the Voting
Stock, voting together as a single class, may remove such
Director or Directors for cause.

Section 5. Amendment, Repeal, Etc. Notwithstanding
anything contained in this Certificate of Incorporation to the
contrary, the affirmative vote of the holders of at least 80% of
the Voting Stock, voting together as a single class, is required
to amend or repeal, or adopt any provision inconsistent with,
this Article Seventh; provided, however, that if any such
-------- -------
proposed amendment or repeal or adoption of an inconsistent
provision is approved by the affirmative vote of the holders of a
majority, but less than 80%, of the Voting Stock, voting together
as a single class, such proposed amendment, repeal, or adoption
of an inconsistent provision will become effective 12 months
after such approval.

EIGHTH. Section 1. Business Combinations With Interested
Stockholders. Notwithstanding anything contained in this
Certificate of Incorporation to the contrary, the Company will
not engage in any Business Combination with any Interested
Stockholder for a period of three years following the date that
such stockholder became an Interested Stockholder, unless (a)
prior to such date the Board approved the transaction that
resulted in the stockholder becoming an Interested Stockholder,
(b) upon consummation of the transaction that resulted in the
stockholder becoming an Interested Stockholder, the Interested
Stockholder owned at least 85% of the Voting Stock outstanding at
the time the transaction commenced, excluding for purposes of
determining the number of shares outstanding those shares Owned
by (i) Persons who are Directors and also officers of the Company
and (ii) employee stock plans maintained by the Company or any
direct or indirect majority-owned subsidiary of the Company in
which employee participants do not have the right to determine
confidentially whether shares held subject to the plan will be
tendered in a tender or exchange offer, or (c) on or subsequent
to such date the Business Combination is approved by the Board
and authorized at an annual or special meeting of stockholders,
and not by written consent, by the affirmative vote of at least
66-2/3% of the Voting Stock which is not Owned by the Interested
Stockholder.

<PAGE>

Section 2. Exceptions. The restrictions contained in
Section 1 of this Article Eighth will not apply if:

(a) a stockholder becomes an Interested Stockholder
inadvertently and (i) as soon as practicable divests
sufficient shares so that such stockholder ceases to be an
Interested Stockholder and (ii) would not, at any time
within the three-year period immediately prior to a Business
Combination between the Company and such stockholder, have
been an Interested Stockholder but for the inadvertent
acquisition; or

(b) the Business Combination is proposed prior to the
consummation or abandonment and subsequent to the earlier of
the public announcement or the notice required under this
paragraph (b) of a proposed transaction which (i)
constitutes one of the transactions described in the second
sentence of this paragraph (b); (ii) is with or by a Person
who either was not an Interested Stockholder during the
previous three years or who became an Interested Stockholder
with the approval of the Board; and (iii) is approved or not
opposed by a majority of the members of the Board then in
office (but not less than one) who were Directors prior to
any Person becoming an Interested Stockholder during the
previous three years or were recommended for election or
elected to succeed such Directors by a majority of such
Directors. The proposed transactions referred to in the
preceding sentence of this paragraph (b) are limited to (x)
a merger or consolidation of the Company (except for a
merger in respect of which, pursuant to Section 251(f) of
the Delaware General Corporation Law as in effect on the
effective date of the plan of reorganization of R. H. Macy &
Co., Inc. and certain of its subsidiaries as confirmed by
the United States Bankruptcy Court for the Southern District
of New York in Case Nos. 92 B 40477 (BRL) (the "Macy's Plan
of Reorganization") (the "DGCL"), no vote of the
stockholders of the Company is or would have been required),
(y) a sale, lease, exchange, mortgage, pledge, transfer, or
other disposition (in one transaction or a series of
transactions), whether as part of a dissolution or
otherwise, of assets of the Company or of any direct or
indirect majority-owned subsidiary of the Company (other
than to any direct or indirect wholly owned subsidiary of
the Company or to the Company) having an aggregate market
value equal to 50% or more of either the aggregate market
value of all of the assets of the Company determined on a
consolidated basis or the aggregate market value of all the
outstanding stock of the Company, or (z) a proposed tender
or exchange offer for 50% or more of the outstanding Voting
Stock. The Company will give at least 20 calendar days
notice to all Interested Stockholders prior to the
consummation of any of the transactions described in clauses
(x) or (y) of the second sentence of this paragraph (b).

<PAGE>

Section 3. Certain Definitions. For purposes of this
Article Eighth:

(a) "Affiliate" means a Person that directly, or
indirectly through one or more intermediaries, Controls, or
is Controlled By, or is Under Common Control With another
Person.

(b) "Associate," when used to indicate a relationship
with any Person, means (i) any corporation or organization
of which such Person is a Director, officer, or partner or
is, directly or indirectly, the Owner of 20% or more of any
class of Voting Stock, (ii) any trust or other estate in
which such Person has at least a 20% beneficial interest or
as to which such Person serves as trustee or in a similar
fiduciary capacity, and (iii) any relative or spouse of such
Person, or any relative of such spouse, who has the same
residence as such Person.

(i) any merger or consolidation of the Company or
any direct or indirect majority-owned subsidiary of the
Company with (A) the Interested Stockholder or (B) with
any other corporation if the merger or consolidation is
caused by the Interested Stockholder and as a result of
such merger or consolidation Section 1 of this Article
Eighth is not applicable to the surviving corporation;

(ii) any sale, lease, exchange, mortgage, pledge,
transfer, or other disposition (in one transaction or a
series of transactions), except proportionately as a
stockholder of the Company, to or with the Interested
Stockholder, whether as part of a dissolution or
otherwise, of assets of the Company or of any direct or
indirect majority-owned subsidiary of the Company which
assets have an aggregate market value equal to 10% or
more of either the aggregate market value of all the
assets of the Company determined on a consolidated
basis or the aggregate market value of all the
outstanding stock of the Company;

(iii) any transaction which results in the issuance
or transfer by the Company or by any direct or indirect
majority-owned subsidiary of the Company of any stock
of the Company or of such subsidiary to the Interested
Stockholder, except (A) pursuant to the exercise,
exchange, or conversion of securities exercisable for,
exchangeable for, or convertible into stock of the
Company or any such subsidiary which securities were
outstanding prior to the time that the Interested
Stockholder became such, (B) pursuant to a dividend or
distribution paid or made, or the exercise, exchange,

<PAGE>

or conversion of securities exercisable for,
exchangeable for, or convertible into stock of the
Company or any such subsidiary which security is
distributed, pro rata to all holders of a class or
series of stock of the Company subsequent to the time
the Interested Stockholder became such, (C) pursuant to
an exchange offer by the Company to purchase stock made
on the same terms to all holders of such stock, or (D)
any issuance or transfer of stock by the Company;
provided, however, that in no case under subclauses
-------- -------
(B), (C), or (D) of this clause (iii) will there be an
increase in the Interested Stockholder's proportionate
share of the stock of any class or series of the
Company or of the Voting Stock;

(iv) any transaction involving the Company or any
direct or indirect majority-owned subsidiary of the
Company which has the effect, directly or indirectly,
of increasing the proportionate share of the stock of
any class or series, or securities convertible into the
stock of any class or series, of the Company or of any
such subsidiary which is Owned by the Interested
Stockholder, except as a result of immaterial changes
due to fractional share adjustments or as a result of
any purchase or redemption of any shares of stock not
caused, directly or indirectly, by the Interested
Stockholder; or

(v) any receipt by the Interested Stockholder of
the benefit, directly or indirectly (except
proportionately as a stockholder of the Company), of
any loans, advances, guarantees, pledges, or other
financial benefits (other than those expressly
permitted in clauses (i)-(iv) of this paragraph (c))
provided by or through the Company or any direct of
indirect majority-owned subsidiary of the Company.

(d) "Control," including the terms "Controlling,"
"Controlled By," and "Under Common Control With," means the
possession, directly or indirectly, of the power to direct
or cause the direction of the management and policies of a
Person, whether through the ownership of Voting Stock, by
contract, or otherwise. A Person who is the Owner of 20% of
more of a corporation's outstanding stock entitled to vote
generally in the election of directors will be presumed to
have Control of such corporation, in the absence of proof by
a preponderance of the evidence to the contrary.
Notwithstanding the foregoing, a presumption of Control will
not apply where such Person holds such voting stock, in good
faith and not for the purpose of circumventing this Article
Eighth, as an agent, bank, broker, nominee, custodian, or
trustee for one or more Owners who do not individually or as
a group have Control of such corporation.

<PAGE>

(e) "Interested Stockholder" means any Person (other
than the Company and any direct or indirect majority-owned
subsidiary of the Company) that (i) is the Owner of 15% or
more of the Voting Stock or (ii) is an Affiliate or
Associate of the Company and was the Owner of 15% or more of
the outstanding Voting Stock at any time within the three-
year period immediately prior to the date on which it is
sought to be determined whether such Person is an Interested
Stockholder, and the Affiliates and Associates of such
Person; provided, however, that the term Interested
-------- -------
Stockholder will not include any Person whose Ownership of
shares in excess of the 15% limitation set forth herein is
the result of action taken solely by the Company unless and
until such Person thereafter acquires additional shares of
Voting Stock, except as a result of further corporate action
not caused, directly or indirectly, by such Person; provided
--------
further, however, that a Person will not be deemed to be an
------- -------
Interested Stockholder solely by reason of such Person, and
the Affiliates and Associates of such Person, receiving, or
having the right to receive, shares of Common Stock, or
securities that are convertible into, or exercisable or
exchangeable for, shares of Common Stock, pursuant to the
Macy's Plan of Reorganization unless and until such time on
or after the effective date of the Macy's Plan of
Reorganization as (A) such Person or any Affiliate or
Associate of such Person becomes the Owner of additional
Voting Stock representing 1% or more of the outstanding
Voting Stock otherwise than pursuant to the Macy's Plan of
Reorganization or as a result of a stock dividend, stock
split, or similar transaction effected by the Company in
which all holders of each class or series of Voting Stock
are treated equally with all other holders of such class or
series of Voting Stock or (B) any Person which Owns Voting
Stock representing 1% or more of the outstanding Voting
Stock and was not an Affiliate or Associate of such Person
as of the effective date of the Macy's Plan of
Reorganization subsequently becomes an Affiliate or
Associate of such Person. For the purpose of determining
whether a Person is an Interested Stockholder, the Voting
Stock deemed to be outstanding will include stock deemed to
be Owned by such Person through application of paragraph (f)
of this Section 3 but will not include any other unissued
stock of the Company that may be issuable pursuant to any
agreement, arrangement, or understanding, or upon exercise
of conversion rights, warrants, options, or other rights.

(f) "Owner" including the terms "Own," "Owned," and
"Ownership" when used with respect to any stock means a
Person that individually or with or through any of its
Affiliates or Associates:

(i) beneficially owns such stock, directly or
indirectly; or

<PAGE>

(ii) has (A) the right to acquire such stock
(whether such right is exercisable immediately or only
after the passage of time) pursuant to any agreement,
arrangement, or understanding, or upon the exercise of
conversion rights, exchange rights, warrants, options,
or other rights; provided, however, that a Person will
-------- -------
not be deemed the Owner of stock tendered pursuant to a
tender or exchange offer made by such Person or any of
such Person's Affiliates or Associates until such
tendered stock is accepted for purchase or exchange or
(B) the right to vote such stock pursuant to any
agreement, arrangement, or understanding; provided,
--------
however, that a Person will not be deemed to be the
-------
Owner of any stock because of such Person's right to
vote such stock if the agreement, arrangement, or
understanding to vote such stock arises solely from a
revocable proxy or consent given in response to a proxy
or consent solicitation made to 10 or more persons; or

(iii) has any agreement, arrangement, or
understanding for the purpose of acquiring, holding,
voting (except voting pursuant to a revocable proxy or
consent as described in subclause (B) of clause (ii) of
this paragraph (f)), or disposing of such stock with
any other Person that beneficially owns, or whose
Affiliates or Associates beneficially own, directly or
indirectly, such stock.

(g) "Person" means any individual, corporation,
partnership, unincorporated association, or other entity.

Section 4. Powers of the Board. For purposes of this
Article Eighth, a majority of the Whole Board will have the power
to make all determinations pursuant to this Article Eighth,
including with respect to (a) whether a Person is an Interested
Stockholder, (b) the number of shares of Voting Stock owned by a
Person, (c) whether a Person is an Affiliate or Associate of
another Person, and (d) the aggregate fair market value of assets
and stock of the Company.

Section 5. Interpretations. Each of the provisions of this
Article Eighth which is also a part of Section 203 of the DGCL
will be interpreted in a manner consistent with the judicial
interpretations that have been, or may in the future be, rendered
with respect to Section 203 of the DGCL.

Section 6. Amendment, Repeal, Etc. Notwithstanding
anything contained in this Certificate of Incorporation to the
contrary, the affirmative vote of at least a majority of the
Voting Stock, voting together as a single class, is required to
amend or repeal, or adopt any provision inconsistent with, this
Article Eighth. An amendment or repeal, or adoption of any
provision inconsistent with, this Article Eighth adopted pursuant

<PAGE>

to this Section 6 shall not be effective until 12 months after
the adoption of such amendment, repeal, or adoption of an
inconsistent provision, and will not apply to any Business
Combination between the Company and any Person who became an
Interested Stockholder on or prior to such amendment, repeal, or
adoption of an inconsistent provision.

NINTH. To the full extent permitted by the Delaware General
Corporation Law or any other applicable law currently or
hereafter in effect, no Director of the Company will be
personally liable to the Company or its stockholders for or with
respect to any acts or omissions in the performance of his or her
duties as a Director of the Company. Any repeal or modification
of this Article Ninth will not adversely affect any right or
protection of a Director of the Company existing prior to such
repeal or modification.

TENTH. Each person who is or was or had agreed to become a
Director or officer of the Company, and each such person who is
or was serving or who had agreed to serve at the request of the
Board or an officer of the Company as an employee or agent of the
Company or as a director, officer, employee, or agent of another
corporation, partnership, joint venture, trust, or other entity,
whether for profit or not for profit (including the heirs,
executors, administrators, or estate of such person), will be
indemnified by the Company to the full extent permitted by the
Delaware General Corporation Law or any other applicable law as
currently or hereafter in effect. Persons in respect of whom
indemnity obligations were deemed to have been assumed by
Federated Department Stores, Inc. (a predecessor to the Company)
pursuant to Article V.E.3 of the plan of reorganization of
Federated Department Stores, Inc., Allied Stores Corporation, and
certain of their subsidiaries as confirmed by the United States
Bankruptcy Court for the Southern District of Ohio, Western
Division, in Consolidated Case No. 1-90-00130 (the "Federated
Plan of Reorganization") and Section 365 of title 11 of the
United States Code as in effect on the effective date of the
Federated Plan of Reorganization (the "Bankruptcy Code") or in
respect of whom indemnity obligations arose thereafter or may
arise in the future by reason of such person's service as a
director, officer, or employee of the Company, will be deemed to
have served at the request of the predecessors of the Company to
the extent that they served as directors, officers, or employees
of Federated Stores, Inc. ("FSI") or any of its affiliates (as
defined in Section 101(2) of the Bankruptcy Code) prior to the
effective date of the Federated Plan of Reorganization; provided,
--------
however, that the indemnity provided for in this Article Tenth
- -------
will not apply to any person who continued to serve as a director
of Ralphs Grocery Company ("Ralphs") as of or following the
effective date of the Federated Plan of Reorganization
notwithstanding the immediately preceding sentence of this
Article Tenth to the extent that the action, suit, or proceeding
in respect of which a claim for indemnification is made relates

<PAGE>

to or arises out of such person's service as a director, officer,
or employee of Ralphs at any time after the effective date of the
Federated Plan of Reorganization. The right of indemnification
provided in this Article Tenth (a) will not be exclusive of any
other rights to which any person seeking indemnification may
otherwise be entitled, including without limitation pursuant to
the Agreement and Plan of Merger, dated as of August 16, 1994, by
and between R. H. Macy & Co., Inc. and Federated Department
Stores, Inc. (the "Merger Agreement") or any contract approved by
a majority of the Whole Board (whether or not the Directors
approving such contract are or are to be parties to such contract
or similar contracts), and (b) will be applicable to matters
otherwise within its scope (with each reference in the first
sentence of this Article Tenth to the "Company" being deemed for
purposes of this sentence to include all predecessors of the
Company) whether or not such matters arose or arise before or
after the adoption of this Article Tenth except to the extent
that the obligation of the Company or its predecessors to provide
such indemnification would otherwise have terminated as expressly
provided in Article V.D.1 of the Macy's Plan of Reorganization or
Article V.E.3 of the Federated Plan of Reorganization. Without
limiting the generality or the effect of the foregoing, the
Company may adopt By-Laws, or enter into one or more agreements
with any person, which provide for indemnification greater or
different than that provided in this Article Tenth or the DGCL.
Any amendment or repeal of, or adoption of any provision
inconsistent with, this Article Tenth will not adversely affect
any right or protection existing hereunder, or arising out of
facts occurring, prior to such amendment, repeal, or adoption and
no such amendment, repeal, or adoption, will affect the legality,
validity, or enforceability of any contract entered into or right
granted prior to the effective date of such amendment, repeal, or
adoption.

ELEVENTH. The Company will not issue nonvoting capital
stock to the extent prohibited by Section 1123 of the Bankruptcy
Code; provided, however, that this Article Eleventh (a) will have
-------- -------
no further force and effect beyond that required under Section
1123 of the Bankruptcy Code, (b) will have such force and effect,
if any, only for so long as such Section is in effect and
applicable to the Company, and (c) in all events may be amended
or eliminated in accordance with applicable law as from time to
time in effect.

Exhibit T3B(2)

FEDERATED DEPARTMENT STORES, INC.

BY-LAWS

As Adopted and in
Effect on __________, 199_

<PAGE>

FEDERATED DEPARTMENT STORES, INC.

BY-LAWS

TABLE OF CONTENTS
-----------------

Page
----
STOCKHOLDERS' MEETINGS . . . . . . . . . . . . . . . . . . . 1
1. Time and Place of Meetings . . . . . . . . . . . . . 1
2. Annual Meeting . . . . . . . . . . . . . . . . . . . 1
3. Special Meetings . . . . . . . . . . . . . . . . . . 1
4. Notice of Meetings . . . . . . . . . . . . . . . . . 1
5. Inspectors . . . . . . . . . . . . . . . . . . . . . 2
6. Quorum . . . . . . . . . . . . . . . . . . . . . . . 2
7. Voting . . . . . . . . . . . . . . . . . . . . . . . 2
8. Order of Business . . . . . . . . . . . . . . . . . . 3

DIRECTORS . . . . . . . . . . . . . . . . . . . . . . . . . . 4
9. Function . . . . . . . . . . . . . . . . . . . . . . 4
10. Number, Election, and Terms . . . . . . . . . . . . . 4
11. Vacancies and Newly Created Directorships . . . . . . 4
12. Removal . . . . . . . . . . . . . . . . . . . . . . . 5
13. Nominations of Directors; Election . . . . . . . . . 5
14. Resignation . . . . . . . . . . . . . . . . . . . . . 6
15. Regular Meetings . . . . . . . . . . . . . . . . . . 6
16. Special Meetings . . . . . . . . . . . . . . . . . . 6
17. Quorum . . . . . . . . . . . . . . . . . . . . . . . 6
18. Participation in Meetings by Telephone Conference . . 7
19. Committees . . . . . . . . . . . . . . . . . . . . . 7
20. Compensation . . . . . . . . . . . . . . . . . . . . 8
21. Rules . . . . . . . . . . . . . . . . . . . . . . . . 8

NOTICES . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
22. Generally . . . . . . . . . . . . . . . . . . . . . . 9
23. Waivers . . . . . . . . . . . . . . . . . . . . . . . 9

OFFICERS . . . . . . . . . . . . . . . . . . . . . . . . . . 9
24. Generally . . . . . . . . . . . . . . . . . . . . . . 9
25. Compensation . . . . . . . . . . . . . . . . . . . . 9
26. Succession . . . . . . . . . . . . . . . . . . . . . 10
27. Authority and Duties . . . . . . . . . . . . . . . . 10

STOCK . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
28. Certificates . . . . . . . . . . . . . . . . . . . . 10
29. Classes of Stock . . . . . . . . . . . . . . . . . . 10
30. Lost, Stolen, or Destroyed Certificates . . . . . . . 10
31. Record Dates . . . . . . . . . . . . . . . . . . . . 11

INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . . . . 11
32. Damages and Expenses . . . . . . . . . . . . . . . . 11
33. Insurance, Contracts, and Funding . . . . . . . . . . 18

<PAGE>

Page
----

GENERAL . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
34. Fiscal Year . . . . . . . . . . . . . . . . . . . . . 18
35. Seal . . . . . . . . . . . . . . . . . . . . . . . . 18
36. Reliance Upon Books, Reports, and Records . . . . . . 18
37. Time Periods . . . . . . . . . . . . . . . . . . . . 18
38. Amendments . . . . . . . . . . . . . . . . . . . . . 18
39. Certain Defined Terms . . . . . . . . . . . . . . . . 19

<PAGE>

STOCKHOLDERS' MEETINGS

1. Time and Place of Meetings. All meetings of the
stockholders for the election of Directors or for any other
purpose will be held at such time and place, within or without
the State of Delaware, as may be designated by the Board or, in
the absence of a designation by the Board, the Chairman, the
President, or the Secretary, and stated in the notice of meeting.
The Board may postpone and reschedule any previously scheduled
annual or special meeting of the stockholders.

2. Annual Meeting. An annual meeting of the stockholders
will be held at such date and time as may be designated from time
to time by the Board, at which meeting the stockholders will
elect by a plurality vote the Directors to succeed those whose
terms expire at such meeting and will transact such other
business as may properly be brought before the meeting in
accordance with By-Law 8.

3. Special Meetings. (a) Special meetings of the
stockholders may be called only by (i) the Chairman, (ii) the
Secretary within 10 calendar days after receipt of the written
request of a majority of the Whole Board, and (iii) as provided
in By-Law 3(b). Any such request by a majority of the Whole
Board must be sent to the Chairman and the Secretary and must
state the purpose or purposes of the proposed meeting. Special
meetings of holders of the outstanding Preferred Stock, if any,
may be called in the manner and for the purposes provided in the
applicable Preferred Stock Designation.

(b) Upon the receipt by the Company of a written request
executed by the holders of not less than 15% of the outstanding
Voting Stock (a "Meeting Request"), the Board will (i) call a
special meeting of the stockholders for the purposes specified in
the Meeting Request and (ii) fix a record date for the
determination of stockholders entitled to notice of and to vote
at such meeting, which record date will not be later than 60
calendar days after the date of receipt by the Company of the
Meeting Notice; provided, however, that no separate special
-------- -------
meeting of stockholders requested pursuant to a Meeting Request
will be required to be convened if (A) the Board calls an annual
or special meeting of stockholders to be held not later than 90
calendar days after receipt of such Meeting Request and (B) the
purposes of such annual or special meeting include (among any
other matters properly brought before the meeting) the purposes
specified in such Meeting Request. Notwithstanding any provision
of the Certificate of Incorporation or these By-Laws to the
contrary, this By-Law 3(b) may not be amended or repealed by the
Board, and no provision inconsistent therewith may be adopted by
the Board, without the affirmative vote of the holders of at
least a majority of the Common Stock present or represented by
proxy and entitled to vote at any annual or special meeting of
stockholders at which such vote is to be taken.

<PAGE>

4. Notice of Meetings. Written notice of every meeting of
the stockholders, stating the place, date, and hour of the
meeting and, in the case of a special meeting, the purpose or
purposes for which the meeting is called, will be given not less
than 10 nor more than 60 calendar days before the date of the
meeting to each stockholder of record entitled to vote at such
meeting, except as otherwise provided herein or by law. When a
meeting is adjourned to another place, date, or time, written
notice need not be given of the adjourned meeting if the place,
date, and time thereof are announced at the meeting at which the
adjournment is taken; provided, however, that if the adjournment
-------- -------
is for more than 30 calendar days, or if after the adjournment a
new record date is fixed for the adjourned meeting, written
notice of the place, date, and time of the adjourned meeting must
be given in conformity herewith. At any adjourned meeting, any
business may be transacted which properly could have been
transacted at the original meeting.

5. Inspectors. The Board may appoint one or more
inspectors of election to act as judges of the voting and to
determine those entitled to vote at any meeting of the
stockholders, or any adjournment thereof, in advance of such
meeting. The Board may designate one or more persons as
alternate inspectors to replace any inspector who fails to act.
If no inspector or alternate is able to act at a meeting of
stockholders, the presiding officer of the meeting may appoint
one or more substitute inspectors.

6. Quorum. Except as otherwise provided by law or in a
Preferred Stock Designation, the holders of a majority of the
stock issued and outstanding and entitled to vote thereat,
present in person or represented by proxy, will constitute a
quorum at all meetings of the stockholders for the transaction of
business thereat. If, however, such quorum is not present or
represented at any meeting of the stockholders, the stockholders
entitled to vote thereat, present in person or represented by
proxy, will have the power to adjourn the meeting from time to
time, without notice other than announcement at the meeting,
until a quorum is present or represented.

7. Voting. Except as otherwise provided by law, by the
Certificate of Incorporation, or in a Preferred Stock
Designation, each stockholder will be entitled at every meeting
of the stockholders to one vote for each share of stock having
voting power standing in the name of such stockholder on the
books of the Company on the record date for the meeting and such
votes may be cast either in person or by written proxy. Every
proxy must be duly executed and filed with the Secretary. A
stockholder may revoke any proxy that is not irrevocable by
attending the meeting and voting in person or by filing an
instrument in writing revoking the proxy or another duly executed
proxy bearing a later date with the Secretary. The vote upon any
question brought before a meeting of the stockholders may be by
voice vote, unless otherwise required by the Certificate of
Incorporation or these By-Laws or unless the Chairman or the
holders of a majority of the outstanding shares of all classes of

<PAGE>

stock entitled to vote thereon present in person or by proxy at
such meeting otherwise determine. Every vote taken by written
ballot will be counted by the inspectors of election. When a
quorum is present at any meeting, the affirmative vote of the
holders of a majority of the stock present in person or
represented by proxy at the meeting and entitled to vote on the
subject matter and which has actually been voted will be the act
of the stockholders, except in the election of Directors or as
otherwise provided in these By-Laws, the Certificate of
Incorporation, a Preferred Stock Designation, or by law.

8. Order of Business. (a) The Chairman, or such other
officer of the Company designated by a majority of the Whole
Board, will call meetings of the stockholders to order and will
act as presiding officer thereof. Unless otherwise determined by
the Board prior to the meeting, the presiding officer of the
meeting of the stockholders will also determine the order of
business and have the authority in his or her sole discretion to
regulate the conduct of any such meeting, including without
limitation by imposing restrictions on the persons (other than
stockholders of the Company or their duly appointed proxies) who
may attend any such stockholders' meeting, by ascertaining
whether any stockholder or his proxy may be excluded from any
meeting of the stockholders based upon any determination by the
presiding officer, in his sole discretion, that any such person
has unduly disrupted or is likely to disrupt the proceedings
thereat, and by determining the circumstances in which any person
may make a statement or ask questions at any meeting of the
stockholders.

(b) At an annual meeting of the stockholders, only such
business will be conducted or considered as is properly brought
before the meeting. To be properly brought before an annual
meeting, business must be (i) specified in the notice of meeting
(or any supplement thereto) given by or at the direction of the
Board in accordance with By-Law 4, (ii) otherwise properly
brought before the meeting by the presiding officer or by or at
the direction of a majority of the Whole Board, or (iii)
otherwise properly requested to be brought before the meeting by
a stockholder of the Company in accordance with By-Law 8(c).

(c) For business to be properly requested by a stockholder
to be brought before an annual meeting, the stockholder must (i)
be a stockholder of the Company of record at the time of the
giving of the notice for such annual meeting provided for in
these By-Laws, (ii) be entitled to vote at such meeting, and
(iii) have given timely notice thereof in writing to the
Secretary. To be timely, a stockholder's notice must be
delivered to or mailed and received at the principal executive
offices of the Company not less than 60 calendar days prior to
the annual meeting; provided, however, that in the event public
-------- -------
announcement of the date of the annual meeting is not made at
least 75 calendar days prior to the date of the annual meeting,
notice by the stockholder to be timely must be so received not
later than the close of business on the 10th calendar day
following the day on which public announcement is first made of

<PAGE>

the date of the annual meeting. A stockholder's notice to the
Secretary must set forth as to each matter the stockholder
proposes to bring before the annual meeting (A) a description in
reasonable detail of the business desired to brought before the
annual meeting and the reasons for conducting such business at
the annual meeting, (B) the name and address, as they appear on
the Company's books, of the stockholder proposing such business
and the beneficial owner, if any, on whose behalf the proposal is
made, (C) the class and number of shares of the Company that are
owned beneficially and of record by the stockholder proposing
such business and by the beneficial owner, if any, on whose
behalf the proposal is made, and (D) any material interest of
such stockholder proposing such business and the beneficial
owner, if any, on whose behalf the proposal is made in such
business. Notwithstanding the foregoing provisions of this
By-Law 8(c), a stockholder must also comply with all applicable
requirements of the Securities Exchange Act of 1934, as amended,
and the rules and regulations thereunder with respect to the
matters set forth in this By-Law 8(c). For purposes of this
By-Law 8(c) and By-Law 13, "public announcement" means disclosure
in a press release reported by the Dow Jones News Service,
Associated Press, or comparable national news service or in a
document publicly filed by the Company with the Securities and
Exchange Commission pursuant to Sections 13, 14, or 15(d) of the
Securities Exchange Act of 1934, as amended, or furnished to
stockholders. Nothing in this By-Law 8(c) will be deemed to
affect any rights of stockholders to request inclusion of
proposals in the Company's proxy statement pursuant to Rule 14a-8
under the Securities Exchange Act of 1934, as amended.

(d) At a special meeting of stockholders, only such
business may be conducted or considered as is properly brought
before the meeting. To be properly brought before a special
meeting, business must be (i) specified in the notice of the
meeting (or any supplement thereto) given by or at the direction
of the Chairman or a majority of the Whole Board in accordance
with By-Law 4 or (ii) otherwise properly brought before the
meeting by the presiding officer or by or at the direction of a
majority of the Whole Board.

(e) The determination of whether any business sought to be
brought before any annual or special meeting of the stockholders
is properly brought before such meeting in accordance with this
By-Law 8 will be made by the presiding officer of such meeting.
If the presiding officer determines that any business is not
properly brought before such meeting, he or she will so declare
to the meeting and any such business will not be conducted or
considered.

DIRECTORS

9. Function. The business and affairs of the Company will
be managed under the direction of its Board.

<PAGE>

10. Number, Election, and Terms. Subject to the rights, if
any, of any series of Preferred Stock to elect additional
Directors under circumstances specified in a Preferred Stock
Designation and to the minimum and maximum number of authorized
Directors provided in the Certificate of Incorporation, the
authorized number of Directors may be determined from time to
time only (i) by a vote of a majority of the Whole Board or (ii)
by the affirmative vote of the holders of at least 80% of the
Voting Stock, voting together as a single class. The Directors,
other than those who may be elected by the holders of any series
of the Preferred Stock, will be classified with respect to the
time for which they severally hold office in accordance with the
Certificate of Incorporation.

11. Vacancies and Newly Created Directorships. Subject to
the rights, if any, of the holders of any series of Preferred
Stock to elect additional Directors under circumstances specified
in a Preferred Stock Designation, newly created directorships
resulting from any increase in the number of Directors and any
vacancies on the Board resulting from death, resignation,
disqualification, removal, or other cause will be filled solely
by the affirmative vote of a majority of the remaining Directors
then in office, even though less than a quorum of the Board, or
by a sole remaining Director. Any Director elected in accordance
with the preceding sentence will hold office for the remainder of
the full term of the class of Directors in which the new
directorship was created or the vacancy occurred and until such
Director's successor is elected and qualified. No decrease in
the number of Directors constituting the Board will shorten the
term of an incumbent Director.

12. Removal. Subject to the rights, if any, of the holders
of any series of Preferred Stock to elect additional Directors
under circumstances specified in a Preferred Stock Designation,
any Director may be removed from office by the stockholders only
for cause and only in the manner provided in the Certificate of
Incorporation and, if applicable, any amendment to this By-Law
12.

13. Nominations of Directors; Election. (a) Subject to the
rights, if any, of the holders of any series of Preferred Stock
to elect additional Directors under circumstances specified in a
Preferred Stock Designation, only persons who are nominated in
accordance with the following procedures will be eligible for
election at a meeting of stockholders as Directors of the
Company.

(b) Nominations of persons for election as Directors of the
Company may be made only at an annual meeting of stockholders (i)
by or at the direction of the Board or (ii) by any stockholder
who is a stockholder of record at the time of giving of notice
provided for in this By-Law 13, who is entitled to vote for the
election of Directors at such meeting, and who complies with the
procedures set forth in this By-Law 13. All nominations by
stockholders must be made pursuant to timely notice in proper
written form to the Secretary.

<PAGE>

(c) To be timely, a stockholder's notice must be delivered
to or mailed and received at the principal executive offices of
the Company not less than 60 calendar days prior to the annual
meeting of stockholders; provided, however, that in the event
-------- -------
that public announcement of the date of the annual meeting is not
made at least 75 calendar days prior to the date of the annual
meeting, notice by the stockholder to be timely must be so
received not later than the close of business on the 10th
calendar day following the day on which public announcement is
first made of the date of the annual meeting. To be in proper
written form, such stockholder's notice must set forth or include
(i) the name and address, as they appear on the Company's books,
of the stockholder giving the notice and of the beneficial owner,
if any, on whose behalf the nomination is made; (ii) a
representation that the stockholder giving the notice is a holder
of record of stock of the Company entitled to vote at such annual
meeting and intends to appear in person or by proxy at the annual
meeting to nominate the person or persons specified in the
notice; (iii) the class and number of shares of stock of the
Company owned beneficially and of record by the stockholder
giving the notice and by the beneficial owner, if any, on whose
behalf the nomination is made; (iv) a description of all
arrangements or understandings between or among any of (A) the
stockholder giving the notice, (B) the beneficial owner on whose
behalf the notice is given, (C) each nominee, and (D) any other
person or persons (naming such person or persons) pursuant to
which the nomination or nominations are to be made by the
stockholder giving the notice; (v) such other information
regarding each nominee proposed by the stockholder giving the
notice as would be required to be included in a proxy statement
filed pursuant to the proxy rules of the Securities and Exchange
Commission had the nominee been nominated, or intended to be
nominated, by the Board; and (vi) the signed consent of each
nominee to serve as a director of the Company if so elected. At
the request of the Board, any person nominated by the Board for
election as a Director must furnish to the Secretary that
information required to be set forth in a stockholder's notice of
nomination which pertains to the nominee. The presiding officer
of any annual meeting will, if the facts warrant, determine that
a nomination was not made in accordance with the procedures
prescribed by this By-Law 13, and if he or she should so
determine, he or she will so declare to the meeting and the
defective nomination will be disregarded. Notwithstanding the
foregoing provisions of this By-Law 13, a stockholder must also
comply with all applicable requirements of the Securities
Exchange Act of 1934, as amended, and the rules and regulations
thereunder with respect to the matters set forth in this By-Law
13.

14. Resignation. Any Director may resign at any time by
giving written notice of his resignation to the Chairman or the
Secretary. Any resignation will be effective upon actual receipt
by any such person or, if later, as of the date and time
specified in such written notice.

<PAGE>

15. Regular Meetings. Regular meetings of the Board may be
held immediately after the annual meeting of the stockholders and
at such other time and place either within or without the State
of Delaware as may from time to time be determined by the Board.
Notice of regular meetings of the Board need not be given.

16. Special Meetings. Special meetings of the Board may be
called by the Chairman or the President on one day's notice to
each Director by whom such notice is not waived, given either
personally or by mail, telephone, telegram, telex, facsimile, or
similar medium of communication, and will be called by the
Chairman or the President in, like manner and on like notice on
the written request of five or more Directors. Special meetings
of the Board may be held at such time and place either within or
without the State of Delaware as is determined by the Board or
specified in the notice of any such meeting.

17. Quorum. At all meetings of the Board, a majority of
the total number of Directors then in office will constitute a
quorum for the transaction of business. Except for the
designation of committees as hereinafter provided and except for
actions required by these By-Laws or the Certificate of
Incorporation to be taken by a majority of the Whole Board, the
act of a majority of the Directors present at any meeting at
which there is a quorum will be the act of the Board. If a
quorum is not present at any meeting of the Board, the Directors
present thereat may adjourn the meeting from time to time to
another place, time, or date, without notice other than
announcement at the meeting, until a quorum is present.

18. Participation in Meetings by Telephone Conference.
Members of the Board or any committee designated by the Board may
participate in a meeting of the Board or any such committee, as
the case may be, by means of telephone conference or similar
means by which all persons participating in the meeting can hear
each other, and such participation in a meeting will constitute
presence in person at the meeting.

19. Committees. (a) The Board, by resolution passed by a
majority of the Whole Board, will designate an executive and
finance committee (the "Executive and Finance Committee") of not
less than five members of the Board, one of whom will be the
Chairman. The Executive and Finance Committee will have and may
exercise the powers of the Board, except the power to amend these
By-Laws or the Certificate of Incorporation (except, to the
extent authorized by a resolution of the Whole Board, to fix the
designation, preferences, and other terms of any series of
Preferred Stock), adopt an agreement of merger or consolidation,
authorize the issuance of stock, declare a dividend, or recommend
to the stockholders the sale, lease, or exchange of all or
substantially all of the Company's property and assets, a
dissolution of the Company, or a revocation of a dissolution, and
except as otherwise provided by law.

(b) The Board, by resolution passed by a majority of the
Whole Board, may designate one or more additional committees,

<PAGE>

each such committee to consist of one or more Directors and each
to have such lawfully delegable powers and duties as the Board
may confer.

(c) The Executive and Finance Committee and each other
committee of the Board will serve at the pleasure of the Board or
as may be specified in any resolution from time to time adopted
by the Board. The Board may designate one or more Directors as
alternate members of any such committee, who may replace any
absent or disqualified member at any meeting of such committee.
In lieu of such action by the Board, in the absence or
disqualification of any member of a committee of the Board, the
members thereof present at any such meeting of such committee and
not disqualified from voting, whether or not they constitute a
quorum, may unanimously appoint another member of the Board to
act at the meeting in the place of any such absent or
disqualified member.

(d) Except as otherwise provided in these By-Laws or by
law, any committee of the Board, to the extent provided in
Paragraph (a) of this By-Law or, if applicable, in the resolution
of the Board, will have and may exercise all the powers and
authority of the Board in the direction of the management of the
business and affairs of the Company. Any such committee
designated by the Board will have such name as may be determined
from time to time by resolution adopted by the Board. Unless
otherwise prescribed by the Board, a majority of the members of
any committee of the Board will constitute a quorum for the
transaction of business, and the act of a majority of the members
present at a meeting at which there is a quorum will be the act
of such committee. Each committee of the Board may prescribe its
own rules for calling and holding meetings and its method of
procedure, subject to any rules prescribed by the Board, and will
keep a written record of all actions taken by it.

(e) A majority of the members of the Executive and Finance
Committee, and all of the members of any committee the primary
responsibilities of which include (i) reviewing the professional
services to be provided by the Company's independent auditors and
the independence of such firm from the Company's management,
reviewing financial statements with management or independent
auditors, and/or reviewing internal accounting controls, (ii)
reviewing and approving salaries and other compensation, whether
cash or non-cash, and benefits of the Company's executive
officers, or (iii) recommending candidates to the Board for
nomination for election to the Board, will be Non-Employee
Directors. For purposes of these By-Laws, "Non-Employee
Director" means any Director who is not a full-time employee of
the Company or any subsidiary of the Company and who, as of the
Effective Time of the Federated/Allied Combination Transactions
(as defined in the Federated Plan of Reorganization), was not
then, and for the preceding two years had not been, a full-time
employee of Federated Department Stores, Inc. (a predecessor to
the Company, "Federated"), any subsidiary of Federated, any
predecessor of Federated, any subsidiary of any predecessor of
Federated, Federated Stores, Inc. ("FSI"), Ralphs Grocery Company

<PAGE>

("Ralphs"), any other subsidiary of FSI, Campeau Corporation
("Campeau"), or any other affiliate (as that term is defined in
Section 101(2) of the Bankruptcy Code) of Campeau Corporation;
provided, however, that any Director who is elected to the Board
- -------- -------
by the Company's stockholders and who is not at the time of such
election a full-time employee of the Company or any subsidiary of
the Company, but who would not otherwise be a Non-Employee
Director because he or she had been such an employee during such
two-year period, will be deemed to be a Non-Employee Director for
all purposes, other than membership on any committee of the Board
described in clause (iii) of the immediately preceding sentence,
effective as of the time of such election. Notwithstanding any
provision of the Certificate of Incorporation or these By-Laws to
the contrary, this By-Law 19(e) may not be amended or repealed by
the Board, and no provision inconsistent therewith may be adopted
by the Board, without the affirmative vote of the holders of at
least a majority of the Common Stock present or represented by
proxy and entitled to vote at any annual or special meeting of
stockholders at which such vote is to be taken.

20. Compensation. The Board may establish the compensation
for, and reimbursement of the expenses of, Directors for
membership on the Board and on committees of the Board,
attendance at meetings of the Board or committees of the Board,
and for other services by Directors to the Company or any of its
majority-owned subsidiaries.

21. Rules. The Board may adopt rules and regulations for
the conduct of meetings and the oversight of the management of
the affairs of the Company.

NOTICES

22. Generally. Except as otherwise provided by law, these
By-Laws, or the Certificate of Incorporation, whenever by law or
under the provisions of the Certificate of Incorporation or these
By-Laws notice is required to be given to any Director or
stockholder, it will not be construed to require personal notice,
but such notice may be given in writing, by mail, addressed to
such Director or stockholder, at the address of such Director or
stockholder as it appears on the records of the Company, with
postage thereon prepaid, and such notice will be deemed to be
given at the time when the same is deposited in the United States
mail. Notice to Directors may also be given by telephone,
telegram, telex, facsimile, or similar medium of communication or
as otherwise may be permitted by these By-Laws.

23. Waivers. Whenever any notice is required to be given
by law or under the provisions of the Certificate of
Incorporation or these By-Laws, a waiver thereof in writing,
signed by the person or persons entitled to such notice, whether
before or after the time of the event for which notice is to be
given, will be deemed equivalent to such notice. Attendance of a
person at a meeting will constitute a waiver of notice of such
meeting, except when the person attends a meeting for the express

<PAGE>

purpose of objecting, at the beginning of the meeting, to the
transaction of any business because the meeting is not lawfully
called or convened.

OFFICERS

24. Generally. The officers of the Company will be elected
by the Board and will consist of a Chairman (who, unless the
Board specifies otherwise, will also be the Chief Executive
Officer), a President, a Deputy Chairman, a Secretary, and a
Treasurer. The Board of Directors may also choose any or all of
the following: one or more Vice Chairmen, one or more Assistants
to the Chairman, one or more Vice Presidents (who may be given
particular designations with respect to authority, function, or
seniority), and such other officers as the Board may from time to
time determine. Notwithstanding the foregoing, by specific
action the Board may authorize the Chairman to appoint any person
to any office other than Chairman, President, Secretary, or
Treasurer. Any number of offices may be held by the same person.
Any of the offices may be left vacant from time to time as the
Board may determine. In the case of the absence or disability of
any officer of the Company or for any other reason deemed
sufficient by a majority of the Board, the Board may delegate the
absent or disabled officer's powers or duties to any other
officer or to any Director.

25. Compensation. The compensation of all officers and
agents of the Company who are also Directors of the Company will
be fixed by the Board or by a committee of the Board. The Board
may fix, or delegate the power to fix, the compensation of other
officers and agents of the Company to an officer of the Company.

26. Succession. The officers of the Company will hold
office until their successors are elected and qualified. Any
officer may be removed at any time by the affirmative vote of a
majority of the Whole Board. Any vacancy occurring in any office
of the Company may be filled by the Board or by the Chairman as
provided in By-Law 24.

27. Authority and Duties. Each of the officers of the
Company will have such authority and will perform such duties as
are customarily incident to their respective offices or as may be
specified from time to time by the Board.

<PAGE>

STOCK

28. Certificates. Certificates representing shares of
stock of the Company will be in such form as is determined by the
Board, subject to applicable legal requirements. Subject to
Section 2.7 of the Merger Agreement, each such certificate will
be numbered and its issuance recorded in the books of the
Company, and such certificate will exhibit the holder's name and
the number of shares and will be signed by, or in the name of,
the Company by the Chairman and the Secretary or an Assistant
Secretary, or the Treasurer or an Assistant Treasurer, and will
also be signed by, or bear the facsimile signature of, a duly
authorized officer or agent of any properly designated transfer
agent of the Company. Any or all of the signatures and the seal
of the Company, if any, upon such certificates may be facsimiles,
engraved, or printed. Such certificates may be issued and
delivered notwithstanding that the person whose facsimile
signature appears thereon may have ceased to be such officer at
the time the certificates are issued and delivered.

29. Classes of Stock. The designations, preferences, and
relative participating, optional, or other special rights of the
various classes of stock or series thereof, and the
qualifications, limitations, or restrictions thereof, will be set
forth in full or summarized on the face or back of the
certificates which the Company issues to represent its stock or,
in lieu thereof, such certificates will set forth the office of
the Company from which the holders of certificates may obtain a
copy of such information.

30. Lost, Stolen, or Destroyed Certificates. The Secretary
may direct a new certificate or certificates to be issued in
place of any certificate or certificates theretofore issued by
the Company alleged to have been lost, stolen, or destroyed, upon
the making of an affidavit of that fact, satisfactory to the
Secretary, by the person claiming the certificate of stock to be
lost, stolen, or destroyed. As a condition precedent to the
issuance of a new certificate or certificates, the Secretary may
require the owners of such lost, stolen, or destroyed certificate
or certificates to give the Company a bond in such sum and with
such surety or sureties as the Secretary may direct as indemnity
against any claims that may be made against the Company with
respect to the certificate alleged to have been lost, stolen, or
destroyed or the issuance of the new certificate.

31. Record Dates. (a) In order that the Company may
determine the stockholders entitled to notice of or to vote at
any meeting of stockholders or any adjournment thereof, the Board
may fix a record date, which will not be more than 60 nor less
than 10 calendar days before the date of such meeting. If no
record date is fixed by the Board, the record date for
determining stockholders entitled to notice of or to vote at a
meeting of stockholders will be at the close of business on the
calendar day next preceding the day on which notice is given, or,
if notice is waived, at the close of business on the calendar day
next preceding the day on which the meeting is held. A

<PAGE>

determination of stockholders of record entitled to notice of or
to vote at a meeting of the stockholders will apply to any
adjournment of the meeting; provided, however, that the Board may
fix a new record date for the adjourned meeting.

(b) In order that the Company may determine the
stockholders entitled to receive payment of any dividend or other
distribution or allotment of any rights or the stockholders
entitled to exercise any rights in respect of any change,
conversion, or exchange of stock, or for the purpose of any other
lawful action, the Board may fix a record date, which record date
will not be more than 60 calendar days prior to such action. If
no record date is fixed, the record date for determining
stockholders for any such purpose will be at the close of
business on the calendar day on which the Board adopts the
resolution relating thereto.

(c) The Company will be entitled to treat the person in
whose name any share of its stock is registered as the owner
thereof for all purposes, and will not be bound to recognize any
equitable or other claim to, or interest in, such share on the
part of any other person, whether or not the Company has notice
thereof, except as expressly provided by applicable law.

INDEMNIFICATION

32. Damages and Expenses. (a) Without limiting the
generality or effect of Article Ninth of the Certificate of
Incorporation or Section 6.9 of the Merger Agreement, the Company
will to the fullest extent permitted by applicable law as then in
effect indemnify any person (an "Indemnitee") who is or was
involved in any manner (including without limitation as a party
or a witness) or is threatened to be made so involved in any
threatened, pending, or completed investigation, claim, action,
suit, or proceeding, whether civil, criminal, administrative, or
investigative (including without limitation any action, suit, or
proceeding by or in the right of the Company to procure a
judgment in its favor) (a "Proceeding") by reason of the fact
that such person is or was or had agreed to become a Director,
officer, employee, or agent of the Company, or is or was serving
at the request of the Board or an officer of the Company as a
director, officer, employee, or agent of another corporation,
partnership, joint venture, trust, or other entity, whether for
profit or not for profit (including the heirs, executors,
administrators, or estate of such person), or anything done or
not by such person in any such capacity, against all expenses
(including attorneys' fees), judgments, fines, and amounts paid
in settlement actually and reasonably incurred by such person in
connection with such Proceeding. Such indemnification will be a
contract right and will include the right to receive payment in
advance of any expenses incurred by an Indemnitee in connection
with such Proceeding, consistent with the provisions of
applicable law as then in effect. No change in applicable law or
amendment or repeal of any provision of the Certificate of
Incorporation or By-Laws will adversely affect any right or

<PAGE>

protection existing hereunder, or arising out of facts occurring,
prior to such change, amendment, or repeal.

(b) The right of indemnification provided in this By-Law 32
will not be exclusive of any other rights to which any person
seeking indemnification may otherwise be entitled, and will be
applicable to Proceedings commenced or continuing after the
adoption of this By-Law 32, whether arising from acts or
omissions occurring before or after such adoption.

(c) In furtherance, but not in limitation of the foregoing
provisions, the following procedures, presumptions, and remedies
will apply with respect to advancement of expenses and the right
to indemnification under this By-Law 32:

(i) All reasonable expenses incurred by or on behalf
of an Indemnitee in connection with any Proceeding will be
advanced to the Indemnitee by the Company within 30 calendar
days after the receipt by the Company of a statement or
statements from the Indemnitee requesting such advance or
advances from time to time, whether prior to or after final
disposition of such Proceeding. Such statement or
statements will describe in reasonable detail the expenses
incurred by the Indemnitee and, if and to the extent
required by law at the time of such advance, will include or
be accompanied by an undertaking by or on behalf of the
Indemnitee to repay such amounts advanced as to which it may
ultimately be determined that the Indemnitee is not
entitled. If such an undertaking is required by law at the
time of an advance, no security will be required for such
undertaking and such undertaking will be accepted without
reference to the recipient's financial ability to make
repayment.

(ii) To obtain indemnification under this By-Law 32,
the Indemnitee will submit to the Secretary a written
request, including such documentation supporting the claim
as is reasonably available to the Indemnitee and is
reasonably necessary to determine whether and to what extent
the Indemnitee is entitled to indemnification (the
"Supporting Documentation"). The determination of the
Indemnitee's entitlement to indemnification will be made not
less than 60 calendar days after receipt by the Company of
the written request for indemnification together with the
Supporting Documentation. The Secretary will promptly upon
receipt of such a request for indemnification advise the
Board in writing that the Indemnitee has requested
indemnification. The Indemnitee's entitlement to
indemnification under this By-Law 32 will be determined in
one of the following ways: (A) by a majority vote of the
Disinterested Directors (as hereinafter defined), if they
constitute a quorum of the Board, or, in the case of an
Indemnitee that is not a present or former officer of the
Company, by any committee of the Board or committee of
officers or agents of the Company designated for such
purpose by a majority of the Whole Board; (B) by a written

<PAGE>

opinion of Independent Counsel if (1) a Change of Control
has occurred and the Indemnitee so requests or (2) in the
case of an Indemnitee that is a present or former officer of
the Company, a quorum of the Board consisting of
Disinterested Directors is not obtainable or, even if
obtainable, a majority of such Disinterested Directors so
directs; (C) by the stockholders (but only if a majority of
the Disinterested Directors, if they constitute a quorum of
the Board, presents the issue of entitlement to
indemnification to the stockholders for their
determination); or (D) as provided in subparagraph (iii)
below. In the event the determination of entitlement to
indemnification is to be made by Independent Counsel
pursuant to clause (B) above, a majority of the
Disinterested Directors will select the Independent Counsel,
but only an Independent Counsel to which the Indemnitee does
not reasonably object; provided, however, that if a Change
-------- -------
of Control has occurred, the Indemnitee will select such
Independent Counsel, but only an Independent Counsel to
which the Board does not reasonably object.

(iii) Except as otherwise expressly provided in this
By-Law 32, the Indemnitee will be presumed to be entitled to
indemnification under this By-Law 32 upon submission of a
request for indemnification together with the Supporting
Documentation in accordance with subparagraph (c)(ii) above,
and thereafter the Company will have the burden of proof to
overcome that presumption in reaching a contrary
determination. In any event, if the person or persons
empowered under subparagraph (c)(ii) to determine
entitlement to indemnification has not been appointed or has
not made a determination within 60 calendar days after
receipt by the Company of the request thereof or together
with the Supporting Documentation, the Indemnitee will be
deemed to be entitled to indemnification and the Indemnitee
will be entitled to such indemnification unless (A) the
Indemnitee misrepresented or failed to disclose a material
fact in making the request for indemnification or in the
Supporting Documentation or (B) such indemnification is
prohibited by law. The termination of any Proceeding
described in paragraph (a) of this By-Law 32, or of any
claim, issue, or matter therein, by judgment, order,
settlement, or conviction, or upon a plea of nolo contendere
---- ----------
or its equivalent, will not, of itself, adversely affect the
right of the Indemnitee to indemnification or create a
presumption that the Indemnitee did not act in good faith
and in a manner which the Indemnitee reasonably believed to
be in or not opposed to the best interests of the Company
or, with respect to any criminal Proceeding, that the
Indemnitee had reasonable cause to believe that his conduct
was unlawful.

(iv) (A) In the event that a determination is made
pursuant to subparagraph (c)(ii) that the Indemnitee is not
entitled to indemnification under this By-Law 32, (1) the
Indemnitee will be entitled to seek an adjudication of his

<PAGE>

or her entitlement to such indemnification either, at the
Indemnitee's sole option, in (x) an appropriate court of the
State of Delaware or any other court of competent
jurisdiction or (y) an arbitration to be conducted by a
single arbitrator pursuant to the rules of the American
Arbitration Association; (2) any such judicial proceeding or
arbitration will be de novo and the Indemnitee will not be
-- ----
prejudiced by reason of such adverse determination; and (3)
in any such judicial proceeding or arbitration the Company
will have the burden of proving that the Indemnitee is not
entitled to indemnification under this By-Law 32.

(B) If a determination is made or deemed to have been
made, pursuant to subparagraph (c)(ii) or (iii) of this
By-Law 32, that the Indemnitee is entitled to
indemnification, the Company will be obligated to pay the
amounts constituting such indemnification within five
business days after such determination has been made or
deemed to have been made and will be conclusively bound by
such determination unless (1) the Indemnitee misrepresented
or failed to disclose a material fact in making the request
for indemnification or in the Supporting Documentation or
(2) such indemnification is prohibited by law. In the event
that advancement of expenses is not timely made pursuant to
subparagraph (c)(i) of this By-Law 32 or payment of
indemnification is not made within five business days after
a determination of entitlement to indemnification has been
made or deemed to have been made pursuant to subparagraph
(c)(ii) or (iii) of this By-Law 32, the Indemnitee will be
entitled to seek judicial enforcement of the Company's
obligation to pay to the Indemnitee such advancement of
expenses or indemnification. Notwithstanding the foregoing,
the Company may bring an action, in an appropriate court in
the State of Delaware or any other court of competent
jurisdiction, contesting the right of the Indemnitee to
receive indemnification hereunder due to the occurrence of
any event described in subclause (1) or (2) of this clause
(B) (a "Disqualifying Event"); provided, however, that in
-------- -------
any such action the Company will have the burden of proving
the occurrence of such Disqualifying Event.

(C) The Company will be precluded from asserting in
any judicial proceeding or arbitration commenced pursuant to
the provisions of this subparagraph (c)(iv) that the
procedures and presumptions of this By-Law 32 are not valid,
binding, and enforceable and will stipulate in any such
court or before any such arbitrator that the Company is
bound by all the provisions of this By-Law 32.

(D) In the event that the Indemnitee, pursuant to the
provisions of this subparagraph (c)(iv), seeks a judicial
adjudication of, or an award in arbitration to enforce, his
rights under, or to recover damages for breach of, this
By-Law 32, the Indemnitee will be entitled to recover from
the Company, and will be indemnified by the Company against,
any expenses actually and reasonably incurred by the

<PAGE>

Indemnitee if the Indemnitee prevails in such judicial
adjudication or arbitration. If it is determined in such
judicial adjudication or arbitration that the Indemnitee is
entitled to receive part but not all of the indemnification
or advancement of expenses sought, the expenses incurred by
the Indemnitee in connection with such judicial adjudication
or arbitration will be prorated accordingly.

(v) For purposes of this paragraph (c):

(A) "Change in Control" means the occurrence of any of
the following events (other than the Federated/Macy Merger
(as that term is defined in the Macy's Plan of
Reorganization) or any other event provided for in the
Macy's Plan of Reorganization):

(1) The Company is merged, consolidated, or
reorganized into or with another corporation or other
legal entity, and as a result of such merger,
consolidation, or reorganization less than a majority
of the combined voting power of the then-outstanding
securities of such corporation or entity immediately
after such transaction are held in the aggregate by the
holders of the Voting Stock immediately prior to such
transaction;

(2) The Company sells or otherwise transfers all
or substantially all of its assets to another
corporation or other legal entity and, as a result of
such sale or transfer, less than a majority of the
combined voting power of the then-outstanding
securities of such other corporation or entity
immediately after such sale or transfer is held in the
aggregate by the holders of Voting Stock immediately
prior to such sale or transfer;

(3) There is a report filed on Schedule 13D or
Schedule 14D-1 (or any successor schedule, form, or
report or item therein), each as promulgated pursuant
to the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), disclosing that any person (as the
term "person" is used in Section 13(d)(3) or Section
14(d)(2) of the Exchange Act) has become the beneficial
owner (as the term "beneficial owner" is defined under
Rule 13d-3 or any successor rule or regulation
promulgated under the Exchange Act) of securities
representing 30% or more of the combined voting power
of the Voting Stock;

(4) The Company files a report or proxy statement
with the Securities and Exchange Commission pursuant to
the Exchange Act disclosing in response to Form 8-K or
Schedule 14A (or any successor schedule, form, or
report or item therein) that a change in control of the
Company has occurred or will occur in the future

<PAGE>

pursuant to any then-existing contract or transaction;
or

(5) If, during any period of two consecutive
years or such longer period, if any, commencing
immediately prior to a meeting of the stockholders at
which Directors are elected and concluding immediately
after the next succeeding meeting of stockholders at
which Directors are elected, individuals who at the
beginning of any such period constitute the Directors
cease for any reason to constitute at least a majority
thereof; provided, however, that for purposes of this
-------- -------
clause (5) each Director who is first elected, or first
nominated for election by the Company's stockholders,
by a vote of at least two-thirds of the Directors (or a
committee of the Board) then still in office who were
Directors at the beginning of any such period will be
deemed to have been a Director at the beginning of such
period.

Notwithstanding the foregoing provisions of clauses (3) or
(4) of this paragraph (c)(v)(A), unless otherwise determined
in a specific case by majority vote of the Board, a "Change
in Control" will not be deemed to have occurred for purposes
of such clauses (3) or (4) solely because (x) the Company,
(y) an entity in which the Company, directly or indirectly,
beneficially owns 50% or more of the voting securities (a
"Subsidiary"), or (z) any employee stock ownership plan or
any other employee benefit plan of the Company or any
Subsidiary either files or becomes obligated to file a
report or a proxy statement under or in response to Schedule
13D, Schedule 14D-1, Form 8-K, or Schedule 14A (or any
successor schedule, form, or report or item therein) under
the Exchange Act disclosing beneficial ownership by it of
shares of Voting Stock, whether in excess of 30% or
otherwise, or because the Company reports that a change in
control of the Company has occurred or will occur in the
future by reason of such beneficial ownership.

(B) "Disinterested Director" means a Director of the
Company who is not or was not a party to the Proceeding in
respect of which indemnification is sought by the
Indemnitee.

(C) "Independent Counsel" means a law firm or a member
of a law firm that neither presently is, nor in the past
five years has been, retained to represent (1) the Company
or the Indemnitee in any matter material to either such
party or (2) any other party to the Proceeding giving rise
to a claim for indemnification under this By-Law 32.
Notwithstanding the foregoing, the term "Independent
Counsel" will not include any person who, under the
applicable standards of professional conduct then prevailing
under the law of the State of Delaware, would be precluded
from representing either the Company or the Indemnitee in an

<PAGE>

action to determine the Indemnitee's rights under this
By-Law 32.

(d) Notwithstanding anything contained in these By-Laws to
the contrary, and without limiting the generality or effect of
Section 6.9 of the Merger Agreement, the Company will indemnify
any person serving (i) on or after January 15, 1990 as a
director, officer, or employee of Federated or any predecessor of
Federated, including Federated Department Stores, Inc. ("Old
Federated") and Allied Stores Corporation ("Allied"), or any of
their respective majority-owned subsidiaries or (ii) as a
director, officer, or employee of another corporation,
partnership, joint venture, trust, or other entity, including
without limitation Campeau, Campeau Properties, Inc. ("Campeau
Properties"), Federated Holdings, Inc. ("Holdings"), Federated
Holdings II, Inc. ("Holdings II"), Federated Holdings III, Inc.
("Holdings III"), FSI, Gold Circle, Inc. ("Gold Circle"), Ralphs,
and their affiliates (as defined in Section 101(2) of the
Bankruptcy Code) as of the effective date of the Plan of
Reorganization other than Old Federated, Allied, and their
respective subsidiaries (collectively, the "FSI Companies"), to
the extent that such person, by reason of such person's past or
future service in such a capacity, is, or but for the merger of
Federated and the Company or the merger of Old Federated and
Allied would be, entitled to indemnification by Federated, Old
Federated, Allied, or any of their respective subsidiaries
(collectively, the "Predecessor Companies") under, and to the
extent provided in, the applicable certificates of incorporation,
by-laws, or similar constituent documents of any of the
Predecessor Companies, under any written agreement to which any
of the Predecessor Companies is or was a party, or under any
applicable statute; provided, however, that no person who (A) (1)
-------- -------
as of the Effective Date of the Federated Plan of Reorganization
(as therein defined) or prior thereto was a director, officer, or
employee of any FSI Company other than Gold Circle and (2) as of
the Effective Date of the Federated Plan of Reorganization (as
therein defined), had not ceased to be a director, officer, or
employee of any FSI Company other than FSI, Gold Circle, or
Ralphs or had not ceased to be an officer or employee of Ralphs
or (B) is or becomes a director, officer, or employee of
Holdings, Holdings II, Holdings III, Campeau, or Campeau
Properties or an officer or employee of Ralphs following the
Effective Date of the Federated Plan of Reorganization (as
therein defined) will be entitled to indemnification pursuant to
this By-Law 32. Any person who is entitled to indemnification
pursuant to the immediately preceding sentence or in respect of
whom indemnity obligations arise in the future by reason of his
or her service as director, officer, or employee of the Company
will be deemed to have served at the request of Federated, Old
Federated and Allied to the extent that he or she served as a
director, officer, or employee of any subsidiary of Old Federated
or Allied or any FSI Company prior to the effective date of the
Plan of Reorganization; provided, however, that such indemnity
-------- -------
will not apply to any person who continued to serve as a director
of Ralphs as of or following the Effective Date of the Federated
Plan of Reorganization (as therein defined) to the extent that

<PAGE>

any Proceeding relates to or arises out of such person's service
as a director, officer, or employee of Ralphs at any time after
the Effective Date of the Federated Plan of Reorganization (as
therein defined).

(e) If any provision or provisions of this By-Law 32 are
held to be invalid, illegal, or unenforceable for any reason
whatsoever: (i) the validity, legality, and enforceability of
the remaining provisions of this By-Law 32 (including without
limitation all portions of any paragraph of this By-Law 32
containing any such provision held to be invalid, illegal, or
unenforceable, that are not themselves invalid, illegal, or
unenforceable) will not in any way be affected or impaired
thereby and (ii) to the fullest extent possible, the provisions
of this By-Law 32 (including without limitation all portions of
any paragraph of this By-Law 32 containing any such provision
held to be invalid, illegal, or unenforceable, that are not
themselves invalid, illegal, or unenforceable) will be construed
so as to give effect to the intent manifested by the provision
held invalid, illegal, or unenforceable.

33. Insurance, Contracts, and Funding. Without limiting
the generality or effect of Section 6.9 of the Merger Agreement,
the Company may purchase and maintain insurance to protect itself
and any Indemnitee against any expenses, judgments, fines, and
amounts paid in settlement or incurred by any Indemnitee in
connection with any Proceeding referred to in By-Law 32 or
otherwise, to the fullest extent permitted by applicable law as
then in effect. Without limiting the generality or effect of
Section 6.9 of the Merger Agreement, the Company may enter into
contracts with any person entitled to indemnification under
By-Law 32 or otherwise, and may create a trust fund, grant a
security interest, or use other means (including without
limitation a letter of credit) to ensure the payment of such
amounts as may be necessary to effect indemnification as provided
in By-Law 32.

GENERAL

34. Fiscal Year. The fiscal year of the Company will end
on the Saturday closest to January 31st of each year or such
other date as may be fixed from time to time by the Board.

35. Seal. The Board may adopt a corporate seal and use the
same by causing it or a facsimile thereof to be impressed or
affixed or reproduced or otherwise.

36. Reliance Upon Books, Reports, and Records. Each
Director, each member of a committee designated by the Board, and
each officer of the Company will, in the performance of his or
her duties, be fully protected in relying in good faith upon the
records of the Company and upon such information, opinions,
reports, or statements presented to the Company by any of the
Company's officers or employees, or committees of the Board, or
by any other person or entity as to matters the Director,

<PAGE>

committee member, or officer believes are within such other
person's professional or expert competence and who has been
selected with reasonable care by or on behalf of the Company.

37. Time Periods. In applying any provision of these
By-Laws that requires that an act be done or not be done a
specified number of days prior to an event or that an act be done
during a period of a specified number of days prior to an event,
calendar days will be used unless otherwise specified, the day of
the doing of the act will be excluded, and the day of the event
will be included.

38. Amendments. Except as otherwise provided by law or by
the Certificate of Incorporation or these By-Laws, these By-Laws
or any of them may be amended in any respect or repealed at any
time, either (i) at any meeting of stockholders, provided that
any amendment or supplement proposed to be acted upon at any such
meeting has been described or referred to in the notice of such
meeting, or (ii) at any meeting of the Board, provided that no
amendment adopted by the Board may vary or conflict with any
amendment adopted by the stockholders.

39. Certain Defined Terms. Terms used herein with initial
capital letters that are not otherwise defined are used herein as
defined in the Certificate of Incorporation.

Exhibit T3C(1)
Draft of November 23, 1994

=================================================================

Federated Department Stores, Inc.

and

The First National Bank of Boston

Trustee

----------------------

Indenture

Dated as of , 199_
----------- --

----------------------

SENIOR SECURITIES

=================================================================

<PAGE>

Federated Department Stores, Inc.
Senior Securities
Cross Reference Sheet*

This Cross Reference Sheet shows the location in the
Indenture of the provisions inserted pursuant to Sections 310 - 318(a),
inclusive, of the Trust Indenture Act of 1939, as amended.

Trust Indenture Act Sections
------------------- --------
of Indenture
------------
Sec. 310(a)(1) . . . . . . . . . . . . . . . . . 9.08
(a)(2) . . . . . . . . . . . . . . . . . 9.08
(a)(3) . . . . . . . . . . . . . . . . . Inapplicable
(a)(4) . . . . . . . . . . . . . . . . . Inapplicable
(a)(5) . . . . . . . . . . . . . . . . . 9.08
(b) . . . . . . . . . . . . . . . . . . . 9.07 and 9.09
(c) . . . . . . . . . . . . . . . . . . . Inapplicable

Sec. 311(a) . . . . . . . . . . . . . . . . . . . 9.12
(b) . . . . . . . . . . . . . . . . . . . 9.12
(c) . . . . . . . . . . . . . . . . . . . Inapplicable

Sec. 312(a) . . . . . . . . . . . . . . . . . . . 7.01 and 7.02
(b) . . . . . . . . . . . . . . . . . . . 7.02
(c) . . . . . . . . . . . . . . . . . . . 7.02

Sec. 313(a) . . . . . . . . . . . . . . . . . . . 7.03
(b) . . . . . . . . . . . . . . . . . . . 7.03
(c) . . . . . . . . . . . . . . . . . . . 7.03
(d) . . . . . . . . . . . . . . . . . . . 7.03

Sec. 314(a) . . . . . . . . . . . . . . . . . . . 7.04
(a)(4) . . . . . . . . . . . . . . . . . 1.01 and 6.07
(b) . . . . . . . . . . . . . . . . . . . Inapplicable
(c)(1) . . . . . . . . . . . . . . . . . 13.05
(c)(2) . . . . . . . . . . . . . . . . . 13.05
(c)(3) . . . . . . . . . . . . . . . . . Inapplicable
(d) . . . . . . . . . . . . . . . . . . . Inapplicable
(e) . . . . . . . . . . . . . . . . . . . 13.05
(f) . . . . . . . . . . . . . . . . . . . Inapplicable

Sec. 315(a) . . . . . . . . . . . . . . . . . . . 9.01
(b) . . . . . . . . . . . . . . . . . . . 8.08
(c) . . . . . . . . . . . . . . . . . . . 9.01
(d) . . . . . . . . . . . . . . . . . . . 9.01
(e) . . . . . . . . . . . . . . . . . . . 8.07

Sec. 316(a) . . . . . . . . . . . . . . . . . . . 1.01
(a)(1)(A) . . . . . . . . . . . . . . . . 8.01 and 8.06
(a)(1)(B) . . . . . . . . . . . . . . . . 8.01
(a)(2) . . . . . . . . . . . . . . . . . Inapplicable
(b) . . . . . . . . . . . . . . . . . . . 8.09
(c) . . . . . . . . . . . . . . . . . . . 13.11

Sec. 317(a)(1) . . . . . . . . . . . . . . . . . 8.02
(a)(2) . . . . . . . . . . . . . . . . . 8.02
(b) . . . . . . . . . . . . . . . . . . . 6.03

Sec. 318(a) . . . . . . . . . . . . . . . . . . . 13.08

-----------------
* The Cross Reference Sheet is not part of the Indenture.

<PAGE>

Table of Contents*

-----------------------

Page
----

Recitals . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Form of Face of Security . . . . . . . . . . . . . . . . . 1
Form of Reverse of Security . . . . . . . . . . . . . . . 3
Form of Trustee's Certificate Of Authentication for
Securities . . . . . . . . . . . . . . . . . . . . 7
Form of Legend for Global Securities . . . . . . . . . . . 7

Article I. Definitions . . . . . . . . . . . . . . . . . . . . 8
Section 1.01. Certain Terms Defined . . . . . . . . . . . 8
Act . . . . . . . . . . . . . . . . . . . . . . . . 8
Affiliate . . . . . . . . . . . . . . . . . . . . . 8
Authenticating Agent . . . . . . . . . . . . . . . 9
Board of Directors . . . . . . . . . . . . . . . . 9
Board Resolution . . . . . . . . . . . . . . . . . 9
Business Day . . . . . . . . . . . . . . . . . . . 9
Capital Lease . . . . . . . . . . . . . . . . . . . 9
Capital Lease Obligation . . . . . . . . . . . . . 9
Commission . . . . . . . . . . . . . . . . . . . . 9
Common Stock . . . . . . . . . . . . . . . . . . 10
Company . . . . . . . . . . . . . . . . . . . . . 10
Company Request or Company Order . . . . . . . . 10
Corporate Trust Office . . . . . . . . . . . . . 10
Covenant Defeasance . . . . . . . . . . . . . . . 10
Default . . . . . . . . . . . . . . . . . . . . . 10
Defaulted Interest . . . . . . . . . . . . . . . 10
Defeasance . . . . . . . . . . . . . . . . . . . 10
Defeasible Series . . . . . . . . . . . . . . . . 10
Depositary . . . . . . . . . . . . . . . . . . . 11
Event of Default . . . . . . . . . . . . . . . . 11
Exchange Act . . . . . . . . . . . . . . . . . . 11
GAAP . . . . . . . . . . . . . . . . . . . . . . 11
Global Security . . . . . . . . . . . . . . . . . 11
Holder . . . . . . . . . . . . . . . . . . . . . 11
Indebtedness . . . . . . . . . . . . . . . . . . 11
Indenture . . . . . . . . . . . . . . . . . . . . 12
Interest . . . . . . . . . . . . . . . . . . . . 12
Interest Payment Date . . . . . . . . . . . . . . 12

------------------

*The Table of Contents is not part of the Indenture.

<PAGE>

Material Adverse Effect . . . . . . . . . . . . . 13
Maturity . . . . . . . . . . . . . . . . . . . . 13
Notice of Default . . . . . . . . . . . . . . . . 13
Officer's Certificate . . . . . . . . . . . . . . 13
Opinion of Counsel . . . . . . . . . . . . . . . 13
Original Issue Discount Security . . . . . . . . 13
Outstanding . . . . . . . . . . . . . . . . . . . 13
Paying Agent . . . . . . . . . . . . . . . . . . 14
Person . . . . . . . . . . . . . . . . . . . . . 14
Place of Payment . . . . . . . . . . . . . . . . 14
Predecessor Security . . . . . . . . . . . . . . 14
Redemption Date . . . . . . . . . . . . . . . . . 15
Redemption Price . . . . . . . . . . . . . . . . 15
Regular Record Date . . . . . . . . . . . . . . . 15
Responsible Officer . . . . . . . . . . . . . . . 15
Securities . . . . . . . . . . . . . . . . . . . 15
Security Register and Security Registrar . . . . 16
Special Record Date . . . . . . . . . . . . . . . 16
Stated Maturity . . . . . . . . . . . . . . . . . 16
Subsidiary . . . . . . . . . . . . . . . . . . . 16
Trust Indenture Act . . . . . . . . . . . . . . . 16
Trustee . . . . . . . . . . . . . . . . . . . . . 16
U.S. Government Obligation . . . . . . . . . . . 17
Vice President . . . . . . . . . . . . . . . . . 17

Article II. The Securities . . . . . . . . . . . . . . . . . 17
Section 2.01. Designation and Amount of Securities . . 17
Section 2.02. Form of Securities and Trustee's Certificate
of Authentication . . . . . . . . . . . . . . . . 19
Section 2.03. Date and Denominations . . . . . . . . . 19
Section 2.04. Execution, Authentication and Delivery of
Securities . . . . . . . . . . . . . . . . . . . 20
Section 2.05. Registration of Transfer and Exchange . . 21
Section 2.06. Temporary Securities . . . . . . . . . . 22
Section 2.07. Mutilated, Destroyed, Lost, and Stolen
Securities . . . . . . . . . . . . . . . . . . . 23
Section 2.08. Cancellation of Surrendered Securities . 24
Section 2.09. Payment of Interest; Interest Rights
Preserved . . . . . . . . . . . . . . . . 24
Section 2.10. Persons Deemed Owners . . . . . . . . . . 25
Section 2.11. Computation of Interest . . . . . . . . . 25

Article III. Redemption of Securities . . . . . . . . . . . 26
Section 3.01. Applicability of Article . . . . . . . . 26
Section 3.02. Election to Redeem; Notice to Trustee . . 26
Section 3.03. Deposit of Redemption Price . . . . . . . 27

------------------

*The Table of Contents is not part of the Indenture.

(ii)

<PAGE>

Section 3.04. Securities Payable on Redemption Date . . 27
Section 3.05. Securities Redeemed in Part . . . . . . . 27

Article IV. Sinking Funds . . . . . . . . . . . . . . . . . 28
Section 4.01. Applicability of Article . . . . . . . . 28
Section 4.02. Satisfaction of Sinking Fund Payments With
Securities . . . . . . . . . . . . . . . 28
Section 4.03. Redemption of Securities for Sinking Fund 28

Article V. Defeasance and Covenant Defeasance . . . . . . . 29
Section 5.01. Company's Option to Effect Defeasance or
Covenant Defeasance . . . . . . . . . . . 29
Section 5.02. Defeasance and Discharge . . . . . . . . 29
Section 5.03. Covenant Defeasance . . . . . . . . . . . 29
Section 5.04. Conditions to Defeasance or Covenant
Defeasance . . . . . . . . . . . . . . . 30
Section 5.05. Deposited Money and U.S. Government
Obligations to be Held in Trust; Other
Miscellaneous Provisions . . . . . . . . 31
Section 5.06. Reinstatement . . . . . . . . . . . . . . 32

Article VI. Particular Covenants of the Company . . . . . . 32
Section 6.01. Payment of Principal, Premium and Interest on
Securities . . . . . . . . . . . . . . . 32
Section 6.02. Maintenance of Office or Agency . . . . . 33
Section 6.03. Money for Securities Payments to be Held in
Trust . . . . . . . . . . . . . . . . . . 33
Section 6.04. Payment of Taxes and Other Claims . . . . 34
Section 6.05. Maintenance of Properties . . . . . . . . 35
Section 6.06. Existence . . . . . . . . . . . . . . . . 35
Section 6.07. Compliance with Laws . . . . . . . . . . 35
Section 6.08. Statement by Officers as to Default . . . 35
Section 6.09. Waiver of Certain Covenants . . . . . . . 36

Article VII. Securities Holders' Lists And Reports By The
Company And The Trustee . . . . . . . . . . . . . . . . 36
Section 7.01. Company to Furnish Trustee Names and
Addresses of Holders . . . . . . . . . . 36
Section 7.02. Preservation of Information; Communication to
Holders . . . . . . . . . . . . . . . . . 36
Section 7.03. Reports by Trustee . . . . . . . . . . . 37
Section 7.04. Reports by Company . . . . . . . . . . . 37

Article VIII. Default . . . . . . . . . . . . . . . . . . . 37
Section 8.01. Event of Default . . . . . . . . . . . . 37
Section 8.02. Covenant of Company to Pay to Trustee Whole
Amount Due on Securities on Default in
Payment of Interest or Principal; Suits for
Enforcement by Trustee . . . . . . . . . 40
Section 8.03. Application of Money Collected by Trustee 41
Section 8.04. Limitation on Suits by Holders of Securities
41

------------------

*The Table of Contents is not part of the Indenture.

(iii)

<PAGE>

Section 8.05. Rights and Remedies Cumulative; Delay or
Omission in Exercise of Rights not a Waiver
of Event of Default . . . . . . . . . . . 42
Section 8.06. Rights of Holders of Majority in Principal
Amount of Outstanding Securities to Direct
Trustee . . . . . . . . . . . . . . . . . 42
Section 8.07. Requirement of an Undertaking to Pay Costs in
Certain Suits Under the Indenture or Against
the Trustee . . . . . . . . . . . . . . . 42
Section 8.08. Notice of Defaults . . . . . . . . . . . 43
Section 8.09. Unconditional Right of Holders to Receive
Principal, Premium, and Interest . . . . 43
Section 8.10. Restoration of Rights and Remedies . . . 43
Section 8.11. Trustee May File Proofs of Claims . . . . 43

Article IX. Concerning the Trustee . . . . . . . . . . . . . 44
Section 9.01. Certain Duties and Responsibilities . . . 44
Section 9.02. Certain Rights of Trustee . . . . . . . . 44
Section 9.03. Not Responsible for Recitals or Issuance of
Securities . . . . . . . . . . . . . . . 45
Section 9.04. May Hold Securities . . . . . . . . . . . 45
Section 9.05. Money Held in Trust . . . . . . . . . . . 45
Section 9.06. Compensation and Reimbursement . . . . . 45
Section 9.07. Disqualification; Conflicting Interests . 46
Section 9.08. Corporate Trustee Required Eligibility . 46
Section 9.09. Resignation and Removal; Appointment of
Successor . . . . . . . . . . . . . . . . 46
Section 9.10. Acceptance of Appointment by Successor . 47
Section 9.11. Merger, Conversion, Consolidation, or
Succession to Business . . . . . . . . . 49
Section 9.12. Preferential Collection of Claims Against
Company . . . . . . . . . . . . . . . . . 49
Section 9.13. Appointment of Authenticating Agent . . . 49

Article X. Supplemental Indentures And Certain Actions . . . 51
Section 10.01. Purposes for Which Supplemental Indentures
May Be Entered Into Without Consent of
Holders . . . . . . . . . . . . . . . . . 51
Section 10.02. Modification of Indenture With Consent of
Holders of at Least a Majority in Principal
Amount of Outstanding Securities . . . . 52
Section 10.03. Execution of Supplemental Indentures . . 53
Section 10.04. Effect of Supplemental Indentures . . . . 53
Section 10.05. Conformity with Trust Indenture Act . . . 53
Section 10.06. Reference in Securities to Supplemental
Indentures . . . . . . . . . . . . . . . 53

Article XI. Consolidation, Merger, Sale, or Transfer . . . . 54
Section 11.01. Consolidations and Mergers of Company and
Sales Permitted Only on Certain Terms . . 54

------------------

*The Table of Contents is not part of the Indenture.

(iv)

<PAGE>

Article XII. Satisfaction and Discharge of Indenture . . . . 54
Section 12.01. Satisfaction and Discharge of Indenture . 54
Section 12.02. Application of Trust Money . . . . . . . 55

Article XIII. Miscellaneous Provisions . . . . . . . . . . . 55
Section 13.01. Successors and Assigns of Company Bound by
Indenture . . . . . . . . . . . . . . . . 55
Section 13.02. Service of Required Notice to Trustee and
Company . . . . . . . . . . . . . . . . . 55
Section 13.03. Service of Required Notice to Holders;
Waiver . . . . . . . . . . . . . . . . . 56
Section 13.04. Indenture and Securities to be Construed in
Accordance with the Laws of the State of New
York . . . . . . . . . . . . . . . . . . 56
Section 13.05. Compliance Certificates and Opinions . . 56
Section 13.06. Form of Documents Delivered to Trustee . 56
Section 13.07. Payments Due on Non-Business Days . . . . 57
Section 13.08. Provisions Required by Trust Indenture Act to
Control . . . . . . . . . . . . . . . . . 57
Section 13.09. Invalidity of Particular Provisions . . . 57
Section 13.10. Indenture May be Executed In Counterparts 57
Section 13.11. Acts of Holders; Record Dates . . . . . . 58
Section 13.12. Effect of Headings and Table of Contents 60
Section 13.13. Benefits of Indenture . . . . . . . . . . 60

------------------

*The Table of Contents is not part of the Indenture.

(v)

<PAGE>

Indenture, dated as of _________ __, 199_, between Federated
Department Stores, Inc., a corporation duly organized and existing under
the laws of the State of Delaware (the "Company"), and The First National
Bank of Boston, a national banking association, organized and existing
under the laws of the United States of America, as Trustee (the "Trustee").

Recitals

A. The Company has duly authorized the execution and delivery
of this Indenture to provide for the issuance from time to time of its
unsecured debentures, notes, and other evidences of indebtedness (the
"Securities"), to be issued in one or more series as in this Indenture
provided.

B. The Securities of each series will be in substantially the
form set forth below, or in such other form as may be established by or
pursuant to a Board Resolution or in one or more indentures supplemental
hereto, in each case with such appropriate insertions, omissions,
substitutions, and other variations as are required or permitted by this
Indenture, and may have such letters, numbers, or other marks of
identification and such legends or endorsements placed thereon as may be
required to comply with the rules of any securities exchange or as may,
consistently herewith, be determined by the officers executing such
Securities, as evidenced by their execution of the Securities.

[Form of Face of Security]

[Insert any legend required by the Internal
Revenue Code and the regulations thereunder.]

Federated Department Stores, Inc.

-------------------------------------------

No. $
-----------
- -----------

Federated Department Stores, Inc., a corporation duly organized
and existing under the laws of Delaware (hereinafter called the "Company",
which term includes any successor Person under the Indenture hereinafter
referred to), for value received, hereby promises to pay to , or
----------
registered assigns, the principal sum of $ on [if
-------- ---------------- --
the Security is to bear interest prior to Maturity, insert: ", and to pay
- ----------------------------------------------------------
interest thereon from or from the most recent Interest
-------------
Payment Date to which interest has been paid or duly provided for, on
and in each year, commencing
- ------------------------- --------------------
on _____________ , at the rate of % per annum, until the principal hereof
-
is paid or made available for payment [if applicable, insert: ", and at
---------------------
the rate of % per annum on any overdue principal and premium and on
----
-
any overdue installment of interest"]. The interest so payable, and
punctually paid or duly provided for, on any Interest Payment Date will, as
provided in such Indenture, be paid to the Person in whose name this
Security (or one or more Predecessor Securities) is registered at the close
of business on the Regular Record Date for such interest, which will be the
or (whether or not a Business Day), as the
- -------------------- -----------
case may be, next preceding such Interest Payment Date. Any such interest
not so punctually paid or duly provided for will forthwith cease to be
payable to the Holder on such Regular Record Date and may either be paid to
the Person in whose name this Security (or one or more Predecessor
Securities) is registered at the close of business on a Special Record Date
for the payment of such Defaulted Interest to be fixed by the Trustee,

<PAGE>

notice whereof will be given to Holders of Securities of this series not
less than 10 calendar days prior to such Special Record Date, or be paid at
any time in any other lawful manner not inconsistent with the requirements
of any securities exchange on which the Securities of this series may be
listed, and upon such notice as may be required by such exchange, all as
more fully provided in said Indenture"].

[If the Security is not to bear interest prior to Maturity,
----------------------------------------------------------
insert: "The principal of this Security will not bear interest except in
- ------
the case of a default in payment of principal upon acceleration, upon
redemption, or at Stated Maturity, and in such case the overdue principal
of this Security will bear interest at the rate of % per annum which
---
will accrue from the date of such default in payment to the date payment of
such principal has been made or duly provided for. Interest on any overdue
principal will be payable on demand. Any such interest on any overdue
principal that is not so paid on demand will bear interest at the rate of
--
% per annum which will accrue from the date of such demand for payment to
the date payment of such interest has been made or duly provided for, and
such interest will also be payable on demand."]

Payment of the principal of (and premium, if any) and [if
--
applicable, insert: "any such"] interest on this Security will be made at
- ------------------
the office or agency of the Company maintained for the purpose in , in
----
such coin or currency of the United States of America as at the time of
payment is legal tender for payment of public and private debts [if
--
applicable, insert: "; provided, however, that at the option of the Company
- ------------------ -------- -------
payment of interest may be made by check mailed to the address of the
Person entitled thereto as such address appears in the Security Register"].

REFERENCE IS HEREBY MADE TO THE FURTHER PROVISIONS SET FORTH ON
THE REVERSE HEREOF. SUCH PROVISIONS WILL FOR ALL PURPOSES HAVE THE SAME
EFFECT AS THOUGH FULLY SET FORTH IN THIS PLACE.

This Security will not be valid or become obligatory for any
purpose until the certificate of authentication herein has been signed
manually by the Trustee under the Indenture referred to on the reverse side
hereof.

<PAGE>

In Witness Whereof, this instrument has been duly executed in
accordance with the Indenture.

Federated Department Stores, Inc.

Date Issued: By:
---------------- ------------------------------

Attest:

By:
-------------------------

[Form of Reverse of Security]

Federated Department Stores, Inc.

This Security is one of a duly authorized issue of securities
of the Company (herein called the "Securities") issued and to be issued in
one or more series under an Indenture, dated as of , 199_
--------- ---
(herein called the "Indenture"), between the Company and The First National
Bank of Boston, as Trustee (herein called the "Trustee", which term
includes any successor trustee under the Indenture), to which Indenture and
all indentures supplemental thereto reference is hereby made for a
statement of the respective rights, limitations of rights, duties, and
immunities thereunder of the Company, the Trustee, and the Holders of the
Securities and of the terms upon which the Securities are, and are to be,
authenticated and delivered. This Security is one of the series designated
on the face hereof [if applicable, insert: ", limited in aggregate
---------------------
principal amount to $ "].
-------

[If applicable, insert: "The Securities of this series are
---------------------
subject to redemption upon not less than 30 calendar days' notice by
mail,[if applicable, insert: "(a) on in each year
--------------------- --------------
commencing with the year and ending with the year
---------- ----------
through operation of the sinking fund for this series at a Redemption Price
equal to 100% of the principal amount, and (b)"] at any time [if
--
applicable, insert: "on or after , "], as a whole or in
- ------------------ ----------- ----
part, at the election of the Company, at the following Redemption Prices
(expressed as percentages of the principal amount): If redeemed [If
--
applicable, insert: "on or before , %, and if redeemed"]
- ------------------ --------------- --
during the 12-month period beginning of the years
---------------
indicated,

<PAGE>

Redemption Redemption
Year Price Year Price
- ---- ----- ---- -----

and thereafter at a Redemption Price equal to % of the principal amount,
--
together in the case of any such redemption [if applicable, insert:
---------------------
"whether through operation of the sinking fund or otherwise)"] with accrued
interest to the Redemption Date, but interest installments whose Stated
Maturity is on or prior to such Redemption Date will be payable to the
Holders of such Securities, or one or more Predecessor Securities, of
record at the close of business on the relevant Record Dates referred to on
the face hereof, all as provided in the Indenture."]

[If applicable, insert: "The Securities of this series are
---------------------
subject to redemption upon not less than 30 calendar days' notice by
mail,[if applicable, insert: "(a) on in each year
--------------------- ---------------
commencing with the year and ending with the year
---------- ----------
through operation of the sinking fund for this series at the following
Redemption Prices (expressed as percentages of the principal amount)
applicable to redemption through operation of the sinking fund and (b)"] at
any time [if applicable, insert: "on or after , "], as a
--------------------- ----------- ----
whole or in part, at the election of the Company, at the following
Redemption Prices (expressed as percentages of the principal amount)
applicable to redemption otherwise than through operation of the sinking
fund: If redeemed [If applicable, insert: "on or before ,
--------------------- --------------- --
%, and if redeemed"] during the 12-month period beginning of the
- - --------
years indicated,

Redemption Price For Redemption Price For
Redemption Through Redemption Otherwise
Operation of the Than Through Operation
Year Sinking Fund of the Sinking Fund
- ---- ------------------- -------------------------

and thereafter at a Redemption Price equal to % of the principal
----
amount, together in the case of any such redemption (whether through
operation of the sinking fund or otherwise) with accrued interest to the
Redemption Date, but interest installments whose Stated Maturity is on or
prior to such Redemption Date will be payable to the Holders of such
Securities, or one or more Predecessor Securities, of record at the close
of business on the relevant Record Dates referred to on the face hereof,
all as provided in the Indenture."]

<PAGE>

[If applicable, insert: "Notwithstanding the foregoing, the
---------------------
Company may not, prior to , redeem any Securities of this series
---------
as contemplated by [if applicable, insert: "Clause (b) of"] the preceding
---------------------
paragraph as a part of, or in anticipation of, any refunding operation by
the application, directly or indirectly, of moneys borrowed having an
interest cost to the Company (calculated in accordance with generally
accepted financial practice) of less than % per annum."]
---

[If applicable, insert: "The sinking fund for this series
---------------------
provides for the redemption on in each year beginning with
--------------
the year and ending with the year of [if
----------- ------------ --
applicable, insert: "not less than $ ("mandatory sinking
- ------------------ ------------
fund") and not more than"] $ aggregate principal amount of
------------
Securities of this series. Securities of this series acquired or redeemed
by the Company otherwise than through [if applicable, insert: "mandatory"]
---------------------
sinking fund payments may be credited against subsequent [if applicable,
--------------
insert: "mandatory"] sinking fund payments otherwise required to be made
- ------
[if applicable, insert: "in the inverse order in which they become
---------------------
due"]."]

[If the Security is subject to redemption of any kind, insert:
-------------------------------------------------------------
"In the event of redemption of this Security in part only, a new Security
or Securities of this series and of like tenor for the unredeemed portion
hereof will be issued in the name of the Holder hereof upon the
cancellation hereof."]

[If applicable, insert: "The Indenture contains provisions for
----------------------
defeasance at any time of (a) the entire indebtedness evidenced by this
Security or (b) certain restrictive covenants and Events of Default with
respect to this Security, in each case upon compliance with certain
conditions set forth in the Indenture."]

[If the Security is not an Original Issue Discount Security,
------------------------------------------------------------
insert: "If an Event of Default with respect to Securities of this series
- ------
shall occur and be continuing, the principal of the Securities of this
series may be declared due and payable in the manner and with the effect
provided in the Indenture."]

[If the Security is an Original Issue Discount Security,
--------------------------------------------------------
insert: "If an Event of Default with respect to Securities of this series
- ------
shall occur and be continuing, an amount of principal of the Securities of
this series may be declared due and payable in the manner and with the
effect provided in the Indenture. Such amount will be equal to [insert
-------
formula for determining the amount]. Upon payment (a) of the amount of
- -----------------------------------
principal so declared due and payable and (b) of interest on any overdue
principal and overdue interest, all of the Company's obligations in respect
of the payment of the principal of and interest, if any, on the Securities
of this series will terminate."]

<PAGE>

each series at the time Outstanding, on behalf of the Holders of all
Securities of such series, to waive compliance by the Company with certain
provisions of the Indenture and certain past defaults under the Indenture
and their consequences. Any such consent or waiver by the Holder of this
Security will be conclusive and binding upon such Holder and upon all
future Holders of this Security and of any Security issued upon the
registration of transfer hereof or in exchange herefor or in lieu hereof,
whether or not notation of such consent or waiver is made upon this
Security.

As provided in and subject to the provisions of the Indenture,
the Holder of this Security will not have the right to institute any
proceeding with respect to the Indenture or for the appointment of a
receiver or trustee or for any other remedy thereunder, unless such Holder
shall have previously given the Trustee written notice of a continuing
Event of Default with respect to the Securities of this series, the Holders
of not less than 25% in principal amount of the Securities of this series
at the time Outstanding shall have made written request to the Trustee to
institute proceedings in respect of such Event of Default as Trustee and
offered the Trustee reasonable indemnity, and the Trustee shall not have
received from the Holders of a majority in principal amount of Securities
of this series at the time Outstanding a direction inconsistent with such
request and shall have failed to institute such proceeding for 60 calendar
days after receipt of such notice, request, and offer of indemnity. The
foregoing will apply to any suit instituted by the Holder of this Security
for the enforcement of any payment of principal hereof or any premium or
interest hereon on or after the respective due dates expressed herein.

No reference herein to the Indenture and no provision of this
Security or of the Indenture will alter or impair the obligation of the
Company, which is absolute and unconditional, to pay the principal of and
any premium and interest on this Security at the times, place, and rate,
and in the coin or currency, herein prescribed.

As provided in the Indenture and subject to certain limitations
therein set forth, the transfer of this Security is registerable in the
Security Register, upon surrender of this Security for registration of
transfer at the office or agency of the Company in any place where the
principal of and any premium and interest on this Security are payable,
duly endorsed by, or accompanied by a written instrument of transfer in
form satisfactory to the Company and the Security Registrar duly executed
by, the Holder hereof or his attorney duly authorized in writing, and
thereupon one or more new Securities of this series and of like tenor, of
authorized denominations and for the same aggregate principal amount, will
be issued to the designated transferee or transferees.

The Securities of this series are issuable only in registered
form without coupons in denominations of $1,000 and integral multiples
thereof. As provided in the Indenture and subject to certain limitations
therein set forth, Securities of this series are exchangeable for a like
aggregate principal amount of Securities of this series and of like tenor
of a different authorized denomination, as requested by the Holder
surrendering the same.

<PAGE>

No service charge will be made for any such registration of
transfer or exchange, but the Company may require payment of a sum
sufficient to cover any tax or other governmental charge payable in
connection therewith.

Prior to due presentment of this Security for registration of
transfer, the Company, the Trustee, and any agent of the Company or the
Trustee may treat the Person in whose name this Security is registered as
the owner hereof for all purposes, whether or not this Security shall be
overdue, and neither the Company, the Trustee, nor any such agent will be
affected by notice to the contrary.

All terms used in this Security that are defined in the
Indenture will have the respective meanings assigned to them in the
Indenture.

C. The Trustee's certificate of authentication will be in
substantially the following form:

[Form of Trustee's Certificate Of Authentication for Securities]

Trustee's Certificate of Authentication

This is one of the Securities of the series designated therein
referred to in the within-mentioned Indenture.

The First National Bank of Boston,
as Trustee

By:
-----------------
Authorized Officer

D. Every Global Security authenticated and delivered
hereunder will bear a legend in substantially the following form:

[Form of Legend for Global Securities]

This Security is a Global Security within the meaning of the
Indenture hereinafter referred to and is registered in the name of a
Depositary or a nominee thereof. This Security may not be transferred to,
or registered or exchanged for Securities registered in the name of, any
Person other than the Depositary or a nominee thereof, and no such transfer
may be registered, except in the limited circumstances described in the
Indenture. Every Security authenticated and delivered upon registration of

<PAGE>

transfer of, or in exchange for, or in lieu of, this Security will be a
Global Security subject to the foregoing, except in such limited
circumstances.

E. All acts and things necessary to make the Securities, when
the Securities have been executed by the Company and authenticated by the
Trustee and delivered as provided in this Indenture, the valid, binding,
and legal obligations of the Company and to constitute these presents a
valid indenture and agreement according to its terms, have been done and
performed, and the execution and delivery by the Company of this Indenture
and the issue hereunder of the Securities have in all respects been duly
authorized; and the Company, in the exercise of legal right and power in it
vested, is executing and delivering this Indenture and proposes to make,
execute, issue, and deliver the Securities.

Now, Therefore, this Indenture Witnesseth:

In order to declare the terms and conditions upon which the
Securities are authenticated, issued, and delivered, and in consideration
of the premises and of the purchase and acceptance of the Securities by the
Holders thereof, it is mutually agreed, for the equal and proportionate
benefit of the respective Holders from time to time of the Securities or of
a series thereof, as follows:

ARTICLE I. DEFINITIONS.

Section 1.01. Certain Terms Defined.

(a) The terms defined in this Section 1.01 (except as herein
otherwise expressly provided or unless the context of this Indenture
otherwise requires) for all purposes of this Indenture and of any indenture
supplemental hereto have the respective meanings specified in this Section
1.01. All other terms used in this Indenture that are defined in the Trust
Indenture Act, either directly or by reference therein (except as herein
otherwise expressly provided or unless the context of this Indenture
otherwise requires), have the respective meanings assigned to such terms in
the Trust Indenture Act as in force at the date of this Indenture as
originally executed.

Act:
- ---

The term "Act", when used with respect to any Holder, has the
meaning set forth in Section 13.11.

Affiliate:
- ---------

The term "Affiliate" means, with respect to a particular
Person, any Person that, directly or indirectly, is in control of, is
controlled by, or is under common control with, such Person. For purposes
of this definition, control of a Person means the power to direct the
management and policies of such Person, directly or indirectly, whether

<PAGE>

through the ownership of voting securities, by contract or otherwise; and
the terms "controlling" and "controlled" have meanings correlative of the
foregoing.

Authenticating Agent:
- --------------------

The term "Authenticating Agent" means any Person authorized by
the Trustee pursuant to Section 9.13 to act on behalf of the Trustee to
authenticate Securities of one or more series.

Board of Directors:
- ------------------

The term "Board of Directors" means the Board of Directors of
the Company or a duly authorized committee of such Board.

Board Resolution:
- ----------------

The term "Board Resolution" means a copy of a resolution
certified by the Secretary or an Assistant Secretary of the Company to have
been duly adopted by the Board of Directors and to be in full force and
effect on the date of such certification, and delivered to the Trustee.

Business Day:
- ------------

The term "Business Day", when used with respect to any Place of
Payment, means each Monday, Tuesday, Wednesday, Thursday, and Friday which
is not a day on which banking institutions in that Place of Payment are
authorized or required by law or executive order to close.

Capital Lease:
- -------------

The term "Capital Lease" means, with respect to any Person, any
lease of property (whether real, personal, or mixed) by such Person or its
Subsidiaries as lessee that would be capitalized on a balance sheet of such
Person or its Subsidiaries prepared in conformity with GAAP, other than, in
the case of such Person or its Subsidiaries, any such lease under which
such Person or any of its Subsidiaries is the lessor.

Capital Lease Obligation:
- ------------------------

The term "Capital Lease Obligations" means, with respect to any
Person, the capitalized amount of all obligations of such Person and its
Subsidiaries under Capital Leases, as determined on a consolidated basis in
conformity with GAAP.

Commission:
- ----------

The term "Commission" means the Securities and Exchange
Commission, as from time to time constituted, created under the Exchange
Act or, if at any time after the execution of this instrument such

<PAGE>

Commission is not existing and performing the duties now assigned to it
under the Trust Indenture Act, then the body performing such duties at such
time.

Common Stock:
- ------------

The term "Common Stock" means the common stock of the Company.

Company:
- -------

The term "Company" means Federated Department Stores, Inc., a
Delaware corporation, until a successor Person shall have become such
pursuant to the applicable provisions of this Indenture, and thereafter
"Company" will mean such successor Person.

Company Request or Company Order:
- --------------------------------

The term "Company Request" or "Company Order" means a written
request or order signed in the name of the Company by the Chairman of the
Board of Directors, the Vice Chairman of the Board of Directors, the
President, a Vice President, the Treasurer, an Assistant Treasurer, the
Secretary, or an Assistant Secretary of the Company, and delivered to the
Trustee.

Corporate Trust Office:
- ----------------------

The term "Corporate Trust Office" means the office of the
Trustee at which at any particular time its corporate trust business is
principally administered, which on the date hereof is 150 Royall Street,
Mail Stop 45-02-15, Canton, Massachusetts 02021.

Covenant Defeasance:
- -------------------

The term "Covenant Defeasance" has the meaning set forth in
Section 5.03.

Default:
- -------

The term "Default" means any event which, with notice or
passage of time or both, would constitute an Event of Default.

Defaulted Interest:
- ------------------

The term "Defaulted Interest" has the meaning set forth in
Section 2.09.

Defeasance:
- ----------

The term "Defeasance" has the meaning set forth in Section
5.02.

<PAGE>

Defeasible Series:
- -----------------

The term "Defeasible Series" has the meaning set forth in
Section 5.01.

Depositary:
- ----------

The term "Depositary" means, with respect to Securities of any
series issuable in whole or in part in the form of one or more Global
Securities, a clearing agency registered under the Exchange Act that is
designated to act as Depositary for such Securities as contemplated by
Section 2.01.

Event of Default:
- ----------------

The term "Event of Default" has the meaning set forth in
Section 8.01(a).

Exchange Act:
- ------------

The term "Exchange Act" means the Securities Exchange Act of
1934, as amended, or any similar federal statute, and the rules and
regulations of the Commission thereunder, as the same may be in effect from
time to time.

GAAP:
- ----

The term "GAAP" means generally accepted accounting principles
in the United States of America as in effect from time to time set forth in
the opinions and pronouncements of the Accounting Principles Board and The
American Institute of Certified Public Accountants and the statements and
pronouncements of the Financial Accounting Standards Board, or in such
other statements by any successor entity as may be in general use by
significant segments of the accounting profession, which are applicable to
the circumstances as of the date of determination.

Global Security:
- ---------------

The term "Global Security" means a Security that evidences all
or part of the Securities of any series and is authenticated and delivered
to, and registered in the name of, the Depositary for such Securities or a
nominee thereof.

Holder:
- ------

The term "Holder" means a person in whose name a particular
Security is registered in the Security Register.

Indebtedness:
- ------------

The term "Indebtedness" means, as applied to any Person,
without duplication: (a) all obligations of such Person for borrowed money;
(b) all obligations of such Person for the deferred purchase price of

<PAGE>

property or services (other than property and services purchased, and
expense accruals and deferred compensation items arising, in the ordinary
course of business); (c) all obligations of such Person evidenced by notes,
bonds, debentures, mandatorily redeemable preferred stock, or other similar
instruments (other than performance, surety, and appeals bonds arising in
the ordinary course of business); (d) all payment obligations created or
arising under any conditional sale, deferred price, or other title
retention agreement with respect to property acquired by such Person
(unless the rights and remedies of the seller or lender under such
agreement in the event of default are limited to repossession or sale of
such property); (e) any Capital Lease Obligation of such Person; (f) all
reimbursement, payment, or similar obligations, contingent or otherwise, of
such Person under acceptance, letter of credit, or similar facilities
(other than letters of credit in support of trade obligations or incurred
in connection with public liability insurance, workers' compensation,
unemployment insurance, old-age pensions, and other social security
benefits other than in respect of employee benefit plans subject to ERISA);
(g) all obligations of such Person, contingent or otherwise, under any
guarantee by such Person of the obligations of another Person of the type
referred to in clauses (a) through (f) above; and (h) all obligations
referred to in clauses (a) through (f) above secured by (or for which the
holder of such Indebtedness has an existing right, contingent or otherwise,
to be secured by) any mortgage or security interest in property (including
without limitation accounts, contract rights, and general intangibles)
owned by such Person and as to which such Person has not assumed or become
liable for the payment of such obligations other than to the extent of the
property subject to such mortgage or security interest; provided, however,
-------- -------
that Indebtedness of the type referred to in clauses (g) and (h) above
shall be included within the definition of "Indebtedness" only to the
extent of the least of: (i) the amount of the underlying Indebtedness
referred to in the applicable clause (a) through (f) above; (ii) in the
case of clause (g), the limit on recoveries, if any, from such Person under
obligations of the type referred to in clause (g) above; and (iii) in the
case of clause (h), the aggregate value (as determined in good faith by the
Board of Directors) of the security for such Indebtedness.

Indenture:
- ---------

The term "Indenture" means this Indenture, as this Indenture
may be amended, supplemented, or otherwise modified from time to time,
including, for all purposes of this Indenture and any such supplemental
indenture, the provisions of the Trust Indenture Act that are deemed to be
a part of and govern this instrument and any such supplemental indenture,
respectively. The term "Indenture" will also include the terms of
particular series of Securities established as contemplated by Section
2.01.

Interest:
- --------

The term "interest," (i) when used with respect to an Original
Issue Discount Security which by its terms bears interest only after
Maturity, means interest which accrues from and after and is payable after
Maturity and (ii) when used with respect to any Security, means the amount
of all interest accruing on such Security, including any default interest
and any interest accruing after any Event of Default that would have

<PAGE>

accrued but for the occurrence of such Event of Default, whether or not a
claim for such interest would be otherwise allowable under applicable law.

Interest Payment Date:
- ---------------------

The term "Interest Payment Date," when used with respect to any
Security, means the Stated Maturity of an installment of interest on such
Security.

Material Adverse Effect:
- -----------------------

The term "Material Adverse Effect" means a material adverse
effect on the business, assets, financial condition or results of
operations of the of the Company (taken together with its Subsidiaries as a
whole).

Maturity:
- --------

The term "Maturity," when used with respect to any Security,
means the date on which the principal of that Security or an installment of
principal becomes due and payable as therein or herein provided, whether at
the Stated Maturity or by declaration of acceleration, call for redemption,
or otherwise.

Notice of Default:
- -----------------

The term "Notice of Default" means a written notice of the kind
set forth in Section 8.01(a)(iv).

Officer's Certificate:
- ---------------------

The term "Officer's Certificate" means a certificate executed
on behalf of the Company by a Responsible Officer, and delivered to the
Trustee.

Opinion of Counsel:
- ------------------

The term "Opinion of Counsel" means an opinion in writing
signed by legal counsel, who, subject to any express provisions hereof, may
be an employee of or counsel for the Company or any Subsidiary, reasonably
acceptable to the Trustee.

Original Issue Discount Security:
- --------------------------------

The term "Original Issue Discount Security" means any Security
which provides for an amount less than the principal amount thereof to be
due and payable upon a declaration of acceleration of the Maturity thereof
pursuant to Section 8.01(b).

Outstanding:
- -----------

The term "Outstanding" means, when used with reference to
Securities as of a particular time, all Securities theretofore issued by
the Company and authenticated and delivered by the Trustee under this

<PAGE>

Indenture, except (a) Securities theretofore cancelled by the Trustee or
delivered to the Trustee for cancellation, (b) Securities for the payment
or redemption of which money in the necessary amount has been theretofore
deposited with the Trustee or any Paying Agent (other than the Company) in
trust or set aside and segregated in trust by the Company (if the Company
is acting as its own Paying Agent) for the Holders of such Securities;
provided that, if such Securities are to be redeemed, notice of such
- --------
redemption has been duly given pursuant to this Indenture or provision
therefor satisfactory to the Trustee has been made, and (c) Securities in
exchange for or in lieu of which other Securities have been authenticated
and delivered pursuant to this Indenture, other than any such Securities in
respect of which there shall have been presented to the Trustee proof
satisfactory to it that such Securities are held by a bona fide purchaser
in whose hands such Securities are valid obligations of the Company;
provided, however, that in determining whether the Holders of the requisite
- -------- -------
principal amount of the Outstanding Securities have given any request,
demand, authorization, direction, notice, consent, or waiver hereunder, (i)
the principal amount of an Original Issue Discount Security that will be
deemed to be Outstanding will be the amount of the principal thereof that
would be due and payable as of the date of such determination upon
acceleration of the Maturity thereof to such date pursuant to Section
8.01(b), (ii) the principal amount of a Security denominated in one or more
foreign currencies or currency units will be the U.S. dollar equivalent,
determined in the manner contemplated by Section 2.01 on the date of
original issuance of such Security, of the principal amount (or, in the
case of an Original Issue Discount Security, the U.S. dollar equivalent on
the date of original issuance of such Security of the amount determined as
provided in clause (i) above) of such Security, and (iii) Securities owned
by the Company or any other obligor upon the Securities or any Affiliate of
the Company or of such other obligor will be disregarded and deemed not to
be Outstanding, except that, in determining whether the Trustee will be
protected in relying upon any such request, demand, authorization,
direction, notice, consent, or waiver, only Securities which the Trustee
knows to be so owned will be so disregarded. Securities so owned which
have been pledged in good faith may be regarded as Outstanding if the
pledgee establishes to the satisfaction of the Trustee the pledgee's right
so to act with respect to such Securities and that the pledgee is not the
Company or any other obligor upon the Securities or any Affiliate of the
Company or of such other obligor.

Paying Agent:
- ------------

The term "Paying Agent" means any Person authorized by the
Company to pay the principal of or any premium or interest on any
Securities on behalf of the Company.

Person:
- ------
The term "Person" means any individual, partnership,
corporation, joint stock company, business trust, trust, unincorporated
association, joint venture, or other entity, or government or political
subdivision or agency thereof.

<PAGE>

Place of Payment:
- ----------------

The term "Place of Payment," when used with respect to the
Securities of any series, means the place or places where the principal of
and any premium and interest on the Securities of that series are payable
as specified as contemplated by Section 2.01.

Predecessor Security:
- --------------------

The term "Predecessor Security," when used with respect to any
particular Security, means every previous Security evidencing all or a
portion of the same debt as that evidenced by such Security; and, for the
purposes of this definition, any Security authenticated and delivered under
Section 2.07 in exchange for or in lieu of a mutilated, destroyed, lost, or
stolen Security will be deemed to evidence the same debt as the mutilated,
destroyed, lost, or stolen Security.

Redemption Date:
- ---------------

The term "Redemption Date," when used with respect to any
Security to be redeemed, means the date fixed for such redemption by or
pursuant to this Indenture.

Redemption Price:
- ----------------

The term "Redemption Price," when used with respect to any
Security to be redeemed, means the price (including premium, if any) at
which it is to be redeemed pursuant to this Indenture.

Regular Record Date:
- -------------------

The term "Regular Record Date" for the interest payable on any
Interest Payment Date on the Securities of any series means the date
specified for that purpose as contemplated by Section 2.01.

Responsible Officer:
- -------------------

The term "Responsible Officer," when used (a) with respect to
the Company, means the Chairman, the Deputy Chairman, the Vice Chairman,
the President, a Vice President, the Treasurer, an Assistant Treasurer, the
Secretary, or an Assistant Secretary of the Company and (b) with respect to
the Trustee, means the Chairman or any Vice Chairman of the Board of
Directors (if an officer), the Chairman or any Vice Chairman of the
Executive Committee of the Board of Directors (if an officer), the Chief
Executive Officer, the President, any Vice President, any Second or
Assistant Vice President, the Secretary, any Assistant Secretary, the
Treasurer, any Assistant Treasurer, any Trust Officer or Assistant Trust
Officer, or any other officer or assistant officer of the Trustee
customarily performing functions similar to those performed by the persons
who at the time are such officers, respectively, or to whom any corporate
trust matter is referred because of his knowledge of and familiarity with
the particular subject.

<PAGE>

Securities:
- ----------

The term "Securities" has the meaning set forth in the first
recital of this Indenture and more particularly means any Securities
authenticated and delivered under this Indenture.

Security Register and Security Registrar:
- ----------------------------------------

The terms "Security Register" and "Security Registrar" have the
respective meanings set forth in Section 2.05.

Special Record Date:
- -------------------

The term "Special Record Date" for the payment of any Defaulted
Interest means a date fixed by the Trustee pursuant to Section 2.09.

Stated Maturity:
- ---------------

The term "Stated Maturity," when used with respect to any
Security, any installment of interest thereon, or any other amount payable
under this Indenture or the Securities, means the date specified in this
Indenture or such Security as the regularly scheduled date on which the
principal of such Security, such installment of interest, or such other
amount, is due and payable.

Subsidiary:
- ----------

The term "Subsidiary" means, as applied with respect to any
Person, any corporation, partnership, or other business entity of which, in
the case of a corporation, more than 50% of the issued and outstanding
capital stock having ordinary voting power to elect a majority of the board
of directors of such corporation (irrespective of whether at the time
capital stock of any other class or classes of such corporation has or
might have voting power upon the occurrence of any contingency), or, in the
case of any partnership or other legal entity, more than 50% of the
ordinary equity capital interests, is at the time directly or indirectly
owned or controlled by such Person, by such Person and one or more of its
other Subsidiaries, or by one or more of such Person's other Subsidiaries.

Trust Indenture Act:
- -------------------

The term "Trust Indenture Act" means the Trust Indenture Act of
1939, as amended, as in force at the date as of which this instrument was
executed; provided, however, that in the event the Trust Indenture Act of
-------- -------
1939 is amended after such date, "Trust Indenture Act" means, to the extent
required by any such amendment, the Trust Indenture Act of 1939 as so
amended.

<PAGE>

Trustee:
- -------

The term "Trustee" means the Person named as the "Trustee" in
the first paragraph of this Indenture until a successor Trustee shall have
become such pursuant to the applicable provisions of this Indenture, and
thereafter "Trustee" will mean or include each Person who is then a Trustee
hereunder, and if at any time there is more than one such Person, "Trustee"
as used with respect to the Securities of any series will mean each Trustee
with respect to Securities of that series.

U.S. Government Obligation:
- --------------------------

The term "U.S. Government Obligation" means (a) any security
that is (i) a direct obligation of the United States of America for the
payment of which full faith and credit of the United States of America is
pledged or (ii) an obligation of a Person controlled or supervised by and
acting as an agency or instrumentality of the United States of America the
payment of which is unconditionally guaranteed as a full faith and credit
obligation by the United States of America, which, in either case (i) or
(ii), is not callable or redeemable at the option of the issuer thereof and
(b) any depositary receipt issued by a bank (as defined in Section 3(a)(2)
of the Securities Act of 1933, as amended) as custodian with respect to any
U.S. Government Obligation specified in clause (a), which U.S. Government
Obligation is held by such custodian for the account of the holder of such
depositary receipt, or with respect to any specific payment of principal of
or interest on any such U.S. Government Obligation, provided that (except
--------
as required by law) such custodian is not authorized to make any deduction
from the amount payable to the holder of such depositary receipt from any
amount received by the custodian in respect of the U.S. Government
Obligation or the specific payment of principal or interest evidenced by
such depositary receipt.

Vice President:
- --------------

The term "Vice President," when used with respect to the
Company or the Trustee, means any vice president, whether or not designated
by a number or a word or words added before or after the title "vice
president."

(b) The words "Article" and "Section" refer to an Article and
Section, respectively, of this Indenture. The words "herein", "hereof,"
and "hereunder" and other words of similar import refer to this Indenture
as a whole and not to any particular Article, Section, or other
subdivision. Certain terms used principally in Articles V, VI, and IX are
defined in those Articles. Terms in the singular include the plural and
terms in the plural include the singular.

<PAGE>

ARTICLE II. THE SECURITIES.

Section 2.01. Designation and Amount of Securities.

(a) The aggregate principal amount of Securities that may be
authenticated and delivered under this Indenture is unlimited.

(b) The Securities may be issued in one or more series. There
will be established in or pursuant to a Board Resolution and, subject to
Section 2.04, set forth or determined in the manner provided in an
Officer's Certificate, or established in one or more indentures
supplemental hereto, prior to the issuance of Securities of any series:
(i) the title of the Securities of the series (which will distinguish the
Securities of the series from Securities of any other series); (ii) any
limit upon the aggregate principal amount of the Securities of the series
which may be authenticated and delivered under this Indenture (except for
Securities authenticated and delivered upon registration of transfer of, or
in the exchange for, or in lieu of, other Securities of the series pursuant
to Section 2.05, 2.06, 2.07, 3.05, or 10.06 and except for any Securities
which, pursuant to Section 2.04, are deemed never to have been
authenticated and delivered hereunder); (iii) the Person to whom any
interest on a Security of the series will be payable, if other than the
Person in whose name that Security (or one or more Predecessor Securities)
is registered at the close of business on the Regular Record Date for such
interest; (iv) the date or dates on which the principal of the Securities
of the series is payable; (v) the rate or rates at which the Securities of
the series will bear interest, if any, the date or dates from which such
interest will accrue, the Interest Payment Dates on which any such interest
will be payable, and the Regular Record Date for any interest payable on
any Interest Payment Date; (vi) the place or places where the principal of
and any premium and interest on Securities of the series will be payable;
(vii) the period or periods within which, the price or prices at which, and
the terms and conditions upon which Securities of the series may be
redeemed, in whole or in part, at the option of the Company; (viii) the
obligation, if any, of the Company to redeem or purchase Securities of the
series pursuant to any sinking fund or analogous provisions or at the
option of a Holder thereof and the period or periods within which, the
price or prices at which, and the terms and conditions upon which
Securities of the series will be redeemed or purchased, in whole or in
part, pursuant to such obligation; (ix) if other than denominations of
$1,000 and integral multiples thereof, the denominations in which
Securities of the series will be issuable; (x) the currency, currencies, or
currency units in which payment of the principal of and any premium and
interest on any Securities of the series will be payable if other than the
currency of the United States of America and the manner of determining the
equivalent thereof in the currency of the United States of America for
purposes of the definition of "Outstanding" in Section 1.01; (xi) if the
amount of payments of principal of or any premium or interest on any
Securities of the series may be determined with reference to an index,
based upon a formula, or in some other manner, the manner in which such
amounts will be determined; (xii) if the principal of or any premium or
interest on any Securities of the series is to be payable, at the election
of the Company or a Holder thereof, in one or more currencies or currency
units other than that or those in which the Securities are stated to be
payable, the currency, currencies, or currency units in which payment of
the principal of and any premium and interest on Securities of such series
as to which such election is made will be payable, and the periods within
which and the terms and conditions upon which such election is to be made;
(xiii) if other than the principal amount thereof, the portion of the
principal amount of Securities of the series which will be payable upon
declaration of acceleration of the Maturity thereof pursuant to Section

<PAGE>

8.01(b); (xiv) if applicable, that the Securities of the series will be
subject to either or both of Defeasance or Covenant Defeasance as provided
in Article V, provided that no series of Securities that is convertible
into Common Stock pursuant to Section 2.01(b)(xvi) or convertible into or
exchangeable for any other securities pursuant to Section 2.01(b)(xvii)
will be subject to Defeasance pursuant to Section 5.02; (xv) if and as
applicable, that the Securities of the series will be issuable in whole or
in part in the form of one or more Global Securities and, in such case, the
Depositary or Depositaries for such Global Security or Global Securities
and any circumstances other than those set forth in Section 2.05 in which
any such Global Security may be transferred to, and registered and
exchanged for Securities registered in the name of, a Person other than the
Depositary for such Global Security or a nominee thereof and in which any
such transfer may be registered; (xvi) the terms and conditions, if any,
pursuant to which the Securities are convertible into Common Stock; (xvii)
the terms and conditions, if any, pursuant to which the Securities are
convertible into or exchangeable for any other securities, including
(without limitation) securities of Persons other than the Company; and
(xviii) any other terms of, or provisions, covenants, rights or other
matters applicable to, the series (which terms, provisions, covenants,
rights or other matters will not be inconsistent with the provisions of
this Indenture, except as permitted by Section 10.01(e)).

(c) All Securities of any one series will be substantially
identical except as to denomination and except as may otherwise be provided
in or pursuant to the Board Resolution referred to below and (subject to
Section 2.04) set forth or determined in the manner provided in the
Officer's Certificate referred to above or in any such indenture
supplemental hereto.

(d) If any of the terms of the series are established by
action taken pursuant to a Board Resolution, a copy of an appropriate
record of such action will be certified by the Secretary or an Assistant
Secretary of the Company and delivered to the Trustee concurrently with or
prior to the delivery of the Officer's Certificate setting forth the terms
of the series.

Section 2.02. Form of Securities and Trustee's Certificate of
Authentication.

(a) The Securities of each series will be in substantially the
form set forth in or otherwise contemplated by the recitals to this
Indenture, with appropriate variations to reflect the specific terms of
such series. If the form of Securities of any series is established by
action taken pursuant to a Board Resolution, a copy of an appropriate
record of such action will be certified by the Secretary or an Assistant
Secretary of the Company and delivered to the Trustee concurrently with or
prior to the delivery of the Company Order contemplated by Section 2.04 for
the authentication and delivery of such Securities.

<PAGE>

(b) The definitive Securities will be printed, lithographed,
or engraved on steel engraved borders or may be produced in any other
manner permitted by the rules of any securities exchange on which the
Securities may be listed, all as determined by the officers executing such
Securities, as evidenced by their execution of such Securities.

(c) The Trustee's certificate of authentication will be in
substantially the form set forth in the recitals to this Indenture.

(d) Every Global Security authenticated and delivered
hereunder will bear a legend in substantially the form set forth in the
recitals to this Indenture.

Section 2.03. Date and Denominations.

Each Security will be dated the date of its authentication.
The Securities of each series will be issuable only in registered form
without coupons in such denominations as may be specified as contemplated
by Section 2.01. In the absence of any such specified denomination with
respect to the Securities of any series, the Securities of such series will
be issuable in denominations of $1,000 and integral multiples thereof.

Section 2.04. Execution, Authentication and Delivery of Securities.

(a) The Securities will be executed on behalf of the Company
by the Chairman or any Vice Chairman of the Board of Directors, the Chief
Executive Officer, the President, or any Vice President of the Company and
attested by the Treasurer, the Secretary, any Assistant Treasurer, or any
Assistant Secretary of the Company under its corporate seal. The signature
of any of these officers on the Securities may be manual or facsimile. The
seal of the Company may be in the form of a facsimile thereof and may be
impressed, affixed, imprinted, or otherwise reproduced on the Securities.

(b) Only such Securities bearing the Trustee's certificate of
authentication, signed manually by the Trustee, will be entitled to the
benefits of this Indenture or be valid or obligatory for any purpose. Such
execution of the certificate of authentication by the Trustee upon any
Securities executed by the Company will be conclusive evidence that the
Securities so authenticated have been duly authenticated and delivered
hereunder. Notwithstanding the foregoing, if any Security shall have been
authenticated and delivered hereunder but never issued and sold by the
Company, and the Company shall deliver such Security to the Trustee for
cancellation as provided in Section 2.08, for all purposes of this
Indenture such Security will be deemed never to have been authenticated and
delivered hereunder and will never be entitled to the benefits of this
Indenture.

(c) Securities bearing the manual or facsimile signatures of
individuals who were at any time the proper officers of the Company will
bind the Company, notwithstanding that such individuals or any of them have
ceased to hold such offices prior to the authentication and delivery of

<PAGE>

such Securities or did not hold such offices at the date of such
Securities.

(d) At any time and from time to time after the execution and
delivery of this Indenture, the Company may deliver Securities of any
series executed by the Company to the Trustee for authentication, together
with a Company Order for the authentication and delivery of such
Securities, and the Trustee in accordance with the Company Order will
authenticate and deliver such Securities. If the form or terms of the
Securities of the series have been established in or pursuant to one or
more Board Resolutions as permitted by Sections 2.01 and 2.02, in
authenticating such Securities, and accepting the additional
responsibilities under this Indenture in relation to such Securities, the
Trustee will be entitled to receive, and (subject to Section 9.01) will be
fully protected in relying upon, an Opinion of Counsel stating (i) if the
form of such Securities has been established by or pursuant to a Board
Resolution as permitted by Section 2.02, that such form has been
established in conformity with the provisions of this Indenture, (ii) if
the terms of such Securities have been established by or pursuant to a
Board Resolution as permitted by Section 2.01, that such terms have been
established in conformity with the provisions of this Indenture, and (iii)
that such Securities, when authenticated and delivered by the Trustee and
issued by the Company in the manner and subject to any conditions specified
in such Opinion of Counsel, will constitute valid and binding obligations
of the Company enforceable in accordance with their terms, except as the
enforceability thereof may be limited by bankruptcy, insolvency,
reorganization, moratorium, or other laws relating to or affecting
creditors' rights and by general principles of equity.

(e) Notwithstanding the provisions of Sections 2.01 and
2.04(d), if all Securities of a series are not to be originally issued at
one time, it will not be necessary to deliver the Officer's Certificate
otherwise required pursuant to Section 2.01 or the Company Order and
Opinion of Counsel otherwise required pursuant to Section 2.04(d) at or
prior to the time of authentication of each Security of such series if such
documents are delivered at or prior to the authentication upon original
issuance of the first Security of such series to be issued.

Section 2.05. Registration of Transfer and Exchange.

(a) The Company will cause to be kept at the Corporate Trust
Office a register (the register maintained in such office and in any other
office or agency of the Company in a Place of Payment being herein
sometimes collectively referred to as the "Security Register") in which,
subject to such reasonable regulations as it may prescribe, the Company
will provide for the registration of Securities and of transfers of
Securities. The Trustee is hereby appointed "Security Registrar" for the
purpose of registering Securities and transfers of Securities as herein
provided.

(b) Upon surrender for registration of transfer of any
Security of any series at the office or agency in a Place of Payment for
that series, the Company will execute, and the Trustee will authenticate
and deliver, in the name of the designated transferee or transferees, one

<PAGE>

or more new Securities of the same series, of any authorized denominations
and of a like aggregate principal amount and tenor.

(c) At the option of the Holder, Securities of any series may
be exchanged for other Securities of the same series, of any authorized
denominations and of a like aggregate principal amount and tenor, upon
surrender of the Securities to be exchanged at such office or agency.
Whenever any Securities are so surrendered for exchange, the Company will
execute, and the Trustee will authenticate and deliver, the Securities
which the Holder making the exchange is entitled to receive.

(d) Every Security presented or surrendered for registration
of transfer or exchange will (if so required by the Company or the Trustee)
be duly endorsed, or be accompanied by a written instrument or instruments
of transfer, in form reasonably satisfactory to the Company and the
Security Registrar duly executed, by the Holder thereof or his attorney
duly authorized in writing. No service charge will be made for any
registration of transfer or exchange of Securities, but the Company may
require payment of a sum sufficient to cover any tax or other governmental
charge that may be imposed in connection with any registration of transfer
or exchange of Securities, other than exchanges pursuant to Section 2.06,
3.05, or 10.06 not involving any transfer. The Company will not be
required (i) to issue, register the transfer of, or exchange Securities of
any series during a period beginning at the opening of business 15 calendar
days before the mailing of a notice of redemption of Securities of that
series selected for redemption under Section 3.02(c) and ending at the
close of business on the day of such mailing or (ii) to register the
transfer of or exchange any Security so selected for redemption in whole or
in part, except, in the case of any Securities to be redeemed in part, the
portion thereof not being redeemed.

(e) All Securities issued upon any registration of transfer or
exchange of Securities will be valid obligations of the Company, evidencing
the same debt, and entitled to the same benefits under this Indenture, as
the Securities surrendered upon such registration of transfer or exchange.

(f) Notwithstanding any other provision in this Indenture, no
Global Security may be transferred to, or registered or exchanged for
Securities registered in the name of, any Person other than the Depositary
for such Global Security or any nominee thereof, and no such transfer may
be registered, unless (i) such Depositary (A) notifies the Company that it
is unwilling or unable to continue as Depositary for such Global Security
or (B) ceases to be a clearing agency registered under the Exchange Act,
(ii) the Company executes and delivers to the Trustee a Company Order that
such Global Security shall be so transferable, registrable, and
exchangeable, and such transfers shall be registrable, (iii) there shall
have occurred and be continuing an Event of Default with respect to the
Securities evidenced by such Global Security, or (iv) there shall exist
such other circumstances, if any, as have been specified for this purpose
as contemplated by Section 2.01. Notwithstanding any other provision in
this Indenture, a Global Security to which the restriction set forth in the
preceding sentence shall have ceased to apply may be transferred only to,
and may be registered and exchanged for Securities registered only in the
name or names of, such Person or Persons as the Depositary for such Global
Security shall have directed and no transfer thereof other than such a

<PAGE>

transfer may be registered. Every Security authenticated and delivered
upon registration of transfer of, or in exchange for or in lieu of, a
Global Security to which the restriction set forth in the first sentence of
this Section 2.05(f) shall apply, whether pursuant to this Section 2.05,
Section 2.06, 2.07, 3.05, or 10.06 or otherwise, will be authenticated and
delivered in the form of, and will be, a Global Security.

Section 2.06. Temporary Securities.

Pending the preparation of definitive Securities of any series,
the Company may execute and register and upon Company Order the Trustee
will authenticate and deliver temporary Securities (printed, lithographed,
or typewritten), of any authorized denomination, and substantially in the
form of the definitive Securities but with such omissions, insertions, and
variations as may be appropriate for temporary Securities, all as may be
determined by the officers executing such Securities as evidenced by their
execution of such Securities; provided, however, that the Company will use
-------- -------
reasonable efforts to have definitive Securities of that series available
at the times of any issuance of Securities under this Indenture. Every
temporary Security will be executed and registered by the Company and be
authenticated by the Trustee upon the same conditions and in substantially
the same manner, and with like effect, as the definitive Securities. The
Company will execute and register and furnish definitive Securities of such
series as soon as practicable and thereupon any or all temporary Securities
of such series may be surrendered in exchange therefor at the office or
agency of the Company in the Place of Payment for that series, and the
Trustee will authenticate and deliver in exchange for such temporary
Securities of such series one or more definitive Securities of the same
series, of any authorized denominations, and of a like aggregate principal
amount and tenor. Such exchange will be made by the Company at its own
expense and without any charge to the Holder therefor. Until so exchanged,
the temporary Securities of any series will be entitled to the same
benefits under this Indenture as definitive Securities of the same series
authenticated and delivered hereunder.

Section 2.07. Mutilated, Destroyed, Lost, and Stolen Securities.

(a) If any mutilated Security is surrendered to the Trustee,
the Company will execute and the Trustee will authenticate and deliver in
exchange therefor a new Security of the same series and of like tenor and
principal amount and bearing a number not contemporaneously outstanding.

(b) If there shall be delivered to the Company and the Trustee
(i) evidence to their satisfaction of the destruction, loss, or theft of
any Security and (ii) such security or indemnity as may be required by them
to save each of them and any agent of either of them harmless, then, in the
absence of notice to the Company or the Trustee that such Security has been
acquired by a bona fide purchaser, the Company will execute and the Trustee
will authenticate and deliver, in lieu of any such destroyed, lost, or
stolen Security, a new Security of the same series and of like tenor and
principal amount and bearing a number not contemporaneously outstanding.

<PAGE>

(c) In case any such mutilated, destroyed, lost, or stolen
Security has become or is about to become due and payable, the Company in
its discretion may, instead of issuing a new Security, pay such Security.

(d) Upon the issuance of any new Security under this Section
2.07, the Company may require the payment of a sum sufficient to cover any
tax or other governmental charge that may be imposed in relation thereto
and any other expenses (including the fees and expenses of the Trustee)
connected therewith.

(e) Every new Security of any series issued pursuant to this
Section 2.07 in exchange for any mutilated Security or in lieu of any
destroyed, lost, or stolen Security will constitute an original additional
contractual obligation of the Company, whether or not the mutilated,
destroyed, lost, or stolen Security shall be at any time enforceable by
anyone, and will be entitled to all the benefits of this Indenture equally
and proportionately with any and all other Securities of that series duly
issued hereunder.

(f) The provisions of this Section 2.07 are exclusive and will
preclude (to the extent lawful) all other rights and remedies with respect
to the replacement or payment of mutilated, destroyed, lost, or stolen
Securities.

Section 2.08. Cancellation of Surrendered Securities.

All Securities surrendered for payment, redemption,
registration of transfer or exchange, or for credit against any sinking
fund payment will, if surrendered to any Person other than the Trustee, be
delivered to the Trustee and will be promptly cancelled by it. The Company
may at any time deliver to the Trustee for cancellation any Securities
previously authenticated and delivered hereunder which the Company may have
acquired in any manner whatsoever, and may deliver to the Trustee (or to
any other Person for delivery to the Trustee) for cancellation any
Securities previously authenticated hereunder which the Company has not
issued and sold, and all Securities so delivered will be promptly cancelled
by the Trustee. No Securities will be authenticated in lieu of or in
exchange for any Securities cancelled as provided in this Section 2.08,
except as expressly permitted by this Indenture. All cancelled Securities
held by the Trustee will be disposed of as directed by a Company Order.

Section 2.09. Payment of Interest; Interest Rights Preserved.

(a) Except as otherwise provided as contemplated by Section
2.01 with respect to any series of Securities, interest on any Security
which is payable, and is punctually paid or duly provided for, on any
Interest Payment Date will be paid to the Person in whose name that
Security (or one or more Predecessor Securities) is registered at the close
of business on the Regular Record Date for such interest.

(b) Any interest on any Security of any series which is
payable, but is not punctually paid or duly provided for, on any Interest
Payment Date (herein called "Defaulted Interest") will forthwith cease to

<PAGE>

be payable to the Holder on the relevant regular Record Date by virtue of
having been such Holder, and such Defaulted Interest may be paid by the
Company together with interest thereon (to the extent permitted by law) at
the rate of interest applicable to such Security, at its election in each
case, as provided in clause (i) or (ii) below:

(i) The Company may elect to make payment of any
Defaulted Interest (and interest thereon, if any) to the Persons in
whose names the Securities of such series (or their respective
Predecessor Securities) are registered at the close of business on a
Special Record Date for the payment of such Defaulted Interest, which
will be fixed in the following manner. The Company will notify the
Trustee in writing of the amount of Defaulted Interest (and interest
thereon, if any) proposed to be paid on each Security of such series
and the date of the proposed payment, and at the same time the Company
will deposit with the Trustee an amount of money equal to the
aggregate amount proposed to be paid in respect of such Defaulted
Interest (and interest thereon, if any) or will make arrangements
satisfactory to the Trustee for such deposit prior to the date of the
proposed payment, such money when deposited to be held in trust for
the benefit of the persons entitled to such Defaulted Interest (and
interest thereon, if any) as in this clause (i) provided. Thereupon
the Trustee will fix a Special Record Date for the payment of such
Defaulted Interest (and interest thereon, if any) which will be not
more than 15 calendar days and not less than 10 calendar days prior to
the date of the proposed payment and not less than 10 calendar days
after the receipt by the Trustee of the notice of the proposed
payment. The Trustee will promptly notify the Company of such Special
Record Date and, in the name and at the expense of the Company, will
cause notice of the proposed payment of such Defaulted Interest and
the Special Record Date therefor to be mailed, first-class postage
prepaid, to each Holder of Securities of such series at his address as
it appears in the Security Register, not less than 10 calendar days
prior to such Special Record Date. Notice of the proposed payment of
such Defaulted Interest (and interest thereon, if any) and the Special
Record Date therefor having been so mailed, such Defaulted Interest
will be paid to the Persons in whose names the Securities of such
series (or their respective Predecessor Securities) are registered at
the close of business on such Special Record Date and will no longer
be payable pursuant to the following clause (ii).

(ii) The Company may make payment of any Defaulted
Interest (and interest thereon, if any) on the Securities of any
series in any other lawful manner not inconsistent with the
requirements of any securities exchange on which such Securities may
be listed, and upon such notice as may be required by such exchange,
if, after notice given by the Company to the Trustee of the proposed
payment pursuant to this clause (ii), such manner of payment shall be
deemed practicable by the Trustee.

(c) Subject to the foregoing provisions of this Section 2.09,
each Security delivered under this Indenture upon registration of transfer
of or in exchange for or in lieu of any other Security will carry the
rights to interest accrued and unpaid, and to accrue, which were carried by
such other Security.

<PAGE>

Section 2.10. Persons Deemed Owners.

Prior to due presentment of a Security for registration of
transfer, the Company, the Trustee, and any agent of the Company or the
Trustee may treat the Person in whose name such Security is registered as
the owner of such Security for the purpose of receiving payment of
principal of and any premium and (subject to Section 2.09) any interest on
such Security and for all other purposes whatsoever, whether or not such
Security shall be overdue, and neither the Company, the Trustees nor any
agent of the Company or the Trustee will be affected by notice to the
contrary.

Section 2.11. Computation of Interest.

Except as otherwise specified as contemplated by Section 2.01
for Securities of any series, interest on the Securities of each series
will be computed on the basis of a 360-day year consisting of 12 30-day
months.

ARTICLE III. REDEMPTION OF SECURITIES.

Section 3.01. Applicability of Article.

Securities of any series which are redeemable before their
Stated Maturity will be redeemable in accordance with their terms and
(except as otherwise specified as contemplated by Section 2.01 for
Securities of any series) in accordance with this Article III.

Section 3.02. Election to Redeem; Notice to Trustee.

(a) The election of the Company to redeem any Securities will
be evidenced by a Board Resolution. In case of any redemption at the
election of the Company of less than all the Securities of any series, the
Company will, at least 60 calendar days prior to the Redemption Date fixed
by the Company (unless a shorter notice shall be satisfactory to the
Trustee), notify the Trustee of such Redemption Date, of the principal
amount of Securities of such series to be redeemed. In the case of any
redemption of Securities prior to the expiration of any restriction on such
redemption provided in the terms of such Securities or elsewhere in this
Indenture, the Company will furnish the Trustee with an Officer's
Certificate evidencing compliance with such restriction.

(b) Notice of redemption of Securities to be redeemed at the
election of the Company will be given by the Company or, at the Company's
request, by the Trustee in the name and at the expense of the Company and
will be irrevocable. Notice of redemption will be given by mail, first-
class postage prepaid, not less than 30 or more than 60 calendar days prior
to the Redemption Date, to each Holder of Securities to be redeemed, at his
address appearing in the Security Register. All notices of redemption will
state (i) the Redemption Date, (ii) the Redemption Price, (iii) if less
than all the Outstanding Securities of any series are to be redeemed, the
identification (and, in the case of partial redemption of any Securities,
the principal amounts) of the particular Securities to be redeemed,

<PAGE>

(iv) that on the Redemption Date the Redemption Price will become due and
payable upon each such Security to be redeemed and, if applicable, that
interest thereon will cease to accrue on and after said date, (v) the place
or places where such Securities are to be surrendered for payment of the
Redemption Price, (vi) that the redemption is for a sinking fund, if such
is the case, and (vii) the specific provision of this Indenture pursuant to
which such Securities are to be redeemed.

(c) If less than all the Securities of any series are to be
redeemed, the particular Securities to be redeemed will be selected not
more than 60 calendar days prior to the Redemption Date by the Trustee,
from the Outstanding Securities of such series not previously called for
redemption, by such method as the Trustee may deem fair and appropriate and
which may provide for the selection for redemption of portions (equal to
the minimum authorized denomination for Securities of that series or any
integral multiple thereof) of the principal amount of Securities of such
series of a denomination larger than the minimum authorized denomination
for Securities of that series. The Trustee will promptly notify the
Company in writing of the Securities selected for redemption and, in the
case of any Securities selected for partial redemption, the principal
amount thereof to be redeemed.

(d) For all purposes of this Indenture, unless the context
otherwise requires, all provisions relating to the redemption of Securities
will relate, in the case of any Securities redeemed or to be redeemed only
in part, to the portion of the principal amount of such Securities which
has been or is to be redeemed.

Section 3.03. Deposit of Redemption Price.

Prior to any Redemption Date, the Company will deposit with the
Trustee or with a Paying Agent (or, if the Company is acting as its own
Paying Agent, segregate and hold in trust as provided in Section 6.03) an
amount of money sufficient to pay the Redemption Price of, and (except if
the Redemption Date shall be an Interest Payment Date) any accrued interest
on, all of the Securities that are to be redeemed on that date.

Section 3.04. Securities Payable on Redemption Date.

(a) Notice of redemption having been given as aforesaid, the
Securities so to be redeemed will, on the Redemption Date, become due and
payable at the Redemption Price therein specified, and from and after such
date (unless the Company defaults in the payment of the Redemption Price
and accrued interest) such Securities will cease to accrue interest. Upon
surrender of any such Security for redemption in accordance with said
notice, such Security will be paid by the Company at the Redemption Price,
together with accrued interest to the Redemption Date; provided, however,
-------- -------
that, unless otherwise specified as contemplated by Section 2.01,
installments of interest whose Stated Maturity is on or prior to the
Redemption Date will be payable to the Holders of such Securities, or one
or more Predecessor Securities, registered as such at the close of business
on the relevant Record Dates in accordance with their terms and the
provisions of Section 2.09.

<PAGE>

(b) If any Security called for redemption shall not be so paid
upon surrender thereof for redemption, the principal and any premium will,
until paid, bear interest from the Redemption Date at the rate prescribed
therefor in the Security.

Section 3.05. Securities Redeemed in Part.

Any Security that is to be redeemed only in part will be
surrendered at a Place of Payment therefor (with, if the Company or the
Trustee so requires, due endorsement by, or a written instrument of
transfer in form satisfactory to the Company and the Trustee duly executed
by, the Holder thereof or his attorney duly authorized in writing), and the
Company will execute, and the Trustee will authenticate and deliver to the
Holder of such Security without service charge, a new Security or
Securities of the same series and of like tenor, of any authorized
denomination as requested by such Holder, in aggregate principal amount
equal to and in exchange for the unredeemed portion of the principal of the
Security so surrendered.

ARTICLE IV. SINKING FUNDS.

Section 4.01. Applicability of Article.

The provisions of this Article IV will be applicable to any
sinking fund for the retirement of Securities of a series except as
otherwise specified as contemplated by Section 2.01 for Securities of such
series. The minimum amount of any sinking fund payment provided for by the
terms of Securities of any series is herein referred to as a "mandatory
sinking fund payment," and any payment in excess of such minimum amount
provided for by the terms of Securities of any series is herein referred to
as an "optional sinking fund payment." If provided for by the terms of
Securities of any series, the amount of any sinking fund payment may be
subject to reduction as provided in Section 4.02. Each sinking fund
payment with respect to Securities of a particular series will be applied
to the redemption of Securities of such series as provided for by the terms
of Securities of such series.

Section 4.02. Satisfaction of Sinking Fund Payments With Securities.

The Company (a) may deliver Outstanding Securities of a series
(other than any previously called for redemption) and (b) may apply as a
credit Securities of a series which have been redeemed either at the
election of the Company pursuant to the terms of such Securities or through
the application of permitted optional sinking fund payments pursuant to the
terms of such Securities, in each case in satisfaction of all or any part
of any sinking fund payment with respect to the Securities of such series
required to be made pursuant to the terms of such Securities as provided
for by the terms of such series, provided that such Securities have not
been previously so credited. Such Securities will be received and credited
for such purpose by the Trustee at the Redemption Price specified in such
Securities for redemption through operation of the sinking fund and the
amount of such sinking fund payment will be reduced accordingly.

<PAGE>

Section 4.03. Redemption of Securities for Sinking Fund.

Not less than 60 calendar days prior to each sinking fund
payment date for any series of Securities, the Company will deliver to the
Trustee an Officer's Certificate specifying the amount of the next ensuing
sinking fund payment for that series pursuant to the terms of that series,
the portion thereof, if any, that is to be satisfied by payment of cash and
the portion thereof, if any, that is to be satisfied by delivering and
crediting Securities of that series pursuant to Section 4.02 and will also
deliver to the Trustee any Securities to be so delivered. Not less than 30
calendar days before each such sinking fund payment date, the Trustee will
select the Securities to be redeemed upon such sinking fund payment date in
the manner specified in Section 3.02(c) and cause notice of the redemption
thereof to be given in the name of and at the expense of the Company in the
manner provided in Section 3.02(b). Such notice having been duly given,
the redemption of such Securities will be made upon the terms and in the
manner stated in Sections 3.04 and 3.05.

ARTICLE V. DEFEASANCE AND COVENANT
DEFEASANCE.

Section 5.01. Company's Option to Effect Defeasance or Covenant
Defeasance.

The Company may elect, at its option by Board Resolution at any
time, to have either Section 5.02 or Section 5.03 applied to the
Outstanding Securities of any series designated pursuant to Section 2.01 as
being defeasible pursuant to this Article V (hereinafter called "Defeasible
Series"), upon compliance with the conditions set forth below in this
Article V, provided that Section 5.02 will not apply to any series of
--------
Securities that is convertible into Common Stock pursuant to Section
2.01(b)(xvi) or convertible into or exchangeable for any other securities
pursuant to Section 2.01(b)(xvii).

Section 5.02. Defeasance and Discharge.

Upon the Company's exercise of the option provided in Section
5.01 to have this Section 5.02 applied to the Outstanding Securities of any
Defeasible Series and subject to the proviso to Section 5.01, the Company
will be deemed to have been discharged from its obligations with respect to
the Outstanding Securities of such series as provided in this Section 5.02
on and after the date the conditions set forth in Section 5.04 are
satisfied (hereinafter called "Defeasance"). For this purpose, such
Defeasance means that the Company will be deemed to have paid and
discharged the entire indebtedness represented by the Outstanding
Securities of such series and to have satisfied all its other obligations
under the Securities of such series and this Indenture insofar as the
Securities of such series are concerned (and the Trustee, at the expense of
the Company, will execute proper instruments acknowledging the same),
subject to the following which will survive until otherwise terminated or
discharged hereunder: (a) the rights of Holders of Securities of such
series to receive, solely from the trust fund described in Section 5.04 and
as more fully set forth in Section 5.04, payments in respect of the
principal of and any premium and interest on such Securities of such series
when payments are due, (b) the Company's obligations with respect to the
Securities of such series under Sections 2.05, 2.06, 2.07, 6.02, 6.03, and

<PAGE>

10.06, (c) the rights, powers, trusts, duties, and immunities of the
Trustee hereunder, and (d) this Article V. Subject to compliance with this
Article V, the Company may exercise its option provided in Section 5.01 to
have this Section 5.02 applied to the Outstanding Securities of any
Defeasible Series notwithstanding the prior exercise of its option provided
in Section 5.01 to have Section 5.03 applied to the Outstanding Securities
of such series.

Section 5.03. Covenant Defeasance.

Upon the Company's exercise of the option provided in Section
5.01 to have this Section 5.03 applied to the Outstanding Securities of any
Defeasible Series, (a) the Company will be released from its obligations
under Sections 6.04 through 6.07, inclusive, Section 11.01, and the
provisions of any Supplemental Indenture specified in such Supplemental
Indenture, and (b) the occurrence of any event specified in Sections
8.01(a)(iii), 8.01(a)(iv) (with respect to any of Sections 6.04 through
6.07, inclusive, Section 11.01, and the provisions of any Supplemental
Indenture specified in such Supplemental Indenture), 8.01(a)(v), and
8.01(a)(viii) will be deemed not to be or result in an Event of Default, in
each case with respect to the Outstanding Securities of such series as
provided in this Section on and after the date the conditions set forth in
Section 5.04 are satisfied (hereinafter called "Covenant Defeasance"). For
this purpose, such Covenant Defeasance means that the Company may omit to
comply with and will have no liability in respect of any term, condition,
or limitation set forth in any such specified Section (to the extent so
specified in the case of Section 8.01(a)(iv)), whether directly or
indirectly by reason of any reference elsewhere herein to any such Section
or by reason of any reference in any such Section to any other provision
herein or in any other document, but the remainder of this Indenture and
the Securities of such series will be unaffected thereby.

Section 5.04. Conditions to Defeasance or Covenant Defeasance.

The following will be the conditions to application of either
Section 5.02 or Section 5.03 to the Outstanding Securities of any
Defeasible Series:

(a) The Company shall irrevocably have deposited or caused to
be deposited with the Trustee (or another trustee that satisfies the
requirements contemplated by Section 9.08 and agrees to comply with
the provisions of this Article V applicable to it) as trust funds in
trust for the benefit of the Holders of Outstanding Securities of such
series (i) money in an amount, or (ii) U.S. Government Obligations
that through the scheduled payment of principal and interest in
respect thereof in accordance with their terms will provide, without
reinvestment, not later than one day before the due date of any
payment, money in an amount, or (iii) a combination thereof, in each
case sufficient to pay and discharge, and which will be applied by the
Trustee (or any such other qualifying trustee) to pay and discharge,
the principal of and any premium and interest on the Securities of
such series on the respective Stated Maturities or on any earlier date
or dates on which the Securities of such series shall be subject to
redemption and the Company shall have given the Trustee irrevocable

<PAGE>

instructions satisfactory to the Trustee to give notice to the Holders
of the redemption of the Securities of such series, all in accordance
with the terms of this Indenture and the Securities of such series.

(b) In the case of an election under Section 5.02, the Company
shall have delivered to the Trustee an Opinion of Counsel (from a
counsel who shall not be an employee of the Company) to the effect
that (i) the Company has received from, or there has been published
by, the Internal Revenue Service a ruling, or (ii) since the date of
this Indenture there has been a change in the applicable federal
income tax law, in either case to the effect that, and based thereon,
such opinion shall confirm that, the Holders of the Outstanding
Securities of such series will not recognize gain or loss for federal
income tax purposes as a result of the deposit, Defeasance, and
discharge to be effected with respect to the Securities of such series
and will be subject to federal income tax on the same amount, in the
same manner, and at the same times as would be the case if such
deposit, Defeasance, and discharge were not to occur.

(c) In the case of an election under Section 5.03, the Company
shall have delivered to the Trustee an Opinion of Counsel (from a
counsel who shall not be an employee of the Company) to the effect
that the Holders of the Outstanding Securities of such series will not
recognize gain or loss for federal income tax purposes as a result of
the deposit and Covenant Defeasance to be effected with respect to the
Securities of such series and will be subject to federal income tax on
the same amount, in the same manner, and at the same times as would be
the case if such deposit and Covenant Defeasance were not to occur.

(d) The Company shall have delivered to the Trustee an
Officer's Certificate to the effect that the Securities of such
series, if then listed on any securities exchange, will not be
delisted solely as a result of such deposit.

(e) No Event of Default or event that (after notice or lapse
of time or both) would become an Event of Default shall have occurred
and be continuing at the time of such deposit or, with regard to any
Event of Default or any such event specified in Sections 8.01(a)(vi)
and (vii), at any time on or prior to the 90th calendar day after the
date of such deposit (it being understood that this condition will not
be deemed satisfied until after such 90th calendar day).

(f) Such Defeasance or Covenant Defeasance will not cause the
Trustee to have a conflicting interest within the meaning of the Trust
Indenture Act (assuming all Securities are in default within the
meaning of such Act).

(g) Such Defeasance or Covenant Defeasance will not result in
a breach or violation of, or constitute a default under, any other
agreement or instrument to which the Company is a party or by which it
is bound.

(h) The Company shall have delivered to the Trustee an
Officer's Certificate and an Opinion of Counsel, each stating that all
conditions precedent with respect to such Defeasance or Covenant
Defeasance have been complied with.

(i) Such Defeasance or Covenant Defeasance will not result in
the trust arising from such deposit constituting an investment company
within the meaning of the Investment Company Act of 1940, as amended,

<PAGE>

unless such trust will be qualified under such Act or exempt from
regulation thereunder.

Section 5.05. Deposited Money and U.S. Government Obligations to be Held
in Trust; Other Miscellaneous Provisions.

(a) Subject to the provisions of Section 6.03(e), all money
and U.S. Government Obligations (including the proceeds thereof) deposited
with the Trustee or other qualifying trustee (solely for purposes of this
Section 5.05 and Section 5.06, the Trustee and any such other trustee are
referred to collectively as the "Trustee") pursuant to Section 5.04 in
respect of the Securities of any Defeasible Series will be held in trust
and applied by the Trustee, in accordance with the provisions of the
Securities of such series and this Indenture, to the payment, either
directly or through any such Paying Agent (including the Company acting as
its own Paying Agent) as the Trustee may determine, to the Holders of
Securities of such series, of all sums due and to become due thereon in
respect of principal and any premium and interest, but money so held in
trust need not be segregated from other funds except to the extent required
by law.

(b) The Company will pay and indemnify the Trustee against any
tax, fee, or other charge imposed on or assessed against the U.S.
Government Obligations deposited pursuant to Section 5.04 or the principal
and interest received in respect thereof other than any such tax, fee, or
other charge that by law is for the account of the Holders of Outstanding
Securities.

(c) Notwithstanding anything in this Article V to the
contrary, the Trustee will deliver or pay to the Company from time to time
upon a Company Request any money or U.S. Government Obligations held by it
as provided in Section 5.04 with respect to Securities of any Defeasible
Series that are in excess of the amount thereof that would then be required
to be deposited to effect an equivalent Defeasance or Covenant Defeasance
with respect to the Securities of such series.

Section 5.06. Reinstatement.

If the Trustee or the Paying Agent is unable to apply any money
in accordance with this Article V with respect to the Securities of any
series by reason of any order or judgment of any court or governmental
authority enjoining, restraining, or otherwise prohibiting such
application, then the Company's obligations under this Indenture and the
Securities of such series will be revived and reinstated as though no
deposit had occurred pursuant to this Article V with respect to Securities

<PAGE>

of such series until such time as the Trustee or Paying Agent is permitted
to apply all money held in trust pursuant to Section 5.05 with respect to
Securities of such series in accordance with this Article V; provided,
--------
however, that if the Company makes any payment of principal of or any
- -------
premium or interest on any Security of such series following the
reinstatement of its obligations, the Company will be subrogated to the
rights of the Holders of Securities of such series to receive such payment
from the money so held in trust.

ARTICLE VI. PARTICULAR COVENANTS OF THE
COMPANY.

Section 6.01. Payment of Principal, Premium and Interest on Securities.

The Company, for the benefit of each series of Securities, will
duly and punctually pay the principal of and any premium and interest on
the Securities of that series in accordance with the terms of the
Securities and this Indenture.

Section 6.02. Maintenance of Office or Agency.

(a) The Company will maintain in each Place of Payment for any
series of Securities an office or agency where Securities of that series
may be presented or surrendered for payment, where Securities of that
series may be surrendered for registration of transfer or exchange, and
where notices and demands to or upon the Company in respect of the
Securities of that series and this Indenture may be served. The Company
will give prompt written notice to the Trustee of the location, and any
change in the location, of such office or agency. If at any time the
Company shall fail to maintain any such required office or agency or shall
fail to furnish the Trustee with the address thereof, such presentations,
surrenders, notices, and demands may be made or served at the Corporate
Trust Office, and the Company hereby appoints the Trustee as its agent to
receive all such presentations, surrenders, notices, and demands.

(b) The Company may also from time to time designate one or
more other offices or agencies where the Securities of one or more series
may be presented or surrendered for any or all such purposes and may from
time to time rescind such designations; provided, however, that no such
-------- -------
designation or rescission will in any manner relieve the Company of its
obligation to maintain an office or agency in each Place of Payment for
Securities of any series for such purposes. The Company will give prompt
written notice to the Trustee of any such designation or rescission and of
any change in the location of any such other office or agency.

Section 6.03. Money for Securities Payments to be Held in Trust.

(a) If the Company shall at any time act as its own Paying
Agent with respect to any series of Securities, it will, on or before each
due date of the principal of or any premium or interest on any of the
Securities of that series, segregate and hold in trust for the benefit of
the Persons entitled thereto a sum sufficient to pay the principal and any
premium and interest so becoming due until such sums shall be paid to such

<PAGE>

Persons or otherwise disposed of as herein provided and will promptly
notify the Trustee of its action or failure so to act.

(b) Whenever the Company shall have one or more Paying Agents
for any series of Securities, it will, prior to each due date of the
principal of or any premium or interest on any Securities of that series,
deposit with a Paying Agent a sum sufficient to pay such amount, such sum
to be held as provided by the Trust Indenture Act, and (unless such Paying
Agent is the Trustee) the Company will promptly notify the Trustee of its
action or failure so to act.

(c) The Company will cause each Paying Agent for any series of
Securities other than the Trustee to execute and deliver to the Trustee an
instrument in which such Paying Agent will agree with the Trustee, subject
to the provisions of this Section 6.03, that such Paying Agent will (i)
comply with the provisions of the Trust Indenture Act applicable to it as a
Paying Agent and (ii) during the continuance of any default by the Company
(or any other obligor upon the Securities of that series) in the making of
any payment in respect of the Securities of that series, and upon the
written request of the Trustee, forthwith pay to the Trustee all sums held
in trust by such Paying Agent for payment in respect of the Securities of
that series.

(d) The Company may at any time, for the purpose of obtaining
the satisfaction and discharge of this Indenture or for any other purpose,
pay, or by Company Order direct any Paying Agent to pay, to the Trustee all
sums held in trust by the Company or such Paying Agent, such sums to be
held by the Trustee upon the same trusts as those upon which such sums were
held by the Company or such Paying Agent; and, upon such payment by any
Paying Agent to the Trustee, such Paying Agent will be released from all
further liability with respect to such money.

(e) Any money deposited with the Trustee or any Paying Agent,
or then held by the Company, in trust for the payment of the principal of
or any premium or interest on any Security of any series and remaining
unclaimed for two years after such principal, premium, or interest has
become due and payable will be paid to the Company upon a Company Request
(or, if then held by the Company, will be discharged from such trust); and
the Holder of such Security will thereafter, as an unsecured general
creditor, look only to the Company for payment thereof, and all liability
of the Trustee or such Paying Agent with respect to such trust money, and
all liability of the Company as trustee thereof, will thereupon cease;
provided, however, that the Trustee or such Paying Agent, before being
- -------- -------
required to make any such repayment, may at the expense of the Company
cause to be published once, in a newspaper published in the English
language, customarily published on each Business Day and of general
circulation in the Borough of Manhattan, The City of New York, notice that
such money remains unclaimed and that, after a date specified therein,
which will not be less than 30 calendar days from the date of such
publication, any unclaimed balance of such money then remaining will be
repaid to the Company.

<PAGE>

Section 6.04. Payment of Taxes and Other Claims.

The Company will pay or discharge or cause to be paid or
discharged, before the same shall become delinquent, (a) all taxes,
assessments, and governmental charges levied or imposed upon the Company or
any Subsidiary of the Company or upon the income, profits, or property of
the Company or any Subsidiary of the Company, and (b) all lawful claims for
labor, materials, and supplies, in each case which, if unpaid, might by law
become a lien upon the property of the Company or any Subsidiary of the
Company and might have a Material Adverse Effect; provided, however, that
-------- -------
the Company will not be required to pay or discharge or cause to be paid or
discharged any such tax, assessment, charge, or claim the amount,
applicability, or validity of which is being contested in good faith by
appropriate proceedings.

Section 6.05. Maintenance of Properties.

The Company will cause all properties used or useful in the
conduct of its business or the business of any Subsidiary of the Company to
be maintained and kept in good condition, repair, and working order and
supplied with all necessary equipment and will cause to be made all
necessary repairs, renewals, replacements, betterments, and improvements
thereof, all as in the judgment of the Company may be necessary so that the
business carried on in connection therewith may be properly and
advantageously conducted at all times; provided, however, that nothing in
-------- -------
this Section 6.05 will prevent the Company from discontinuing the operation
or maintenance of any of such properties if such discontinuance is, in the
judgment of the Company, desirable in the conduct of its business or the
business of any Subsidiary of the Company and will not result in a Material
Adverse Effect.

Section 6.06. Existence.

Subject to Article XI, the Company will, and will cause each of
its Subsidiaries to, do or cause to be done all things necessary to
preserve and keep in full force and effect its existence, rights (charter
and statutory), and franchises; provided, however, that neither the Company
-------- -------
nor any Subsidiary will be required to preserve any such right or franchise
if the Board of Directors determines that the preservation thereof is no
longer desirable in the conduct of the business of the Company and that the
loss thereof will not result in a Material Adverse Effect.

Section 6.07. Compliance with Laws.

The Company will, and will cause each of its Subsidiaries to,
comply with all applicable federal, state, local, or foreign laws, rules,
regulations, or ordinances, including without limitation such laws, rules,
regulations, or ordinances relating to pension, environmental, employee,
and tax matters, in each case to the extent that the failure so to comply
would have a Material Adverse Effect.

<PAGE>

Section 6.08. Statement by Officers as to Default.

The Company will deliver to the Trustee, within 120 calendar
days after the end of each fiscal year of the Company ending after the date
hereof, an Officer's Certificate signed by the principal executive officer,
principal financial officer, or principal accounting officer of the Company
stating whether or not to the knowledge of such person after due inquiry
the Company is in default in the performance and observance of any of the
terms, provisions, and conditions of this Indenture (without regard to any
period of grace or requirement of notice provided hereunder) and, if the
Company is in default, specifying all such defaults and the nature and
status thereof of which such person may have such knowledge.

Section 6.09. Waiver of Certain Covenants.

The Company may omit in any particular instance to comply with
any term, provision, or condition set forth in Sections 6.04 through 6.07,
inclusive, and the provisions of any Supplemental Indenture specified in
such Supplemental Indenture, with respect to the Securities of any series
if the Holders of a majority in principal amount of the Outstanding
Securities of such series shall, by Act of such Holders, either waive such
compliance in such instance or generally waive compliance with such term,
provision, or condition, but no such waiver will extend to or affect such
term, provision, or condition except to the extent so expressly waived,
and, until such waiver shall become effective, the obligations of the
Company and the duties of the Trustee in respect of any such term,
provision, or condition will remain in full force and effect.

ARTICLE VII. SECURITIES HOLDERS' LISTS AND
REPORTS BY THE COMPANY AND THE TRUSTEE.

Section 7.01. Company to Furnish Trustee Names and Addresses of Holders.

The Company will furnish or cause to be furnished to the
Trustee (a) semi-annually, not more than 15 calendar days after the
applicable Regular Record Date, a list for each series of Securities, in
such form as the Trustee may reasonably require, of the names and addresses
of the Holders of Securities of such series as of such Regular Record Date
and (b) at such other times as the Trustee may request in writing, within
30 calendar days after the receipt by the Company of any such request, a
list of similar form and content as of a date not more than 15 calendar
days prior to the time such list is furnished; excluding from any such list
---------
names and addresses received by the Trustee in its capacity as Security
Registrar.

Section 7.02. Preservation of Information; Communication to Holders.

(a) The Trustee will preserve, in as current a form as is
reasonably practicable, the names and addresses of Holders contained in the
most recent list furnished to the Trustee as provided in Section 7.01 and

<PAGE>

the names and addresses of Holders received by the Trustee in its capacity
as Security Registrar. The Trustee may destroy any list furnished to it as
provided in Section 7.01 upon receipt of a new list so furnished.

(b) The rights of the Holders to communicate with other
Holders with respect to their rights under this Indenture or under the
Securities, and the corresponding rights and privileges of the Trustee,
will be as provided by the Trust Indenture Act.

(c) Every Holder of Securities, by receiving and holding the
same, agrees with the Company and the Trustee that neither the Company nor
the Trustee nor any agent of either of them will be held accountable by
reason of any disclosure of information as to names and addresses of
Holders made pursuant to the Trust Indenture Act.

Section 7.03. Reports by Trustee.

The Trustee will transmit to Holders such reports concerning
the Trustee and its actions under this Indenture as may be required
pursuant to the Trust Indenture Act at the times and in the manner provided
pursuant thereto. A copy of each such report will, at the time of such
transmission to Holders, be filed by the Trustee with each stock exchange
upon which any Securities are listed, with the Commission, and with the
Company. The Company will notify the Trustee when any Securities are
listed on any stock exchange.

Section 7.04. Reports by Company.

The Company will file with the Trustee and the Commission, and
transmit to Holders, such information, documents, and other reports, and
such summaries thereof, as may be required pursuant to the Trust Indenture
Act at the times and in the manner provided pursuant to such Act; provided
--------
that any such information, documents, or reports required to be filed with
the Commission pursuant to Section 13 or 15(d) of the Exchange Act will be
filed with the Trustee within 15 calendar days after the same is so
required to be filed with the Commission.

ARTICLE VIII. DEFAULT.

Section 8.01. Event of Default.

(a) "Event of Default," wherever used herein with respect to
Securities of any series, means any one of the following events (whatever
the reason for such Event of Default and whether it may be voluntary or
involuntary or be effected by operation of law or pursuant to any judgment,
decree, or order of any court or any order, rule, or regulation of any
administrative or governmental body):

(i) default in the payment of any interest upon any
Security of that series when it becomes due and payable, and
continuance of such default for a period of 30 calendar days;

<PAGE>

(ii) default in the payment of the principal of (or
premium, if any, on) any Security of that series when it becomes due
and payable;

(iii) default in the making of any sinking fund payment
when and as due by the terms of a Security of that series;

(iv) default in the performance, or breach, of any
covenant or warranty of the Company in this Indenture (other than a
covenant or warranty, a default in the performance or breach of which
is elsewhere in this Section 8.01 specifically dealt with or which has
expressly been included in this Indenture solely for the benefit of
one or more series of Securities other than that series), and
continuance of such default or breach for a period of 60 calendar days
after there has been given, by registered or certified mail, to the
Company by the Trustee or to the Company and the Trustee by the
Holders of at least 25% in principal amount of the Outstanding
Securities of that series a written notice specifying such default or
breach and requiring it to be remedied and stating that such notice is
a "Notice of Default" hereunder;

(v) any nonpayment at maturity or other default is
made under any agreement or instrument relating to any other
Indebtedness of the Company (the unpaid principal amount of which is
not less than $100.0 million), and, in any such case, such default (A)
continues beyond any period of grace provided with respect thereto and
(B) results in such Indebtedness becoming due prior to its stated
maturity or occurs at the final maturity of such Indebtedness;
provided, however, that, subject to the provisions of Section 9.01 and
-------- -------
8.08, the Trustee will not be deemed to have knowledge of such
nonpayment or other default unless either (1) a Responsible Officer of
the Trustee has actual knowledge of nonpayment or other default or
(2) the Trustee has received written notice thereof from the Company,
from any Holder, from the holder of any such Indebtedness or from the
trustee under the agreement or instrument relating to such
Indebtedness;

(vi) the entry by a court having jurisdiction in the
premises of (A) a decree or order for relief in respect of the Company
in an involuntary case or proceeding under any applicable federal or
state bankruptcy, insolvency, reorganization, or other similar law or
(B) a decree or order adjudging the Company a bankrupt or insolvent,
or approving as properly filed a petition seeking reorganization,
arrangement, adjustment, or composition of or in respect of the
Company under any applicable federal or state law, or appointing a
custodian, receiver, liquidator, assignee, trustee, sequestrator, or
other similar official of the Company or of any substantial part of
its property, or ordering the winding up or liquidation of its
affairs, and the continuance of any such decree or order for relief or
any such other decree or order unstayed and in effect for a period of
60 consecutive calendar days;

(vii) the commencement by the Company of a voluntary
case or proceeding under any applicable federal or state bankruptcy,
insolvency, reorganization, or other similar law or of any other case

<PAGE>

or proceeding to be adjudicated a bankrupt or insolvent, or the
consent by it to the entry of a decree or order for relief in respect
of the Company in an involuntary case or proceeding under any
applicable federal or state bankruptcy, insolvency, reorganization, or
other similar law or to the commencement of any bankruptcy or
insolvency case or proceeding against it, or the filing by it of a
petition or answer or consent seeking reorganization or relief with
respect to the Company under any applicable federal or state
bankruptcy, insolvency, reorganization, or other similar law, or the
consent by it to the filing of such petition or to the appointment of
or taking possession by a custodian, receiver, liquidator, assignee,
trustee, sequestrator, or other similar official of the Company or of
any substantial part of its property pursuant to any such law, or the
making by it of an assignment for the benefit of creditors, or the
admission by it in writing of its inability to pay its debts generally
as they become due, or the taking of corporate action by the Company
in furtherance of any such action; or

(viii) any other Event of Default provided with respect
to Securities of that series.

(b) If an Event of Default (other than an Event of Default
arising under Section 8.01(a)(vi) or (vii)) with respect to Securities of
any series at the time Outstanding occurs and is continuing, then in every
case the Trustee or the Holders of not less than 25% in principal amount of
the Outstanding Securities of that series may declare the principal amount
(or, if any of the Securities of that series are Original Issue Discount
Securities, such portion of the principal amount of such Securities as may
be specified in the terms thereof) of all of the Securities of that series
to be due and payable immediately, by a notice in writing to the Company
(and to the Trustee if given by Holders), and upon any such declaration
such principal amount (or specified amount) will become immediately due and
payable. If an Event of Default under Section 8.01(a)(vi) or (vii) occurs,
then the principal of, premium, if any, and accrued interest on the
Securities shall become immediately due and payable without any declaration
or other act on the part of the Trustee or any Holder.

(c) At any time after such a declaration of acceleration with
respect to Securities of any series has been made and before a judgment or
decree for payment of the money due has been obtained by the Trustee as
hereinafter in this Article VIII provided, the Holders of a majority in
principal amount of the outstanding Securities of that series, by written
notice to the Company and the Trustee, may rescind and annul such
declaration and its consequences if (i) the Company has paid or deposited
with the Trustee a sum sufficient to pay (A) all overdue interest on all
Securities of that series, (B) the principal of (and premium, if any, on)
any Securities of that series which have become due otherwise than by such
declaration of acceleration and any interest thereon at the rate or rates
prescribed therefor in such Securities, (C) to the extent that payment of
such interest is lawful, interest upon overdue interest at the rate or
rates prescribed therefor in such Securities, and (D) all sums paid or
advanced by the Trustee hereunder and the reasonable compensation,
expenses, disbursements, and advances of the Trustee and its agents and
counsel and (ii) all Events of Default with respect to Securities of that
series, other than the non-payment of the principal of Securities of that
series which have become due solely by such declaration of acceleration,

<PAGE>

have been cured or waived as provided in Section 8.01(d). No such
rescission will affect any subsequent default or impair any right
consequent thereon.

(d) The Holders of a majority in principal amount of the
Outstanding Securities of any series may on behalf of the Holders of all
the Securities of such series waive any past default hereunder with respect
to such series and its consequences, except a default (i) in the payment of
the principal of or any premium or interest on any Security of such series
or (ii) in respect of a covenant or provision hereof which under Article X
cannot be modified or amended without the consent of the Holder of each
Outstanding Security of such series affected. Upon any such waiver, such
default will cease to exist, and any Event of Default arising therefrom
will be deemed to have been cured, for every purpose of this Indenture, but
no such waiver will extend to any subsequent or other default or impair any
right consequent thereon.

Section 8.02. Covenant of Company to Pay to Trustee Whole Amount Due on
Securities on Default in Payment of Interest or Principal;
Suits for Enforcement by Trustee.

(a) The Company covenants that if (i) default is made in the
payment of any interest on any Security when such interest becomes due and
payable and such default continues for a period of 30 calendar days or (ii)
default is made in the payment of the principal of (or premium, if any, on)
any Security when it becomes due and payable, the Company will, upon demand
of the Trustee, pay to it, for the benefit of the Holders of such
Securities, the whole amount then due and payable on such Securities for
principal and any premium and interest and, to the extent that payment of
such interest will be legally enforceable, interest on any overdue
principal and premium and on any overdue interest, at the rate or rates
prescribed therefor in such Securities, and, in addition thereto, such
further amount as will be sufficient to cover the costs and expenses of
collection, including the reasonable compensation, expenses, disbursements,
and advances of the Trustee and its agents and counsel.

(b) If an Event of Default with respect to Securities of any
series occurs and is continuing, the Trustee may in its discretion proceed
to protect and enforce its rights and the rights of the Holders of
Securities of such series by such appropriate judicial proceedings as the
Trustee shall deem most effectual to protect and enforce any such rights,
whether for the specific enforcement of any covenant or agreement in this
Indenture or in aid of the exercise of any power granted herein, or to
enforce any other proper remedy.

(c) In case of any judicial proceeding relative to the Company
(or any other obligor upon the Securities), its property or its creditors,
the Trustee will be entitled and empowered, by intervention in such
proceeding or otherwise, to take any and all actions authorized under the
Trust Indenture Act in order to have claims of the Holders and the Trustee
allowed in any such proceeding. In particular, the Trustee will be
authorized to collect and receive any money or other property payable or
deliverable on any such claims and to distribute the same, and any
custodian, receiver, assignee, trustee, liquidator, sequestrator, or other

<PAGE>

similar official in any such judicial proceeding is hereby authorized by
each Holder to make such payments to the Trustee and, in the event that the
Trustee consents to the making of such payments directly to the Holders, to
pay to the Trustee any amount due it for the reasonable compensation,
expenses, disbursements, and advances of the Trustee and its agents and
counsel, and any other amounts due the Trustee under Section 9.06.

(d) No provision of this Indenture will be deemed to authorize
the Trustee to authorize or consent to or accept or adopt on behalf of any
Holder any plan of reorganization, arrangement, adjustment, or composition
affecting the Securities or the rights of any Holder thereof or to
authorize the Trustee to vote in respect of the claim of any Holder in any
such proceeding; provided, however, that the Trustee may, on behalf of the
-------- -------
Holders, vote for the election of a trustee in bankruptcy or similar
official and be a member of a creditors' or other similar committee.

(e) All rights of action and claims under this Indenture or
the Securities may be prosecuted and enforced by the Trustee without the
possession of any of the Securities or the production thereof in any
proceeding relating thereto, and any such proceeding instituted by the
Trustee will be brought in its own name as trustee of an express trust, and
any recovery of judgment will, after provision for the payment of the
reasonable compensation, expenses, disbursements, and advances of the
Trustee and its agents and counsel, be for the ratable benefit of the
Holders of the Securities in respect of which such judgment has been
recovered.

Section 8.03. Application of Money Collected by Trustee.

Any money collected by the Trustee pursuant to this Article
VIII will be applied in the following order, at the date or dates fixed by
the Trustee and, in case of the distribution of such money on account of
principal or any premium or interest, upon presentation of the Securities
and the notation thereon of the payment if only partially paid and upon
surrender thereof if fully paid:

FIRST: To the payment of all amounts due the Trustee under
Section 9.06; and

SECOND: To the payment of the amounts then due and unpaid for
principal of and any premium and interest on the
Securities in respect of which or for the benefit of
which such money has been collected, ratably, without
preference or priority of any kind, according to the
amounts due and payable on such Securities for
principal and any premium and interest, respectively.

<PAGE>

Section 8.04. Limitation on Suits by Holders of Securities.

No Holder of any Security of any series will have any right to
institute any proceeding, judicial or otherwise, with respect to this
Indenture, or for the appointment of a receiver or trustee, or for any
other remedy hereunder, unless (a) such Holder has previously given written
notice to the Trustee of a continuing Event of Default with respect to the
Securities of that series, (b) the Holders of not less than 25% in
principal amount of the Outstanding Securities of that series shall have
made written request to the Trustee to institute proceedings in respect of
such Event of Default in its own name as Trustee hereunder, (c) such Holder
or Holders have offered to the Trustee reasonable indemnity against the
costs, expenses, and liabilities to be incurred in compliance with such
request, (d) the Trustee for 60 calendar days after its receipt of such
notice, request, and offer of indemnity has failed to institute any such
proceeding, and (e) no direction inconsistent with such written request has
been given to the Trustee during such 60-day period by the Holders of a
majority in principal amount of the Outstanding Securities of that series,
it being understood and intended that no one or more of such Holders will
have any right in any manner whatever by virtue of, or by availing of, any
provision of this Indenture to affect, disturb, or prejudice the rights of
any other of such Holders, or to obtain or to seek to obtain priority or
preference over any other of such Holders or to enforce any right under
this Indenture, except in the manner herein provided and for the equal and
ratable benefit of all of such Holders.

Section 8.05. Rights and Remedies Cumulative; Delay or Omission in
Exercise of Rights not a Waiver of Event of Default.

(a) Except as otherwise provided with respect to the
replacement or payment of mutilated, destroyed, lost, or stolen Securities
in the last paragraph of Section 2.07, no right or remedy herein conferred
upon or reserved to the Trustee or to the Holders is intended to be
exclusive of any other right or remedy, and every right and remedy will, to
the extent permitted by law, be cumulative and in addition to every other
right and remedy given hereunder or now or hereafter existing at law or in
equity or otherwise. The assertion or employment of any right or remedy
hereunder, or otherwise, will not prevent the concurrent assertion or
employment of any other appropriate right or remedy.

(b) No delay or omission of the Trustee or of any Holder of
any Securities to exercise any right or remedy accruing upon any Event of
Default will impair any such right or remedy or constitute a waiver of any
such Event of Default or an acquiescence therein. Every right and remedy
given by this Article VIII or by law to the Trustee or to the Holders may
be exercised from time to time, and as often as may be deemed expedient, by
the Trustee or by the Holders, as the case may be.

Section 8.06. Rights of Holders of Majority in Principal Amount of
Outstanding Securities to Direct Trustee.

The Holders of a majority in principal amount of the
Outstanding Securities of any series will have the right to direct the
time, method, and place of conducting any proceeding for any remedy

<PAGE>

available to the Trustee, or exercising any trust or power conferred on the
Trustee, with respect to the Securities of such series, provided that (a)
--------
such direction will not be in conflict with any rule of law or with this
Indenture and (b) the Trustee may take any other action deemed proper by
the Trustee which is not inconsistent with such direction.

Section 8.07. Requirement of an Undertaking to Pay Costs in Certain
Suits Under the Indenture or Against the Trustee.

In any suit for the enforcement of any right or remedy under
this Indenture, or in any suit against the Trustee for any action taken,
suffered, or omitted by it as Trustee, a court may require any party
litigant in such suit to file an undertaking to pay the costs of such suit,
and may assess costs against any such party litigant, in the manner and to
the extent provided in the Trust Indenture Act; provided that neither this
--------
Section 8.07 nor the Trust Indenture Act will be deemed to authorize any
court to require such an undertaking or to make such an assessment in any
suit instituted by the Company.

Section 8.08. Notice of Defaults.

If a Default occurs hereunder with respect to Securities of any
series, the Trustee will give the Holders of Securities of such series
notice of such Default as and to the extent provided by the Trust Indenture
Act; provided, however, that in the case of any Default of the character
-------- -------
specified in Section 8.01(a)(iv) with respect to Securities of such series
no such notice to Holders will be given until at least 30 calendar days
after the occurrence thereof. The Company will give the Trustee notice of
any uncured Event of Default within 10 days after any Responsible Officer
of the Company becomes aware of or receives actual notice of such Event of
Default.

Section 8.09. Unconditional Right of Holders to Receive Principal,
Premium, and Interest.

Notwithstanding any other provision in this Indenture, the
Holder of any Security will have the right, which is absolute and
unconditional, to receive payment of the principal of and any premium and
(subject to Section 2.09) interest on such Security on the respective
Stated Maturities expressed in such Security (or, in the case of
redemption, on the Redemption Date) and to institute suit for the
enforcement of any such payment, and such rights may not be impaired
without the consent of such Holder.

Section 8.10. Restoration of Rights and Remedies.

If the Trustee or any Holder has instituted any proceeding to
enforce any right or remedy under this Indenture and such proceeding has
been discontinued or abandoned for any reason, or has been determined
adversely to the Trustee or to such Holder, then and in every such case,

<PAGE>

subject to any determination in such proceeding, the Company, the Trustee,
and the Holders will be restored severally and respectively to their former
positions hereunder and thereafter all rights and remedies of the Trustee
and the Holders will continue as though no such proceeding had been
instituted.

Section 8.11. Trustee May File Proofs of Claims.

The Trustee may file such proofs of claim and other papers or
documents as may be necessary or advisable in order to have the claims of
the Trustee (including any claim for the reasonable compensation, expenses,
disbursements, and advances of the Trustee, its agents and counsel) and the
Holders allowed in any judicial proceeding relative to the Company or the
Subsidiaries (or any other obligor upon the Securities), their creditors or
their property and shall be entitled and empowered to collect and receive
any monies or other property payable or deliverable on any such claim and
to distribute the same, and any custodian in any such judicial proceedings
is hereby authorized by each Holder to make such payments to the Trustee
and, in the event that the Trustee shall consent to the making of such
payments directly to the Holders, to pay to the Trustee any amount due to
it for the reasonable compensation, expenses, disbursements, and advances
of the Trustee, its agents and counsel, and any other amounts due the
Trustee hereunder. Nothing herein contained shall be deemed to authorize
the Trustee to authorize or consent to or accept or adopt on behalf of any
Holder any plan of reorganization, arrangement, adjustment or composition
affecting the Securities or the rights of any Holder thereof, or to
authorize the Trustee to vote in respect of the claim of any Holder in any
such proceeding.

ARTICLE IX. CONCERNING THE TRUSTEE.

Section 9.01. Certain Duties and Responsibilities.

The duties and responsibilities of the Trustee will be as
provided by the Trust Indenture Act. Notwithstanding the foregoing, no
provision of this Indenture will require the Trustee to expend or risk its
own funds or otherwise incur any financial liability in the performance of
any of its duties hereunder, or in the exercise of any of its rights or
powers, if it shall have reasonable grounds for believing that repayment of
such funds or adequate indemnity against such risk or liability is not
reasonably assured to it. Whether or not therein expressly so provided,
every provision of this Indenture relating to the conduct or affecting the
liability of or affording protection to the Trustee will be subject to the
provisions of this Section 9.01.

Section 9.02. Certain Rights of Trustee.

Subject to the provisions of Section 9.01: (a) the Trustee may
rely and will be protected in acting or refraining from acting upon any
resolution, certificate, statement, instrument, opinion, report, notice,
request, direction, consent, order, bond, debenture, note, other evidence
of indebtedness, or other paper or document believed by it to be genuine
and to have been signed or presented by the proper party or parties; (b)

<PAGE>

any request or direction of the Company mentioned herein will be
sufficiently evidenced by a Company Request or Company Order and any
resolution of the Board will be sufficiently evidenced by a Board
Resolution; (c) whenever in the administration of this Indenture the
Trustee shall deem it desirable that a matter be proved or established
prior to taking, suffering, or omitting any action hereunder, the Trustee
(unless other evidence be herein specifically prescribed) may, in the
absence of bad faith on its part, rely upon an Officer's Certificate; (d)
the Trustee may consult with counsel and the written advice of such counsel
or any Opinion of Counsel will be full and complete authorization and
protection in respect of any action taken, suffered, or omitted by it
hereunder in good faith and in reliance thereon; (e) the Trustee will be
under no obligation to exercise any of the rights or powers vested in it by
this Indenture at the request or direction of any of the Holders pursuant
to this Indenture, unless such Holders shall have offered to the Trustee
reasonable security or indemnity against the costs, expenses, and
liabilities which might be incurred by it in compliance with such request
or direction; (f) the Trustee will not be bound to make any investigation
into the facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order,
bond, debenture, note, other evidence of indebtedness, or other paper or
document, but the Trustee, in its discretion, may make such further inquiry
or investigation into such facts or matters as it may see fit, and, if the
Trustee shall determine to make such further inquiry or investigation, it
will be entitled to examine the books, records, and premises of the
Company, personally or by agent or attorney; and (g) the Trustee may
execute any of the trusts or powers hereunder or perform any duties
hereunder either directly or by or through agents or attorneys and the
Trustee will not be responsible for any misconduct or negligence on the
part of any agent or attorney appointed with due care by it hereunder.

Section 9.03. Not Responsible for Recitals or Issuance of Securities.

The recitals contained herein and in the Securities, except the
Trustee's certificates of authentication, may be taken as the statements of
the Company, and neither the Trustee nor any Authenticating Agent assumes
any responsibility for their correctness. The Trustee makes no
representations as to the validity or sufficiency of this Indenture or of
the Securities. The Trustee or any Authenticating Agent will not be
accountable for the use or application by the Company of Securities or the
proceeds thereof.

Section 9.04. May Hold Securities.

The Trustee, any Authenticating Agent, any Paying Agent, any
Security Registrar, or any other agent of the Company, in its individual or
any other capacity, may become the owner or pledgee of Securities and,
subject to Sections 9.07 and 9.12, may otherwise deal with the Company with
the same rights it would have if it were not Trustee, Authenticating Agent,
Paying Agent, Security Registrar, or such other agent.

Section 9.05. Money Held in Trust.

Money held by the Trustee in trust hereunder need not be
segregated from other funds except to the extent required herein or by law.

<PAGE>

The Trustee will be under no liability for interest on any money received
by it hereunder except as otherwise agreed with the Company.

Section 9.06. Compensation and Reimbursement.

The Company will (a) pay to the Trustee from time to time
reasonable compensation for all services rendered by it hereunder (which
compensation will not be limited to any provision of law in regard to the
compensation of a trustee of an express trust); (b) except as otherwise
expressly provided herein, reimburse the Trustee upon its request for all
reasonable expenses, disbursements, and advances incurred or made by the
Trustee in accordance with provision of this Indenture (including the
reasonable compensation and the expenses and disbursements of agents and
counsel), except any such expense, disbursement, or advance as may be
attributable to its negligence or bad faith; and (c) indemnify the Trustee
for, and hold the Trustee harmless against, any loss, liability, or expense
incurred without negligence or bad faith on its part arising out of or in
connection with the acceptance or administration of the trust or trusts
hereunder, including the costs and expenses of defending itself against any
claim or liability in connection with the exercise or performance of any of
its powers or duties hereunder.

Section 9.07. Disqualification; Conflicting Interests.

If the Trustee has or acquires a conflicting interest within
the meaning of the Trust Indenture Act, the Trustee will either eliminate
such interest or resign, to the extent and in the manner provided by, and
subject to the provisions of, the Trust Indenture Act and this Indenture.

Section 9.08. Corporate Trustee Required Eligibility.

There will at all times be one or more Trustees hereunder with
respect to the Securities of each series, at least one of which will be a
Person that is eligible pursuant to the Trust Indenture Act to act as such
and has a combined capital and surplus of at least $100,000,000 and its
Corporate Trust Office or principal office in New York City, or any other
major city in the United States that is acceptable to the Company. If such
Person publishes reports of condition at least annually, pursuant to law or
to the requirements of a supervising or examining state or federal
authority, then for the purposes of this Section 9.08, the combined capital
and surplus of such Person shall be deemed to be its combined capital and
surplus as set forth in its most recent report of condition so published.
If at any time the Trustee shall cease to be eligible in accordance with
the provisions of this Section 9.08, it will resign immediately in the
manner and with the effect hereinafter specified in this Article IX.

<PAGE>

Section 9.09. Resignation and Removal; Appointment of Successor.

(a) No resignation or removal of the Trustee and no
appointment of a successor Trustee pursuant to this Article IX will become
effective until the acceptance of appointment by the successor Trustee in
accordance with the applicable requirements of Section 9.10.

(b) The Trustee may resign at any time with respect to the
Securities of one or more series by giving written notice thereof to the
Company. If the instrument of acceptance by a successor Trustee required
by Section 9.10 shall not have been delivered to the Trustee within 30
calendar days after the giving of such notice of resignation, the resigning
Trustee may petition any court of competent jurisdiction for the
appointment of a successor Trustee with respect to the Securities of such
series.

(c) The Trustee may be removed at any time with respect to the
Securities of any series by Act of the Holders of a majority in principal
amount of the Outstanding Securities of such series, delivered to the
Trustee and to the Company.

(d) If, at any time, (i) the Trustee fails to comply with
Section 9.07 after written request therefor by the Company or by any Holder
who has been a bona fide Holder of a Security for at least six months, (ii)
the Trustee ceases to be eligible under Section 9.08 and fails to resign
after written request therefor by the Company or by any such Holder, or
(iii) the Trustee becomes incapable of acting or is adjudged a bankrupt or
insolvent or a receiver of the Trustee or of its property is appointed or
any public officer takes charge or control of the Trustee or of its
property or affairs for the purpose of rehabilitation, conservation, or
liquidation, then, in any such case, (A) the Company by a Board Resolution
may remove the Trustee with respect to all Securities or (B) subject to
Section 8.07, any Holder who has been a bona fide Holder of a Security for
at least six months may, on behalf of himself and all others similarly
situated, petition any court of competent jurisdiction for the removal of
the Trustee with respect to all Securities and the appointment of a
successor Trustee or Trustees.

(e) If the Trustee resigns, is removed, or becomes incapable
of acting, or if a vacancy occurs in the office of Trustee for any cause,
with respect to the Securities of one or more series, the Company by a
Board Resolution will promptly appoint a successor Trustee or Trustees with
respect to the Securities of that or those series (it being understood that
any such successor Trustee may be appointed with respect to the Securities
of one or more or all of such series and that at any time there will be
only one Trustee with respect to the Securities of any particular series)
and will comply with the applicable requirements of Section 9.10. If,
within one year after such resignation, removal, or incapability or the
occurrence of such vacancy, a successor Trustee with respect to the
Securities of any series is appointed by Act of the Holders of a majority
in principal amount of the Outstanding Securities of such series delivered
to the Company and the retiring Trustee, the successor Trustee so appointed
will, forthwith upon its acceptance of such appointment in accordance with

<PAGE>

the applicable requirements of Section 9.10, become the successor Trustee
with respect to the Securities of such series and to that extent supersede
the successor Trustee appointed by the Company. If no successor Trustee
with respect to the Securities of any series shall have been so appointed
by the Company or the Holders and accepted appointment in the manner
required by Section 9.10, any Holder who has been a bona fide Holder of a
Security of such series for at least six months may, on behalf of himself
and all others similarly situated, petition any court of competent
jurisdiction for the appointment of a successor Trustee with respect to the
Securities of such series.

(f) The Company will give notice of each resignation and each
removal of the Trustee with respect to the Securities of any series and
each appointment of a successor Trustee with respect to the Securities of
any series to all holders of Securities of such series in the manner
provided in Section 13.03. Each notice will include the name of the
successor Trustee with respect to the Securities of such series and the
address of its Corporate Trust Office.

Section 9.10. Acceptance of Appointment by Successor.

(a) In case of the appointment hereunder of a successor
Trustee with respect to all Securities, every such successor Trustee so
appointed will execute, acknowledge, and deliver to the Company and to the
retiring Trustee an instrument accepting such appointment, and thereupon
the resignation or removal of the retiring Trustee will become effective
and such successor Trustee, without any further act, deed, or conveyance,
will become vested with all the rights, powers, trusts, and duties of the
retiring Trustee, but, on the request of the Company or the successor
Trustee, such retiring Trustee will, upon payment of its charges, execute
and deliver an instrument transferring to such successor Trustee all the
rights, powers, and duties of the retiring Trustee and will duly assign,
transfer, and deliver to such Trustee all property and money held by such
retiring Trustee hereunder.

(b) In case of the appointment hereunder of a successor
Trustee with respect to the Securities of one or more (but not all) series,
the Company, the retiring Trustee, and each successor Trustee with respect
to the Securities of one or more series will execute and deliver an
indenture supplemental hereto wherein such successor Trustee will accept
such appointment and which (i) will contain such provisions as may be
necessary or desirable to transfer and confirm to, and to vest in, each
successor Trustee all the rights, powers, trusts, and duties of the
retiring Trustee with respect to the Securities of that or those series to
which the appointment of such successor Trustee relates, (ii) if the
retiring Trustee is not retiring with respect to all Securities, will
contain such provisions as may be deemed necessary or desirable to confirm
that all the rights, powers, trusts, and duties of the retiring Trustee
with respect to the Securities of that or those series as to which the
retiring Trustee is not retiring will continue to be vested in the retiring

<PAGE>

Trustee, and (iii) will add to or change any of the provisions of this
Indenture as may be necessary to provide for or facilitate the
administration of the trusts hereunder by more than one Trustee, it being
understood that nothing herein or in such supplemental indenture will
constitute such Trustees co-trustees of the same trust and that each such
Trustee will be trustee of a trust or trusts hereunder separate and apart
from any trust or trusts hereunder administered by any other such Trustees
and upon the execution and delivery of such supplemental indenture the
resignation or removal of the retiring Trustee will become effective to the
extent provided therein and each such successor Trustee, without any
further act, deed, or conveyance, will become vested with all the rights,
powers, trusts, and duties of the retiring Trustee with respect to the
Securities of that or those series to which the appointment of such
successor Trustee relates; but on request of the Company or any successor
Trustee, such retiring Trustee will duly assign, transfer, and deliver to
such successor Trustee all property and money held by such retiring Trustee
hereunder with respect to the Securities of that or those series to which
the appointment of such successor Trustee relates.

(c) Upon request of any such successor Trustee, the Company
will execute any and all instruments for more fully and certainly vesting
in and confirming to such successor Trustee all applicable rights, powers,
and trusts referred to in the preceding paragraphs of this Section 9.10.

(d) No successor Trustee will accept its appointment unless at
the time of such acceptance such successor Trustee is qualified and
eligible under this Article IX.

Section 9.11. Merger, Conversion, Consolidation, or Succession to
Business.

Any corporation into which the Trustee may be merged or
converted or with which it may be consolidated, or any corporation
resulting from any merger, conversion, or consolidation to which the
Trustee may be a party, or any corporation succeeding to all or
substantially all the corporate trust business of the Trustee, will be the
successor of the Trustee hereunder, provided such corporation is otherwise
qualified and eligible under this Article IX, without the execution or
filing of any paper or any further act on the part of any of the parties
hereto. In case any Securities shall have been authenticated, but not
delivered, by the Trustee then in office, any successor by merger,
conversion, or consolidation to such authenticating Trustee may adopt such
authentication and deliver the Securities so authenticated with the same
effect as if such successor Trustee had itself authenticated such
Securities.

Section 9.12. Preferential Collection of Claims Against Company.

If and when the Trustee is or becomes a creditor of the Company
(or any other obligor upon the Securities), the Trustee will be subject to
the provisions of the Trust Indenture Act regarding the collection of
claims against the Company (or any such other obligor).

Section 9.13. Appointment of Authenticating Agent.

(a) The Trustee may appoint an Authenticating Agent or Agents
with respect to one or more series of Securities which will be authorized
to act on behalf of the Trustee to authenticate Securities of such series
issued upon original issue and upon exchange, registration of transfer, or
partial redemption thereof or pursuant to Section 2.07, and Securities so
authenticated will be entitled to the benefits of this Indenture and will

<PAGE>

be valid and obligatory for all purposes as if authenticated by the Trustee
hereunder. Wherever reference is made in this Indenture to the
authentication and delivery of Securities by the Trustee or the Trustee's
certificate of authentication, such reference will be deemed to include
authentication and delivery on behalf of the Trustee by an Authenticating
Agent and a certificate of authentication executed on behalf of the Trustee
by an Authenticating Agent. Each Authenticating Agent shall be acceptable
to the Company and shall at all times be a corporation organized and doing
business under the laws of the United States of America, any state thereof,
or the District of Columbia, authorized under such laws to act as
Authenticating Agent, having a combined capital and surplus of not less
than $50,000,000 and subject to supervision or examination by federal or
state authority. If such Authenticating Agent publishes reports of
condition at least annually, pursuant to law or to the requirements of said
supervising or examining authority, then for the purposes of this Section
9.13, the combined capital and surplus of such Authenticating Agent will be
deemed to be its combined capital and surplus as set forth in its most
recent report of condition so published. If at any time an Authenticating
Agent shall cease to be eligible in accordance with the provisions of this
Section 9.13, such Authenticating Agent will resign immediately in the
manner and with the effect specified in this Section 9.13.

(b) Any corporation into which an Authenticating Agent may be
merged or converted or with which it may be consolidated, or any
corporation resulting from any merger, conversion, or consolidation to
which such Authenticating Agent may be a party, or any corporation
succeeding to the corporate agency or corporate trust business of an
Authenticating Agent, will continue to be an Authenticating Agent, provided
such corporation is otherwise eligible under this Section 9.13, without the
execution or filing of any paper or any further act on the part of the
Trustee or the Authenticating Agent.

(c) An Authenticating Agent may resign at any time by giving
written notice thereof to the Trustee and to the Company. The Trustee may
at any time terminate the agency of an Authenticating Agent by giving
written notice thereof to such Authenticating Agent and to the Company.
Upon receiving such a notice of resignation or upon such a termination, or
in case at any time such Authenticating Agent shall cease to be eligible in
accordance with the provisions this Section 9.13, the Trustee may appoint a
successor Authenticating Agent which shall be acceptable to the Company and
will mail written notice of such appointment by first-class mail, postage
prepaid, to all Holders of Securities of the series with respect to which
such Authenticating Agent will serve, as their names and addresses appear
in the Security Register. Any successor Authenticating Agent upon
acceptance of its appointment hereunder will become vested with all the
rights, powers, and duties of its predecessor hereunder, with like effect
as if originally named as an Authenticating Agent. No successor
Authenticating Agent will be appointed unless eligible under the provisions
of this Section 9.13.

(d) The Trustee agrees to pay to each Authenticating Agent
from time to time reasonable compensation for its services under this
Section 9.13, and the Trustee will be entitled to be reimbursed for such
payments, subject to the provisions of Section 9.06.

<PAGE>

(e) If an appointment with respect to one or more series of
Securities is made pursuant to this Section 9.13, the Securities of such
series may have endorsed thereon, in addition to the Trustee's certificate
of authentication, an alternative form of certificate of authentication in
the following form:

This is one of the Securities of the series designated
therein referred to in the within-mentioned Indenture.

-------------------------------
As Trustee

By:
----------------------------
As Authenticating Agent

By:
----------------------------
Authorized Officer

ARTICLE X. SUPPLEMENTAL INDENTURES AND
CERTAIN ACTIONS.

Section 10.01. Purposes for Which Supplemental Indentures May Be Entered
Into Without Consent of Holders.

Without the consent of or notice to any Holders, the Company,
when authorized by a Board Resolution, and the Trustee, at any time and
from time to time, may enter into one or more indentures supplemental
hereto, in form satisfactory to the Trustee, for any of the following
purposes:

(a) to evidence the succession of another Person to the
Company and the assumption by any such successor of the covenants of
the Company herein and in the Securities, all to the extent otherwise
permitted hereunder;

(b) to add to the covenants of the Company for the benefit of
the Holders of all or any series of Securities (and if such covenants
are to be for the benefit of less than all series of Securities,
stating that such covenants are expressly being included solely for
the benefit of such series) or to surrender any right or power herein
conferred upon the Company;

<PAGE>

(d) to add to or change any of the provisions of this
Indenture to such extent as may be necessary to permit or facilitate
the issuance of Securities in bearer form, registrable or not
registrable as to principal, and with or without interest coupons, or
to permit or facilitate the issuance of Securities in uncertificated
form;

(e) to add to, change, or eliminate any of the provisions of
this Indenture in respect of one or more series of Securities,
provided that any such addition, change, or elimination (i) will
--------
neither (A) apply to any Security of any series created prior to the
execution of such supplemental indenture and entitled to the benefit
of such provision nor (B) modify the rights of the Holder of any such
Security with respect to such provision or (ii) will become effective
only when there is no such Security Outstanding;

(f) to establish the form or terms of Securities of any series
as permitted by Sections 2.01 and 2.02;

(g) to evidence and provide for the acceptance of appointment
hereunder by a successor Trustee with respect to the Securities of one
or more series and to add to or change any of the provisions of this
Indenture as may be necessary to provide for or facilitate the
administration of the trusts hereunder by more than one Trustee,
pursuant to the requirements of Section 9.10; or

(h) to cure any ambiguity, to correct or supplement any
provision herein which may be defective or inconsistent with any other
provision herein, or to make any other provisions with respect to
matters or questions arising under this Indenture, provided that such
--------
action pursuant to this clause (h) will not adversely affect the
interests of the Holders of Securities of any series in any material
respect.

Section 10.02. Modification of Indenture With Consent of Holders of at
Least a Majority in Principal Amount of Outstanding
Securities.

(a) With the consent of the Holders of a majority in principal
amount of the Outstanding Securities of each series affected by such
supplemental indenture, by Act of said Holders delivered to the Company and
the Trustee, the Company, when authorized by a Board Resolution, and the
Trustee may enter into an indenture or indentures supplemental hereto for
the purpose of adding any provisions to or changing in any manner or
eliminating any of the provisions of this Indenture or of modifying in any
manner the rights of the Holders of Securities of such series under this
Indenture; provided, however, that no such supplemental indenture will,
-------- -------
without the consent of the Holder of each Outstanding Security affected
thereby:

(i) change the Stated Maturity of the principal of, or any
installment of principal of or interest on, any Security, or reduce
the principal amount thereof or the rate of interest thereon or any
premium payable upon the redemption thereof, or reduce the amount of
the principal of an Original Issue Discount Security that would be due

<PAGE>

and payable upon a declaration of acceleration of the Maturity thereof
pursuant to Sections 8.01(b), or change any Place of Payment where, or
the coin or currency in which, any Security or any premium or interest
thereon is payable, or impair the right to institute suit for the
enforcement of any such payment on or after the Stated Maturity
thereof (or, in the case of redemption, on or after the Redemption
Date);

(ii) reduce the percentage in principal amount of the
Outstanding Securities of any series, the consent of the Holders of
which is required for any such supplemental indenture, or the consent
of the Holders of which is required for any waiver (of compliance with
certain provisions of this Indenture or certain defaults hereunder and
their consequences) provided for in this Indenture; or

(iii) modify any of the provisions of this Section 10.02,
Section 8.01(d) or Section 6.09, except to increase the percentage in
principal amount of Holders required under any such Section or to
provide that certain other provisions of this Indenture cannot be
modified or waived without the consent of the Holder of each
Outstanding Security affected thereby, provided, however, that this
-------- -------
clause (c) will not be deemed to require the consent of any Holder
with respect to changes in the references to "the Trustee" and
concomitant changes in this Section 10.02 and Section 6.09, or the
deletion of this proviso, in accordance with the requirements of
Sections 9.10 and 10.01(g).

(b) A supplemental indenture which changes or eliminates any
covenant or other provision of this Indenture which has expressly been
included solely for the benefit of one or more particular series of
Securities, or which modifies the rights of the Holders of Securities of
such series with respect to such covenant or other provision, will be
deemed not to affect the rights under this Indenture of the Holders of
Securities of any other series.

(c) It will not be necessary for any Act of Holders under this
Section 10.02 to approve the particular form of any proposed supplemental
indenture, but it will be sufficient if such Act approves the substance
thereof.

<PAGE>

Section 10.03. Execution of Supplemental Indentures.

In executing, or accepting the additional trusts created by,
any supplemental indenture permitted by this Article X or the modifications
thereby of the trusts created by this Indenture, the Trustee will be
entitled to receive, and (subject to Section 9.01) will be fully protected
in relying upon, an Opinion of Counsel stating that the execution of such
supplemental indenture is authorized or permitted by this Indenture. The
Trustee may, but will not be obligated to, enter into any such supplemental
indenture which affects the Trustee's own rights, duties, or immunities
under this Indenture or otherwise.

Section 10.04. Effect of Supplemental Indentures.

Upon the execution of any supplemental indenture under this
Article X, this Indenture will be modified in accordance therewith, and
such supplemental indenture will form a part of this Indenture for all
purposes; and every Holder of Securities theretofore or thereafter
authenticated and delivered hereunder will be bound thereby.

Section 10.05. Conformity with Trust Indenture Act.

Every supplemental indenture executed pursuant to this Article
X will conform to the requirements of the Trust Indenture Act.

Section 10.06. Reference in Securities to Supplemental Indentures.

Securities of any series authenticated and delivered after the
execution of any supplemental indenture pursuant to this Article X may, and
will if required by the Trustee, bear a notation in form approved by the
Trustee as to any matter provided for in such supplemental indenture. If
the Company shall so determine, new Securities of any series so modified as
to conform, in the opinion of the Trustee and the Company, to any such
supplemental indenture may be prepared and executed by the Company and
authenticated and delivered by the Trustee in exchange for Outstanding
Securities of such series.

ARTICLE XI. CONSOLIDATION, MERGER, SALE, OR
TRANSFER.

Section 11.01. Consolidations and Mergers of Company and Sales Permitted
Only on Certain Terms.

(a) The Company shall not consolidate with or merge with or
into any other Person, or transfer (by lease, assignment, sale, or
otherwise) all or substantially all of its properties and assets to another
Person unless (i) either (A) the Company shall be the continuing or
surviving Person in such a consolidation or merger or (B) the Person (if
other than the Company) formed by such consolidation or into which the
Company is merged or to which all or substantially all of the properties
and assets of the Company are transferred (the Company or such other Person
being referred to as the "Surviving Person") shall be a corporation
organized and validly existing under the laws of the United States, any
state thereof, or the District of Columbia, and shall expressly assume, by
an indenture supplement, all the obligations of the Company under the
Securities and the Indenture, (ii) immediately after the transaction and
the incurrence or anticipated incurrence of any Indebtedness to be incurred
in connection therewith, no Default will exist, and (iii) an Officer's
Certificate has been delivered to the Trustee to the effect that the
conditions set forth in the preceding clauses (i) and (ii) have been
satisfied and an Opinion of Counsel (from a counsel who shall not be an

<PAGE>

employee of the Company) has been delivered to the Trustee to the effect
that the conditions set forth in the preceding clause (i) have been
satisfied.

(b) The Surviving Person will succeed to and be substituted
for the Company with the same effect as if it had been named herein as a
party hereto, and thereafter the predecessor corporation will be relieved
of all obligations and covenants under this Indenture and the Securities.

ARTICLE XII. SATISFACTION AND DISCHARGE OF
INDENTURE.

Section 12.01. Satisfaction and Discharge of Indenture.

This Indenture will upon a Company Request cease to be of
further effect (except as to any surviving rights of registration of
transfer or exchange of Securities herein expressly provided for), and the
Trustee, at the expense the Company, will execute proper instruments
acknowledging satisfaction and discharge of this Indenture, when: (a)
either (i) all Securities theretofore authenticated and delivered (other
than (A) Securities which have been destroyed, lost, or stolen and which
have been replaced or paid as provided in Section 2.07 and (B) Securities
for the payment of which money has theretofore been deposited in trust or
segregated and held in trust by the Company and thereafter repaid to the
Company or discharged from such trust, as provided in Section 6.03) have
been delivered to the Trustee for cancellation or (ii) all such Securities
not theretofore delivered to the Trustee for cancellation (A) have become
due and payable, (B) will become due and payable at their Stated Maturity
within one year, or (C) are to be called for redemption within one year
under arrangements satisfactory to the Trustee for the giving of notice of
redemption by the Trustee in the name, and at the expense, of the Company,
and the Company, in the case of clause (A), (B), or (C) above, has
deposited or caused to be deposited with the Trustee as trust funds in
trust for such purpose an amount sufficient to pay and discharge the entire
indebtedness on such Securities not theretofore delivered to the Trustee
for cancellation, for principal and any premium and interest to the date of
such deposit (in the case of Securities which have become due and payable)
or to the Stated Maturity or Redemption Date, as the case may be; (b) the
Company has paid or caused to be paid all other sums payable hereunder by
the Company; and (c) the Company has delivered to the Trustee an Officer's
Certificate and an Opinion of Counsel, each stating that all conditions
precedent herein provided for relating to the satisfaction and discharge of
this Indenture have been satisfied. Notwithstanding the satisfaction and
discharge of this Indenture, the obligations of the Company to the Trustee
under Section 9.06, the obligations of the Trustee to any Authenticating
Agent under Section 9.13, and, if money shall have been deposited with the
Trustee pursuant to subclause (ii) of clause (a) of this Section 12.01, the
obligations of the Trustee under Sections 6.03(e) and 12.02, will survive.

Section 12.02. Application of Trust Money.

Subject to provisions of Section 6.03(e), all money deposited
with the Trustee pursuant to Section 12.01 will be held in trust and
applied by it, in accordance with the provisions of the Securities and this
Indenture, to the payment, either directly or through any Paying Agent
(including the Company acting as its own Paying Agent) as the Trustee may
determine, to the Persons entitled thereto, of the principal and any

<PAGE>

premium and interest for whose payment such money has been deposited with
the Trustee.

ARTICLE XIII. MISCELLANEOUS PROVISIONS.

Section 13.01. Successors and Assigns of Company Bound by Indenture.

All the covenants, stipulations, promises, and agreements in
this Indenture contained by or on behalf of the Company will bind its
successors and assigns, whether so expressed or not.

Section 13.02. Service of Required Notice to Trustee and Company.

Any request, demand, authorization, direction, notice, consent,
waiver, Act of Holders or other document provided or permitted by this
Indenture to be made upon, given or furnished to, or filed with (a) the
Trustee by any Holder or by the Company will be sufficient for every
purpose hereunder if made, given, furnished, or filed in writing to or with
the Trustee at its Corporate Trust Office, Attention: Corporate Trust
Department or (b) the Company by the Trustee or by any Holder will be
sufficient for every purpose hereunder (unless otherwise herein expressly
provided) if in writing and mailed, first-class postage prepaid, to the
Company addressed to it at 7 West Seventh Street, Cincinnati, Ohio 45202
(marked for the attention of both the Chief Financial Officer and the
General Counsel) or at any other address previously furnished in writing to
the Trustee by the Company.

Section 13.03. Service of Required Notice to Holders; Waiver.

Where this Indenture provides for notice to Holders of any
event, such notice will be sufficiently given (unless otherwise herein
expressly provided) if in writing and mailed, first-class postage prepaid,
to each Holder affected by such event, at his address as it appears in the
Security Register, not later than the latest date (if any), and not earlier
than the earliest date (if any), prescribed for the giving of such notice.
In any case where notice to Holders is given by mail, neither the failure
to mail such notice, nor any defect in any notice so mailed, to any
particular Holder will affect the sufficiency of such notice with respect
to other Holders. Where this Indenture provides for notice in any manner,
such notice may be waived in writing by the Person entitled to receive such
notice, either before or after the event, and such waiver will be the
equivalent of such notice. Waivers of notice by Holders will be filed with
the Trustee, but such filing will not be a condition precedent to the
validity of any action taken in reliance upon such waiver. In case by
reason of the suspension of regular mail service or by reason of any other
cause it will be impracticable to give such notice by mail, then such
notification as may be made with the approval of the Trustee will
constitute a sufficient notification for every purpose hereunder.

<PAGE>

Section 13.04. Indenture and Securities to be Construed in Accordance
with the Laws of the State of New York.

This Indenture and the Securities will be deemed to be a
contract made under the laws of the State of New York, and for all purposes
will be construed in accordance with the laws of said State without giving
effect to principles of conflict of laws of such State.

Section 13.05. Compliance Certificates and Opinions.

Upon any application or request by the Company to the Trustee
to take any action under any of the provisions of this Indenture, the
Company will furnish to the Trustee such certificates and opinions as may
be required under the Trust Indenture Act. Each such certificate or
opinion will be given in the form of an Officer's Certificate, if to be
given by an officer of the Company, or an Opinion of Counsel, if to be
given by counsel, and will comply with the requirements of the Trust
Indenture Act and any other requirements set forth in this Indenture.

Section 13.06. Form of Documents Delivered to Trustee.

In any case where several matters are required to be certified
by, or covered by an opinion of, any specified Person, it is not necessary
that all such matters be certified by, or covered by the opinion of, only
one such Person, or that they be so certified or covered by only one
document, but one such Person may certify or give an opinion with respect
to some matters and one or more other such Persons as to other matters, and
any such Person may certify or give an opinion as to such matters in one or
several documents. Where any Person is required to make, give, or execute
two or more applications, requests, consents, certificates, statements,
opinions, or other instruments under this Indenture, they may, but need
not, be consolidated and form one instrument.

Section 13.07. Payments Due on Non-Business Days.

In any case where any Interest Payment Date, Redemption Date,
or Stated Maturity of any Security shall not be a Business Day at any Place
of Payment, then (notwithstanding any other provision of this Indenture or
of the Securities (other than a provision of the Securities of any series
which specifically states that such provision will apply in lieu of this
Section 13.07)) payment of interest or principal (and premium, if any) need
not be made at such Place of Payment on such date, but may be made on the
next succeeding Business Day at such Place of Payment with the same force
and effect as if made on the Interest Payment Date or Redemption Date, or
at the Stated Maturity, provided that interest will accrue for the period
--------
from and after such Interest Payment Date, Redemption Date, or Stated
Maturity, as the case may be.

<PAGE>

Section 13.08. Provisions Required by Trust Indenture Act to Control.

If any provision of this Indenture limits, qualifies, or
conflicts with the duties imposed on any Person by Sections 310 to and
including 317 of the Trust Indenture Act (including provisions
automatically deemed included in this Indenture pursuant to the Trust
Indenture Act unless this Indenture provides that such provisions are
excluded), which are deemed to be a part of and govern this Indenture,
whether or not contained herein, then such imposed duties will control.

Section 13.09. Invalidity of Particular Provisions.

In case any one or more of the provisions contained in this
Indenture or in the Securities is for any reason held to be invalid,
illegal, or unenforceable in any respect, such the validity, illegality, or
enforceability will not affect any other provision of this Indenture or of
the Securities, but this Indenture and such Securities will be construed as
if such invalid or illegal or unenforceable provision had never been
contained herein or therein.

Section 13.10. Indenture May be Executed In Counterparts.

This instrument may be executed in any number of counterparts,
each of which will be an original, but such counterparts will together
constitute but one and the same instrument.

Section 13.11. Acts of Holders; Record Dates.

(a) Any request, demand, authorization, direction, notice,
consent, waiver, or other action provided or permitted by this Indenture to
be given or taken by Holders may be embodied in and evidenced by one or
more instruments of substantially similar tenor signed by such Holders in
person or by agent duly appointed in writing; and, except as herein
otherwise expressly provided, such action will become effective when such
instrument or instruments are delivered to the Trustee and, where it is
hereby expressly required, to the Company. Such instrument or instruments
(and the action embodied therein and evidenced thereby) are herein
sometimes referred to as the "Act" of the Holders signing such instrument
or instruments. Proof of execution of any such instrument or of a writing
appointing any such agent will be sufficient for any purpose of this
Indenture and (subject to Section 9.01) conclusive in favor of the Trustee
and the Company, if made in the manner provided in this Section 13.11.

(b) The fact and date of the execution by any Person of any
such instrument or writing may be proved by the affidavit of a witness of
such execution or by a certificate of a notary public or other officer
authorized by law to take acknowledgments of deeds, certifying that the
individual signing such instrument or writing acknowledged to him the
execution thereof. Where such execution is by a signer acting in a
capacity other than his individual capacity, such certificate or affidavit
will also constitute sufficient proof of his authority. The fact and date

<PAGE>

of the execution of any such instrument or writing, or the authority of the
Person executing the same, may also be proved in any other manner which the
Trustee deems sufficient.

(d) Any request, demand, authorization, direction, notice,
consent, waiver, or other Act of the Holder of any Security will bind every
future Holder of the same Security and the Holder of every Security issued
upon the registration of transfer thereof or in exchange thereof or in lieu
thereof in respect of anything done, omitted, or suffered to be done by the
Trustee or the Company in reliance thereon, whether or not notation of such
action is made upon such Security.

(e) The Company may, in the circumstances permitted by the
Trust Indenture Act, set any day as the record date for the purpose of
determining the Holders of Outstanding Securities of any series entitled to
give or take any request, demand, authorization, direction, notice,
consent, waiver, or other action provided or permitted by this Indenture to
be given or taken by Holders of Securities of such series. With regard to
any record date set pursuant to this paragraph, the Holders of Outstanding
Securities of the relevant series on such record date (or their duly
appointed agents), and only such Persons, will be entitled to give or take
the relevant action, whether or not such Holders remain Holders after such
record date. With regard to any action that may be given or taken
hereunder only by Holders of a requisite principal amount of Outstanding
Securities of any series (or their duly appointed agents) and for which a
record date is set pursuant to this paragraph, the Company may, at its
option, set an expiration date after which no such action purported to be
given or taken by any Holder will be effective hereunder unless given or
taken on or prior to such expiration date by Holders of the requisite
principal amount of Outstanding Securities of such series on such record
date (or their duly appointed agents). On or prior to any expiration date
set pursuant to this paragraph, the Company may, on one or more occasions
at its option, extend such date to any later date. Nothing in this
paragraph will prevent any Holder (or any duly appointed agent thereof)
from giving or taking, after any such expiration date, any action identical
to, or, at any time, contrary to or different from, the action or purported
action to which such expiration date relates, in which event the Company
may set a record date in respect thereof pursuant to this paragraph.
Nothing in this Section 13.11(e) will be construed to render ineffective
any action taken at any time by the Holders (or their duly appointed
agents) of the requisite principal amount of Outstanding Securities of the
relevant series on the date such action is so taken. Notwithstanding the
foregoing or the Trust Indenture Act, the Company will not set a record
date for, and the provisions of this Section 13.11(e) will not apply with
respect to, any notice, declaration, or direction referred to in the next
paragraph.

(f) Upon receipt by the Trustee from any Holder of Securities
of a particular series of (a) any notice of default or breach referred to
in Section 8.01(a)(iv) or 8.01(a)(v) with respect to Securities of such
series, if such default or breach has occurred and is continuing and the
Trustee shall not have given such notice to the Company, (b) any
declaration of acceleration referred to in Section 8.01(b), if an Event of

<PAGE>

Default with respect to Securities of such series has occurred and is
continuing and the Trustee shall not have given such a declaration to the
Company, or (c) any direction referred to in Section 8.06 with respect to
Securities of such series, if the Trustee shall not have taken the action
specified in such direction, then a record date will automatically and
without any action by the Company or the Trustee be set for determining the
Holders of Outstanding Securities of such series entitled to join in such
notice, declaration, or direction, which record date will be the close of
business on the tenth calendar day following the day on which the Trustee
receives such notice, declaration, or direction. Promptly after such
receipt by the Trustee, and in any case not later than the fifth calendar
day thereafter, the Trustee will notify the Company and the Holders of
Outstanding Securities of such series of any such record date so fixed.
The Holders of Outstanding Securities of such series on such record date
(or their duly appointed agents), and only such Persons, will be entitled
to join in such notice, declaration, or direction, whether or not such
Holders remain Holders after such record date; provided that, unless such
--------
notice, declaration, or direction shall have become effective by virtue of
Holders of the requisite principal amount of Outstanding Securities of such
series on such record date (or their duly appointed agents) having joined
therein on or prior to the 90th calendar day after such record date, such
notice, declaration, or direction will automatically and without any action
by any Person be cancelled and of no further effect. Nothing in this
Section 13.11(f) will be construed to prevent a Holder (or a duly appointed
agent thereof) from giving, before or after the expiration of such 90-day
period, a notice, declaration, or direction contrary to or different from,
or, after the expiration of such period, identical to, the notice,
declaration, or direction to which such record date relates, in which event
a new record date in respect thereof will be set pursuant to this Section
13.11(f). Nothing in this Section 13.11(f) will be construed to render
ineffective any notice, declaration, or direction of the type referred to
in this Section 13.11(f) given at any time to the Trustee and the Company
by Holders (or their duly appointed agents) of the requisite principal
amount of Outstanding Securities of the relevant series on the date such
notice, declaration, or direction is so given.

(g) Without limiting the foregoing, a Holder entitled
hereunder to give or take any action hereunder with regard to any
particular Security may do so with regard to all or any part of the
principal amount of such Security or by one or more duly appointed agents
each of which may do so pursuant to such appointment with regard to all or
any different part of such principal amount.

Section 13.12. Effect of Headings and Table of Contents.

The Article and Section headings herein and the Table of
Contents are for convenience only and will not affect the construction
hereof.

Section 13.13. Benefits of Indenture.

Nothing in this Indenture or in the Securities, express or
implied, will give to any Person, other than the parties hereto and their
successors hereunder and the Holders any benefit or any legal or equitable
right, remedy, or claim under this Indenture.

____________________

<PAGE>

In Witness Whereof, the parties hereto have caused this Indenture
to be duly executed, and their respective corporate seals to be hereunto
affixed and attested, all as of the day and year first above written.

[Seal] Federated Department Stores, Inc.

By:
----------------------
Name:
--------------------
Title:
------------------------
Attest:

- --------------------
Name:
---------------
Title:
-------------------

The First National Bank of Boston

By:
----------------------
Name:
--------------------
Title:
------------------------

Attest:

- --------------------
Name:
---------------
Title:
-------------------

<PAGE>

STATE OF )
------
) ss.:
COUNTY OF )
-----

On this ____ day of , 199_, before me personally
----------- ---
came ______________________, to me known, who, being by me duly sworn, did
depose and say that he/she is ___________________ of Federated Department
Stores, Inc., one of the entities described in and which executed the above
instrument; that he/she knows the seal of said entity; that the seal or a
facsimile thereof affixed to said instrument is such seal; that it was so
affixed by authority of the Board of Directors of said entity, and that
he/she signed his/her name thereto by like authority.

-------------------------
Notary Public

In Witness Whereof, I have hereunto set my hand and affixed
my official seal the day and year in this certificate first above written.

-------------------------
Notary Public

<PAGE>

STATE OF )
------
) ss.:
COUNTY OF )
-----

On this ____ day of , 199_, before me personally came
----------- ---
______________________, to me known, who, being by me duly sworn, did
depose and say that he/she is ___________________ of The First National
Bank of Boston, one of the entities described in and which executed the
above instrument; that he/she knows the seal of said entity; that the seal
or a facsimile thereof affixed to said instrument is such seal; that it was
so affixed by authority of the Board of Directors of said entity, and that
he/she signed his/her name thereto by like authority.

-------------------------
Notary Public

In Witness Whereof, I have hereunto set my hand and affixed
my official seal the day and year in this certificate first above written.

-------------------------

Notary Public

Exhibit T3C(2)
Draft of November 23, 1994

Federated Department Stores, Inc.

and

The First National Bank of Boston,

Trustee

[First] Supplemental Trust Indenture

Dated as of ________ __, 199_

Supplementing that certain

Indenture

Dated as of _________ __, 199_

Authorizing the Issuance and Delivery of

Senior Securities

consisting of [$385,300,000] aggregate principal amount of

Series [A] Notes due June 30, [1999]1

1 This form of Supplemental Indenture will be modified, as
appropriate, to reflect the principal amount, interest rate and
optional redemption provisions applicable to the Series B Notes
and the Series C Notes, as set forth on Schedule I hereto.

<PAGE>

Table of Contents

Page

Recitals . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

[Form of Face of Security] . . . . . . . . . . . . . . . . . . 1

[Form of Reverse of Security] . . . . . . . . . . . . . . . . . 3

Form of Trustee's Certificate Of Authentication for Series [A]
Notes] . . . . . . . . . . . . . . . . . . . . . . . . . . 6

Article I. Issuance of Series [A] Notes . . . . . . . . . . . 6
Section 1.1. Issuance of Series [A] Notes; Principal
Amount; Maturity . . . . . . . . . . . . . . . . . . 6
Section 1.2. Interest on the Series [A] Notes; Payment of
Interest . . . . . . . . . . . . . . . . . . . . . . 7
Section 1.3. Redemption of the Series [A] Notes . . . . . 8

Article II. Certain Definitions . . . . . . . . . . . . . . . 8
Section 2.1. Certain Definitions . . . . . . . . . . . . 8

Article III. Certain Covenants . . . . . . . . . . . . . . . 17
Section 3.1. Indebtedness . . . . . . . . . . . . . . . 17
Section 3.2. Liens . . . . . . . . . . . . . . . . . . 17
Section 3.3. Restricted Payments . . . . . . . . . . . 18
Section 3.4. Change of Control . . . . . . . . . . . . 19
Section 3.5. Payment Restrictions Affecting Restricted
Subsidiaries . . . . . . . . . . . . . . . . . . . 19
Section 3.6. Issuance of Subsidiary Preferred Stock . . 20
Section 3.7. Asset Sales . . . . . . . . . . . . . . . 20
Section 3.8. Transactions with Affiliates . . . . . . . 21
Section 3.9. Sale and Leaseback Transactions . . . . . 22
Section 3.10. Merger and Certain Other Transactions . . 22
Section 3.11. Permitting Unrestricted Subsidiaries to
Become Restricted
Subsidiaries . . . . . . . . . . . . . . . . . 22
Section 3.12. Paying Agent . . . . . . . . . . . . . . 22

Article IV. Additional Events of Default . . . . . . . . . . 22
Section 4.1. Additional Events of Default . . . . . . . 22

Article V. Defeasance . . . . . . . . . . . . . . . . . . . 23
Section 5.1. Applicability of Article V of the Indenture
23

Article VI. Miscellaneous . . . . . . . . . . . . . . . . . 24
Section 6.1. Reference to and Effect on the Indenture . 24
Section 6.2. Waiver of Certain Covenants . . . . . . . 24
Section 6.3. Supplemental Indenture May be Executed In
Counterparts . . . . . . . . . . . . . . . . . . . 25
Section 6.4. Effect of Headings . . . . . . . . . . . . 25

<PAGE>

[First] Supplemental Indenture, dated as of _________ __, 199_,
between Federated Department Stores, Inc., a corporation duly organized and
existing under the laws of the State of Delaware (the "Company"), and The
First National Bank of Boston, a national banking association, organized
and existing under the laws of the United States of America, as Trustee
(the "Trustee"), supplementing that certain Indenture dated as of ________
__, 199_, between the Company and the Trustee (the "Indenture").

Recitals

A. The Company has duly authorized the execution and delivery
of the Indenture to provide for the issuance from time to time of its
unsecured debentures, notes, or other evidences of indebtedness (the
"Securities"), to be issued in one or more series as provided for in the
Indenture.

B. The Indenture provides that the Securities of each series
will be in substantially the form set forth in the Indenture, or in such
other form as may be established by or pursuant to a Board Resolution or in
one or more indentures supplemental thereto, in each case with such
appropriate insertions, omissions, substitutions, and other variations as
are required or permitted by the Indenture, and may have such letters,
numbers, or other marks of identification and such legends or endorsements
placed thereon as may be required to comply with the rules of any
securities exchange or as may, consistently herewith, be determined to be
required by the officers executing such Securities, as evidenced by their
execution thereof.

C. The Company and the Trustee have agreed that the Company
shall issue and deliver, and the Trustee shall authenticate, Securities
denominated "Series [A] Notes" pursuant to the terms of this Supplemental
Indenture and substantially in the form set forth below, in each case with
such appropriate insertions, omissions, substitutions, and other variations
as are required or permitted by the Indenture and this Supplemental
Indenture, and with such letters, numbers, or other marks of identification
and such legends or endorsements placed thereon as may be required to
comply with the rules of any securities exchange or as may, consistently
herewith, be determined by the officers executing such Securities, as
evidenced by their execution of such Securities.

<PAGE>

[Form of Face of Security]

[Insert any legend required by the Internal
Revenue Code and the regulations thereunder.]

Federated Department Stores, Inc.

Series [A] Note due June 30, [1999]

No. $
---------- -----------

Federated Department Stores, Inc., a corporation duly organized
and existing under the laws of Delaware (hereinafter called the
"Company," which term includes any successor Person under the
Indenture hereinafter referred to), for value received, hereby
promises to pay to , or registered assigns, the
----------------
principal sum of $ on June 30, [1999], subject to earlier
-------
redemption at the option of the Company as provided in the Indenture,
and to pay interest thereon from January 31, 1995 or from the most
recent Interest Payment Date to which interest has been paid or duly
provided for, semiannually on June 15 and December 15 of each year,
commencing on June 15, 1995, at the rate of ___% per annum, until the
principal hereof is paid or made available for payment. The interest
so payable, and punctually paid or duly provided for, on any Interest
Payment Date will, as provided in such Indenture, be paid to the
Person in whose name this Security (or one or more Predecessor
Securities) is registered at the close of business on the Regular
Record Date for such interest, which will be the June 1 or December 1
(whether or not a Business Day), as the case may be, next preceding
such Interest Payment Date. Any such interest not so punctually paid
or duly provided for will forthwith cease to be payable to the Holder
on such Regular Record Date and may either be paid to the Person in
whose name this Security (or one or more Predecessor Securities) is
registered at the close of business on a Special Record Date for the
payment of such Defaulted Interest to be fixed by the Trustee, notice
whereof will be given to Holders of Securities of this series not less
than 10 calendar days prior to such Special Record Date, or be paid at
any time in any other lawful manner not inconsistent with the
requirements of any securities exchange on which the Securities of
this series may be listed, and upon such notice as may be required by
such exchange, all as more fully provided in said Indenture.

Payment of the principal of (and premium, if any) and any such
interest on this Security will be made at the office or agency of the
Company maintained for the purpose in , in such coin
-----------------
or currency of the United States of America as at the time of payment
is legal tender for payment of public and private debts; provided,
--------
however, that at the option of the Company payment of interest may be
-------
made by check mailed to the address of the Person entitled thereto as
such address appears in the Security Register.

<PAGE>

REFERENCE IS HEREBY MADE TO THE FURTHER PROVISIONS SET FORTH ON
THE REVERSE HEREOF. SUCH PROVISIONS WILL FOR ALL PURPOSES HAVE THE
SAME EFFECT AS THOUGH FULLY SET FORTH IN THIS PLACE.

In Witness Whereof, this instrument has been duly executed in
accordance with the Indenture.

Federated Department Stores, Inc.

Date Issued: By:
---------------- -----------------------------------

Attest:

By:
-------------------------

[Form of Reverse of Security]

Federated Department Stores, Inc.

This Security is one of a duly authorized issue of securities of
the Company (herein called the "Securities") issued and to be issued
in one or more series under an Indenture, dated as of ,
--------- ---
199_ as supplemented by a [First] Supplemental Indenture (herein
collectively called the "Indenture"), each between the Company and The
First National Bank of Boston, as Trustee (herein called the
"Trustee," which term includes any successor trustee under the
Indenture), to which Indenture and all indentures supplemental thereto
reference is hereby made for a statement of the respective rights,
limitations of rights, duties, and immunities thereunder of the
Company, the Trustee, and the Holders of the Securities and of the
terms upon which the Securities are, and are to be, authenticated and
delivered. This Security is one of the series designated on the face
hereof, limited in aggregate principal amount to $[385,300,000].

The Securities of this series are subject to redemption upon not
less than 30 calendar days' notice by mail, at any time on or after
January 1, 1998, as a whole or in part, at the election of the
Company, at 100% of the principal amount, together in the case of any

<PAGE>

such redemption with accrued interest to the Redemption Date, but
interest installments the Stated Maturity of which is on or prior to
such Redemption Date will be payable to the Holders of such
Securities, or one or more Predecessor Securities, of record at the
close of business on the relevant Record Dates referred to on the face
hereof, all as provided in the Indenture. In addition, the Securities
of this series are subject to redemption upon not less than 1 calendar
day's notice by hand delivery or telecopy, at any time on or prior to
January 31, 1995, as a whole or in part, at the election of the
Company, at 100% of the principal amount thereof.

In the event of redemption of this Security in part only, a new
Security or Securities of this series and of like tenor for the
unredeemed portion hereof will be issued in the name of the Holder
hereof upon the cancellation hereof.

The Indenture contains provisions for defeasance at any time of
(a) the entire indebtedness of this Security or (b) certain
restrictive covenants and Events of Default with respect to this
Security, in each case upon compliance with certain conditions set
forth in the Indenture.

If an Event of Default with respect to Securities of this series
shall occur and be continuing, the principal of the Securities of this
series may be declared due and payable in the manner and with the
effect provided in the Indenture.

The Indenture permits, with certain exceptions as therein
provided, the amendment thereof and the modification of the rights and
obligations of the Company and the rights of the Holders of the
Securities of each series to be affected under the Indenture at any
time by the Company and the Trustee with the consent of the Holders of
a majority in principal amount of the Securities at the time
Outstanding of each series to be affected. The Indenture also
contains provisions permitting the Holders of specified percentages in
principal amount of the Securities of each series at the time
Outstanding, on behalf of the Holders of all Securities of such
series, to waive compliance by the Company with certain provisions of
the Indenture and certain past defaults under the Indenture and their
consequences. Any such consent or waiver by the Holder of this
Security will be conclusive and binding upon such Holder and upon all
future Holders of this Security and of any Security issued upon the
registration of transfer hereof or in exchange herefor or in lieu
hereof, whether or not notation of such consent or waiver is made upon
this Security.

As provided in and subject to the provisions of the Indenture,
the Holder of this Security will not have the right to institute any
proceeding with respect to the Indenture or for the appointment of a
receiver or trustee or for any other remedy thereunder, unless such
Holder shall have previously given the Trustee written notice of a
continuing Event of Default with respect to the Securities of this
series, the Holders of not less than 25% in principal amount of the
Securities of this series at the time Outstanding shall have made
written request to the Trustee to institute proceedings in respect of
such Event of Default as Trustee and offered the Trustee reasonable
indemnity, and the Trustee shall not have received from the Holders of
a majority in principal amount of Securities of this series at the
time Outstanding a direction inconsistent with such request and shall
have failed to institute such proceeding for 60 calendar days after

<PAGE>

receipt of such notice, request, and offer of indemnity. The
foregoing will apply to any suit instituted by the Holder of this
Security for the enforcement of any payment of principal hereof or any
premium or interest hereon on or after the respective due dates
expressed herein.

No reference herein to the Indenture and no provision of this
Security or of the Indenture will alter or impair the obligation of
the Company, which is absolute and unconditional, to pay the principal
of and any premium and interest on this Security at the times, place,
and rate, and in the coin or currency, herein prescribed.

As provided in the Indenture and subject to certain limitations
therein set forth, the transfer of this Security is registerable in
the Security Register, upon surrender of this Security for
registration of transfer at the office or agency of the Company in any
place where the principal of and any premium and interest on this
Security are payable, duly endorsed by, or accompanied by a written
instrument of transfer in form satisfactory to the Company and the
Security Registrar duly executed by, the Holder hereof or his attorney
duly authorized in writing, and thereupon one or more new Securities
of this series and of like tenor, of authorized denominations and for
the same aggregate principal amount, will be issued to the designated
transferee or transferees.

The Securities of this series are issuable only in registered
form without coupons in denominations of $1,000 and integral multiples
thereof. As provided in the Indenture and subject to certain
limitations therein set forth, Securities of this series are
exchangeable for a like aggregate principal amount of Securities of
this series and of like tenor of a different authorized denomination,
as requested by the Holder surrendering the same.

Prior to due presentment of this Security for registration of
transfer, the Company, the Trustee, and any agent of the Company or
the Trustee may treat the Person in whose name this Security is
registered as the owner hereof for all purposes, whether or not this
Security shall be overdue, and neither the Company, the Trustee, nor
any such agent will be affected by notice to the contrary.

All terms used in this Security that are defined in the Indenture
will have the respective meanings assigned to them in the Indenture.

D. The Trustee's certificate of authentication will be in
substantially the following form:

<PAGE>

[Form of Trustee's Certificate Of Authentication for Series [A] Notes]

Trustee's Certificate of Authentication

This is one of the Securities of the series designated therein
referred to in the within-mentioned Indenture.

, as Trustee
------------------

By:
---------------------------
Authorized Officer

E. All acts and things necessary to make the Series [A] Notes,
when the Series [A] Notes have been executed by the Company and
authenticated by the Trustee and delivered as provided in the Indenture and
this Supplemental Indenture, the valid, binding, and legal obligations of
the Company and to constitute these presents a valid indenture and
agreement according to its terms, have been done and performed, and the
execution and delivery by the Company of the Indenture and this
Supplemental Indenture and the issue hereunder of the Series [A] Notes have
in all respects been duly authorized; and the Company, in the exercise of
legal right and power in it vested, is executing and delivering the
Indenture and this Supplemental Indenture and proposes to make, execute,
issue, and deliver the Series [A] Notes.

Now, Therefore, this Supplemental Indenture Witnesseth:

In order to declare the terms and conditions upon which the
Series [A] Notes are authenticated, issued, and delivered, and in
consideration of the premises and of the purchase and acceptance of the
Series [A] Notes by the Holders thereof, it is mutually agreed, for the
equal and proportionate benefit of the respective Holders from time to time
of the Series [A] Notes or of a series thereof, as follows:

ARTICLE I. ISSUANCE OF SERIES [A] NOTES.

Section 1.1. Issuance of Series [A] Notes; Principal Amount;
Maturity.

(a) On ___________, 199_, the Company shall issue and deliver to
the Trustee, and the Trustee shall authenticate, Series [A] Notes
substantially in the form set forth above, in each case with such
appropriate insertions, omissions, substitutions, and other variations as
are required or permitted by the Indenture and this Supplemental Indenture,
and with such letters, numbers, or other marks of identification and such
legends or endorsements placed thereon as may be required to comply with
the rules of any securities exchange or as may, consistently herewith, be

<PAGE>

determined by the officers executing such Series [A] Notes, as evidenced by
their execution of such Series [A] Notes.

(b) The Series [A] Notes shall be issued in the aggregate
principal amount of [$385,300,0002], and shall mature on June 30, [1999].

Section 1.2. Interest on the Series [A] Notes; Payment of Interest.

(a) The Series [A] Notes shall bear interest at the rate of __%3
per annum from January 31, 1995, except in the case of Series [A] Notes
delivered pursuant to Sections 2.05 or 2.07 of the Indenture, which shall
bear interest from last Interest Payment Date through which interest has
been paid.

(b) The interest so payable, and punctually paid or duly
provided for, on any Interest Payment Date will, as provided in such
Indenture, be paid to the Person in whose name a Series [A] Note (or one or
more Predecessor Securities) is registered at the close of business on the
Regular Record Date for such interest, which will be the June 1 or
December 1 (whether or not a Business Day), as the case may be, next
preceding such Interest Payment Date. Any such interest not so punctually
paid or duly provided for will forthwith cease to be payable to the Holder
on such Regular Record Date and may either be paid to the Person in whose
name the Series [A] Note (or one or more Predecessor Securities) is
registered at the close of business on a Special Record Date for the
payment of such Defaulted Interest to be fixed by the Trustee, notice
whereof will be given to Holders of Securities of this series not less than
10 calendar days prior to such Special Record Date, or be paid at any time
in any other lawful manner not inconsistent with the requirements of any
securities exchange on which the Securities of this series may be listed,
and upon such notice as may be required by such exchange, all as more fully
provided in the Indenture.

(c) Payment of the principal of (and premium, if any) and any
such interest on the Series [A] Notes will be made at the office or agency
of the Company maintained for the purpose in , in such
--------------------
coin or currency of the United States of America as at the time of payment
is legal tender for payment of public and private debts; provided, however,
-------- -------
that at the option of the Company payment of interest may be made by check

2 Subject to reduction prior to the Effective Date.

3 The interest rate per annum on the Series A Notes shall be
equal to the Interpolated Rate plus 325 basis points.
"Interpolated Rate" means the average, for the ten consecutive
trading days ending on the sixth trading day immediately
preceding the Effective Date, of the interpolated yield to June
30, 1999 based on the most actively traded 3 year and 5 year
United States Treasury securities at 3:00 p.m. Eastern Time, as
reported on Bloomburg Financial Markets news service. The Series
B Notes will be priced based on the 7 and 10 year Treasuries plus
350 basis points, and the Series C Notes will be priced based on
the 10 and 30 year Treasuries plus 375 basis points, as set forth
on Annex I hereto. The actual interest rate, determined as
aforesaid, will be inserted in the Supplemental Indenture as
executed.

<PAGE>

mailed to the address of the Person entitled thereto as such address
appears in the Security Register.

Section 1.3. Redemption of the Series [A] Notes.

The Series [A] Notes shall be subject to redemption upon not less
than 30 calendar days' notice by mail, at any time on or after [January 1,
1998, as a whole or in part, at the election of the Company, at 100% of the
principal amount thereof,] together in the case of any such redemption with
accrued interest to the Redemption Date, but interest installments the
Stated Maturity of which is on or prior to such Redemption Date will be
payable to the Holders of such Securities, or one or more Predecessor
Securities, of record at the close of business on the relevant Record Dates
referred to on the face hereof, all as provided in the Indenture. In
addition, the Series [A] Notes shall be subject to redemption upon not less
than 1 calendar day's notice by hand delivery or telecopy, at any time on
or prior to January 31, 1995, as a whole or in part, at the election of the
Company, at 100% of the principal amount thereof.

ARTICLE II. CERTAIN DEFINITIONS.

Section 2.1. Certain Definitions.

The terms defined in this Section 2.1 (except as herein otherwise
expressly provided or unless the context of this Supplemental Indenture
otherwise requires) for all purposes of this Supplemental Indenture and of
any indenture supplemental hereto have the respective meanings specified in
this Section 2.1. All accounting terms not otherwise defined herein have
the meanings assigned to them in accordance with GAAP. All other terms
used in this Supplemental Indenture that are defined in the Indenture or
the Trust Indenture Act, either directly or by reference therein (except as
herein otherwise expressly provided or unless the context of this
Supplemental Indenture otherwise requires), have the respective meanings
assigned to such terms in the Indenture or the Trust Indenture Act, as the
case may be, as in force at the date of this Supplemental Indenture as
originally executed.

"Cash Equivalent" means: (a) obligations unconditionally
guaranteed as to principal and interest by the United States of America or
by any agency or authority controlled or supervised by and acting as an
instrumentality of the United States of America; (b) obligations
(including, but not limited to, demand or time deposits, bankers'
acceptances and certificates of deposit) issued by a depository institution
or trust company or a wholly owned Subsidiary or branch office of any
depository institution or trust company, provided that (i) such depository
institution or trust company has, at the time of the Company's or any
Restricted Subsidiary's investment therein or contractual commitment
providing for such investment, capital, surplus or undivided profits (as of
the date of such institution's most recently published financial
statements) in excess of $100.0 million and (ii) the commercial paper of
such depository institution or trust company, at the time of the Company's
or any Restricted Subsidiary's investment therein or contractual commitment
providing for such investment, is rated at least A1 by Standard & Poor's

<PAGE>

Corporation or P-1 by Moody's Investors Service; and (c) debt obligations
(including, but not limited to, commercial paper and medium term notes)
issued or unconditionally guaranteed as to principal and interest by any
corporation, state or municipal government or agency or instrumentality
thereof, or foreign sovereignty, if the commercial paper of such
corporation, state or municipal government or foreign sovereignty, at the
time of the Company's or any Restricted Subsidiary's investment therein or
contractual commitment providing for such investment, is rated at least A1
by Standard & Poor's Corporation or P-1 by Moody's Investors Service; (d)
repurchase obligations with a term of not more than 7 days for underlying
securities of the type described above entered into with a depository
institution or trust company meeting the qualifications described in clause
(b) above; and (e) Investments in money market or mutual funds that invest
solely in Cash Equivalents of the type described in clauses (a), (b), (c)
and (d) above; provided, however, that, in the case of clauses (a) through
-------- -------
(c) above, each such investment has a maturity of one year or less from the
date of acquisition thereof.

"Change of Control" means the occurrence of any of the following
events: (a) any "Person" or "group" (as such terms are used in Sections
13(d) and 14(d) of the Exchange Act) is or becomes the "beneficial owner"
(as defined in Rules 13d-3 and 13d-5 under the Exchange Act), directly or
indirectly, of more than 50% of the total voting power of all classes of
stock of the Company entitled to vote generally in the election of
directors ("Voting Stock") of the Company; (b) the Company consolidates
with, or merges with or into, another Person or sells, assigns, conveys,
transfers, leases, or otherwise disposes of all or substantially all of its
assets to any Person, or another Person consolidates with, or merges with
or into, the Company, in any such event pursuant to a transaction in which
the outstanding Voting Stock of the Company is converted into or exchanged
for cash, securities, or other property, other than any such transaction
where (i) the outstanding Voting Stock of the Company is converted into or
exchanged for (1) Voting Stock (other than redeemable Voting Stock) of the
surviving or transferee corporation, (2) cash, securities, and other
property in an amount that could be paid by the Company as a Restricted
Payment, or (3) a combination thereof, and (ii) immediately after such
transaction (A) no "person" or "group" (as such terms are used in Sections
13(d) and 14(d) of the Exchange Act) is or becomes the "beneficial owner"
(as defined in Rules 13d-3 and 13d-5 under the Exchange Act), directly or
indirectly, of more than 50% of the total Voting Stock of the Company and
(B) the stockholders of the Company immediately prior to such transaction
hold, immediately following such transaction, a majority of the total
Voting Stock of the Person surviving such transaction; (c) during any
consecutive two-year period, individuals who at the beginning of such
period constituted the Board of Directors (together with any new directors
whose election by such Board of Directors or whose nomination for election
by the stockholders of the Company was approved by a vote of a majority of
the directors then still in office who were either directors at the
beginning of such period or whose election or nomination for election was
previously so approved) cease for any reason to constitute a majority of
the Board of Directors then in office; or (d) the dissolution or
liquidation of the Company.

"Effective Date" means the Effective Date, as defined in the
Plan.

<PAGE>

"Existing Indebtedness" means all indebtedness under or evidenced
by: (a) the Series [A] Notes, the Company's Series [B] Notes due June 30,
2002, and the Company's Series [C] Notes due June 30, 2005; (b) the
approximately $280.7 million outstanding principal amount of notes issued
pursuant to the Series A Note Agreement, dated as of February 5, 1992,
among the Company, the financial institutions listed on the signature pages
thereof, Citibank, N.A., as agent, and The Sumitomo Bank, Limited, New York
Branch, as co-agent; (c) the approximately $335.2 million outstanding
principal amount of the Note dated as of December 31, 1993, by Federated
Noteholding Corporation, as issuer, and The Prudential Insurance Company of
America, as payee; (d) the approximately $345.0 million principal amount of
notes outstanding pursuant to the Loan Agreement, dated as of December 30,
1987, by and among Allied Stores General Real Estate Company and certain of
its Subsidiaries and The Prudential Insurance Company of America; (e) the
approximately $550.9 million principal amount of notes to be issued
pursuant to the Mortgage Note Agreement, dated as of the Effective Date,
among Macy's Primary Real Estate, Inc., the Lenders parties thereto and The
Prudential Insurance Company of America, as Agent; (f) the approximately
$53.5 million principal amount of notes to be issued pursuant to the
Amended and Restated First Secured Term Loan Agreement, dated as of the
Effective Date, among Macy's Warehouse Real Estate, Inc., as Borrower, and
General Electric Capital Corporation, as Lender; (g) the approximately
$40.0 million principal amount of notes issued pursuant to the Loan
Agreement, dated as of May 26, 1994, by and among Joseph Horne Co., Inc.,
PNC Bank, Ohio, National Association, as agent, and the financial
institutions listed on the signature pages thereof; (h) the Capital Lease
Obligations of the Company and the Restricted Subsidiaries either (i)
reflected on the July 30, 1994 consolidated balance sheet of either
Federated Department Stores, Inc. or R.H. Macy & Co., Inc., (ii) incurred
after July 30, 1994 and on or prior to the Effective Date consistent with
the Combined Company Business Plan and the Projections (as defined in the
Plan) and not exceeding $25.0 million in the aggregate, or (iii) incurred
in complete or partial substitution of any of the foregoing Capital Lease
Obligations; (i) the approximately $35.1 million of uncertificated
obligations of the Company owed to the Internal Revenue Service and other
taxing authorities; (j) the approximately $267.5 million of uncertificated
obligation of the Company owed to the Internal Revenue Service and other
taxing authorities; (k) the existing other secured mortgage debt to be
assumed pursuant to the Plan; (l) the Promissory Note, dated as of
[Effective Date] by Kings Plaza Shopping Center of Avenue U, Inc., as
Issuer, and John Hancock Mutual Life Insurance Company, as Noteholder and
the Promissory Note, dated as of [Effective Date] by Macy's Kings Plaza
Real Estate, Inc. [name subject to change], as Issuer, and John Hancock
Mutual Life Insurance Company, as Noteholder; (m) the other secured
Indebtedness of the Company or secured or unsecured Indebtedness of the
Restricted Subsidiaries either (i) reflected on the July 30, 1994
consolidated balance sheet of either Federated Department Stores, Inc. or
R.H. Macy & Co., Inc., (ii) issued pursuant to the Plan, (iii) incurred
after July 30, 1994 and on or prior to the Effective Date consistent with
the Combined Company Business Plan and the Projections and not exceeding
$25.0 million in the aggregate, or (iv) incurred in complete or partial
substitution of any of the foregoing Indebtedness; and (n) any bank
borrowings incurred on or prior to the Effective Date in complete or
partial substitution of any of the foregoing.

<PAGE>

"Interest Coverage Ratio" means the ratio of (a) the sum of (i)
net income (other than net income of any Restricted Subsidiary during a
period in which such Restricted Subsidiary is prohibited from paying
dividends pursuant to any provision referred to in clause (ii), (iii) or
(iv) of Section 3.5 hereof) (ii) net interest expense, (iii) cash dividends
with respect to redeemable preferred stock (to the extent deducted from net
income and not included in net interest expense in accordance with GAAP),
(iv) income tax expense, (v) depreciation expense; (vi) amortization
expense, and (vii) the net amount, which may be less than zero, of
extraordinary and unusual losses minus extraordinary and unusual gains of
the Company and its Subsidiaries on a consolidated basis, to (b) net
interest expense, plus cash dividends with respect to redeemable preferred
stock (to the extent deducted from net income and not included in net
interest expense in accordance with GAAP), of the Company and its
Subsidiaries on a consolidated basis, all as determined in accordance with
GAAP (or, in respect of the net income of any Restricted Subsidiary for
purposes of the parenthetical in clause (a)(i) above, the normal accounting
practices of such Restricted Subsidiary as in effect from time to time) for
the four most recently completed fiscal quarters of the Company.

"Investment" means, with respect to any Person, any direct or
indirect loan or other extension of credit or capital contribution to (by
means of any transfer of cash or other property to others or any payment
for property or services for the account or use of others), or any purchase
or acquisition by such Person of any capital stock, bonds, notes,
debentures, or other securities or evidences of Indebtedness issued by, any
other Person. The amount of any Investment shall be the original cost
thereof, plus the cost of all additions thereto, without any adjustments
for increases or decreases in value, write-ups, write-downs, or write-offs
with respect to such Investment.

"Lien" means any mortgage, deed of trust, pledge, hypothecation,
assignment, deposit arrangement, encumbrance, lien (statutory or other),
security interest, or preference, priority, or other security agreement or
preferential arrangement of any kind or nature whatsoever intended to
assure payment of any Indebtedness or other obligation, including without
limitation any conditional sale, deferred purchase price, or other title
retention agreement, the interest of a lessor under a Capital Lease
Obligation, any financing lease having substantially the same economic
effect as any of the foregoing, and the filing, under the Uniform
Commercial Code or comparable law of any jurisdiction, of any financing
statement naming the owner of the asset to which such Lien relates as
debtor.

"Notice" means, with respect to an Offer to Purchase, a written
notice stating:

(a) the Section of this Supplemental Indenture pursuant to which
such Offer to Purchase is being made;

(b) the applicable Purchase Amount (including, if less than all
the Series [A] Notes, the calculation thereof pursuant to the Section
hereof requiring such Offer to Purchase);

<PAGE>

(d) the purchase price to be paid by the Company for each $1,000
principal amount at maturity of Series [A] Notes accepted for payment
(as specified in this Supplemental Indenture);

(e) that the Holder of any Series [A] Note may tender for
purchase by the Company all or any portion of such Series [A] Note
equal to $1,000 principal amount or any integral multiple thereof;

(f) the place or places where Series [A] Notes are to be
surrendered for tender pursuant to such Offer to Purchase;

(g) any Series [A] Note not tendered or tendered but not
purchased by the Company pursuant to such Offer to Purchase will
continue to accrue interest as set forth in such Series [A] Note and
this Supplemental Indenture;

(h) that on the Purchase Date the purchase price will become due
and payable upon each Series [A] Note (or portion thereof) selected
for purchase pursuant to such Offer to Purchase and that interest
thereon shall cease to accrue on and after the Purchase Date;

(i) that each Holder electing to tender a Series [A] Note
pursuant to such Offer to Purchase will be required to surrender such
Series [A] Note at the place or places specified in the Notice prior
to the close of business on the fifth Business Day prior to the
Purchase Date (such Series [A] Note being, if the Company or the
Trustee so requires, duly endorsed by, or accompanied by a written
instrument of transfer in form satisfactory to the Company and the
Trustee duly executed by, the Holder thereof or its attorney duly
authorized in writing);

(j) that (a) if Series [A] Notes (or portions thereof) in an
aggregate principal amount less than or equal to the Purchase Amount
are duly tendered and not withdrawn pursuant to such Offer to
Purchase, the Company shall purchase all such Series [A] Notes and
(b) if Series [A] Notes in an aggregate principal amount in excess of
the Purchase Amount are duly tendered and not withdrawn pursuant to
such Offer to Purchase, (i) the Company shall purchase Series [A]
Notes having an aggregate principal amount equal to the Purchase
Amount and (ii) the particular Series [A] Notes (or portions thereof)
to be purchased shall be selected by such method as the Trustee shall
deem fair and appropriate and which may provide for the selection for
purchase of portions (equal to $1,000 or an integral multiple of
$1,000) of the principal amount of Series [A] Notes of a denomination
larger than $1,000;

(k) that, in the case of any Holder whose Series [A] Note is
purchased only in part, the Company shall execute, and the Trustee
shall authenticate and deliver to the Holder of such Series [A] Note
without service charge, a new Series [A] Note or Series [A] Notes, of
any authorized denomination as requested by such Holder, in an
aggregate principal amount equal to and in exchange for the
unpurchased portion of the Series [A] Note so tendered; and

<PAGE>

(l) any other information required by applicable law to be
included therein.

"Offer to Purchase" means an offer to purchase Series [A] Notes
pursuant to and in accordance with a Notice, in the aggregate Purchase
Amount, on the Purchase Date, and at the purchase price specified in such
Notice (as determined pursuant to this Supplemental Indenture). Any Offer
to Purchase shall remain open from the time of mailing of the Notice until
the Purchase Date, and shall be governed by and effected in accordance
with, and the Company and the Trustee shall perform their respective
obligations specified in, the Notice for such Offer to Purchase.

"Permitted Indebtedness" means: (a) Existing Indebtedness; (b)
Indebtedness incurred for the purpose of providing the Company and its
Subsidiaries with working capital, including bankers' acceptances, letters
of credit, and similar assurances of payment, in outstanding amounts not to
exceed $1,250.0 million at any particular time, subject to increase from
and after the Effective Date at a rate (compounded annually) equal to 3%
per annum; (c) Indebtedness existing as of the Effective Date of any
Subsidiary of the Company engaged primarily in the business of owning or
leasing real property; (d) Indebtedness incurred for the purpose of
financing store construction and remodeling or other capital expenditures;
(e) unsecured Indebtedness among the Company and its Subsidiaries; (f)
Indebtedness in respect of the deferred purchase price of property or
arising under any conditional sale or other title retention agreement; (g)
Indebtedness of a Person acquired by the Company or a Subsidiary of the
Company at the time of such acquisition; (h) to the extent deemed to be
"Indebtedness," obligations under swap agreements, cap agreements, collar
agreements, insurance arrangements or any other agreement or arrangement,
in each case designed to provide protection against fluctuations in
interest rates, the cost of currency or the cost of goods (other than
inventory); (i) other Indebtedness in outstanding amounts not to exceed
$500.0 million in the aggregate incurred by the Company and the Restricted
Subsidiaries at any particular time; (j) the approximately $101.5 million
of uncertificated obligations of certain Subsidiaries of the Company owed
to certain former holders of prepetition unsecured claims against such
Subsidiaries or their predecessors due February 4, 1995; (k) the
approximately aggregate $307.0 million aggregate amount of convertible
notes issued and outstanding pursuant to the Senior Convertible Discount
Note Agreement, dated as of February 5, 1992, among the Company, the
holders of such Convertible Notes listed on the signature pages thereto,
Citibank, N.A., as Convertible Note Agent, and The Sumitomo Bank, Limited,
New York Branch, as Convertible Note Co-Agent, and the Indenture, dated as
of April 8, 1993, between the Company and The First National Bank of
Boston, as trustee; and (l) Indebtedness incurred in connection with any
extension, renewal, refinancing, replacement, or refunding (including
successive extensions, renewals, refinancings, replacements, or
refundings), in whole or in part, of any Indebtedness of the Company or the
Restricted Subsidiaries; provided, however, that: (i) the principal amount
-------- -------
of the Indebtedness so incurred does not exceed the sum of the principal
amount of the Indebtedness so extended, renewed, refinanced, replaced, or
refunded, plus all interest accrued thereon and all related fees and
expenses (including any payments made in connection with procuring any
required lender or similar consents); (ii) in the case of the extension,
renewal, refinancing, replacement, or refunding of the Indebtedness
referred to in clause (k) above, the Indebtedness so incurred is pari passu
with or subordinate to the Series [A] Notes; and (iii) in the case of the

<PAGE>

refinancing, replacement, or refunding of the Series [A] Notes in part on
or prior to January 31, 1995, not less than $200.0 million aggregate
principal amount of the Series [A] Notes remain outstanding following such
refinancing, replacement, or refunding.

"Permitted Investments" means: (a) Cash Equivalents; (b)
Investments in another Person, if as a result of such Investment (i) such
other Person becomes a Restricted Subsidiary of the Company or (ii) such
other Person is merged or consolidated with or into, or transfers or
conveys all or substantially all of its assets to, the Company or a
Restricted Subsidiary of the Company; (c) Investments in the Company or any
Restricted Subsidiary of the Company; (d) Investments represented by
accounts receivable created or acquired in the ordinary course of business,
extensions of trade credit on commercially reasonable terms in accordance
with normal trade practices or liabilities to the Company or any Restricted
Subsidiary represented by customer credit card obligations; (e) commissions
and advances to employees of the Company and its Subsidiaries in the
ordinary course of business; (f) investments representing notes, securities
or other instruments or obligations acquired in connection with the sale of
assets; (g) Investments in the form of the sale (on a "true-sale" non-
recourse basis) of receivables transferred from the Company or any
Restricted Subsidiary, or transfers of cash, to an Unrestricted Subsidiary
as a capital contribution or in exchange for Indebtedness of such
Unrestricted Subsidiary or cash; (h) Permitted Joint Venture Investments;
(i) Investments representing capital stock or obligations issued to the
Company or any Restricted Subsidiary in settlement of claims against any
other Person by reason of a composition or readjustment of debt or a
reorganization of any debtor of the Company or such Restricted Subsidiary;
(j) loans or advances to vendors in connection with in-store merchandising
to be repaid either on a lump-sum basis or over a period of time by the
delivery of merchandise; (k) loans or advances to sublessees in an
aggregate amount not to exceed $5 million at any time outstanding; (l)
construction advances to developers; (m) Investments in swap agreements,
cap agreements, collar agreements, insurance arrangements or any other
agreement or arrangement, in each case designed to provide protection
against fluctuations in interest rates, the cost of currency or the cost of
goods (other than inventory); and (n) other Investments not to exceed
$100.0 million in the aggregate.

"Permitted Joint Venture Investments" means Investments in joint
ventures or other "risk-sharing" arrangements (which may include
investments in partnerships or corporations) the purpose of which is to
engage in the same or similar lines of business as the operating business
of the Company or a Restricted Subsidiary or in businesses consistent with
the fundamental nature of the operating business of the Company or a
Restricted Subsidiary or are necessary or desirable to facilitate the
operating business of the Company or a Restricted Subsidiary and is a
business or operation that the Company or a Restricted Subsidiary could
engage in directly under the terms hereof and that constitute "Investments"
solely due to the fact that Persons other than the Company or a Restricted
Subsidiary have an interest in such business or operation; provided,
--------
however, that the business of such joint venture, partnership, or
- -------
corporation is, by the terms of the applicable joint venture agreement,
partnership agreement or corporate charter, prohibited from the making of
Investments other than Permitted Investments to the extent the Company
could make such Investments directly in accordance with the terms hereof.

<PAGE>

"Permitted Liens" means: (a) Liens (other than Liens on
inventory) securing Indebtedness referred to in any of clauses (a) through
(d), clauses (f) through (j) and clause (l) of the definition of "Permitted
Indebtedness"; (b) Liens incurred and pledges and deposits made in the
ordinary course of business in connection with liability insurance,
workers' compensation, unemployment insurance, old-age pensions, and other
social security benefits other than in respect of employee benefit plans
subject to the Employee Retirement Income Security Act of 1974, as amended;
(c) Liens securing performance, surety, and appeal bonds and other
obligations of like nature incurred in the ordinary course of business; (d)
Liens on goods and documents securing trade letters of credit; (e) Liens
imposed by law, such as carriers', warehousemen's, mechanics',
materialmen's, and vendor's Liens, incurred in the ordinary course of
business and securing obligations which are not yet due or which are being
contested in good faith by appropriate proceedings; (f) Liens securing the
payment of taxes, assessments, and governmental charges or levies, either
(i) not delinquent or (ii) being contested in good faith by appropriate
legal or administrative proceedings and as to which adequate reserves shall
have been established on the books of the relevant Person in conformity
with GAAP; (g) zoning restrictions, easements, rights of way, reciprocal
easement agreements, operating agreements, covenants, conditions, or
restrictions on the use of any parcel of property that are routinely
granted in real estate transactions or do not interfere in any material
respect with the ordinary conduct of the business of the Company and its
Subsidiaries or the value of such property for the purpose of such
business; (h) Liens on property existing at the time such property is
acquired; (i) purchase money Liens upon or in any property acquired or held
in the ordinary course of business to secure Indebtedness incurred solely
for the purpose of financing the acquisition of such property; (j) Liens on
the assets of any Subsidiary of the Company at the time such Subsidiary is
acquired; (k) Liens with respect to obligations in outstanding amounts not
to exceed $25.0 million at any particular time and that (i) are not
incurred in connection with the borrowing of money or obtaining advances or
credit (other than trade credit in the ordinary course of business) and
(ii) do not in the aggregate interfere in any material respect with the
ordinary conduct of the business of the Company and its Subsidiaries; and
(l) without limiting the ability of the Company or any Restricted
Subsidiary to create, incur, assume, or suffer to exist any Lien otherwise
permitted under any of the foregoing clauses, any extension, renewal, or
replacement, in whole or in part, of any Lien described in the foregoing
clauses; provided, however, that any such extension, renewal, or
-------- -------
replacement Lien is limited to the property or assets covered by the Lien
extended, renewed, or replaced or substitute property or assets, the value
of which is determined by the Board of Directors of the Company to be not
materially greater than the value of the property or assets for which the
substitute property or assets are substituted.

"Plan" means the Amended Joint Plan of Reorganization of R.H.
Macy & Co., Inc. and Certain of its Subsidiaries filed on August 31, 1994
with the United States Bankruptcy Court for the Southern District of New
York.

"Purchase Amount" means the aggregate outstanding principal
amount of the Series [A] Notes required to be offered to be purchased by
the Company pursuant to an Offer to Purchase.

<PAGE>

"Purchase Date" means, with respect to any Offer to Purchase, a
date specified by the Company in such Offer to Purchase not less than 30
days or more than 60 days after the date of the mailing of the Notice of
such Offer to Purchase (or such other time period as is necessary for the
Offer to Purchase to remain open for a sufficient period of time to comply
with applicable securities laws).

"Restricted Subsidiary" means any direct or indirect subsidiary
(as that term is defined in Regulation S-X promulgated by the Securities
and Exchange Commission) other than an Unrestricted Subsidiary.

"Sale and Leaseback Transaction" means, with respect to any
Person, an arrangement with any bank, insurance company or other lender or
investor or to which such lender or investor is a party, providing for the
leasing pursuant to a Capital Lease by such Person or any Subsidiary of
such Person of any property or asset of such Person or such Subsidiary
which has been or is being sold or transferred by such Person or such
Subsidiary to such lender or investor or to any Person to whom funds have
been or are to be advanced by such lender or investor on the security of
such property or asset.

"Senior Indebtedness" means any Indebtedness of the Company or
its Subsidiaries other than Subordinated Indebtedness.

"Significant Subsidiary" means any Subsidiary which accounts for
2.5% or more of the total consolidated assets of the Company and its
Subsidiaries as of any date of determination or 2.5% or more of the total
consolidated revenues of the Company and its Subsidiaries for the most
recently concluded fiscal quarter.

"Subordinated Indebtedness" means any Indebtedness of the Company
which is expressly subordinated in right of payment to the Series [A]
Notes.

"Unrestricted Subsidiary" means (a) FDS National Bank, FACS
Group, Inc., Federated Credit Holdings Corporation, Prime Credit Card
Master Trust (to the extent that it is deemed to be a Subsidiary), Prime
Receivables Corporation, Seven Hills Funding Corporation, Ridge Capital
Trust II (to the extent that it is deemed to be a Subsidiary), Macy
Financial, Inc., Macy Receivables Funding Corp., Macy Receivables Master
Servicing Corp., Macy Credit Corp., Macy's Bank, and Macy's Data and Credit
Services Corp., (b) any Subsidiary of the Company the primary business of
which consists of, and is restricted by the charter, partnership agreement
or similar organizational document of such Subsidiary to, financing
operations on behalf of the Company and its Subsidiaries, and/or purchasing
accounts receivable or direct or indirect interests therein, and/or making
loans secured by accounts receivable or direct or indirect interests
therein (and business related to the foregoing), or which is otherwise
primarily engaged in, and restricted by its charter, partnership agreement
or similar organizational document to, the business of a finance company
(and business related thereto), which, in accordance with the provisions of
this Supplemental Indenture, has been designated by Board Resolution as an
Unrestricted Subsidiary, in each case unless and until any of the
Subsidiaries of the Company referred to in the foregoing clauses (a) and
(b) is, in accordance with the provisions of this Supplemental Indenture,

<PAGE>

designated by a Board Resolution as a Restricted Subsidiary, and (c) any
Subsidiary of the Company of which, in the case of a corporation, more than
50% of the issued and outstanding capital stock having ordinary voting
power to elect a majority of the board of directors of such corporation
(irrespective of whether at the time capital stock of any other class or
classes of such corporation has or might have voting power upon the
occurrence of any contingency), or, in the case of any partnership or other
legal entity, more than 50% of the ordinary equity capital interests, is at
the time directly or indirectly owned or controlled by one or more
Unrestricted Subsidiaries and the primary business of which consists of,
and is restricted by the charter, partnership agreement or similar
organizational document of such Subsidiary to, financing operations on
behalf of the Company and its Subsidiaries, and/or purchasing accounts
receivable or direct or indirect interests therein, and/or making loans
secured by accounts receivable or direct or indirect interests therein (and
business related to the foregoing), or which is otherwise primarily engaged
in, and restricted by its charter, partnership agreement or similar
organizational document to, the business of a finance company (and business
related thereto).

ARTICLE III. CERTAIN COVENANTS.

Section 3.1. Indebtedness.

The Company shall not directly or indirectly incur, assume,
guarantee, or otherwise become liable with respect to any Indebtedness
other than Permitted Indebtedness referred to in clauses (a) through (c),
clauses (e) and (f), and clauses (h) through (l) of the definition thereof
unless immediately thereafter the Interest Coverage Ratio is 2.25 to 1.0 or
greater, after giving effect, on a pro forma basis as if incurred at the
beginning of the applicable period, to the obligations of the Company and
the Restricted Subsidiaries in respect of such Indebtedness.

The Company shall not permit any Restricted Subsidiary to
directly or indirectly incur, assume, guarantee, or otherwise become liable
with respect to, any Indebtedness (A) other than Permitted Indebtedness
referred to in clauses (a) through (c), clauses (e) and (f), clauses (h)
through (j), and clause (l) of the definition thereof and (B) other than
Permitted Indebtedness referred to in clauses (d) and (g) of the definition
thereof if, in the case of Permitted Indebtedness incurred pursuant to this
clause (B), immediately thereafter the Interest Coverage Ratio is 2.25 to
1.0 or greater, after giving effect, on a pro forma basis as if incurred at
the beginning of the applicable period, to the obligations of the Company
and the Restricted Subsidiaries in respect of such Indebtedness.

Section 3.2. Liens.

The Company shall not, and shall not permit any Restricted
Subsidiary to, create, incur, assume, or suffer to exist any Liens upon any
of their respective assets, other than Permitted Liens, unless the Series
[A] Notes are secured by an equal and ratable Lien on the same assets.

<PAGE>

Section 3.3. Restricted Payments.

The Company shall not, and shall not permit any Restricted
Subsidiary to, (a) declare or pay any dividend on, or make any other
distribution on account of, the Company's capital stock; (b) purchase,
redeem, or otherwise acquire or retire for value any capital stock
(including any option, warrant, or right to purchase capital stock) of the
Company owned beneficially by a Person other than a wholly owned Subsidiary
of the Company; (c) purchase, redeem, or otherwise acquire or retire for
value the principal of any Subordinated Indebtedness (other than the
approximately $345.0 million principal amount of notes outstanding pursuant
to the Loan Agreement, dated as of December 30, 1987, by and among Allied
Stores General Real Estate Company and certain of its Subsidiaries and The
Prudential Insurance Company of America, if deemed to be subordinated by
virtue of the Company's guaranty thereof) prior to the scheduled maturity
thereof other than pursuant to mandatory scheduled redemptions or
repayments; or (d) make any Investment other than Permitted Investments
(all such dividends, distributions, purchases, redemptions, or Investments
being collectively referred to as "Restricted Payments"); if, at the time
of such action, or after giving effect thereto: (i) an Event of Default
shall have occurred and is continuing; (ii) the Company could not incur at
least $1.00 of additional Indebtedness under the Interest Coverage Ratio
test in Section 3.1; or (iii) the cumulative amount of Restricted Payments
made subsequent to the Effective Date shall be greater than the sum of: (A)
50% of the Company's cumulative consolidated net income (or, a negative
amount equal to 100% of the Company's cumulative consolidated net loss, if
applicable) from January 31, 1995 through the end of the Company's fiscal
quarter next preceding the taking of such action; (B) 100% of the aggregate
net cash proceeds received by the Company from the issue or sale of capital
stock of the Company (other than redeemable capital stock), including
capital stock issued upon the conversion of convertible Indebtedness issued
on or after the Effective Date, in exchange for outstanding Indebtedness,
or from the exercise of options, warrants or rights to purchase capital
stock of the Company to any Person other than to a Subsidiary of the
Company subsequent to the Effective Date (with the Company being deemed, in
the case of capital stock issued upon conversion or in exchange for
Indebtedness, to have received net cash proceeds equal to the principal
amount of the Indebtedness so converted or exchanged); and (C) $250.0
million; provided, however, that (1) the payment of any dividend within 60
-------- -------
days after the date of declaration thereof, if such declaration complied
with the foregoing provisions on the date of such declaration, (2) the
purchase, redemption, or other acquisition or retirement for value of any
shares of capital stock of the Company in exchange for, or out of the
proceeds of, a substantially concurrent issue and sale (other than to a
Restricted Subsidiary) of other shares of capital stock (other than
redeemable capital stock) of the Company, (3) the redemption or other
acquisition or retirement for value prior to any scheduled maturity of any
Subordinated Indebtedness in exchange for, or out of the proceeds of, a
substantially concurrent issue and sale of (a) capital stock (other than
redeemable capital stock) of the Company or (b) Subordinated Indebtedness
of the Company, (4) any purchase, redemption, or other acquisition or
retirement for value of any capital stock (including any option, warrant,
or right to purchase capital stock) of the Company issued to any employee
or director of the Company pursuant to any employee benefit or similar
plan, and (5) any redemption of share purchase rights issued pursuant to
[name of Federated's existing share purchase rights plan] (as the same may

<PAGE>

be amended from time to time) or any similar successor replacement share
purchase rights plan involving an aggregate redemption price (A) for any
one such redemption of less than $10.0 million and (B) for all such
redemptions of not more than $20.0 million shall not be deemed to
constitute "Restricted Payments" and shall not be prohibited under this
Section.

Section 3.4. Change of Control.

Following any Change of Control, the Company shall offer to
repurchase the Series [A] Notes pursuant to an Offer to Purchase at a
purchase price equal to 101% of the principal amount thereof (or, if the
Series [A] Notes are then redeemable at 100% of the principal amount
thereof, 100% of the principal amount thereof), plus interest accrued
thereon to the date established for such repurchase. Such Offer to
Purchase shall be made by mailing of a Notice to the Trustee and to each
Holder at the address appearing in the Security Register, by first class
mail, postage prepaid, by the Company or, at the Company's request, by the
Trustee in the name and at the expense of the Company, on a date selected
by the Company, which shall be not more than 60 days following the Change
in Control. On the Purchase Date, the Company shall (i) accept for payment
the Series [A] Notes or portions thereof tendered pursuant to the Offer to
Purchase, (ii) deposit with the Paying Agent money sufficient to pay the
purchase price of all Series [A] Notes or portions thereof so accepted, and
(iii) deliver to the Trustee the Series [A] Notes so accepted. The Paying
Agent shall promptly mail to the Holders of Series [A] Notes so accepted
payment in an amount equal to the purchase price, and the Trustee shall
promptly authenticate and mail to such Holders new Series [A] Notes equal
in principal amount to any unpurchased portion of the Series [A] Notes
surrendered.

Section 3.5. Payment Restrictions Affecting Restricted Subsidiaries.

The Company shall not, and shall not permit any Restricted
Subsidiary to, directly or indirectly, create or otherwise cause or suffer
to exist any contractual restriction on the ability of any Restricted
Subsidiary to (a) pay any dividend on, or make any other distribution on
account of, its capital stock or pay any Indebtedness owed to the Company
or a Restricted Subsidiary or (b) make loans or advances to the Company or
a Restricted Subsidiary, except for (i) restrictions existing as of the
Effective Date, (ii) restrictions in the documentation setting forth the
terms of or entered into in connection with any Permitted Indebtedness,
(iii) restrictions in the documentation setting forth the terms of or
entered into in connection with the sale of such Restricted Subsidiary to a
third party, (iv) restrictions applicable to a Person acquired by the
Company or a Subsidiary of the Company or designated as a Restricted
Subsidiary, which exist at the time of such acquisition or designation, or
(v) other restrictions arising in the ordinary course of business otherwise
than in connection with financing transactions.

<PAGE>

Section 3.6. Issuance of Subsidiary Preferred Stock.

The Company shall not permit any Restricted Subsidiary to issue
any shares of preferred stock other than (a) preferred stock issued to the
Company or a wholly owned Subsidiary of the Company, or (b) preferred stock
issued to any other Person if, after giving effect thereto on a pro forma
basis as if such preferred stock were issued at the beginning of the
applicable period, such Restricted Subsidiary could have incurred
additional Indebtedness in an amount equal to the aggregate liquidation
value of such preferred stock (assuming such Indebtedness were incurred to
the Person(s) and for the purposes to which and for which such preferred
stock was issued).

Section 3.7. Asset Sales.

The Company shall not, and shall not permit any Restricted
Subsidiary to, consummate any sale of assets (other than sales of
inventories, goods, fixtures, and accounts receivable in the ordinary
course of business, sales of assets to the Company or a wholly owned
Subsidiary of the Company) unless such sale is for fair market value and,
in the case of individual sales of assets for which the consideration
received (including liabilities assumed) is more than $10.0 million at
least 75% of the consideration therefor (other than liabilities assumed)
consists of either (a) any combination of cash, cash equivalents, or
promissory notes secured by letters of credit or similar assurances of
payment issued by commercial banks of recognized standing or (b) capital
asset contributions or capital expenditures made for or on behalf of the
Company or a Subsidiary by a third party. Asset sales not subject to
Section 3.8 below will be presumed to be for fair market value if the
consideration received is less than $10.0 million and will be conclusively
presumed to have been for fair market value if the transaction is
determined by the Board of Directors to be fair, from a financial point of
view, to the Company. To the extent that the aggregate amount of cash
proceeds (net of all legal, title and recording tax expenses, commissions
and other fees and expenses incurred, and all federal, state, provincial,
foreign and local taxes and reserves required to be accrued as a liability,
as a consequence of such sales of assets, and net of all payments made on
any Indebtedness which is secured by such assets in accordance with the
terms of any Liens upon or with respect to such assets or which must by the
terms of such Lien, or in order to obtain a necessary consent to such sale
or by applicable law be repaid out of the proceeds from such sales of
assets, and net of all distributions and other payments made to minority
interest holders in Subsidiaries or joint ventures as a result of such
sales of assets) from such sales of assets that shall not have been
reinvested in the business of the Company or its Subsidiaries or used to
reduce Senior Indebtedness of the Company or its Subsidiaries within 12
months of the receipt of such proceeds (with cash equivalents being deemed
to be proceeds upon receipt of such cash equivalents and cash payments
under promissory notes secured as aforesaid being deemed to be proceeds
upon receipt of such payments) shall exceed $50.0 million ("Excess Sale
Proceeds") from time to time, the Company shall offer to repurchase
pursuant to an Offer to Purchase Series [A] Notes with such Excess Sale
Proceeds (on a pro rata basis with any other Senior Indebtedness of the
Company or its Subsidiaries required by the terms of such Indebtedness to
be repurchased with such Excess Sale Proceeds, based on the principal
amount of such Senior Indebtedness required to be repurchased) at 100% of

<PAGE>

principal amount, plus accrued interest, and to pay related costs and
expenses. Such Offer to Purchase shall be made by mailing of a Notice to
the Trustee and to each Holder at the address appearing in the Security
Register, by first class mail, postage prepaid, by the Company or, at the
Company's request, by the Trustee in the name and at the expense of the
Company, on a date selected by the Company not later than 12 months from
the date such Offer to Purchase is required to be made pursuant to the
immediately preceding sentence. To the extent that the aggregate purchase
price for Series [A] Notes or other Senior Indebtedness tendered pursuant
to such offer to repurchase is less than the aggregate purchase price
offered in such offer, an amount of Excess Sale Proceeds equal to such
shortfall will cease to be Excess Sale Proceeds and may thereafter be used
for general corporate purposes. On the Purchase Date, the Company shall
(i) accept for payment Series [A] Notes or portions thereof tendered
pursuant to the Offer to Purchase in an aggregate principal amount equal to
the Purchase Amount (selected by such method as the Trustee shall deem fair
and appropriate and which may provide for the selection for purchase of
portions (equal to $1,000 or an integral multiple of $1,000) of the
principal amount of Series [A] Notes of a denomination larger than $1,000),
(ii) deposit with the Paying Agent money sufficient to pay the purchase
price of all Series [A] Notes or portions thereof so accepted, and
(iii) deliver to the Trustee Series [A] Notes so accepted. The Paying
Agent shall promptly mail to the Holders of Series [A] Notes so accepted
payment in an amount equal to the purchase price, and the Trustee shall
promptly authenticate and mail to such Holders a new Series [A] Note equal
in principal amount to any unpurchased portion of each Series [A] Note
surrendered.

Section 3.8. Transactions with Affiliates.

The Company shall not, and shall not permit any Restricted
Subsidiary to, (a) sell, lease, transfer, or otherwise dispose of any of
its properties, assets, or securities to, (b) purchase any property,
assets, or securities from, or (c) enter into any contract or agreement
with or for the benefit of an Affiliate (as defined below) of the Company
or a Subsidiary of the Company (other than the Company or a wholly-owned
Subsidiary of the Company) (an "Affiliate Transaction") other than
Affiliate Transactions in the ordinary course of business which in the
aggregate do not exceed (i) $25.0 million in any one Affiliate Transaction
or series of related Affiliate Transactions unless a majority of the
disinterested members of the Board of Directors determines that such
Affiliate Transaction or series of Affiliate Transactions is on terms not
less favorable to the Company or such Restricted Subsidiary than those that
would apply to an arms-length transaction with an unaffiliated party and
(ii) $100.0 million in any one Affiliate Transaction or series of related
Affiliate Transactions unless the test set forth in clause (i) has been
satisfied and the Board of Directors of the Company shall have been advised
by an independent financial advisor that, in the opinion of such advisor,
such Affiliate Transaction or series of Affiliate Transactions is fair,
from a financial point of view, to the Company or such Restricted
Subsidiary. Solely for purposes of this Section 3.8, the term "Affiliate"
shall have the meaning set forth in Rule 405 promulgated by the Securities
and Exchange Commission under the Securities Act of 1933, as amended,
provided, however, that there will be a rebuttable presumption that any
- -------- -------
Person that holds more than 10% of the stock having ordinary voting power
of an entity is an "Affiliate" of such entity.

<PAGE>

Section 3.9. Sale and Leaseback Transactions.

The Company shall not, and shall not permit any Restricted
Subsidiary to, enter into any Sale and Leaseback Transaction unless: (a)
the Capital Lease Obligation incurred in connection therewith complies with
Section 3.1 and (b) the net cash proceeds therefrom are applied in
compliance with Section 3.7 and to the extent required by Section 3.7.

Section 3.10. Merger and Certain Other Transactions.

In addition to the conditions set forth in Section 11.01 of the
Indenture, the Company, in a single transaction or through a series of
related transactions, shall not consolidate with or merge with or into any
other Person, or transfer (by lease, assignment, sale, or otherwise) all or
substantially all of its properties and assets to another Person unless
immediately after and giving effect to such transaction and the incurrence
of any Indebtedness to be incurred in connection therewith (a) the
Surviving Person shall have a consolidated net worth equal to or greater
than the consolidated net worth of the Company immediately preceding the
transaction and (b) the Surviving Person could incur $1.00 of additional
Indebtedness under the Interest Coverage Ratio test.

Section 3.11. Permitting Unrestricted Subsidiaries to Become
Restricted Subsidiaries.

The Company will not permit any Unrestricted Subsidiary to be
designated as a Restricted Subsidiary unless such Subsidiary has
outstanding no Indebtedness except such Indebtedness as the Company could
permit it to become liable for immediately after becoming a Restricted
Subsidiary and such Subsidiary is otherwise in compliance with all
provisions of the Indenture and this Supplemental Indenture that apply to
Restricted Subsidiaries.

Section 3.12. Paying Agent.

The Company shall not serve as Paying Agent with respect to the
Series [A] Notes. The Company shall cause a Payment Office for the Series
[A] Notes to be maintained at all times in New York, New York.

ARTICLE IV. ADDITIONAL EVENTS OF DEFAULT.

Section 4.1. Additional Events of Default.

In addition to the Events of Default set forth in the Indenture,
the term "Event of Default," whenever used in the Indenture or this
Supplemental Indenture with respect to the Series [A] Notes, means any one
of the following events (whatever the reason for such Event of Default and
whether it may be voluntary or involuntary or be effected by operation of

<PAGE>

law or pursuant to any judgment, decree, or order of any court or any
order, rule, or regulation of any administrative or governmental body):

(a) the failure to redeem the Series [A] Notes when required
pursuant to the terms and conditions thereof or to pay the repurchase
price for Series [A] Notes to be repurchased in accordance with
Section 3.4 or 3.7 of this Supplemental Indenture;

(b) any nonpayment at maturity or other default is made under
any agreement or instrument relating to any other Indebtedness of the
Company or any Restricted Subsidiary (the unpaid principal amount of
which is not less than $50.0 million), and, in any such case, such
default (i) continues beyond any period of grace provided with respect
thereto and (ii) results in such Indebtedness becoming due prior to
its stated maturity or occurs at the final maturity of such
Indebtedness; provided, however, that, subject to the provisions of
-------- -------
Section 9.01 and 8.08 of the Indenture, the Trustee will not be deemed
to have knowledge of such nonpayment or other default unless either
(1) a Responsible Officer of the Trustee has actual knowledge of
nonpayment or other default or (2) the Trustee has received written
notice thereof from the Company, from any Holder, from the holder of
any such Indebtedness or from the trustee under the agreement or
instrument relating to such Indebtedness;

(c) the entry of one or more judgments or orders for the payment
of money against the Company or any Restricted Subsidiary, which
judgments and orders create a liability of $50.0 million or more in
excess of insured amounts and have not been stayed (by appeal or
otherwise), vacated, discharged, or otherwise satisfied within 60
calendar days of the entry of such judgments and orders; and

(d) Events of Default of the type and subject to the conditions
set forth in clauses (vi) and (vii) of Section 8.01(a) of the
Indenture in respect of any Significant Subsidiary or, in related
events, any group of Subsidiaries which, if considered in the
aggregate, would be a Significant Subsidiary of the Company.

ARTICLE V. DEFEASANCE.

Section 5.1. Applicability of Article V of the Indenture.

(a) The Series [A] Notes shall be subject to Defeasance and
Covenant Defeasance as provided in Article V of the Indenture; provided,
--------
however, that no Defeasance or Covenant Defeasance shall be effective
- -------
unless and until:

(i) there shall have been delivered to the Trustee the
opinion of a nationally recognized independent public accounting firm
certifying the sufficiency of the amount of the moneys, U.S.
Government Obligations, or a combination thereof, placed on deposit to
pay, without regard to any reinvestment, the principal of and any

<PAGE>

premium and interest on the Series [A] Notes on the Stated Maturity
thereof or on any earlier date on which the Series [A] Notes shall be
subject to redemption;

(ii) there shall have been delivered to the Trustee the
certificate of a Responsible Officer of the Company certifying, on
behalf of the Company, to the effect that such Defeasance or Covenant
Defeasance will not result in a breach or violation of, or constitute
a default under, any agreement to which the Company is a party or
violate any law to which the Company is subject; and

(iii) No Event of Default or event that (after notice or
lapse of time or both) would become an Event of Default shall have
occurred and be continuing at the time of such deposit or, with regard
to any Event of Default or any such event specified in Sections
8.01(a)(vi) and (vii), at any time on or prior to the 124th calendar
day after the date of such deposit (it being understood that this
condition will not be deemed satisfied until after such 124th calendar
day).

(b) Upon the exercise of the option provided in Section 5.01 of
the Indenture to have Section 5.03 of the Indenture applied to the
Outstanding Series [A] Notes, in addition to the obligations from which
the Company will be released specified in the Indenture, the Company will
be released from its obligations under Article III hereof.

ARTICLE VI. MISCELLANEOUS.

Section 6.1. Reference to and Effect on the Indenture.

This Supplemental Indenture shall be construed as supplemental to
the Indenture and all the terms and conditions of this Supplemental
Indenture shall be deemed to be part of the terms and conditions of the
Indenture. Except as set forth herein, the Indenture heretofore executed
and delivered is hereby (i) incorporated by reference in this Supplemental
Indenture and (ii) ratified, approved and confirmed.

Section 6.2. Waiver of Certain Covenants.

The Company may omit in any particular instance to comply with
any term, provision, or condition set forth in Article III hereof if the
Holders of a majority in principal amount of the Outstanding Series [A]
Notes shall, by Act of such Holders, either waive such compliance in such
instance or generally waive compliance with such term, provision, or
condition, but no such waiver will extend to or affect such term,
provision, or condition except to the extent so expressly waived, and,
until such waiver shall become effective, the obligations of the Company
and the duties of the Trustee in respect of any such term, provision, or
condition will remain in full force and effect.

Section 6.3. Supplemental Indenture May be Executed In Counterparts.

<PAGE>

This instrument may be executed in any number of counterparts,
each of which will be an original; but such counterparts will together
constitute but one and the same instrument.

Section 6.4. Effect of Headings.

The Article and Section headings herein are for convenience only
and will not affect the construction hereof.

<PAGE>

In Witness Whereof, the parties hereto have caused this
Supplemental Indenture to be duly executed, and their respective corporate
seals to be hereunto affixed and attested, all as of the day and year first
above written.

[Seal] Federated Department Stores, Inc.

By:
----------------------
Name:
--------------------
Title:
-------------------------------
Attest:

- -------------------------
Name:
-----------------------------------
Title:
----------------------------------

The First National Bank of Boston,
as Trustee

By:
----------------------------------
Name:
--------------------------------
Title:
-------------------------------

Attest:

- -----------------------------------
Name:
------------------------------
Title:
-----------------------------

<PAGE>

STATE OF )
-------------
) ss.:
COUNTY OF )
----------

____________________________
Notary Public

In Witness Whereof, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.

____________________________
Notary Public

<PAGE>

STATE OF )
------------
) ss.:
COUNTY OF )
---------

____________________________
Notary Public

In Witness Whereof, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.

----------------------------
Notary Public

<PAGE>

Schedule I

Particular Terms of Series B Notes and Series C Notes

Maturity: The Series B Notes will mature on June 30, 2002.

The Series C Notes will mature on June 30, 2005.

Interest: The interest rate per annum on the Series B Notes shall be
equal to the Interpolated Rate plus 350 basis points.
"Interpolated Rate" means the average, for the ten
consecutive trading days ending on the sixth trading day
immediately preceding the Effective Date, of the
interpolated yield to June 30, 2002 based on the most
actively traded 7 year and 10 year United States Treasury
securities at 3:00 p.m. Eastern Time, as reported on
Bloomburg Financial Markets news service.

The interest rate per annum on the Series C Notes shall be
equal to the Interpolated Rate plus 375 basis points.
"Interpolated Rate" means the average, for the ten
consecutive trading days ending on the sixth trading day
immediately preceding the Effective Date, of the
interpolated yield to June 30, 2005 based on the most
actively traded 10 year and 30 year United States Treasury
securities at 3:00 p.m. Eastern Time, as reported on
Bloomburg Financial Markets news service.

Redemption: The Series B Notes will be redeemable, in whole or in part,
at the option of the Company, on or after June 30, 1999, at
the redemption price of 103% of the principal amount
thereof, on or after June 30, 2000, at the redemption price
of 102% of the principal amount thereof, and on or after
June 30, 2001, at the redemption price of 101% of the
principal amount thereof. In addition, the Series B Notes
will be redeemable, in whole or in part, at the option of
the Company, on or prior to January 31, 1995, at the
redemption price of 100% of the principal amount thereof.

The Series C Notes will be redeemable, in whole or in part,
at the option of the Company, on or after June 30, 2000, at
the redemption price of 105% of the principal amount
thereof, on or after June 30, 2001, at the redemption price
of 104% of the principal amount thereof, on or after June
30, 2002 at the redemption price of 103% of the principal
amount thereof, on or after June 30, 2003, at the redemption
price of 102% of the principal amount thereof, and on or
after June 30, 2004, at the redemption price of 101% of the
principal amount thereof. In addition, the Series C Notes
will be redeemable, in whole or in part, at the option of
the Company, on or prior to January 31, 1995, at the
redemption price of 100% of the principal amount thereof.

EXHIBIT I
SECOND AMENDED JOINT PLAN OF REORGANIZATION
OF R.H. MACY & CO., INC. AND
CERTAIN OF ITS SUBSIDIARIES

<PAGE>
United States Bankruptcy Court
FOR THE SOUTHERN DISTRICT OF NEW YORK
----------------

</TABLE>

DAVID G. HEIMAN (DH 9111)
HARVEY R. MILLER (HM 6078)
RICHARD M. CIERI (RC 6062)
RICHARD P. KRASNOW (RK 5707)
SCOTT J. DAVIDO (SD 7424)
JUDY G.Z. LIU (JL 6449)
PAUL E. HARNER (PH 8276)
WEIL, GOTSHAL & MANGES
JONES, DAY, REAVIS & POGUE
767 Fifth Avenue
North Point
New York, New York 10153
901 Lakeside Avenue
(212) 310-8000
Cleveland, Ohio 44114
ATTORNEYS FOR DEBTORS AND
(216) 586-3939
DEBTORS IN POSSESSION
ROBERT A. PROFUSEK (RP 4594)
MARK E. BETZEN (MB 0176)
JONES, DAY, REAVIS & POGUE
599 Lexington Avenue
New York, New York 10022
(212) 326-3939
ATTORNEYS FOR FEDERATED
DEPARTMENT STORES, INC.
OCTOBER 21, 1994

<PAGE>

TABLE OF CONTENTS
Page
----

INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . I-1

ARTICLE I. DEFINED TERMS, RULES OF INTERPRETATION
AND COMPUTATION OF TIME . . . . . . . . . . . . . I-1
A. Defined Terms . . . . . . . . . . . . . . . . . . . . I-1
1. "49 Store Bank Group" . . . . . . . . . . . . . . I-1
2. "1992 Loss Carrybacks" . . . . . . . . . . . . . . I-1
3. "Administrative Claim" . . . . . . . . . . . . . . I-1
4. "Affiliate" . . . . . . . . . . . . . . . . . . . I-1
5. "Agent Bank" . . . . . . . . . . . . . . . . . . . I-1
6. "Agent Bank Charges" . . . . . . . . . . . . . . . I-2
7. "Allowed Bank Loan Claim" . . . . . . . . . . . . I-2
8. "Allowed Claim" or "Allowed Unsecured Claim" . . . I-2
9. "Allowed . . . Claim" . . . . . . . . . . . . . . I-2
10. "Allowed Debt Security Claim" . . . . . . . . . . I-2
11. "Allowed Secondary Liability Claim" . . . . . . . I-2
12. "Bankruptcy Code" . . . . . . . . . . . . . . . . I-2
13. "Bankruptcy Court" . . . . . . . . . . . . . . . . I-3
14. "Bankruptcy Rules" . . . . . . . . . . . . . . . . I-3
15. "Bar Date" . . . . . . . . . . . . . . . . . . . . I-3
16. "Bar Date Order" . . . . . . . . . . . . . . . . . I-3
17. "Bondholders' Committee" . . . . . . . . . . . . . I-3
18. "Bullock's" . . . . . . . . . . . . . . . . . . . I-3
19. "Business Day" . . . . . . . . . . . . . . . . . . I-3
20. "Cash Investment Yield" . . . . . . . . . . . . . I-3
21. "Claim" . . . . . . . . . . . . . . . . . . . . . I-3
22. "Claims Objection Bar Date" . . . . . . . . . . . I-3
23. "Claims Resolution Committee" . . . . . . . . . . I-3
24. "Class" . . . . . . . . . . . . . . . . . . . . . I-3
25. "Combined Company" . . . . . . . . . . . . . . . . I-3
26. "Confirmation" . . . . . . . . . . . . . . . . . . I-3
27. "Confirmation Date" . . . . . . . . . . . . . . . I-3
28. "Confirmation Order" . . . . . . . . . . . . . . . I-4
29. "Creditors' Committees" . . . . . . . . . . . . . I-4
30. "CREI" . . . . . . . . . . . . . . . . . . . . . . I-4
31. "CREI Bank Group" . . . . . . . . . . . . . . . . I-4
32. "Debtors" . . . . . . . . . . . . . . . . . . . . I-4
33. "Delaware General Corporation Law" . . . . . . . . I-4
34. "DIP Credit Agreement" . . . . . . . . . . . . . . I-4
35. "Disbursing Agent" . . . . . . . . . . . . . . . . I-4
36. "Disclosure Statement" . . . . . . . . . . . . . . I-4
37. "Disputed Claim" . . . . . . . . . . . . . . . . . I-4
38. "Disputed Claims Reserve" . . . . . . . . . . . . I-5
39. "Disputed Insured Claim" and "Disputed Uninsured
Claim" . . . . . . . . . . . . . . . . . . . . . . I-5
40. "Distributable Shares (Pool A)" . . . . . . . . . I-5
41. "Distributable Shares (Pool B)" . . . . . . . . . I-5
42. "Distributable Warrants" . . . . . . . . . . . . . I-5
43. "Distribution Record Date" . . . . . . . . . . . . I-5
44. "Document Reviewing Centers" . . . . . . . . . . . I-5
45. "Effective Date" . . . . . . . . . . . . . . . . . I-5

I-i

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----

46. "Effective Time of the Federated/Macy's Merger" . I-5
47. "Estate" . . . . . . . . . . . . . . . . . . . . . I-6
48. "Face Amount" . . . . . . . . . . . . . . . . . . I-6
49. "Federal Priority Tax Claims" . . . . . . . . . . I-6
50. "Federated" . . . . . . . . . . . . . . . . . . . I-6
51. "Federated Average Market Price (Pool A)" . . . . I-6
52. "Federated Average Market Price (Pool B)" . . . . I-6
53. "Federated/Macy's Merger" . . . . . . . . . . . . I-7
54. "Federated/Macy's Merger Agreement" . . . . . . . I-7
55. "Fidelity" . . . . . . . . . . . . . . . . . . . . I-7
56. "File," "Filed" or "Filing" . . . . . . . . . . . I-7
57. "Final Order" . . . . . . . . . . . . . . . . . . I-7
58. "Fixed Cash Portion" . . . . . . . . . . . . . . . I-7
59. "FNC" . . . . . . . . . . . . . . . . . . . . . . I-7
60. "GECC" . . . . . . . . . . . . . . . . . . . . . . I-7
61. "GE Credit" . . . . . . . . . . . . . . . . . . . I-7
62. "I. Magnin" . . . . . . . . . . . . . . . . . . . I-7
63. "Indenture Trustees" . . . . . . . . . . . . . . . I-7
64. "Indenture Trustee Charging Lien" . . . . . . . . I-7
65. "Insured Claim" . . . . . . . . . . . . . . . . . I-7
66. "Intercompany Claim" . . . . . . . . . . . . . . . I-7
67. "Interest" . . . . . . . . . . . . . . . . . . . . I-8
68. "IRS" . . . . . . . . . . . . . . . . . . . . . . I-8
69. "IRS Settlement Agreement" . . . . . . . . . . . . I-8
70. "John Hancock" . . . . . . . . . . . . . . . . . . I-8
71. "John Hancock Kings Plaza Claims" . . . . . . . . I-8
72. "John Hancock KPM Note" . . . . . . . . . . . . . I-8
73. "John Hancock Plaza Store Note" . . . . . . . . . I-8
74. "KPM" . . . . . . . . . . . . . . . . . . . . . . I-8
75. "Macy's" . . . . . . . . . . . . . . . . . . . . . I-8
76. "Macy's/49 Store Lease Payment Guaranty" . . . . . I-8
77. "Macy's/49 Store Loan Agreement" . . . . . . . . . I-8
78. "Macy's/49 Store Loan Guaranty" . . . . . . . . . I-9
79. "Macy's/49 Store Operating Subsidiary Debtors" . . I-9
80. "Macy's/49 Store Real Estate Subsidiary Debtors" . I-9
81. "Macy's Bank Loan Agreements" . . . . . . . . . . I-9
82. "Macy's California" . . . . . . . . . . . . . . . I-9
83. "Macy's/CREI Lease Payment Guaranty" . . . . . . . I-9
84. "Macy's/CREI Loan Agreement" . . . . . . . . . . . I-9
85. "Macy's/CREI Operating Subsidiary Debtors" . . . . I-9
86. "Macy's/CREI Real Estate Subsidiary Debtors" . . . I-9
87. "Macy's/CREI Swap Agreement" . . . . . . . . . . . I-9
88. "Macy's Financial" . . . . . . . . . . . . . . . I-10
89. "Macy's/GECC Interest Guaranty" . . . . . . . . I-10
90. "Macy's/GECC Loan Agreement" . . . . . . . . . . I-10
91. "Macy's/GECC Operating Subsidiary Debtors" . . . I-10
92. "Macy's/Macy's South Liquidated Damages Guaranty"
I-10
93. "Macy's Miscellaneous Subsidiary Debtors" . . . I-10
94. "Macy's Nondebtor Subsidiaries" . . . . . . . . I-10
95. "Macy's Northeast" . . . . . . . . . . . . . . . I-10
96. "Macy's Operating Subsidiary Debtors" . . . . . I-10

I-ii

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97. "Macy's/Prudential 1986 Mortgage Notes" . . . . I-10
98. "Macy's/Prudential 1987 Mortgage Notes" . . . . I-11
99. "Macy's/Prudential Loan Agreement" . . . . . . . I-11
100."Macy's/Prudential Mortgage Notes" . . . . . . I-11
101."Macy's/Prudential Operating Subsidiary
Debtors" . . . . . . . . . . . . . . . . . . . . I-11
102. "Macy's/Prudential Real Estate Subsidiary
Debtors" . . . . . . . . . . . . . . . . . . . . I-11
103. "Macy's Real Estate Subsidiary Debtors" . . I-11
104. "Macy's Senior Subordinated Debentures" . . I-11
105. "Macy's Senior Subordinated Debentures
Assumption Agreement" . . . . . . . . . . . . . I-11
106. "Macy's Senior Subordinated Debentures
Guarantors" . . . . . . . . . . . . . . . . . . I-11
107. "Macy's Senior Subordinated Debentures
Guaranty" . . . . . . . . . . . . . . . . . . . I-11
108. "Macy's Senior Subordinated Debentures
Indenture" . . . . . . . . . . . . . . . . . . . I-11
109. "Macy's South" . . . . . . . . . . . . . . I-12
110. "Macy's Specialty" . . . . . . . . . . . . I-12
111. "Macy's Subordinated Debentures" . . . . . I-12
112. "Macy's Subordinated Debentures Assumption
Agreement" . . . . . . . . . . . . . . . . . . . I-12
113. "Macy's Subordinated Debentures Guarantors" I-12
114. "Macy's Subordinated Debentures Guaranty" . I-12
115. "Macy's Subordinated Debentures Indenture" I-12
116. "Macy's Subordinated Discount Debentures" . I-12
117. "Macy's Subordinated Discount Debentures
Assumption Agreement" . . . . . . . . . . . . . I-12
118. "Macy's Subordinated Discount Debentures
Guarantors" . . . . . . . . . . . . . . . . . . I-12
119. "Macy's Subordinated Discount Debentures
Guaranty" . . . . . . . . . . . . . . . . . . . I-12
120. "Macy's Subordinated Discount Debentures
Indenture" . . . . . . . . . . . . . . . . . . . I-13
121. "Macy's Subsidiaries" . . . . . . . . . . . I-13
122. "Macy's Subsidiary Debtors" . . . . . . . . I-13
123. "Macy's/Swiss Bank Liquidated Damages
Agreement" . . . . . . . . . . . . . . . . . . . I-13
124. "Macy's/WCB Guarantor Debtors" . . . . . . I-13
125. "Macy's/WCB Guaranty" . . . . . . . . . . . I-13
126. "Macy's/WCB (Junior Lien) Subsidiary Debtors"
I-13
127. "Macy's/WCB Loan Agreement" . . . . . . . . I-13
128. "Macy's/WCB Obligor Debtors" . . . . . . . I-14
129. "Macy's/WCB Real Estate (First Lien)
Subsidiary Debtors" . . . . . . . . . . . . . . I-14
130. "Macy's/WCB Swap Agreement" . . . . . . . . I-14
131. "MCO" . . . . . . . . . . . . . . . . . . . I-14
132. "New Combined Company Common Stock" . . . . I-14
133. "New Combined Company Preferred Stock" . . I-14
134. "New Combined Company Share Purchase Rights"
I-14
135. "New Combined Company Share Purchase Rights
Agreement" . . . . . . . . . . . . . . . . . . . I-14
136. "New Debt" . . . . . . . . . . . . . . . . I-14
137. "New Debt Instruments" . . . . . . . . . . I-14
138. "New Equity" . . . . . . . . . . . . . . . I-14
139. "New GECC Mortgage Notes" . . . . . . . . . I-14
140. "New GECC Mortgage Note Agreement" . . . . I-15
141. "New Global Indenture" . . . . . . . . . . I-15
142. "New John Hancock KPM Note Override Agreement"
I-15
143. "New John Hancock Plaza Store Note" . . . . I-15
144. "New John Hancock Plaza Store Note Agreement"
I-15
145. "New Macy's Kings Plaza Real Estate" . . . I-15
146. "New Macy's Primary Real Estate" . . . . . I-15
147. "New Macy's Warehouse Real Estate" . . . . I-15

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----

148. "New Mortgage Notes" . . . . . . . . . . . I-15
149. "New Mortgage Notes Agreements" . . . . . . I-15
150. "New Prudential Mortgage Note and Guaranty
Agreement" . . . . . . . . . . . . . . . . . . . I-15
151. "New Prudential Mortgage Notes" . . . . . . I-15
152. "New Securities" . . . . . . . . . . . . . I-15
153. "New Series A Notes" . . . . . . . . . . . I-15
154. "New Series A Notes Supplemental Indenture" I-16
155. "New Series B Notes" . . . . . . . . . . . I-16
156. "New Series B Notes Supplemental Indenture" I-16
157. "New Series C Notes" . . . . . . . . . . . I-16
158. "New Series C Notes Supplemental Indenture" I-16
159. "New Series C Warrants" . . . . . . . . . . I-16
160. "New Series C Warrants Agreement" . . . . . I-16
161. "New Series D Warrants" . . . . . . . . . . I-16
162. "New Series D Warrants Agreement" . . . . . I-16
163. "New Unsecured Notes" . . . . . . . . . . . I-16
164. "New Warrants" . . . . . . . . . . . . . . I-16
165. "New Warrants Agreements" . . . . . . . . . I-16
166. "Obligations" . . . . . . . . . . . . . . . I-16
167. "Old Capital Stock" . . . . . . . . . . . . I-16
168. "Old Common Stock of . . ." . . . . . . . . I-16
169. "Old Debt Securities" . . . . . . . . . . . I-17
170. "Old Debt Securities Assumption Agreements" I-17
171. "Old Debt Securities Guaranties" . . . . . I-17
172. "Old Debt Securities Guarantors" . . . . . I-17
173. "Old Indentures" . . . . . . . . . . . . . I-17
174. "Old Preferred Stock" . . . . . . . . . . . I-17
175. "Old Series I Preferred Stock" . . . . . . I-17
176. "Old Series II Preferred Stock" . . . . . . I-17
177. "Old Series III Preferred Stock" . . . . . I-17
178. "Old Stock Options" . . . . . . . . . . . . I-17
179. "Operating Subsidiary Transactions" . . . . I-17
180. "Ordinary Course Professionals Order" . . . I-17
181. "Other Priority Tax Claim" . . . . . . . . I-17
182. "Personal Injury Claims" . . . . . . . . . I-18
183. "Petition Dates" . . . . . . . . . . . . . I-18
184. "Plan" . . . . . . . . . . . . . . . . . . I-18
185. "Plan Negotiating Committee" . . . . . . . I-18
186. "Plan Proponents" . . . . . . . . . . . . . I-18
187. "Priority Claim" . . . . . . . . . . . . . I-18
188. "Priority Tax Claims" . . . . . . . . . . . I-18
189. "Pro Rata" . . . . . . . . . . . . . . . . I-18
190. "Professional" . . . . . . . . . . . . . . I-18
191. "Prudential" . . . . . . . . . . . . . . . I-19
192. "Prudential/Federated Intercreditor Agreement"
I-19
193. "Prudential/Federated Security Agreement" . I-19
194. "Quarterly Distribution Date" . . . . . . . I-19
195. "Real Estate Subsidiary Transactions" . . . I-19
196. "Real Property Executory Contracts and
Unexpired Leases" . . . . . . . . . . . . . . . I-19
197. "Reinstated" or "Reinstatement" . . . . . . I-19
198. "Reorganization Case" . . . . . . . . . . . I-20

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----

199. "Reorganized . . ." . . . . . . . . . . . . I-20
200. "Reserve Classes" . . . . . . . . . . . . . I-20
201. "Responsible Person Priority Tax Claim" . . I-20
202. "Restructuring Transactions" . . . . . . . I-20
203. "Secondary Liability Claim" . . . . . . . . I-20
204. "Secured Claim" . . . . . . . . . . . . . . I-20
205. "Securities Act" . . . . . . . . . . . . . I-20
206. "Senior Indebtedness" . . . . . . . . . . . I-20
207. "Senior Indebtedness Claim" . . . . . . . . I-21
208. "Senior Lenders" . . . . . . . . . . . . . I-21
209. "Shawmut" . . . . . . . . . . . . . . . . . I-21
210. "Stipulation of Amount and Nature of Claim" I-21
211. "Swiss Bank" . . . . . . . . . . . . . . . I-21
212. "Third-Party Disbursing Agent" . . . . . . I-21
213. "Trade Claim" . . . . . . . . . . . . . . . I-21
214. "Uninsured Claim" . . . . . . . . . . . . . I-21
215. "Unsecured Claim" . . . . . . . . . . . . . I-21
216. "Unsecured Creditors' Committee" . . . . . I-21
217. "Untendered Securities" . . . . . . . . . . I-21
218. "Voting Deadline" . . . . . . . . . . . . . I-21
219. "Voting Trustee" . . . . . . . . . . . . . I-21
220. "WCB Group" . . . . . . . . . . . . . . . . I-21
B. Rules of Interpretation and Computation of Time . . I-22
1. Rules of Interpretation . . . . . . . . . . . . I-22
2. Computation of Time . . . . . . . . . . . . . . I-22

ARTICLE II. CLASSES OF CLAIMS AND INTERESTS . . . . . . I-22
A. Claims Against and Interests in Macy's (Class M- )
I-22
----
1. Unimpaired Classes of Claims
(Classes M-1 through M-3) . . . . . . . . . . . I-22
2. Impaired Classes of Claims
(Classes M-4 through M-14) . . . . . . . . . . . I-23
3. Impaired Classes of Interests
(Classes M-15 through M-17) . . . . . . . . . . I-24
B. Claims Against and Interests in Macy's Operating
Subsidiary
Debtors (Class MOS- ) . . . . . . . . . . . . . . I-24
----
1. Unimpaired Classes of Claims
(Classes MOS-1 through MOS-3) . . . . . . . . . I-24
2. Impaired Classes of Claims
(Classes MOS-4 through MOS-13) . . . . . . . . . I-24
3. Unimpaired Class of Interests
(Class MOS-14) . . . . . . . . . . . . . . . . . I-25
C. Claims Against and Interests in Macy's Real Estate
Subsidiary Debtors (Class MRS- ) . . . . . . . . I-25
----
1. Unimpaired Classes of Claims
(Classes MRS-1 through MRS-3) . . . . . . . . . I-25
2. Impaired Classes of Claims
(Classes MRS-4 through MRS-10) . . . . . . . . . I-26
3. Unimpaired Class of Interests
(Class MRS-11) . . . . . . . . . . . . . . . . . I-26

I-v
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Page
----

D. Claims Against and Interests in Macy's Miscellaneous
Subsidiary Debtors (Class MMS- ) . . . . . . . . . I-27
---
1. Unimpaired Classes of Claims
(Classes MMS-1 through MMS-3) . . . . . . . . . I-27
2. Impaired Classes of Claims
(Classes MMS-4 and MMS-5) . . . . . . . . . . . I-27
3. Unimpaired Class of Interests
(Class MMS-6) . . . . . . . . . . . . . . . . . I-27

ARTICLE III. TREATMENT OF CLAIMS AND INTERESTS . . . . . I-27
A. Unclassified Claims . . . . . . . . . . . . . . . . I-28
1. Payment of Administrative Claims . . . . . . . . I-28
a. Administrative Claims in General . . . . . I-28
b. Statutory Fees . . . . . . . . . . . . . . I-28
c. Ordinary Course Liabilities . . . . . . . . I-28
d. Claims Under DIP Credit Agreement . . . . . I-28
e. Bar Dates for Administrative Claims . . . . I-28
i. General Bar Date Provisions . . . . . . I-28
ii. Bar Dates for Certain Administrative
Claims . . . . . . . . . . . . . . . . I-29
A. Professional Compensation . . . . I-29
B. Ordinary Course Liabilities . . . I-29
C. Claims Under DIP Credit Agreement I-29
2. Payment of Priority Tax Claims . . . . . . . . . I-29
a. Federal Priority Tax Claims . . . . . . . . I-29
b. Responsible Person Priority Tax Claims . . I-30
c. Other Priority Tax Claims . . . . . . . . . I-30
B. Classified Claims and Interests . . . . . . . . . . I-30
1. Unimpaired Classes of Claims Held by Third Parties
I-30
a. Unsecured Claims Entitled to Priority Under
Section
507(a)(3), 507(a)(4) or 507(a)(6) of the
Bankruptcy Code
(Classes M-1, MOS-1, MRS-1 and MMS-1) . . . I-30
b. Unsecured Convenience Claims (Classes M-2,
MOS-2,
MRS-2 and MMS-2) . . . . . . . . . . . . . I-30
c. Secured Claims Not Otherwise Classified
(Classes
M-3, MOS-3, MRS-3 and MMS-3) . . . . . . . I-30
2. Impaired Classes of Claims Held by Third Parties I-31
a. Claims Under or Evidenced by the
Macy's/Prudential
Loan Agreement (Classes M-4, MOS-4 and MRS-4)
I-31
b. Claims Under or Evidenced by the Macy's/WCB
Loan Agreement, the Macy's/WCB Guaranty or the
Macy's/WCB Swap Agreement (Classes M-5, MOS-5,
MRS-5 and MMS-4) . . . . . . . . . . . . . I-31
c. Claims Under or Evidenced by the Macy's/49
Store
Loan Agreement or the Macy's/49 Store Loan
Guaranty (Other Than Liquidated Damages Claims
of Swiss Bank) (Classes M-6, MOS-6 and MRS-6)
I-31
d. Claims Under or Evidenced by the Macy's/CREI
Loan Agreement or the Macy's/CREI Swap Agreement
(Classes M-7, MOS-7 and MRS-7) . . . . . . I-31

I-vi
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Page
----

e. Claims Under or Evidenced by the Macy's/Swiss
Bank Liquidated Damages Agreement or the
Macy's/Macy's South Liquidated Damages
Guaranty (Classes M-8, MOS-8 and MRS-8) . . I-32
f. Claims Under or Evidenced by the Macy's/GECC
Loan Agreement or the Macy's/GECC Interest
Guaranty (Classes M-9 and MOS-9) . . . . . I-32
g. John Hancock Kings Plaza Claims (Class MRS-9)
I-32
i. John Hancock KPM Note Claims (Class
MRS-9A) . . . . . . . . . . . . . . . . I-32
ii. John Hancock Plaza Store Claims (Class
MRS-9B) . . . . . . . . . . . . . . . . I-32
h. Claims Under or Evidenced by the Macy's Senior
Subordinated Debentures, the Macy's Senior
Subordinated Debentures Indenture, the
Macy's Senior Subordinated Debentures Guaranty
or the Macy's Senior Subordinated Debentures
Assumption Agreement (Classes M-10 and MOS-10)
I-32
i. Claims Under or Evidenced by the Macy's
Subordinated Debentures, the Macy's Subordinated
Debentures Indenture, the Macy's Subordinated
Debentures Guaranty or the Macy's Subordinated
Debentures Assumption Agreement (Classes M-11
and MOS-11) . . . . . . . . . . . . . . . . I-33
j. Claims Under or Evidenced by the Macy's
Subordinated Discount Debentures, the
Macy's Subordinated Discount Debentures
Indenture, the Macy's Subordinated Discount
Debentures Guaranty or the Macy's Subordinated
Discount Debentures Assumption Agreement
(Classes M-12 and MOS-12) . . . . . . . . . I-33
k. General Unsecured Claims (Classes M-13,
MOS-13,
MRS-10 and MMS-5) . . . . . . . . . . . . . I-33
l. Subordinated Unsecured Claims for Penalties,
Fines
and Punitive Damages, Subordinated Unsecured
Claims Related to Rescission, Damages or
Indemnity
Claims Arising From Securities Transactions and
Claims Relating to Old Stock Options (Class M-14)
I-33
3. Unimpaired Classes of Common Stock Interests in the
Macy's
Subsidiary Debtors (Classes MOS-14, MRS-11 and MMS-6)
I-33
4. Impaired Classes of Interests in Macy's (Classes
M-15 through M-17) . . . . . . . . . . . . . . . I-34
C. Special Provisions Regarding Treatment of Certain
Claims . . . . . . . . . . . . . . . . . . . . . . I-34
1. Adjustments of Amounts of Distributions for
Pre-Effective Date
Sales of Collateral . . . . . . . . . . . . . . I-34
a. Sales of Collateral Securing Allowed Bank
Loan Claims or
Claims of Swiss Bank . . . . . . . . . . . I-34
b. Sales of Collateral Securing Allowed Claims
of Prudential and FNC . . . . . . . . . . . I-34
2. Adjustments for Increased Distributions of Cash I-34
a. Adjustments of Amounts of Cash and New Debt to
be
Distributed to Prudential, GECC or Holders of
Allowed
Bank Loan Claims and Swiss Bank . . . . . . I-34
b. Adjustments of Amounts of Cash and New
Combined
Company Common Stock to be Distributed . . I-35

I-vii
<PAGE>

3. Adjustment of Amounts of New Series B Notes and New
Series C Notes
to be Distributed . . . . . . . . . . . . . . . I-35
D. Special Provisions Regarding Treatment of Allowed
Secondary Liability Claims . . . . . . . . . . . . . I-35
E. Additional Treatment Provisions . . . . . . . . . . I-36
1. Claims as to Which Macy's is Primarily Liable . I-36
2. Unsecured Claims as to Which a Debtor Other than
Macy's is
Primarily Liable . . . . . . . . . . . . . . . . I-36
3. Contribution of Certain Secured Claims to the
Capital of Reorganized
Macy's Subsidiary Debtors . . . . . . . . . . . I-36
4. Distributions Received by FNC and Macy's Financial
I-37
F. Accrual of Postpetition Interest . . . . . . . . . . I-37

ARTICLE IV. MEANS FOR IMPLEMENTATION OF THE PLAN . . . I-37
A. Continued Corporate Existence and Vesting of Assets in
the Reorganized Debtors . . . . . . . . . . . . . . I-37
B. The Restructuring Transactions . . . . . . . . . . . I-37
1. The Federated/Macy's Merger . . . . . . . . . . I-37
a. Consummation of the Federated/Macy's Merger I-37
b. Cancellation of Old Capital Stock . . . . . I-38
c. The Reorganized Debtors' Obligations Under the
Plan . . . . . . . . . . . . . . . . . . . I-38
2. The Operating Subsidiary Transactions . . . . . I-38
3. The Real Estate Subsidiary Transactions . . . . I-38
4. Other Restructuring Transactions . . . . . . . . I-39
C. Corporate Governance, Directors and Officers,
Employment-Related
Agreements and Compensation Programs . . . . . . . . I-39
1. Certificates of Incorporation and By-Laws . . . I-39
a. Combined Company . . . . . . . . . . . . . I-39
b. The Reorganized Macy's Subsidiary Debtors . I-40
2. Directors and Officers of the Reorganized Debtors
I-40
a. Combined Company . . . . . . . . . . . . . I-40
b. The Reorganized Macy's Subsidiary Debtors . I-40
3. New Employment, Retirement, Indemnification and
Other Agreements
and Incentive Compensation Programs . . . . . . I-40
4. Corporate Action . . . . . . . . . . . . . . . . I-41
D. Obtaining Cash for Plan Distributions and Transfers of
Funds Among the Debtors . . . . . . . . . . . . . . I-41
E. Execution of Agreements and Indentures Related to New
Securities . . . . . . . . . . . . . . . . . . . . . I-41
F. Collateralization of Obligations to Prudential . . . I-42
G. Preservation of Rights of Action; Releases . . . . . I-42
1. Preservation of Rights of Action by the Debtors and
Reorganized Debtors . . . . . . . . . . . . . . I-42
2. Releases . . . . . . . . . . . . . . . . . . . . I-42
a. Releases by the Debtors . . . . . . . . . . I-42
b. Releases by Swiss Bank . . . . . . . . . . I-43
c. Releases by Holders of Claims or Interests I-43
d. Injunction Related to Releases . . . . . . I-44
H. Continuation of Certain Retirement Benefits . . . . I-44
1. Certain Retiree Health, Medical and Life Insurance
Benefits . . . . . . . . . . . . . . . . . . . . I-44
2. Purchase Discounts for Retirees . . . . . . . . I-44
I. Limitations on Amounts to Be Distributed to Holders of
Allowed Insured Claims . . . . . . . . . . . . . . . I-44
J. Cancellation and Surrender of Instruments, Securities
and Other Documentation . . . . . . . . . . . . . . I-44
K. Release of Liens . . . . . . . . . . . . . . . . . . I-45
L. Intercompany Claims and Certain Claims of Affiliates I-45

I-viii

<PAGE>

Page
----

M. Effectuating Documents; Further Transactions; Exemption
from
Certain Transfer Taxes . . . . . . . . . . . . . . . I-45

ARTICLE V. TREATMENT OF EXECUTORY CONTRACTS
AND UNEXPIRED LEASES . . . . . . . . . . . . . . I-46
A. Assumption and Rejection . . . . . . . . . . . . . . I-46
1. Assumptions, Assignments and Rejections of Non-Real
Property
Executory Contracts and Unexpired Leases . . . . I-46
a. Assumptions and Assignments . . . . . . . . I-46
b. Rejections . . . . . . . . . . . . . . . . I-46
2. Assumptions and Rejections of Real Property
Executory Contracts and
Unexpired Leases . . . . . . . . . . . . . . . . I-47
3. Assignments Related to Restructuring Transactions
I-47
4. Approval of Assumptions, Assignments and Rejections
I-47
B. Payments Related to Assumption of Executory Contracts
and Unexpired Leases . . . . . . . . . . . . . . . . I-48
C. Bar Date for Rejection Damages . . . . . . . . . . . I-48
D. Special Executory Contract and Unexpired Lease Issues
I-48
1. Obligations to Indemnify Directors, Officers and
Employees . . . . . . . . . . . . . . . . . . . I-48
2. Reinstatement of Allowed Secondary Liability Claims
Arising From or
Related to Executory Contracts or Unexpired Leases
Assumed by
Macy's or Macy's Subsidiaries . . . . . . . . . I-49
3. Cancellation of Old Indentures . . . . . . . . . I-49
4. Reinstatement of Intercompany Agreement . . . . I-49
E. Executory Contracts and Unexpired Leases Entered Into
and Other Obligations
Incurred After the Applicable Petition Date . . . . I-49

ARTICLE VI. PROVISIONS GOVERNING DISTRIBUTIONS . . . . I-50
A. Distributions for Claims Allowed as of the Effective
Date . . . . . . . . . . . . . . . . . . . . . . . . I-50
B. Methods of Distributions . . . . . . . . . . . . . . I-50
1. Distributions to Holders of Allowed Bank Loan
Claims . . . . . . . . . . . . . . . . . . . . . I-50
2. Distributions to Holders of Allowed Debt Security
Claims . . . . . . . . . . . . . . . . . . . . . I-51
3. Distributions to Holders of Other Claims . . . . I-51
C. Compensation and Reimbursement for Services Related to
Balloting
and Distributions . . . . . . . . . . . . . . . . . I-51
D. Delivery of Distributions and Undeliverable or
Unclaimed Distributions . . . . . . . . . . . . . . I-52
1. Delivery of Distributions in General . . . . . . I-52
2. Undeliverable Distributions . . . . . . . . . . I-52
a. Distributions Held by Disbursing Agents . . I-52
i. Holding and Investment of
Undeliverable Distributions . . . . . . I-52
ii. After Distributions Become Deliverable I-52
iii. Failure to Claim Undeliverable
Distributions . . . . . . . . . . I-53
b. Distributions Held by Agent Banks or Indenture
Trustees . . . . . . . . . . . . . . . . . I-53
E. Distribution Record Date . . . . . . . . . . . . . . I-53
F. Means of Cash Payments . . . . . . . . . . . . . . . I-54
G. Timing and Calculation of Amounts to be Distributed I-54
1. Allowed Claims in Non-Reserve Classes and the Fixed
Cash Portion of
Allowed Claims in Reserve Classes . . . . . . . I-54
2. New Combined Company Common Stock to be Distributed
to Holders
of Allowed Claims in Reserve Classes . . . . . . I-54
a. Initial Distributions . . . . . . . . . . . I-54

I-ix

<PAGE>

APPENDICES

I.A.42 Determination of Assumed Values for a New Series C
Warrant and a New Series D Warrant1

I.A.54 Federated/Macy's Merger Agreement1

I.A.80 Macy's Real Estate Subsidiary Debtors1

I.A.93 Macy's Miscellaneous Subsidiary Debtors1

I.A.135 New Combined Company Share Purchase Rights
Agreement1

I.A.140 New GECC Mortgage Note Agreement Term Sheet1,2

I.A.141 New Global Indenture1

I.A.142 New John Hancock KPM Note Override Agreement Term
Sheet1,2

I.A.144 New John Hancock Plaza Store Note Agreement Term
Sheet1,2

I.A.150 New Prudential Mortgage Note and Guaranty
Agreement Term Sheet1,2

I.A.154 New Series A, B and C Notes Supplemental
Indentures1

I.A.160 New Series C Warrants Agreement1

I.A.162 New Series D Warrants Agreement1

IV.C.1.a(i) Certificate of Incorporation of the Combined
Company1

IV.C.1.a(ii) By-Laws of the Combined Company1

IV.C.1.b(i) Amended Certificates or Articles of Incorporation
of Each Reorganized Macy's Subsidiary Debtor1

IV.C.1.b(ii) Amended By-Laws or Regulations of Each Reorganized
Macy's Subsidiary Debtor1

IV.C.2.a Directors and Officers of the Combined Company1

--------------------

1 Available for review at the Document Reviewing Centers.

2 Forms of the New Mortgage Notes Agreements will be Filed and
made available for review at the Document Reviewing Centers
prior to the hearing on Confirmation.

I-xii
<PAGE>
APPENDICES (continued)

IV.C.2.b Directors and Officers of Each Reorganized Macy's
Subsidiary Debtor1

IV.G.2.c Exceptions to Releases1

IV.L.1 Surviving Intercompany Claims or Agreements1

V.A.1.a Schedule of Non-Real Property Executory Contracts
and Unexpired Leases to be Assumed or Assumed and
Assigned1

V.A.1.b Nonexclusive Schedule of Non-Real Property
Executory Contracts and Unexpired Leases to be
Rejected1

V.A.2 Schedule of Real Property Executory Contracts and
Unexpired Leases to be Rejected1

VII.D Tax Requirements for Income Generated by Disputed
Claims Reserve1

I-xiii
<PAGE>
INTRODUCTION

R.H. Macy & Co., Inc. ("Macy's") and Federated Department Stores, Inc.
("Federated") (collectively, the "Plan Proponents") propose the following second
amended joint plan of reorganization (the "Plan") for the resolution of the
outstanding creditor claims against and equity interests in Macy's and the
subsidiaries of Macy's that are debtors in the above-captioned chapter 11 cases
(collectively with Macy's, the "Debtors"). The Plan Proponents are proponents
of the Plan within the meaning of section 1129 of the Bankruptcy Code, 11 U.S.C.
Sec. 1129. On the Effective Date (as defined herein), Federated will merge with
Macy's, on the terms and subject to the conditions set forth in the
Federated/Macy's Merger Agreement (as defined herein). All securities to be
issued pursuant to the Plan, other than certain mortgage notes, will be issued
by, and the various obligations of the Debtors under the Plan will be performed
by, the Combined Company (as defined herein). ALL HOLDERS OF CLAIMS AGAINST THE
DEBTORS ARE ENCOURAGED TO READ THE PLAN AND THE RELATED DISCLOSURE STATEMENT IN
THEIR ENTIRETY BEFORE VOTING TO ACCEPT OR TO REJECT THE PLAN. SUBJECT TO
CERTAIN RESTRICTIONS AND REQUIREMENTS SET FORTH IN THE PLAN, THE PLAN PROPONENTS
RESERVE THE RIGHT TO ALTER, AMEND, MODIFY, REVOKE OR WITHDRAW THE PLAN PRIOR TO
ITS CONSUMMATION.

ARTICLE I.

DEFINED TERMS, RULES OF INTERPRETATION
AND COMPUTATION OF TIME

A. Defined Terms

As used in the Plan, capitalized terms have the meanings set forth
below. Any term used in the Plan that is not defined herein, but that is used
in the Bankruptcy Code or the Bankruptcy Rules, will have the meaning assigned
to that term in the Bankruptcy Code or the Bankruptcy Rules.

1. "49 Store Bank Group" means, collectively, those entities
identified as "Lenders" in the Macy's/49 Store Loan Agreement.

2. "1992 Loss Carrybacks" means the net operating loss carrybacks
from the taxable year ended August 1, 1992, to the taxable years ended July 29,
1989 and August 3, 1991, as reflected in the Debtors' Forms 1120X, "Amended U.S.
Corporation Income Tax Return," dated October 25, 1993.

3. "Administrative Claim" means a Claim for costs and expenses of
administration allowed under sections 503(b), 507(b) or 1114(e)(2) of the
Bankruptcy Code, including: (a) the actual and necessary costs and expenses
incurred after the applicable Petition Date of preserving the respective Estates
and operating the businesses of the Debtors (such as wages, salaries,
commissions for services and payments for inventories, leased equipment and
premises); (b) compensation for legal, financial advisory, accounting and other
services and reimbursement of expenses awarded or allowed under sections 330(a)
or 331 of the Bankruptcy Code; (c) all fees and charges assessed against the
Estates under chapter 123 of title 28, United States Code, 28 U.S.C. Sec.Sec.
1911-1930; and (d) Claims for reclamation allowed in accordance with section
546(c)(2) of the Bankruptcy Code.

4. "Affiliate" means any corporation in which a Debtor directly or
indirectly owns 50% or more of the outstanding stock entitled to vote generally
in the election of directors.

5. "Agent Bank" means one or more lenders performing the functions
of "Designated Servicer," "Administrative Agent" or "Servicing Agent" under a
Macy's Bank Loan Agreement or otherwise designated as the agent for the lenders
under a Macy's Bank Loan Agreement.

<PAGE>
I-2
6. "Agent Bank Charges" means any lien, right or other priority in
payment or right to indemnification or reimbursement to which an Agent Bank is

entitled, pursuant to the applicable Macy's Bank Loan Agreement, against
distributions to be made to or payments to be made by holders of Allowed Claims
under the applicable Macy's Bank Loan Agreement, including such liens, rights or
priorities in payment with respect to an Agent Bank's out-of-pocket costs and
expenses for attorneys, financial advisors and other professionals that are
incurred or authorized by an Agent Bank acting in such capacity.

7. "Allowed Bank Loan Claim" means an Allowed Claim under or
evidenced by a Macy's Bank Loan Agreement that is classified in Classes M-5,
MOS-5, MRS-5, MMS-4, M-6, MOS-6, MRS-6, M-7, MOS-7 or MRS-7.

8. "Allowed Claim" or "Allowed Unsecured Claim" means:

a. a Claim that has been listed by a particular Debtor in its
schedules of liabilities as other than disputed, contingent or
unliquidated, to the extent that it is not otherwise a Disputed Claim;

b. a Claim that: (i) is allowed: (A) in any Stipulation of Amount
and Nature of Claim executed by the applicable Reorganized Debtor and Claim
holder on or after the Effective Date; (B) in any contract, instrument,
indenture or other agreement entered into in connection with the Plan;
(C) in a Final Order; or (D) pursuant to the terms of the Plan or (ii) is
settled prior to the Effective Date pursuant to: (A) that certain Order
Pursuant to Bankruptcy Rule 9019 Approving and Authorizing the Debtors to
Compromise and Settle Certain Disputed Claims in Accordance with Proposed
Settlement Procedures and Limitations, entered July 19, 1993, with respect
to certain Unsecured Claims; (B) that certain Order (A) Pursuant to
Bankruptcy Rule 9019(a) Approving and Authorizing the Compromise and
Settlement, from Time to Time, of Certain Disputed Property Tax Claims, and
(B) Pursuant to Section 362(d) of the Bankruptcy Code and Bankruptcy Rule
4001(d) Modifying the Automatic Stay to Permit Setoff of Certain Undisputed
Prepetition Property Tax Claims Against the Refunds Due to the Debtors,
entered on January 18, 1994, with respect to certain Tax Claims; or
(C) that certain Omnibus Order (A) Modifying the Automatic Stay Pursuant to
Section 362 of the Bankruptcy Code to Permit Commencement, Continued
Prosecution or Settlement of Certain Personal Injury, Property Damage,
Products Liability and Other Actions Covered by Insurance Policies and
(B) Authorizing the Compromise, Settlement and Payment in Full of Certain
Claims Pursuant to Rule 9019(b) of the Federal Rules of Bankruptcy
Procedure, dated June 8, 1992; or

c. a Claim for which a proof of Claim has been Filed by the Bar Date
or has otherwise been deemed timely Filed under applicable law, to the
extent that it is not otherwise a Disputed Claim.

9. "Allowed . . . Claim" means an Allowed Claim in the particular
Class or category specified. Any reference herein to an Allowed Claim includes
both Secured Claims and Unsecured Claims.

10. "Allowed Debt Security Claim" means an Allowed Claim under or
evidenced by an Old Debt Security, an Old Debt Securities Guaranty, an Old Debt
Securities Assumption Agreement or an Old Indenture.

11. "Allowed Secondary Liability Claim" means a Secondary Liability
Claim that is an Allowed Claim.

12. "Bankruptcy Code" means title 11 of the United States Code, as
now in effect or hereafter amended.

<PAGE>
I-3
13. "Bankruptcy Court" means the United States District Court having
jurisdiction over any of the Reorganization Cases and, to the extent of any
reference made pursuant to 28 U.S.C. Sec. 157, the bankruptcy unit of such
District Court.

14. "Bankruptcy Rules" means, collectively, the Federal Rules of
Bankruptcy Procedure and the local rules of the Bankruptcy Court, as now in
effect or hereafter amended.

15. "Bar Date" means the applicable bar date by which a proof of
Claim must be Filed, as established by an order of the Bankruptcy Court,
including the Bar Date Order and the Confirmation Order.

16. "Bar Date Order" means the Order Granting Application to Set Bar
Date for Filing Certain Proofs of Claim, Approving Bar Order Notice and
Approving Notice and Publication Procedure, entered by the Bankruptcy Court on
October 14, 1992, as subsequently amended or supplemented.

17. "Bondholders' Committee" means the official unsecured
bondholders' committee appointed in the Reorganization Cases pursuant to section
1102 of the Bankruptcy Code, as the same may have been or is constituted from
time to time.

18. "Bullock's" means Bullock's, Inc., a Delaware corporation and the
debtor in Reorganization Case No. 92 B 40481.

19. "Business Day" means any day, other than a Saturday, Sunday or
"legal holiday" (as defined in Bankruptcy Rule 9006(a)).

20. "Cash Investment Yield" means the net yield earned by the
applicable Disbursing Agent from the investment of cash held pending
distribution pursuant to the Plan (including any cash received by such
Disbursing Agent on account of dividends and other distributions on New Combined
Company Common Stock), which investment will be in a manner consistent with the
Combined Company's investment and deposit guidelines.

21. "Claim" means a "claim" (as defined in section 101(5) of the
Bankruptcy Code) against any Debtor.

22. "Claims Objection Bar Date" means, for all Claims, other than
those Claims allowed in accordance with Section I.A.8.b, the latest of: (a) 90
days after the Effective Date; (b) 45 days after the Filing of a proof of claim
for such Claim; and (c) such other period of limitation as may be specifically
fixed by the Plan, the Confirmation Order, the Bankruptcy Rules or an order of
the Bankruptcy Court for objecting to a Claim.

23. "Claims Resolution Committee" means the committee to be
established pursuant to Section XII.A.2.

24. "Class" means a class of Claims or Interests, as described in
Article II below.

25. "Combined Company" means the corporation that is the surviving
corporation in the Federated/Macy's Merger.

26. "Confirmation" means the entry of the Confirmation Order on the
docket of the Bankruptcy Court.

27. "Confirmation Date" means the date on which the Bankruptcy Court
enters the Confirmation Order on its docket, within the meaning of Bankruptcy
Rules 5003 and 9021.

<PAGE>
I-4
28. "Confirmation Order" means the order of the Bankruptcy Court
confirming the Plan pursuant to section 1129 of the Bankruptcy Code.

29. "Creditors' Committees" means, collectively: (a) the Unsecured
Creditors' Committee; (b) the Bondholders' Committee; and (c) any other
committee of creditors appointed in the Reorganization Cases pursuant to section
1102 of the Bankruptcy Code.

30. "CREI" means Citicorp Real Estate, Inc., a Delaware corporation.

31. "CREI Bank Group" means, collectively, those entities identified
as "Lenders," "Designated Servicer" or "Servicing Agent" in the Macy's/CREI Loan
Agreement.

32. "Debtors" means, collectively: (a) Macy's; (b) the Macy's
Operating Subsidiary Debtors; (c) the Macy's Miscellaneous Subsidiary Debtors;
and (d) the Macy's Real Estate Subsidiary Debtors.

33. "Delaware General Corporation Law" means title 8 of the Delaware
Code, as now in effect or hereafter amended.

34. "DIP Credit Agreement" means, collectively: (a) the Amended and
Restated Revolving Credit and Guaranty Agreement, dated as of August 12, 1993,
as subsequently amended and modified, among Macy's (as borrower), the other
Debtors (as guarantors), Chemical Bank (as administrative agent), Bankers Trust
Company (as co-agent) and those entities identified as "Banks" therein and their
respective successors and assigns; and (b) all security agreements and
instruments related to the documents identified in (a).

35. "Disbursing Agent" means the Combined Company, in its capacity as
a disbursing agent pursuant to Article VI, or any Third-Party Disbursing Agent.

36. "Disclosure Statement" means the disclosure statement (including
all exhibits and schedules thereto or referenced therein) that relates to the
Plan, as approved by the Bankruptcy Court pursuant to section 1125 of the
Bankruptcy Code.

37. "Disputed Claim" means:

a. if no proof of Claim has been Filed by the Bar Date or has
otherwise been deemed timely Filed under applicable law: (i) a Claim that
has been listed on a Debtor's schedules of liabilities as other than
disputed, contingent or unliquidated, but as to which the applicable
Debtor, Reorganized Debtor or, prior to Confirmation, any other party in
interest, has Filed an objection by the Claims Objection Bar Date, but only
to the extent of the difference between the amount of the Claim listed in
the schedules and the amount of such Claim asserted in the objection or
(ii) a Claim that has been listed on a Debtor's schedule of liabilities as
disputed, contingent or unliquidated; or

b. if a proof of Claim or request for payment of an Administrative
Claim has been Filed by the Bar Date or has otherwise been deemed timely
Filed under applicable law: (i) a Claim that is listed on a Debtor's
schedule of liabilities as other than disputed, contingent or unliquidated,
but as to which the nature or amount of the Claim as asserted in the proof
of Claim varies from the nature and amount of such Claim as it is listed on
the schedule of liabilities, but only to the extent of such variation
provided, however, that such Claim will not be a Disputed Claim under
such circumstances if a Debtor determines that the allowable nature
and amount of the Claim is as asserted in the proof of Claim;
(ii) a Claim as to which an objection has been Filed by the applicable
Debtor, Reorganized Debtor or, prior to Confirmation, any other party in
interest by the Claims Objection Bar Date, and such objection has not been
withdrawn on or before the Claims Objection Bar Date or denied by a Final
Order, but only to the extent of the difference between the amount of the

<PAGE>
I-5

Claim asserted in the proof of Claim and the amount of such Claim asserted
in the objection; or (iii) any Personal Injury Claim, as specified in
Section VII.A.1. Notwithstanding the foregoing, a Claim that is an Allowed
Claim in accordance with Section I.A.8.b will not be a Disputed Claim, and,
pursuant to Section VII.A.2, the Debtors, Federated, the Reorganized
Debtors and any other party in interest will be prohibited from Filing any
objections to such Allowed Claims.

38. "Disputed Claims Reserve" means the reserve of cash and New
Combined Company Common Stock established pursuant to Section VII.B for the
Reserve Classes in which there are Disputed Claims, which reserve will be held
in trust for holders of Allowed Claims in Reserve Classes and will not
constitute property of the Combined Company.

39. "Disputed Insured Claim" and "Disputed Uninsured Claim" means,
respectively, an Insured Claim or an Uninsured Claim that is also a Disputed
Claim.

40. "Distributable Shares (Pool A)" means the number of shares of New
Combined Company Common Stock to be distributed to holders of Allowed Claims,
other than holders of Allowed Debt Security Claims, as specified in Sections
III.B.2.a through e and k. The total number of Distributable Shares will be
equal to $1,339,101,700 divided by the Federated Average Market Price (Pool A).

41. "Distributable Shares (Pool B)" means the number of shares of New
Combined Company Common Stock to be distributed to holders of Allowed Debt
Security Claims, as specified in Sections III.B.2.h, i and j. The total number
of such shares will be equal to $358,665,400 divided by the Federated Average
Market Price (Pool B).

42. "Distributable Warrants" means the number of New Warrants to be
distributed to holders of Allowed Debt Security Claims in Classes M-10, MOS-10,
M-11 or MOS-11, as specified in Sections III.B.2.h and i. An equal number of
New Series C Warrants and New Series D Warrants will be issued. The number of
New Series C Warrants and the number of New Series D Warrants each will be equal
to $139,152,300 divided by the sum of the value of a New Series C Warrant and
the value of a New Series D Warrant, which values will be determined by applying
the Black-Scholes warrant valuation model as set forth in Appendix I.A.42.

43. "Distribution Record Date" means: (a) with respect to Allowed
Bank Loan Claims and Allowed Claims in a Reserve Class, the Confirmation Date
and (b) with respect to all other Allowed Claims, the close of business on the
earlier of (i) the Effective Time of the Federated/Macy's Merger or (ii) 14 days
after the Confirmation Date.

44. "Document Reviewing Centers" means, collectively: (a) the
offices of Jones, Day, Reavis & Pogue located at 599 Lexington Avenue, New York,
New York 10022 and (b) any other locations designated by the Plan Proponents at
which any party in interest may review all of the exhibits and schedules to the
Plan and the Disclosure Statement.

45. "Effective Date" means a Business Day, as determined by the Plan
Proponents, that is as soon as reasonably practicable but that is at least
11 days after the Confirmation Date and no more than 14 days after the first day
on which each of the conditions in Section VIII.B has either been satisfied or
duly waived pursuant to Section VIII.C, and on which: (a) no stay of the
Confirmation Order is in effect and (b) the Effective Time of the
Federated/Macy's Merger occurs. The Effective Date will be deemed to commence
simultaneously with the Effective Time of the Federated/Macy's Merger.

46. "Effective Time of the Federated/Macy's Merger" means the time,
coinciding with the commencement of the Effective Date, at which the
Federated/Macy's Merger is consummated and becomes effective pursuant to the
terms of the Federated/Macy's Merger Agreement and applicable law.

<PAGE>
I-6
47. "Estate" means, as to each Debtor, the estate created for that
Debtor in its Reorganization Case pursuant tosection 541 of the Bankruptcy Code.

48. "Face Amount" means:

a. when used with reference to a Disputed Insured Claim, either (i)
the full stated amount claimed by the holder of such Claim in any proof of
Claim Filed by the Bar Date or otherwise deemed timely Filed under
applicable law if the proof of Claim specifies only a liquidated amount or

(ii) the applicable deductible under the relevant insurance policy, minus
any reimbursement obligations of the applicable Debtor to the insurance
carrier for sums expended by the insurance carrier on account of such Claim
(including defense costs), if such amount is less than the amount specified
in (i) above or the proof of Claim specifies an unliquidated amount; and

b. when used with reference to a Disputed Uninsured Claim, either
(i) the full stated amount claimed by the holder of such Claim in any proof
of Claim Filed by the Bar Date or otherwise deemed timely Filed under
applicable law if the proof of Claim specifies only a liquidated amount or
(ii) the amount of the Claim set forth in any objection Filed to such
Claim, if no proof of Claim has been Filed by the Bar Date or has otherwise
been deemed timely Filed under applicable law or if the proof of Claim
specifies an unliquidated amount.

49. "Federal Priority Tax Claims" means the Claims of the IRS that
are entitled to priority in payment pursuant to section 507(a)(7) of the
Bankruptcy Code, the aggregate gross amount of which is fixed pursuant to the
IRS Settlement Agreement and which are reduced to reflect the application of the
1992 Loss Carrybacks.

50. "Federated" means Federated Department Stores, Inc., a Delaware
corporation.

51. "Federated Average Market Price (Pool A)" means the average of
intraday high and low average sales prices on the New York Stock Exchange, as
reported in The Wall Street Journal (National Edition), of the Common Stock of
Federated for the 30 consecutive trading days ending on the sixth trading day
prior to the Effective Date; provided, however, that if the Federated Average
Market Price would otherwise be more than 115%, or less than 85%, of the average
of intraday high and low average sales prices on the New York Stock Exchange, as
reported in The Wall Street Journal (National Edition), of the Common Stock of
Federated for the 30 consecutive trading days ending on the sixth trading day
prior to: (a) the Confirmation Date, if the Effective Date is within 45 days
after the Confirmation Date, or (b) the day determined pursuant to the following
sentence, if the Effective Date is more than 45 days after the Confirmation
Date, the Federated Average Market Price will be equal to 115% (if such amount
would otherwise exceed 115%) or 85% (if such amount would otherwise be less than
85%), respectively, of such average. If the Effective Date is more than 45 days
after the Confirmation Date but within 75 days after the Confirmation Date, the
day referred to in clause (b) above will be the 30th day after the Confirmation
Date, subject to similar extension by an additional 30 days after the
Confirmation Date for each full 30-day period between the 75th day after the
Confirmation Date and the Effective Date, with the first such period commencing
on the 75th day after the Confirmation Date.

52. "Federated Average Market Price (Pool B)" means the average of
intraday high and low average sales prices on the New York Stock Exchange, as
reported in The Wall Street Journal (National Edition), of the Common Stock of
Federated for the 30 consecutive trading days ending on the sixth trading day
prior to the Effective Date; provided, however, that, if the Federated Average
Market Price would otherwise be more than $23.00, or less than $18.00, the
Federated Average Market Price will be equal to $23.00 (if such amount would
otherwise exceed $23.00) or $18.00 (if such amount would otherwise be less than
$18.00), respectively; and provided further, that, if Federated (a) pays a
dividend or makes a distribution on account of the outstanding shares of Common
Stock of Federated (other than the redemption of Federated's existing share
purchase rights at a redemption price not to exceed $.05 per right),

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(b) subdivides the outstanding shares of such stock, (c) combines the
outstanding shares of such stock into a smaller number of shares or (d) issues,
by reclassification of such stock, any shares of Federated capital stock, the
$23.00 and $18.00 limits established in this Section I.A.52 will be adjusted
proportionately.

53. "Federated/Macy's Merger" means the merger of Federated and
Macy's pursuant to Section IV.B.1.

54. "Federated/Macy's Merger Agreement" means the agreement and plan
of merger substantially in the form of Appendix I.A.54, pursuant to which the
Federated/Macy's Merger will be effected.

55. "Fidelity" means Fidelity Management & Research Company, a
Massachusetts corporation, on behalf of the funds that it manages.

56. "File," "Filed" or "Filing" means file, filed or filing with the
Bankruptcy Court in the Reorganization Cases.

57. "Final Order" means an order or judgment of the Bankruptcy Court,
or other court of competent jurisdiction, as entered on the docket in any
Reorganization Case or the docket of any other court of competent jurisdiction,
which has not been reversed, stayed, modified or amended, and as to which the
time to appeal or seek certiorari has expired, and no appeal or petition for
certiorari has been timely taken, or as to which any appeal that has been taken
or any petition for certiorari that has been timely filed has been resolved by
the highest court to which the order or judgment was appealed or from which
certiorari was sought.

58. "Fixed Cash Portion" means cash in an amount equal to 25% of the
amount of an Allowed Claim in a Reserve Class, to be distributed pursuant to
Sections III.B.2.k and VI.G.1.

59. "FNC" means Federated Noteholding Corporation, a Delaware
corporation and a wholly owned subsidiary of Federated.

60. "GECC" means General Electric Capital Corporation, a New York
corporation.

61. "GE Credit" means, collectively: (a) GECC and (b) GE Capital
Consumer Card Co. (formerly known as Monogram Bank, USA).

62. "I. Magnin" means I. Magnin, Inc., a Delaware corporation and the
debtor in Reorganization Case No. 92 B 40483.

63. "Indenture Trustees" means, collectively: (a) Shawmut; (b) IBJ
Schroder Bank & Trust Company, as trustee under the Macy's Subordinated
Debentures Indenture; and (c) Bank of Montreal Trust Company, as trustee under
the Macy's Subordinated Discount Debentures Indenture.

64. "Indenture Trustee Charging Lien" means any lien or other
priority in payment arising prior to the Effective Date to which an Indenture
Trustee is entitled, pursuant to the applicable Old Indenture, against
distributions to be made to holders of Allowed Debt Security Claims for payment
of any fees, costs or disbursements incurred by such Indenture Trustee.

65. "Insured Claim" means any Claim arising from an incident or
occurrence that is covered under a Debtor's insurance policy, other than a
workers' compensation insurance policy.

66. "Intercompany Claim" means, other than Claims of Macy's Financial
under or evidenced by Old Debt Securities held by Macy's Financial,
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collectively: (a) any account reflecting intercompany book entries by one
Debtor with respect to any other Debtor; (b) any Claim not reflected in such
book entries that is held by a Debtor; and (c) any Claim held by an Affiliate.

67. "Interest" means the rights of the holders of the Old Common
Stock of any Debtor, the Old Preferred Stock or the Old Stock Options, and the
rights of any entity to purchase or demand the issuance of any of the foregoing,
including: (a) redemption, conversion, exchange, voting, participation and
dividend rights; (b) liquidation preferences; and (c) stock options and
warrants.

68. "IRS"meanstheInternal RevenueServiceof theUnitedStatesof America.

69. "IRS Settlement Agreement" means the Closing Agreement as to
Final Determination of Tax Liability and Specific Matters by and between the
Debtors and the IRS, dated July 23, 1993, and the related stipulation and order
entered by the Bankruptcy Court on August 11, 1993.

70. "John Hancock" means John Hancock Mutual Life Insurance Company.

71. "John Hancock Kings Plaza Claims" means, collectively, the Claims
under or evidenced by: (a) the John Hancock KPM Note and (b) the John Hancock
Plaza Store Note.

72. "John Hancock KPM Note" means the 7% Secured Note with Contingent
Interest, dated January 20, 1971, issued by KPM and Kings Plaza Shopping Center
of Flatbush Avenue, Inc. to John Hancock, and all notes, security agreements,
mortgages, guaranties, collateral assignments, pledges and other instruments,
agreements or documents related thereto, as amended, modified or supplemented.

73. "John Hancock Plaza Store Note" means the 6-1/4% 30-Year Secured
Note, dated January 20, 1971, as amended, issued by Flatbrook Properties Corp.
to John Hancock, and all notes, security agreements, mortgages, guaranties,
collateral assignments, pledges and other instruments, agreements or documents
related thereto, as amended, modified or supplemented.

74. "KPM" means Kings Plaza Shopping Center of Avenue U, Inc., a New
York corporation and the debtor in Reorganization Case No. 92 B 40636.

75. "Macy's" means R.H. Macy & Co., Inc, a Delaware corporation and
the debtor in Reorganization Case No. 92 B 40477.

76. "Macy's/49 Store Lease Payment Guaranty" means Macy's guaranty of
payment obligations in respect of certain alleged intercompany leases in which
the 49 Store Bank Group has a security interest, provided to the Macy's/49 Store
Real Estate Subsidiary Debtors in connection with the Macy's/49 Store Loan
Agreement.

77. "Macy's/49 Store Loan Agreement" means, collectively: (a) the
Loan Agreement, dated November 22, 1988, among Bullock's-Wilshire, Inc. (as
borrower), I. Magnin (as co-borrower), Kidder Peabody Mortgage Capital
Corporation (as lender) and Swiss Bank (as lender and agent); (b) the Loan
Agreement, dated November 22, 1988, among Macy's Poydras Properties Corp. (as
borrower), Macy's South (as co-borrower), Kidder Peabody Mortgage Capital
Corporation (as lender) and Swiss Bank (as lender and agent); (c) the Loan
Agreement, dated November 22, 1988, among I. Magnin Properties Corp. (as
borrower), I. Magnin (as co-borrower), Kidder Peabody Mortgage Capital
Corporation (as lender) and Swiss Bank (as lender and agent); (d) the Loan
Agreement, dated November 22, 1988, among Macy's Northeast Properties Corp.
(as borrower), Macy's Northeast (as co-borrower), Kidder Peabody Mortgage
Capital Corporation (as lender) and Swiss Bank (as lender and agent); (e) the
Loan Agreement, dated November 22, 1988, among Bullock's Properties Corp.
(as borrower), Bullock's (as co-borrower), Kidder Peabody Mortgage Capital
Corporation (as lender) and Swiss Bank (as lender and agent); (f) the Indemnity
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I-9

Agreement, dated November 22, 1988, among Macy's, the Macy's/49 Store Operating
Subsidiary Debtors, the Macy's/49 Store Real Estate Subsidiary Debtors and the
49 Store Bank Group in respect of certain environmental liabilities; and (g) all
mortgages, notes and other security agreements and instruments related to the
documents identified in (a) through (f) above.

78. "Macy's/49 Store Loan Guaranty" means, collectively: (a) the
Macy's/49 Store Lease Payment Guaranty; (b) the Macy's/Macy's South Liquidated

Damages Guaranty; and (c) any guarantees of debt service in connection with the
Macy's/49 Store Loan Agreement.

79. "Macy's/49 Store Operating Subsidiary Debtors" means,
collectively: (a) Bullock's; (b) I. Magnin; (c) Macy's Northeast; and
(d) Macy's South.

80. "Macy's/49 Store Real Estate Subsidiary Debtors" means,
collectively, the debtors identified as such on Appendix I.A.80.

81. "Macy's Bank Loan Agreements" means, collectively: (a) the
Macy's/49 Store Loan Agreement; (b) the Macy's/CREI Loan Agreement; (c) the
Macy's/WCB Loan Agreement; and (d) the Syndicate Agreement, dated as of November
22, 1988, among Kidder Peabody Mortgage Capital Corporation, Swiss Bank
Corporation, New York Branch and Swiss Bank Corporation, New York Branch, as
agent, as subsequently amended and supplemented.

82. "Macy's California" means Macy's California, Inc., a Delaware
corporation and the debtor in Reorganization Case No. 92 B 40479.

83. "Macy's/CREI Lease Payment Guaranty" means Macy's guaranty of
payment obligations in respect of certain alleged intercompany leases in which
the CREI Bank Group has a security interest, provided to the Macy's/CREI Real
Estate Subsidiary Debtors pursuant to the terms of the Macy's/CREI Loan
Agreement.

84. "Macy's/CREI Loan Agreement" means, collectively: (a) the Ten
Store Financing New York Division Loan Agreement, dated September 30, 1987,
among CREI (as lender), Macy's, Macy's New York, Inc. (as co-borrower) and
Brooksmith Properties Corp., Waltwhit Properties Corp. and Housgalleria
Properties Corp. (collectively, as borrowers); (b) the Ten Store Financing New
Jersey Division Loan Agreement, dated September 30, 1987, among CREI (as
lender), Macy's, Macy's New Jersey, Inc. (as co-borrower) and Livingston
Properties Corp., Marley Properties Corp. and Owings Mills Properties Corp.
(collectively, as borrowers); (c) the Ten Store Financing Atlanta Division Loan
Agreement, dated September 30, 1987, among CREI (as lender), Macy's, Macy's
Atlanta, Inc. (as co-borrower), Lenox Properties Corp., Macobb Properties Corp.,
Riverchase Properties Corp. and Esplanade Properties Corp. (collectively, as
borrowers); (d) the Credit Facility and Reimbursement Agreement, dated
September 30, 1987, among CREI (as lender), Citibank, N.A. (as letter of credit
issuer), Macy's, Macy Special Real Estate Capital Corp. and Macy's New York,
Inc., Macy's New Jersey, Inc., Macy's Atlanta, Inc. and the Macy's/CREI Real
Estate Subsidiary Debtors (collectively, as borrowers); and (e) all mortgages,
notes and other security agreements and instruments related to the documents
identified in (a) through (d) above.

85. "Macy's/CREI Operating Subsidiary Debtors" means, collectively:
(a) Macy's Northeast and (b) Macy's South.

86. "Macy's/CREI Real Estate Subsidiary Debtors" means, collectively,
the debtors identified as such on Appendix I.A.80.

87. "Macy's/CREI Swap Agreement" means, collectively, the three
Interest Rate Exchange Agreements in respect of the Macy's/CREI Loan Agreement,
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all dated May 6, 1987, among CREI Bank, the Macy's/CREI Operating Subsidiary
Debtors and the Macy's/CREI Real Estate Subsidiary Debtors.

88. "Macy's Financial" means Macy's Financial, Inc., a Delaware
corporation and the debtor in Reorganization Case No. 92 B 40486.

89. "Macy's/GECC Interest Guaranty" means Macy's guaranty, pursuant
to the Macy's/GECC Loan Agreement, of interest payment obligations of the
Macy's/GECC Operating Subsidiary Debtors to GECC pursuant to the Macy's/GECC
Loan Agreement.

90. "Macy's/GECC Loan Agreement" means, collectively: (a) the First
Secured Term Loan Agreement, dated May 10, 1991, among GECC (as lender) and
Macy's California, Macy's South and Bullock's (collectively, as borrowers), as
amended in October 1991 to include Macy's Northeast as a borrower and (b) all
mortgages, notes and other security agreements and instruments related to the
documents identified in (a) above.

91. "Macy's/GECC Operating Subsidiary Debtors" means, collectively:
(a) Bullock's; (b) Macy's California; (c) Macy's Northeast; and (d) Macy's
South.

92. "Macy's/Macy's South Liquidated Damages Guaranty" means Macy's
guaranty of the obligations of Macy's South to Swiss Bank pursuant to the terms
of the Macy's/Swiss Bank Liquidated Damages Agreement.

93. "Macy's Miscellaneous Subsidiary Debtors" means, collectively,
the debtors listed on Appendix I.A.93.

94. "Macy's Nondebtor Subsidiaries" means, collectively: (a) Bamrest
Del, Inc., a Delaware corporation; (b) Bamrest NJ, Inc., a New Jersey
corporation; (c) Bamrest Penn, Inc., a Pennsylvania corporation; (d) Calclove
Realty Corp., a California corporation; (e) Cowie & Company, Limited, a Delaware
corporation; (f) Davrest Georgia, Inc., a Georgia corporation; (g) Finite
Limited, a Hong Kong corporation; (h) Hamilton By Appointment, Inc., a Delaware
corporation; (i) L&K Properties Corp., an Ohio corporation; (j) Mac Fla Rest,
Inc., a Florida corporation; (k) Macy Receivables Funding Corp., a Delaware
corporation; (l) Macy Special Real Estate Capital Corp., a Delaware corporation;
(m) Macy's Bank, a New York corporation; (n) MCC Special Corp., a Delaware
corporation; (o) MOA Rest, Inc., a Minnesota corporation; (p) R.H. Macy (France)
S.A.R.L., a French corporation; (q) R.H. Macy Holdings (HK), Ltd., a Delaware
corporation; (r) R.H. Macy Overseas Finance, N.V., a Netherlands Antilles
corporation; (s) R.H. Macy Warehouse (HK), Ltd., a Delaware corporation;
(t) Rest Tex, Inc., a Texas corporation; (u) Sabugo, Ltd., a Kowloon
corporation; (v) U&F Realty Corp., a New York corporation; (w) Wise Chat, Ltd.,
a Hong Kong corporation; and (x) any other subsidiary of a Debtor that is not a
Macy's Subsidiary Debtor.

95. "Macy's Northeast" means Macy's Northeast, Inc., a Delaware
corporation and the debtor in Reorganization Case No. 92 B 40480.

96. "Macy's Operating Subsidiary Debtors" means, collectively:
(a) Bullock's; (b) I. Magnin; (c) Macy's California; (d) Macy's Northeast;
(e) Macy's South; (f) Macy's Specialty; and (g) MCO.

97. "Macy's/Prudential 1986 Mortgage Notes" means those notes dated
July 15, 1986, and November 3, 1986, purchased by Prudential from certain of the
Macy's/Prudential Operating Subsidiary Debtors and Macy's/Prudential Real Estate
Subsidiary Debtors pursuant to the Macy's/Prudential Loan Agreement.

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98. "Macy's/Prudential 1987 Mortgage Notes" means those notes dated
May 18, 1987, and June 30, 1987, purchased by Prudential from certain of the
Macy's/Prudential Operating Subsidiary Debtors and Macy's/Prudential Real Estate
Subsidiary Debtors pursuant to the Macy's/Prudential Loan Agreement.

99. "Macy's/Prudential Loan Agreement" means, collectively: (a) the
Term Loan Agreement, dated July 15, 1986, between Macy's and Prudential; (b) the
Rider to Term Loan Agreement, dated July 15, 1986, among Macy's, Prudential, the
Macy's/Prudential Real Estate Subsidiary Debtors (except W.P. Properties Corp.)
and Macy's New York, Inc.; (c) the Macy's/Prudential Mortgage Notes; and (d) all
other security agreements and instruments related to the documents identified in
(a) through (c) above.

100. "Macy's/Prudential Mortgage Notes" means, collectively: (a) the
Macy's/Prudential 1986 Mortgage Notes and (b) the Macy's/Prudential 1987
Mortgage Notes.

101. "Macy's/Prudential Operating Subsidiary Debtors" means,
collectively: (a) Macy's California; (b) Macy's Northeast; and (c) Macy's
South.

102. "Macy's/Prudential Real Estate Subsidiary Debtors" means,
collectively, the debtors identified as such on Appendix I.A.80.

103. "Macy's Real Estate Subsidiary Debtors" means, collectively:
(a) the Macy's/49 Store Real Estate Subsidiary Debtors; (b) the Macy's/CREI Real
Estate Subsidiary Debtors; (c) the Macy's/Prudential Real Estate Subsidiary
Debtors; (d) the Macy's/WCB Real Estate (First Lien) Subsidiary Debtors; and
(e) the remaining debtors identified as such on Appendix I.A.80.

104. "Macy's Senior Subordinated Debentures" means the 14-1/2% Senior
Subordinated Debentures due 1998, issued by Macy's pursuant to the Macy's Senior
Subordinated Debentures Indenture.

105. "Macy's Senior Subordinated Debentures Assumption Agreement"
means, collectively: (a) the Assumption Agreement, dated as of November 3,
1986, provided by Macy's California; (b) the Assumption Agreement, dated as of
November 3, 1986, provided by Macy's New Jersey, Inc.; (c) the Assumption
Agreement, dated as of November 3, 1986, provided by MNY Corp.; and (d) the
Assumption Agreement, dated as of November 3, 1986, provided by Macy's Atlanta,
Inc., pursuant to which each such entity assumed the obligation to pay the
principal and interest on a percentage of the Macy's Senior Subordinated
Debentures and agreed to be bound by the terms of and perform the covenants of
Macy's under the Macy's Senior Subordinated Debentures Indenture.

106. "Macy's Senior Subordinated Debentures Guarantors" means,
collectively: (a) Macy's California; (b) Macy's Northeast; and (c) Macy's
South.

107. "Macy's Senior Subordinated Debentures Guaranty" means,
collectively: (a) the Mirror Subsidiary Guarantee, dated as of November 3,
1986, provided by Macy's California; (b) the Mirror Subsidiary Guarantee, dated
as of November 3, 1986, provided by Macy's New Jersey, Inc.; (c) the Mirror
Subsidiary Guarantee, dated as of November 3, 1986, provided by MNY Corp.; and
(d) the Mirror Subsidiary Guarantee, dated as of November 3, 1986, provided by
Macy's Atlanta, Inc., pursuant to which each such entity guaranteed (y) the
payment of the Macy's Senior Subordinated Debentures, plus interest thereon and
certain costs and expenses incurred in connection therewith and (z) the
performance of all obligations under the Macy's Senior Subordinated Debentures
Indenture.

108. "Macy's Senior Subordinated Debentures Indenture" means the
Indenture, dated as of July 15, 1986, by and between Macy Merger Corp., Macy
Acquiring Corp. (as guarantor) and Shawmut, as trustee, as subsequently amended
and supplemented.

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109. "Macy's South" means Macy's South, Inc., a Delaware corporation
and the debtor in Reorganization Case No. 92 B 40478.

110. "Macy's Specialty" means Macy Specialty Stores, Inc., a Delaware
corporation and the debtor in Reorganization Case No. 92 B 40484.

111. "Macy's Subordinated Debentures" means the 14-1/2% Subordinated
Debentures due 2001, issued by Macy's pursuant to the Macy's Subordinated
Debentures Indenture.

112. "Macy's Subordinated Debentures Assumption Agreement" means,
collectively: (a) the Assumption Agreement, dated as of November 3, 1986,
provided by Macy's California; (b) the Assumption Agreement, dated as of
November 3, 1986, provided by Macy's New Jersey, Inc.; (c) the Assumption
Agreement, dated as of November 3, 1986, provided by MNY Corp.; and (d) the
Assumption Agreement, dated as of November 3, 1986, provided by Macy's Atlanta,
Inc., pursuant to which each such entity assumed the obligation to pay the
principal and interest on a percentage of the Macy's Subordinated Debentures and
agreed to be bound by the terms of and perform the covenants of Macy's under the
Macy's Subordinated Debentures Indenture.

113. "Macy's Subordinated Debentures Guarantors" means, collectively:
(a) Macy's California; (b) Macy's Northeast; and (c) Macy's South.

114. "Macy's Subordinated Debentures Guaranty" means, collectively:
(a) the Mirror Subsidiary Guarantee, dated as of November 3, 1986, provided by
Macy's California; (b) the Mirror Subsidiary Guarantee, dated as of November 3,
1986, provided by Macy's New Jersey, Inc.; (c) the Mirror Subsidiary Guarantee,
dated as of November 3, 1986, provided by MNY Corp.; and (d) the Mirror
Subsidiary Guarantee, dated as of November 3, 1986, provided by Macy's Atlanta,
Inc., pursuant to which each such entity guaranteed (y) the payment of the
Macy's Subordinated Debentures, plus interest thereon and certain costs and
expenses incurred in connection therewith and (z) the performance of all
obligations under the Macy's Subordinated Debentures Indenture.

115. "Macy's Subordinated Debentures Indenture" means the Indenture,
dated as of July 15, 1986, by and between Macy Merger Corp. and IBJ Schroder
Bank & Trust Company (formerly known as J. Henry Schroder Bank & Trust Company),
as trustee, as subsequently amended and supplemented.

116. "Macy's Subordinated Discount Debentures" means the 16-1/2%
Subordinated Discount Debentures due 2006, issued by Macy's pursuant to the
Macy's Subordinated Discount Debentures Indenture.

117. "Macy's Subordinated Discount Debentures Assumption Agreement"
means, collectively: (a) the Assumption Agreement, dated as of November 3,
1986, provided by Macy's California; (b) the Assumption Agreement, dated as of
November 3, 1986, provided by Macy's New Jersey, Inc.; (c) the Assumption
Agreement, dated as of November 3, 1986, provided by MNY Corp.; and (d) the
Assumption Agreement, dated as of November 3, 1986, provided by Macy's Atlanta,
Inc., pursuant to which each such entity assumed the obligation to pay the
principal and interest on a percentage of the Macy's Subordinated Discount
Debentures and agreed to be bound by the terms of and perform the covenants of
Macy's under the Macy's Subordinated Discount Debentures Indenture.

118. "Macy's Subordinated Discount Debentures Guarantors" means,
collectively: (a) Macy's California; (b) Macy's Northeast; and (c) Macy's
South.

119. "Macy's Subordinated Discount Debentures Guaranty" means,
collectively: (a) the Mirror Subsidiary Guarantee, dated as of November 3,
1986, provided by Macy's California; (b) the Mirror Subsidiary Guarantee, dated
as of November 3, 1986, provided by Macy's New Jersey, Inc.; (c) the Mirror

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Subsidiary Guarantee, dated as of November 3, 1986, provided by MNY Corp.; and
(d) the Mirror Subsidiary Guarantee, dated as of November 3, 1986, provided by
Macy's Atlanta, Inc., pursuant to which each such entity guaranteed (y) the
payment of the Macy's Subordinated Discount Debentures, plus interest thereon
and certain costs and expenses incurred in connection therewith and (z) the
performance of all obligations under the Macy's Subordinated Discount Debentures
Indenture.

120. "Macy's Subordinated Discount Debentures Indenture" means the
Indenture, dated as of July 15, 1986, by and between Macy Merger Corp. and Bank
of Montreal Trust Company, as trustee, as subsequently amended and supplemented.

121. "Macy's Subsidiaries" means, collectively: (a) the Macy's
Operating Subsidiary Debtors; (b) the Macy's Miscellaneous Subsidiary Debtors;
(c) the Macy's Real Estate Subsidiary Debtors; and (d) the Macy's Nondebtor
Subsidiaries.

122. "Macy's Subsidiary Debtors" means, collectively: (a) the Macy's
Operating Subsidiary Debtors; (b) the Macy's Miscellaneous Subsidiary Debtors;
and (c) the Macy's Real Estate Subsidiary Debtors.

123. "Macy's/Swiss Bank Liquidated Damages Agreement" means,
collectively: (a) the letter agreements, dated June 17, 1988, and June 22,
1988, respectively, between Swiss Bank and Macy's and (b) the Macy's/49 Store
Loan Agreement, which provide for liquidated damages in respect of certain
interest rate exchange agreements entered into in connection with the
Macy's/49 Store Loan Agreement.

124. "Macy's/WCB Guarantor Debtors" means, collectively: (a) the
Macy's/WCB Real Estate (First Lien) Subsidiary Debtors; (b) the Macy's/WCB
(Junior Lien) Subsidiary Debtors (other than Bullock's Properties Corp., I.
Magnin Properties Corp., Macy's Northeast Properties Corp., Macy's Poydras
Properties Corp., Esplanade Properties Corp., Housgalleria Properties Corp.,
Lenox Properties Corp., Macobb Properties Corp., Riverchase Properties Corp. and
Waltwhit Properties Corp.); (c) the Macy's Real Estate Subsidiary Debtors listed
under section E of Appendix I.A.80; (d) MCO; (e) Pasadena Properties Corp.;
(f) Macy Specialty Stores, Inc.; (g) Brooksmith Properties Corp.; and (h) W. P.
Properties Corp.

125. "Macy's/WCB Guaranty" means, collectively, the guaranties
provided to the WCB Group by the Macy's/WCB Guarantor Debtors pursuant to the
terms of the Macy's/WCB Loan Agreement.

126. "Macy's/WCB (Junior Lien) Subsidiary Debtors" means,
collectively: (a) the Macy's/49 Store Real Estate Debtors; (b) the Macy's/CREI
Real Estate Subsidiary Debtors (other than Brooksmith Properties Corp.); (c) the
Macy's Miscellaneous Subsidiary Debtors (other than Bullock's Specialty Stores,
Inc., Delphis Corporation, Executive Placement Consultants, Inc., Macy Credit
Corp. and Macy Receivables Master Servicing Corp.); (d) the Macy's Operating
Subsidiary Debtors; and (e) the Macy's/Prudential Real Estate Subsidiary
Debtors.

127. "Macy's/WCB Loan Agreement" means, collectively: (a) the Credit
Agreement, dated July 10, 1986, among the entities identified therein as
"Banks," the entities identified therein as "Borrowers" and Manufacturers
Hanover Agent Bank Services Corporation, as subsequently amended and restated;
(b) the Amended and Restated Credit Agreement, dated April 27, 1988, between the
Macy's/WCB Obligor Debtors and the WCB Group, as subsequently amended and
restated; (c) the Amended and Restated Collateral Trust Agreement, dated
April 27, 1988, by and among Macy's, the Macy's/WCB Obligor Debtors, the

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Macy's/WCB Guarantor Debtors and Wilmington Trust Company and William J. Wade
(as trustees for the benefit of the WCB Group); (d) the Amended, Restated and
Consolidated Pledge Agreement, dated April 27, 1988, by and among the Macy's/WCB
Obligor Debtors, the Macy's/WCB Guarantor Debtors and Wilmington Trust Company
and William J. Wade (as trustees for the benefit of the WCB Group); (e) the
Amended and Restated Security Agreement, dated April 27, 1988, by the Macy's/WCB
Obligor Debtors, the Macy's/WCB Guarantor Debtors and Wilmington Trust Company
and William J. Wade (as trustees for the benefit of the WCB Group); (f) the
Amended and Restated Trademark Security Agreement and Conditional Assignment,
dated April 27, 1988, by the Macy's/WCB Obligor Debtors, the Macy's/WCB
Guarantor Debtors and Wilmington Trust Company and William J. Wade (as trustees
for the benefit of the WCB Group); (g) the Pledge Agreement, dated December 11,
1990, between Macy Financial, Inc. and Wilmington Trust Company and William J.
Wade (as trustees for the benefit of the WCB Group); and (h) all mortgages,
notes and other security or pledge agreements and instruments related to the
documents identified in (a) through (g) above.

128. "Macy's/WCB Obligor Debtors" means, collectively, those entities
identified as "Borrowers" in the Macy's/WCB Loan Agreement and their respective
successors and assigns.

129. "Macy's/WCB Real Estate (First Lien) Subsidiary Debtors" means,
collectively, the debtors identified as such on Appendix I.A.80.

130. "Macy's/WCB Swap Agreement" means, collectively: (a) the
Interest Rate Swap Agreement, dated May 12, 1988, between the Chase Manhattan
Bank, N.A. and Macy's and (b) the Interest Rate Swap Agreement, dated May 13,
1988, between Citibank, N.A. and Macy's.

131. "MCO" means MCO, Inc., a Delaware corporation and the debtor in
Reorganization Case No. 92 B 40482.

132. "New Combined Company Common Stock" means the shares of common
stock, par value $.01 per share, authorized pursuant to the certificate of
incorporation of the Combined Company.

133. "New Combined Company Preferred Stock" means the Series A Junior
Participating Preferred Stock, par value $.01 per share, of the Combined Company
authorized pursuant to the certificate of incorporation of the Combined Company
or a certificate of designation substantially in the form of Exhibit B to the
New Combined Company Share Purchase Rights Agreement.

134. "New Combined Company Share Purchase Rights" means the rights to
purchase shares of New Combined Company Preferred Stock to be issued pursuant to
the New Combined Company Share Purchase Rights Agreement.

135. "New Combined Company Share Purchase Rights Agreement" means the
share purchase rights agreement substantially in the form of Appendix I.A.135,
pursuant to which New Combined Company Share Purchase Rights will be issued.

136. "New Debt" means, collectively: (a) the New Mortgage Notes and
(b) the New Unsecured Notes.

137. "New Debt Instruments" means, collectively: (a) the New Global
Indenture; (b) the New Mortgage Notes Agreements; (c) the New Series A Notes
Supplemental Indenture; (d) the New Series B Notes Supplemental Indenture; and
(e) the New Series C Notes Supplemental Indenture.

138. "New Equity" means, collectively: (a) the New Combined Company
Common Stock and (b) the New Warrants.

139. "New GECC Mortgage Notes" means the mortgage notes due on the
fifth anniversary of the Effective Date, to be issued by New Macy's Warehouse
Real Estate to GECC pursuant to the New GECC Mortgage Note Agreement,
substantially in the form provided therein.

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I-15

140. "New GECC Mortgage Note Agreement" means the mortgage note
agreement between New Macy's Warehouse Real Estate and GECC, substantially on
the terms provided in Appendix I.A.140.

141. "New Global Indenture" means the global indenture between the
Combined Company and the trustee named therein, substantially in the form of
Appendix I.A.141.

142. "New John Hancock KPM Note Override Agreement" means the secured
note override agreement between KPM and John Hancock, substantially on the terms
provided in Appendix I.A.142.

143. "New John Hancock Plaza Store Note" means the secured note to be
issued by New Macy's Kings Plaza Real Estate to John Hancock pursuant to the New
John Hancock Plaza Store Note Agreement, substantially in the form provided
therein.

144. "New John Hancock Plaza Store Note Agreement" means the secured
note agreement between New Macy's Kings Plaza Real Estate and John Hancock,
substantially on the terms provided in Appendix I.A.144.

145. "New Macy's Kings Plaza Real Estate" means Macy's Kings Plaza
Real Estate, Inc., which will be formed as part of the Real Estate Subsidiary
Transactions and will be the issuer of the New John Hancock Plaza Store Note.

146. "New Macy's Primary Real Estate" means Macy's Primary Real
Estate, Inc., which will be formed as part of the Real Estate Subsidiary
Transactions and will be the issuer of the New Prudential Mortgage Notes.

147. "New Macy's Warehouse Real Estate" means Macy's Warehouse Real
Estate, Inc., which will be formed as part of the Real Estate Subsidiary
Transactions and will be the issuer of the New GECC Mortgage Notes.

148. "New Mortgage Notes" means, collectively: (a) the New GECC
Mortgage Notes; (b) the New John Hancock Plaza Store Note; and (c) the New
Prudential Mortgage Notes.

149. "New Mortgage Notes Agreements" means, collectively: (a) the New
GECC Mortgage Note Agreement; (b) the New John Hancock KPM Note Override
Agreement and the New John Hancock Plaza Store Note Agreement; and (c) the New
Prudential Mortgage Note and Guaranty Agreement.

150. "New Prudential Mortgage Note and Guaranty Agreement" means the
mortgage note and guaranty agreement between and among the Combined Company, New
Macy's Primary Real Estate, the other Reorganized Debtors named therein, and
Prudential, which agreement will be on those terms set forth in Appendix I.A.150
and on other terms that are satisfactory to Prudential (in the exercise of its
sole discretion) with respect to those terms not set forth in Appendix I.A.150.

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I-16

151. "New Prudential Mortgage Notes" means the mortgage notes due June
30, 2005, to be issued by New Macy's Primary Real Estate to Prudential pursuant
to the New Prudential Mortgage Note and Guaranty Agreement, substantially in the
form provided therein.

152. "New Securities" means, collectively: (a) the New Debt and
(b) the New Equity.

153. "New Series A Notes" means the unsecured notes due June 30, 1999,
to be issued by the Combined Company pursuant to the New Global Indenture and
the New Series A Notes Supplemental Indenture, substantially in the form
provided therein.

154. "New Series A Notes Supplemental Indenture" means the
supplemental indenture between the Combined Company and the trustee named
therein, substantially on the terms provided in Appendix I.A.154.

155. "New Series B Notes" means the unsecured notes due June 30, 2002,
to be issued by the Combined Company pursuant to the New Global Indenture and
the New Series B Notes Supplemental Indenture, substantially in the form
provided therein.

156. "New Series B Notes Supplemental Indenture" means the
supplemental indenture between the Combined Company and the trustee named
therein, substantially on the terms provided in Appendix I.A.154.

157. "New Series C Notes" means the unsecured notes due June 30, 2005,
to be issued by the Combined Company pursuant to the New Global Indenture and
the New Series C Notes Supplemental Indenture, substantially in the form
provided therein.

158. "New Series C Notes Supplemental Indenture" means the
supplemental indenture between the Combined Company and the trustee named
therein, substantially on the terms provided in Appendix I.A.154.

159. "New Series C Warrants" means the warrants to be issued by the
Combined Company pursuant to the New Series C Warrants Agreement, substantially
in the form provided therein.

160. "New Series C Warrants Agreement" means the warrants agreement
between the Combined Company and the warrants agent named therein, substantially
in the form of Appendix I.A.160.

161. "New Series D Warrants" means the warrants to be issued by the
Combined Company pursuant to the New Series D Warrants Agreement, substantially
in the form provided therein.

162. "New Series D Warrants Agreement" means the warrants agreement
between the Combined Company and the warrants agent named therein, substantially
in the form of Appendix I.A.162.

163. "New Unsecured Notes" means, collectively: (a) the New Series A
Notes; (b) the New Series B Notes; and (c) the New Series C Notes.

164. "New Warrants" means, collectively: (a) the New Series C
Warrants and (b) the New Series D Warrants.

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I-17
165. "New Warrants Agreements" means, collectively: (a) the New
Series C Warrants Agreement and (b) the New Series D Warrants Agreement.

166. "Obligations" shall have the meaning set forth in Section 1 of
the Prudential/Federated Security Agreement.

167. "Old Capital Stock" means, collectively: (a) the Old Common
Stock of Macy's; (b) the Old Preferred Stock; and (c) the Old Stock Options.

168. "Old Common Stock of . . ." means, when used with reference to a
particular Debtor or Debtors, the common stock issued by such Debtor or Debtors
and outstanding immediately prior to the Effective Date.

169. "Old Debt Securities" means, collectively: (a) the Macy's Senior
Subordinated Debentures; (b) the Macy's Subordinated Debentures; and (c) the
Macy's Subordinated Discount Debentures.

170. "Old Debt Securities Assumption Agreements" means, collectively:
(a) the Macy's Senior Subordinated Debentures Assumption Agreement; (b) the
Macy's Subordinated Debentures Assumption Agreement; and (c) the Macy's
Subordinated Discount Debentures Assumption Agreement.

171. "Old Debt Securities Guaranties" means, collectively: (a) the
Macy's Senior Subordinated Debentures Guaranty; (b) the Macy's Subordinated
Debentures Guaranty; and (c) the Macy's Subordinated Discount Debentures
Guaranty.

172. "Old Debt Securities Guarantors" means, collectively: (a) the
Macy's Senior Subordinated Debentures Guarantors; (b) the Macy's Subordinated
Debentures Guarantors; and (c) the Macy's Subordinated Discount Debentures
Guarantors.

173. "Old Indentures" means, collectively: (a) the Macy's Senior
Subordinated Debentures Indenture; (b) the Macy's Subordinated Debentures
Indenture; and (c) the Macy's Subordinated Discount Debentures Indenture.

174. "Old Preferred Stock" means, collectively: (a) the Old Series I
Preferred Stock; (b) the Old Series II Preferred Stock; and (c) the Old Series
III Preferred Stock.

175. "Old Series I Preferred Stock" means the shares of Convertible
Participating Preferred Stock, par value $1.00 per share, of Macy's issued and
outstanding immediately prior to the Effective Date.

176. "Old Series II Preferred Stock" means the shares of Convertible
Participating Preferred Stock Series II, par value $1.00 per share, of Macy's
issued and outstanding immediately prior to the Effective Date.

177. "Old Series III Preferred Stock" means the shares of Convertible
Participating Preferred Stock Series III, par value $1.00 per share, of Macy's
issued and outstanding immediately prior to the Effective Date.

178. "Old Stock Options" means, collectively: (a) the options to
purchase Old Common Stock of Macy's through the 1987 Participation Stock Option
Plan and the 1987 Stock Award Plan, which were established by the Board of
Directors of Macy's on June 15, 1987 and (b) any other options, warrants or
other rights to purchase Old Common Stock of Macy's, whenever granted.

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I-18
179. "Operating Subsidiary Transactions" means, collectively, such
mergers, consolidations, restructurings, dispositions, liquidations or
dissolutions or other transactions as may be determined by Federated or the
Combined Company to be necessary or appropriate to effect the corporate
restructuring of the Reorganized Debtors' respective department and specialty
store operations that is contemplated in Section IV.B.2.

180. "Ordinary Course Professionals Order" means the Order Pursuant to
Sections 327 and 328 of the Bankruptcy Code Authorizing the Employment of
Attorneys, Accountants, and Real Estate Appraisers Utilized by Debtors in the
Ordinary Course of Business, entered by the Bankruptcy Court on March 9, 1992.

181. "Other Priority Tax Claim" means a Claim that is entitled to
priority in payment pursuant to section 507(a)(7) of the Bankruptcy Code, other
than a Federal Priority Tax Claim or a Responsible Person Priority Tax Claim.

182. "Personal Injury Claims" means all personal injury tort or
wrongful death Claims asserted against any of the Debtors that, prior to the
Effective Date, were not settled, compromised or otherwise resolved.

183. "Petition Dates" means, collectively, the dates on which the
Debtors Filed their respective petitions for relief under chapter 11 of the
Bankruptcy Code to commence the Reorganization Cases.

184. "Plan" means this second amended joint plan of reorganization for
each of the Debtors, to the extent applicable to any Debtor, and all Appendices
attached hereto or referenced herein, as the same may be amended, modified or
supplemented.

185. "Plan Negotiating Committee" means: (a) with respect to the 49
Store Bank Group, the committee appointed by the Lenders that are parties to the
Macy's/49 Store Loan Agreement to address and negotiate plan of reorganization
matters on behalf of and subject to the ultimate vote of the 49 Store Bank
Group; (b) with respect to the CREI Bank Group, CREI; and (c) with respect to
the WCB Group, the committee appointed by the Banks that are parties to the
Macy's/WCB Loan Agreement to address and negotiate plan of reorganization
matters on behalf of and subject to the ultimate vote of the WCB Group.

186. "Plan Proponents" means, collectively: (a) Macy's and
(b) Federated. When any action or decision is referred to herein as being taken
or made by the Plan Proponents, such actions or decisions will not be effective
(for purposes of the Plan) unless taken or made by the Plan Proponents acting
jointly.

187. "Priority Claim" means a Claim that is entitled to priority in
payment pursuant to section 507(a) of the Bankruptcy Code and that is not an
Administrative Claim or a Priority Tax Claim.

188. "Priority Tax Claims" means, collectively: (a) Federal Priority
Tax Claims; (b) Responsible Person Priority Tax Claims; and (c) Other Priority
Tax Claims.

189. "Pro Rata" means:

a. when used with reference to a distribution of cash or New
Securities pursuant to Article III herein, proportionately so that with
respect to a particular Allowed Claim, the ratio of (i)(A) the amount of
property distributed on account of such Claim to (B) the amount of such
Claim, is the same as the ratio of (ii)(A) the amount of property

<PAGE>
I-19

distributed on account of all Allowed Claims of the Class in which such
Claim is included to (B) the amount of all Allowed Claims in that Class;
and

b. when used with reference to distributions of the Cash Investment
Yield pursuant to Sections VI.A, VI.D, VI.G and VII.C, the portion of the
Cash Investment Yield allocable to a particular Allowed Claim on the basis
of the amount of cash then being distributed on account of such Claim
(including dividends and other distributions on New Combined Company Common
Stock being distributed on account of such Claim). Calculations of the Pro
Rata shares of the Cash Investment Yield to be distributed at any
particular time will be based on the Cash Investment Yield generated as of
the last day of the month prior to the month in which such distributions
are to be made.

190. "Professional" means any professional employed in the
Reorganization Cases pursuant to sections 327 or 1103 of the Bankruptcy Code or
any professional seeking compensation or reimbursement of expenses in connection
with the Reorganization Cases pursuant to section 503(b)(4) of the Bankruptcy
Code.

191. "Prudential" means The Prudential Insurance Company of America, a
New Jersey mutual insurance corporation.

192. "Prudential/Federated Intercreditor Agreement" means the
Intercreditor Agreement, dated December 31, 1993, among Prudential, FNC and
Federated.

193. "Prudential/Federated Security Agreement" means the Pledge and
Security Agreement, dated as of December 31, 1993, by and between FNC and
Prudential.

194. "Quarterly Distribution Date" means the last Business Day of the
month following the end of each calendar quarter after the Effective Date;
provided, however, that if the Effective Date is within 45 days of the end of a
calendar quarter, the first Quarterly Distribution Date will be the last
Business Day of the month following the end of the first calendar quarter after
the calendar quarter in which the Effective Date falls.

195. "Real Estate Subsidiary Transactions" means, collectively, such
mergers, consolidations, restructurings, dispositions, liquidations or
dissolutions or other transactions as may be determined by Federated or the
Combined Company to be necessary or appropriate to effect the corporate
restructuring of the Macy's Real Estate Subsidiaries that is contemplated in
Section IV.B.3, including the formation of New Macy's Kings Plaza Real Estate,
New Macy's Primary Real Estate and New Macy's Warehouse Real Estate.

196. "Real Property Executory Contracts and Unexpired Leases" means
all executory contracts and unexpired leases between a Debtor and any entity
relating to the Debtors' interests in real property, and agreements and leases
appurtenant to real property, including all easements, licenses, permits,
rights, privileges, immunities, options, rights of first refusal, powers, uses,
usufructs, reciprocal easement agreements, vault, tunnel or bridge agreements or
franchises, development rights and any other interests in real estate or rights
in rem related to the applicable real property.

197. "Reinstated" or "Reinstatement" means rendering a Claim
unimpaired within the meaning of section 1124 of the Bankruptcy Code. Unless
the Plan specifies a particular method of Reinstatement, when the Plan provides
that an Allowed Claim or Interest will be Reinstated, such Claim or Interest
will be Reinstated, at the applicable Reorganized Debtor's sole discretion, in
accordance with one of the following:

a. The legal, equitable and contractual rights to which such Claim
or Interest entitles the holder will be unaltered;

<PAGE>
I-20

b. Notwithstanding any contractual provision or applicable law that
entitles the holder of such Claim or Interest to demand or receive
accelerated payment of such Claim or Interest after the occurrence of a
default:

i. any such default that occurred before or after the
commencement of the applicable Reorganization Case, other than a
default of a kind specified in section 365(b)(2) of the Bankruptcy
Code, will be cured;

ii. the maturity of such Claim or Interest as such maturity
existed before such default will be reinstated;

iii. the holder of such Claim or Interest will be compensated
for any damages incurred as a result of any reasonable reliance by
such holder on such contractual provision or such applicable law; and

iv. the legal, equitable or contractual rights to which such
Claim or Interest entitles the holder of such Claim or Interest will
not otherwise be altered; or

c. On the Effective Date, the holder of such Claim will receive, on
account of such Claim, cash equal to the allowed amount of such Claim.

198. "Reorganization Case" means: (a) when used with reference to a
particular Debtor or Debtors, the chapter 11 case or cases pending for that
Debtor or Debtors in the Bankruptcy Court and (b) when used with reference to
all Debtors, the chapter 11 cases pending for the Debtors in the Bankruptcy
Court.

199. "Reorganized . . ." means, when used in reference to a particular
Debtor, such Debtor on and after the Effective Date, including the Combined
Company.

200. "Reserve Classes" means, collectively, Classes M-13, MOS-13, MRS-
10 and MMS-5.

201. "Responsible Person Priority Tax Claim" means a Claim entitled to
priority in payment pursuant to section 507(a)(7) of the Bankruptcy Code, to the
extent that such Claim is: (a) considered to be held in trust for the
governmental unit under applicable nonbankruptcy law; (b) of a type for which
the directors, officers or employees of a corporation may be personally liable
to such governmental unit under section 6672 of the Internal Revenue Code of
1986, as amended, or any comparable provision under the statutory or decisional
laws of the governing jurisdiction; or (c) otherwise designated by the Combined
Company at or before the time of payment as a Responsible Person Priority Tax
Claim.

202. "Restructuring Transactions" means, collectively: (a) the
Federated/Macy's Merger; (b) the Operating Subsidiary Transactions; (c) the Real
Estate Subsidiary Transactions; and (d) the reincorporation or elimination by
merger, consolidation, restructuring, disposition, liquidation or dissolution of
certain Macy's Subsidiaries, substantially as described in the Disclosure
Statement.

203. "Secondary Liability Claim" means an Unsecured Claim that arises
from a Debtor being liable as a guarantor of, or otherwise being jointly,
severally or secondarily liable for, any contractual, tort or other obligation
of another Debtor, including any Unsecured Claim based on: (a) guaranties of
collection, payment or performance; (b) indemnity bonds, obligations to
indemnify or obligations to hold harmless; (c) performance bonds; (d) contingent
liabilities arising out of contractual obligations or out of undertakings
(including any assignment or other transfer) with respect to leases, operating

<PAGE>
I-21

agreements or other similar obligations made or given by a Debtor relating to
the obligations or performance of another Debtor; (e) vicarious liability; or
(f) any other joint or several liability that any Debtor may have in respect of
any obligation that is the basis of a Claim.

204. "Secured Claim" means a Claim that is secured by a lien on
property in which an Estate has an interest or that is subject to setoff under
section 553 of the Bankruptcy Code, to the extent of the value of the Claim
holder's interest in the applicable Estate's interest in such property or to the
extent of the amount subject to setoff, as applicable, as determined pursuant to
section 506(a) of the Bankruptcy Code.

205. "Securities Act" means the Securities Act of 1933, 15 U.S.C.
Sec.Sec. 77a-77aa, as now in effect or hereafter amended.

206. "Senior Indebtedness" means: (a) when used with reference to the
Macy's Senior Subordinated Debentures, such term as defined in the Macy's Senior
Subordinated Debentures Indenture; (b) when used with reference to the Macy's
Subordinated Debentures, such term as defined in the Macy's Subordinated
Debentures Indenture; and (c) when used with reference to the Macy's
Subordinated Discount Debentures, such term as defined in the Macy's
Subordinated Discount Debentures Indenture.

207. "Senior Indebtedness Claim" means a claim in respect of Senior
Indebtedness under the applicable Old Indenture or Old Debt Securities Guaranty.

208. "Senior Lenders" means, collectively: (a) Prudential; (b) the
WCB Group; (c) the 49 Store Bank Group; (d) the CREI Bank Group; (e) Fidelity;
and (f) Swiss Bank.

209. "Shawmut" means Shawmut Bank Connecticut, National Association,
as successor to The Connecticut National Bank, as trustee under the Macy's
Senior Subordinated Debentures Indenture.

210. "Stipulation of Amount and Nature of Claim" means a stipulation
between the applicable Reorganized Debtor and a holder of a Claim or an agreed
order of the Bankruptcy Court establishing the amount and nature of a Claim.

211. "Swiss Bank" means Swiss Bank Corporation, New York Branch.

212. "Third-Party Disbursing Agent" means an entity designated by
Federated or the Combined Company, after consultation with the Unsecured
Creditors' Committee, to act as a Disbursing Agent pursuant to Section VI.B.3.

213. "Trade Claim" means any Unsecured Claim arising from or with
respect to the sale of goods or rendition of services prior to the applicable
Petition Date, in the ordinary course of the applicable Debtor's business,
including any Claim of an employee that is not a Priority Claim (other than a
Claim, if any, of an employee for damages arising from the termination or
rejection of any Old Stock Options or otherwise relating to any Old Stock
Options).

214. "Uninsured Claim" means any Claim that is not an Insured Claim.

215. "Unsecured Claim" means any Claim that is not an Administrative
Claim, Priority Claim, Priority Tax Claim, Secured Claim or Intercompany Claim.

216. "Unsecured Creditors' Committee" means the official committee of
unsecured creditors appointed in the Reorganization Cases pursuant to section
1102 of the Bankruptcy Code, as the same may have been or is constituted from
time to time.

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217. "Untendered Securities" means the untendered or unredeemed shares
of common stock, par value $.25 per share, and all untendered or unredeemed
shares of preferred stock of R.H. Macy & Co., Inc. (a New York corporation and
the predecessor of Macy's) issued and outstanding immediately prior to the
merger in 1986 of Macy Merger Corp., a New York corporation, into such
predecessor.

218. "Voting Deadline" means the deadline for submitting ballots to
accept or reject the Plan in accordance with section 1126 of the Bankruptcy
Code, as specified in the Disclosure Statement.

219. "Voting Trustee" shall have the meaning set forth in the Voting
Trust Agreement, dated July 15, 1986, by and among Macy Acquiring Corp., Edward
S. Finkelstein, Mark S. Handler and the other entities identified therein as
"Stockholders," as subsequently amended.

220. "WCB Group" means, collectively, those entities identified as
"Banks" or "Agents" in the Macy's/WCB Loan Agreement.

B. Rules of Interpretation and Computation of Time

1. Rules of Interpretation

For purposes of the Plan: (a) whenever from the context it is
appropriate, each term, whether stated in the singular or the plural, will
include both the singular and the plural; (b) unless otherwise provided in the
Plan, any reference in the Plan to a contract, instrument, release, indenture or
other agreement or document being in a particular form or on particular terms
and conditions means that such document will be substantially in such form or
substantially on such terms and conditions; (c) unless otherwise provided in the
Plan, any reference in the Plan to an existing document or Appendix Filed or to
be Filed means such document or Appendix, as it may have been or may be amended,
modified or supplemented pursuant to the Plan; (d) unless otherwise specified
herein, any reference to an entity as a holder of a Claim includes that entity's
successors, assigns and affiliates; (e) unless otherwise specified, all
references in the Plan to Sections, Articles and Appendices are references to
Sections, Articles and Appendices of or to the Plan; (f) the words "herein" and
"hereto" refer to the Plan in its entirety rather than to a particular portion
of the Plan; (g) captions and headings to Articles and Sections are inserted for
convenience of reference only and are not intended to be a part of or to affect

the interpretation of the Plan; and (h) the rules of construction set forth in
section 102 of the Bankruptcy Code will apply.

2. Computation of Time

In computing any period of time prescribed or allowed by the Plan, the
provisions of Bankruptcy Rule 9006(a) will apply.

ARTICLE II.

CLASSES OF CLAIMS AND INTERESTS

The Plan constitutes a separate plan of reorganization for each
Debtor, and each Class of Claims and Interests constitutes a separate Class for
each Debtor. All Claims and Interests, except Administrative Claims and
Priority Tax Claims, are placed in the following Classes for each of the
Debtors. In accordance with section 1123(a)(1) of the Bankruptcy Code,
Administrative Claims and Priority Tax Claims, as described in Section III.A,
have not been classified and thus are excluded from the following Classes. A
Claim or Interest is classified in a particular Class only to the extent that
the Claim or Interest qualifies within the description of that Class and is
classified in other Classes to the extent that any remainder of the Claim or
Interest qualifies within the description of such other Classes.

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A. Claims Against and Interests in Macy's (Class M- )
----

1. Unimpaired Classes of Claims
(Classes M-1 through M-3)

Class M-1: Unsecured Claims against Macy's that are entitled to
priority under section 507(a)(3), 507(a)(4) or 507(a)(6) of the Bankruptcy Code.

Class M-2: Unsecured Claims against Macy's of $1,000 or less, and
Unsecured Claims against Macy's that the Claim holder elects by the Voting
Deadline to reduce to $1,000 on the ballot provided for voting on the Plan,
which Claims would otherwise be classified in Class M-13, absent the existence
of this Class M-2. A holder of a Claim that would have been classified in Class
M-13, absent such election, may make this election only as to all such holder's
Claims in Classes M-2 and M-13. Therefore, if a Claim holder makes an election
to reduce any Class M-13 Claim to $1,000, all of such holder's Class M-2 and
M-13 Claims will be reduced to $1,000 in the aggregate, and no Claims of the
Claim holder will remain in Class M-13. To obtain classification in Class M-2
for multiple Unsecured Claims under $1,000 that aggregate more than $1,000 and
would otherwise be classified in Class M-13 absent the existence of this Class
M-2, the holder of such Claims must elect classification in Class M-2 as if such
Claims were, in the aggregate, one Claim, even if such Claims were purchased by
or assigned to the holder making the election from different Claim holders.

Class M-3: Secured Claims against Macy's that are not classified in
Class M-5.

2. Impaired Classes of Claims
(Classes M-4 through M-14)

Class M-4: Claims of Prudential or FNC against Macy's under or
evidenced by the Macy's/Prudential Loan Agreement.

Class M-5: Claims of the WCB Group against Macy's under or evidenced
by the Macy's/WCB Loan Agreement or the Macy's/WCB Swap Agreement.

Class M-6: Claims of the 49 Store Bank Group against Macy's under or
evidenced by the Macy's/49 Store Loan Agreement or the Macy's/49 Store Loan
Guaranty, other than those Claims of Swiss Bank in Class M-8.

Class M-7: Claims of the CREI Bank Group against Macy's under or
evidenced by the Macy's/CREI Loan Agreement.

Class M-8: Claims of Swiss Bank against Macy's for liquidated damages
under or evidenced by the Macy's/Swiss Bank Liquidated Damages Agreement or the
Macy's/49 Store Loan Guaranty.

Class M-9: Claims of GECC against Macy's on account of the
Macy's/GECC Interest Guaranty.

Class M-10: Claims against Macy's under or evidenced by the Macy's
Senior Subordinated Debentures or the Macy's Senior Subordinated Debentures
Indenture, other than such Claims secured by an Indenture Trustee Charging Lien.

Class M-11: Claims against Macy's under or evidenced by the Macy's
Subordinated Debentures or the Macy's Subordinated Debentures Indenture, other
than such Claims secured by an Indenture Trustee Charging Lien.

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I-24

Class M-12: Claims against Macy's under or evidenced by the Macy's
Subordinated Discount Debentures or the Macy's Subordinated Discount Debentures
Indenture, other than such Claims secured by an Indenture Trustee Charging Lien.

Class M-13: Unsecured Claims against Macy's that are not otherwise
classified in Classes M-1, M-2, M-4, M-6 through M-12 or M-14, including Trade
Claims.

Class M-14: Unsecured Claims against Macy's: (a) for any fine,
penalty or forfeiture, or for multiple, exemplary or punitive damages, to the
extent that such Claims are not compensation for the Claim holder's actual
pecuniary loss; (b) arising from rescission of a purchase or sale of a security
of Macy's, for damages arising from a purchase or sale of such security or
reimbursement or contribution allowed under section 502 of the Bankruptcy Code
on account of such Claims; or (c) arising from or related to the Old Stock
Options, including any Claims arising out of the rejection or termination of any
Old Stock Options.

3. Impaired Classes of Interests
(Classes M-15 through M-17)

Class M-15: Interests of the holders of Old Preferred Stock.

Class M-16: Interests of the holders of Old Common Stock of Macy's.

Class M-17: Interests against Macy's that are not otherwise
classified in Classes M-15 or M-16, including Interests of the holders of Old
Stock Options.

B. Claims Against and Interests in Macy's Operating Subsidiary
Debtors (Class MOS- )
----

1. Unimpaired Classes of Claims
(Classes MOS-1 through MOS-3)

Class MOS-1: Unsecured Claims against a Macy's Operating Subsidiary
Debtor that are entitled to priority under section 507(a)(3), 507(a)(4) or
507(a)(6) of the Bankruptcy Code.

Class MOS-2: Unsecured Claims against a Macy's Operating Subsidiary
Debtor of $1,000 or less, and Unsecured Claims against a Macy's Operating
Subsidiary Debtor that the Claim holder elects by the Voting Deadline to reduce
to $1,000 on the ballot provided for voting on the Plan, which Claims would
otherwise be classified in Class MOS-13 absent the existence of this Class MOS-
2. A holder of a Claim that would have been classified in Class MOS-13, absent
such election, may make this election only as to all such holder's Claims in
Classes MOS-2 and MOS-13 that are against the particular Macy's Operating
Subsidiary Debtor against which the reduced Claim is held. Therefore, if a
Claim holder makes an election to reduce any Class MOS-13 Claim to $1,000, all
of such holder's Class MOS-2 and MOS-13 Claims against the particular Macy's
Operating Subsidiary Debtor against which the reduced Claim is held will be
reduced to $1,000 in the aggregate, and no Claims of the Claim holder against
the particular Macy's Operating Subsidiary Debtor against which the reduced
Claim is held will remain in Class MOS-13. To obtain classification in Class
MOS-2 for multiple Unsecured Claims under $1,000 against a particular Macy's
Operating Subsidiary Debtor that aggregate more than $1,000 and would otherwise
be classified in Class MOS-13 absent the existence of this Class MOS-2, the
holder of such Claims must elect classification in Class MOS-2 as if such Claims
were, in the aggregate, one Claim, even if such Claims were purchased by or
assigned to the holder making the election from different Claim holders.

<PAGE>
I-25
Class MOS-3: Secured Claims against a Macy's Operating Subsidiary
Debtor that are not otherwise classified in Classes MOS-4 through MOS-9.

2. Impaired Classes of Claims
(Classes MOS-4 through MOS-13)

Class MOS-4: Claims of Prudential or FNC against a Macy's/Prudential
Operating Subsidiary Debtor under or evidenced by the Macy's/Prudential Loan
Agreement.

Class MOS-5: Claims of the WCB Group against a Macy's Operating
Subsidiary Debtor under or evidenced by the Macy's/WCB Loan Agreement or
Macy's/WCB Swap Agreement.

Class MOS-6: Claims of the 49 Store Bank Group against a Macy's/49
Store Operating Subsidiary Debtor under or evidenced by the Macy's/49 Store Loan
Agreement, other than those Claims of Swiss Bank in Class MOS-8.

Class MOS-7: Claims of the CREI Bank Group against a Macy's/CREI
Operating Subsidiary Debtor under or evidenced by the Macy's/CREI Loan Agreement
or the Macy's/CREI Swap Agreement.

Class MOS-8: Claims of Swiss Bank against a Macy's/49 Store Operating
Subsidiary Debtor for liquidated damages under or evidenced by the Macy's/49
Store Loan Agreement or the Macy's/49 Store Loan Guaranty.

Class MOS-9: Claims of GECC against a Macy's/GECC Operating
Subsidiary Debtor under or evidenced by the Macy's/GECC Loan Agreement.

Class MOS-10: Claims against an Old Debt Securities Guarantor under
or evidenced by the Macy's Senior Subordinated Debentures Guaranty or the Macy's
Senior Subordinated Debentures Assumption Agreement, other than such Claims
secured by an Indenture Trustee Charging Lien.

Class MOS-11: Claims against an Old Debt Securities Guarantor under
or evidenced by the Macy's Subordinated Debentures Guaranty or the Macy's
Subordinated Debentures Assumption Agreement, other than such Claims secured by
an Indenture Trustee Charging Lien.

Class MOS-12: Claims against an Old Debt Securities Guarantor under
or evidenced by the Macy's Subordinated Discount Debentures Guaranty or the
Macy's Subordinated Discount Debentures Assumption Agreement, other than such
Claims secured by an Indenture Trustee Charging Lien.

Class MOS-13: Unsecured Claims against a Macy's Operating Subsidiary
Debtor that are not classified in Classes MOS-1, MOS-2 or MOS-10 through MOS-12,
including Trade Claims.

3. Unimpaired Class of Interests
(Class MOS-14)

Class MOS-14: Interests of the holders of Old Common Stock of a
Macy's Operating Subsidiary Debtor.

<PAGE>
I-26

C. Claims Against and Interests in Macy's Real Estate
Subsidiary Debtors (Class MRS- )
----

1. Unimpaired Classes of Claims
(Classes MRS-1 through MRS-3)

Class MRS-1: Unsecured Claims against a Macy's Real
Estate Subsidiary Debtor that are entitled to priority under
section 507(a)(3), 507(a)(4) or 507(a)(6) of the Bankruptcy Code.

Class MRS-2: Unsecured Claims against a Macy's Real
Estate Subsidiary Debtor of $1,000 or less, and Unsecured Claims
against a Macy's Real Estate Subsidiary Debtor that the Claim
holder elects by the Voting Deadline to reduce to $1,000 on the
ballot provided for voting on the Plan, which Claims would
otherwise be classified in Class MRS-10, absent the existence of
this Class MRS-2. A holder of a Claim that would have been
classified in Class MRS-10, absent such election, may make this
election only as to all such holder's Claims in Classes MRS-2 and
MRS-10 that are against the particular Macy's Real Estate
Subsidiary Debtor against which the reduced Claim is held.
Therefore, if a Claim holder makes an election to reduce any
Class MRS-10 Claim to $1,000, all of such holder's Class MRS-2
and MRS-10 Claims against the particular Macy's Real Estate
Subsidiary Debtor against which the reduced Claim is held will be
reduced to $1,000 in the aggregate, and no Claims of the Claim
holder against the particular Macy's Real Estate Subsidiary
Debtor against which the reduced Claim is held will remain in
Class MRS-10. To obtain classification in Class MRS-2 for
multiple Unsecured Claims under $1,000 against a particular
Macy's Real Estate Subsidiary Debtor that aggregate more than
$1,000 and would otherwise be classified in MRS-10 absent the
existence of this Class MRS-2, the holder of such Claims must
elect classification in Class MRS-2 as if such Claims were, in
the aggregate, one Claim, even if such Claims were purchased by
or assigned to the holder making the election from different
Claim holders.

Class MRS-3: Secured Claims against a Macy's Real
Estate Subsidiary Debtor that are not otherwise classified in
Classes MRS-4 through MRS-9.

2. Impaired Classes of Claims
(Classes MRS-4 through MRS-10)

Class MRS-4: Claims of Prudential or FNC against a
Macy's/Prudential Real Estate Subsidiary Debtor under or
evidenced by the Macy's/Prudential Loan Agreement.

Class MRS-5: Claims of the WCB Group against a
Macy's/WCB Guarantor Debtor or a Macy's/WCB (Junior Lien)
Subsidiary Debtor that is also a Macy's Real Estate Subsidiary
Debtor under or evidenced by the Macy's/WCB Loan Agreement, the
Macy's/WCB Guaranty or the Macy's/WCB Swap Agreement.

Class MRS-6: Claims of the 49 Store Bank Group against
a Macy's/49 Store Real Estate Subsidiary Debtor under or

evidenced by the Macy's/49 Store Loan Agreement, other than those
Claims of Swiss Bank in Class MRS-8.

Class MRS-7: Claims of the CREI Bank Group against a
Macy's/CREI Real Estate Subsidiary Debtor under or evidenced by
the Macy's/CREI Loan Agreement or the Macy's/CREI Swap Agreement.

Class MRS-8: Claims of Swiss Bank against a Macy's/49
Store Real Estate Subsidiary Debtor for liquidated damages under
or evidenced by the Macy's/Swiss Bank Liquidated Damages
Agreement.

<PAGE>
I-27

Class MRS-9: John Hancock Kings Plaza Claims

a. Class MRS-9A: Claims of John Hancock under or
evidenced by the John Hancock KPM Note.

b. Class MRS-9B: Claims of John Hancock under or
evidenced by the John Hancock Plaza Store Note.

Class MRS-10: Unsecured Claims against a Macy's Real
Estate Subsidiary Debtor that are not otherwise classified in
Classes MRS-1 or MRS-2, including Trade Claims.

3. Unimpaired Class of Interests
(Class MRS-11)

Class MRS-11: Interests of the holders of Old Common
Stock of a Macy's Real Estate Subsidiary Debtor.

D. Claims Against and Interests in Macy's Miscellaneous
Subsidiary Debtors (Class MMS- )
---

1. Unimpaired Classes of Claims
(Classes MMS-1 through MMS-3)

Class MMS-1: Unsecured Claims against a Macy's
Miscellaneous Subsidiary Debtor that are entitled to priority
under section 507(a)(3), 507(a)(4) or 507(a)(6) of the Bankruptcy
Code.

Class MMS-2: Unsecured Claims against a Macy's
Miscellaneous Subsidiary Debtor of $1,000 or less, and Unsecured
Claims against a Macy's Miscellaneous Subsidiary Debtor that the
Claim holder elects by the Voting Deadline to reduce to $1,000 on
the ballot provided for voting on the Plan, which Claims would
otherwise be classified in Class MMS-5 absent the existence of
this Class MMS-2. A holder of a Claim that would have been
classified in Class MMS-2, absent such election, may make this
election only as to all such holder's Claims in Classes MMS-2 and
MMS-5 that are against the particular Macy's Miscellaneous
Subsidiary Debtor against which the reduced Claim is held.
Therefore, if a Claim holder makes an election to reduce any
Class MMS-5 Claim to $1,000, all of such holder's Class MMS-2 and
MMS-5 Claims against the particular Macy's Miscellaneous
Subsidiary Debtor against which the reduced Claim is held will be
reduced to $1,000 in the aggregate, and no Claims of the Claim
holder against the particular Macy's Miscellaneous Subsidiary
Debtor against which the reduced Claim is held will remain in
MMS-5. To obtain classification in Class MMS-2 for multiple
Unsecured Claims under $1,000 against a particular Macy's
Miscellaneous Subsidiary Debtor that aggregate more than $1,000
and would otherwise be classified in Class MMS-5 absent the
existence of this Class MMS-2, the holder of such Claims must
elect classification in Class MMS-2 as if such Claims were, in
the aggregate, one Claim, even if such Claims were purchased by
or assigned to the holder making the election from different
Claim holders.

Class MMS-3: Secured Claims against a Macy's
Miscellaneous Subsidiary Debtor that are not otherwise classified
in Class MMS-4.

<PAGE>
I-28
2. Impaired Classes of Claims
(Classes MMS-4 and MMS-5)

Class MMS-4: Claims of the WCB Group against a Macy's
Miscellaneous Subsidiary Debtor under or evidenced by the
Macy's/WCB Loan Agreement, the Macy's/WCB Guaranty or the
Macy's/WCB Swap Agreement.

Class MMS-5: Unsecured Claims against a Macy's
Miscellaneous Subsidiary Debtor that are not classified in
Classes MMS-1 or MMS-2, including Trade Claims.

3. Unimpaired Class of Interests
(Class MMS-6)

Class MMS-6: Interests of the holders of Old Common
Stock of a Macy's Miscellaneous Subsidiary Debtor.

ARTICLE III.

TREATMENT OF CLAIMS AND INTERESTS

The treatment of Claims provided in Sections III.A and
III.B is subject to the additional treatment provisions of
Sections III.C though F. Section III.E will not affect the
nature, amount or timing, as provided in the other Sections
herein, of the ultimate distributions to be received by holders
of Allowed Claims.

A. Unclassified Claims

1. Payment of Administrative Claims

a. Administrative Claims in General

Except as specified in this Section III.A.1, and
subject to the bar date provisions herein, unless otherwise
agreed by the holder of an Administrative Claim and the
applicable Debtor or Reorganized Debtor, each holder of an
Administrative Claim will receive, in full satisfaction of its
Claim, cash equal to the amount of such Administrative Claim on
the Effective Date or, if the Administrative Claim is not allowed
as of the Effective Date: (i) 30 days after the date on which an
order allowing such Claim (other than a Claim for reclamation
under section 546(c) of the Bankruptcy Code) becomes a Final
Order or (ii) with respect to Claims for reclamation under
section 546(c) of the Bankruptcy Code, 30 days after the date on
which (A) an order allowing such Claim becomes a Final Order or
(B) a Stipulation of Amount and Nature of Claim is executed by
the applicable Reorganized Debtor and Claim holder.

b. Statutory Fees

On or before the Effective Date, Administrative Claims
for fees payable pursuant to section 1930 of title 28 of the
United States Code, 28 U.S.C. Sec. 1930, as determined by the
Bankruptcy Court at the hearing on Confirmation, will be paid in
cash equal to the amount of such Administrative Claims.

c. Ordinary Course Liabilities

Administrative Claims based on liabilities incurred by
a Debtor in the ordinary course of its business (including
Administrative Claims that are Trade Claims, Administrative
Claims of governmental units for taxes (including tax audit
Claims related to tax years commencing after the Petition Date)

<PAGE>
I-29

and Administrative Claims arising from or under those executory
contracts and unexpired leases of the kind described in Section
V.E) will be assumed and paid by the applicable Reorganized
Debtor pursuant to the terms and conditions of the particular
transaction giving rise to such Administrative Claims, without
any further action by the holders of such Claims.

d. Claims Under DIP Credit Agreement

On the Effective Date or at a later date determined
pursuant to the DIP Credit Agreement, Administrative Claims under
or evidenced by the DIP Credit Agreement will be paid, as
Federated or the Combined Company determines, in its sole
discretion: (i) in cash equal to the amount of such
Administrative Claims or (ii) in accordance with the terms of the
DIP Credit Agreement.

e. Bar Dates for Administrative Claims

i. General Bar Date Provisions

Except as otherwise provided in Section III.A.1.e.ii,
unless previously Filed, requests for payment of Administrative
Claims must be Filed and served on the Reorganized Debtors,
pursuant to the procedures specified in the Confirmation Order
and the notice of entry of the Confirmation Order, no later than
30 days after the Effective Date. Holders of Administrative
Claims that are required to File and serve a request for payment
of such Claims and that do not File and serve a request by the
applicable bar date will be forever barred from asserting such
Claims against the Debtors, the Reorganized Debtors or their
respective property. Objections to such requests must be Filed
and served on the Reorganized Debtors and the requesting party by
the later of: (A) 90 days after the Effective Date and (B) 60
days after the Filing of the applicable request for payment of
Administrative Claims.

ii. Bar Dates for Certain Administrative Claims

A. Professional Compensation

Professionals or other entities requesting compensation
or reimbursement of expenses pursuant to sections 327, 328, 330,
331, 503(b) and 1103 of the Bankruptcy Code for services rendered
before the Effective Date (including compensation requested
pursuant to section 503(b)(3) and (4) of the Bankruptcy Code by
any Professional or other entity for making a substantial
contribution in any Reorganization Case) must File and serve on
the Reorganized Debtors and such other entities who are
designated by the Bankruptcy Rules, the Confirmation Order or
other order of the Bankruptcy Court an application for final
allowance of compensation and reimbursement of expenses no later
than 45 days after the Effective Date; provided, however, that
any Professional who may receive compensation or reimbursement of
expenses pursuant to the Ordinary Course Professionals Order may
continue to receive such compensation and reimbursement of
expenses for services rendered before the Effective Date, without
further Bankruptcy Court review or approval, pursuant to the
Ordinary Course Professionals Order. Objections to applications
of Professionals or other entities for compensation or
reimbursement of expenses must be Filed and served on the
Reorganized Debtors and the requesting party by the later of:
(1) 75 days after the Effective Date and (2) 30 days after the
Filing of the applicable request for payment of Administrative
Claims.

B. Ordinary Course Liabilities

Holders of Administrative Claims based on liabilities
incurred by a Debtor in the ordinary course of its business
(including Administrative Claims that are Trade Claims,
Administrative Claims of governmental units for taxes (including
tax audit Claims related to tax years commencing after the
Petition Date) and Administrative Claims arising from or under
those executory contracts and unexpired leases of the kind
described in Section V.E) will not be required to File or serve
any request for payment of such Claims. Such Claims will be
satisfied pursuant to Section III.A.1.c.

<PAGE>
I-30
C. Claims Under DIP Credit Agreement

Holders of Administrative Claims under or evidenced by
the DIP Credit Agreement will not be required to File or serve
any request for payment of such Claims. Such Claims will be
satisfied pursuant to Section III.A.1.d.

2. Payment of Priority Tax Claims

a. Federal Priority Tax Claims

On the Effective Date, the aggregate amount of the
Federal Priority Tax Claims will be deemed to be $163,744,339.15
(inclusive of that portion of such Claims that constitute
Responsible Person Priority Tax Claims) and, pursuant to section
1129(a)(9)(C) of the Bankruptcy Code and as contemplated in the
IRS Settlement Agreement, beginning one year after the Effective
Date (except as provided in Section III.A.2.b), the IRS will
receive, in full satisfaction of its Federal Priority Tax Claims,
deferred cash payments in the amount of such Claims in six equal
annual installments of principal, plus simple interest accruing
from the Effective Date at 7% per annum on the unpaid portion of
such Claims (or upon such other terms determined by the
Bankruptcy Court to provide the holders of Federal Priority Tax
Claims with deferred cash payments having a value, as of the
Effective Date, equal to such Claims); provided, however, that
the Reorganized Debtors will have the right to pay any Federal
Priority Tax Claim, or any remaining balance of such Claim, in
full, at any time on or after the Effective Date, without premium
or penalty.

b. Responsible Person Priority Tax Claims

On the Effective Date or, if the Responsible Person
Priority Tax Claim is not allowed as of the Effective Date, the
first Quarterly Distribution Date after the date on which (i) an
order allowing such Claim becomes a Final Order or (ii) a
Stipulation of Amount and Nature of Claim is executed by the
applicable Reorganized Debtor and Claim holder, each holder of a
Responsible Person Priority Tax Claim will receive cash equal to
the amount of such Claim. To the extent that any holder of a
Responsible Person Priority Tax Claim holds any other Allowed
Claims, all distributions received by the holder of such
Responsible Person Priority Tax Claim, whether on account of such
Responsible Person Priority Tax Claim or on account of other
Allowed Claims, will be first applied toward and will reduce the
amount of such Responsible Person Priority Tax Claim.

c. Other Priority Tax Claims

Pursuant to section 1129(a)(9)(C) of the Bankruptcy
Code, unless otherwise agreed by the holder of an Other Priority
Tax Claim and the applicable Debtor or Reorganized Debtor, each
holder of an Other Priority Tax Claim will receive, in full
satisfaction of its Claim, deferred cash payments over a period
not exceeding six years from the date of assessment of such
Claim. Payments will be made in equal annual installments of
principal, plus simple interest accruing from the Effective Date
at 7% per annum on the unpaid portion of each Other Priority Tax
Claim (or upon such other terms determined by the Bankruptcy
Court to provide the holders of Other Priority Tax Claims with
deferred cash payments having a value, as of the Effective Date,
equal to such Claims). Unless otherwise agreed by the holder of
such Claim and the applicable Debtor or Reorganized Debtor, the
first payment will be payable one year after the Effective Date
or, if the Other Priority Tax Claim is not allowed within one
year after the Effective Date, the first Quarterly Distribution
Date after the date on which (i) an order allowing such Claim
becomes a Final Order or (ii) a Stipulation of Amount and Nature
of Claim is executed by the applicable Reorganized Debtor and
Claim holder; provided, however, that the Reorganized Debtors
will have the right to pay any Other Priority Tax Claim, or any
remaining balance of such Claim, in full, at any time on or after
the Effective Date, without premium or penalty.

<PAGE>
I-31
B. Classified Claims and Interests

1. Unimpaired Classes of Claims Held by Third Parties

a. Unsecured Claims Entitled to
Priority Under Section
507(a)(3), 507(a)(4) or 507(a)(6) of the
Bankruptcy Code
(Classes M-1, MOS-1, MRS-1 and MMS-1)

On the Effective Date, each holder of an Allowed Claim
in Class M-1, MOS-1, MRS-1 or MMS-1 will receive cash equal to
the amount of such Claim.

b. Unsecured Convenience Claims
(Classes M-2, MOS-2,
MRS-2 and MMS-2)

On the Effective Date, each holder of an Allowed Claim
in Class M-2, MOS-2, MRS-2 or MMS-2 will receive cash equal to
the amount of such Claim (as reduced, if applicable, pursuant to
an election by the holder thereof).

c. Secured Claims Not Otherwise
Classified (Classes
M-3, MOS-3, MRS-3 and MMS-3)

On the Effective Date, each holder of an Allowed Claim
in Class M-3, MOS-3, MRS-3 or MMS-3 will have its Allowed Claim
Reinstated.

2. Impaired Classes of Claims Held by Third Parties

a. Claims Under or Evidenced by the
Macy's/Prudential
Loan Agreement (Classes M-4, MOS-4 and MRS-4)

On the Effective Date, the respective aggregate amounts
of the Claims of Prudential and FNC in each of Classes M-4, MOS-4
and MRS-4 will each be deemed to be Allowed Claims of
$428,174,000, and, subject to certain of the adjustments
specified in Section III.C, on the Effective Date, Prudential
will receive, in full satisfaction of such Allowed Claims:
(i) $5,709,000 cash minus 1/2 of the amount of any cash
distributed to Prudential on account of Allowed Claims in Classes
M-4, MOS-4 and MRS-4 prior to the Effective Date and
(ii) $550,926,100 aggregate principal amount of New Prudential
Mortgage Notes. On the Effective Date, FNC will receive, in full
satisfaction of its Allowed Claims in Classes M-4, MOS-4 and
MRS-4: (i) $5,709,000 cash minus 1/2 of the amount of any cash
distributed to Prudential on account of Allowed Claims in Classes
M-4, MOS-4 and MRS-4 prior to the Effective Date and
(ii) 41.14147% of the number of Distributable Shares (Pool A).

b. Claims Under or Evidenced by the
Macy's/WCB
Loan Agreement, the Macy's/WCB Guaranty or the
Macy's/WCB Swap Agreement (Classes M-5, MOS-5,
MRS-5 and MMS-4)

On the Effective Date, the aggregate amount of the
Claims in each of Classes M-5, MOS-5, MRS-5 and MMS-4 will be
deemed to be an Allowed Claim of $735,698,190, and, subject to
the adjustments specified in Section III.C, on the Effective
Date, each holder of an Allowed Claim in Classes M-5, MOS-5,
MRS-5 and MMS-4 will receive, in full satisfaction of its Allowed
Claims, its Pro Rata share of: (i) $23,836,000 cash;
(ii) $198,081,000 aggregate principal amount of New Series A
Notes; (iii) $148,561,000 aggregate principal amount of New
Series B Notes; (iv) $148,561,000 aggregate principal amount of
New Series C Notes; and (v) 28.26623% of the number of
Distributable Shares (Pool A).

<PAGE>
I-32

c. Claims Under or Evidenced by the
Macy's/49 Store
Loan Agreement or the Macy's/49 Store Loan
Guaranty (Other Than Liquidated Damages Claims
of Swiss Bank) (Classes M-6, MOS-6 and MRS-6)

On the Effective Date, the aggregate amount of the
Claims in each of Classes M-6, MOS-6 and MRS-6 will be deemed to
be an Allowed Claim of $560,434,006, and, subject to the
adjustments specified in Section III.C, on the Effective Date,
each holder of an Allowed Claim in Classes M-6, MOS-6 and MRS-6
will receive, in full satisfaction of its Allowed Claims, its Pro
Rata share of: (i) $14,109,000 cash; (ii) $128,559,000 aggregate
principal amount of New Series A Notes; (iii) $96,420,000
aggregate principal amount of New Series B Notes;
(iv) $96,420,000 aggregate principal amount of New Series C
Notes; and (v) 18.47086% of the number of Distributable Shares
(Pool A).

d. Claims Under or Evidenced by the
Macy's/CREI
Loan Agreement or the Macy's/CREI Swap Agreement
(Classes M-7, MOS-7 and MRS-7)

On the Effective Date, the aggregate amount of the
Claims in each of Classes M-7, MOS-7 and MRS-7 will be deemed to
be an Allowed Claim of $201,480,925, and, subject to the
adjustments specified in Section III.C, on the Effective Date,
each holder of an Allowed Claim in Classes M-7, MOS-7 and MRS-7
will receive, in full satisfaction of its Allowed Claims, its Pro
Rata share of: (i) $47,376,000 aggregate principal amount of New
Series A Notes; (ii) $35,532,000 aggregate principal amount of
New Series B Notes; (iii) $35,532,000 aggregate principal amount
of New Series C Notes; and (iv) 6.80307% of the number of
Distributable Shares (Pool A).

e. Claims Under or Evidenced by the
Macy's/Swiss
Bank Liquidated Damages Agreement or the
Macy's/Macy's South Liquidated Damages
Guaranty (Classes M-8, MOS-8 and MRS-8)

On the Effective Date, the Claims of Swiss Bank in each
of Classes M-8, MOS-8 and MRS-8 will be deemed to be an Allowed
Claim and, subject to certain of the adjustments specified in
Section III.C, on the Effective Date, Swiss Bank will receive, in
full satisfaction of its Allowed Claims: (i) $1,210,300 cash;
(ii) $11,028,000 aggregate principal amount of New Series A
Notes; (iii) $8,272,000 aggregate principal amount of New Series
B Notes; (iv) $8,272,000 aggregate principal amount of New Series
C Notes; and (v) 1.58452% of the number of Distributable Shares
(Pool A).

f. Claims Under or Evidenced by the
Macy's/GECC
Loan Agreement or the Macy's/GECC Interest
Guaranty (Classes M-9 and MOS-9)

On the Effective Date, the aggregate amount of the
Claims of GECC in each of Classes M-9 and MOS-9 will be deemed to
be an Allowed Claim of $53,458,000, and, subject to certain of
the adjustments specified in Section III.C.2, on the Effective
Date, GECC will receive, in full satisfaction of its Allowed
Claims, $53,458,000 aggregate principal amount of New GECC
Mortgage Notes.

g. John Hancock Kings Plaza Claims
(Class MRS-9)

i. John Hancock KPM Note Claims (Class MRS-9A)

On the Effective Date, in full satisfaction of its
Allowed Claims in Class MRS-9A, John Hancock will
receive $3,245,000 cash and KPM will enter into the New John
Hancock KPM Note Override Agreement.

<PAGE>
I-33

ii. John Hancock Plaza Store Claims (Class
MRS-9B)

On the Effective Date, John Hancock will receive, in
full satisfaction of its Allowed Claims in Class MRS-9B:
(A) $2,324,000 cash and (B) the New John Hancock Plaza Store Note
in an aggregate principal amount of $6,100,000.

h. Claims Under or Evidenced by the
Macy's Senior
Subordinated Debentures, the Macy's Senior
Subordinated Debentures Indenture, the
Macy's Senior Subordinated Debentures Guaranty
or the Macy's Senior Subordinated Debentures
Assumption Agreement (Classes M-10 and MOS-10)

On the Effective Date, the aggregate amount of the
Claims in each of Classes M-10 and MOS-10 will be deemed to be an
Allowed Claim of $399,106,619, and, on the Effective Date, each
holder of an Allowed Claim in Classes M-10 and MOS-10 will
receive, in full satisfaction of its Allowed Claims, its Pro Rata
share of: (i) $35,375,000 cash; (ii) 47.90577% of the number of
Distributable Shares (Pool B); and (iii) 57.38061% of each series
of Distributable Warrants.

i. Claims Under or Evidenced by the
Macy's
Subordinated Debentures, the Macy's Subordinated
Debentures Indenture, the Macy's Subordinated
Debentures Guaranty or the Macy's Subordinated
Debentures Assumption Agreement (Classes M-11
and MOS-11)

On the Effective Date, the aggregate amount of the
Claims in each of Classes M-11 and MOS-11 will be deemed to be an
Allowed Claim of $508,880,225, and, on the Effective Date, each
holder of an Allowed Claim in Classes M-11 and MOS-11 will
receive, in full satisfaction of its Allowed Claims, its Pro Rata
share of: (i) 30.55407% of the number of Distributable Shares
(Pool B) and (ii) 42.61939% of the number of each series of
Distributable Warrants.

j. Claims Under or Evidenced by the Macy's
Subordinated Discount Debentures, the
Macy's Subordinated Discount Debentures
Indenture, the Macy's Subordinated Discount
Debentures Guaranty or the Macy's Subordinated
Discount Debentures Assumption Agreement
(Classes M-12 and MOS-12)

On the Effective Date, the aggregate amount of the
Claims in each of Classes M-12 and MOS-12 will be deemed to be an
Allowed Claim of $582,819,136, and, on the Effective Date, each
holder of an Allowed Claim in Classes M-12 and MOS-12 will
receive, in full satisfaction of its Allowed Claims, its Pro Rata
share of 21.54016% of the number of Distributable Shares
(Pool B).

k. General Unsecured Claims (Classes
M-13, MOS-13,
MRS-10 and MMS-5)

i. On the Effective Date, each holder of an
Allowed Claim in Class M-13, MOS-13, MRS-10 or MMS-5 (other than
Federated) will receive, in full satisfaction of its Allowed
Claim: (A) the Fixed Cash Portion of such Claim and (B) its Pro
Rata share of 3.73385% of the number of Distributable Shares
(Pool A). For the purposes of calculating distributions to the
holders of Allowed Claims in Classes M-13, MOS-13, MRS-10 or
MMS-5, each holder's Pro Rata share will be calculated as if the
Allowed Claims in Classes M-13, MOS-13, MRS-10 and MMS-5 were in
a single Class.

<PAGE>
I-34

ii. No property will be distributed to or
retained by Federated on account of its Claims, including its
Claims in Class M-13 described in proofs of Claim numbers 10430
and 10446, and all such Claims will be discharged as of the
Effective Date.

l. Subordinated Unsecured Claims for
Penalties, Fines
and Punitive Damages, Subordinated Unsecured
Claims Related to Rescission, Damages or Indemnity
Claims Arising From Securities Transactions and
Claims Relating to Old Stock Options (Class M-14)

No property will be distributed to or retained by the
holders of Claims in Class M-14 on account of such Claims, and
such Claims will be discharged as of the Effective Date.

3. Unimpaired Classes of Common Stock Interests
in the Macy's
Subsidiary Debtors (Classes MOS-14, MRS-11 and MMS-6)

On the Effective Date, each Interest in Class MOS-14,
MRS-11 or MMS-6 will be Reinstated by leaving unaltered the
legal, equitable and contractual rights to which such Interest
entitles the holder of such Interest.

4. Impaired Classes of Interests in Macy's
(Classes M-15 through M-17)

No property will be distributed to or retained by the
holders of Interests in Classes M-15, M-16 or M-17 on account of
such Interests, and such Interests will be terminated as of the
Effective Date.

C. Special Provisions Regarding Treatment of Certain
Claims

1. Adjustments of Amounts of Distributions for
Pre-Effective Date
Sales of Collateral

a. Sales of Collateral Securing Allowed Bank
Loan Claims or
Claims of Swiss Bank

If collateral securing an Allowed Bank Loan Claim or an
Allowed Claim of Swiss Bank is sold or otherwise reduced to cash
after July 28, 1994 and prior to the Effective Date, the
net cash proceeds generated from such sales or other
transactions will be distributed Pro Rata, in accordance with
Sections III.B.2.b, c, d or e, as applicable, on the Effective
Date to the holders of the Allowed Bank Loan Claims secured by
liens on such collateral or Swiss Bank, as applicable, in the
priority established between and among such holders, in addition
to the amount of cash to be distributed pursuant to Sections
III.B.2.b, c, d or e, as applicable. The aggregate principal
amounts of each series of New Unsecured Notes to be distributed
pursuant to Sections III.B.2.b, c, d or e, as applicable, to the
holders of such Allowed Bank Loan Claims or Swiss Bank will be
reduced proportionately (on the basis of the aggregate amounts of
each series of New Unsecured Notes to be distributed pursuant to
the applicable Section) by the aggregate amount of such cash
distribution.

b. Sales of Collateral Securing Allowed Claims
of Prudential and FNC

If collateral securing the Allowed Claims of Prudential
and FNC in Classes M-4, MOS-4 and MRS-4 is sold or otherwise
reduced to cash prior to the Effective Date, the excess, if any,
of the aggregate of (i) (A) the net cash proceeds generated from
such sales or other transactions and (B) any other cash
collateral (as defined in section 363(a) of the Bankruptcy Code)
securing such Claims over (ii) the amount of cash to be
distributed pursuant to Section III.B.2.a, will be distributed to
Prudential on the Effective Date (if not previously distributed),
and the aggregate principal amount of the New Prudential Mortgage

<PAGE>
I-35

Notes and the aggregate value of the New Combined Company Common
Stock to be distributed pursuant to Section III.B.2.a will each
be reduced by 1/2 of the amount of all cash distributions to
Prudential (both on account of its Claims and the Claims of FNC
in Classes M-4, MOS-4 and MRS-4) in excess of the amount of cash
to be distributed pursuant to Section III.B.2.a.

2. Adjustments for Increased Distributions of Cash

a. Adjustments of Amounts of Cash and
New Debt to be
Distributed to Prudential, GECC or Holders of
Allowed
Bank Loan Claims and Swiss Bank

Federated or the Combined Company, in its sole
discretion, may elect to increase the amount of cash to be
distributed pursuant to any of Sections III.B.2.a through f,
other than cash to be distributed to FNC on account of its
Allowed Claims in Classes M-4, MOS-4 and MRS-4, and make a
corresponding reduction in the amount of New Debt to be
distributed pursuant to those Sections, as specified herein.
Such increased cash distributions, if any, will be made, as
determined by Federated or the Combined Company, in its sole
discretion: (i) to Prudential, (ii) to GECC or (iii) Pro Rata to
holders of Allowed Bank Loan Claims and Swiss Bank as if all
Allowed Bank Loan Claims and Allowed Claims of Swiss Bank in
Classes M-8, MOS-8 and MRS-8 were in a single Class.
The aggregate principal amounts of the New Prudential Mortgage
Notes (if an additional distribution of cash is made to
Prudential), the New GECC Mortgage Notes (if an additional
distribution of cash is made to GECC) or the New Unsecured Notes
(if an additional distribution of cash is made to the holders of
Allowed Bank Loan Claims and Swiss Bank) to be distributed
pursuant to Sections III.B.2.a through f, as applicable, will be
reduced by the aggregate amount of such cash distribution. Any
such reduction in the aggregate principal amounts of the New
Series A Notes, New Series B Notes and New Series C Notes will be
determined by either Federated or the Combined Company in its
sole discretion.

b. Adjustments of Amounts of Cash and
New Combined
Company Common Stock to be Distributed

Federated or the Combined Company, in its sole
discretion, may elect to increase the amount of cash to be
distributed pursuant to Sections III.B.2.b through e, and make a
corresponding reduction in the number of shares of New Combined
Common Stock to be distributed pursuant to those Sections, as
specified herein. Such increased cash distributions, if any,
will be made Pro Rata to holders of Allowed Bank Loan Claims and
Swiss Bank as if all Allowed Bank Loan Claims and Allowed Claims
of Swiss Bank in Classes M-8, MOS-8 and MRS-8 were in a single
Class. If such an election is made, the aggregate number of
Distributable Shares (Pool A) to be distributed pursuant to
Sections III.B.2.b through e will be reduced by a number of
shares equal to the aggregate amount of such cash distribution
divided by the Federated Average Market Price (Pool A), except
that the 115% stock price collar upper limit set forth in
Section I.A.51 will not apply in this calculation.

3. Adjustment of Amounts of New Series B Notes
and New Series C Notes
to be Distributed

Subject to the restrictions in this Section III.C.3,
Federated or the Combined Company, in its sole discretion, may
elect to increase the aggregate principal amount either of the
New Series B Notes or the New Series C Notes to be distributed
pursuant to Sections III.B.2.b through e, and make a
corresponding dollar-for-dollar reduction in the aggregate
principal amount of the New Series C Notes or New Series B Notes,
respectively, to be distributed pursuant to those Sections. Such
adjustments to the distributions of the New Series B Notes and
the New Series C Notes, if any, will be made Pro Rata as if all
Allowed Bank Loan Claims and Allowed Claims of Swiss Bank in
Classes M-8, MOS-8 and MRS-8 were in a single Class; provided,

<PAGE>
I-36

however, that no election pursuant to this Section III.C.3 that
would cause the aggregate principal amount of either the New
Series B Notes or the New Series C Notes to be distributed
pursuant to the Plan to be less than $200,000,000 is permitted.

D. Special Provisions Regarding Treatment of Allowed Secondary
Liability Claims

The classification and treatment of Allowed Claims
under the Plan take into consideration all Allowed Secondary
Liability Claims. On the Effective Date, Allowed Secondary
Liability Claims will be treated as follows:

1. The Allowed Secondary Liability Claims arising
from or related to any Debtor's joint or several liability for
the obligations under any: (a) Allowed Claim that is being
Reinstated under the Plan or (b) executory contract or unexpired
lease that is being assumed by another Debtor or under any
executory contract or unexpired lease that is being assumed by
and assigned to another Debtor, will be Reinstated.

2. Except as provided in Section III.D.1, holders of
Allowed Secondary Liability Claims, including such Claims against
Macy's arising from or related to Macy's guarantees of payment or
collection of Unsecured Claims in Classes MOS-13, MRS-10 or MMS-
5, will be entitled to only one distribution from only one Debtor
against which the underlying Allowed Claim is held, which
distribution will be as provided in the Plan in respect of such
underlying Allowed Claim. No multiple recovery on account of any
Allowed Secondary Liability Claim will be provided or permitted.
Allowed Secondary Liability Claims will be deemed satisfied in
full by the distributions by only one Debtor on account of the
related underlying Allowed Claim.

E. Additional Treatment Provisions

1. Claims as to Which Macy's is Primarily Liable

Except as provided in Section III.E.2, all Allowed
Claims as to which Macy's is primarily liable, irrespective of
whether any other Debtor is also primarily liable for all or a
portion thereof, will be satisfied for the consideration provided
for herein, which consideration will be provided by the Combined
Company directly and by no other Reorganized Debtor, and any
rights of contribution of the Combined Company against any other
Reorganized Debtor on account of the Combined Company's direct
provision of such consideration will be contributed to the
capital of such Reorganized Debtor.

2. Unsecured Claims as to Which a Debtor Other
than Macy's is
Primarily Liable

At Macy's election, any Allowed Unsecured Claim as to
which a Debtor other than Macy's is primarily liable,
irrespective of whether any other Debtor, including Macy's, is
also primarily liable for all or a portion thereof, in the first
instance will be discharged for cash from the applicable
Reorganized Debtor, debt of such Reorganized Debtor, stock of
such Reorganized Debtor or warrants to acquire stock of such
Reorganized Debtor, as the case may be, in amounts and in
proportions paralleling the consideration provided for herein, or
for such other consideration as Macy's may elect. Such
consideration will be held by the Combined Company on behalf of
the holders of the Allowed Claims as to which the election is
made and, immediately thereafter, distributed as provided for
herein or, to the extent different from the consideration
provided for herein, exchanged on such holders' behalf for the
consideration provided for herein. For purposes of this Section
III.E.2, an Allowed Claim as to which property of a Debtor serves
as collateral but as to which there is otherwise no recourse to
such Debtor will be deemed an Allowed Claim as to which such
Debtor is primarily liable.
<PAGE>
I-37

3. Contribution of Certain Secured Claims to the
Capital of Reorganized
Macy's Subsidiary Debtors

Notwithstanding any provision herein to the contrary,
the Combined Company will acquire, for the distributions provided
for herein, from the holders thereof, each Secured Claim as to
which Macy's is not primarily liable and as to which the noncash
distributions provided for herein are in the form of debt of the
Combined Company or New Combined Company Common Stock.
Thereafter, the Combined Company will, directly or indirectly,
contribute all such Claims acquired to the capital of the
respective Reorganized Debtors to which such Claims relate.
Immediately upon such contribution, all promissory notes and
other instruments, indentures or other agreements or documents
evidencing such Claims will be deemed canceled and terminated
without further action under any applicable agreement, law,
regulation, order or rule, and the obligations of the respective
Debtors under such promissory notes and other instruments,
indentures or other agreements or documents evidencing such
Claims will be discharged in full.

4. Distributions Received by FNC and Macy's Financial

Except as provided in the Prudential/Federated Intercreditor
Agreement with respect to shares of New Combined Company Common
Stock received by FNC, FNC and Macy's Financial will not sell,
assign, grant any security interest in, pledge as collateral or
otherwise transfer or encumber any shares of New Combined Company
Common Stock or any New Warrants received by either such entity
pursuant to the Plan; provided, however, that FNC and Macy's
Financial may transfer all or a portion of such shares or
warrants to (a) any wholly owned subsidiary of the Combined
Company, which subsidiary will hold such shares or warrants
subject to the restrictions herein, or (b) the Combined Company;
and provided further, that New Combined Company Common Stock
acquired by the Combined Company may be retired and returned to
the status of authorized but unissued shares.

F. Accrual of Postpetition Interest

No holder of a Priority Tax Claim, a Priority Claim
or an Allowed Unsecured Claim will be entitled to any separate or
additional distribution on account of accrued postpetition
interest in respect of such Claim for any purpose.

ARTICLE IV.

MEANS FOR IMPLEMENTATION OF THE PLAN

A. Continued Corporate Existence and Vesting of Assets in
the Reorganized Debtors

Subject to the Restructuring Transactions, each Debtor
will, as a Reorganized Debtor, continue to exist after the
Effective Date as a separate corporate entity, with all the
powers of a corporation under applicable law and without
prejudice to any right to alter or terminate such existence
(whether by merger or otherwise) under applicable state law.
Except as otherwise provided in the Plan, as of the Effective
Date, all property of the respective Estates of the Debtors will
vest in the applicable Reorganized Debtor, free and clear of all
Claims, liens, charges, other encumbrances and Interests. On and
after the Effective Date, each Reorganized Debtor may operate its
businesses and may use, acquire and dispose of property and
compromise or settle any Claims or Interests without supervision
or approval by the Bankruptcy Court and free of any restrictions
of the Bankruptcy Code or Bankruptcy Rules, other than those
restrictions expressly imposed by the Plan or the Confirmation
Order. Without limiting the foregoing, each Reorganized Debtor
may pay the charges that it incurs on or after the Effective Date
for professionals' fees, disbursements, expenses or related
support services, including those professional fees and expenses
<PAGE>
I-38

incurred by the Claims Resolution Committee pursuant to Section
XII.A.2, without application to the Bankruptcy Court.

B. The Restructuring Transactions

1. The Federated/Macy's Merger

a. Consummation of the
Federated/Macy's Merger

Simultaneously with the commencement of the Effective
Date, Federated and Macy's will take all such actions as may be
necessary or appropriate to effect the Federated/Macy's Merger on
the terms and subject to the conditions set forth in the
Federated/Macy's Merger Agreement. Without limiting the
generality of the foregoing sentence, promptly upon the
satisfaction or waiver (pursuant to Section VIII.C) of each of
the conditions set forth in Section VIII.B, each of Federated and
Macy's will cause the Federated/Macy's Merger Agreement or a
certificate of merger conforming to the applicable provisions of
the Delaware General Corporation Law to be filed with the
Secretary of State of Delaware pursuant to applicable provisions
of the Delaware General Corporation Law and will take or cause to
be taken all other actions, including making appropriate filings
or recordings, that may be required by the Delaware General
Corporation Law or other applicable law in connection with the
Federated/Macy's Merger.

b. Cancellation of Old Capital Stock

On the Effective Date, all Old Capital Stock issued and
outstanding or held in Macy's treasury or the treasury of any
Macy's Subsidiary immediately prior to the Effective Time of the
Federated/Macy's Merger will be canceled and extinguished and no
consideration will be paid or delivered with respect thereto, in
all events without any action on the part of Macy's, the Combined
Company, the holders of Old Capital Stock or any other entity.
Such further provisions will be made in or taken pursuant to the
Plan or the Federated/Macy's Merger Agreement as may be necessary
or appropriate to result in there being no shares of capital
stock of the Combined Company issued or outstanding immediately
following the Effective Time of the Federated/Macy's Merger and
prior to the distribution of New Combined Company Common Stock
pursuant to the Plan, except as provided in the Federated/Macy's
Merger Agreement. Thereafter, shares of capital stock of the
Combined Company will be issued pursuant to the Plan and may
otherwise be issued pursuant to the Combined Company's
certificate of incorporation and by-laws and the Delaware General
Corporation Law.

c. The Reorganized Debtors'
Obligations Under the Plan

From and after the Effective Time of the
Federated/Macy's Merger, the Reorganized Debtors will perform the
obligations of the Debtors under the Plan.

2. The Operating Subsidiary Transactions

On or after the Effective Date, the Reorganized Debtors
may take such actions as may be necessary or appropriate to
effect a corporate restructuring of their respective department
and specialty store operations. Such restructuring is
contemplated to include one or more mergers, consolidations,
restructurings, dispositions, liquidations or dissolutions, as
may be determined by Federated or the Combined Company to be
necessary or appropriate. The actions to effect the Operating
Subsidiary Transactions may include: (a) the execution and
delivery of appropriate agreements or other documents of merger,
consolidation, restructuring, disposition, liquidation or
dissolution containing terms that are consistent with the terms
of the Plan and that satisfy the applicable requirements of
applicable state law and such other terms to which the applicable
entities may agree; (b) the execution and delivery of appropriate
instruments of transfer, assignment, assumption or delegation of
any asset, property, right, liability, duty or obligation on

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I-39

terms consistent with the terms of the Plan and having such other
terms to which the applicable entities may agree; (c) the filing
of appropriate certificates of merger, consolidation or
dissolution pursuant to applicable state law; and (d) all other
actions that the applicable entities determine to be necessary or
appropriate, including making filings or recordings that may be
required by the applicable state law in connection with the
transactions contemplated as part of the Operating Subsidiary
Transactions.

3. The Real Estate Subsidiary Transactions

On or after the Effective Date, the Reorganized Debtors
may take such actions as may be necessary or appropriate to
effect a corporate restructuring of their respective real estate
operations and holdings. Such restructuring is contemplated to
include one or more mergers, consolidations, restructurings,
dispositions, liquidations or dissolutions, as may be determined
by Federated or the Combined Company to be necessary or
appropriate, including the formation of New Macy's Kings Plaza
Real Estate, New Macy's Primary Real Estate, New Macy's Warehouse
Real Estate and other real estate subsidiaries. The actions to
effect the Real Estate Subsidiary Transactions may include:
(a) the execution and delivery of appropriate agreements or other
documents of merger, consolidation, restructuring, disposition,
liquidation or dissolution containing terms that are consistent
with the terms of the Plan and that satisfy the applicable
requirements of applicable state law and such other terms to
which the applicable entities may agree; (b) the execution and
delivery of appropriate instruments of transfer, assignment,
assumption or delegation of any asset, property, right,
liability, duty or obligation on terms consistent with the terms
of the Plan and having such other terms to which the applicable
entities may agree; (c) the filing of appropriate certificates of
merger, consolidation or dissolution pursuant to applicable state
law; and (d) all other actions that the applicable entities
determine to be necessary or appropriate, including making
filings or recordings that may be required by the applicable
state law in connection with the transactions contemplated as
part of the Real Estate Subsidiary Transactions.

4. Other Restructuring Transactions

After the Effective Date, the applicable Debtors or
Reorganized Debtors may enter into such transactions and take
such other actions as may be necessary or appropriate to simplify
the overall corporate structure of the Reorganized Debtors or to
reincorporate certain of the Macy's Subsidiaries under the laws
of jurisdictions other than those under the laws of which the
applicable Macy's Subsidiaries are presently incorporated. Such
transactions or other actions are contemplated to include one or
more mergers, consolidations, restructurings, dispositions,
liquidations or dissolutions, as may be determined by Federated
or the Combined Company to be necessary or appropriate to result
in substantially all of the respective assets, properties,
rights, liabilities, duties and obligations of certain Macy's
Subsidiaries vesting in one or more surviving, resulting or
acquiring corporations. In each case in which the surviving,
resulting or acquiring corporation in any such transaction is a
successor to a Reorganized Debtor, such surviving, resulting or
acquiring corporation will perform the obligations of the
applicable Reorganized Debtor pursuant to the Plan to pay or
otherwise satisfy the Allowed Claims against such Reorganized
Debtor, except as provided in any contract, instrument or other
agreement or document effecting a disposition of such surviving,
resulting or acquiring corporation, which may provide that
another Reorganized Debtor will perform such obligations, subject
to any restrictions or prohibitions under the New Debt
Instruments. The actions to effect these transactions and other
actions may include: (a) the execution and delivery of
appropriate agreements or other documents of merger,
consolidation, restructuring, disposition, liquidation or
dissolution containing terms that are consistent with the terms
of the Plan and that satisfy the requirements of applicable state
law and such other terms to which the applicable entities may
agree; (b) the execution and delivery of appropriate instruments
of transfer, assignment, assumption or delegation of any asset,
property, right, liability, duty or obligation on terms
consistent with the terms of the Plan and having such other terms
to which the applicable entities may agree; (c) the filing of
appropriate certificates of merger, consolidation or dissolution
pursuant to the provisions of applicable state law; and (d) all

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I-40
other actions that such entities determine to be necessary or
appropriate, including making filings or recordings that may be
required by applicable state law in connection with the
transactions contemplated as part of these other Restructuring
Transactions.

C. Corporate Governance, Directors and Officers, Employment-
Related
Agreements and Compensation Programs

1. Certificates of Incorporation and By-Laws

a. Combined Company

Immediately following the Effective Time of the
Federated/Macy's Merger, the certificate of incorporation and the
by-laws of the Combined Company will be substantially in the
forms of Appendices IV.C.1.a(i) and (ii), respectively. The
initial certificate of incorporation and by-laws of the Combined
Company will, among other things: (i) prohibit the issuance of
nonvoting equity securities to the extent required by section
1123(a) of the Bankruptcy Code and (ii) authorize the issuance of
New Equity and New Combined Company Share Purchase Rights in
amounts not less than the amounts necessary to permit the
distributions thereof required or contemplated by the Plan and
the Federated/Macy's Merger Agreement. After the Effective Time
of the Federated/Macy's Merger, the Combined Company may amend
and restate its certificate of incorporation or by-laws as
permitted by the Delaware General Corporation Law, subject to the
terms and conditions of the certificate of incorporation and
by-laws of the Combined Company.

b. The Reorganized Macy's Subsidiary Debtors

As of the Effective Date or the effective time of any
applicable Restructuring Transaction, as the case may be, the
certificate or articles of incorporation and the by-laws or
regulations or similar constituent documents of each Reorganized
Macy's Subsidiary Debtor will, among other things, prohibit or be
amended to prohibit the issuance of nonvoting equity securities
to the extent required by section 1123(a) of the Bankruptcy Code,
and otherwise will, or will be amended and restated to be,
substantially in the forms of Appendices IV.C.1.b(i) and (ii),
respectively. If a Reorganized Macy's Subsidiary Debtor is
incorporated under the laws of a jurisdiction for which the forms
of a certificate or articles of incorporation and by-laws or
regulations are not included in Appendices IV.C.1.b(i) or (ii),
such Debtor's constituent documents will be substantially
identical to Appendices IV.C.1.b(i) and (ii), with such
differences as may be necessary or appropriate under the
applicable jurisdiction's corporation law. After the Effective
Date or the effective time of any applicable Restructuring
Transaction, as the case may be, each such entity may amend and
restate its certificate or articles of incorporation or its by-
laws or regulations or similar constituent documents as permitted
by applicable state law, subject to the terms and conditions of
its certificate or articles of incorporation or its by-laws or
regulations or similar constituent documents.

2. Directors and Officers of the Reorganized Debtors

a. Combined Company

The initial directors and officers of the Combined
Company will be the directors and officers of Federated
immediately prior to the Effective Time of the Federated/Macy's
Merger and the additional persons listed on Appendix IV.C.2.a,
which persons will be designated pursuant to the Federated/Macy's
Merger Agreement. Each such director and officer will serve from
and after the Effective Time of the Federated/Macy's Merger until
his or her successor is duly elected or appointed and qualified
or until their earlier death, resignation or removal in

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accordance with the terms of the certificate of incorporation and
by-laws of the Combined Company and the Delaware General
Corporation Law.

b. The Reorganized Macy's Subsidiary Debtors

The initial directors and officers of each Reorganized
Macy's Subsidiary Debtor will be selected from the directors and
officers of Federated and the subsidiaries of Federated, and will
include the additional persons listed on Appendix IV.C.2.b. Each
such director and officer will serve from and after the Effective
Date or the effective time of any applicable Restructuring
Transaction, as the case may be, until his or her successor is
elected and qualified in accordance with the terms of the
applicable certificate or articles of incorporation, the
applicable by-laws or regulations or similar constituent
documents and applicable corporation or similar law.

3. New Employment, Retirement, Indemnification
and Other Agreements
and Incentive Compensation Programs

As of the Effective Time of the Federated/Macy's
Merger, the Reorganized Debtors will have the authority to:
(a) enter into employment, retirement, indemnification and other
agreements with their active directors, officers and employees
and (b) implement retirement income plans, welfare benefit plans
and other plans for active employees. Such agreements and plans
may include equity, bonus and other incentive plans in which
officers and other employees of the Reorganized Debtors may be
eligible to participate. The Disclosure Statement and the
Federated/Macy's Merger Agreement provide a general summary and
description of such agreements and plans that are to take effect
as of the Effective Date, as well as a general summary and
description of the Debtors' and Federated's existing employment,
retirement, indemnification and other agreements and incentive
compensation programs that are to remain in effect as of the
Effective Date.

4. Corporate Action

The Restructuring Transactions; the adoption of new or
amended and restated certificates or articles of incorporation
and by-laws or regulations or similar constituent documents for
the Reorganized Debtors; the initial selection of directors and
officers for the Reorganized Debtors; the distribution of cash
pursuant to the Plan; the issuance and distribution of New
Securities and New Combined Company Share Purchase Rights
pursuant to the Plan; the grant of mortgages, deeds of trust,
liens and other security interests pursuant to the New Mortgage
Notes Agreements; the adoption, execution, delivery and
implementation of all contracts, leases, instruments, releases,
indentures and other agreements or documents related to any of
the foregoing, including the Federated/Macy's Merger Agreement,
New Debt Instruments, the New Warrants Agreements and the New
Combined Company Share Purchase Rights Agreement; the adoption,
execution and implementation of employment, retirement and
indemnification agreements, incentive compensation programs,
retirement income plans, welfare benefit plans and other employee
plans and related agreements; and the other matters provided for
under the Plan involving the corporate structure of any Debtor or
Reorganized Debtor or corporate action to be taken by or required
of any Debtor or Reorganized Debtor will occur and be effective
as provided herein, and will be authorized and approved in all
respects and for all purposes without any requirement of further
action by stockholders or directors of any of the Debtors or the
Reorganized Debtors.

D. Obtaining Cash for Plan Distributions and Transfers of Funds
Among the Debtors

All cash necessary for the Reorganized Debtors to make
payments pursuant to the Plan will be obtained from the
Reorganized Debtors' cash balances and operations or
postconfirmation working capital or other borrowing facilities of
the Combined Company or the other Reorganized Debtors. Cash

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payments to be made pursuant to the Plan will be made by the
Combined Company or such other Reorganized Debtor that is liable
on the underlying Allowed Claim; provided, however, that the
Debtors and the Reorganized Debtors will be entitled to transfer
funds between and among themselves as they determine to be
necessary or appropriate to enable each Reorganized Debtor to
satisfy its obligations under the Plan.

E. Execution of Agreements and Indentures Related to New
Securities

1. On or effective as of the Effective Date, the
Combined Company and the applicable subsidiaries of the Combined
Company will execute and deliver the New Debt Instruments, the
New Warrants Agreements and the New Combined Company Share
Purchase Rights Agreement. As a condition precedent to
Prudential receiving the New Prudential Mortgage Notes, GECC
receiving the New GECC Mortgage Notes or John Hancock receiving
the New John Hancock KPM Note Override Agreement and the New John
Hancock Plaza Store Note, Prudential, GECC or John Hancock shall
have executed and delivered to the Combined Company and the
applicable subsidiaries of the Combined Company the applicable
New Mortgage Notes Agreement.

2. The New Prudential Mortgage Notes, the New GECC
Mortgage Notes and the New John Hancock Plaza Store Note to be
distributed will, pending execution and delivery of the
applicable New Mortgage Notes Agreement, be treated as
undeliverable distributions pursuant to Section VI.D.2.

F. Collateralization of Obligations to Prudential

Pursuant to the Prudential/Federated Intercreditor
Agreement, all Obligations owing to Prudential by FNC and
Federated thereunder will become secured by the collateral that
secured the Allowed Claims of Prudential and FNC in Classes M-4,
MOS-4 and MRS-4, subject to any prior sales of collateral as
contemplated in Section III.C.1.

G. Preservation of Rights of Action; Releases

1. Preservation of Rights of Action by the Debtors and
Reorganized Debtors

Except as provided in the Plan or in any contract,
instrument, release, indenture or other agreement entered into in
connection with the Plan, in accordance with section 1123(b) of
the Bankruptcy Code, the Reorganized Debtors will retain and may
enforce any claims, demands, rights and causes of action that any
Debtor or Estate may hold against any entity. The Reorganized
Debtors or their successors may pursue such retained claims,
demands, rights or causes of action as appropriate, in accordance
with the best interests of the Reorganized Debtors or the
successors holding such rights of action.

2. Releases

a. Releases by the Debtors

i. As of the Effective Date, for good and
valuable consideration, the adequacy of which is hereby
confirmed, each Debtor and Reorganized Debtor will be deemed to
forever release, waive and discharge all claims, demands, debts,
rights, causes of action and liabilities in connection with or
related to: (A) Allowed Claims in Classes M-4 through M-9, MOS-4
through MOS-9, MRS-4 through MRS-8 or MMS-4 (including causes of
action under sections 510, 544, 547, 548 and 550 of the
Bankruptcy Code and comparable nonbankruptcy law, but excluding
the rights of the Debtors or Reorganized Debtors to enforce the
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I-43

Plan and the contracts, instruments, releases, indentures and
other agreements or documents delivered thereunder) or (B) those
alleged by a Debtor in any adversary proceeding or contested
matter pending in a Reorganization Case, whether liquidated or
unliquidated, fixed or contingent, matured or unmatured, known or
unknown, foreseen or unforeseen, then existing or thereafter
arising, that are based in whole or in part on any act, omission
or other occurrence taking place on or prior to the Effective
Date and that may be asserted by or on behalf of a Debtor or its
Estate against: (A) Federated; (B) FNC; (C) any Senior Lender
(including any member of the WCB Group, the 49 Store Bank Group
or the CREI Bank Group); (D) GECC (other than those claims,
demands, debts, rights, causes of action and liabilities arising
from or in connection with the operation of the credit card
program provided to Macy's and certain of the Macy's Subsidiaries
by GE Credit); or (E) the respective agents, advisors, attorneys
and representatives (including the respective current and former
directors, officers, employees, members and professionals) of any
of the foregoing, acting in such capacity.

ii. As of the Effective Date, for good and
valuable consideration, the adequacy of which is hereby
confirmed, each Debtor and Reorganized Debtor will be deemed to
forever release, waive and discharge all claims, demands, debts,
rights, causes of action and liabilities in connection with or
related to the Debtors or the Reorganization Cases (other than
the rights of the Debtors or the Reorganized Debtors to enforce
the Plan and the contracts, instruments, releases, indentures and
other agreements or documents delivered thereunder), whether
liquidated or unliquidated, fixed or contingent, matured or
unmatured, known or unknown, foreseen or unforeseen, then
existing or thereafter arising, that are based in whole or in
part on any act, omission or other occurrence taking place on or
prior to the Effective Date and that may be asserted by or on
behalf of a Debtor or its Estate against: (A) the Unsecured
Creditors' Committee and its members, acting in such capacity;
(B) the Bondholders' Committee and its members, acting in such
capacity; (C) the Voting Trustee; or (D) the respective agents,
advisors, attorneys and representatives (including the current
and former members and professionals) of either of the foregoing,
acting in such capacity; provided, however, that this release
will not apply to any releasee that seeks to enforce any
subordination or turnover rights terminated, compromised or
settled pursuant to Sections X.C.1 and X.C.2.

iii. As of the Effective Date, for good and
valuable consideration, the adequacy of which is hereby
confirmed, each Debtor and Reorganized Debtor will be deemed to
forever release, waive and discharge all claims, demands, debts,
rights, causes of action and liabilities under sections 510, 544,
547, 548 and 550 of the Bankruptcy Code and comparable
nonbankruptcy law of any nature, whether liquidated or
unliquidated, fixed or contingent, matured or unmatured, known or
unknown, foreseen or unforeseen, then existing or thereafter
arising, that are based in whole or in part on any act, omission
or other occurrence taking place on or prior to the Effective
Date and that may be asserted by or on behalf of a Debtor or its
Estate against: (A) GE Credit (other than those claims,
demands, debts, rights, causes of action and liabilities arising
from or in connection with the operation of the credit card
program provided to Macy's and certain of the Macy's Subsidiaries
by GE Credit); (B) any holder of a Claim in a Reserve Class; or
(C) any holder of an Allowed Debt Security Claim and any
Indenture Trustee (and any predecessor thereof), acting in such
capacity; provided, however, that this release will not apply to
any releasee that seeks to enforce any subordination or turnover
rights terminated, compromised or settled pursuant to Sections
X.C.1 and X.C.2.

b. Releases by Swiss Bank

Without in any manner limiting the scope of the release
provided pursuant to Section IV.G.2.c, except as provided in
Appendix IV.G.2.c, as of the Effective Date, in exchange for the
treatment of its Claims in Classes M-8, MOS-8 and MRS-8, Swiss
Bank will be deemed to forever release, waive and discharge all
claims, demands, debts, rights, causes of action and liabilities,
whether liquidated or unliquidated, fixed or contingent, matured
or unmatured, known or unknown, foreseen or unforeseen, then
existing or thereafter arising, that Swiss Bank has, had or may
have against any member of the 49 Store Bank Group for damages in
respect of the unsatisfied portion of any of its Claims
classified in Classes M-8, MOS-8 and MRS-8.

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I-44

c. Releases by Holders of Claims or Interests

As of the Effective Date, except as provided in
Appendix IV.G.2.c, to the fullest extent permissible under
applicable law, in consideration for the obligations of the
Debtors and the Reorganized Debtors under the Plan and the cash,
New Securities, contracts, instruments, releases, indentures or
other agreements or documents to be delivered in connection with
the Plan, each entity that has held, holds or may hold a Claim or
Interest will be deemed to forever release, waive and discharge
all claims, demands, debts, rights, causes of action or
liabilities (other than the right to enforce the Debtors' or the
Reorganized Debtors' obligations under the Plan and the
contracts, instruments, releases, indentures and other agreements
and documents delivered thereunder), whether liquidated or
unliquidated, fixed or contingent, matured or unmatured, known or
unknown, foreseen or unforeseen, then existing or thereafter
arising, that are based in whole or in part on any act, omission
or other occurrence taking place on or prior to the Effective
Date in any way relating to a Debtor, the Reorganization Cases or
the Plan that such entity has, had or may have against:
(i) Federated; (ii) FNC; (iii) any Senior Lender (including any
member of the WCB Group, the 49 Store Bank Group or the CREI Bank
Group); (iv) GE Credit (other than those claims, demands, debts,
rights, causes of action and liabilities arising from or in
connection with the operation of the credit card program provided
to Macy's and certain of the Macy's Subsidiaries by GE Credit);
(v) the Creditors' Committees; (vi) the Indenture Trustees;
(vii) the Voting Trustee; (viii) any Debtor (which release will
be in addition to the discharge of Claims and termination of
Interests provided herein and under the Confirmation Order and
the Bankruptcy Code); or (ix) the respective agents, advisors,
attorneys and representatives (including the respective current
and former directors, officers, employees, members and
professionals) of any of the foregoing, acting in such capacity.

d. Injunction Related to Releases

As further provided in Section X.B, the Confirmation
Order will enjoin the prosecution, whether directly, derivatively
or otherwise, of any claim, demand, debt, right, cause of action
or liability released pursuant to the Plan.

H. Continuation of Certain Retirement Benefits

1. Certain Retiree Health, Medical and Life
Insurance Benefits

From and after the Effective Date, the Reorganized
Debtors will be obligated to pay the retiree benefits (as defined
in section 1114(a) of the Bankruptcy Code) in accordance with the
terms of the retiree benefit plans governing the payment of such
benefits, subject to any rights to amend, modify or terminate
such retiree benefits under the terms of the applicable retiree
benefits plan or applicable nonbankruptcy law.

2. Purchase Discounts for Retirees

From and after the Effective Date, the Reorganized
Debtors will provide their respective retirees with merchandise
and service purchase price discounts, in accordance with the
Debtors' business practices in effect prior to the applicable
Petition Dates; provided, however, that each of the Reorganized
Debtors will have the right to modify, reduce or eliminate such
discounts in its sole discretion without any claims, debts,
rights, causes of action or liabilities arising against the
Reorganized Debtors from such action.

I. Limitations on Amounts to Be Distributed to Holders of
Allowed Insured Claims

Distributions under the Plan to each holder of an
Allowed Insured Claim will be in accordance with the treatment
provided under the Plan for the Class in which such Allowed

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I-45

Insured Claim is classified, but solely to the extent that such
Allowed Insured Claim is not satisfied from proceeds payable to
the holder thereof under any pertinent insurance policies and
applicable law. Nothing in this Section IV.I will constitute a
waiver of any claim, demand, debt, right, cause of action or
liability that any entity may hold against any other entity,
including the Debtors' insurance carriers.

J. Cancellation and Surrender of Instruments, Securities
and Other Documentation

In addition to the cancellation of the Old Capital
Stock provided for in Section IV.B.1.b and the cancellation of
the Old Indentures provided for in Section V.D.3, except as
otherwise provided in Section VI.B.1 (with respect to Agent Banks
receiving and making Plan distributions, maintaining the validity
of Agent Bank Charges and remaining entitled to limitation of
liability, exculpation and indemnification under the applicable
Macy's Bank Loan Agreement), Section VI.B.2 (with respect to
Indenture Trustees receiving and making Plan distributions),
Section VI.I (with respect to surrender of Old Debt Securities or
other old notes to Indenture Trustees or Agent Banks), Section
VI.J.2 (with respect to maintaining the validity of Indenture
Trustee Charging Liens) or in any contract, instrument, indenture
or other agreement or document created in connection with the
Plan, on the Effective Date and concurrently with the applicable
distributions made pursuant to Article III, the Old Debt
Securities, the Old Debt Securities Assumption Agreements, the
Old Debt Securities Guaranties, the Macy's/49 Store Lease Payment
Guaranty, the Macy's/49 Store Loan Agreement, the Macy's 49 Store
Loan Guaranty, the Macy's/CREI Lease Payment Guaranty, the
Macy's/CREI Loan Agreement, the Macy's/CREI Swap Agreement, the
Macy's/GECC Interest Guaranty, the Macy's/GECC Loan Agreement, the
Macy's/Prudential Mortgage Notes, the Macy's/Prudential Loan
Agreement, the Macy's/Swiss Bank Liquidated Damages Agreement,
the Macy's/WCB Guaranty, the Macy's/WCB Loan Agreement, the
Macy's/WCB Swap Agreement, the John Hancock KPM Note and the John
Hancock Plaza Store Note will be canceled and of no further force
and effect, without any further action on the part of any Debtor
or Reorganized Debtor. The holders of or parties to such
canceled instruments, securities and other documentation will
have no rights arising from or relating to such instruments,
securities and other documentation or the cancellation thereof,
except the rights provided pursuant to the Plan; provided,
however, that no distribution under the Plan will be made to or
on behalf of any holder of an Allowed Claim evidenced by such
canceled instruments or securities unless and until such
instruments or securities are received by the applicable
Disbursing Agent, Agent Bank or Indenture Trustee pursuant to
Section VI.I.

K. Release of Liens

Except as otherwise provided in the Plan or in any
contract, instrument, release, indenture or other agreement or
document created in connection with the Plan, on the Effective
Date and concurrently with the applicable distributions made
pursuant to Article III, all mortgages, deeds of trust, liens or
other security interests against the property of any Estate will
be fully released and discharged, and all of the right, title and
interest of any holder of such mortgages, deeds of trust, liens
or other security interests will revert to the applicable
Reorganized Debtor and its successors and assigns.

L. Intercompany Claims and Certain Claims of Affiliates

1. On the Effective Date, all Intercompany Claims,
except those Intercompany Claims that arise from or relate to the
intercompany agreements listed on Appendix IV.L.1, will be
extinguished, and no property will be distributed to or retained
by holders of such Intercompany Claims on account of such Claims.

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I-46
Appendix IV.L.1 specifies the treatment of the Intercompany
Claims that arise from or relate to the intercompany agreements
listed thereon.

2. On the Effective Date, the respective aggregate
amounts of the Allowed Debt Security Claims of Macy's Financial
will be deemed to be: (a) $4,230,730 in each of Classes M-10 and
MOS-10, (b) $114,172,200 in each of Classes M-11 and MOS-11 and
(c) $79,641,600 in each of Classes M-12 and MOS-12.

M. Effectuating Documents; Further Transactions;
Exemption from
Certain Transfer Taxes

The Chairman of the Board, Vice Chairman of the Board,
Chief Executive Officer, President, Chief Financial Officer or
any Vice President of each Debtor or Reorganized Debtor or such
other persons as the Bankruptcy Court may designate at the
request of the Plan Proponents will be authorized to execute,
deliver, file or record such contracts, instruments, releases,
indentures and other agreements or documents and take such
actions as may be necessary or appropriate to effectuate and
implement the provisions of the Plan. The Secretary or any
Assistant Secretary of each Debtor or Reorganized Debtor or such
other persons as the Bankruptcy Court may designate at the
request of the Plan Proponents will be authorized to certify or
attest to any of the foregoing actions. Pursuant to section
1146(c) of the Bankruptcy Code: (1) the issuance, transfer or
exchange of New Securities; (2) the creation of any mortgage,
deed of trust or other security interest; (3) the making or
assignment of any lease or sublease; or (4) the making or
delivery of any deed or other instrument of transfer under, in
furtherance of, or in connection with, the Plan, including any
merger agreements; agreements of consolidation, restructuring,
disposition, liquidation or dissolution; deeds; bills of sale; or
assignments executed in connection with the Restructuring
Transactions, will not be subject to any stamp tax, real estate
transfer tax or similar tax.

ARTICLE V.

TREATMENT OF EXECUTORY CONTRACTS
AND UNEXPIRED LEASES

A. Assumption and Rejection

1. Assumptions, Assignments and Rejections of
Non-Real Property
Executory Contracts and Unexpired Leases

a. Assumptions and Assignments

Except as otherwise provided in the Plan or in any
contract, instrument, release, indenture or other agreement or
document entered into in connection with the Plan, on the
Effective Date, pursuant to section 365 of the Bankruptcy Code,
the Debtors will assume, or assume and assign, as indicated, each
of the executory contracts and unexpired leases listed on
Appendix V.A.1.a; provided, however, that Federated and the
Reorganized Debtors reserve the right, at any time prior to 60
days after the Effective Date, to amend Appendix V.A.1.a to:
(a) delete any executory contract or unexpired lease listed
therein, thus providing for its rejection pursuant to this
Section V.A.1, or (b) add any executory contract or unexpired
lease thereto, thus providing for its assumption or assumption
and assignment pursuant to this Section V.A.1. Federated or the
Reorganized Debtors, as applicable, will provide notice of any
amendments to Appendix V.A.1.a to the parties to the executory
contracts or unexpired leases affected thereby and the Claims
Resolution Committee and, if such amendments are made before the
Effective Date, to the parties on the then applicable
administrative service list in the Reorganization Cases. Any
amendment to Appendix V.A.1.a after the Effective Date to delete
an executory contract or unexpired lease listed therein will be

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I-47

deemed and treated as a rejection of such contract or lease
pursuant to section 365(g)(1) of the Bankruptcy Code. Each
contract and lease listed on Appendix V.A.1.a will be assumed
only to the extent that any such contract or lease constitutes an
executory contract or unexpired lease. Listing a contract or
lease on Appendix V.A.1.a does not constitute an admission by a
Debtor, Reorganized Debtor or Federated that such contract or
lease is an executory contract or unexpired lease or that a
Debtor or Reorganized Debtor has any liability thereunder.

b. Rejections

On the Effective Date, except for a non-Real Property
Executory Contract or Unexpired Lease that was previously assumed
or rejected by an order of the Bankruptcy Court or that is
assumed pursuant to Section V.A.1.a, each non-Real Property
Executory Contract and Unexpired Lease entered into by a Debtor
prior to the applicable Petition Date that has not previously
expired or terminated pursuant to its own terms will be rejected
pursuant to section 365 of the Bankruptcy Code. The non-Real
Property Executory Contracts and Unexpired Leases to be rejected
will include the executory contracts and unexpired leases listed
on Appendix V.A.1.b. Each contract and lease listed on Appendix
V.A.1.b will be rejected only to the extent that any such
contract or lease constitutes an executory contract or unexpired
lease. Listing a contract or lease on Appendix V.A.1.b does not
constitute an admission by a Debtor, Reorganized Debtor or
Federated that such contract or lease is an executory contract or
unexpired lease or that a Debtor or Reorganized Debtor has any
liability thereunder. Any non-Real Property Executory Contract
and Unexpired Lease not listed on Appendix V.A.1.a will be
rejected irrespective of whether such contract is listed on
Appendix V.A.1.b.

2. Assumptions and Rejections of Real Property
Executory Contracts and
Unexpired Leases

a. Except as otherwise provided in the Plan or in any
contract, instrument, release, indenture or other agreement or
document entered into in connection with the Plan, on the
Effective Date, pursuant to section 365 of the Bankruptcy Code,
the Debtors will assume, or assume and assign, all Real Property
Executory Contracts and Unexpired Leases, except for any such
Real Property Executory Contract and Unexpired Lease: (i) that
was previously assumed or rejected by an order of the Bankruptcy
Court entered prior to the Confirmation Date, (ii) as to which a
motion for authority to reject has been Filed and served prior to
the Confirmation Date, (iii) that has previously expired or
terminated pursuant to its own terms, (iv) that is between a
Debtor and an Affiliate (other than those agreements listed on
Appendix IV.L.1) or (v) that is listed on Appendix V.A.2;
provided, however, that Federated and the Reorganized Debtors
reserve the right, at any time prior to 60 days after the
Effective Date, to amend Appendix V.A.2 to: (i) add any Real
Property Executory Contract and Unexpired Lease, thus providing
for its rejection pursuant to this Section V.A.2, or (ii) delete
any Real Property Executory Contract and Unexpired Lease, thus
providing for its assumption pursuant to this Section V.A.2.
Federated or the Reorganized Debtors, as applicable, will provide
notice of any amendments to Appendix V.A.2 to the parties to the
Real Property Executory Contracts and Unexpired Leases affected
thereby and the Claims Resolution Committee and, if such
amendments are made before the Effective Date, to the parties on
the then applicable administrative service list in the
Reorganization Cases. Each Real Property Executory Contract and
Unexpired Lease assumed or rejected pursuant to this Section
V.A.2 will be assumed or rejected only to the extent that any
such contract or lease constitutes an executory contract or
unexpired lease. Listing a Real Property Executory Contract and
Unexpired Lease on Appendix V.A.2 does not constitute an
admission by a Debtor, Reorganized Debtor or Federated that such
contract or lease is an executory contract or unexpired lease or
that a Debtor or Reorganized Debtor has any liability thereunder.

b. Each Real Property Executory Contract and
Unexpired Lease assumed or rejected pursuant to this Section
V.A.2 will include all modifications, amendments, supplements,
restatements or other agreements made directly or indirectly by
any agreement, instrument or other document that in any manner
affects such Real Property Executory Contract and Unexpired
Lease.

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I-48

3. Assignments Related to Restructuring
Transactions

As of the effective time of the applicable
Restructuring Transactions, any executory contract or unexpired
lease (including any related agreements as described in
Section V.A.2.b) to be held by the Combined Company or a
surviving, resulting or acquiring corporation in the Operating
Subsidiary Transactions, the Real Estate Subsidiary Transactions
or any other Restructuring Transactions, as the case may be, will
be deemed assigned to the applicable entity, pursuant to section
365 of the Bankruptcy Code.

4. Approval of Assumptions, Assignments and
Rejections

The Confirmation Order will constitute an order of the
Bankruptcy Court approving the assumptions, assignments and
rejections described in this Section V.A, pursuant to section 365
of the Bankruptcy Code, as of the Effective Date. The order of
the Bankruptcy Court approving the Disclosure Statement, the
Confirmation Order or another order of the Bankruptcy Court
entered on or prior to the Confirmation Date will specify the
procedures for providing notice to each party whose executory
contract or unexpired lease is being assumed or assumed and
assigned pursuant to the Plan of: (a) the contract or lease
being assumed or assumed and assigned; (b) the amount of the cure
payment, if any, that the applicable Debtor believes it would be
obligated to pay in connection with such assumption; and (c) the
procedures for such party to object to the assumption, assignment
or amount of the proposed cure payment.

B. Payments Related to Assumption of Executory Contracts and
Unexpired Leases

Any monetary amounts by which each executory contract
and unexpired lease to be assumed pursuant to the Plan is in
default will be satisfied, pursuant to section 365(b)(1) of the
Bankruptcy Code, at the option of the Debtor assuming such
contract or lease, the assignee of such Debtor or Federated:
(1) by payment of the default amount in cash on the Effective
Date; (2) by payment of the default amount in quarterly cash
installments commencing on the Effective Date and continuing for
one year; or (3) on such other terms as are agreed to by the
parties to such executory contract or unexpired lease. If there
is a dispute regarding: (1) the amount of any default amount or
cure payment; (2) the ability of the applicable Reorganized
Debtor or any assignee to provide "adequate assurance of future
performance" (within the meaning of section 365 of the Bankruptcy
Code) under the contract or lease to be assumed; or (3) any other
matter pertaining to assumption of such contract or lease, the
cure payments required by section 365(b)(1) of the Bankruptcy
Code will be made following the entry of a Final Order resolving
the dispute and approving the assumption. For assumptions of
executory contracts between Debtors, the Reorganized Debtor
assuming such contract may cure any monetary default by treating
such amount as either a direct or indirect contribution to
capital or distribution (as appropriate) in lieu of payment in
cash.

C. Bar Date for Rejection Damages

If the rejection of an executory contract or unexpired
lease pursuant to Section V.A gives rise to a Claim (including
any Claims arising from those indemnification obligations
described in Section V.D.1.b) by the other party or parties to
such contract or lease, such Claim will be forever barred and
will not be enforceable against the Debtors, the Reorganized
Debtors, their respective successors or their respective
properties unless a proof of Claim is Filed and served on the
Reorganized Debtors, pursuant to the procedures specified in the
Confirmation Order and the notice of the entry of the
Confirmation Order or another order of the Bankruptcy Court, no
later than 30 days after the later of: (1) the Effective Date
and (2) delivery of a notice of amendment pursuant to Sections
V.A.1 or V.A.2 providing for the rejection of the applicable
executory contract or unexpired lease.

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I-49

D. Special Executory Contract and Unexpired Lease Issues

1. Obligations to Indemnify Directors, Officers and
Employees

a. The obligations of each Debtor or Reorganized
Debtor to indemnify any person serving as a director, officer or
employee of such Debtor or Reorganized Debtor as of or following
July 15, 1986 will be as provided in the Federated/Macy's Merger
Agreement. In its sole discretion, Federated also may elect to
have a Debtor or Reorganized Debtor assume certain of its
obligations to indemnify any person who, as of July 15, 1986, was
no longer serving as a director, officer or employee of such
Debtor by listing such obligations on Appendix V.A.1.a (as
provided in Section V.A.1), which obligations will be deemed and
treated as executory contracts that are assumed by the applicable
Debtor pursuant to the Plan and section 365 of the Bankruptcy
Code as of the Effective Date. Accordingly, to the extent
assumed, such indemnification obligations will survive and be
unaffected by entry of the Confirmation Order, irrespective of
whether such indemnification is owed for an act or event
occurring before or after the Petition Date.

b. Unless assumed by a Debtor pursuant to an election
under Section V.D.1.a, the obligations of each Debtor or
Reorganized Debtor to indemnify any person who, as of July 15,
1986, was no longer serving as a director, officer or employee of
such Debtor or Reorganized Debtor, which indemnity obligation
arose by reason of such person's prior service in any such
capacity, or as a director, officer or employee of another
corporation, partnership or other legal entity, whether provided
in the applicable certificates of incorporation, by-laws or
similar constituent documents or by statutory law or written
agreement of or with such Debtor or policies or procedures of or
with such Debtor, will terminate and be discharged pursuant to
section 502(e) of the Bankruptcy Code or otherwise, as of the
Effective Date; provided, however, that, to the extent that such
indemnification obligations no longer give rise to contingent
Claims that can be disallowed pursuant to section 502(e) of the
Bankruptcy Code, such indemnification obligations will be deemed
and treated as executory contracts that are rejected by the
applicable Debtor pursuant to the Plan and section 365 of the
Bankruptcy Code, as of the Effective Date, and any Claims arising
from such indemnification obligations (including any rejection
damage claims) will be subject to the bar date provisions of
Section V.C.

c. Nothing herein will be exclusive of or limit the
terms of any indemnification agreement entered into pursuant to
Section IV.C.3 or the Federated/Macy's Merger Agreement.

2. Reinstatement of Allowed Secondary Liability
Claims Arising From or
Related to Executory Contracts or Unexpired Leases
Assumed by
Macy's or Macy's Subsidiaries

On the Effective Date, any Allowed Secondary Liability
Claim arising from or related to any Debtor's joint or several
liability for the obligations under or with respect to: (a) any
executory contract or unexpired lease that is being assumed or
deemed assumed pursuant to section 365 of the Bankruptcy Code by
another Debtor, (b) any executory contract or unexpired lease
that is being assumed by and assigned to another Debtor or (c) a
Reinstated Claim, will be Reinstated. Accordingly, such Allowed
Secondary Liability Claims will survive and be unaffected by
entry of the Confirmation Order.

3. Cancellation of Old Indentures

As of the Effective Date, except as otherwise provided
in Section VI.B.2 (with respect to Indenture Trustees' receiving
and making Plan distributions), Section VI.I (with respect to
surrender of Old Debt Securities to Indenture Trustees), Section
VI.J.2 (with respect to maintaining the validity of the Indenture
Trustee Charging Liens) and Section X.C.3 (with respect to the
preservation of subordination and turnover rights), the Old
Indentures will be canceled pursuant to section 1123(a)(5)(F) of
the Bankruptcy Code.

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4. Reinstatement of Intercompany Agreement

Notwithstanding anything to the contrary in Section
V.A.2.a or in any order entered prior to the Confirmation Date in
the Reorganization Cases, the Lease and Agreement, dated
September 25, 1974, between Macy's California, as successor in
interest to Liberty House, Inc., and Sanstoff East Properties
Corp., as successor in interest to Amcisco Associates, will be
reinstated and will be deemed to be assumed pursuant to Section
V.A.2.a.

E. Executory Contracts and Unexpired Leases Entered Into
and Other Obligations
Incurred After the Applicable Petition Date

Executory contracts and unexpired leases entered into
or assumed and other obligations incurred after the Petition Date
by any Debtor will be performed by the Debtor or Reorganized
Debtor liable thereunder in the ordinary course of its business.
Accordingly, such executory contracts, unexpired leases and other
obligations will survive and remain unaffected by entry of the
Confirmation Order.

ARTICLE VI.

PROVISIONS GOVERNING DISTRIBUTIONS

A. Distributions for Claims Allowed as of the Effective Date

1. Except as otherwise provided in this Article VI,
distributions to be made on the Effective Date to holders of
Claims that are allowed as of the Effective Date will be deemed
made on the Effective Date if made on the Effective Date or as
promptly thereafter as practicable, but in any event no later
than: (a) 90 days after the Effective Date or (b) such later
date when the applicable conditions of Section IV.E (regarding
execution of agreements related to the New Mortgage Notes),
Section V.B (regarding cure payments for executory contracts and
unexpired leases being assumed), Section VI.D.2 (regarding
undeliverable distributions) or Section VI.I (regarding surrender
of canceled instruments and securities) are satisfied.
Notwithstanding the foregoing, subject (as applicable) to the
conditions of Section IV.E.1 (regarding execution of the New
Mortgage Notes Agreements) and Section VI.I (regarding surrender
of canceled instruments and securities), distributions will be
made on the Effective Date to: (a) the applicable Agent Banks on
account of Allowed Bank Loan Claims, (b) Prudential on account of
the Allowed Claims of Prudential in Classes M-4, MOS-4 and MRS-4,
(c) Swiss Bank on account of Allowed Claims in Classes M-8, MOS-8
and MRS-8, (d) GECC on account of Allowed Claims in Classes M-9
and MOS-9, (e) John Hancock on account of Allowed Claims in Class
MRS-9 and (f) the applicable Indenture Trustee or Disbursing
Agent on account of Allowed Debt Security Claims. Distributions
on account of Claims that become Allowed Claims after the
Effective Date will be made pursuant to Sections VI.G and VII.C.

2. From and after the Effective Date, cash to be
distributed on the Effective Date on account of Reserve Class
Claims allowed as of the Effective Date will be deposited in a
segregated bank account in the name of the applicable Disbursing
Agent, held in trust pending distribution by the Disbursing Agent
for the benefit of the holders of such Claims and accounted for
separately, and, subject to Section VI.D.2.a.iii, will not
constitute property of the Combined Company. The Disbursing
Agent will invest such cash in a manner consistent with the
Combined Company's investment and deposit guidelines.
Distributions of cash on account of each Reserve Class Claim
allowed as of the Effective Date will include a Pro Rata share of
the Cash Investment Yield from such investment of cash. New Debt
will accrue interest from, January 31, 1995, regardless of the date
on which New Debt is actually distributed.

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I-51

B. Methods of Distributions

1. Distributions to Holders of Allowed Bank Loan
Claims

All distributions provided for in the Plan on account
of Allowed Bank Loan Claims will be made to the applicable Agent
Bank for further distribution, subject to Agent Bank Charges,
as hereafter provided, to individual holders of such
Claims or those participants that such holders certify in writing
to the applicable Agent Bank by the close of business on the
Distribution Record Date. Distributions will be made by the
Reorganized Debtors to each Agent Bank in the names of those
holders of Allowed Bank Loan Claims or their participants and in
such amounts of cash, principal amounts of New Debt and numbers
of shares of New Combined Company Common Stock (as applicable) to
the extent that such Agent Bank provides the applicable
information in writing to Federated within seven days after the
Distribution Record Date. Distributions will be made in accordance
with the applicable Macy's Bank Loan Agreement, as provided herein
or in the Confirmation Order or as otherwise agreed between the
Agent Bank and any beneficial owner of an Allowed Bank Loan Claim,
and will be subject to any Agent Bank Charges, except as may be
agreed between Swiss Bank and any beneficial owner of an Allowed
Claim in Classes M-6, MOS-6 and MRS-6. Agent Banks will make
distributions to their respective holders of Allowed Bank Loan Claims
on the Effective Date or as promptly thereafter as practicable, but
in any event no later than: (a) 10 days after the Effective Date or
(b) as to any particular Allowed Bank Loan Claim, such later date when
the applicable conditions of Section VI.I (regarding surrender of
canceled instruments and securities) are satisfied and any
dispute asserted in writing to the Agent Bank with respect to the
identity of the party that is entitled to receive a distribution
or the amount of such distribution on account of such Claim is
resolved. Notwithstanding the provisions of Section IV.J
regarding the cancellation of the Macy's Bank Loan Agreements,
the Macy's Bank Loan Agreements will continue in effect to the
extent necessary to allow the Agent Banks to receive and make
distributions pursuant to the Plan, subject to the deduction of
Agent Bank Charges, and the Agent Banks will remain entitled to
any limitation of liability, exculpation or indemnification
provisions between or among the holders of Allowed Bank Loan
Claims under the applicable Macy's Bank Loan Agreement.

2. Distributions to Holders of Allowed Debt
Security Claims

All distributions provided for in the Plan on account
of Allowed Debt Security Claims will be made, at the option of
Federated or the Combined Company, to the respective Indenture
Trustees or a Disbursing Agent for further distribution to
individual holders of Allowed Debt Security Claims. Any such
distribution made by an Indenture Trustee will be made pursuant
to the applicable Old Indenture or other disbursing agent
agreement entered into by the Combined Company and the applicable
Indenture Trustee. Notwithstanding the provisions of Section
V.D.3 (regarding the cancellation of the Old Indentures), the Old
Indentures will continue in effect to the extent necessary to
allow the Indenture Trustees to receive and make distributions
pursuant to the Plan on account of Allowed Debt Security Claims.
Any actions taken by the Indenture Trustees that are not for this
purpose will be null and void as against the Debtors and the
Reorganized Debtors, and the Reorganized Debtors will have no
obligations to the Indenture Trustees for any fees, costs or
expenses incurred in connection with any such actions.

3. Distributions to Holders of Other Claims

The Combined Company, or such Third-Party Disbursing
Agents as Federated or the Combined Company, after consultation
with the Unsecured Creditors' Committee, may employ in its sole
discretion, will make all distributions of cash and New
Securities required under the Plan, except for distributions made
by Agent Banks or Indenture Trustees pursuant to Sections VI.B.1
and VI.B.2. Each Disbursing Agent will serve without bond, and
any Disbursing Agent may employ or contract with other entities
to assist in or make the distributions required by the Plan.

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I-52

C. Compensation and Reimbursement for Services Related to
Balloting
and Distributions

1. Each Agent Bank and Indenture Trustee providing
services related to balloting or distributions pursuant to the
Plan to holders of Allowed Bank Loan Claims or Allowed Debt
Security Claims will receive, from the Combined Company, without
further Bankruptcy Court approval, reasonable compensation for
such services and reimbursement of reasonable out-of-pocket
expenses incurred in connection with such services. These
payments will be made on terms agreed to with Federated or the
Combined Company, and will be in addition to distributions made
on account of any Agent Bank Charges or Indenture Trustee
Charging Liens.

2. Each Third-Party Disbursing Agent providing
services related to distributions pursuant to the Plan will
receive from the Combined Company, without further Bankruptcy
Court approval, reasonable compensation for such services and
reimbursement of reasonable out-of-pocket expenses incurred in
connection with such services. These payments will be made on
terms agreed to with Federated or the Combined Company, and will
not be deducted from distributions to be made pursuant to the
Plan to holders of Allowed Claims (including any distributions of
Cash Investment Yield) receiving distributions from a Third-Party
Disbursing Agent.

D. Delivery of Distributions and Undeliverable or Unclaimed
Distributions

1. Delivery of Distributions in General

Distributions to holders of Allowed Claims will be made
as follows: (a) with respect to Allowed Bank Loan Claims, by the
applicable Agent Bank, and as otherwise specified herein, in the
Confirmation Order or in the applicable Macy's Bank Loan
Agreement; (b) with respect to Allowed Debt Security Claims, if
made by an Indenture Trustee, in accordance with the applicable
Old Indenture and, if made by a Disbursing Agent, at the
addresses supplied by the applicable Indenture Trustee; and
(c) with respect to all other Allowed Claims, by a Disbursing
Agent (i) at the addresses set forth on the respective proofs of
Claim Filed by holders of such Claims; (ii) at the addresses set
forth in any written notices of address change delivered to the
Disbursing Agents after the date of Filing of any related proof
of Claim; or (iii) at the addresses reflected in the applicable
Debtor's schedule of liabilities if no proof of Claim has been
Filed and the Disbursing Agents have not received a written
notice of a change of address.

2. Undeliverable Distributions

a. Distributions Held by Disbursing Agents

i. Holding and Investment of
Undeliverable Distributions

A. If any Allowed Claim holder's
distribution is returned to a Disbursing Agent as undeliverable,
no further distributions will be made to such holder unless and
until the applicable Disbursing Agent is notified in writing of
such holder's then-current address. Undeliverable distributions
will remain in the possession of the applicable Disbursing Agent
pursuant to this Section VI.D.2.a.i until such time as a
distribution becomes deliverable. Undeliverable cash (including
dividends or other distributions on undeliverable New Combined
Company Common Stock) will be held in segregated bank accounts in
the name of the applicable Disbursing Agent for the benefit of
the potential claimants of such funds. Any Disbursing Agent
holding undeliverable cash will invest such cash in a manner
consistent with the Combined Company's investment and deposit
guidelines. Undeliverable New Equity will be held by the
applicable Disbursing Agent for the benefit of the potential
claimants of such securities.

<PAGE>
I-53

B. Pending the distribution of any New
Combined Company Common Stock, each Disbursing Agent will cause
all of the New Combined Company Common Stock held by it in its
capacity as Disbursing Agent to be: (1) represented in person or
by proxy at each meeting of the stockholders of the Combined
Company; (2) voted in any election of directors of the Combined
Company, at the option of the Disbursing Agent, either
(a) proportionately with the votes cast by the other stockholders
of the Combined Company, taken as a whole, or (b) for the
nominees recommended by the board of directors of the Combined
Company; and (3) voted with respect to any other matter, at the
option of the Disbursing Agent, either (a) proportionately with
the votes cast by the other stockholders of the Combined Company,
taken as a whole, or (b) as recommended by the board of directors
of the Combined Company.

ii. After Distributions Become Deliverable

On each Quarterly Distribution Date, the applicable
Disbursing Agents will make all distributions that become
deliverable to holders of Allowed Claims during the preceding
calendar quarter. Each such distribution will include, to the
extent applicable: (A) dividends or other distributions, if any,
that shall have theretofore been paid to the Disbursing Agent in
respect of any New Combined Company Common Stock included in such
distribution and (B) a Pro Rata share of the Cash Investment
Yield from the investment of any undeliverable cash (including
dividends or other distributions on undeliverable New Combined
Company Common Stock), from the date that such distribution would
have first been due had it then been deliverable to the date that
such distribution becomes deliverable.

iii. Failure to Claim Undeliverable Distributions

Any holder of an Allowed Claim that does not assert a
claim pursuant to the Plan for an undeliverable distribution to
be made by a Disbursing Agent within two years after the
Effective Date will have its claim for such undeliverable
distribution discharged and will be forever barred from asserting
any such claim against the Reorganized Debtors or their
respective property. In such cases: (A) with respect to
undeliverable cash held by a Disbursing Agent, such cash will be
property of the Combined Company, free of any restrictions
thereon and (B) with respect to undeliverable New Combined
Company Common Stock held by a Disbursing Agent on account of
Allowed Claims in a Reserve Class, such New Combined Company
Common Stock will be retained in the Disputed Claims Reserve for
redistribution Pro Rata to holders of Allowed Claims in the
Reserve Classes, pursuant to Section VI.G.2.b. For purposes of
this redistribution, each Allowed Claim in a Reserve Class for
which such distributions are undeliverable will be deemed
disallowed in its entirety. To the extent that undeliverable
cash held by a Third-Party Disbursing Agent is subject to Section
VI.D.2.a.iii(A), the Third-Party Disbursing Agent will return
such cash to the Combined Company. Nothing contained in the Plan
will require any Debtor, Reorganized Debtor or Disbursing Agent
to attempt to locate any holder of an Allowed Claim.

b. Distributions Held by Agent Banks or Indenture
Trustees

i. For distributions to holders of Allowed Bank
Loan Claims or Allowed Debt Security Claims that are made by an
Agent Bank or Indenture Trustee, respectively, unless otherwise
provided in the Confirmation Order or any other order of the
Bankruptcy Court that is not subject to any stay, the provisions
of the applicable Macy's Bank Loan Agreement or Old Indenture
will govern the holding of undeliverable distributions and the
delivery of those distributions to individual holders of Allowed
Bank Loan Claims or Allowed Debt Security Claims, respectively.

ii. If an Indenture Trustee or Disbursing Agent,
as applicable, determines that an individual holder of an Allowed
Debt Security Claim is no longer entitled to a distribution
pursuant to the applicable Old Indenture, the Plan or the
Confirmation Order, such individual holder's claim for such
distribution will be discharged, and such individual holder will
be forever barred from asserting any such claim for a
distribution against the Debtors, the Reorganized Debtors or

<PAGE>
I-54

their respective property. In such cases: (A) any cash held for
distribution on account of such claims (including dividends or
other distributions on New Combined Company Common Stock) will be
property of the Combined Company, free of any claims or
restrictions thereon and (B) any New Equity held for distribution
on account of such claims will either be canceled or held in the
Combined Company's treasury, as the Combined Company may
determine is appropriate. The applicable Indenture Trustee or
Third-Party Disbursing Agent will return such cash or the
instruments or securities evidencing such New Equity to the
Combined Company.

E. Distribution Record Date

1. The Agent Banks will have no obligation to
recognize the transfer of, or the sale of any participation in,
any Allowed Bank Loan Claim occurring after the close of business
on the Distribution Record Date, and will be entitled for all
purposes herein to recognize and distribute only to those holders
of Allowed Bank Loan Claims who are holders of such Claims, or
participants therein, as certified by such holders in writing to
the Agent Banks by the close of business on the Distribution
Record Date.

2. As of the close of business on the Distribution
Record Date, the respective transfer register for each of the Old
Debt Securities, as maintained by the Debtors, the Indenture
Trustees or their respective agents, will be closed, and the
applicable Disbursing Agents, Indenture Trustees or their
respective agents will have no obligation to recognize the
transfer of any Old Debt Securities occurring after the close of
business on the Distribution Record Date and will be entitled for
all purposes herein to recognize and deal only with those holders
of record as of the close of business on the Distribution Record
Date.

3. Except as otherwise provided in an order of the
Bankruptcy Court that is not subject to any stay, the transferees
of Claims in Reserve Classes that are transferred pursuant to
Bankruptcy Rule 3001 on or prior to the Distribution Record Date
will be treated as the holders of such Claims for all purposes,
notwithstanding that any period provided by Bankruptcy Rule 3001
for objecting to such transfer has not expired by the
Distribution Record Date.

F. Means of Cash Payments

Except as otherwise specified herein, cash payments
made pursuant to the Plan will be in U.S. dollars by checks drawn
on a domestic bank selected by the applicable Debtor or
Reorganized Debtor, or by wire transfer from a domestic bank, at
the option of the applicable Debtor or Reorganized Debtor. Cash
payments of $1,000,000 or more to be made pursuant to the Plan to
or on behalf of holders of Allowed Bank Loan Claims, Allowed
Trade Claims or Allowed Debt Security Claims will, to the extent
requested in writing no later than five days after the
Confirmation Date by the applicable holder, be made by wire
transfer from a domestic bank. Cash payments to foreign holders
of Allowed Trade Claims may be made, at the option of the
applicable Debtor or Reorganized Debtor, in such funds and by
such means as are necessary or customary in a particular foreign
jurisdiction.

G. Timing and Calculation of Amounts to be Distributed

1. Allowed Claims in Non-Reserve Classes and the
Fixed Cash Portion of
Allowed Claims in Reserve Classes

Subject to Section VI.A, on the Effective Date: (a)
each holder of an Allowed Claim in a non-Reserve Class will
receive the full amount of the distributions that the Plan
provides for Allowed Claims in the applicable non-Reserve Class
and (b) each holder of an Allowed Claim in a Reserve Class will

<PAGE>
I-55

receive the Fixed Cash Portion of the distributions that the Plan
provides for Allowed Claims in a Reserve Class. On each
Quarterly Distribution Date, distributions will also be made,
pursuant to Section VII.C, to holders of Disputed Claims in any
such Class that were allowed during the preceding calendar
quarter. Such quarterly distributions on account of Allowed
Claims in a non-Reserve Class and the Fixed Cash Portion of
Allowed Claims in a Reserve Class will also be in the full amount
that the Plan provides for Allowed Claims in the applicable
Class.

2. New Combined Company Common Stock to be
Distributed to Holders
of Allowed Claims in Reserve Classes

a. Initial Distributions

The amount of distributions of New Combined Company
Common Stock to be made on the Effective Date (subject to Section
VI.A) to holders of Allowed Claims in a Reserve Class on account
of such Claims will be calculated as if each Disputed Claim in
the applicable Reserve Class were an Allowed Claim in its Face
Amount. On each Quarterly Distribution Date, distributions will
also be made, pursuant to Section VII.C, to holders of Disputed
Claims in Reserve Classes that were allowed during the preceding
calendar quarter. Such quarterly distributions of New Combined
Company Common Stock will also be calculated pursuant to the
provisions set forth in this Section VI.G.2.a.

b. Additional Quarterly Distributions
on Account of
Previously Allowed Claims

On each Quarterly Distribution Date, each holder of a
Claim previously allowed in a Reserve Class will receive an
additional distribution of New Combined Company Common Stock from
the Disputed Claims Reserve on account of such Claim in an amount
equal to: (i) the amount of New Combined Company Common Stock
that such holder would have been entitled to receive pursuant to
Section VI.G.2.a as if such Claim had become an Allowed Claim on
the applicable Quarterly Distribution Date, minus (ii) the
aggregate amount of New Combined Company Common Stock previously
distributed on account of such Claim. Each such quarterly
additional distribution will also include, on the basis of the
amount then being distributed: (i) any dividends or other
distributions made on account of the New Combined Company Common
Stock held in the Disputed Claims Reserve and (ii) a Pro Rata
share of the Cash Investment Yield from the investment of any
cash in the Disputed Claims Reserve, from the date such amounts
would have been due had such Claim initially been paid on the
Effective Date 100% of the allowed amount to the date that such
distribution is made.

3. Distributions of New Debt

Notwithstanding any other provisions of the Plan,
principal amounts of the New Debt will be issued only in
denominations of $1,000 and integral multiples thereof. When any
distribution on account of an Allowed Claim would otherwise
result in the issuance of New Debt with an aggregate principal
amount that is not an integral multiple of $1,000, the actual
distribution of such notes will be rounded to the next higher or
lower integral multiple of $1,000, as follows: (a) aggregate
principal amounts that exceed an integral multiple of $1,000 by
$500 or more will be rounded to the next higher integral multiple
of $1,000 and (b) aggregate principal amounts that exceed an
integral multiple of $1,000 by less than $500 will be rounded to
the next lower integral multiple of $1,000. If, as a result of
rounding of principal amounts of any series of New Unsecured
Notes to be distributed to particular holders of Allowed Bank
Loan Claims in a particular Class, the sum of such principal
amounts differs from the aggregate principal amount of such
series of New Unsecured Notes to be distributed pursuant to
Section III.B.2.b, c or d, as applicable: (a) the aggregate
principal amount of the applicable series of New Unsecured Notes
specified in Section III.B.2.b, c or d will be adjusted upward or
downward to provide for the distribution of the applicable series
of New Unsecured Notes in an aggregate principal amount equal to
such sum and (b) the corresponding amount of cash to be
distributed pursuant to Section III.B.2.b, c or d, as applicable,
will be increased or decreased dollar for dollar to offset the

<PAGE>
I-56
adjustment to the principal amount of the New Unsecured Notes
described in (a). No consideration will be provided in lieu of
principal amounts of any other issues of New Debt that are
rounded down.

4. Distributions of New Equity

a. Notwithstanding any other provision of the Plan,
only whole numbers of shares of New Combined Company Common Stock
and whole numbers of New Warrants will be issued. When any
distribution on account of an Allowed Claim would otherwise
result in the issuance of a number of shares of New Combined
Company Common Stock or a number of New Warrants that is not a
whole number, the actual distribution of shares of such stock or
warrants will be rounded to the next higher or lower whole number
as follows: (i) fractions equal to or greater than 1/2 will be
rounded to the next higher whole number and (ii) fractions less
than 1/2 will be rounded to the next lower whole number. The
total number of shares of New Combined Company Common Stock and
New Warrants to be distributed to a Class of Claims will be
adjusted as necessary to account for the rounding provided for in
this Section VI.G.4.a. If, as a result of rounding of shares of
New Combined Company Common Stock to be distributed to particular
holders of Allowed Bank Loan Claims in a particular Class, the
sum of the number of such shares differs from the aggregate
number of shares of New Combined Company Common Stock to be
distributed pursuant to Section III.B.2.b, c or d, as applicable:
(i) the aggregate number of shares of New Combined Company Common
Stock specified in Section III.B.2.b, c or d will be adjusted
upward or downward to provide for the distribution of New
Combined Company Common Stock in an aggregate number of shares
equal to such sum and (ii) the corresponding amount of cash to be
distributed pursuant to Section III.B.2.b, c or d, as applicable,
will be increased or decreased dollar for dollar to offset the
adjustment to the number of shares of New Combined Company Common
Stock described in (i). For purposes of the foregoing sentence,
each share of New Combined Company Common Stock will be deemed to
have a value equal to the Federated Average Market Price (Pool
A), subject to the stock price collar described in Section
I.A.51. Except as provided in this Section VI.G.4.a, no
consideration will be provided in lieu of fractional shares or
warrants that are rounded down.

b. Subject to the provisions of the New Combined
Company Share Purchase Rights Agreement, each share of New
Combined Company Common Stock distributed pursuant to the Plan
will be accompanied by one New Combined Company Share Purchase
Right.

5. De Minimis Distributions

The Disbursing Agents and the Indenture Trustees will
not be required to distribute cash to the holder of an Allowed
Claim in an impaired Class if the amount of cash to be
distributed on account of such Claim is less than $25. Any
holder of an Allowed Claim on account of which the amount of cash
to be distributed is less than $25 will have its claim for such
distribution discharged and will be forever barred from asserting
any such claim against the Reorganized Debtors or their
respective property. Any cash not distributed pursuant to this
Section VI.G.5 with respect to Claims in a non-Reserve Class or
the Fixed Cash Portion of Allowed Claims in a Reserve Class will
be the property of the Combined Company, free of any restrictions
thereon, and any such cash held by a Third-Party Disbursing Agent
or an Indenture Trustee will be returned to the Combined Company.
Any cash not distributed pursuant to this Section VI.G.5 with
respect to dividends or other distributions made on account of
New Combined Company Common Stock held in the Disputed Claims
Reserve will be retained in the Disputed Claims Reserve for
redistribution Pro Rata to holders of Allowed Claims in the
Reserve Classes, pursuant to Section VI.G.2.b.

6. Compliance with Tax Requirements

a. In connection with the Plan, to the extent
applicable, each Disbursing Agent, Agent Bank and Indenture
Trustee will comply with all tax withholding and reporting

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I-57

requirements imposed on it by any governmental unit, and all
distributions pursuant to the Plan will be subject to such
withholding and reporting requirements. Each Disbursing Agent,
Agent Bank and Indenture Trustee will be authorized to take any
and all actions that may be necessary or appropriate to comply
with such withholding and reporting requirements.

b. Notwithstanding any other provision of the Plan,
each entity receiving a distribution of cash or New Securities
pursuant to the Plan will have sole and exclusive responsibility
for the satisfaction and payment of any tax obligations imposed
by any governmental unit, including income, withholding and other
tax obligations, on account of such distribution.

H. Setoffs

Except with respect to claims of a Debtor or
Reorganized Debtor released pursuant to the Plan or any contract,
instrument, release, indenture or other agreement or document
created in connection with the Plan, the Reorganized Debtors may,
pursuant to section 553 of the Bankruptcy Code or applicable
nonbankruptcy law, set off against any Allowed Claim in a Reserve
Class and the distributions to be made pursuant to the Plan on
account of such Claim (before any distribution is made on account
of such Claim), the claims, rights and causes of action of any
nature that the applicable Debtor or Reorganized Debtor may hold
against the holder of such Allowed Claim; provided, however, that
neither the failure to effect such a setoff nor the allowance of
any Claim hereunder will constitute a waiver or release by the
applicable Debtor or Reorganized Debtor of any such claims,
rights and causes of action that the Debtor or Reorganized Debtor
may possess against such holder. To the extent that a
Reorganized Debtor fails to effect a setoff with a holder of an
Allowed Reserve Class Claim and seeks to collect a claim from
such holder after a distribution to such holder pursuant to the
Plan on account of its Claim, the applicable Reorganized Debtor's
recovery on its claim against such holder will be limited to an
amount that does not exceed the amount that would have been
recovered had the claim against the holder been set off against
the holder's Allowed Reserve Class Claim prior to any
distribution pursuant to the Plan to the holder on account of
such Allowed Claim.

I. Surrender of Canceled Instruments or Securities

As a condition precedent to receiving any distribution
pursuant to the Plan on account of an Allowed Claim evidenced by
the notes, instruments, securities or other documentation
canceled pursuant to Section IV.J, the holder of such Claim will
tender, as specified in this Section VI.I, the applicable notes,
instruments, securities or other documentation evidencing such
Claim to the applicable Agent Bank, Indenture Trustee or
Disbursing Agent. Any cash and New Securities to be distributed
pursuant to the Plan on account of any such Claim will, pending
such surrender, be treated as an undeliverable distribution
pursuant to Section VI.D.2.

1. Old Debt Securities and Untendered Securities

Except as provided in Section VI.I.2 for lost, stolen,
mutilated or destroyed Old Debt Securities or Untendered
Securities, each holder of an Allowed Claim evidenced by an Old
Debt Security or an Untendered Security will tender such Old Debt
Security or Untendered Security to the applicable Disbursing
Agent or Indenture Trustee in accordance with a letter of
transmittal to be provided to such holders by the Disbursing
Agents or Indenture Trustees as promptly as practicable following
the Effective Date. The letter of transmittal will include,
among other provisions, customary provisions with respect to the
authority of the holder of the applicable Old Debt Security or
Untendered Security to act and the authenticity of any signatures
required thereon. All surrendered Old Debt Securities and
Untendered Securities will be marked as canceled and delivered to
the appropriate Reorganized Debtor.

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I-58

2. Lost, Stolen, Mutilated or Destroyed Old Debt
Securities or
Untendered Securities

In addition to any requirements under the applicable
Old Indenture, any holder of a Claim evidenced by an Old Debt
Security or Untendered Security that has been lost, stolen,
mutilated or destroyed will, in lieu of surrendering such Old
Debt Security or Untendered Security, deliver to the applicable
Disbursing Agent or Indenture Trustee: (a) evidence satisfactory
to the Disbursing Agent or Indenture Trustee of the loss, theft,
mutilation or destruction and (b) such security or indemnity as
may be required by the Disbursing Agent or Indenture Trustee to
hold the Disbursing Agent or Indenture Trustee harmless from any
damages, liabilities or costs incurred in treating such
individual as a holder of an Old Debt Security or an Untendered
Security. Upon compliance with this Section VI.I.2 by a holder
of a Claim evidenced by an Old Debt Security or an Untendered
Security, such holder will, for all purposes under the Plan, be
deemed to have surrendered an Old Debt Security or an Untendered
Security, as applicable.

3. Failure to Surrender Canceled Old Debt
Securities or Untendered
Securities

Any holder of an Old Debt Security or an Untendered
Security that fails to surrender or be deemed to have surrendered
the Old Debt Security or Untendered Security within two years
after the Effective Date will have its claim for a distribution
pursuant to the Plan on account of such Old Debt Security or
Untendered Security discharged and will be forever barred from
asserting any such claim against the Reorganized Debtors or their
respective property. In such cases, any cash or New Equity held
for distribution on account of such claim will be disposed of
pursuant to the provisions set forth in Section VI.D.2.a (for
distributions held by Disbursing Agents) or VI.D.2.b (for
distributions held by Indenture Trustees), as applicable.

4. Other Notes, Instruments or Documents

Except as provided below for lost, stolen, mutilated or
destroyed notes or other instruments, holders of Claims in
Classes M-4 through M-9, MOS-4 through MOS-9, MRS-4 through MRS-9
or MMS-4 will be required to surrender any existing notes or, if
not evidenced by a note, any other instrument evidencing their
respective Allowed Claims as and when such entities receive cash
or New Securities pursuant to the Plan. If any such entity's
notes or other instruments evidencing its Allowed Claims are
lost, stolen, mutilated or destroyed, such entity will be
required, in lieu of surrendering such note or other instrument,
to deliver to the applicable Agent Bank or Disbursing Agent
evidence satisfactory to the Agent Bank or Disbursing Agent of
the loss, theft, mutilation or destruction.

J. Special Provisions Regarding Agent Bank Charges,
Indenture Trustee Charging
Liens and Certain Fees and Expenses of Senior Lenders

1. Agent Bank Charges

Notwithstanding the provisions of Section IV.J with
respect to cancellation of the Macy's Bank Loan Agreements, any
Agent Bank Charges will be preserved. Consequently,
distributions actually received by the holders of Allowed Bank
Loan Claims may be less than the gross distributions provided for
under the Plan in an amount equal to the amount of distributions
applied by an Agent Bank to its respective Agent Bank Charges.

2. Indenture Trustee Charging Liens

In full satisfaction of Allowed Claims secured by
Indenture Trustee Charging Liens, the Indenture Trustees will
receive from the Combined Company cash equal to the amount of
such Claims, and any Indenture Trustee Charging Liens will be

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released. Distributions received by holders of Allowed Debt
Security Claims pursuant to the Plan will not be reduced on
account of payment of Allowed Claims secured by Indenture Trustee
Charging Liens. Notwithstanding any other provisions of the
Plan, upon: (a) submission of appropriate documentation to the
Combined Company regarding fees and expenses incurred by an
Indenture Trustee in connection with the Reorganization Cases
through the Effective Date that are secured by an Indenture
Trustee Charging Lien and (b) the failure of the Combined Company
to object on the grounds of reasonableness, as determined under
the terms of the applicable Old Indenture, to the payment of such
fees and expenses within 10 days after receipt of such
documentation, such Indenture Trustee will be deemed to hold an
Allowed Claim for such fees and expenses, which the Combined
Company will pay in cash within 30 days after the receipt of the
documentation regarding the fees and expense of such Indenture
Trustee, without further Bankruptcy Court approval.

3. Fees and Expenses of Senior Lenders

The Combined Company will reimburse the Senior Lenders,
as part of their Secured Claims, for certain fees, costs and
other expenses incurred by the Senior Lenders in connection with
the Reorganization Cases in amounts now agreed upon by Federated
and the Senior Lenders, without further Bankruptcy Court
approval.

ARTICLE VII.

PROCEDURES FOR RESOLVING DISPUTED CLAIMS

A. Prosecution of Objections to Claims

1. Objections to Claims

All objections to Claims must be Filed and served on
the holders of such Claims by the Claims Objection Bar Date.
If an objection has not been Filed to a proof of Claim or a
scheduled Claim by the Claims Objection Bar Date, the Claim to
which the proof of Claim or scheduled Claim relates will be
treated as an Allowed Claim if such Claim has not been allowed
earlier. An objection is deemed to have been timely Filed as to
all Personal Injury Claims, thus making each such Claim a
Disputed Claim as of the Claims Objection Bar Date. Each such
Claim will remain a Disputed Claim until it becomes an Allowed
Claim in accordance with Section I.A.8.b.

2. Authority to Prosecute Objections

a. After the Confirmation Date, only the Debtors,
with the approval of Federated, and the Reorganized Debtors will
have the authority to File objections, settle, compromise,
withdraw or litigate to judgment objections to Claims, including
Claims for reclamation under section 546(c) of the Bankruptcy
Code; provided, however, that the Debtors, Federated and the
Reorganized Debtors will be prohibited from Filing any objections
to Claims allowed in accordance with Section I.A.8.b. Except as
provided in Section VII.A.2.b, from and after the Effective Date,
the Reorganized Debtors may settle or compromise any Disputed
Claim without approval of the Bankruptcy Court.

b. Within 30 days after the end of each month or as
otherwise agreed in writing by the Debtors and the Unsecured
Creditors' Committee, the Reorganized Debtors will provide
counsel to the Claims Resolution Committee with written notice by
overnight delivery service or facsimile transmission of each
Disputed Claim in a Reserve Class that has been settled or
compromised in the prior month, other than such settlements or
compromises that fall within the parameters of settlement
guidelines to be agreed to by the Debtors and the Unsecured
Creditors' Committee. Within 15 days after the receipt of such
notice, the Claims Resolution Committee will provide the
Reorganized Debtors with written notice (as provided in Section
XII.H) of any such settlements or compromises with which it does

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not concur. If the Reorganized Debtors and the Claims Resolution
Committee cannot reach agreement with respect to any such
settlement or compromise, the Claims Resolution Committee will be
permitted to File and serve on the Reorganized Debtors an
objection to the reasonableness of such settlement or compromise
by the last Business Day of the month in which the Claims
Resolution Committee received written notice of the settlement or
compromise, with the reasonableness of such settlement or
compromise to be determined by the Bankruptcy Court. If the
Claims Resolution Committee does not provide a written notice and
File and serve an objection as specified in this Section
VII.A.2.b with respect to any particular settlement or
compromise, then such settlement or compromise will be deemed
resolved pursuant to Section VII.A.2.a on the terms and subject
to the conditions agreed to by the Reorganized Debtors. The
Combined Company and the Claims Resolution Committee may modify
the foregoing procedures by a writing executed by both.

B. Treatment of Disputed Claims

1. No Payments on Account of Disputed Claims and
Disputed Claims
Reserve

Notwithstanding any other provisions of the Plan, no
payments or distributions will be made on account of a Disputed
Claim or, if less than the entire Claim is a Disputed Claim, the
portion of a Claim that is a Disputed Claim, until such Claim or
portion of a Claim becomes an Allowed Claim. In lieu of
distributions under the Plan to holders of Disputed Claims that
would be in a Reserve Class if allowed, a Disputed Claims Reserve
will be established on the Effective Date. The Combined Company
will fund the Disputed Claims Reserve with cash and New Combined
Company Common Stock as described in Section VII.B.2.

2. Funding of Disputed Claims Reserve and Recourse

a. Funding

i. On the Effective Date, cash will be
deposited in the Disputed Claims Reserve in an amount equal to:
(A) the greater of (i) $100,000,000 and (ii) the Fixed Cash
Portion of Allowed Claims in the Reserve Classes on the Effective
Date minus (B) the amount of cash distributed on the Effective
Date on account of Allowed Claims in the Reserve Classes. At the
hearing on Confirmation, the Plan Proponents will provide
testimony or other evidence as to the aggregate amount of Allowed
Claims in the Reserve Classes as of the date of such hearing and
the estimated aggregate amount of such Claims as of the Effective
Date.

ii. On the Effective Date, New Combined Company
Common Stock will be placed in the Disputed Claims Reserve in a
number of shares equal to: (A) 3.73385% of the number of
Distributable Shares (Pool A) minus (B) the number of shares of
New Combined Company Common Stock distributed on the Effective
Date on account of Allowed Claims in the Reserve Classes.

b. Recourse

Each holder of a Disputed Claim that ultimately becomes
an Allowed Claim in a Reserve Class will have recourse:

i. to the Combined Company, the Reorganized
Macy's Subsidiary Debtors, their respective successors and their
respective property for satisfaction of the Fixed Cash Portion to
which such Claim is entitled under the Plan and an amount equal
to any related Cash Investment Yield, computed on the basis that
such Fixed Cash Portion was placed in the Disputed Claims Reserve
on the Effective Date, irrespective of whether it was, and

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ii. only to the undistributed New Combined
Company Common Stock held in the Disputed Claims Reserve for
satisfaction of the distributions of New Combined Company Common
Stock to which holders of such Claims are entitled under the
Plan, and not to any Reorganized Debtor, its property or any
assets previously distributed on account of any Allowed Claim.

3. Property Held in Disputed Claims Reserve

a. Cash held in the Disputed Claims Reserve
(including dividends and other distributions on New Combined
Company Common Stock held in such reserve) will be deposited in a
segregated bank account in the name of the applicable Disbursing
Agent and held in trust for the benefit of the potential
claimants of such funds and accounted for separately, and,
subject to Section VI.D.2.a.iii, will not constitute property of
the Combined Company. The applicable Disbursing Agent will
invest the cash held in the Disputed Claims Reserve in a manner
consistent with the Combined Company's investment and deposit
guidelines. The Disbursing Agent will also place in the Disputed
Claims Reserve the Cash Investment Yield from such investment of
cash.

b. New Combined Company Common Stock held in the
Disputed Claims Reserve will be held in trust for the benefit of
the potential claimants of such securities by the applicable
Disbursing Agent and accounted for separately, and, subject to
Section VI.D.2.a.iii, will not constitute property of the
Combined Company. Pending the distribution of any New Combined
Company Common Stock held in the Disputed Claims Reserve, such
stock will be voted pursuant to Section VI.D.2.a.i.B.

C. Distributions on Account of Disputed Claims Once They are
Allowed

On each Quarterly Distribution Date, the applicable
Disbursing Agent will make all distributions on account of any
Disputed Claim that has become an Allowed Claim during the
preceding calendar quarter. Such distributions will be made
pursuant to the provisions of the Plan governing the applicable
Class, including the incremental distribution provisions set
forth in Section VI.G.2. Holders of Disputed Claims in Reserve
Classes that are ultimately allowed will also be entitled to
receive, on the basis of the amount ultimately allowed, the net
amount of: (1) any dividends or other distributions received on
account of the shares of New Combined Company Common Stock and
(2) a Pro Rata share of the Cash Investment Yield from the
investment of any cash in the Disputed Claims Reserve from the
Effective Date or, with respect to net cash proceeds generated
after the Effective Date from property held in the Disputed
Claims Reserve, the date that such cash was invested after the
Effective Date, to the date that such distributions are made from
the Disputed Claims Reserve.

D. Tax Requirements for Income Generated by Disputed Claim
Reserve

The recovery of holders of Claims in the Reserve Classes
consists of the treatment set forth herein and post-Effective Date
interest on such Claims at a rate determined by the Cash Investment
Yield. Therefore, the Combined Company and the holders of all Claims
in Reserve Classes will treat cash distributions of the Cash
Investment Yield as interest for all income tax purposes, and the
Combined Company will cause such information returns to be issued to
such holders consistent with this treatment as may be required
by any governmental unit. The Combined Company will include in
its tax returns all items of income, deduction and credit of the
Disputed Claims Reserve; provided, however, that no distribution
will be made to the Combined Company out of the Disputed Claims
Reserve as a result of this inclusion. Pursuant to the provisions
set forth in Appendix VII.D, the applicable Disbursing Agent will
pay, or cause to be paid, out of the funds held in the Disputed
Claims Reserve, any tax imposed on the Disputed Claims Reserve (as
opposed to the Combined Company or the holders of Claims in the
Reserve Classes) by any governmental unit with respect to income
generated by the funds and New Combined Company Common Stock held in
the Disputed Claims Reserve. The applicable Disbursing Agent will
also file or cause to be filed any tax or information return related
to the Disputed Claims Reserve that is required by any governmental
unit.

<PAGE>
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ARTICLE VIII.

CONDITIONS PRECEDENT TO CONFIRMATION
AND CONSUMMATION OF THE PLAN

A. Conditions to Confirmation

The Bankruptcy Court will not enter the Confirmation
Order unless and until each of the following conditions has been
satisfied or duly waived by the Plan Proponents pursuant to
Section VIII.C.

1. The Confirmation Order shall be reasonably
acceptable in form and substance to each of the Plan Proponents.

2. The Confirmation Date shall occur no later than
January 31, 1995.

B. Conditions to Effective Date

The Plan Proponents will use reasonable efforts and
will assist and cooperate with each other to cause the Effective
Date to occur and to consummate the Plan, including the
satisfaction of the conditions to the Effective Date set forth
herein. The Effective Date will not occur and the Plan will not
be consummated unless and until each of the following conditions
has been satisfied or duly waived by the Plan Proponents or
Federated, as applicable, pursuant to Section VIII.C:

1. a. All Appendices to the Plan and all other
material documents necessary or appropriate to implement the Plan
shall be substantially in the form provided with the Plan or
substantially as described in the Disclosure Statement.

b. If the form of any of the New Global
Indenture, the New Series A Notes Supplemental Indenture, the New
Series B Notes Supplemental Indenture or the New Series C Notes
Supplemental Indenture is amended, modified or supplemented after
its Filing, the Plan Proponents shall have promptly delivered
copies of the form of such New Unsecured Notes instrument, as
amended, modified or supplemented, to each Plan Negotiating
Committee, with a copy to each Creditors' Committee, and no Plan
Negotiating Committee shall have delivered written notice to the
Plan Proponents, with a copy to each Creditors' Committee, within
five days after delivery of such New Unsecured Notes instrument,
that any such amendment, modification or supplement adversely
changes the consideration to be received under the Plan by the
holders of Allowed Bank Loan Claims in the applicable Classes.

c. If the form of the New Series C Warrants
Agreement or the New Series D Warrants Agreement is amended,
modified or supplemented after its Filing, the Plan Proponents
shall have delivered a copy of the form of such New Warrants
Agreement, as amended, modified or supplemented, to the
Bondholders' Committee, with a copy to each Plan Negotiating
Committee and the Unsecured Creditors' Committee, and the
Bondholders' Committee shall not have provided written notice to
the Plan Proponents, with a copy to each Plan Negotiating
Committee and the Unsecured Creditors' Committee, within five
days after delivery of such New Warrants Agreement, that any such

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I-63

amendment, modification or supplement adversely changes the
consideration to be received under the Plan by the holders of
Allowed Debt Security Claims in the applicable Classes.

d. If a notice as described in Sections
VIII.B.1.b or c shall have been delivered to the Plan Proponents
by a Plan Negotiating Committee or the Bondholders' Committee as
specified herein, the Plan Proponents and the applicable Plan
Negotiating Committee or the Bondholders' Committee shall seek an
expedited hearing for the Bankruptcy Court to determine whether
the amendments, modifications or supplements at issue adversely
change the consideration to be received under the Plan by the
holders of Allowed Bank Loan Claims or Allowed Debt Security
Claims in the applicable Classes. If the Bankruptcy Court
determines in an order not subject to any stay that the
amendments, modifications or supplements at issue do not
adversely change the consideration to be received under the Plan
by the holders of Allowed Bank Loan Claims or Allowed Debt
Security Claims in the applicable Classes, the conditions to the
Effective Date in Sections VIII.B.1.b or c, as applicable, shall
be deemed to be satisfied. If the Bankruptcy Court determines in
an order not subject to any stay that the amendments,
modifications or supplements at issue adversely change the
consideration to be received under the Plan by holders of Allowed
Bank Loan Claims or Allowed Debt Security Claims in the
applicable Classes, such amendments, modifications or supplements
will be deemed withdrawn and of no force or effect, and the
applicable New Unsecured Notes instrument or New Warrants
Agreement will be on the terms and subject to the conditions
specified prior to such amendment, modification or supplement.

2. The New Global Indenture shall have been qualified
under the Trust Indenture Act of 1939, as amended, by the
Securities and Exchange Commission.

3. The New Combined Company Common Stock shall have
been authorized for listing on the New York Stock Exchange upon
official notice of issuance or accepted for quotation through the
National Association of Securities Dealers Automated Quotation
System -- National Market System.

C. Waiver of Conditions to Confirmation or Effective Date

1. Each of the conditions set forth in Section VIII.A
may be waived in whole or part by the Plan Proponents after 10 days'
written notice of such waiver to each Plan Negotiating Committee and
each Creditors' Committee and an expedited hearing; provided, however,
that a hearing will not be held unless a written request for an
expedited hearing is Filed and served on the Plan Proponents,
each Plan Negotiating Committee and each Creditors' Committee
within 10 days after delivery of the notice of waiver. To be
effective, such waiver must be in writing and Filed and served on
each Plan Negotiating Committee and each Creditors' Committee.

2. The conditions set forth in Section VIII.B may be
waived in whole or part by the Plan Proponents only with the
written consent of each Plan Negotiating Committee and each
Creditors' Committee.

3. Subject to the restrictions of Section VIII.C.1,
any waiver pursuant to this Section VIII.C may be made by the
applicable parties at any time.

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I-64

D. Effect of Nonoccurrence of Conditions to Effective Date

1. Each of the conditions to the Effective Date must
be satisfied or duly waived pursuant to Section VIII.C, and the
Effective Date must occur, by February 28, 1995, or by such later
date established pursuant to Section VIII.D.2. On the earlier of
January 31, 1995 and the first date on which the Plan Proponents
know that each of the conditions to the Effective Date will not
be satisfied or duly waived by January 31, 1995, the Plan
Proponents will provide written notice to each Plan Negotiating
Committee and each Creditors' Committee of those conditions to
the Effective Date that will not be satisfied or duly waived as
of January 31, 1995, and whether the Plan Proponents expect such
unsatisfied conditions to be satisfied or duly waived by
February 28, 1995. Upon receipt of such notice, a Plan
Negotiating Committee or a Creditors' Committee may File and
serve on each Plan Proponent and each other Plan Negotiating
Committee and Creditors' Committee a motion and seek an expedited
hearing on reasonable notice (the scheduling of which the Plan
Proponents will not oppose) for an order by the Bankruptcy Court
prohibiting any extension of the February 28 date by which each
condition to the Effective Date must be satisfied or duly waived.

2. If the Bankruptcy Court has not entered an order,
pursuant to Section VIII.D.1, that there may be no extensions of
the February 28 date by which each condition to the Effective
Date must be satisfied or duly waived, the Plan Proponents may
File and serve no later than February 15, 1995 on each Plan
Negotiating Committee and each Creditors' Committee a motion and
seek an expedited hearing for an order by the Bankruptcy Court
extending the February 28 date.

3. If the Effective Date has not occurred by the
applicable date established in accordance with this Section
VIII.D, then upon motion by any party in interest made before the
Effective Date has occurred and upon notice to such parties in
interest as the Bankruptcy Court may direct and a hearing, the
Confirmation Order will be vacated by the Bankruptcy Court;
provided, however, that, notwithstanding the Filing of such
motion to vacate, the Confirmation Order may not be vacated if
the Effective Date occurs before the Bankruptcy Court enters an
order granting such motion. If the Confirmation Order is vacated
pursuant to this Section VIII.D or otherwise, except as provided
in any order of the Bankruptcy Court vacating the Confirmation
Order, the Plan will be null and void in all respects, including
the discharge of Claims and termination of Interests pursuant to
the Plan and section 1141 of the Bankruptcy Code and the
assumptions, assignments or rejections of executory contracts or
unexpired leases pursuant to Section V.A, and nothing contained
in the Plan will: (1) constitute a waiver or release of any
claims by or against, or any Interests in, the Debtors or
(2) prejudice in any manner the rights of the Plan Proponents or
any other party in interest.

ARTICLE IX.

CONFIRMABILITY AND SEVERABILITY
OF A PLAN AND CRAMDOWN

A. Confirmability and Severability of a Plan

The Plan constitutes a separate plan of reorganization
for each Debtor. Accordingly, the confirmation requirements of
section 1129 of the Bankruptcy Code must be satisfied separately
with respect to each Debtor. The Plan Proponents reserve the
right: (1) to modify the Plan pursuant to Section XII.C and
(2) prior to the Confirmation Date, to revoke or withdraw the
Plan (a) as to all of the Debtors, after five days' notice to
each Plan Negotiating Committee and each Creditors' Committee,
and (b) as to any particular Macy's Miscellaneous Subsidiary
Debtor, without any notice, pursuant to Section XII.D.

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I-65

B. Cramdown

The Plan Proponents request Confirmation under section
1129(b) of the Bankruptcy Code with respect to any impaired Class
that does not accept the Plan pursuant to section 1126 of the
Bankruptcy Code. The Plan Proponents reserve the right to modify
the Plan, subject to the Federated/Macy's Merger Agreement, to
the extent, if any, that Confirmation pursuant to section 1129(b)
of the Bankruptcy Code requires modification, including as
provided in Section X.C.3.

ARTICLE X.

DISCHARGE, TERMINATION, INJUNCTION
AND SUBORDINATION RIGHTS

A. Discharge of Claims and Termination of Interests

1. Except as provided in the Confirmation Order, the
rights afforded under the Plan and the treatment of Claims and
Interests under the Plan will be in exchange for and in complete
satisfaction, discharge and release of all Claims and termination
of all Interests, including any interest accrued on Claims from
the applicable Petition Date. Except as provided in the Plan or
Confirmation Order, Confirmation will, as of the Effective Date:
(a) discharge the Debtors from all Claims or other debts that
arose before the Effective Date, and all debts of the kind
specified in sections 502(g), 502(h) or 502(i) of the Bankruptcy
Code, whether or not (i) a proof of Claim based on such debt is
Filed or deemed Filed pursuant to section 501 of the Bankruptcy
Code, (ii) a Claim based on such debt is allowed pursuant to
section 502 of the Bankruptcy Code or (iii) the holder of a Claim
based on such debt has accepted the Plan and (b) terminate all
Interests and other rights of equity security holders in the
Debtors.

2. As of the Effective Date, except as provided in
the Plan or Confirmation Order, all entities will be precluded
from asserting against the Debtors, the Reorganized Debtors,
their respective successors or their respective property, any
other or further Claims, demands, debts, rights, causes of
action, liabilities or equity interests based upon any act,
omission, transaction or other activity of any kind or nature
that occurred prior to the Effective Date. In accordance with
the foregoing, except as provided in the Plan or Confirmation
Order, the Confirmation Order will be a judicial determination,
as of the Effective Date, of discharge of all such Claims and
other debts and liabilities against the Debtors and termination
of all such Interests and other rights of equity security holders
in the Debtors, pursuant to sections 524 and 1141 of the
Bankruptcy Code, and such discharge will void any judgment
obtained against the Debtors at any time, to the extent that such
judgment relates to a discharged Claim.

B. Injunctions

1. Except as provided in the Plan or Confirmation
Order, as of the Effective Date, all entities that have held,
currently hold or may hold a Claim or other debt or liability
that is discharged or an Interest or other right of an equity
security holder that is terminated pursuant to the terms of the
Plan are permanently enjoined from taking any of the following
actions on account of any such discharged Claims, debts or
liabilities or terminated Interests or rights: (a) commencing or
continuing in any manner any action or other proceeding against
the Debtors, the Reorganized Debtors or their respective
property; (b) enforcing, attaching, collecting or recovering in
any manner any judgment, award, decree or order against the
Debtors, the Reorganized Debtors or their respective property;
(c) creating, perfecting or enforcing any lien or encumbrance
against the Debtors, the Reorganized Debtors or their respective
property; (d) asserting a setoff, right of subrogation or
recoupment of any kind against any debt, liability or obligation
due to the Debtors, the Reorganized Debtors or their respective
property; and (e) commencing or continuing any action, in any
manner, in any place that does not comply with or is inconsistent
with the provisions of the Plan.

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I-66

2. As of the Effective Date, all entities that have
held, currently hold or may hold a claim, demand, debt, right,
cause of action or liability that is released pursuant to Section
IV.G are permanently enjoined from taking any of the following
actions on account of such released claims, demands, debts,
rights, causes of action or liabilities: (a) commencing or
continuing in any manner any action or other proceeding;
(b) enforcing, attaching, collecting or recovering in any manner
any judgment, award, decree or order; (c) creating, perfecting or
enforcing any lien or encumbrance; (d) asserting a setoff, right
of subrogation or recoupment of any kind against any debt,
liability or obligation due to any released entity; and
(e) commencing or continuing any action, in any manner, in any
place that does not comply with or is inconsistent with the
provisions of the Plan.

3. By accepting distributions pursuant to the Plan,
each holder of an Allowed Claim receiving distributions pursuant
to the Plan will be deemed to have specifically consented to the
injunctions set forth in this Section X.B.

C. Termination of Subordination Rights and Settlement of
Related
Claims and Controversies

1. The classification and manner of satisfying all
Claims and Interests under the Plan take into consideration all
contractual, legal and equitable subordination and turnover
rights, whether arising under general principles of equitable
subordination, section 510(c) of the Bankruptcy Code or
otherwise, that a holder of a Claim or Interest may have against
other Claim holders with respect to any distribution made
pursuant to the Plan. Except as otherwise provided in Section
X.C.3, on the Effective Date, all contractual, legal or equitable
subordination rights that a holder of a Claim or Interest may
have with respect to any distribution to be made pursuant to the
Plan will be discharged and terminated, and all actions related
to the enforcement of such subordination rights will be
permanently enjoined. Accordingly, except as otherwise provided
in Section X.C.3, distributions pursuant to the Plan to holders
of Allowed Claims will not be subject to payment to a beneficiary
of such terminated subordination rights, or to levy, garnishment,
attachment or other legal process by a beneficiary of such
terminated subordination rights.

2. Except as otherwise provided in Section X.C.3,
pursuant to Bankruptcy Rule 9019 and in consideration for the
distributions and other benefits provided under the Plan, the
provisions of the Plan will constitute a good faith compromise
and settlement of all claims or controversies relating to the
amounts of Allowed Claims in Classes M-4 through M-12, MOS-4
through MOS-12, MRS-4 through MRS-9 and MMS-4 and the enforcement
or termination of all contractual, legal and equitable
subordination and turnover rights that a holder of a Claim or
Interest may have with respect to any Allowed Claim, or any
distribution to be made pursuant to the Plan on account of such
Claim. The entry of the Confirmation Order will constitute the
Bankruptcy Court's approval, as of the Effective Date, of the
compromise or settlement of all such claims or controversies and
the Bankruptcy Court's finding that such compromise or settlement
is in the best interests of the Debtors, the Reorganized Debtors
and their respective property and Claim holders, and is fair,
equitable and reasonable.

3. If a Class of Claims does not accept the Plan, all
contractual, legal and equitable subordination or turnover rights
to which any Claim or holder of a Claim in such nonaccepting
Class may be subject or entitled will survive and remain
unaffected by Confirmation or occurrence of the Effective Date,
and all contractual subordination and turnover rights to which
any Allowed Claim in such nonaccepting Class or any distribution
to be made pursuant to the Plan on account of any such Allowed
Claim, is subject, will survive and remain unaffected by and will
be enforced by entry of the Confirmation Order, including the
rights of holders of Senior Indebtedness Claims against the
holders of Allowed Debt Security Claims.

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ARTICLE XI.

RETENTION OF JURISDICTION

Notwithstanding the entry of the Confirmation Order and
the occurrence of the Effective Date, the Bankruptcy Court will
retain such jurisdiction over the Reorganization Cases after the
Effective Date as is legally permissible, including jurisdiction
to:

1. Allow, disallow, determine, liquidate, classify,
estimate or establish the priority or secured or unsecured status
of any Claim or Interest, including the resolution of any request
for payment of any Administrative Claim and the resolution of any
and all objections to the allowance or priority of Claims or
Interests;

2. Grant or deny any applications for allowance of
compensation or reimbursement of expenses authorized pursuant to
the Bankruptcy Code or the Plan, for periods ending on or before
the Effective Date;

3. Resolve any matters related to the assumption,
assumption and assignment or rejection of any executory contract
or unexpired lease to which any Debtor is a party or with respect
to which any Debtor or Reorganized Debtor may be liable and to
hear, determine and, if necessary, liquidate, any Claims arising
therefrom, including those matters related to the amendment of
Appendices V.A.1.a and V.A.2 after the Effective Date pursuant to
Section V.A to add or delete any executory contracts or unexpired
leases to the lists of executory contracts and unexpired leases
to be assumed, assumed and assigned or rejected;

4. Ensure that distributions to holders of Allowed
Claims are accomplished pursuant to the provisions of the Plan;

5. Decide or resolve any motions, adversary
proceedings, contested or litigated matters and any other matters
and grant or deny any applications involving the Debtors that may
be pending on the Effective Date;

6. Enter such orders as may be necessary or
appropriate to implement or consummate the provisions of the Plan
and all contracts, instruments, releases, indentures and other
agreements or documents created in connection with the Plan or
the Disclosure Statement or the Confirmation Order, except as
otherwise provided herein;

7. Resolve any cases, controversies, suits or
disputes that may arise in connection with the consummation,
interpretation or enforcement of the Plan or any entity's
obligations incurred in connection with the Plan, except that
such retention of jurisdiction will not apply to any cases,
controversies, suits or disputes that may arise in connection
with the Combined Company's or any other entity's rights or
obligations as the issuer or a holder, respectively, of New Debt
or New Equity, or as a party to any New Debt Instrument or any
other agreements governing, instruments evidencing or documents
relating to any of the foregoing, including the interpretation or
enforcement of any rights, remedies or obligations under any of
the foregoing;

8. Permit the Plan Proponents to modify the Plan
before or after the Effective Date pursuant to section 1127 of
the Bankruptcy Code, the Confirmation Order or any contract,
instrument, release or other agreement or document created in
connection with the Plan, the Disclosure Statement or the
Confirmation Order; or remedy any defect or omission or reconcile
any inconsistency in any Bankruptcy Court order, the Plan, the
Disclosure Statement or the Confirmation Order or any contract,
instrument, release, indenture or other agreement or document
created in connection with the Plan, the Disclosure Statement or
the Confirmation Order, in such manner as may be necessary or
appropriate to consummate the Plan, to the extent authorized by
the Bankruptcy Code;

<PAGE>
I-68

9. Issue injunctions, enter and implement other
orders or take such other actions as may be necessary or
appropriate to restrain interference by any entity with
consummation, implementation or enforcement of the Plan or the
Confirmation Order;

10. Enter and implement such orders as are necessary
or appropriate if the Confirmation Order is for any reason
modified, stayed, reversed, revoked or vacated or distributions
pursuant to the Plan are enjoined or stayed;

11. Determine any other matters that may arise in
connection with or relate to the Plan, the Disclosure Statement,
the Confirmation Order or any contract, instrument, release,
indenture or other agreement or document created in connection
with the Plan or the Disclosure Statement, including the
Federated/Macy's Merger Agreement (subject to the terms thereof);

12. Enforce the subordination and turnover provisions
of the Old Indentures as provided in Sections IX.B and X.C.3; and

13. Enter an order concluding the Reorganization
Cases.

ARTICLE XII.

MISCELLANEOUS PROVISIONS

A. Dissolution of the Creditors' Committees and Creation
of the Claims Resolution
Committee

1. Creditors' Committees

On the Effective Date, each of the Creditors'
Committees will dissolve and the members of each Creditors'
Committee will be released and discharged from all duties and
obligations arising from or related to the Reorganization Cases.
The Professionals retained by each of the Creditors' Committees
and the members thereof will not be entitled to compensation or
reimbursement of expenses for any services rendered after the
Effective Date, except for services rendered and expenses
incurred in connection with any applications for allowance of
compensation and reimbursement of expenses pending on the
Effective Date or Filed and served after the Effective Date
pursuant to Section III.A.1.e.ii.A, which will be the subject of
an estimate to be included in each such Professional's final fee
and expense application.

2. Claims Resolution Committee

a. Function and Composition of the Committee

On the Effective Date, the Claims Resolution Committee
will be established. Its sole functions will be: (i) to monitor
the Reorganized Debtors' progress in (A) reconciling and
resolving Disputed Claims in Reserve Classes and (B) making
distributions on account of such Claims once resolved and (ii) to
review and assert objections to the reasonableness of settlements
or compromises of Disputed Claims in Reserve Classes, pursuant to
Section VII.A.2.b. The Claims Resolution Committee will consist
of three holders of Claims who each have previously served as a
member of the Unsecured Creditors' Committee.
<PAGE>
I-69

b. Committee Procedures

The Claims Resolution Committee will adopt by-laws that
will control its functions. These by-laws, unless modified by
the Claims Resolution Committee, will provide the following:
(i) a majority of the Claims Resolution Committee will constitute
a quorum; (ii) one member of the Claims Resolution Committee will
be designated by the majority of its members as its chairperson;
(iii) meetings of the Claims Resolution Committee will be called
by its chairperson on such notice and in such manner as its
chairperson may deem advisable; and (iv) the Claims Resolution
Committee will function by decisions made by a majority of its
members in attendance at any meeting.

c. Employment of Professionals by the
Committee and
Reimbursement of Committee Members

The Claims Resolution Committee will be authorized to
retain and employ one law firm and one accounting firm. The role
of the Claims Resolution Committee's professionals will be
strictly limited to assisting the committee in its functions as
set forth herein. The Reorganized Debtors will pay the actual,
necessary, reasonable and documented fees and expenses of the
professionals retained by the Claims Resolution Committee, as
well as the actual, necessary, reasonable and documented expenses
incurred by each committee member in the performance of its
duties, in accordance with Federated's normal business practices
for compensating and reimbursing professionals. Other than as
specified in the preceding sentence, the members of the Claims
Resolution Committee will serve without compensation. If there
is any unresolved dispute between the Combined Company and the
Claims Resolution Committee, its professionals or a member
thereof as to any fees or expenses, such dispute will be
submitted to the Bankruptcy Court for resolution.

d. Dissolution of the Committee

Subject to further order of the Bankruptcy Court, the Claims
Resolution Committee will dissolve on the earlier of: (i) the
date that an officer of the Combined Company Files and serves on
counsel to the Claims Resolution Committee by overnight delivery
service or facsimile transmission a certification that the
aggregate Face Amount of the remaining Disputed Claims in Reserve
Classes is equal to or less than $20,000,000 and (ii) the third
anniversary of the Effective Date. The Claims Resolution
Committee may File and serve on the Reorganized Debtors (as
provided in Section XII.H) an objection to the certification
within 10 days of receipt thereof, with the issue of the
aggregate Face Amount of remaining Disputed Claims to be
determined by the Bankruptcy Court. The professionals retained
by the Claims Resolution Committee and the members of the
committee will not be entitled to compensation or reimbursement
of expenses for any services rendered after the date of
dissolution of the committee.

B. Limitation of Liability

The Plan Proponents, FNC, the Senior Lenders, the
Creditors' Committees, the Indenture Trustees, in their capacity
as Disbursing Agents, the Claims Resolution Committee and their
respective members, agents, advisors, attorneys and
representatives (including their respective current and former
directors, officers, employees, and professionals), acting in
such capacity, will neither have nor incur any liability to any
entity for any act taken or omitted to be taken in connection
with or related to the formulation, preparation, dissemination,
implementation, Confirmation or consummation of the Plan, the
Disclosure Statement or any contract, instrument, release or
other agreement or document created or entered into, or any other
act taken or omitted to be taken in connection with the Plan;
provided, however, that the foregoing provisions of this Section
XII.B will have no effect on: (1) the liability of any entity
that would otherwise result from the failure to perform or pay
any obligation or liability under the Plan or any contract,
instrument, release, indenture or other agreement or document to
be delivered or distributed in connection with the Plan or
<PAGE>
I-70

(2) the liability of any entity that would otherwise result from
any such act or omission to the extent that such act or omission
is determined in a Final Order to have constituted gross
negligence or willful misconduct.

C. Modification of the Plan

Subject to the restrictions on modifications set forth
in section 1127 of the Bankruptcy Code, the Plan Proponents
reserve the right to alter, amend or modify the Plan before its
substantial consummation.

D. Revocation of the Plan

The Plan Proponents reserve the right, prior to the
Confirmation Date, to revoke or withdraw the Plan: (1) as to all
of the Debtors, after five days' notice to each Plan Negotiating
Committee and each Creditors' Committee, and (2) as to any
particular Macy's Miscellaneous Subsidiary Debtor, without any
notice. If the Plan Proponents revoke or withdraw the Plan as
provided in the preceding sentence, or if Confirmation as to any
or all of the Debtors does not occur, then, with respect to such
Debtors, the Plan will be null and void in all respects, and
nothing contained in the Plan will: (1) constitute a waiver or
release of any claims by or against, or any Interests in, such
Debtors or (2) prejudice in any manner the rights of any such
Debtors or the Plan Proponents.

E. Severability of Plan Provisions

If, prior to Confirmation, any term or provision of the
Plan is held by the Bankruptcy Court to be invalid, void or
unenforceable, the Bankruptcy Court will have the power to alter
and interpret such term or provision to make it valid or
enforceable to the maximum extent practicable, consistent with
the original purpose of the term or provision held to be invalid,
void or unenforceable, and such term or provision will then be
applicable as altered or interpreted. Notwithstanding any such
holding, alteration or interpretation, the remainder of the terms
and provisions of the Plan will remain in full force and effect
and will in no way be affected, impaired or invalidated by such
holding, alteration or interpretation. The Confirmation Order
will constitute a judicial determination and will provide that
each term and provision of the Plan, as it may have been altered
or interpreted in accordance with the foregoing, is valid and
enforceable pursuant to its terms.

F. Successors and Assigns

The rights, benefits and obligations of any entity
named or referred to in the Plan will be binding on, and will
inure to the benefit of, any heir, executor, administrator,
successor or assign of such entity.

G. Service of Certain Plan Appendices and Disclosure Statement
Exhibits

Because certain of the Appendices referred to in the
Plan are extremely voluminous, these Appendices are not being
served with copies of the Plan and the Disclosure Statement. The
table of contents for the Plan indicates which Plan Appendices
are attached to the Plan as distributed and which are only
available for review in the Document Reviewing Centers. Any
party in interest may review the Plan Appendices during normal
business hours (9:00 a.m. to 4:30 p.m.) in the Document Reviewing
Centers.

<PAGE>
I-71
H. Service of Documents on the Plan Proponents or the
6 Reorganized Debtors

Any pleading, notice or other document required by the
Plan or Confirmation Order to be served on or delivered to the
Plan Proponents or the Reorganized Debtors, the Senior Lenders,
the Plan Negotiating Committees, or the Creditors' Committees
will be sent by overnight delivery service, facsimile
transmission or courier service or messenger to:

1. R.H. MACY & CO., INC.
151 West 34th Street
New York, New York 10001
Attn: General Counsel

with copies to:

Harvey R. Miller
Richard P. Krasnow
WEIL, GOTSHAL & MANGES
767 Fifth Avenue
New York, New York 10153-0101

(counsel to the Debtors)

2. Dennis J. Broderick
Senior Vice President, General Counsel
and Secretary
FEDERATED DEPARTMENT STORES, INC.
7 West Seventh Street
Cincinnati, Ohio 45202

with copies to:

David G. Heiman
Richard M. Cieri
JONES, DAY, REAVIS & POGUE
North Point
901 Lakeside Avenue
Cleveland, Ohio 44114

(counsel to Federated)

3. Chaim J. Fortgang
WACHTELL, LIPTON, ROSEN & KATZ
51 West 52nd Street
New York, New York 10019

(counsel to Prudential)

<PAGE>
I-72

4. Joel B. Zweibel
Benjamin D. Feder
O'MELVENY & MYERS
153 East 53rd Street
52nd Floor
New York, New York 10022

(counsel to the WCB Group; designee to receive
notices or other documents on behalf of WCB
Group Plan Negotiating Committee)

5. Michael J. Crames
Arthur J. Steinberg
KAYE, SCHOLER, FIERMAN, HAYS & HANDLER
425 Park Avenue
New York, New York 10022

(counsel to the 49 Store Bank Group; designee
to receive notices or other documents on
behalf of 49 Store Bank Group Plan Negotiating
Committee)

6. R. Paul Wickes
Douglas P. Bartner
SHEARMAN & STERLING
599 Lexington Avenue
New York, New York 10022

(counsel to the CREI Bank Group; designee to
receive notices or other documents on behalf
of CREI Bank Group Plan Negotiating Committee)

7. Daniel H. Golden
Lisa G. Beckerman
STROOCK & STROOCK & LAVAN
Seven Hanover Square
New York, New York 10004

(counsel to Fidelity)

8. Donald S. Bernstein
Karen E. Wagner
DAVIS POLK & WARDWELL
450 Lexington Avenue
New York, New York 10017

(counsel to Swiss Bank)

9. Scott L. Hazan
Enid N. Stuart
OTTERBOURG, STEINDLER, HOUSTON & ROSEN, P.C.
230 Park Avenue
New York, New York 10169

(counsel to the Unsecured Creditors' Committee)

<PAGE>
I-73
10. Robert M. Miller
Bari J. Mattes
BERLACK, ISRAELS & LIBERMAN
120 West 45th Street
New York, New York 10036

(counsel to the Bondholders' Committee)

<PAGE>
Dated: New York, New York Respectfully
submitted,
October 21, 1994

FEDERATED DEPARTMENT STORES, R.H. MACY & CO., INC.
INC. (for itself and on behalf
of each of the Macy's
Subsidiary Debtors)

By: /s/ Ronald W. Tysoe By: /s/ Myron E. Ullman, III
------------------------ ------------------------
Name: Ronald W. Tysoe Name: Myron E. Ullman, III
Title: Vice Chairman and Title: Chairman of the
Chief Financial Board of Directors and
Officer Chief Executive
Officer

COUNSEL: COUNSEL:

DAVID G. HEIMAN (DH 9111) HARVEY R. MILLER (HM 6078)
RICHARD M. CIERI (RC 6062)
SCOTT J. DAVIDO (SD 7424) RICHARD P. KRASNOW (RK 5707)
PAUL E. HARNER (PH 8276)
JONES, DAY, REAVIS & POGUE JUDY G.Z. LIU (JL 6449)
North Point WEIL, GOTSHAL & MANGES
901 Lakeside Avenue 767 Fifth Avenue
Cleveland, Ohio 44114 New York, New York 10153
(216) 586-3939 (212) 310-8000

ROBERT A. PROFUSEK (RP 4594) ATTORNEYS FOR DEBTORS AND
MARK E. BETZEN (MB 0176) DEBTORS IN POSSESSION
JONES, DAY, REAVIS & POGUE
599 Lexington Avenue
New York, New York 10022
(212) 326-3939

ATTORNEYS FOR FEDERATED
DEPARTMENT STORES, INC.

Exhibit T3F
Federated Department Stores, Inc.
Senior Securities
Cross Reference Sheet

This Cross Reference Sheet shows the location in the
Indenture of the provisions inserted pursuant to Sections 310 - 318(a),
inclusive, of the Trust Indenture Act of 1939, as amended.

Trust Indenture Act Sections
------------------- --------
of Indenture
------------
Sec. 310(a)(1) . . . . . . . . . . . . . . . . 9.08
(a)(2) . . . . . . . . . . . . . . . . . 9.08
(a)(3) . . . . . . . . . . . . . . . . . Inapplicable
(a)(4) . . . . . . . . . . . . . . . . . Inapplicable
(a)(5) . . . . . . . . . . . . . . . . . 9.08
(b) . . . . . . . . . . . . . . . . . . . 9.07 and 9.09
(c) . . . . . . . . . . . . . . . . . . . Inapplicable

Sec. 311(a) . . . . . . . . . . . . . . . . . 9.12
(b) . . . . . . . . . . . . . . . . . . . 9.12
(c) . . . . . . . . . . . . . . . . . . . Inapplicable

Sec. 312(a) . . . . . . . . . . . . . . . . . 7.01 and 7.02
(b) . . . . . . . . . . . . . . . . . . . 7.02
(c) . . . . . . . . . . . . . . . . . . . 7.02

Sec. 313(a) . . . . . . . . . . . . . . . . . 7.03
(b) . . . . . . . . . . . . . . . . . . . 7.03
(c) . . . . . . . . . . . . . . . . . . . 7.03
(d) . . . . . . . . . . . . . . . . . . . 7.03

Sec. 314(a) . . . . . . . . . . . . . . . . . 7.04
(a)(4) . . . . . . . . . . . . . . . . . 1.01 and 6.07
(b) . . . . . . . . . . . . . . . . . . . Inapplicable
(c)(1) . . . . . . . . . . . . . . . . . 13.05
(c)(2) . . . . . . . . . . . . . . . . . 13.05
(c)(3) . . . . . . . . . . . . . . . . . Inapplicable
(d) . . . . . . . . . . . . . . . . . . . Inapplicable
(e) . . . . . . . . . . . . . . . . . . . 13.05
(f) . . . . . . . . . . . . . . . . . . . Inapplicable

Sec. 315(a) . . . . . . . . . . . . . . . . . 9.01
(b) . . . . . . . . . . . . . . . . . . . 8.08
(c) . . . . . . . . . . . . . . . . . . . 9.01
(d) . . . . . . . . . . . . . . . . . . . 9.01
(e) . . . . . . . . . . . . . . . . . . . 8.07

Sec. 316(a) . . . . . . . . . . . . . . . . . 1.01
(a)(1)(A) . . . . . . . . . . . . . . . . 8.01 and 8.06
(a)(1)(B) . . . . . . . . . . . . . . . . 8.01
(a)(2) . . . . . . . . . . . . . . . . . Inapplicable
(b) . . . . . . . . . . . . . . . . . . . 8.09
(c) . . . . . . . . . . . . . . . . . . . 13.11

Sec. 317(a)(1) . . . . . . . . . . . . . . . . 8.02
(a)(2) . . . . . . . . . . . . . . . . . 8.02
(b) . . . . . . . . . . . . . . . . . . . 6.03

Sec. 318(a) . . . . . . . . . . . . . . . . . 13.08

SECURITIES ACT OF 1933 FILE NO: (IF APPLICATION TO DETERMINE ELIGIBILITY
OF TRUSTEE FOR DELAYED OFFERING PURSUANT TO SECTION 305(b)(2)
================================================================================

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

_______________________

FORM T-1

STATEMENT OF ELIGIBILITY AND QUALIFICATION
UNDER THE TRUST INDENTURE ACT OF 1939 OF A
CORPORATION DESIGNATED TO ACT AS TRUSTEE

CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY
OF A TRUSTEE PURSUANT TO SECTION 305(b) (2)_______

______________________

THE FIRST NATIONAL BANK OF BOSTON
(Exact name of Trustee as specified in its charter)

04-2472499
(I.R.S. Employer Identification No.)

100 Federal Street, Boston, Massachusetts 02110
(Address of principal executive offices) (Zip Code)

Gary A. Spiess, Cashier and General Counsel
100 Federal Street, 24th Floor, Boston, Massachusetts 02110 (617) 434-2870
_______________________

Federated Department Stores, Inc.
(Exact name of obligor as specified in its charter)

Delaware 31-0513863
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)

1440 Broadway 100183
New York, New York (Zip Code)
(Address of principal executive offices)

Series A Senior Notes Due 1999
Series B Senior Notes Due 2002
Series C Senior Notes Due 2005
(Title of Indenture Securities)

<PAGE>

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 of the United States, Washington D.C.
Board of Governors of the Federal Reserve System, Washington, D.C.
Federal Deposit Insurance Corporation, Washington, D.C.

(b) Whether it is authorized to exercise corporate trust powers.

Trustee is authorized to exercise corporate trust powers.

2. Affiliations with Obligor and Underwriters.

If the obligor or any underwriter for the obligor is an affiliate of the
trustee, describe each such affiliation.

None with respect to the Trustee.
(See Notes on page 2)
None with respect to Bank of Boston Corporation.

16. List of Exhibits.

List below all exhibits filed as part of this statement of eligibility
and qualification.

1. A copy of the articles of association of the trustee as now in
effect.

A certified copy of the Articles of Association of the trustee is filed
as Exhibit No. 1 to statement of eligibility and qualification No. 22-9514 and
is incorporated herein by reference thereto.

2. A copy of the certificate of authority of the trustee to commence
business, if not contained in the articles of association.

A copy of the certificate of T. McLean Griffin, Cashier of the trustee,
dated February 3, 1978, as to corporate succession containing copies of the
Certificate of the Comptroller of the Currency that The Massachusetts Bank,
National Association, into which The First National Bank of Boston was merged
effective January 4, 1971, is authorized to commence the business of banking as
a national banking association, as well as a certificate as to such merger is
filed as Exhibit No. 2 to statement of eligibility and qualification No.
22-9514 and is incorporated herein by reference thereto.

3. A copy of the authorization of the trustee to exercise corporate
trust powers, if such authorization is not contained in the documents specified
in paragraph (1) or (2) above.

A copy of a certificate of the Office of the Currency dated February 6,
1978 is filed as Exhibit No. 3 to statement of eligibility and qualification
No. 22-9514 and is incorporated herein by reference thereto.

4. A copy of the existing by-laws of the trustee, or instruments
corresponding thereto.

A certified copy of the existing By-Laws of the trustee dated December
23,1993 is filed as Exhibit No. 4 to statement of eligibility and
qualifications No. 22-25754 and is incorporated herein by reference thereto.

5. The consent of the trustee required by Section 321(b) of the Act.

The consent of the trustee required by Section 321(b) of the Act is
annexed hereto as Exhibit 5 and made a part hereof.

6. A copy of the latest report of condition of the trustee published
pursuant to law or the requirements of its supervising or examining authority.

A copy of the latest report of condition of the trustee published
pursuant to law or the requirements of its supervising or examining authority
is annexed hereto as Exhibit 6 and made a part hereof.

<PAGE>

NOTES

In answering any item in this Statement of Eligibility and Qualification
which relates to matters peculiarly within the knowledge of the obligor or any
underwriter for the obligor, the trustee has relied upon information furnished
to it by the obligor and the underwriters, and the trustee disclaims
responsibility for the accuracy or completeness of such information.

The answer furnished to Item 2 of this statement will be amended, if
necessary, to reflect any facts which differ from those stated and which would
have been required to be stated if known at the date hereof.

SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939, the trustee,
The First National Bank of Boston, a national banking association organized and
existing under the laws of The United States of America, has duly caused this
statement of eligibility and qualification to be signed on its behalf by the
undersigned, thereunto duly authorized, all in the City of Boston and
Commonwealth of Massachusetts, on the 23rd Day of November, 1994.

THE FIRST NATIONAL BANK OF BOSTON, Trustee

By ROLAND S. GUSTAFSEN
-------------------
Roland S. Gustafsen
Senior Account Manager

EXHIBIT 5

CONSENT OF TRUSTEE

Pursuant to the requirements of Section 321(b) of the Trust Indenture Act
of 1939, in connection with the proposed issue of Federated Department Stores,
Inc. Series A Senior Notes Due 1999, Series B Senior Notes Due 2002, Series C
Senior Notes Due 2005, we hereby consent that reports of examinations by
Federal, State, Territorial, or District authorities may be furnished by such
authorities to the Securities and Exchange Commission upon request therefor.

THE FIRST NATIONAL BANK OF BOSTON, Trustee

By ROLAND S. GUSTAFSEN
-------------------
Roland S. Gustafsen
Senior Account Manager

<PAGE>

EXHIBIT 6
CONSOLIDATED REPORT OF CONDITION, INCLUDING DOMESTIC AND FOREIGN
SUBSIDIARIES, OF

THE FIRST NATIONAL BANK OF BOSTON

In the Commonwealth of Massachusetts, at the close of business on June 30,
1994. Published in response to call made by Comptroller of the Currency, under
Title 12, United States Code, Section 161. Charter number 200. Comptroller of
the Currency Northeastern District.

<TABLE><CAPTION>
ASSETS Dollar
Amounts in
Thousands
---------
<S> <C> <C>
Cash and balances due from depository institutions:
Noninterest-bearing balances and currency and coin . . . . . . . . . . . . . . $ 2,597,212
Interest-bearing balances . . . . . . . . . . . . . . . . . . . . . . . 1,006,033
Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,805,830
Federal funds sold and securities purchased under agreements to resell in domestic
offices of the bank and of its Edge and Agreement subsidiaries, and in IBF's:
Federal funds sold . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51,077
Securities purchased under agreements to resell . . . . . . . . . . . . . . . . . . 24,125
Loans and lease financing receivables:
Loans and leases, net of unearned income . . . . . . $25,226,498
LESS: Allowance for loan and lease losses . . . . . . . . 510,109
LESS: Allocated transfer risk reserve . . . . . . . . . . . . . 0
Loans and leases, net of unearned income, allowance and reserve . . . . . . . . 25,226,498
Assets held in trading accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,055,276
Premises and fixed assets (including capitalized leases) . . . . . . . . . . . . . . . 358,768
Other real estate owned . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43,942
Investments in unconsolidated subsidiaries and associated companies . . . . . . . . . . 121,355
Customers' liability to this bank on acceptances outstanding . . . . . . . . . . . . . 377,660
Intangible assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 494,273
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 893,037
-------
Total Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $35,055,086
===========

LIABILITIES
Deposits:
In domestic offices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $14,858,614
Noninterest-bearing . . . . . . . . . . . . . . . . . . 3,939,164
Interest-bearing . . . . . . . . . . . . . . . . . . . . 10,919,450
In foreign offices, Edge and Agreement subsidiaries, and IBF's . . . . . . . . . . . 8,075,335
Noninterest-bearing . . . . . . . . . . . . . . . . . . . 471,458
Interest-bearing . . . . . . . . . . . . . . . . . . . . 7,603,877
Federal funds purchased and securities sold under agreements to repurchase in domestic
offices of the bank and of its Edge and Agreement subsidiaries, and in IBF's:
Federal funds purchased . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,202,229
Securities sold under agreements to repurchase . . . . . . . . . . . . . . . . . . 106,173
Demand notes issued to the U.S. Treasury . . . . . . . . . . . . . . . . . . . . . . . . 49,384
Other borrowed money . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,856,596
Mortgage indebtedness and obligations under capitalized leases . . . . . . . . . . . . . 14,096
Bank's liability on acceptances executed and outstanding . . . . . . . . . . . . . . . 377,824
Subordinated notes and debentures . . . . . . . . . . . . . . . . . . . . . . . . . . . 780,900
Other liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 913,130.
--------
Total Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $32,720,661
===========
Limited-life preferred stock and equity capital . . . . . . . . . . . . . . . . . . . . . . . 0

EQUITY CAPITAL

Perpetual preferred stock and related surplus . . . . . . . . . . . . . . . . . . . . . $ 0
Common stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82,264
Surplus . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 987,398
Undivided profits and capital reserves . . . . . . . . . . . . . . . . . . . . . . . 1,285,223
LESS: Net unrealized loss on marketable equity securities . . . . . . . . . . . . . . . (13,374)
Cumulative foreign currency translation adjustments . . . . . . . . . . . . . . . . . . (7,086)
Total equity capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,334,425
---------
Total Liabilities, Limited-life preferred stock, and equity . . . . . . . . . $35,055,086
===========
</TABLE>

<PAGE>

I, Robert T. Jefferson, Comptroller of the above-named bank, do hereby
declare that this Report of Condition is true and correct to the best of my
knowledge and belief.

Robert T. Jefferson

August 10, 1994

We, the undersigned directors, attest to the correctness of this statement
of resources and liabilities. We declare that it has been examined by us, and
to the best of our knowledge and belief has been prepared in conformance with
the instructions and is true and correct.

Charles G. Gifford
Ira Stepanian
Wayne A. Budd
Directors

August 10, 1994