GUARANTEE AND COLLATERAL AGREEMENT dated as of April 8, 2009, among J. C. PENNEY COMPANY, INC., J. C. PENNEY CORPORATION, INC., J. C. PENNEY PURCHASING CORPORATION, the Subsidiaries of J. C. Penney Company, Inc. identified herein, and JPMORGAN CHASE...
Exhibit
10.2
EXECUTION
COPY
dated
as of
April
8, 2009,
among
X.
X. XXXXXX COMPANY, INC.,
X.
X. PENNEY CORPORATION, INC.,
X.
X. XXXXXX PURCHASING CORPORATION,
the
Subsidiaries of X. X. Penney Company, Inc.
identified
herein,
and
JPMORGAN
CHASE BANK, N.A.,
as
Administrative Agent
Table of
Contents
| Page | ||
|
ARTICLE I
Definitions
|
||
| SECTION 1.01. | Credit Agreement | 1 |
| SECTION 1.02. | Other Defined Terms | 1 |
|
ARTICLE II
Guarantee
|
||
| SECTION 2.01. | Guarantee | 3 |
| SECTION 2.02. | Guarantee of Payment; Continuing Guarantee | 3 |
| SECTION 2.03. | No Limitations, Etc. | 3 |
| SECTION 2.04. | Reinstatement | 4 |
| SECTION 2.05. | Agreement To Pay; Subrogation | 4 |
| SECTION 2.06. | Information | 5 |
|
ARTICLE
III
Security
Interest
|
||
| SECTION 3.01. | Security Interest | 5 |
| SECTION 3.02. | Representations and Warranties | 6 |
| SECTION 3.03. | Covenants | 7 |
|
ARTICLE
IV
Remedies
|
||
| SECTION 4.01. | Remedies upon Default | 9 |
| SECTION 4.02. | Application of Proceeds | 10 |
|
ARTICLE
V
Indemnity,
Subrogation and Subordination
|
||
| SECTION 5.01. | Indemnity and Subrogation | 11 |
| SECTION 5.02. | Contribution and Subrogation | 11 |
| SECTION 5.03. | Subordination | 12 |
|
ARTICLE
VI
Miscellaneous
|
||
| SECTION 6.01. | Notices | 12 |
| SECTION 6.02. | Rights Absolute | 12 |
| SECTION 6.03. | Survival of Agreement | 12 |
| SECTION 6.04. | Binding Effect; Several Agreement | 13 |
| SECTION 6.05. | Successors and Assigns | 13 |
| SECTION 6.06. | Administrative Agent’s Fees and Expenses; Indemnification | 13 |
| SECTION 6.07. | Administrative Agent Appointed Attorney-in-Fact | 14 |
| SECTION 6.08. | Applicable Law | 15 |
| SECTION 6.09. | Waivers; Amendment | 15 |
| SECTION 6.10. | WAIVER OF JURY TRIAL | 15 |
| SECTION 6.11. | Severability | 16 |
| SECTION 6.12. | Counterparts | 16 |
| SECTION 6.13. | Headings | 16 |
| SECTION 6.14. | Jurisdiction; Consent to Service of Process | 16 |
| SECTION 6.15. | Termination or Release | 17 |
| SECTION 6.16. | Additional Guarantors | 17 |
| SECTION 6.17. | Additional Grantors | 18 |
| SECTION 6.18. | Right of Setoff | 18 |
| SCHEDULE I | Subsidiary Grantors | |
| SCHEDULE II | Subsidiary Guarantors | |
| SCHEDULE III | Insurance Requirements | |
| EXHIBIT A | Form of Guarantee Supplement | |
| EXHIBIT B | Form of Grantor Supplement | |
| EXHIBIT C | Form of Perfection Certificate |
ii
GUARANTEE
AND COLLATERAL AGREEMENT dated as of April 8, 2009, among X. X. XXXXXX COMPANY,
INC. (“Holdings”), X. X.
PENNEY CORPORATION, INC. (the “Parent Borrower”), X.
X. XXXXXX PURCHASING CORPORATION (“Purchasing”), the
Subsidiaries of X. X. Penney Company, Inc. identified herein and JPMORGAN CHASE
BANK, N.A., as Administrative Agent.
ARTICLE
I
Definitions
SECTION
1.01. Credit
Agreement. (a) Capitalized terms used in this
Agreement and not otherwise defined herein have the meanings specified in the
Credit Agreement (as defined herein). All terms defined in the New
York UCC (as defined herein) and not defined in this Agreement have the meanings
specified therein; the term “instrument” shall have the meaning specified in
Article 9 of the New York UCC.
(b) The
rules of construction specified in Section 1.03 of the Credit Agreement also
apply to this Agreement.
SECTION
1.02. Other Defined
Terms. As used in this Agreement, the following terms have the
meanings specified below:
“Collateral” has the
meaning assigned to such term in Section 3.01.
“Credit Agreement”
means the Credit Agreement dated as of April 8, 2009, among Holdings, the Parent
Borrower, Purchasing, the Lenders party thereto, JPMorgan Chase Bank, N.A., as
Administrative Agent and Wachovia Bank, National Association, as LC
Agent.
“Grantors” means
Holdings, the Parent Borrower, Purchasing and the Subsidiary
Grantors.
“Guarantors” means
Holdings, the Parent Borrower, Purchasing and the Subsidiary
Guarantors.
“Inventory” means all
inventory of any Grantor other than consignment inventory.
“Loan Document
Obligations” means (a) the due and punctual payment by each Borrower and
each Account Party of (i) the principal of and interest (including interest
accruing during the pendency of any bankruptcy, insolvency, receivership or
other similar proceeding, regardless of whether allowed or allowable in such
proceeding) on the Loans, when and as due, whether at maturity, by acceleration,
upon one or more dates set for prepayment or otherwise, (ii) each payment
required to be made by any Borrower or any Account Party under the Credit
Agreement in respect of any Letter of
Credit,
when and as due, including payments in respect of reimbursement of
disbursements, interest thereon and obligations to provide cash collateral, and
(iii) all other monetary obligations of any Borrower or any Account Party to any
of the Secured Parties under the Credit Agreement and each of the other Loan
Documents, including obligations to pay fees, expense and reimbursement
obligations and indemnification obligations, whether primary, secondary, direct,
contingent, fixed or otherwise (including monetary obligations incurred during
the pendency of any bankruptcy, insolvency, receivership or other similar
proceeding, regardless of whether allowed or allowable in such proceeding), (b)
the due and punctual performance of all other obligations of each Borrower and
each Account Party under or pursuant to the Credit Agreement and each of the
other Loan Documents and (c) the due and punctual payment and performance of all
the obligations of each other Loan Party under or pursuant to this Agreement and
each of the other Loan Documents.
“New York UCC” means
the Uniform Commercial Code as from time to time in effect in the State of New
York.
“Obligations” means
(a) Loan Document Obligations, (b) the due and punctual payment and
performance of all obligations of each Loan Party under each Swap Agreement that
(i) is in effect on the Effective Date with a counterparty that is a Lender or
an Affiliate of a Lender as of the Effective Date or (ii) is entered into after
the Effective Date with any counterparty that is a Lender or an Affiliate of a
Lender at the time such Swap Agreement is entered into and (c) the due and
punctual payment of all monetary obligations and other liabilities of any Loan
Party in respect of overdrafts and related liabilities and obligations arising
from or in connection with Treasury Services, to the extent, in the case of
clauses (b) and (c) above, the documentation for such obligations specifically
provides that such Lender or Affiliate of a Lender is entitled to the benefit of
the Security Interest hereunder.
“Parties” means the
Grantors and the Guarantors.
“Perfection
Certificate” means a certificate substantially in the form of Exhibit C,
completed and supplemented with the schedules and attachments contemplated
thereby, and duly executed by a Financial Officer of the Parent
Borrower.
“Proceeds” has the
meaning specified in Section 9-102 of the New York UCC.
“Secured Parties”
means (a) the Lenders, (b) the Administrative Agent, (c) the LC Agent,
(d) the Issuing Banks, (e) each counterparty to any Swap Agreement
with a Loan Party the obligations under which constitute Obligations,
(f) the beneficiaries of each indemnification obligation undertaken by any
Loan Party under any Loan Document, (g) any Lender to which obligations in
respect of Treasury Services are owed and (h) the successors and assigns of
each of the foregoing.
“Security Interest”
has the meaning assigned to such term in Section 3.01.
2
“Subsidiary Grantors”
means (a) the Subsidiaries identified on Schedule I and (b) each Additional
Grantor that becomes a party to this Agreement as contemplated by Section
6.17.
“Subsidiary
Guarantors” means (a) the Subsidiaries identified on Schedule II and
(b) each other Subsidiary that becomes a party to this Agreement as contemplated
by Section 6.16.
“Subsidiary Parties”
means the Subsidiary Grantors and the Subsidiary Guarantors.
“Treasury Services”
means treasury, depositary or cash management services (including purchasing
cards and stored value cards) from, or any automated clearinghouse transfer of
funds to, any entity that is a Lender.
ARTICLE
II
Guarantee
SECTION
2.01. Guarantee. Each
Guarantor unconditionally guarantees, jointly with the other Guarantors and
severally, as a primary obligor and not merely as a surety, the due and punctual
payment and performance of the Obligations. Each Guarantor further
agrees that the Obligations may be extended or renewed, in whole or in part,
without notice to or further assent from it, and that it will remain bound upon
its guarantee notwithstanding any extension or renewal of any
Obligation. Each of the Guarantors waives presentment to, demand of
payment from and protest to any Loan Party of any of the Obligations, and also
waives notice of acceptance of its guarantee and notice of protest for
nonpayment.
SECTION
2.02. Guarantee of
Payment. Each of the Guarantors further agrees that its
guarantee hereunder constitutes a guarantee of payment when due and not of
collection, and waives any right to require that any resort be had by the
Administrative Agent or any other Secured Party to any security held for the
payment of the Obligations or to any balance of any deposit account or credit on
the books of the Administrative Agent or any other Secured Party in favor of any
Borrower, any Account Party or any other Person.
SECTION
2.03. No Limitations,
Etc. (a) Except for termination of a Guarantor’s
obligations hereunder as expressly provided in Section 6.15, the obligations of
each Guarantor hereunder shall not be subject to any reduction, limitation,
impairment or termination for any reason, including any claim of waiver,
release, surrender, alteration or compromise, and shall not be subject to any
defense or setoff, counterclaim, recoupment or termination whatsoever by reason
of the invalidity, illegality or unenforceability of the Obligations or
otherwise, other than the defense of payment of such obligations in accordance
with the terms thereof. Without limiting the generality of the
foregoing, the obligations of each Guarantor hereunder shall not be discharged
or impaired or otherwise affected by (i) the failure of the Administrative
Agent or any other
3
(b) To
the fullest extent permitted by applicable law, each Guarantor waives any
defense based on or arising out of any defense of any Loan Party or the
unenforceability of the Obligations or any part thereof from any cause, or the
cessation from any cause of the liability of any Loan Party, other than the
payment in full in cash of all the Obligations. The Administrative
Agent and the other Secured Parties may, at their election, foreclose on any
security held by one or more of them by one or more judicial or nonjudicial
sales, accept an assignment of any such security in lieu of foreclosure,
compromise or adjust any part of the Obligations, make any other accommodation
with any Loan Party or exercise any other right or remedy available to them
against any Loan Party, without affecting or impairing in any way the liability
of any Guarantor (in its capacity as such) hereunder except to the extent the
Obligations have been paid in full in cash. To the fullest extent
permitted by applicable law, each Guarantor (in its capacity as such) waives any
defense arising out of any such election even though such election operates,
pursuant to applicable law, to impair or to extinguish any right of
reimbursement or subrogation or other right or remedy of such Guarantor against
any Loan Party, as the case may be, or any security.
SECTION
2.04. Reinstatement. Each
of the Guarantors agrees that its guarantee hereunder shall continue to be
effective or be reinstated, as the case may be, if at any time payment, or any
part thereof, of any Obligation is rescinded or must otherwise be restored to
any Loan Party by the Administrative Agent or any other Secured Party upon the
bankruptcy or reorganization of any Loan Party or otherwise.
SECTION
2.05. Agreement To Pay;
Subrogation. In furtherance of the foregoing and not in
limitation of any other right that the Administrative Agent or any other Secured
Party has at law or in equity against any Guarantor by virtue hereof, upon the
failure of any Loan Party to pay any Obligation when and as the same shall
become due, whether at maturity, by acceleration, after notice of prepayment or
otherwise, each Guarantor hereby promises to and will forthwith pay, or cause to
be paid, to the Administrative Agent for distribution to the applicable Secured
Parties in cash the
4
SECTION
2.06. Information. Each
Guarantor assumes all responsibility for being and keeping itself informed of
each Loan Party’s financial condition and assets, and of all other circumstances
bearing upon the risk of nonpayment of the Obligations and the nature, scope and
extent of the risks that such Guarantor assumes and incurs hereunder, and agrees
that none of the Administrative Agent or the other Secured Parties will have any
duty to advise such Guarantor of information known to it or any of them
regarding such circumstances or risks.
ARTICLE
III
Security
Interest
SECTION
3.01. Security
Interest. (a) As security for the payment or
performance, as the case may be, in full of the Obligations, each Grantor hereby
assigns and pledges to the Administrative Agent, its successors and assigns, for
the ratable benefit of the Secured Parties, and hereby grants to the
Administrative Agent, its successors and assigns, for the ratable benefit of the
Secured Parties, a security interest (the “Security Interest”)
in, all its right, title or interest in or to (i) any and all of the Inventory
now owned or at any time hereafter acquired by such Grantor or in which such
Grantor now has or at any time in the future may acquire any right, title or
interest and (ii) all Proceeds and products of any and all of the foregoing and
all collateral security and guarantees given by any Person with respect to the
foregoing (collectively, the “Collateral”).
(b) Each
Grantor hereby irrevocably authorizes the Administrative Agent at any time and
from time to time to file in any relevant jurisdiction any initial financing
statements with respect to the Collateral or any part thereof and amendments
thereto that contain the information required by Article 9 of the Uniform
Commercial Code of each applicable jurisdiction for the filing of any financing
statement or amendment, including whether such Grantor is an organization, the
type of organization and any organizational identification number issued to such
Grantor. Each Grantor agrees to provide such information to the
Administrative Agent promptly upon request.
(c) Each
Grantor also ratifies its authorization for the Administrative Agent to file in
any relevant jurisdiction any initial financing statements or amendments thereto
if filed prior to the date hereof.
(d) The
Security Interest is granted as security only and shall not subject the
Administrative Agent or any other Secured Party to, or in any way alter or
modify, any obligation or liability of any Grantor with respect to or arising
out of the Collateral.
5
SECTION
3.02. Representations and
Warranties. The Grantors jointly and severally represent and
warrant to the Administrative Agent and the other Secured Parties
that:
(a) Each
Grantor has good and valid rights in and title to the Collateral with respect to
which it has purported to grant a Security Interest hereunder and has full power
and authority to grant to the Administrative Agent the Security Interest in such
Collateral pursuant hereto and to execute, deliver and perform its obligations
in accordance with the terms of this Agreement, without the consent or approval
of any other Person other than any consent or approval that has been
obtained.
(b) The
Perfection Certificate has been duly prepared, completed and executed and the
information set forth therein, including the exact legal name of each Grantor,
is correct and complete as of the Effective Date. The Uniform
Commercial Code financing statements or other appropriate filings, recordings or
registrations containing a description of the Collateral that have been prepared
by the Administrative Agent based upon the information provided to the
Administrative Agent in the Perfection Certificate for filing in each
governmental, municipal or other office specified in Schedule 6 to the
Perfection Certificate, as modified, delivered, prepared or supplemented from
time to time pursuant to the Credit Agreement (or specified by notice from the
Parent Borrower to the Administrative Agent after the Effective Date in the case
of filings, recordings or registrations required by
Section 5.03(a)
or 5.12 of the Credit Agreement), are all the filings, recordings and
registrations that are necessary to establish a legal, valid and perfected
security interest in favor of the Administrative Agent (for the ratable benefit
of the Secured Parties) in respect of all Collateral in which the Security
Interest may be perfected by filing, recording or registration in the United
States (or any political subdivision thereof), and no further or subsequent
filing, refiling, recording, rerecording, registration or reregistration is
necessary in any such jurisdiction, except as provided under applicable law with
respect to the filing of continuation statements.
(c) The
Security Interest constitutes (i) a legal and valid security interest in
all the Collateral securing the payment and performance of the Obligations and
(ii) subject to the filings described in Section 3.02(b), a perfected
security interest in all Collateral in which a security interest may be
perfected by filing, recording or registering a financing statement or analogous
document in the United States (or any political subdivision thereof) pursuant to
the Uniform Commercial Code or other applicable law in such
jurisdictions. The Security Interest is and shall be prior to any
other Lien on any of the Collateral, other than Permitted Encumbrances that have
priority as a matter of law and Liens expressly permitted pursuant to clause (c)
of Section 6.02 of the Credit Agreement.
(d) The
Collateral is owned by the Grantors free and clear of any Lien, other than
Permitted Encumbrances and Liens expressly permitted pursuant to clause (c) of
Section 6.02 of the Credit Agreement. None of the Grantors has
filed or consented to the filing of any financing statement or analogous
document under the Uniform Commercial Code or any other applicable laws covering
any Collateral, which financing statement or analogous document, assignment,
security agreement or similar instrument
6
(e) Notwithstanding
the foregoing, the representations and warranties set forth in this Section as
to perfection and priority of the Security Interest in Proceeds are limited to
the extent provided in Section 9-315 of the Uniform Commercial
Code.
SECTION
3.03. Covenants. (a) Each
Grantor agrees to maintain, at its own cost and expense, such complete and
accurate records with respect to the Collateral owned by it as is consistent
with its current practices and in accordance with such prudent and standard
practices used in industries that are the same as or similar to those in which
such Grantor is engaged, but in any event to include accounting records
indicating all payments and proceeds received with respect to any part of the
Collateral, and, at such time or times as the Administrative Agent may
reasonably request, promptly to prepare and deliver to the Administrative Agent
a duly certified schedule or schedules in form and detail reasonably
satisfactory to the Administrative Agent showing the identity, amount and
location of any and all Inventory.
(b) Each
Grantor shall, at its own expense, take any and all actions necessary to defend
title to the Collateral against all Persons and to defend the Security Interest
of the Administrative Agent in the Collateral and the priority thereof against
any Lien that is not expressly permitted pursuant to clause (c) of
Section 6.02 of the Credit Agreement.
(c) Each
Grantor agrees, at its own expense, to execute, acknowledge, deliver and cause
to be duly filed all such further instruments and documents and take all such
actions as the Administrative Agent may from time to time reasonably request to
better assure, preserve, protect and perfect the Security Interest and the
rights and remedies created hereby, including the payment of any fees and taxes
required in connection with the execution and delivery of this Agreement, the
granting of the Security Interest and the filing of any financing statements or
other documents in connection herewith or therewith.
(d) The
Administrative Agent and such Persons as the Administrative Agent may reasonably
designate shall have the right, upon reasonable prior notice and without
disruption of the normal and ordinary conduct of business of Holdings or the
Parent Borrower, to inspect the Collateral, all records related thereto (and to
make extracts and copies from such records) and the premises upon which any of
the Collateral is located, to discuss the Grantors’ affairs with the officers of
the Grantors and their independent accountants and to verify under reasonable
procedures, in accordance with Section 5.03 of the Credit Agreement, the
validity, amount, quality, quantity, value, condition and status of, or any
other matter relating to, the Collateral. The Administrative Agent
shall have the absolute right to share any information it gains from such
inspection or verification with any Secured Party.
(e) At
its option, the Administrative Agent may discharge past due taxes, assessments,
charges, fees, Liens, security interests or other encumbrances at any
time
7
(f) Each
Grantor shall remain liable to observe and perform all the conditions and
obligations to be observed and performed by it under each contract, agreement or
instrument relating to the Collateral, all in accordance with the terms and
conditions thereof, and each Grantor jointly and severally agrees to indemnify
and hold harmless the Administrative Agent and the Secured Parties from and
against any and all liability for such performance.
(g) None
of the Grantors shall (i) make or permit to be made a pledge or hypothecation of
the Collateral or (ii) grant any other Lien in respect of the Collateral, except
as expressly permitted by the Credit Agreement. None of the Grantors
shall make or permit to be made any transfer of the Collateral, except
that, unless and until the Administrative Agent shall notify the Grantors
that an Event of Default shall have occurred and be continuing and that during
the continuance thereof the Grantors shall not sell, convey, lease, assign,
transfer or otherwise dispose of any Collateral (which notice may be given by
telephone if promptly confirmed in writing), the Grantors may use and dispose of
the Collateral in any lawful manner not inconsistent with the provisions of this
Agreement, the Credit Agreement or any other Loan Document; provided that,
on or prior to the date of any transfer or any other disposition of Inventory
permitted by the Credit Agreement by any Grantor to any Subsidiary, the Parent
Borrower shall deliver to the Administrative Agent an Asset Coverage
Certificate.
(h) The
Grantors, at their own expense, shall maintain or cause to be maintained
insurance covering physical loss or damage to the Collateral in accordance with
the requirements set forth in Schedule III hereto and Section 5.07 of the
Credit Agreement. Each Grantor irrevocably makes, constitutes and
appoints the Administrative Agent (and all officers, employees or agents
designated by the Administrative Agent) as such Grantor’s true and lawful agent
(and attorney-in-fact) for the purpose, during the continuance of an Event of
Default, of (i) making, settling and adjusting claims in respect of Collateral
under policies of insurance, endorsing the name of such Grantor on any check,
draft, instrument or other item of payment for the proceeds of such policies of
insurance and (ii) making all determinations and decisions with respect
thereto. In the event that any Grantor at any time or times shall
fail to obtain or maintain any of the policies of insurance required hereby or
to pay any premium in whole or part relating thereto, the Administrative Agent
may, without waiving or releasing any obligation or liability of the Grantors
hereunder or any Event of Default, in its sole discretion, obtain
8
ARTICLE
IV
Remedies
SECTION
4.01. Remedies upon
Default. Upon the occurrence and during the continuance of an
Event of Default, each Grantor agrees, upon the demand of the Administrative
Agent, to make the Collateral available to the Administrative Agent, and it is
agreed that the Administrative Agent shall have the right, with or without
legal process and with or without prior notice or demand for performance, to
take possession of the Collateral and without liability for trespass to enter
any premises where the Collateral may be located for the purpose of taking
possession of or removing the Collateral and, generally, to exercise any and all
rights afforded to a secured party under the Uniform Commercial Code or other
applicable law. Without limiting the generality of the foregoing,
each Grantor agrees that the Administrative Agent shall have the right, subject
to the mandatory requirements of applicable law, to sell or otherwise dispose of
all or any part of the Collateral at a public or private sale, for cash, upon
credit or for future delivery as the Administrative Agent shall deem
appropriate. Upon consummation of any such sale the Administrative
Agent shall have the right to assign, transfer and deliver to the purchaser or
purchasers thereof the Collateral so sold. Each such purchaser at any
sale of the Collateral shall hold the property sold absolutely, free from any
claim or right on the part of any Grantor, and each Grantor hereby waives (to
the extent permitted by law) all rights of redemption, stay and appraisal which
such Grantor now has or may at any time in the future have under any rule of law
or statute now existing or hereafter enacted.
The
Administrative Agent shall give the applicable Grantors 10 days’ written
notice (which each Grantor agrees is reasonable notice within the meaning of
Section 9-611 of the New York UCC or its equivalent in other
jurisdictions) of the Administrative Agent’s intention to make any sale of
Collateral. Such notice, in the case of a public sale, shall state
the time and place for such sale. Any such public sale shall be held
at such time or times within ordinary business hours and at such place or places
as the Administrative Agent may fix and state in the notice (if any) of such
sale. At any such sale, the Collateral, or any portion thereof, to be
sold may be sold in one lot as an entirety or in separate parcels, as the
Administrative Agent may (in its sole and absolute discretion)
determine. The Administrative Agent shall not be obligated to make
any sale of any Collateral if it shall determine not to do so, regardless of the
fact that notice of sale of such Collateral shall have been
given. The Administrative Agent may, without notice or publication,
adjourn any public or private sale or cause the same to be adjourned from time
to time by announcement at the time and place fixed for sale, and such sale may,
9
SECTION
4.02. Application of
Proceeds. The Administrative Agent shall apply the proceeds of
any collection or sale of Collateral, including any Collateral consisting of
cash, as follows:
FIRST,
to the payment of all costs and expenses incurred by the Administrative Agent in
connection with such collection or sale or otherwise in connection with this
Agreement, any other Loan Document or any of the Obligations, including all
court costs and the fees and expenses of its agents and legal counsel, the
repayment of all advances made by the Administrative Agent hereunder or under
any other Loan Document on behalf of any Grantor and any other costs or expenses
incurred in connection with the exercise of any right or remedy hereunder or
under any other Loan Document;
SECOND,
to the payment in full of the Obligations (the amounts so applied to be
distributed among the Secured Parties pro rata in accordance with the amounts of
the Obligations owed to them on the date of any such distribution);
and
10
THIRD,
to the Grantors, their successors or assigns, or as a court of competent
jurisdiction may otherwise direct.
The
Administrative Agent shall have absolute discretion as to the time of
application of any such proceeds, moneys or balances in accordance with this
Agreement. Upon any sale of Collateral by the Administrative Agent
(including pursuant to a power of sale granted by statute or under a judicial
proceeding), the receipt of the Administrative Agent or of the officer making
the sale shall be a sufficient discharge to the purchaser or purchasers of the
Collateral so sold and such purchaser or purchasers shall not be obligated to
see to the application of any part of the purchase money paid over to the
Administrative Agent or such officer or be answerable in any way for the
misapplication thereof.
ARTICLE
V
Indemnity, Subrogation and
Subordination
SECTION
5.01. Indemnity and
Subrogation. In addition to all such rights of indemnity and
subrogation as the Guarantors may have under applicable law (but subject to
Section 5.03), each of the Borrowers and each of the Account Parties agrees that
(a) in the event a payment shall be made by any Guarantor under this
Agreement in respect of any Obligation of a Borrower or an Account Party, such
Borrower or such Account Party (as the case may be) shall indemnify such
Guarantor for the full amount of such payment and such Guarantor shall be
subrogated to the rights of the Person to whom such payment shall have been made
to the extent of such payment and (b) in the event any assets of any Grantor
shall be sold pursuant to this Agreement to satisfy in whole or in part an
Obligation of a Borrower or an Account Party, such Borrower or Account Party (as
the case may be) shall indemnify such Grantor in an amount equal to the greater
of the book value or the fair market value of the assets so sold.
SECTION
5.02. Contribution and
Subrogation. Each Guarantor and Grantor (a “Contributing Party”)
agrees (subject to Section 5.03) that, in the event a payment shall be made
by any other Guarantor hereunder in respect of any Obligation or assets of any
other Grantor (other than Holdings or the Parent Borrower) shall be sold
pursuant to this Agreement to satisfy any Obligation of a Borrower or an Account
Party and such other Guarantor or Grantor (the “Claiming Party”)
shall not have been fully indemnified by the Borrowers or the Account Parties as
provided in Section 5.01, the Contributing Party shall indemnify the
Claiming Party in an amount equal to the amount of such payment or the greater
of the book value or the fair market value of such assets, as the case may be,
in each case multiplied by a fraction of which the numerator shall be the net
worth of the Contributing Party on the date hereof and the denominator shall be
the aggregate net worth of all the Guarantors and Grantors on the date hereof
(or, in the case of any Guarantor or Grantor becoming a party hereto pursuant to
Section 6.16 or Section 6.17, respectively, the date of the supplement
hereto executed and delivered by such Guarantor or Grantor). Any
Contributing Party making any payment to a Claiming
11
SECTION
5.03. Subordination. (a) Notwithstanding
any provision of this Agreement to the contrary, all rights of the Guarantors
and Grantors under Sections 5.01 and 5.02 and all other rights of the
Guarantors and Grantors of indemnity, contribution or subrogation under
applicable law or otherwise shall be fully subordinated to the indefeasible
payment in full in cash of the Obligations. No failure on the part of
any Borrower, any Account Party or any Guarantor or Grantor to make the payments
required by Sections 5.01 and 5.02 (or any other payments required under
applicable law or otherwise) shall in any respect limit the obligations and
liabilities of any Guarantor or Grantor with respect to its obligations
hereunder, and each Guarantor and Grantor shall remain liable for the full
amount of the obligations of such Guarantor or Grantor hereunder.
(b) Each
of the Guarantors and Grantors hereby agrees that all Indebtedness and other
monetary obligations owed by it to, or to it by, any other Guarantor, Grantor or
any other Subsidiary shall be fully subordinated to the payment in full in cash
of the Obligations.
ARTICLE
VI
Miscellaneous
SECTION
6.01. Notices. All
communications and notices hereunder shall (except as otherwise expressly
permitted herein) be in writing and given as provided in Section 9.01 of
the Credit Agreement. All communications and notices hereunder to any
Subsidiary Party shall be given to it in care of the Parent Borrower as provided
in Section 9.01 of the Credit Agreement.
SECTION
6.02. Rights
Absolute. All rights of the Administrative Agent hereunder,
the Security Interest and all obligations of each Guarantor and Grantor
hereunder shall be absolute and unconditional irrespective of (a) any lack
of validity or enforceability of the Credit Agreement, any other Loan Document,
any agreement with respect to any of the Obligations or any other agreement or
instrument relating to any of the foregoing, (b) any change in the time,
manner or place of payment of, or in any other term of, all or any of the
Obligations, or any other amendment or waiver of or any consent to any departure
from the Credit Agreement, any other Loan Document or any other agreement or
instrument, (c) any exchange, release or non-perfection of any Lien on
other collateral, or any release or amendment or waiver of or consent under or
departure from any guarantee, securing or guaranteeing all or any of the
Obligations, or (d) any other circumstance that might otherwise constitute
a defense available to, or a discharge of, any Guarantor or Grantor in respect
of the Obligations or this Agreement.
SECTION
6.03. Survival of
Agreement. All covenants, agreements, representations and
warranties made by the Loan Parties in the Loan Documents and in
12
SECTION
6.04. Binding Effect; Several
Agreement. This Agreement shall become effective as to any
Party when a counterpart hereof executed on behalf of such Party shall have been
delivered to the Administrative Agent and a counterpart hereof shall have been
executed on behalf of the Administrative Agent, and thereafter shall be binding
upon such Party and the Administrative Agent and their respective permitted
successors and assigns, and shall inure to the benefit of such Party, the
Administrative Agent and the other Secured Parties and their respective
successors and assigns, except that no Party shall have the right to assign or
transfer its rights or obligations hereunder or any interest herein or in the
Collateral (and any such assignment or transfer shall be void) except as
expressly contemplated by this Agreement or the Credit
Agreement. This Agreement shall be construed as a separate agreement
with respect to each Party and may be amended, modified, supplemented, waived or
released with respect to any Party without the approval of any other Party and
without affecting the obligations of any other Party hereunder.
SECTION
6.05. Successors and
Assigns. Whenever in this Agreement any of the parties hereto
is referred to, such reference shall be deemed to include the permitted
successors and assigns of such party; and all covenants, promises and agreements
by or on behalf of any Guarantor or Grantor or the Administrative Agent that are
contained in this Agreement shall bind and inure to the benefit of their
respective successors and assigns.
SECTION
6.06. Administrative Agent’s Fees
and Expenses; Indemnification. (a) The parties
hereto agree that the Administrative Agent shall be entitled to reimbursement of
its expenses incurred hereunder as provided in Section 9.03 of the Credit
Agreement.
(b) Without
limitation of its indemnification obligations under the other Loan Documents,
each Guarantor and Grantor jointly and severally agrees to indemnify the
Administrative Agent and the other Indemnitees (as defined in Section 9.03
of the Credit Agreement) against, and hold each Indemnitee harmless from, any
and all losses, claims, damages, liabilities and related expenses, including the
fees, charges and disbursements of any counsel for any Indemnitee, incurred by
or asserted against any Indemnitee arising out of, in connection with, or as a
result of, the execution, delivery or performance of this Agreement or any
claim, litigation, investigation or proceeding
13
(c) Any
such amounts payable as provided hereunder shall be additional Obligations
secured hereby. The provisions of this Section 6.06 shall remain
operative and in full force and effect regardless of the termination of this
Agreement or any other Loan Document, the consummation of the transactions
contemplated hereby, the repayment of any of the Obligations, the invalidity or
unenforceability of any term or provision of this Agreement or any other Loan
Document, or any investigation made by or on behalf of the Administrative Agent
or any other Secured Party. All amounts due under this
Section 6.06 shall be payable not later than 30 days after written demand
therefor.
SECTION
6.07. Administrative Agent
Appointed Attorney-in-Fact. Each Guarantor and Grantor hereby
appoints the Administrative Agent the attorney-in-fact of such Guarantor or
Grantor during the continuance of an Event of Default for the purpose of
carrying out the provisions of this Agreement and taking any action and
executing any instrument that the Administrative Agent may reasonably deem
necessary or advisable to accomplish the purposes hereof, which appointment is
irrevocable and coupled with an interest. Without limiting the
generality of the foregoing, the Administrative Agent shall have the right, upon
the occurrence and during the continuance of an Event of Default, with full
power of substitution either in the Administrative Agent’s name or in the name
of such Guarantor or Grantor (a) to receive, endorse, assign and/or deliver
any and all notes, acceptances, checks, drafts, money orders or other evidences
of payment relating to the Collateral or any part thereof; (b) to demand,
collect, receive payment of, give receipt for and give discharges and releases
of all or any of the Collateral; (c) to sign the name of any Grantor on any
invoice or xxxx of lading relating to any of the Collateral; (d) to
commence and prosecute any and all suits, actions or proceedings at law or in
equity in any court of competent jurisdiction to collect or otherwise realize on
all or any of the Collateral or to enforce any rights in respect of any
Collateral; (e) to settle, compromise, compound, adjust or defend any
actions, suits or proceedings relating to all or any of the Collateral; and
(f) to use, sell, assign, transfer, pledge, make any agreement with respect
to or otherwise deal with all or any of the Collateral, and to do all other acts
and things necessary to carry out the purposes of this Agreement, as fully and
completely as though the Administrative Agent were the absolute owner of the
Collateral for all purposes; provided that nothing
herein contained shall be construed as requiring or obligating the
Administrative Agent to make any commitment or to present or file any claim or
notice, or to take any action with respect to the Collateral or any part thereof
or the moneys due or to become due in respect thereof or any property covered
thereby, other than to exercise commercially reasonable care in the custody and
preservation of any Collateral in its possession. The Administrative
Agent and the Parent Borrower
14
SECTION
6.08. Applicable
Law. This Agreement shall be construed in accordance with and
governed by the laws of the State of New York.
SECTION
6.09. Waivers;
Amendment. (a) No failure or delay by the
Administrative Agent, any Issuing Bank or any Lender in exercising any right or
power hereunder or under any other Loan Document shall operate as a waiver
thereof, nor shall any single or partial exercise of any such right or power, or
any abandonment or discontinuance of steps to enforce such a right or power,
preclude any other or further exercise thereof or the exercise of any other
right or power. The rights and remedies of the Administrative Agent,
the Issuing Banks and the Lenders hereunder and under the other Loan Documents
are cumulative and are not exclusive of any rights or remedies that they would
otherwise have. No waiver of any provision of this Agreement or
consent to any departure by any Party therefrom shall in any event be effective
unless the same shall be permitted by paragraph (b) of this Section, and
then such waiver or consent shall be effective only in the specific instance and
for the purpose for which given. Without limiting the generality of
the foregoing, the making of a Loan or issuance of a Letter of Credit shall not
be construed as a waiver of any Default, regardless of whether the
Administrative Agent, any Lender or any Issuing Bank may have had notice or
knowledge of such Default at the time. No notice or demand on any
Party in any case shall entitle any Party to any other or further notice or
demand in similar or other circumstances.
(b) Neither
this Agreement nor any provision hereof may be waived, amended or modified
except pursuant to an agreement or agreements in writing entered into by the
Administrative Agent and the Parties with respect to which such waiver,
amendment or modification is to apply, subject to any consent required in
accordance with Section 9.02 of the Credit Agreement.
SECTION
6.10. WAIVER OF JURY
TRIAL. EACH PARTY HERETO HEREBY WAIVES, TO THE FULLEST EXTENT
PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY
LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS
AGREEMENT, ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY
(WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY
HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER
PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT,
IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND
(B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO
ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND
CERTIFICATIONS IN THIS SECTION.
15
SECTION
6.11. Severability. Any
provision of this Agreement held to be invalid, illegal or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such invalidity, illegality or unenforceability without affecting the validity,
legality and enforceability of the remaining provisions hereof; and the
invalidity of a particular provision in a particular jurisdiction shall not
invalidate such provision in any other jurisdiction.
SECTION
6.12. Counterparts. This
Agreement may be executed in counterparts (and by different parties hereto on
different counterparts), each of which shall constitute a single contract
(subject to Section 6.04), and shall become effective as provided in
Section 6.04. Delivery of an executed signature page to this
Agreement by telecopy or electronic transmission shall be effective as delivery
of a manually executed counterpart of this Agreement.
SECTION
6.13. Headings. Article
and Section headings used herein are for the purpose of reference only, are not
part of this Agreement and are not to affect the construction of, or to be taken
into consideration in interpreting, this Agreement.
SECTION
6.14. Jurisdiction; Consent to
Service of Process. (a) Each of the Parties hereby
irrevocably and unconditionally submits, for itself and its property, to the
nonexclusive jurisdiction of the Supreme Court of the State of New York sitting
in New York County and of the United States District Court of the Southern
District of New York, and any appellate court from any thereof, in any action or
proceeding arising out of or relating to any Loan Document, or for recognition
or enforcement of any judgment, and each of the parties hereto hereby
irrevocably and unconditionally agrees that all claims in respect of any such
action or proceeding may be heard and determined in such New York State or,
to the extent permitted by law, in such Federal court. Each of the
parties hereto agrees that a final judgment in any such action or proceeding
shall be conclusive and may be enforced in other jurisdictions by suit on the
judgment or in any other manner provided by law. Nothing in this
Agreement or any other Loan Document shall affect any right that the
Administrative Agent, any Issuing Bank or any Lender may otherwise have to bring
any action or proceeding relating to this Agreement or any other Loan Document
against any Guarantor or Grantor or its respective properties in the courts of
any jurisdiction.
(b) Each
of the Parties hereby irrevocably and unconditionally waives, to the fullest
extent it may legally and effectively do so, any objection which it may now or
hereafter have to the laying of venue of any suit, action or proceeding arising
out of or relating to this Agreement or any other Loan Document in any court
referred to in paragraph (a) of this Section. Each of the parties
hereto hereby irrevocably waives, to the fullest extent permitted by law, the
defense of an inconvenient forum to the maintenance of such action or proceeding
in any such court.
(c) Each
party to this Agreement irrevocably consents to service of process in the manner
provided for notices in Section 6.01. Nothing in this Agreement
or any other Loan Document will affect the right of any party to this Agreement
to serve process in any other manner permitted by law.
16
SECTION
6.15. Termination or
Release. (a) This Agreement, the Guarantees made
herein, the Security Interest and all other security interests granted hereby
shall terminate when all the Loan Document Obligations have been paid in full
and the Lenders have no further commitment to lend under the Credit Agreement,
the LC Exposure has been reduced to zero and no Issuing Bank has any further
obligations to issue Letters of Credit under the Credit Agreement.
(b) A
Subsidiary Party shall automatically be released from its obligations hereunder
and, in the case of a Subsidiary Party that is a Subsidiary Grantor, the
Security Interest in the Collateral of such Subsidiary Grantor shall be
automatically released upon the consummation of any transaction not prohibited
by the Credit Agreement as a result of which such Subsidiary Party ceases to be
a Subsidiary of Holdings; provided that the
Required Lenders shall have consented to such transaction (to the extent
required by the Credit Agreement) and the terms of such consent did not provide
otherwise; provided further that, after
giving effect to such release, there is no Default under the Credit
Agreement.
(c) Upon
any sale or other transfer by any Grantor of any Collateral that is not
prohibited by the Credit Agreement to any Person that is not a Grantor, or upon
the effectiveness of any written consent to the release of the Security Interest
granted hereby in any Collateral pursuant to Section 9.02 of the Credit
Agreement, the Security Interest in such Collateral shall be automatically
released; provided that after
giving effect to such release, there is no Default under the Credit
Agreement.
(d) Notwithstanding
anything herein to the contrary, the Security Interest shall be released at any
time when (i) Holdings has a Credit Rating of (A) Baa1 with stable outlook or
better from Xxxxx’x or (B) BBB+ with stable outlook or better from S&P;
provided that
if the Credit Ratings are not at the same level, the lower Credit Rating is not
more than one notch worse than the higher Credit Rating, (ii) no Default has
occurred and is continuing or would result from such release and (iii) the
Administrative Agent shall have received a certificate from a Financial Officer
of Holdings or the Parent Borrower confirming that the conditions in this
paragraph (d) are satisfied.
(e) In
connection with any termination or release pursuant to paragraph (a), (b),
(c) or (d) above, the Administrative Agent shall execute and deliver to any
Grantor at such Grantor’s expense, all documents that such Grantor shall
reasonably request to evidence such termination or release. Any
execution and delivery of documents pursuant to this Section 6.15 shall be
without recourse to or warranty by the Administrative Agent.
SECTION
6.16. Additional
Guarantors. (a) Pursuant to, and to the extent
provided in, Section 5.11 of the Credit Agreement, additional Subsidiaries
may be required to enter into this Agreement as Guarantors. Upon
execution and delivery by the Administrative Agent and any such Subsidiary of an
instrument in the form of Exhibit A hereto, such Subsidiary shall become a
Subsidiary Guarantor hereunder with the same force and effect as if originally
named as a Subsidiary Guarantor herein.
17
(b) In
the event of a Permitted Holding Company Reorganization, New Holdco is required
to enter in this Agreement as a Guarantor. Upon execution and
delivery by the Administrative Agent and New Holdco of an instrument in form and
substance similar to Exhibit A hereto, New Holdco shall become a Guarantor
hereunder with the same force and effect as if originally named a Guarantor
herein.
(c) The
execution and delivery of any such instrument described in paragraph (a) or (b)
above shall not require the consent of any other party hereto. The
rights and obligations of each party hereunder shall remain in full force and
effect notwithstanding the addition of any new Guarantee Party as a party to
this Agreement.
SECTION
6.17. Additional
Grantors. Pursuant to the terms of the Credit Agreement,
Additional Grantors may enter into this Agreement as Subsidiary
Grantors. Upon execution and delivery by the Administrative Agent and
any such Additional Grantor of an instrument in the form of Exhibit B hereto,
such Additional Grantor shall become an a Subsidiary Grantor hereunder with the
same force and effect as if originally named as an Subsidiary Grantor
herein. The execution and delivery of any such instrument shall not
require the consent of any other party hereto. The rights and
obligations of each party hereto shall remain in full force and effect
notwithstanding the addition of any new Subsidiary Grantor as a party to this
Agreement.
SECTION
6.18. Right of
Setoff. If an Event of Default shall have occurred and be
continuing and the Loans have become due and payable, each Issuing Bank and
Lender and each of its Affiliates is hereby authorized at any time and from time
to time, to the fullest extent permitted by law, to set off and apply any and
all deposits (general or special, time or demand, provisional or final) at any
time held and other obligations at any time owing by such Issuing Bank or Lender
or Affiliate to or for the credit or the account of any Guarantor against any of
and all the obligations of such Guarantor now or hereafter existing under this
Agreement owed to such Issuing Bank or Lender, irrespective of whether or not
such Issuing Bank or Lender shall have made any demand under this Agreement and
although such obligations may be unmatured. The rights of each
Issuing Bank and Lender under this Section are in addition to other rights and
remedies (including other rights of setoff) which such Issuing Bank or Lender
may have. Any Lender or Issuing Bank exercising its rights under this
Section shall give notice thereof to the relevant Guarantor on or prior to the
day of the exercise of such rights.
[The
remainder of this page has been left blank intentionally.]
18
IN
WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of the
day and year first above written.
|
|
X.
X. PENNEY COMPANY, INC.,
by /s/ X. X. Xxxxxxxxx
Name: X. X. Xxxxxxxxx
Title: Executive Vice President
and
Chief Financial Officer
|
|
|
X.
X. XXXXXX CORPORATION, INC.,
by /s/ M. D. Xxxxxx
Name: M. D. Xxxxxx
Title: Vice President,
Treasurer
|
|
|
X.
X. PENNEY PURCHASING CORPORATION,
by /s/ M. D. Xxxxxx
Name: M. D. Xxxxxx
Title: Vice President, Treasurer
of
X. X. Xxxxxx Corporation,
Inc.
|
|
|
EACH
OF THE SUBSIDIARIES LISTED ON SCHEDULES I AND II HERETO,
by /s/ M. D. Xxxxxx
Name: M. D. Xxxxxx
Title: Vice President,
Treasurer of
X. X. Penney Corporation, Inc.
|
19
|
|
JPMORGAN
CHASE BANK, N.A., as
Administrative Agent,
by /s/ Xxxxx Xxxxxxx
Name: Xxxxx Xxxxxxx
Title: Managing
Director
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|
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20
SCHEDULE I
to the Guarantee and
Collateral Agreement
Subsidiary
Grantors
JCP
Real Estate Holdings, Inc.
X.
X. Xxxxxx Properties, Inc.
SCHEDULE II
to the
Guarantee and
Collateral Agreement
Subsidiary
Guarantors
JCP
Real Estate Holdings, Inc.
X.
X. Penney Properties, Inc.
SCHEDULE III
to the
Guarantee and
Collateral Agreement
Insurance
Requirements
(a) Each
Grantor will maintain (or cause to be maintained on its behalf), with
financially sound and reputable insurance companies, insurance with respect to
all Inventory constituting Collateral, in such amounts as are customarily
maintained by companies in the same or similar business operating in the same or
similar locations.
(b) Policies maintained with
respect to any Collateral shall be endorsed or otherwise amended to include (i)
a lenders’ loss payable clause in favor of the Administrative Agent and
providing for losses thereunder to be payable to the Administrative Agent or its
designee and (ii) such other provisions as the Administrative Agent may
reasonably require from time to time to protect the interests of the
Lenders. Each such policy referred to in this paragraph also shall
provide that it shall not be canceled, modified or not renewed (i) by reason of
nonpayment of premium except upon not less than 10 days’ prior written notice
thereof by the insurer to the Administrative Agent (giving the Administrative
Agent the right to cure defaults in the payment of premiums) or (ii) for any
other reason except upon not less than 30 days’ prior written notice thereof by
the insurer to the Administrative Agent. Each Grantor shall deliver
to the Administrative Agent a copy of a certificate of insurance evidencing the
required coverage on or prior to the Effective Date and upon each renewal or
replacement of such policies thereafter.
