EXHIBIT 4(e)
COMPOSITE CONFORMED COPY
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X. X. XXXXXX COMPANY, INC.
X. X. PENNEY FUNDING CORPORATION
____________________
$1,500,000,000
FIVE-YEAR REVOLVING CREDIT AGREEMENT
Dated as of December 16, 1993,
As Amended and Restated as of December 7, 1994,
As Amended as of December 6, 1995
And as Amended and Restated as of December 3, 1996
____________________
XXXXXX GUARANTY TRUST COMPANY OF NEW YORK,
as Agent,
BANK OF AMERICA ILLINOIS, BANKERS TRUST COMPANY, THE CHASE MANHATTAN
BANK, CITIBANK, N.A., CREDIT SUISSE and
NATIONSBANK OF TEXAS, N.A.,
as Co-Agents
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TABLE OF CONTENTS
Article Section Page
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I. DEFINITIONS
1.01 Defined Terms................................. 1
1.02 Terms Generally............................... 20
II. THE CREDITS
2.01 Commitments................................... 20
2.02 Loans......................................... 21
2.03 Competitive Bid Procedure..................... 23
2.04 Standby Borrowing Procedure................... 26
2.05 Refinancings.................................. 27
2.06 Fees.......................................... 28
2.07 Repayment of Loans; Evidence of the
Borrowers' Obligations....................... 28
2.08 Interest on Loans............................. 29
2.09 Default Interest.............................. 30
2.10 Alternate Rate of Interest.................... 30
2.11 Termination and Reduction
of Commitments............................... 31
2.12 Prepayment.................................... 32
2.13 Reserve Requirements;
Change in Circumstances....................... 32
2.14 Change in Legality............................ 34
2.15 Indemnity..................................... 35
2.16 Pro Rata Treatment............................ 36
2.17 Sharing of Setoffs............................ 37
2.18 Payments...................................... 38
2.19 Taxes......................................... 38
2.20 Mitigation; Duties of Lenders
and Agent.................................... 41
2.21 Optional Increase in Commitments.............. 44
III. REPRESENTATIONS AND WARRANTIES
3.01 Organization; Powers.......................... 45
3.02 Authorization................................. 45
3.03 Enforceability................................ 46
3.04 Governmental Approvals........................ 46
3.05 Financial Statements.......................... 46
3.06 No Material Adverse Change.................... 47
3.07 Title to Properties; Possession
Under Leases................................. 47
3.08 Restricted Subsidiaries....................... 47
Contents, p. 3
Article Section Page
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3.09 Litigation; Compliance with
Laws......................................... 47
3.10 Agreements.................................... 48
3.11 Federal Reserve Regulations................... 48
3.12 Investment Company Act;
Public Utility Holding Company
Act.......................................... 48
3.13 Use of Proceeds............................... 49
3.14 Tax Returns................................... 49
3.15 No Material Misstatements..................... 49
3.16 Employee Benefit Plans........................ 49
3.17 Support Agreements............................ 49
IV. CONDITIONS OF LENDING
4.01 All Borrowings................................ 50
4.02 First Borrowing [INTENTIONALLY
OMITTED]..................................... 50
V. AFFIRMATIVE COVENANTS
5.01 Existence; Businesses and
Properties.................................... 51
5.02 Insurance..................................... 51
5.03 Obligations and Taxes......................... 51
5.04 Financial Statements, Reports, etc............ 52
5.05 Litigation and Other Notices.................. 53
5.06 ERISA......................................... 54
5.07 Maintaining Records; Access to
Properties and Inspections................... 54
5.08 Use of Proceeds............................... 55
5.09 Pari-Passu.................................... 55
5.10 Support Agreements............................ 55
VI. NEGATIVE COVENANTS
6.01 Limitation on Liens--JCPenney................. 55
6.02 Limitations on Senior Funded
Indebtedness................................. 59
6.03 Limitations with Respect to
Restricted Subsidiaries...................... 59
6.04 Mergers, Consolidations, Sales of
Assets and Acquisitions...................... 61
6.05 Limitations on Liens--Funding................. 62
6.06 Conduct of Funding's Business................. 64
VII. EVENTS OF DEFAULT......................................... 66
VIII. THE AGENT................................................. 69
IX. MISCELLANEOUS............................................. 73
Contents, p. 4
Article Section Page
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9.01 Notices....................................... 73
9.02 Survival of Agreement......................... 73
9.03 Binding Effect................................ 74
9.04 Successors and Assigns........................ 74
9.05 Expenses; Indemnity........................... 77
9.06 Right of Setoff............................... 78
9.07 Applicable Law................................ 79
9.08 Waivers; Amendment............................ 79
9.09 Interest and Charges.......................... 80
9.10 Entire Agreement.............................. 80
9.11 Severability.................................. 80
9.12 Counterparts.................................. 81
9.13 Headings...................................... 81
9.14 Jurisdiction; Consent to Service
of Process................................... 81
9.15 Confidentiality............................... 82
9.16 Liability of Borrowers........................ 82
9.17 No Collateral................................. 82
Exhibit A-1 Form of Competitive Bid Request
Exhibit A-2 Form of Notice of Competitive Bid Request
Exhibit A-3 Form of Competitive Bid
Exhibit A-4 Form of Standby Borrowing Request
Exhibit B Form of Opinion [INTENTIONALLY OMITTED]
Exhibit C Form of Guaranty
Exhibit D Pricing Schedule
Schedule 2.01 Commitments
Schedule 3.06 Material Adverse Change
Schedule 3.08 Restricted Subsidiaries
Schedule 3.09 Material Litigation
FIVE-YEAR REVOLVING CREDIT AGREEMENT dated as of December 16,
1993, as amended and restated as of December 7, 1994, as amended
as of December 6, 1995 and as amended and restated as of December
3, 1996 (as so amended and restated and as the same may be further
amended, modified, extended or restated from time to time, the
"Agreement"), among X. X. XXXXXX COMPANY, INC. a Delaware
corporation ("JCPenney"), X. X. PENNEY FUNDING CORPORATION, a
Delaware corporation ("Funding"), the lenders listed in Schedule
2.01 (as of any date, together with any permitted assigns
hereunder on such date, the "Lenders"), XXXXXX GUARANTY TRUST
COMPANY OF NEW YORK ("Xxxxxx"), as agent for the Lenders (in such
capacity, the "Agent") and BANK OF AMERICA ILLINOIS, BANKERS TRUST
COMPANY, THE CHASE MANHATTAN BANK, CITIBANK, N.A., CREDIT SUISSE
and NATIONSBANK OF TEXAS, N.A., as co-agents for the Lenders (in
such capacity, the "Co-Agents").
The Borrowers (as herein defined) have requested the Lenders to extend
credit to the Borrowers in order to enable them to borrow on a standby revolving
credit basis on and after the Closing Date (as herein defined) and at any time
and from time to time prior to the Maturity Date (as herein defined) an
aggregate principal amount not in excess of $1,500,000,000 at any time
outstanding. The Borrowers have also requested the Lenders to provide a
procedure pursuant to which the Borrowers may invite the Lenders to bid on an
uncommitted basis on borrowings by the Borrowers scheduled to mature on or prior
to the Maturity Date. The proceeds of such borrowings are to be used for
general corporate purposes, including, without limitation, working capital
requirements, liquidity and the repayment of maturing commercial paper and other
indebtedness of the Borrowers. The Lenders will extend such credit to the
Borrowers on the terms and subject to the conditions herein set forth.
Accordingly, the Borrowers, the Lenders, the Agent and the Co-Agents
agree as follows:
ARTICLE I. DEFINITIONS
SECTION 1.01. Defined Terms. As used in this Agreement, the following
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terms shall have the meanings specified below:
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"ABR Borrowing" shall mean a Borrowing comprised of ABR Loans.
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"ABR Loan" shall mean any Standby Loan bearing interest at a rate
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determined by reference to the Alternate Base Rate in accordance with the
provisions of Article II.
"Adjusted CD Rate" shall mean, with respect to any CD Borrowing
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requested by any Borrower pursuant to Section 2.03(a) for any Interest Period,
an interest rate per annum (rounded upwards, if necessary, to the next 1/100 of
1%) equal to the sum of (a) a rate per annum equal to the product of (i) the
Fixed CD Rate in effect for such Interest Period and (ii) Statutory Reserves,
plus (b) the Assessment Rate. For purposes hereof, the term "Fixed CD Rate"
shall mean the arithmetic average (rounded upwards, if necessary, to the next
1/100 of 1%) of the prevailing rates per annum bid at or about 10:00 a.m., New
York City time, to the Agent on the first Business Day of the Interest Period
applicable to such CD Borrowing by three New York City negotiable certificate of
deposit dealers of recognized standing selected by the Agent for the purchase at
face value of negotiable certificates of deposit of major United States money
center banks in a principal amount approximately equal to the product of (x) the
aggregate principal amount of such CD Borrowing as specified in the related
Competitive Bid Request and (y) the percentage which the Agent's Commitment
represents of the Total Commitment and with a maturity comparable to such
Interest Period.
"Additional Costs" shall mean, with respect to any Lender, any
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increased costs or reduction in amounts received or receivable or reduction in
return on capital incurred or suffered by such Lender and in respect of which
such Lender is entitled to request compensation in accordance with Section 2.13.
"Administrative Fees" shall have the meaning assigned to such term in
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Section 2.06(b).
"Affiliate" shall mean, when used with respect to a specified person,
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another person that directly, or indirectly through one or more intermediaries,
Controls or is Controlled by or is under common Control with the person
specified.
"Alternate Base Rate" shall mean, for any day, a rate per annum
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(rounded upwards, if necessary, to the next 1/16 of 1%) equal to the greater of
(a) the Prime Rate on such day, and (b) the Federal Funds Effective Rate in
effect on such day plus 0.50%. For purposes hereof, "Federal Funds
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Effective Rate" shall mean, for any day, the weighted average of the rates on
overnight Federal funds transactions with members of the Federal Reserve System
arranged by Federal funds brokers, as published on the next succeeding Business
Day by the Federal Reserve Bank of New York, or, if such rate is not so
published for any day which is a Business Day, the average of the rates quoted
to the Agent on such day for such transactions by three Federal funds brokers of
recognized standing selected by it. If for any reason the Agent shall have
determined (which determination shall be conclusive absent manifest error) that
it is unable to ascertain the Federal Funds Effective Rate for any reason,
including the inability or failure of the Agent to obtain sufficient quotations
in accordance with the terms hereof, the Alternate Base Rate shall be determined
without regard to clause (b) of the first sentence of this definition until the
circumstances giving rise to such inability no longer exist. Any change in the
Alternate Base Rate due to a change in the Prime Rate shall be effective on the
date such change is announced publicly.
"Applicable Lending Office" shall mean, for each Lender and for each
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Type of Loan, the office or branch of such Lender (or of an Affiliate of such
Lender) designated for such Type of Loan opposite such Lender's name on Schedule
2.01 or such other office or branch of such Lender (or of an Affiliate of such
Lender) as such Lender may from time to time, in accordance with the terms of
this Agreement, specify to the Agent and the Borrowers as the office or branch
by which its Loans of such Type are to be made and maintained.
"Assessment Rate" shall mean for any date the then current net annual
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assessment rate (rounded upwards, if necessary, to the next 1/100 of 1%)
actually employed by the Agent in determining amounts payable by the Agent to
the Federal Deposit Insurance Corporation (or any successor) for insurance by
such Corporation (or such successor) of time deposits made in dollars at the
Agent's domestic offices.
"Board" shall mean the Board of Governors of the Federal Reserve System
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of the United States.
"Borrowers" shall mean JCPenney and Funding.
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"Borrowing" shall mean a Loan or a group of Loans of a single Type made
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by the Lenders (or, in the case of a Competitive Borrowing, by the Lender or
Lenders whose Competitive Bids have been accepted pursuant to Section 2.03)
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to the same Borrower on a single date and as to which a single Interest Period
is in effect.
"Business Day" shall mean any day (other than a day which is a
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Saturday, Sunday or legal holiday in the State of New York) on which banks are
open for business in New York City; provided, however, that, when used in
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connection with a Eurodollar Loan, the term "Business Day" shall also exclude
any day on which banks are not open for dealings in dollar deposits in the
London interbank market.
"CD Borrowing" shall mean a Competitive Borrowing comprised of CD
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Loans.
"CD Loan" shall mean any Competitive Loan bearing interest at a rate
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determined by reference to the Adjusted CD Rate in accordance with the
provisions of Article II.
"Closing Date" shall mean December 3, 1996.
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"Code" shall mean the Internal Revenue Code of 1986, as the same may be
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amended from time to time.
"Commitment" shall mean, with respect to each Lender, the commitment of
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such Lender hereunder as set forth as of the Closing Date in Schedule 2.01
hereto and, thereafter, in the Register (or as otherwise determined by the
parties hereto in the event of manifest error in the Register), as such Lender's
Commitment may be permanently terminated or reduced from time to time pursuant
to Section 2.11 or increased from time to time pursuant to Section 2.21. The
Commitment of each Lender shall automatically and permanently terminate on the
Maturity Date if not terminated earlier pursuant to the terms hereof.
"Commitment Termination Date" shall have the meaning assigned to such
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term in Section 2.11(d).
"Competitive Bid" shall mean an offer by a Lender to make a Competitive
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Loan pursuant to Section 2.03.
"Competitive Bid Rate" shall mean, as to any Competitive Bid made by a
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Lender pursuant to Section 2.03(b), (a) in the case of a Eurodollar Competitive
Loan or a CD Loan, the Competitive Margin, and (b) in the case of a Fixed Rate
Loan, the fixed rate of interest offered by the Lender making such Competitive
Bid.
"Competitive Bid Request" shall mean a request made pursuant to Section
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2.03 in the form of Exhibit A-1.
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"Competitive Borrowing" shall mean a Borrowing consisting of a
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Competitive Loan or concurrent Competitive Loans from the Lender or Lenders
whose Competitive Bids for such Borrowing have been accepted under the bidding
procedure described in Section 2.03 by the Borrower requesting such Borrowing.
"Competitive Loan" shall mean a Loan from a Lender to a Borrower
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pursuant to the bidding procedure described in Section 2.03. Each Competitive
Loan shall be a Eurodollar Competitive Loan, a CD Loan or a Fixed Rate Loan.
"Competitive Margin" shall mean, as to any Eurodollar Competitive Loan
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or CD Loan, the margin (expressed as a percentage rate per annum in the form of
a decimal to no more than four decimal places) to be added to or subtracted from
the LIBO Rate or the Adjusted CD Rate, as applicable, in order to determine the
interest rate applicable to such Eurodollar Competitive Loan or CD Loan, as
specified in the Competitive Bid relating to such Eurodollar Competitive Loan or
CD Loan.
"Control" shall mean the possession, directly or indirectly, of the
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power to direct or cause the direction of the management or policies of a
person, whether through the ownership of voting securities, by contract or
otherwise, and "Controlling" and "Controlled" shall have meanings correlative
thereto.
"Default" shall mean any event or condition which upon notice, lapse of
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time or both would constitute an Event of Default.
"dollars" or "$" shall mean lawful money of the United States of
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America.
"Eligible Assignee" shall mean (a) a commercial bank organized under
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the laws of the United States, or any state thereof, and having total assets in
excess of $1,000,000,000; (b) a commercial bank organized under the laws of any
other country which is a member of the Organization for Economic Cooperation and
Development, or a political subdivision of any such country, and having total
assets in excess of $1,000,000,000, provided that such bank is acting through a
branch or agency located in the country in which it is organized or another
country which is described in this clause; and (c) the central bank of any
country which is a member of the Organization for Economic Cooperation and
Development.
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"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
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as the same may be amended from time to time, and the rules and regulations
promulgated thereunder, as from time to time in effect.
"ERISA Affiliate" shall mean any trade or business (whether or not
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incorporated) that is a member of a group of which any Borrower is a member and
which is treated as a single employer under Section 414 of the Code.
"Eurodollar Borrowing" shall mean a Borrowing comprised of Eurodollar
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Loans.
"Eurodollar Competitive Loan" shall mean any Competitive Loan bearing
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interest at a rate determined by reference to the LIBO Rate in accordance with
the provisions of Article II.
"Eurodollar Loan" shall mean any Eurodollar Competitive Loan or
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Eurodollar Standby Loan.
"Eurodollar Standby Loan" shall mean any Standby Loan bearing interest
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at a rate determined by reference to the LIBO Rate in accordance with the
provisions of Article II.
"Events of Default" shall have the meaning assigned to such term in
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Article VII.
"Facility Fee" shall have the meaning assigned to such term in Section
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2.06(a).
"Facility Fee Percentage" shall mean the facility fee percentage
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determined daily in accordance with the Pricing Schedule.
"Fees" shall mean the Facility Fees and the Administrative Fees.
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"Fixed Rate Borrowing" shall mean a Competitive Borrowing comprised of
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Fixed Rate Loans.
"Fixed Rate Loan" shall mean any Competitive Loan bearing interest at a
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fixed percentage rate per annum (expressed in the form of a decimal to no more
than four decimal places) specified by the Lender making such Loan in its
related Competitive Bid.
"Funded Indebtedness" of any corporation shall mean, at any date for
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the determination thereof, without
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duplication, the outstanding aggregate principal amount of (a) all indebtedness
created, incurred or assumed by such corporation (including, in the case of any
Borrower, the Loans made to such Borrower) which by its terms is not payable on
demand and which matures by its terms, or which by its terms such corporation
has the right at its option to renew or extend to a date, more than one year
after the date of determination, whether outstanding on the Closing Date or
thereafter created, incurred or assumed (including the current portion of any
indebtedness which shall constitute Funded Indebtedness at the time of its
incurrence), and which is (i) for money borrowed or (ii) evidenced by a note or
similar instrument given in connection with the acquisition of any business,
properties or assets, including securities, (b) any indebtedness of others of
the kinds described in the preceding clause (a) for the payment of which such
corporation is responsible or liable as guarantor or otherwise and (c)
amendments, renewals and refundings of any such indebtedness; provided, however,
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that such term shall not include any obligations under leases or any guarantees
of obligations of others under leases. It is understood that for the purposes
of this definition the term "principal" when used at any date with respect to
any indebtedness issued at a discount shall mean the amount of principal of such
indebtedness that could be declared due and payable on that date upon the
occurrence of one or more events permitting the acceleration of such
indebtedness pursuant to the terms of such indebtedness.
"GAAP" shall mean United States generally accepted accounting
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principles, applied on a consistent basis.
"Governmental Authority" shall mean any court or governmental agency,
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authority, instrumentality or regulatory body, in each case whether Federal,
state, local or foreign.
"Indenture" shall mean the Indenture dated as of April 1, 1994, between
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JCPenney and Bank of America National Trust and Savings Association, as trustee.
"Index Debt" shall mean JCPenney's senior unsecured, non credit-
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enhanced, publicly held long-term indebtedness.
"Interest Payment Date" shall mean, with respect to any Loan, the last
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day of the Interest Period applicable thereto and, in the case of a Eurodollar
Loan with an Interest Period of more than three months' duration or a CD Loan or
Fixed Rate Loan with an Interest Period of more than 90 days' duration, each day
that would have been an Interest
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Payment Date for such Loan had successive Interest Periods of three months'
duration or 90 days' duration, as the case may be, been applicable to such Loan
and, in addition, the date of any refinancing or conversion of such Loan with or
to a Loan of a different Type.
"Interest Period" shall mean (a) as to any Eurodollar Borrowing that is
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a Standby Borrowing, the period commencing on the date of such Borrowing or on
the last day of the immediately preceding Interest Period applicable to such
Borrowing, as the case may be, and ending on the numerically corresponding day
(or, if there is no numerically corresponding day, on the last day) in the
calendar month that is 1, 2, 3, 6 or, subject to availability from each Lender,
12 months thereafter, as the Borrower requesting such Borrowing may elect, (b)
as to any ABR Borrowing, the period commencing on the date of such Borrowing and
ending on the date specified in the related Standby Borrowing Request (which
date shall in no event be later than 5 Business Days after the date of such
Borrowing), (c) as to any Eurodollar Borrowing that is a Competitive Borrowing,
the period commencing on the date of such Borrowing and ending on the date
specified in the Competitive Bids in which the offers to make the Eurodollar
Competitive Loans comprising such Borrowing were extended (which date shall be
(A) the numerically corresponding day (or, if there is no numerically
corresponding day, the last day) in the calendar month that is 1, 2, 3, 6, 9 or
12 months after the date of such Borrowing or (B) such other date as shall be
specified in such Competitive Bids) and (d) as to any CD Borrowing or Fixed Rate
Borrowing, the period specified in the Competitive Bids in which the offers to
make the CD Loans or Fixed Rate Loans comprising such Borrowing were extended,
commencing on the date of such Borrowing (which period shall be a period of 30,
60, 90, 180 or 360 days' duration or such other duration as shall be specified
in such Competitive Bids); provided, however, that (x) if any Interest Period
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would end on a day other than a Business Day, such Interest Period shall be
extended to the next succeeding Business Day unless, in the case of Eurodollar
Loans only, such next succeeding Business Day would fall in the next calendar
month, in which case such Interest Period shall end on the next preceding
Business Day, (y) no Interest Period may be selected that ends later than the
Maturity Date then in effect and (z) the Interest Period for any ABR Loan or CD
Loan made in lieu of, or resulting from the conversion of, a Eurodollar Loan
pursuant to Section 2.10 or 2.14 shall be determined in accordance with the
provisions of such Section. Interest shall accrue from and including the first
day of an Interest Period to but excluding the last day of such Interest Period.
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"Investment" shall mean, with respect to each of Funding and its
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Subsidiaries only, any acquisition of any of the capital stock of any
corporation, or any acquisition of indebtedness of, or any capital contribution,
loan or advance to, or any guarantee of an obligation of, any person, except (i)
any loan or advance made in connection with the lease, purchase or construction
of office space for Funding or any of its Subsidiaries or the purchase of
materials, supplies, services or equipment for the offices of Funding or any of
its Subsidiaries and (ii) any guarantee or endorsement made in the ordinary
course of business in connection with the deposit of items for collection or any
guarantee of an obligation of an agent or an employee of Funding or any of its
Subsidiaries that is required to meet applicable legal requirements.
"LIBO Rate" shall mean, with respect to any Eurodollar Borrowing for
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any Interest Period, an interest rate per annum (rounded upwards, if necessary,
to the next 1/16 of 1%) equal to the average of the rates at which dollar
deposits approximately equal in principal amount to (i) in the case of a Standby
Borrowing, each LIBO Reference Lender's portion of such Eurodollar Borrowing and
(ii) in the case of a Competitive Borrowing, the principal amounts that would
have been each LIBO Reference Lender's portion of such Competitive Borrowing had
such Competitive Borrowing been a Standby Borrowing, and for a maturity
comparable to such Interest Period are offered to the principal London office of
the applicable LIBO Reference Lender in immediately available funds in the
London interbank market at approximately 11:00 a.m., London time, two Business
Days prior to the commencement of such Interest Period.
"LIBO Reference Lenders" shall mean Xxxxxx Guaranty Trust Company of
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New York, Credit Suisse and The First National Bank of Chicago, or such other or
additional Lenders as the Borrowers, the Agent and the Required Lenders shall
designate in writing as "LIBO Reference Lenders".
"Lien" shall mean, with respect to any asset, any mortgage, lien,
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pledge or security interest in or on such asset.
"Loan" shall mean a Competitive Loan or a Standby Loan, whether made as
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a Eurodollar Loan, a CD Loan, a Fixed Rate Loan or an ABR Loan, as permitted
hereby.
"Margin Stock" shall have the meaning given such term under
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Regulation U.
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"Material Adverse Effect" shall mean (a) a materially adverse effect on
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the business, assets or financial condition of (i) JCPenney and the Restricted
Subsidiaries, taken as a whole, or (ii) Funding and its Subsidiaries, taken as a
whole, (b) a material impairment of the ability of any Borrower to perform any
of its obligations under this Agreement or (c) a material impairment of the
rights of or benefits available to the Lenders under this Agreement (other than
any such impairment of rights or benefits that is primarily attributable to (x)
action taken by or against one or more Lenders (excluding any action against one
or more Lenders taken by any Borrower or Restricted Subsidiary) or (y)
circumstances that are unrelated to any Borrower).
"Material Subsidiary" shall mean, at any date of determination, any
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Restricted Subsidiary then having consolidated assets in an amount greater than
1% of the consolidated assets of JCPenney and its Subsidiaries, as reflected in
the then most recently published annual audited financial statements of
JCPenney.
"Maturity Date" shall mean December 3, 2001.
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"Maximum Amount" shall mean, with respect to any amount owing to any
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Lender under this Agreement or in connection herewith, the maximum amount of
interest that such Lender is permitted to charge under applicable law on such
amount.
"Moody's" shall mean Xxxxx'x Investors Service, Inc. and any successor
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thereto that is a nationally recognized rating agency.
"Multiemployer Plan" shall mean a multiemployer plan as defined in
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Section 4001(a)(3) of ERISA to which any Borrower or any ERISA Affiliate (other
than one considered an ERISA Affiliate only pursuant to subsection (m) or (o) of
Section 414 of the Code) is making or accruing an obligation to make
contributions, or has within any of the preceding five plan years made or
accrued an obligation to make contributions.
"Net Tangible Assets" shall mean the aggregate amount at which the
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assets of JCPenney and all Restricted Subsidiaries are reflected, in accordance
with GAAP as in effect on the Closing Date, on the asset side of the
consolidated balance sheet, as at the close of a monthly accounting period
(selected by JCPenney) ending within the 65 days next preceding the date of
determination, of JCPenney and the Restricted Subsidiaries (after deducting all
15
valuation and qualifying reserves relating to said assets), except any of the
following described items that may be included among said assets:
(a) trademarks, patents, goodwill and similar intangibles;
(b) investments in and advances to Non-Restricted Subsidiaries; and
(c) capital lease property rights,
after deducting from such amount current liabilities (other than deferred tax
effects) as reflected, in accordance with GAAP as in effect on the Closing Date,
on such balance sheet.
"Non-Restricted Subsidiary" shall mean any Subsidiary other than the
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Restricted Subsidiaries.
"Officer's Certificate" of any corporation shall mean a certificate
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signed by a Responsible Officer of such corporation.
"PBGC" shall mean the Pension Benefit Guaranty Corporation referred to
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and defined in ERISA.
"Penney Supplier" shall mean any person that supplies goods or services
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to JCPenney or any Subsidiary.
"Penney Supplier Receivables" shall mean the obligations of Penney
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Suppliers for the payment of money for goods or services sold by JCPenney or any
Subsidiary to Penney Suppliers for use in goods or services to be supplied to
JCPenney or any Subsidiary.
"person" shall mean any individual, corporation, partnership, joint
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venture, association, joint-stock company, trust, unincorporated organization or
Governmental Authority.
"Plan" shall mean any pension plan (other than a Multiemployer Plan)
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subject to the provisions of Title IV of ERISA or Section 412 of the Code that
is maintained for employees of any Borrower or ERISA Affiliate.
"Pricing Schedule" shall mean the Pricing Schedule attached as Exhibit
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D hereto.
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"Prime Rate" shall mean the rate of interest publicly announced by
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Xxxxxx Guaranty Trust Company of New York in New York City from time to time as
its Prime Rate.
"Principal Property" shall mean all real property and tangible personal
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property owned by JCPenney or a Restricted Subsidiary constituting a part of any
store, warehouse or distribution center located within one of the 00 xxxxxx xx
xxx Xxxxxx Xxxxxx or the District of Columbia, exclusive of motor vehicles,
mobile materials-handling equipment and other rolling stock, cash registers and
other point of sale recording devices and related equipment, and data processing
and other office equipment; provided, however, that such term shall not include
-------- -------
any such property constituting a part of any such store, warehouse or
distribution center unless the net book value of all real property (including
leasehold improvements) and store fixtures constituting a part of such store,
warehouse or distribution center exceeds .25% of Stockholders' Equity.
"Receivables" shall mean the obligations of customers for the payment
-----------
of money arising under agreements between such customers and JCPenney or any
Subsidiary.
"Register" shall have the meaning assigned to such term in
--------
Section 9.04(d).
"Regulation G" shall mean Regulation G of the Board as from time to
------------
time in effect and all official rulings and interpretations thereunder or
thereof.
"Regulation U" shall mean Regulation U of the Board as from time to
------------
time in effect and all official rulings and interpretations thereunder or
thereof.
"Regulation X" shall mean Regulation X of the Board as from time to
------------
time in effect and all official rulings and interpretations thereunder or
thereof.
"Reportable Event" shall mean any reportable event as defined in
----------------
Section 4043(b) of ERISA or the regulations issued thereunder with respect to a
Plan (other than a Plan maintained by an ERISA Affiliate which is considered an
ERISA Affiliate only pursuant to subsection (m) or (o) of Section 414 of the
Code).
"Required Lenders" shall mean, at any time, (a) for the purposes of
----------------
terminating the Commitments pursuant to clause (x) of Article VII, Lenders
having Commitments representing at least 66-2/3% of the Total Commitment,
17
(b) for purposes of acceleration pursuant to clause (y) of Article VII, Lenders
holding Loans representing at least 66-2/3% of the aggregate principal amount of
the Loans outstanding and (c) for all other purposes, Lenders having Commitments
representing greater than 50% of the Total Commitment or, if the Commitments
shall have been terminated, Lenders holding Loans representing greater than 50%
of the aggregate principal amount of the Loans outstanding.
"Responsible Officer" of any corporation shall mean the chairman, vice
-------------------
chairman, president, chief financial officer, treasurer or controller of such
corporation or any executive or senior vice president of such corporation.
"Restricted Subsidiary" shall mean any Subsidiary of JCPenney (other
---------------------
than Funding) which JCPenney shall, by an Officer's Certificate of JCPenney,
have designated as a Restricted Subsidiary and the designation of which as a
Restricted Subsidiary shall not have been cancelled by an Officer's Certificate
of JCPenney; provided, however, that neither the designation of a Subsidiary as
-------- -------
a Restricted Subsidiary nor the cancellation of such designation shall be
operative if the immediate effect of such designation or cancellation shall be
to make Net Tangible Assets less than 200% of the Senior Funded Indebtedness of
JCPenney and the Restricted Subsidiaries on a pro forma basis (eliminating
intercompany items); and provided, further, that any Officer's Certificate
-------- -------
designating a Subsidiary as a Restricted Subsidiary or cancelling such
designation shall set forth the Net Tangible Assets and Senior Funded
Indebtedness of JCPenney and its Restricted Subsidiaries on a pro forma basis
(eliminating intercompany items) and show compliance with the first proviso of
this paragraph. Any such designation or cancellation of such designation may be
made more than once with respect to any Subsidiary.
"S&P" shall mean Standard & Poor's Ratings Services and any successor
---
thereto that is a nationally recognized rating agency.
"SEC" shall mean the Securities and Exchange Commission.
---
"Senior Funded Indebtedness" of JCPenney shall mean any Funded
--------------------------
Indebtedness of JCPenney unless in any instrument or instruments evidencing or
securing such Funded Indebtedness or pursuant to which the same is outstanding,
or in any amendment, renewal, extension or refunding of such Funded
Indebtedness, it is provided that such Funded Indebtedness is subordinate in
right of payment to the Loans (a) in
18
the event of any dissolution or winding-up or total or partial liquidation or
reorganization of JCPenney, whether voluntary or involuntary, or any bankruptcy,
insolvency, receivership or similar proceedings relative to JCPenney and (b) in
the event of any default in the payment of principal (including any required
prepayments or amortization) of or interest on any Loans of JCPenney. "Senior
Funded Indebtedness" of any Restricted Subsidiary means any Funded Indebtedness
of such Restricted Subsidiary and the aggregate preference on involuntary
liquidation of any class of stock of such Restricted Subsidiary ranking, either
as to payment of dividends or distribution of assets, prior to any other class
of stock of such Restricted Subsidiary.
"Standby Borrowing" shall mean a Borrowing consisting of simultaneous
-----------------
Standby Loans from each of the Lenders.
"Standby Borrowing Request" shall mean a request made pursuant to
-------------------------
Section 2.04 in the form of Exhibit A-4.
"Standby Loans" shall mean the revolving loans made by the Lenders to
-------------
the Borrowers pursuant to Section 2.04. Each Standby Loan shall be a Eurodollar
Standby Loan or an ABR Loan.
"Standby Margin" shall mean with respect to each Standby Loan made as
--------------
part of any ABR Borrowing, 0, and with respect to each Standby Loan made as part
of any Eurodollar Standby Borrowing, the Euro-Dollar Margin determined daily in
accordance with the Pricing Schedule.
"Statutory Reserves" shall mean a fraction (expressed as a decimal),
------------------
the numerator of which is the number one and the denominator of which is the
number one minus the aggregate of the actual reserve percentages (including any
marginal, special, emergency or supplemental reserves) expressed as a decimal
established by the Board and any other banking authority to which the Agent is
subject for new negotiable nonpersonal time deposits in dollars of over $100,000
with maturities approximately equal to the applicable Interest Period.
Statutory Reserves shall be adjusted automatically on and as of the effective
date of any change in any reserve percentage.
"Stockholders' Equity" shall mean the sum, as at the close of a monthly
--------------------
accounting period (selected by JCPenney) ending within the 65 days next
preceding the date of determination, of (a) the aggregate of capital, capital
stock, capital surplus, capital in excess of par value of
19
stock, reinvested earnings, earned surplus and net income retained for use in
the business (however the foregoing may be designated), after deducting the cost
of shares of capital stock of JCPenney held in its treasury, of JCPenney and its
consolidated Subsidiaries, determined in accordance with GAAP, plus (b) the
amount reflected in such determination as deferred tax effects.
"Subsidiary" shall mean (a) any corporation of which JCPenney, directly
----------
or indirectly, owns more than 50% of the outstanding stock which at the time
shall have by the terms thereof ordinary voting power to elect directors of such
corporation, irrespective of whether or not at the time stock of any other class
or classes of such corporation shall have or might have voting power by reason
of the happening of any contingency, or (b) any such corporation of which such
percentage of shares of outstanding stock of the character described in the
foregoing clause (a) shall at the time be owned, directly or indirectly, (i) by
JCPenney and one or more Subsidiaries as defined in the foregoing clause (a) or
(ii) by one or more such Subsidiaries.
"Support Agreements" shall mean (a) the Amended and Restated
------------------
Receivables Agreement dated as of January 29, 1980, between JCPenney and Funding
(formerly X. X. Penney Financial Corporation), as amended by Amendment Xx. 0
xxxxxxx xxxxx xx xx Xxxxxxx 00, 0000, (x) the Loan Agreement dated as of January
28, 1986, between JCPenney and Funding, as amended by Amendment No. 1 thereto
dated as of December 26, 1986 and by Amendment No. 2 dated as of November 22,
1996, in each case as amended or modified from time to time in compliance with
Section 5.10 and (c) the subordinated Guaranty of the obligations of Funding
dated as of December 3, 1996, executed by JCPenney in favor of the Lenders and
attached hereto as Exhibit C.
"Taxes" shall mean, with respect to any Lender or Agent, any and all
-----
U.S. Federal income taxes after application of any relevant treaty or convention
and all interest and penalties with respect thereto, attributable to any payment
made by any Borrower hereunder to such Lender or Agent.
"Total Commitment" shall mean at any time the aggregate amount of the
----------------
Lenders' Commitments, as in effect at such time.
"Tranche B Credit Agreement" shall mean the $1,500,000,000 364-Day
--------------------------
Revolving Credit Agreement amended and restated as of the Closing Date among the
Borrowers, the
20
financial institutions named therein as lenders (which include certain of the
Lenders), Xxxxxx Guaranty Trust Company of New York as Agent for the Lenders,
and Bank of America Illinois, Bankers Trust Company, The Chase Manhattan Bank,
Citibank, N.A., Credit Suisse and NationsBank of Texas, N.A. as Co-Agents for
the Lenders, as such agreement may be amended from time to time.
"Transactions" shall have the meaning assigned to such term in Section
------------
3.02.
"Type", when used in respect of any Loan or Borrowing, shall refer to
----
the Rate by reference to which interest on such Loan or on the Loans comprising
such Borrowing is determined. For purposes hereof, "Rate" shall include the
LIBO Rate, the Adjusted CD Rate, and the Alternate Base Rate and, in the case of
any Fixed Rate Loan, the fixed percentage rate per annum specified by the Lender
making such Loan in its related Competitive Bid.
SECTION 1.02. Terms Generally. The definitions in Section 1.01 shall
----------------
apply equally to both the singular and plural forms of the terms defined.
Whenever the context may require, any pronoun shall include the corresponding
masculine, feminine and neuter forms. The words "include", "includes" and
"including" shall be deemed to be followed by the phrase "without limitation".
All references herein to Articles, Sections, Exhibits and Schedules shall be
deemed references to Articles and Sections of, and Exhibits and Schedules to,
this Agreement unless the context shall otherwise require. Except as otherwise
expressly provided herein, all terms of an accounting or financial nature shall
be construed in accordance with GAAP, as in effect from time to time; provided,
--------
however, that, for purposes of determining compliance with any covenant set
-------
forth in Article VI, such terms shall be construed in accordance with GAAP as in
effect on the date of this Agreement applied on a basis consistent with the
application used in preparing JCPenney's audited consolidated financial
statements referred to in Section 3.05.
ARTICLE II. THE CREDITS
SECTION 2.01. Commitments. Subject to the terms and conditions and
------------
relying upon the representations and warranties herein set forth, each Lender
agrees, severally and not jointly, to make Standby Loans to the Borrowers at any
time and from time to time on and after the Closing Date and until the earlier
of the Maturity Date and the
21
termination of the Commitment of such Lender, in an aggregate principal amount
at any time outstanding not to exceed such Lender's Commitment, subject,
however, to the conditions that (a) at no time shall the outstanding aggregate
principal amount of all Loans made by all Lenders exceed the Total Commitment
and (b) at all times the outstanding aggregate principal amount of all Standby
Loans made by each Lender to a Borrower shall equal the product of (i) the
percentage which its Commitment represents of the Total Commitment times (ii)
the outstanding aggregate principal amount of all Standby Loans made to such
Borrower pursuant to Section 2.04. Subject to Section 2.03(h), any Lender may
at its discretion make Competitive Loans in an aggregate principal amount up to
the amount of the Total Commitment of the Lenders hereunder. Each Lender's
Commitment as of the Closing Date is set forth opposite its respective name in
Schedule 2.01 and, after the Closing Date, each Lender's Commitment shall be set
forth opposite its respective name in the Register. Such Commitments may be
terminated, reduced or extended from time to time pursuant to Section 2.11 and
increased from time to time pursuant to Section 2.21.
Within the foregoing limits, the Borrowers may borrow, pay or prepay
and reborrow hereunder, on and after the Closing Date and prior to the Maturity
Date, subject to the terms, conditions and limitations set forth herein.
SECTION 2.02. Loans. (a) Each Standby Loan shall be made as part of
------
a Borrowing consisting of Loans made by the Lenders ratably in accordance with
their Commitments; provided, however, that the failure of any Lender to make any
-------- -------
Standby Loan shall not by itself relieve any other Lender of its obligation to
lend hereunder (it being understood, however, that no Lender shall be
responsible for the failure of any other Lender to make any Loan required to be
made by such other Lender). Each Competitive Loan shall be made in accordance
with the procedures set forth in Section 2.03. The Standby Loans or Competitive
Loans comprising any Borrowing shall be (i) in the case of Competitive Loans, in
an aggregate principal amount which is an integral multiple of $5,000,000 and
not less than $25,000,000 (or, if less, an aggregate principal amount equal to
the Total Commitment on the date of such Borrowing minus the outstanding
aggregate principal amount on such date of all Competitive Loans) and (ii) in
the case of Standby Loans, in an aggregate principal amount which is an integral
multiple of $5,000,000 and not less than $25,000,000 (or an aggregate principal
amount equal to the remaining available balance of the Total Commitment).
22
(b) Subject to Sections 2.10 and 2.14, each Competitive Borrowing
shall be comprised entirely of Eurodollar Competitive Loans, CD Loans or Fixed
Rate Loans, and each Standby Borrowing shall be comprised entirely of Eurodollar
Standby Loans or ABR Loans, as the Borrower requesting such Competitive
Borrowing or Standby Borrowing may specify pursuant to Section 2.03 or 2.04, as
the case may be.
(c) Subject to Section 2.05, each Lender shall make each Loan to be
made by it hereunder on the proposed date thereof by wire transfer of
immediately available funds to the Agent in New York, New York, not later than
12:00 noon, New York City time (11:00 a.m., New York City time, in the case of a
Eurodollar Loan), and the Agent shall by 2:00 p.m., New York City time, credit
the amounts so received as instructed by the Borrower of such Loan or, if a
Borrowing shall not occur on such date because any condition precedent herein
specified shall not have been met, return the amounts so received to the
respective Lenders. Competitive Loans shall be made by the Lender or Lenders
whose Competitive Bids therefor are accepted pursuant to Section 2.03 in the
amounts so accepted and Standby Loans shall be made by the Lenders pro rata in
accordance with Section 2.16. Unless the Agent shall have received notice from
a Lender prior to the date of any Borrowing that such Lender will not make
available to the Agent such Lender's portion of such Borrowing, the Agent may
assume that such Lender has made such portion available to it on the date of
such Borrowing in accordance with this paragraph (c) and may, in reliance upon
such assumption, make a corresponding amount available on such date to the
Borrower requesting such Borrowing. If and to the extent that such Lender shall
not have made such portion available to the Agent, such Lender and such Borrower
severally agree to pay or repay to the Agent forthwith on demand such
corresponding amount together with interest thereon, for each day from the date
such amount is made available to such Borrower until the date such amount is
repaid to the Agent at (i) in the case of such Borrower, the interest rate
applicable at the time to the Loans comprising such Borrowing and (ii) in the
case of such Lender, the Federal Funds Effective Rate; provided, however, that
-------- -------
such Borrower shall not in any event have any liability in respect of such
repayment under Section 2.15. If such Lender shall pay to the Agent such
corresponding amount, such amount shall constitute such Lender's Loan as part of
such Borrowing for purposes of this Agreement.
(d) Notwithstanding any other provision of this Agreement, no Borrower
shall be entitled to request any
23
Borrowing if the Interest Period requested with respect thereto would end after
the Maturity Date.
(e) The Loans of each Type made by each Lender shall be made through
and maintained at such Lender's Applicable Lending Office for Loans of such
Type. Any Lender may change its Applicable Lending Office for any Type of Loans
without the prior written consent of JCPenney so long as (i) such Lender shall
have no knowledge that such change would cause it to be unlawful for such Lender
to make or maintain any Eurodollar Loan or to give effect to its obligations as
contemplated hereby with respect to any Eurodollar Loan and (ii) such Lender
shall not be entitled to recoupment, reimbursement or indemnification in
accordance with the terms and conditions of Sections 2.13 and 2.15 to the extent
that such Lender shall have had knowledge at the time of such change in
Applicable Lending Office that such entitlement would arise as a result of such
change.
SECTION 2.03. Competitive Bid Procedure. (a) In order to request
--------------------------
Competitive Bids, a Borrower shall hand deliver, telex or telecopy to the Agent
a duly completed Competitive Bid Request in the form of Exhibit A-1 hereto, to
be received by the Agent (i) in the case of a Eurodollar Borrowing or a CD
Borrowing, not later than 11:00 a.m., New York City time, four Business Days
before a proposed Competitive Borrowing and (ii) in the case of a Fixed Rate
Borrowing, not later than 11:00 a.m., New York City time, one Business Day
before a proposed Competitive Borrowing. No ABR Loan shall be requested in, or
made pursuant to, a Competitive Bid Request. A Competitive Bid Request that
does not conform substantially to the format of Exhibit A-1 shall be rejected
and the Agent shall promptly notify the appropriate Borrower of such rejection
by telex or telecopier. Such request shall in each case refer to this Agreement
and specify (x) that the Borrowing then being requested is to be a Eurodollar
Borrowing, a CD Borrowing or a Fixed Rate Borrowing, (y) the date of such
Borrowing (which shall be a Business Day) and the aggregate principal amount
thereof (which shall be, subject to the third sentence of Section 2.02(a), in a
minimum principal amount of $25,000,000 and in an integral multiple of
$5,000,000 and (z) the Interest Period with respect thereto (which may not end
after the Maturity Date). Promptly after its receipt of a Competitive Bid
Request that is not rejected as aforesaid, the Agent shall invite by telex or
telecopier (in the form set forth in Exhibit A-2 hereto) the Lenders to bid, on
the terms and conditions of this Agreement, to make Competitive Loans pursuant
to the Competitive Bid Request.
24
(b) The Agent may, in its sole discretion, make one or more
Competitive Bids to the appropriate Borrower responsive to such Borrower's
Competitive Bid Request. Each Competitive Bid by the Agent must be submitted to
the Borrower via telex or telecopier, in the form of Exhibit A-3 hereto, (i) in
the case of a Eurodollar Borrowing or CD Borrowing, not later than 8:30 a.m.,
New York City time, three Business Days before a proposed Competitive Borrowing
and (ii) in the case of a Fixed Rate Borrowing, not later than 8:30 a.m., New
York City time, on the day of a proposed Competitive Borrowing. Each Lender
may, in its sole discretion, make one or more Competitive Bids to the
appropriate Borrower responsive to such Borrower's Competitive Bid Request.
Each Competitive Bid by a Lender must be received by the Agent via telex or
telecopier, in the form of Exhibit A-3 hereto, (i) in the case of a Eurodollar
Borrowing or CD Borrowing, not later than 9:00 a.m., New York City time, three
Business Days before a proposed Competitive Borrowing and (ii) in the case of a
Fixed Rate Borrowing, not later than 9:00 a.m., New York City time, on the day
of a proposed Competitive Borrowing. Multiple bids will be accepted by the
Agent. Competitive Bids that do not conform substantially to the format of
Exhibit A-3 may be rejected by the Agent after conferring with, and upon the
instruction of, the Borrower requesting such Competitive Bids, and the Agent
shall notify the Lender making such nonconforming bid of such rejection as soon
as practicable. Each Competitive Bid shall refer to this Agreement and specify
(x) the principal amount (which shall be in an integral multiple of $5,000,000
(unless such principal amount shall equal the entire principal amount of the
Competitive Borrowing requested by such Borrower) and which may equal such
entire principal amount) of the Competitive Loan or Loans that the Lender is
willing to make to the Borrower requesting such Competitive Bid, (y) the
Competitive Bid Rate or Rates at which the Lender is prepared to make the
Competitive Loan or Loans and (z) the Interest Period and the last day thereof.
If any Lender shall elect not to make a Competitive Bid, such Lender shall so
notify the Agent via telex or telecopier (A) in the case of a Eurodollar
Borrowing or a CD Borrowing, not later than 9:00 a.m., New York City time, three
Business Days before a proposed Competitive Borrowing and (B) in the case of a
Fixed Rate Borrowing, not later than 9:00 a.m., New York City time, on the day
of a proposed Competitive Borrowing; provided, however, that failure by any
-------- -------
Lender to give such notice shall not cause such Lender to be obligated to make
any Competitive Loan as part of such Competitive Borrowing. A Competitive Bid
submitted by a Lender pursuant to this paragraph (b) shall be irrevocable.
25
(c) The Agent shall notify the appropriate Borrower by telex or
telecopier not later than (i) in the case of a Eurodollar Borrowing or a CD
Borrowing, 10:00 a.m., New York City time, three Business Days before the
proposed Competitive Borrowing and (ii) in the case of a Fixed Rate Borrowing,
10:00 a.m., New York City time, on the day of the proposed Competitive Borrowing
of all the Competitive Bids made, the Competitive Bid Rate and the principal
amount of each Competitive Loan in respect of which a Competitive Bid was made
and the identity of the Lender that made each bid. The Agent shall send a copy
of all Competitive Bids to such Borrower for its records as soon as practicable
after completion of the bidding process set forth in this Section 2.03.
(d) The appropriate Borrower may in its sole and absolute discretion,
subject only to the provisions of this paragraph (d) and paragraph (h) below,
accept or reject any Competitive Bid referred to in paragraph (c) above. Such
Borrower shall notify the Agent by telex or telecopier not later than (i) in the
case of a Eurodollar Borrowing or a CD Borrowing, 11:30 a.m., New York City
time, three Business Days before the proposed Competitive Borrowing and (ii) in
the case of a Fixed Rate Borrowing, not later than 11:30 a.m., New York City
time, on the day of the proposed Competitive Borrowing whether and to what
extent it has decided to accept or reject any of or all the bids referred to in
paragraph (c) above; provided, however, that (v) the failure by such Borrower to
-------- -------
give such notice shall be deemed to be a rejection of all the bids referred to
in paragraph (c) above, (w) such Borrower shall not accept a bid made at a
particular Competitive Bid Rate if it has decided to reject a bid made at a
lower Competitive Bid Rate, (x) the aggregate amount of the Competitive Bids
accepted by such Borrower shall not exceed the principal amount specified in the
related Competitive Bid Request, (y) if such Borrower shall accept a bid or bids
made at a particular Competitive Bid Rate but the amount of such bid or bids
shall cause the total amount of bids to be accepted by such Borrower to exceed
the amount specified in the related Competitive Bid Request, then such Borrower
shall accept a portion of such bid or bids in an amount equal to the amount
specified in the related Competitive Bid Request less the amount of all other
Competitive Bids accepted with respect to such Competitive Bid Request, which
acceptance, in the case of multiple bids at such Competitive Bid Rate, shall be
made pro rata in accordance with the amount of each such bid at such Competitive
Bid Rate, and (z) except pursuant to clause (y) above, no bid shall be accepted
for a Competitive Loan unless the principal amount of such Competitive Loan is
in an
26
integral multiple of $5,000,000 or is equal to the entire principal amount of
the Competitive Borrowing being requested by such Borrower; provided further,
-------- -------
however, that if a Competitive Loan must be in an amount less than $5,000,000
-------
because of the provisions of clause (y) above, such Competitive Loan may be for
a minimum of $1,000,000 or any integral multiple thereof, and in calculating the
pro rata allocation of acceptances of portions of multiple bids at a particular
Competitive Bid Rate pursuant to clause (y) the amounts shall be rounded to
integral multiples of $1,000,000 in a manner which shall be in the discretion of
such Borrower. A notice given pursuant to this paragraph (d) by the appropriate
Borrower shall be irrevocable.
(e) The Agent shall promptly notify each bidding Lender whether or not
its Competitive Bid has been accepted (and if so, in what amount and at what
Competitive Bid Rate) by telex or telecopier sent by the Agent, and each
successful bidder will thereupon become bound, subject to the other applicable
conditions hereof, to make the Competitive Loan in respect of which its bid has
been accepted.
(f) The Borrowers shall not make more than 10 Competitive Bid Requests
during any 30-day period.
(g) All notices required by this Section 2.03 shall be given in
accordance with Section 9.01.
(h) At no time shall the outstanding aggregate principal amount of all
Competitive Loans made by all Lenders exceed the Total Commitment in effect at
such time.
(i) The Agent shall hold in confidence each Competitive Bid received
by the Agent until such Competitive Bid has been disclosed to the appropriate
Borrower pursuant to paragraph (d) above.
SECTION 2.04. Standby Borrowing Procedure. In order to request a
---------------------------
Standby Borrowing, a Borrower shall hand deliver, telex or telecopy a Standby
Borrowing Request in
the form of Exhibit A-4 to the Agent (a) in the case of a Standby Borrowing
that is a Eurodollar Borrowing, not later than 11:00 a.m., New York City time,
three Business Days before a proposed borrowing and (b) in the case of an ABR
Borrowing, not later than 10:00 a.m., New York City time, on the day of a
proposed borrowing. A Borrower shall be deemed to have given a Standby
Borrowing Request if it (i) notifies an officer of the Agent identified in
Section 9.01 by telephone of the content of such Standby Borrowing Request not
later than the relevant time set forth above for delivery
27
thereof and (ii) delivers such Standby Borrowing Request to the Agent as soon as
practicable; provided, however, that a Borrower shall not have any right to
-------- -------
receive the proceeds of a Standby Borrowing unless the Agent has received the
related written Standby Borrowing Request. Such notice shall be irrevocable and
shall in each case specify (i) whether the Borrowing then being requested is to
be a Eurodollar Borrowing or an ABR Borrowing; (ii) the date of such Standby
Borrowing (which shall be a Business Day) and the amount thereof; and (iii) the
Interest Period with respect thereto. If no election as to the Type of Standby
Borrowing is specified in any such notice, then the requested Standby Borrowing
shall be an ABR Borrowing. If no Interest Period with respect to any Standby
Borrowing is specified in any such notice, then the Borrower requesting such
Borrowing shall be deemed to have selected an Interest Period of one month's
duration, in the case of a Eurodollar Borrowing, or five days' duration, in the
case of an ABR Borrowing. If a Borrower shall not have given notice in
accordance with this Section 2.04 of its election to refinance a Standby
Borrowing of such Borrower prior to the end of the Interest Period in effect for
such Borrowing, then such Borrower shall (unless such Borrowing is repaid at the
end of such Interest Period) be deemed to have given notice of an election to
refinance such Borrowing with an ABR Borrowing. The Agent shall promptly advise
the Lenders of any notice given pursuant to this Section 2.04 and of each
Lender's portion of the requested Borrowing.
SECTION 2.05. Refinancings. Any Borrower may refinance all or any
-------------
part of any Borrowing of such Borrower with a Borrowing of the same or a
different Type made pursuant to Section 2.03 or Section 2.04, subject to the
conditions and limitations set forth herein and elsewhere in this Agreement,
including refinancings of Competitive Borrowings with Standby Borrowings and
Standby Borrowings with Competitive Borrowings. Any Borrowing or part thereof
so refinanced shall be deemed to be repaid in accordance with Section 2.07 with
the proceeds of a new Borrowing hereunder and the proceeds of the new Borrowing,
to the extent they do not exceed the principal amount of the Borrowing being
refinanced, shall not be paid by the Lenders to the Agent or by the Agent to the
appropriate Borrower pursuant to Section 2.02(c); provided, however, that (i) if
-------- -------
the principal amount extended by a Lender in a refinancing is greater than the
principal amount extended by such Lender in the Borrowing being refinanced, then
such Lender shall pay such difference to the Agent for distribution to the
Lenders described in (ii) below, (ii) if the principal amount extended by a
Lender in the Borrowing being refinanced is greater than the
28
principal amount being extended by such Lender in the refinancing, the Agent
shall return the difference to such Lender out of amounts received pursuant to
(i) above and (iii) to the extent any Lender fails to pay to the Agent amounts
due from it pursuant to (i) above, any Loan or portion thereof being refinanced
shall not be deemed repaid in accordance with Section 2.07 and shall be payable
by the Borrower to which such Loan was made; provided, however, that such
-------- -------
Borrower shall not have any liability under Section 2.15 in respect of any of
its payment obligations under this clause (iii).
SECTION 2.06. Fees. (a) The Borrowers agree, jointly and severally,
-----
to pay to each Lender, through the Agent, on each March 31, June 30, September
30 and December 31 and on the date on which the Commitment of such Lender shall
be terminated as provided herein, a facility fee (a "Facility Fee") at a rate
per annum equal to the Facility Fee Percentage from time to time in effect on
the amount of the Commitment of such Lender, whether used or unused, from time
to time in effect during the preceding quarter (or shorter period commencing on
the Closing Date and/or ending with the Maturity Date or the Commitment
Termination Date with respect to each Lender or any earlier date on which the
Commitment of such Lender shall be terminated). All Facility Fees shall be
computed in arrears on the basis of the actual number of days elapsed in a year
of 360 days. The Facility Fee due to each Lender shall commence to accrue on
the Closing Date (or, if later, the date on which such Lender became a Lender)
and shall cease to accrue on the earlier of the Maturity Date and the
termination of the Commitment of such Lender as provided herein.
(b) The Borrowers agree, jointly and severally, to pay to the Agent
from time to time, for its own account, agent and administrative fees (the
"Administrative Fees") at such times and in such amounts as have been previously
agreed upon in writing between the Borrowers and the Agent.
(c) All Fees shall be paid on the dates due in immediately available
funds. Once paid, none of the Fees shall be refundable, except in the event of
manifest error.
SECTION 2.07. Repayment of Loans; Evidence of the Borrowers'
----------------------------------------------
Obligations. Subject to Section 4.01, the outstanding principal balance of each
------------
Competitive Loan and Standby Loan made by any Lender shall be payable (i) except
in the case of ABR Loans, on the last day of the Interest Period applicable to
such Loan and (ii) on the Commitment Termination Date with respect to such
Lender. Each
29
Competitive Loan and each Standby Loan shall bear interest from the date thereof
on the outstanding principal balance thereof as set forth in Section 2.08. With
respect to each Lender, the entries made in the accounts maintained by the Agent
and such Lender shall be prima facie evidence of the existence and amounts of
the monetary obligations payable by any Borrower to such Lender in respect of
the Loans made by such Lender to such Borrower; provided that the failure to
--------
maintain any such accounts or any error therein shall not affect the obligations
of the Borrowers hereunder.
SECTION 2.08. Interest on Loans. (a) Subject to the provisions of
------------------
Section 2.09, the Loans comprising each Eurodollar Borrowing shall bear interest
(computed on the basis of the actual number of days elapsed over a year of 360
days) at a rate per annum on any date of determination equal to (i) in the case
of each Eurodollar Standby Loan, the LIBO Rate for the Interest Period in effect
for such Borrowing plus the Standby Margin for such date, and (ii) in the case
of each Eurodollar Competitive Loan, the LIBO Rate for the Interest Period in
effect for such Loan plus the Competitive Margin offered by the Lender making
such Loan and accepted by the Borrower requesting such Loan pursuant to Section
2.03. The LIBO Rate for each Interest Period shall be determined by the Agent
in consultation with the LIBO Reference Lenders, and such determination shall be
conclusive absent manifest error. The Agent shall promptly advise the Borrowers
and each Lender of such determination.
(b) Subject to the provisions of Section 2.09, the Loans comprising
each ABR Borrowing shall bear interest (computed on the basis of the actual
number of days elapsed over a year of 365 or 366 days, as the case may be) at a
rate per annum equal to the Alternate Base Rate. The Alternate Base Rate shall
be determined by the Agent, and such determination shall be conclusive absent
manifest error. The Agent shall promptly advise the Borrowers and each Lender
of such determination.
(c) Subject to the provisions of Section 2.09, the Loans comprising
each CD Borrowing shall bear interest (computed on the basis of the actual
number of days elapsed over a year of 360 days) at a rate per annum equal to the
Adjusted CD Rate for the Interest Period in effect for such Borrowing plus, in
the case of each such Loan, the Competitive Margin offered by the Lender making
such Loan and accepted by the Borrower requesting such Borrowing pursuant to
Section 2.03, provided, however, that any CD Loan made pursuant to Section 2.10
-------- -------
or 2.14 shall bear interest (computed as described in this paragraph) at a rate
per annum
30
on any date of determination equal to the Adjusted CD Rate for the Interest
Period applicable to such CD Loan plus the Standby Margin for Eurodollar Standby
Loans for such date plus 1/8 of 1% per annum.
(d) Subject to the provisions of Section 2.09, each Fixed Rate Loan
shall bear interest at a rate per annum (computed on the basis of the actual
number of days elapsed over a year of 360 days) equal to the fixed rate of
interest offered by the Lender making such Loan and accepted by the Borrower
requesting the applicable Fixed Rate Borrowing pursuant to Section 2.03.
(e) Interest on each Borrowing shall be payable on each applicable
Interest Payment Date.
SECTION 2.09. Default Interest. If any Borrower shall default in the
-----------------
payment of the principal of or interest on any Loan or any other amount becoming
due hereunder, whether by scheduled maturity, notice of prepayment, acceleration
or otherwise, such Borrower shall on demand from time to time from the Agent pay
interest, to the extent permitted by applicable law, on such defaulted amount
from the date on which the Agent first notifies such Borrower that it will be
required to pay interest pursuant to this Section on such defaulted amount up to
(but not including) the date of actual payment (after as well as before
judgment) at a rate per annum (computed on the basis of the actual number of
days elapsed over a year of 365 or 366 days, as the case may be) equal to the
Alternate Base Rate plus 2%.
SECTION 2.10. Alternate Rate of Interest. In the event, and on each
---------------------------
occasion, that on the day two Business Days prior to the commencement of any
Interest Period for a Eurodollar Borrowing the LIBO Reference Lenders shall have
determined and communicated to the Agent that dollar deposits in the principal
amounts of the Eurodollar Loans comprising such Borrowing are not generally
available in the London interbank market, or that the rates at which such dollar
deposits are being offered will not adequately and fairly reflect the cost to
any Lender of making or maintaining its Eurodollar Loan during such Interest
Period, or that reasonable means do not exist for ascertaining the LIBO Rate,
the Agent shall, as soon as practicable thereafter, give written or telex notice
of such determination to the Borrowers and the Lenders. In the event of any
such determination, until the Agent shall have advised the Borrowers and the
Lenders that the circumstances giving rise to such notice no longer exist, (i)
any request by any Borrower for a Competitive Borrowing pursuant to Section 2.03
31
shall be of no force and effect and shall be denied by the Agent and (ii) any
request by any Borrower for a Eurodollar Borrowing pursuant to Section 2.04
shall be deemed to be a request for (A) an ABR Borrowing having an Interest
Period of five days' duration and (B) a refinancing of such ABR Borrowing with
an ABR Borrowing or a CD Borrowing, as such Borrower shall elect by notice to
the Agent not later than 11:00 a.m., New York City time, one Business Day before
such refinancing, comprised of Loans having an Interest Period that is, when
added to the Interest Period for the ABR Borrowing being refinanced, equal to
(in the case of an ABR Borrowing) or as close as possible to (in the case of a
CD Borrowing) the Interest Period requested by such Borrower in connection with
such Eurodollar Borrowing. The parties hereto shall have the same rights and
obligations in respect of a deemed request for a CD Borrowing or an ABR
Borrowing pursuant to this Section and the CD Loans and ABR Loans made pursuant
thereto, and the Commitments shall be utilized by such CD Loans and such ABR
Loans, as if such Borrowing were a Standby Borrowing requested, and such Loans
were Standby Loans made, pursuant to Section 2.04. Each determination by the
LIBO Reference Lenders hereunder shall be conclusive absent manifest error.
SECTION 2.11. Termination and Reduction of Commitments. (a) Any
-----------------------------------------
Commitment that has not been terminated prior to the Maturity Date shall be
automatically terminated on the Maturity Date.
(b) Except as provided in Section 2.20 hereof, upon at least 5
Business Days' prior irrevocable written or telex notice to the Agent, JCPenney
may at any time in whole permanently terminate, or from time to time in part
permanently reduce, the Total Commitment; provided, however, that each partial
-------- -------
reduction of the Total Commitment shall be in an integral multiple of $5,000,000
and in a minimum principal amount of $25,000,000 or, if less, the Total
Commitment then in effect.
(c) Except as provided in Section 2.20, each reduction in the Total
Commitment hereunder shall be made ratably among the Lenders in accordance with
their respective Commitments. Subject to Section 9.09, the Borrowers shall pay
to the Agent for the account of the Lenders, on the date of each termination or
reduction, the Facility Fees accrued through the date of such termination or
reduction.
(d) The Commitment of each Lender shall automatically and permanently
terminate on December 3, 2001 (the "Commitment Termination Date"); provided,
--------
however, that the
-------
32
Commitment Termination Date with respect to any Lender shall not be extended
under any circumstances to a date later than the Maturity Date.
SECTION 2.12. Prepayment. (a) Each Borrower shall have the right at
-----------
any time and from time to time to prepay any Standby Borrowing or any
Competitive Borrowing of such Borrower, in whole or in part, subject to the
requirements of Section 2.15 but otherwise without premium or penalty, upon
giving written or telex notice (or telephone notice promptly confirmed by
written or telex notice) to the Agent before 10:00 a.m., New York City time, one
Business Day prior to such prepayment; provided, however, that each partial
-------- -------
prepayment shall be in an amount which is an integral multiple of $5,000,000 and
not less than $25,000,000.
(b) On the date of any termination or reduction of the Commitments
pursuant to Section 2.11, the Borrowers shall pay or prepay so much of the
Standby Borrowings as shall be necessary in order that the aggregate principal
amount of the Standby Loans outstanding will not exceed the Total Commitment
after giving effect to such termination or reduction.
(c) Each notice of prepayment shall specify the prepayment date and
the principal amount of each Borrowing (or portion thereof) to be prepaid, shall
be irrevocable and shall commit the Borrower giving such notice to prepay such
Borrowing (or portion thereof) by the amount stated therein on the date stated
therein. All prepayments under this Section 2.12 shall be subject to Section
2.15 but otherwise without premium or penalty. All prepayments under this
Section 2.12 shall be accompanied by accrued interest on the principal amount
being prepaid to the date of payment.
SECTION 2.13. Reserve Requirements; Change in Circumstances. Subject
------------------------------- --------------
to the procedures and limitations of Section 2.20:
(a) Notwithstanding any other provision herein, if after the date of
this Agreement any change in applicable law or regulation or in the
interpretation or administration thereof by any governmental authority charged
with the interpretation or administration thereof (whether or not having the
force of law) shall change the basis of taxation of payments to any Lender of
the principal of or interest on any Eurodollar Loan, CD Loan or Fixed Rate Loan
made by such Lender or any Fees or other amounts payable hereunder (other than
changes in respect of taxes imposed on such Lender by the jurisdiction in which
such Lender is organized, has its
33
principal office or maintains its Applicable Lending Office for such Loan or by
any political subdivision or taxing authority in any such jurisdiction), or
shall impose, modify or deem applicable any reserve, special deposit or similar
requirement against assets of, deposits with or for the account of or credit
extended by such Lender, or shall impose on such Lender or the London interbank
market any other condition affecting this Agreement or any Eurodollar Loan, CD
Loan or Fixed Rate Loan made by such Lender, and the result of any of the
foregoing shall be to increase the cost to such Lender of making or maintaining
any Eurodollar Loan, CD Loan or Fixed Rate Loan or to reduce the amount of any
sum received or receivable by such Lender hereunder (whether of principal,
interest or otherwise) by an amount deemed by such Lender in its reasonable
judgment to be material, then such additional amount or amounts as will
compensate such Lender for such additional costs incurred or reduction suffered
will be paid to such Lender in accordance with Section 2.20 (i) if such
additional costs or reduction shall relate to a particular Loan, by the Borrower
to which such Loan was made and (ii) otherwise, by JCPenney. Notwithstanding
the foregoing, no Lender shall be entitled to request compensation under this
paragraph with respect to any Loan if it shall have been aware that the change
giving rise to such request had been adopted or enacted at the earlier of the
time at which the Lender became a party to this Agreement or, with respect to a
Competitive Loan, the time of submission of the Competitive Bid pursuant to
which such Competitive Loan shall have been made.
(b) If the adoption after the Closing Date of any law, rule,
regulation or guideline regarding capital adequacy, or any change after the
Closing Date in any of the foregoing or in the interpretation or administration
of any of the foregoing by any governmental authority, central bank or
comparable agency charged with the interpretation or administration thereof, or
compliance by any Lender (or any Applicable Lending Office of such Lender) with
any request or directive regarding capital adequacy (whether or not having the
force of law) made or issued after the Closing Date by any such authority,
central bank or comparable agency, has or would have the effect of reducing the
rate of return on such Lender's capital as a consequence of this Agreement or
the Loans made by such Lender pursuant hereto to a level below that which such
Lender could have achieved but for such adoption, change or compliance (taking
into consideration such Lender's policies with respect to capital adequacy) by
an amount deemed by such Lender in its reasonable judgment to be material, then
subject to Section 2.20 hereof, from time to time such additional amount or
amounts as will compensate
34
such Lender for any such reduction suffered will be paid to such Lender in
accordance with Section 2.20 (i) if such reduction shall relate to a particular
Loan, by the Borrower to which such Loan was made and (ii) otherwise, by
JCPenney.
SECTION 2.14. Change in Legality. (a) Notwithstanding any other
-------------------
provision herein, if any change after the Closing Date in any law or regulation
or in the interpretation thereof by any Governmental Authority charged with the
administration or interpretation thereof shall make it unlawful for any Lender
to make or maintain any Eurodollar Loan or to give effect to its obligations as
contemplated hereby with respect to any Eurodollar Loan, then, by written notice
to the Borrowers and to the Agent, such Lender may:
(i) declare that Eurodollar Loans will not thereafter be made by such
Lender hereunder, whereupon such Lender shall not submit a Competitive Bid
in response to a request for Competitive Loans and any request by any
Borrower for a Standby Borrowing comprised of Eurodollar Loans shall, as
to such Lender only, be deemed a request for an ABR Loan or a CD Loan, as
such Borrower shall elect by notice to the Agent not later than 11:00
a.m., New York City time, one Business Day before such Borrowing, having
an Interest Period equal to (in the case of an ABR Loan) or as close as
possible to (in the case of a CD Loan) the Interest Period applicable to
such Eurodollar Loans unless such declaration shall be subsequently
withdrawn; and
(ii) require that all outstanding Eurodollar Loans made by it be
converted to ABR Loans or to CD Loans, in which event all such Eurodollar
Loans shall be automatically converted to ABR Loans or, if JCPenney shall
so notify the Agent on the date of such conversion and the Agent shall
have determined that the Adjusted CD Rate can be determined for the
Interest Period in question, to CD Loans as of the effective date of such
notice as provided in paragraph (b) below.
In the event any Lender shall exercise its rights under (i) or (ii) above, all
payments and prepayments of principal that would otherwise have been applied to
repay the Eurodollar Loans that would have been made by such Lender or the
converted Eurodollar Loans of such Lender shall instead be applied to repay the
ABR Loans or CD Loans made by such Lender in lieu of, or resulting from the
conversion of, such Eurodollar Loans. The parties hereto shall have the same
35
rights and obligations in respect of a deemed request for a CD Loan pursuant to
clause (i) above and any CD Loan made pursuant to paragraph (a) above, and the
Commitments shall be utilized by any such CD Loan, as if such CD Loan were a
Standby Loan requested and made pursuant to Section 2.04.
(b) For purposes of this Section 2.14, a notice to the Borrowers by
any Lender shall be effective as to each Eurodollar Loan, if lawful, on the last
day of the Interest Period currently applicable to such Eurodollar Loan; in all
other cases such notice shall be effective on the date of receipt by the
Borrowers (in which case the ABR Loan or CD Loan resulting from the conversion
of such Eurodollar Loan pursuant to clause (ii) of paragraph (a) above shall
have an Interest Period equal to (in the case of an ABR Loan) or as close as
possible to (in the case of a CD Loan) the Interest Period applicable to such
Eurodollar Loan).
SECTION 2.15. Indemnity. Each Borrower agrees to indemnify the Agent
----------
and each Lender against any reasonable out-of-pocket loss or expense which the
Agent and/or such Lender may sustain or incur as a consequence of (a) any
failure by such Borrower to fulfill on the date of any borrowing hereunder the
applicable conditions set forth in Article IV, (b) any failure by such Borrower
to borrow or to refinance or continue any Loan hereunder after irrevocable
notice of such borrowing, refinancing or continuation has been given pursuant to
Section 2.03 or 2.04, (c) any payment, prepayment or conversion of a Eurodollar
Loan, CD Loan or Fixed Rate Loan made to such Borrower that is required by any
other provision of this Agreement or otherwise made or deemed made on a date
other than the last day of the Interest Period applicable thereto or (d) any
default in payment or prepayment of the principal amount of any Eurodollar Loan,
CD Loan or Fixed Rate Loan made to such Borrower or any part thereof or interest
accrued thereon, as and when due and payable (at the due date thereof, whether
by scheduled maturity, acceleration, irrevocable notice of prepayment or
otherwise), after the expiration of the applicable grace period, including, in
each such case, any reasonable out-of-pocket loss or expense sustained or
incurred in liquidating or employing deposits from third parties acquired to
effect or maintain such Loan or any part thereof as a Eurodollar Loan, CD Loan
or Fixed Rate Loan. Such loss or reasonable expense shall include an amount
equal to the excess, if any, as reasonably determined by the Agent and/or such
Lender, of (i) its cost of obtaining the funds for the Loan being paid, prepaid,
converted or not borrowed (based on the LIBO Rate or Adjusted CD Rate or, in the
case of a Fixed Rate Loan, the fixed rate of interest applicable thereto) for
the period
36
from the date of such payment, prepayment or failure to borrow to the last day
of the Interest Period for such Loan (or, in the case of a failure to borrow,
the Interest Period for such Loan which would have commenced on the date of such
failure) over (ii) the amount of interest (as reasonably determined in good
faith by the Agent and/or such Lender) that would be realized by the Agent
and/or such Lender in reemploying the funds so paid, prepaid or not borrowed for
such period or Interest Period, as the case may be; provided, however, that with
-------- -------
respect to any Eurodollar Loan or CD Loan for which the corresponding LIBO Rate
or Adjusted CD Rate, as the case may be, is available for the period or Interest
Period in question, the amount of interest realized in reemploying such funds
shall be computed at such LIBO Rate or Adjusted CD Rate, as the case may be, at
the time of the applicable payment, prepayment or failure to borrow. In order
to exercise its rights under this Section, the Agent and/or a Lender shall
deliver to the appropriate Borrower a certificate setting forth any amount or
amounts which the Agent and/or such Lender is entitled to receive pursuant to
this Section. Such Borrower shall have a 30-Business Day period following the
receipt of such certificate (if such Borrower in good faith disagrees with the
assertion that any payment under such section is due or with the amount shown as
due on such certificate and so notifies the Agent and/or such Lender of such
disagreement within 10 Business Days following receipt of such certificate) to
negotiate with the Agent and/or such Lender, which negotiations shall be
conducted by the respective parties in good faith, and to agree upon another
amount that will adequately compensate the Agent and/or such Lender, it being
expressly understood that if such Borrower does not provide the required notice
of its disagreement as provided above, such Borrower shall pay the amount shown
as due on the certificate on the tenth Business Day following receipt thereof
and further if such Borrower does provide such required notice, and negotiations
are entered into but do not result in agreement by such Borrower and the Agent
and/or such Lender within the 30-Business Day period, then such Borrower shall
pay the amount shown as due on the certificate on the last day of such period.
SECTION 2.16. Pro Rata Treatment. Except as required under Sections
-------------------
2.14 and 2.20(b), each Standby Borrowing, each payment or prepayment of
principal of any Standby Borrowing, each payment of interest on the Standby
Loans, each payment of the Facility Fees, each reduction of the Commitments and
each refinancing of any Borrowing with a Standby Borrowing of any Type, shall be
allocated pro rata among the Lenders in accordance with their respective
Commitments (or, if such Commitments shall have expired or
37
been terminated, in accordance with the respective principal amounts of their
outstanding Standby Loans). Each payment of principal of any Competitive
Borrowing shall be allocated pro rata among the Lenders participating in such
Borrowing in accordance with the respective principal amounts of their
outstanding Competitive Loans comprising such Borrowing. Each payment of
interest on any Competitive Borrowing shall be allocated pro rata among the
Lenders participating in such Borrowing in accordance with the respective
amounts of accrued and unpaid interest on their outstanding Competitive Loans
comprising such Borrowing. For purposes of determining the available
Commitments of the Lenders at any time, each outstanding Competitive Borrowing
shall be deemed to utilize the Commitments of each of the Lenders pro rata in
accordance with their respective Commitments. Each Lender agrees that in
computing such Lender's portion of any Borrowing to be made hereunder, the Agent
may, in its discretion, round each Lender's percentage of such Borrowing to the
next higher or lower whole dollar amount.
SECTION 2.17. Sharing of Setoffs. Each Lender agrees that if it
-------------------
shall, through the exercise of a right of banker's lien, setoff or counterclaim
against any Borrower, or pursuant to a secured claim under Section 506 of Title
11 of the United States Code or other security or interest arising from, or in
lieu of, such secured claim, received by such Lender under any applicable
bankruptcy, insolvency or other similar law or otherwise, or by any other means,
obtain payment (voluntary or involuntary) in respect of any Standby Loan or
Loans as a result of which the unpaid principal portion of its Standby Loans
shall be proportionately less than the unpaid principal portion of the Standby
Loans of any other Lender, it shall be deemed simultaneously to have purchased
from such other Lender at face value, and shall promptly pay to such other
Lender the purchase price for, a participation in the Standby Loans of such
other Lender, so that the aggregate unpaid principal amount of the Standby Loans
and participations in the Standby Loans held by each Lender shall be in the same
proportion to the aggregate unpaid principal amount of all Standby Loans then
outstanding as the principal amount of its Standby Loans prior to such exercise
of banker's lien, setoff or counterclaim or other event was to the principal
amount of all Standby Loans outstanding prior to such exercise of banker's lien,
setoff or counterclaim or other event; provided, however, that, if any such
-------- -------
purchase or purchases or adjustments shall be made pursuant to this Section 2.17
and the payment giving rise thereto shall thereafter be recovered, such purchase
or purchases or adjustments shall be rescinded to the extent of such recovery
and the purchase price or prices or adjustment
38
restored without interest. The Borrowers expressly consent to the foregoing
arrangements and agree that, subject to Section 9.06, any Lender holding a
participation in a Standby Loan deemed to have been so purchased may exercise
any and all rights of banker's lien, setoff or counterclaim with respect to any
and all moneys owing by any Borrowers to such Lender by reason thereof as fully
as if such Lender had made a Standby Loan directly to the Borrower in the amount
of such participation.
SECTION 2.18. Payments. (a) Each Borrower shall make each payment
---------
(including principal of or interest on any Borrowing or any Fees or other
amounts) required to be made by it hereunder not later than 12:00 (noon), New
York City time (11:00 a.m., New York City time, in the case of any payment to be
made to the Agent), on the date when due in dollars to the Agent at its account
number 000-00-000 (attn. PT2000)(ref: JCPenney), in each case in immediately
available funds.
(b) Whenever any payment (including principal of or interest on any
Borrowing or any Fees or other amounts) hereunder shall become due, or
otherwise would occur, on a day that is not a Business Day, such payment may be
made on the next succeeding Business Day, and such extension of time shall in
such case be included in the computation of interest or Fees, if applicable.
SECTION 2.19. Taxes. (a) If any Borrower shall be required by reason
------
of any change occurring after the date of this Agreement in applicable law or
regulation or tax treaty or in the interpretation or administration thereof by
any Governmental Authority charged with the interpretation or administration
thereof (whether or not having force of law) (a "Change of Law") to deduct any
Taxes from or in respect of any sum payable by it hereunder to any Lender or to
the Agent, then except as otherwise provided in this Section 2.19 and subject to
Section 2.20, (i) the sum payable shall be increased by the amount necessary so
that after making all required deductions (including deductions applicable to
additional sums payable under this Section 2.19) such Lender or the Agent (as
the case may be) shall receive an amount equal to the sum it would have received
had no such deductions been made, (ii) such Borrower shall make such deductions
and (iii) such Borrower shall pay the full amount deducted to the relevant
taxing authority or other Governmental Authority in accordance with applicable
law.
(b) In addition, the Borrowers agree, jointly and severally, to pay
any present or future stamp or documentary
39
taxes or any other excise or property taxes, charges or similar levies which
arise from any payment made hereunder or from the execution, delivery or
registration of, or otherwise with respect to, this Agreement (hereinafter
referred to as "Other Taxes") other than any Other Taxes imposed upon any
assignment or participation of a Lender's rights, interests and obligations
hereunder; provided, however, that the amount the Borrowers shall be required to
-------- -------
pay to a particular Lender in respect of Other Taxes shall not exceed 1% of the
aggregate amount of the Loans or, if applicable, the Commitment of such Lender
on which such Other Taxes are imposed and provided further, however, that if a
---------------- -------
Lender is actually aware of the application of any Other Tax to any such
payment, execution, delivery or registration, such Lender shall promptly notify
the Borrowers of such Other Tax and the Borrowers shall thereafter have the
benefit of the provisions of Section 2.20(b).
(c) Within 30 days after the date of any payment of Taxes withheld by
any Borrower in respect of any payment to any Lender or the Agent, such Borrower
will furnish to the Agent, at its address referred to in Section 9.01, the
original or a certified copy of a receipt evidencing payment thereof or, if such
a receipt is not available, a certificate of the treasurer or any assistant
treasurer of such Borrower setting forth the amount of such payment and the date
on which such payment was made.
(d) Without prejudice to the survival of any other agreement contained
herein, the agreements and obligations contained in this Section 2.19 shall
survive the payment in full of the principal of and interest on all Loans made
hereunder.
(e) On the Closing Date (or, in the case of an entity that becomes a
Lender after the Closing Date, on the date such entity becomes a Lender) and
thereafter as required by applicable law, each Lender that is organized under
the laws of a jurisdiction outside the United States shall deliver to JCPenney
and the Agent such certificates, documents or other evidence, and any amendments
or supplements to such certificates, documents or other evidence, as required by
the Code or Treasury Regulations issued pursuant thereto, including Internal
Revenue Service Form 1001 or Form 4224 and any other certificate or statement of
exemption required by Treasury Regulation Section 1.1441-1, 1.1441-2, 1.441-4(a)
or 1.1441-6(c) or any similar or successor provision, properly completed and
duly executed by such Lender (or the Agent) establishing that payments made
under this Agreement to such Lender (or to the Agent) are
40
(i) not subject to withholding under the Code because such payments are
effectively connected with the conduct by such Lender (or the Agent) of a trade
or business in the United States or (ii) totally exempt from United States tax
under a provision of an applicable tax treaty. Unless JCPenney and the Agent
have received forms or other documents satisfactory to them indicating that
payments hereunder are not subject to Taxes or are subject to such Taxes at a
rate reduced by an applicable tax treaty, the appropriate Borrower shall
withhold Taxes from such payments at the applicable statutory rate in the case
of payments to or for any Lender (or to the Agent) organized under the laws of a
jurisdiction outside the United States.
(f) The Borrowers shall not be required to pay any additional amounts
to any Lender (or to the Agent) pursuant to paragraph (a) above if the
obligation to pay such additional amounts would not have arisen but for a
failure by such Lender (or the Agent) to comply with the provisions of paragraph
(e) above unless such failure results from a change occurring after the date of
this Agreement in applicable law or regulation or tax treaty or in the
interpretation or administration thereof by any Governmental Authority charged
with the interpretation or administration thereof (whether or not having force
of law).
(g) The Borrowers shall not be liable under this Section 2.19 to any
Lender or to the Agent that has changed the location of its principal office or
any of its Applicable Lending Offices after the date (the "Relevant Date") on
which it first becomes a party to this Agreement (a "Change in Location") for
any Taxes that would have not been imposed but for a Change of Law enacted,
promulgated or effective before the Relevant Date, but only to the extent such
Taxes exceed the amount the Borrowers were required to pay such Lender or the
Agent pursuant to this Section 2.19 immediately prior to such Change in
Location.
(h) If any Lender or the Agent shall become aware that it is entitled
to receive a refund in respect of Taxes indemnified and paid by the Borrower,
such Lender or the Agent shall promptly notify the Borrowers of the availability
of such refund and shall, within 30 days after receipt of a request by JCPenney,
apply for such refund at JCPenney's expense. If any Lender or the Agent
receives a refund in respect of any Taxes for which such Lender or the Agent has
received payment from any Borrower hereunder, it shall within 30 days after
receipt thereof repay the lesser of such refund and the amount paid by the
Borrowers with respect to such Taxes to the appropriate Borrower, in each case
net of all
41
reasonable out-of-pocket expenses of such Lender or the Agent and with interest
received by such Lender or the Agent from the relevant taxing authority
attributable to such refund; provided, however, that such Borrower, upon the
-------- -------
request of such Lender or the Agent, agrees to return such refund (plus
interest, penalties or other charges) to such Lender or the Agent in the event
such Lender or the Agent is required to repay such refund to any Governmental
Authority.
(i) Each Lender and the Agent severally (but not jointly) represents
and warrants to the Borrowers that, as of the date such person becomes a party
to this Agreement, payments made by the Borrowers to such Lender or to the Agent
in connection with the Agreement are effectively connected with the conduct by
such Lender or the Agent of a trade or business in the United States.
SECTION 2.20. Mitigation; Duties of Lenders and Agent. (a) If, with
----------------------------------------
respect to any Lender or the Agent, an event or circumstance occurs that would
entitle such Lender or the Agent to exercise any of the rights or benefits
afforded by Section 2.13 or 2.19(a), such Lender or the Agent, promptly upon
becoming aware of the same, shall take all steps as may be reasonably available
(including, as may be applicable, designating a different Applicable Lending
Office, making the affected Type of Loan through an Affiliate, or furnishing the
proper certificates under any applicable tax laws, tax treaties, conventions,
and governmental regulations to the extent that such certificates are legally
available to such Lender or to the Agent) to eliminate or mitigate the effects
of any event resulting in the ability of such Lender or the Agent to exercise
rights under any of such Sections; provided, however, that, no Lender or the
-------- -------
Agent shall be under any obligation to take any step that, in its reasonable
judgment, would (i) result in its incurring Additional Costs or taxes in
performing its obligations hereunder unless the Borrowers have expressly agreed
to reimburse it therefor or (ii) be materially disadvantageous to such Lender or
to the Agent. Within 60 days after the occurrence of any event giving rise to
any rights or benefits provided by Sections 2.13 and 2.19(a) in favor of any
Lender or the Agent, such Lender or the Agent (i) will notify the Borrowers of
such event or circumstance and (ii) provide the Borrowers with a certificate
setting forth in reasonable detail (x) the event or circumstance giving rise to
any benefit under Sections 2.13 and 2.19(a), (y) the effective date of, and the
time period during which, compensation for any Additional Costs or Taxes are
being claimed and (z) the determination of amount or amounts claimed thereby and
detailed calculations with respect
42
thereto; provided, however, that if such Lender or the Agent does not give the
-------- -------
Borrowers such notice and certificate within the 60-day period set forth in this
sentence, the Borrowers shall be required to indemnify such Lender or the Agent
only for such Additional Costs and Taxes as are attributable to the period from
and after the first date as of which such notice and certificate have been
received by the Borrowers. Such Lender or the Agent shall notify the Borrowers
of any change in circumstances with respect to the event specified in the above-
described notice and certificate as promptly as practicable after such Lender or
the Agent obtains knowledge thereof. Such certificate shall be conclusive
absent manifest error. Notwithstanding the foregoing, no Lender or Agent shall
deliver the notice and certificate described in this paragraph (a) to the
Borrowers in respect of any Additional Costs or Taxes unless it is then the
general policy of such Lender or the Agent to pursue similar rights and remedies
in similar circumstances under comparable provisions of other credit agreements.
(b) With respect to Sections 2.13 and 2.19, the Borrowers shall have
the right, should any Lender request any compensation or indemnity thereunder,
to (i) unless an Event of Default shall have occurred and be continuing, (A)
promptly terminate such Lender's Commitment by irrevocable written or telex
notice of such termination to such Lender and the Agent without the necessity of
complying with Sections 2.11(b) and (c) hereof, (B) reduce the Total Commitments
by the amount of such Lender's Commitment, and (C) pay or prepay in immediately
available funds all Loans made by such Lender hereunder, together with accrued
and unpaid interest thereon and all other amounts owed to such Lender hereunder,
including under Section 2.15 in connection with any such prepayment or (ii)
require such Lender to assign its Commitment and Loans, without recourse to or
representation or warranty by such Lender, to another Lender or assignee
acceptable to the Borrowers and with the consent of the Agent, which consent
shall not be unreasonably withheld; provided, however, that (x) such assignment
-------- -------
shall not conflict with any statute, law, rule, regulation, order or decree of
any Governmental Authority and (y) the assigning Lender shall have received from
the Borrowers and/or such assignee full payment in immediately available funds
of the principal of and interest accrued to the date of such payment on the
Loans made by it hereunder to the extent that such Loans are subject to such
assignment and all other amounts owed to it hereunder. The Borrowers shall have
the right, should the Agent request any compensation or indemnity under such
Sections, to require the Agent to assign its rights and obligations hereunder to
a successor Agent with the consent
43
of the Required Lenders, which consent shall not be unreasonably withheld.
(c) With respect to Sections 2.13 or 2.19
(i) other than with respect to Section 2.19(b), no Lender or Agent shall be
entitled to exercise any right or benefit afforded thereby and no Borrower shall
be obligated to reimburse any Lender or the Agent pursuant to such Sections
unless (x) such Lender or the Agent has delivered to the Borrowers in accordance
with Section 9.01 the notice and the certificate described in Section 2.20(a)
hereof and (y) the affected Borrower has had a 30-Business Day period following
the receipt of such notice and certificate (if such Borrower in good faith
disagrees with the assertion that any payment under such Sections is due or with
the amount shown as due on such certificate and so notifies the Lender or the
Agent of such disagreement within 10 Business Days following receipt of the
notice and certificate) to negotiate with the requesting Lender or the Agent,
which negotiations shall be conducted by the respective parties in good faith,
and to agree upon another amount that will adequately compensate such Lender or
the Agent, it being expressly understood that if such Borrower does not provide
the required notice of its disagreement as provided above, such Borrower shall
pay the amount shown as due on the certificate on the tenth Business Day
following receipt thereof and further if such Borrower does provide such
required notice, and negotiations are entered into but do not result in
agreement by such Borrower and such Lender or the Agent within the 30-Business
Day period, then such Borrower shall pay the amount shown as due on the
certificate on the last day of such period, but in either event not earlier than
the date as of which the relevant Additional Costs or Taxes are incurred, (ii)
other than with respect to Other Taxes, unless the appropriate notice and
certificate are delivered to the Borrowers within the 60-day period described in
Section 2.20(a), the Borrowers shall be liable only for Additional Costs, Taxes
or amounts required to be paid which are attributable to the period from and
after the date such notice and certificate have been received by the Borrowers,
(iii) the Borrowers' liability for any amounts incurred as a result of any
change in Applicable Lending Office shall be limited as set forth in Section
2.02(e), (iv) in no event shall the Borrowers be liable for any taxes (other
than Other Taxes) that would not have been imposed but for a connection between
such Lender or the Agent (other than by reason of the activities contemplated by
this Agreement) and the relevant taxing jurisdiction, (v) each Lender or the
Agent shall in good faith allocate all Additional Costs, Taxes, and payments
required to be made fairly among all its commitments and
44
credit extensions (whether or not it seeks compensation from all affected
borrowers), (vi) no Lender or Agent shall be entitled to exercise any right or
benefit afforded hereby or receive any payment otherwise due under Sections 2.13
or 2.19 (including without limitation, any repayment by a Borrower of any refund
of Taxes pursuant to Section 2.19(h)) which arises from any gross negligence,
fraud or wilful misconduct of any Lender or the Agent, or the failure of such
Lender or the Agent to comply with the terms of this Agreement, (vii) if a
Lender or the Agent shall have recouped any amount or received any offsetting
tax benefit (other than a refund of Taxes as described in Section 2.19(h)) or
reserve or capital benefits theretofore paid to it by such Borrower, such Lender
or the Agent shall promptly pay to such Borrower an amount equal to the amount
of the recoupment received by such Lender or the Agent reduced by any reasonable
out-of-pocket expenses of such Lender or the Agent attributable to such
recoupment, as determined in good faith by such Lender or the Agent, and (viii)
the liability of either Borrower to any Lender or the Agent with respect to any
taxes shall be reduced to the extent that such Lender or the Agent receives an
offsetting tax benefit (or could have received such a benefit by taking
reasonable measures to receive it); provided, however, that there shall not be
-------- -------
any reductions pursuant to this clause (viii) with respect to any tax benefit
(x) the existence of which such Lender or the Agent is unaware, (y) the claiming
of which would result in any cost or tax to such Lender or the Agent (unless
such Borrower shall have agreed to pay its reasonably allocable portion of such
cost or tax) and (z) unless such Borrower shall agree to indemnify the Lender or
the Agent to the extent any tax benefit taken into account under this clause
(viii) is thereafter lost or becomes unavailable.
(d) In addition to their obligations under Section 2.19 hereof, each
of the Lenders and the Agent hereby agrees to execute and deliver, and to make
any required filings of, all certificates, agreements, documents, reports,
statements and other instruments as are reasonably necessary to effectuate the
purposes of this Section 2.20 and Sections 2.13 and 2.19. The Borrowers agree,
jointly and severally, to pay all filing fees incurred by any Lender or the
Agent in performing its obligations under this Section 2.20.
SECTION 2.21. Optional Increase in Commitments. At any time, if no
--------------------------------
Event of Default or Default shall have occurred and be continuing, the Borrowers
may, if they so elect in their sole discretion, increase the Total Commitment,
either by designating a person not theretofore a
45
Lender to become a Lender or by agreeing with an existing Lender that such
Lender's Commitment shall be increased. Upon execution and delivery by the
Borrowers and such Lender or other person of an instrument of assumption in form
reasonably satisfactory to the Agent, such existing Lender shall have a
Commitment as therein set forth or such other person shall become a Lender with
a Commitment as therein set forth and all the rights and obligations of a Lender
with such a Commitment hereunder; provided:
--------
(i) that the Borrowers shall provide prompt notice of such
increase to the Agent, who shall promptly notify the other Lenders;
(ii) that the Commitment of any Lender does not exceed 10% of the
Total Commitment after such increase; and
(iii) that the amount of such increase, together with all other
increases in Commitments pursuant to this Section 2.21 since the date
of this Agreement, does not exceed $375,000,000.
ARTICLE III. REPRESENTATIONS AND WARRANTIES
The Borrowers represent and warrant to each of the Lenders that:
SECTION 3.01. Organization; Powers. Each of the Borrowers and the
---------------------
Restricted Subsidiaries (a) is a corporation duly organized, validly existing
and in good standing under the laws of the jurisdiction of its organization, (b)
has all requisite power and authority to own its property and assets and to
carry on its business as now conducted and as proposed to be conducted, (c) is
qualified to do business in every jurisdiction where such qualification is
required, except where the failure so to qualify would not result in a Material
Adverse Effect, and (d) in the case of each Borrower, has the corporate power
and authority to execute, deliver and perform its obligations under this
Agreement and each other agreement or instrument contemplated hereby to which it
is or will be a party and to borrow hereunder.
SECTION 3.02. Authorization. The execution, delivery and performance
--------------
by each Borrower of this Agreement and the borrowings hereunder (collectively,
the "Transactions") (a) have been duly authorized by all requisite corporate
and, if required, stockholder action and (b) will not (i) violate (A) any
applicable provision of law, statute, material rule or material regulation, or
of the certificate
46
or articles of incorporation or other constitutive documents or by-laws of
JCPenney, Funding or any Restricted Subsidiary, (B) any applicable material
order of any Governmental Authority or (C) any material provision of any
indenture, agreement or other instrument to which JCPenney, Funding or any
Restricted Subsidiary is a party or by which any of them or any of their
property is or may be bound, (ii) be in conflict with, result in a breach of or
constitute (alone or with notice or lapse of time or both) a default under any
such indenture, agreement or other instrument, in each case in any material
respect, or (iii) result in the creation or imposition of any Lien upon or with
respect to any property or assets now owned or hereafter acquired by JCPenney,
Funding or any Restricted Subsidiary.
SECTION 3.03. Enforceability. This Agreement has been duly executed
---------------
and delivered by each Borrower and constitutes a legal, valid and binding
obligation of such Borrower enforceable against such Borrower in accordance with
its terms, except as enforceability may be limited by (a) any applicable
bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer, or
similar laws relating to or affecting creditors' rights generally and (b)
general principles of equity.
SECTION 3.04. Governmental Approvals. No action, consent or approval
-----------------------
of, registration or filing with, or any other action by, any Governmental
Authority is or will be required in connection with the Transactions, except (a)
such as have been made or obtained and are in full force and effect or as to
which the failure to be made or obtained and in full force and effect would not
result in a Material Adverse Effect and (b) such periodic and current reports,
if any, as (i) are required to disclose the Transactions and (ii) will be filed
with the SEC on a timely basis.
SECTION 3.05. Financial Statements. Each of JCPenney and Funding has
---------------------
heretofore furnished to the Lenders its consolidated balance sheets and related
consolidated statements of income and cash flows (a) as of and for the fiscal
year ended January 27, 1996, audited by and accompanied by the opinion of KPMG
Peat Marwick L.L.P., independent public accountants, and (b) as of and for the
fiscal quarter and the portion of the fiscal year ended July 27, 1996, as filed
by JCPenney or Funding, as the case may be, with the SEC on Form 10-Q in respect
of such fiscal quarter. Such financial statements fairly present the financial
position, results of operations and cash flows of JCPenney and its Subsidiaries,
or of Funding and its Subsidiaries, as the case may be, in accordance with GAAP,
47
subject, in the case of the financial statements referred to in clause (b)
above, to normal year-end audit adjustments.
SECTION 3.06. No Material Adverse Change. Except as set forth in
---------------------------
Schedule 3.06, as of the Closing Date, there has been no material adverse change
in the business, assets, operations or financial condition of JCPenney, Funding
or JCPenney and the Restricted Subsidiaries taken as a whole since January 27,
1996.
SECTION 3.07. Title to Properties; Possession Under Leases. (a) Each
------------------------------- -------------
of the Borrowers and the Restricted Subsidiaries has good and marketable title
to all its Principal Properties, except for minor defects in title and other
restrictions that do not interfere with its ability to conduct its business as
currently conducted or to utilize such Principal Properties for their intended
purposes. All the Principal Properties are free and clear of Liens, other than
Liens expressly permitted by Section 6.01.
(b) Each of the Borrowers and the Restricted Subsidiaries has valid
leasehold interests in all the material properties that it purports to hold
under lease, except for restrictions that do not interfere with its ability to
conduct its business as currently conducted or to utilize such properties for
their intended purposes. Each of the Borrowers and the Restricted Subsidiaries
has complied with all material obligations under all material leases to which it
is a party and all such leases are in full force and effect, except in each case
for provisions of such leases that are being contested in good faith in the
ordinary course of the Borrower's business. Each of the Borrowers and the
Restricted Subsidiaries enjoys peaceful and undisturbed possession under all
such material leases.
SECTION 3.08. Restricted Subsidiaries. Schedule 3.08 sets forth as of
------------------------
the Closing Date a list of all the Restricted Subsidiaries and the percentage
ownership interest of JCPenney therein. JCPenney owns, free and clear of all
Liens, all the issued and outstanding shares of the capital stock of Funding,
and all such outstanding shares are validly issued, fully paid and
nonassessable.
SECTION 3.09. Litigation; Compliance with Laws. (a) Except as set
---------------------------------
forth in Schedule 3.09 or as subsequently disclosed in writing to the Lenders,
there are not any actions, suits or proceedings at law or in equity or by or
before any Governmental Authority now pending or, to the knowledge of any
Borrower, threatened against or affecting JCPenney or Funding or any Restricted
Subsidiary or any
48
business, property or rights of any such person (i) which involve this Agreement
or the Transactions or (ii) as to which there is a reasonable possibility of an
adverse determination and which, if adversely determined, would, individually or
in the aggregate, result in a Material Adverse Effect.
(b) None of the Borrowers or the Restricted Subsidiaries is in
violation of any law, rule or regulation, or in default with respect to any
judgment, writ, injunction or decree of any Governmental Authority, where such
violation or default would result in a Material Adverse Effect.
SECTION 3.10. Agreements. (a) None of the Borrowers or the
-----------
Restricted Subsidiaries is a party to any agreement or instrument or subject to
any corporate restriction that has resulted or would result in a Material
Adverse Effect.
(b) None of the Borrowers or the Restricted Subsidiaries is in default
in any manner under any provision of any indenture or other agreement or
instrument evidencing indebtedness for money borrowed, or any other material
agreement or instrument to which it is a party or by which it or any of its
material properties or material assets are bound, where such default would
result in a Material Adverse Effect.
SECTION 3.11. Federal Reserve Regulations. (a) None of the Borrowers
----------------------------
or the Subsidiaries is engaged principally, or as one of its important
activities, in the business of extending credit for the purpose of purchasing or
carrying Margin Stock.
(b) No part of the proceeds of any Loan will be used, whether directly
or indirectly, and whether immediately, incidentally or ultimately, (i) to
purchase or carry Margin Stock or to extend credit to others for the purpose of
purchasing or carrying Margin Stock or to refund indebtedness originally
incurred for such purpose (except that such proceeds may be used to finance or
refinance the repurchase by JCPenney of its own common stock), or (ii) for any
purpose which entails a violation of, or which is inconsistent with, the
provisions of the Regulations of the Board, including Regulation G, U or X.
SECTION 3.12. Investment Company Act; Public Utility Holding Company
------------------------------ -----------------------
Act. None of the Borrowers is (a) an "investment company" as defined in, or
----
subject to regulation under, the Investment Company Act of 1940 or (b) a
"holding
49
company" as defined in, or subject to regulation under, the Public Utility
Holding Company Act of 1935.
SECTION 3.13. Use of Proceeds. The Borrowers will use the proceeds of
----------------
the Loans only for the purposes specified in the preamble to this Agreement.
SECTION 3.14. Tax Returns. Each of the Borrowers and the Restricted
------------
Subsidiaries has filed or caused to be filed all Federal, state and local tax
returns required to have been filed by it and has paid or caused to be paid all
taxes shown to be due and payable on such returns or on any assessments received
by it, except taxes that are being contested in good faith by appropriate
proceedings and for which the appropriate Borrower or Restricted Subsidiary
shall have set aside on its books adequate reserves.
SECTION 3.15. No Material Misstatements. No information, report,
--------------------------
financial statement, exhibit or schedule furnished by or on behalf of any
Borrower to the Agent or any Lender in connection with the negotiation of this
Agreement or included herein or delivered pursuant hereto contained, contains or
will contain any material misstatement of fact or omitted, omits or will omit to
state any material fact necessary to make the statements therein, in the light
of the circumstances under which they were, are or will be made, not misleading.
SECTION 3.16. Employee Benefit Plans. During the immediately
----------------------
preceding six-year period with respect to the Plans, there were no: (a)
violations known to the Borrowers of ERISA, or (b) Reportable Events (other than
a Reportable Event for which the PBGC has waived the 30-day notice requirement
of Section 4043(a) of ERISA), that would, individually or in the aggregate,
result in a Material Adverse Effect. The present value of all benefit
liabilities under each Plan (based on the assumptions used to fund such Plan)
does not exceed the value of the assets of such Plan. None of the Borrowers or
the ERISA Affiliates has made contributions to any Multiemployer Plan within the
past five years, and such contributions are not now being made or expected to be
required.
SECTION 3.17. Support Agreements. The Support Agreements have been
-------------------
duly executed and delivered by JCPenney and, where applicable, Funding and, as
of the Closing Date, are in full force and effect in accordance with their
terms. A complete and correct copy of each Support Agreement as in effect on
the Closing Date has previously been furnished to each Lender and to the Agent.
50
ARTICLE IV. CONDITIONS OF LENDING
The obligations of the Lenders to make Loans hereunder are subject to
the satisfaction of the following conditions:
SECTION 4.01. All Borrowings. Subject to the provisions of the last
---------------
sentence of this Section 4.01, on the date of each Borrowing:
(a) The Agent shall have received such notice of such Borrowing as is
required by Section 2.03 or Section 2.04, as applicable.
(b) The representations and warranties set forth in Article III hereof
(except, in the case of all Borrowings hereunder, the representation set
forth in Section 3.06) shall be true and correct in all material respects
on and as of the date of such Borrowing with the same effect as though
made on and as of such date, except to the extent such representations and
warranties expressly relate to an earlier date.
(c) At the time of and immediately after such Borrowing, no Event of
Default or Default shall have occurred and be continuing.
Each Borrowing (other than any new Borrowing described in the last sentence of
this Section 4.01) shall be deemed to constitute a representation and warranty
by the Borrowers on the date of such Borrowing as to the matters specified in
paragraphs (b) and (c) of this Section 4.01. Notwithstanding the other
provisions of this Section 4.01, the refinancing of any Borrowing with a new
Borrowing that does not increase the outstanding aggregate principal amount of
the Loans of any Lender shall not be subject to the satisfaction of any of the
foregoing conditions.
SECTION 4.02. First Borrowing. [INTENTIONALLY OMITTED].
----------------
ARTICLE V. AFFIRMATIVE COVENANTS
The Borrowers covenant and agree with each Lender that, so long as
this Agreement shall remain in effect or the principal of or interest on any
Loan, any Fees or any other expenses or amounts payable under this Agreement
shall be
51
unpaid, unless the Required Lenders shall otherwise consent in writing, each of
the Borrowers will, and will cause each of the Restricted Subsidiaries to:
SECTION 5.01. Existence; Businesses and Properties. (a) Do or cause
-------------------------------------
to be done all things necessary to preserve, renew and keep in full force and
effect its legal existence, except as would not cause a Default under Section
6.04 or otherwise cause an Event of Default under this Agreement.
(b) Do or cause to be done all things necessary to obtain, preserve,
renew, extend and keep in full force and effect the rights, licenses, permits,
franchises, authorizations, patents, copyrights, trademarks and trade names
material to the conduct of its business; maintain and operate such business in
substantially the manner in which it is presently conducted and operated; comply
in all material respects with all applicable laws, rules, regulations and orders
of any Governmental Authority, whether now in effect or hereafter enacted;
except in each case where the failure to do so would not result in a Material
Adverse Effect; and at all times maintain and preserve all property material to
the conduct of its business and keep such property in good repair, working order
and condition and from time to time make, or cause to be made, all needful and
proper repairs, renewals, additions, improvements and replacements thereto
necessary in order that the business carried on in connection therewith may be
properly conducted at all times; provided, however, that nothing in this
-------- -------
paragraph (b) shall prevent any Borrower or Restricted Subsidiary from
discontinuing the operation and maintenance of any of its properties no longer
deemed useful in the conduct of its business.
SECTION 5.02. Insurance. Maintain insurance and/or self insurance
----------
programs in force that adequately protect the Principal Properties and the
public liability exposures of the Borrowers, as may be required by law, and as
is customary with companies in the same or similar businesses or of the same
general financial net worth.
SECTION 5.03. Obligations and Taxes. Pay and discharge promptly when
----------------------
due all taxes, assessments and governmental charges or levies imposed upon it or
upon its income or profits or in respect of its properties, before the same
shall become delinquent or in default, as well as all lawful claims for labor,
materials and supplies or otherwise which, if unpaid, might give rise to a Lien
upon such properties or any material part thereof; provided, however, that such
-------- -------
payment and discharge shall not be required with
52
respect to any such tax, assessment, charge, levy or claim so long as (a) the
validity or amount thereof shall be contested in good faith by appropriate
proceedings and (b) the applicable Borrower has made appropriate reserves
therefor as required by GAAP.
SECTION 5.04. Financial Statements, Reports, etc. In the case of the
-----------------------------------
Borrowers, furnish to the Agent for distribution to the Lenders:
(a) as soon as available and in any event within 120 days after the end
of each fiscal year, a copy of the reports filed by each of JCPenney and
Funding with the SEC on Form 10-K in respect of such fiscal year,
accompanied by JCPenney's annual report in respect of such fiscal year or,
if either of JCPenney or Funding is not required to file such a report in
respect of such fiscal year, the consolidated balance sheets and related
consolidated statements of income and cash flows of JCPenney and its
Subsidiaries, or of Funding and its Subsidiaries, as the case may be, as
of the close of such fiscal year, all audited by KPMG Peat Marwick L.L.P.
or other independent public accountants of recognized national standing
and accompanied by an opinion of such accountants (which shall be in scope
and substance reasonably satisfactory to the Required Lenders) to the
effect that such consolidated financial statements fairly present the
financial position, results of operations and cash flows of JCPenney and
its Subsidiaries or of Funding and its Subsidiaries, as the case may be,
in accordance with GAAP;
(b) as soon as available and in any event within 60 days after the end
of each of the first three quarterly periods of each fiscal year, a copy
of the quarterly reports filed by each of JCPenney and Funding with the
SEC on Form 10-Q in respect of such quarterly period, or if either of
JCPenney or Funding is not required to file such a report in respect of
such quarterly period, the consolidated balance sheets and related
consolidated statements of income and cash flows of JCPenney and its
Subsidiaries, or of Funding and its Subsidiaries, as the case may be, as
of the close of such fiscal quarter, certified by its chief financial
officer, treasurer or controller as fairly presenting the financial
position, results of operations and cash flows of JCPenney and its
53
Subsidiaries or of Funding and its Subsidiaries, as the case may be, in
accordance with GAAP, subject to normal year-end audit adjustments;
(c) concurrently with any delivery of financial statements by JCPenney
or Funding under (a) above (whether contained in a report filed with the
SEC or otherwise), a certificate of its chief financial officer,
president, treasurer or controller (i) stating that no Event of Default or
Default has occurred or, if such an Event of Default or Default has
occurred, specifying the nature and extent thereof and any corrective
action taken or proposed to be taken with respect thereto and (ii) with
respect to JCPenney, setting forth computations in reasonable detail
demonstrating compliance with the covenant contained in Section 6.02;
(d) promptly after the same become publicly available, copies of all
documents and reports that any Borrower may be required to file with the
SEC pursuant to Section 13 or 15(d) of the Securities Exchange Act of
1934, as amended, or with any Governmental Authority succeeding to any of
or all the functions of the SEC;
(e) promptly after the execution and delivery thereof by the parties
thereto, copies of all agreements and other instruments that have the
effect of amending, modifying or waiving any provision of a Support
Agreement; and
(f) promptly, from time to time, such other documents and information
regarding the operations, business affairs and financial condition of any
Borrower or Restricted Subsidiary, or compliance with the terms of this
Agreement, as the Agent or any Lender may reasonably request.
SECTION 5.05. Litigation and Other Notices. Furnish to the Agent
-----------------------------
prompt written notice of the following promptly after becoming aware thereof:
(a) any Event of Default or Default, specifying the nature and extent
thereof and the corrective action (if any) proposed to be taken with
respect thereto;
(b) the filing or commencement of, or any threat or notice of intention
of any person to file or commence, any action, suit or proceeding, whether
at law
54
or in equity or by or before any Governmental Authority, against any
Borrower or Restricted Subsidiary which, if adversely determined, would
result in a Material Adverse Effect; and
(c) any development that has resulted in, or would result in, a
Material Adverse Effect.
SECTION 5.06. ERISA. (a) Comply in all material respects with the
------
applicable provisions of ERISA and (b) furnish to the Agent and each Lender (i)
as soon as possible, and in any event within 30 days after any Responsible
Officer of any Borrower or ERISA Affiliate either knows or has reason to know
that any Reportable Event has occurred that alone or together with any other
Reportable Events could reasonably be expected to result in liability of the
Borrowers and/or the Restricted Subsidiaries to the PBGC in an aggregate amount
exceeding $200,000,000, a statement of a Responsible Officer of JCPenney setting
forth details as to such Reportable Event and the action proposed to be taken
with respect thereto, together with a copy of the notice, if any, of such
Reportable Event given to the PBGC, (ii) promptly after receipt thereof, a copy
of any notice that any Borrower or ERISA Affiliate receives from the PBGC
relating to the intention of the PBGC to terminate any Plan or Plans (other than
a Plan maintained by an ERISA Affiliate which is considered an ERISA Affiliate
only pursuant to subsection (m) or (o) of Section 414 of the Code) or to appoint
a trustee to administer any Plan or Plans and (iii) within 10 days after the due
date for filing with the PBGC pursuant to Section 412(n) of the Code of a notice
of failure to make a required installment or other payment with respect to a
Plan, a statement of a Responsible Officer of JCPenney setting forth details as
to such failure and the action proposed to be taken with respect thereto,
together with a copy of such notice given to the PBGC. Any failure to comply
with applicable provisions of ERISA shall not be deemed to be material, unless
such failure or failures would result in a Material Adverse Effect.
SECTION 5.07. Maintaining Records; Access to Properties and
------------------------------ --------------
Inspections. Maintain all financial records in accordance with GAAP and permit
------------
any representatives designated by any Lender to (a) visit and inspect the
financial records and the Principal Properties of any Borrower or Restricted
Subsidiary during business hours upon reasonable notice, (b) make extracts from
and copies of such financial records, (c) discuss the affairs, finances and
condition of any Borrower or Restricted Subsidiary with the chief financial
officer, treasurer or any assistant treasurer
55
of any Borrower or Restricted Subsidiary and (d) discuss the affairs, finances
and condition of any Borrower or Restricted Subsidiary with such person's
independent accountants in the presence of any of the chief financial officer,
treasurer or any assistant treasurer of such person. No such inspection,
discussion or other right granted under this Section 5.07 and exercised by any
Lender shall disrupt the normal and ordinary conduct of business of any Borrower
or Restricted Subsidiary, and all costs and expenses incurred in connection
therewith, shall, prior to the occurrence and continuance of an Event of
Default, be borne by the Lender exercising such right.
SECTION 5.08. Use of Proceeds. Use the proceeds of the Loans only for
----------------
the purposes set forth in the preamble to this Agreement.
SECTION 5.09. Pari-Passu. Ensure that (a) the payment obligations of
-----------
any Borrower under this Agreement will at all times rank at least equally and
ratably in all respects with the claims of any other unsecured creditor of such
Borrower and (b) the proceeds of any Loan made to Funding will be used for the
purpose of making either (i) Investments of the type referred to in clause (v)
of Section 6.06(c) or (ii) loans to JCPenney constituting senior unsecured
indebtedness of JCPenney, and not for any other purpose.
SECTION 5.10. Support Agreements. Ensure that (a) each Support
-------------------
Agreement remains in full force and effect in accordance with its terms and (b)
no amendment or modification is made to any Support Agreement or any of the
terms thereof, and no waiver is given or agreed to be given by or on behalf of
Funding with respect to any of its rights under any Support Agreement, which
would have a Material Adverse Effect.
ARTICLE VI. NEGATIVE COVENANTS
Each Borrower covenants and agrees with each Lender and the Agent, so
long as this Agreement shall remain in effect or the principal of or interest on
any Loan, any Fees or any other expenses or amounts payable under this Agreement
shall be unpaid, unless the Required Lenders shall otherwise consent in writing,
as follows:
SECTION 6.01. Limitation on Liens--JCPenney. JCPenney will not, and
------------------------------
will not permit any Restricted Subsidiary to, issue, assume or guarantee any
notes, bonds, debentures or other similar evidences of indebtedness for
56
money borrowed (referred to in this Section 6.01 as "indebtedness") secured by
any Lien upon any Principal Property, or shares of capital stock or evidences of
indebtedness for money borrowed issued by any Restricted Subsidiary and owned by
JCPenney or any Restricted Subsidiary, whether owned on the Closing Date or
thereafter acquired, without making effective provision whereby the Loans made
to JCPenney are secured by such Lien equally and ratably with any and all other
indebtedness thereby secured, so long as such indebtedness shall be so secured;
provided, however, that the foregoing restriction shall not apply to
-------- -------
indebtedness secured by any of the following:
(i) Liens on any property existing at the time of acquisition thereof
by JCPenney or any Restricted Subsidiary;
(ii) Liens on property of a corporation existing at the time such
corporation is merged into or consolidated with JCPenney or any Restricted
Subsidiary or at the time of a sale, lease or other disposition of the
properties of such corporation (or a division thereof) as an entirety or
substantially as an entirety to JCPenney or any Restricted Subsidiary,
provided that such Lien as a result of such merger, consolidation, sale,
--------
lease or other disposition is not extended to property owned by JCPenney
or such Restricted Subsidiary immediately prior thereto;
(iii) Liens on property of a corporation existing at the time such
corporation first becomes a Restricted
Subsidiary;
(iv) Liens securing indebtedness of a Restricted Subsidiary to
JCPenney or to another Restricted Subsidiary;
(v) Liens on property to secure all or part of the cost of acquiring,
substantially repairing or altering, constructing, developing or
substantially improving such property, or to secure indebtedness incurred
to provide funds for any such purpose or for reimbursement of funds
previously expended for any such purpose, provided that the commitment of
the creditor to extend the credit secured by any such Lien shall have been
obtained not later than twelve months after the later of (a) the
completion of the acquisition, substantial repair or alteration,
construction, development or substantial improvement of such property or
(b) the placing in operation of
57
such property or of such property as so substantially repaired or altered,
constructed, developed or substantially improved;
(vi) Liens securing indebtedness payable on demand or not more than
one year after the date as of which the determination is made (excluding
any indebtedness renewable or extendable at the option of the debtor for a
period or periods ending more than one year after the date as of which
such determination is made), which indebtedness in accordance with GAAP
would be included among current liabilities; or
(vii) any extension, renewal or replacement (or successive extensions,
renewals or replacements), in whole or in part, of any Lien referred to in
the foregoing clauses (i) through (vi), inclusive; provided, however, that
-------- -------
the principal amount of indebtedness secured thereby and not otherwise
authorized by said clauses (i) through (vi), inclusive, shall not exceed
the principal amount of indebtedness, plus any premium or fee payable in
connection with any such extension, renewal or replacement, so secured at
the time of such extension, renewal or replacement;
(viii) Liens arising under workmen's compensation laws, unemployment
insurance laws and old age pensions or other social security benefits or
other similar laws;
(ix) Liens securing the performance of bids, tenders, leases,
contracts, statutory obligations, surety and appeal bonds, and other
obligations of like nature, incurred in the ordinary course of business;
(x) Liens imposed by law, such as carriers', warehouseman's,
mechanics', materialmen's and vendors' liens, incurred in good faith in
the ordinary course of business with respect to obligations not then
delinquent, or that are being contested in good faith by appropriate
proceedings for which adequate reserves have been established;
(xi) Liens for taxes to the extent nonpayment thereof shall be
permitted by Section 5.03 hereof;
(xii) Liens incidental to the normal conduct of the business of
JCPenney and its Restricted Subsidiaries
58
or the ownership of their property and not securing Funded Indebtedness
(including zoning restrictions, easements, licenses, reservations,
restrictions on the use of real property or minor irregularities incident
thereto and with respect to leasehold interests, Liens that are incurred,
created, assumed or permitted to exist and arise by, through or under or
are asserted by a landlord or owner of the leased property, with or
without consent of the lessee) which do not in the aggregate materially
impair the value or use of the property used in the business of JCPenney
and its Restricted Subsidiaries taken as a whole, or the use of such
property for the purpose for which such property is held;
(xiii) Liens arising from capitalized lease obligations, such Liens
not to extend to any other property of JCPenney;
(xiv) Liens in respect of litigation or other similar proceedings in
an amount not to exceed $500,000,000 on an aggregate basis (i) the
validity of which is being currently contested on a timely basis in good
faith by appropriate proceedings (provided that the enforcement of any
Liens arising out of such proceedings shall be stayed during such
proceedings) and (ii) for which adequate reserves shall have been
established;
(xv) Liens in respect of leases or subleases granted to other persons
in the ordinary course of business and not materially interfering with the
conduct of business of JCPenney and its Restricted Subsidiaries;
(xvi) Liens arising out of conditional sale, title retention,
consignment or similar arrangements for the sale of goods entered into by
JCPenney or any of its Restricted Subsidiaries in the ordinary course of
business in accordance with the past practices of JCPenney and its
Restricted Subsidiaries; or
(xvii) Liens in favor of customs and revenue authorities arising as a
matter of law securing payment of customs duties in connection with the
importation of goods.
Notwithstanding the provisions of the immediately preceding sentence,
JCPenney or any Restricted Subsidiary may issue, assume or guarantee
indebtedness secured by Liens
59
which would otherwise be subject to the restrictions of this Section in an
aggregate amount which, together with all attributable debt (as defined in
Section 5.09(b) of the Indenture) outstanding pursuant to Section 5.09(b) of the
Indenture, all Senior Funded Indebtedness outstanding pursuant to the second
sentence of Section 6.03(a), the capitalized amount of all capitalized leases
referred to in Section 6.05(j), and all indebtedness outstanding pursuant to
this sentence, does not exceed 5% of Stockholders' Equity.
SECTION 6.02. Limitations on Senior Funded Indebtedness. JCPenney
------------------------------------------
will not, and will not permit any Restricted Subsidiary to, issue, assume or
guarantee any Senior Funded Indebtedness (otherwise than in connection with any
renewal, extension or refunding of Senior Funded Indebtedness which does not,
except for any premium or fee payable in connection with such renewal, extension
or refunding, increase the unpaid principal amount of Senior Funded Indebtedness
outstanding), or sell, transfer or otherwise dispose of any Senior Funded
Indebtedness of a Restricted Subsidiary, unless, after giving effect thereto and
to the retirement of any Senior Funded Indebtedness to be retired substantially
concurrently therewith, Net Tangible Assets shall be at least 200% of Senior
Funded Indebtedness of JCPenney and the Restricted Subsidiaries (eliminating
intercompany items).
SECTION 6.03. Limitations with Respect to Restricted Subsidiaries.
----------------------------------------------------
(a) JCPenney will not permit any Restricted Subsidiary to issue, assume or
guarantee any Senior Funded Indebtedness; provided, however, that the foregoing
-------- -------
restriction shall not apply to any of the following:
(i) Senior Funded Indebtedness secured by a Lien permitted under the
first sentence of Section 6.01;
(ii) Senior Funded Indebtedness of a corporation existing at the time
such corporation is merged into or consolidated with a Restricted
Subsidiary or at the time of a sale, lease or other disposition of the
properties of such corporation (or a division thereof) as an entirety or
substantially as an entirety to a Restricted Subsidiary;
(iii) Senior Funded Indebtedness of a corporation existing at the time
such corporation first becomes a Restricted Subsidiary:
60
(iv) Senior Funded Indebtedness of a Restricted Subsidiary to or held
by JCPenney or another Restricted Subsidiary; or
(v) any extension, renewal or replacement (or successive extensions,
renewals or replacements), in whole or in part, of any Senior Funded
Indebtedness referred to in the foregoing clauses (i) through (iv),
inclusive; provided, however, that the principal amount or the aggregate
-------- -------
preference on involuntary liquidation, as the case may be, of Senior
Funded Indebtedness issued pursuant to such extension, renewal or
replacement and not otherwise authorized by said clauses (i) through (iv),
inclusive, shall not exceed the principal amount or the aggregate
preference on involuntary liquidation, as the case may be, of the Senior
Funded Indebtedness so extended, renewed or replaced, plus any premium or
fee payable in connection with any such extension, renewal or replacement.
Notwithstanding the provisions of the immediately preceding sentence,
any Restricted Subsidiary may issue, assume or guarantee Senior Funded
Indebtedness which would otherwise be subject to the restrictions of this
Section 6.03(a) in an aggregate amount which, together with all indebtedness
outstanding pursuant to the second sentence of Section 6.01, all attributable
debt (as defined in Section 5.09(b) of the Indenture) outstanding pursuant to
Section 5.09(b) of the Indenture and all Senior Funded Indebtedness of the
Restricted Subsidiaries outstanding pursuant to this sentence, does not exceed
5% of Stockholders' Equity.
(b) JCPenney will not, and will not permit any Restricted Subsidiary
to, (i) sell or transfer (except to JCPenney or a Restricted Subsidiary) any
Senior Funded Indebtedness of a Restricted Subsidiary, except Senior Funded
Indebtedness secured by a Lien permitted under the provisions of the first
sentence of Section 6.01 and except to carry out a transaction permitted by
Section 6.03(c) or (ii) sell or transfer (except, in each case, to the extent,
if any, required to qualify directors of a Restricted Subsidiary under
applicable law or to permit any person to maintain his proportionate interest in
a Restricted Subsidiary or except to effect dissolution of any such Restricted
Subsidiary or to carry out a transaction permitted by Section 6.03(c) or except
to JCPenney or a Restricted Subsidiary) any shares of common stock of a
Restricted Subsidiary, unless all the common stock of such Restricted Subsidiary
at the time owned
61
by JCPenney and the Restricted Subsidiaries shall be sold or transferred at the
same time and unless thereafter Net Tangible Assets shall be at least 200% of
Senior Funded Indebtedness of JCPenney and the Restricted Subsidiaries
(eliminating intercompany items).
(c) JCPenney will not permit any Restricted Subsidiary to sell or
otherwise dispose of its assets substantially as an entirety or consolidate with
or merge into any other corporation, unless the corporation to which such assets
shall be sold or otherwise disposed of or which shall be formed by or result
from such consolidation or merger shall be JCPenney or any Restricted Subsidiary
or unless thereafter Net Tangible Assets shall be at least 200% of Senior Funded
Indebtedness of JCPenney and the Restricted Subsidiaries (eliminating
intercompany items).
SECTION 6.04. Mergers, Consolidations, Sales of Assets and
--------------------------------------------
Acquisitions. (a) JCPenney shall not xxxxxxx-date with or merge into any other
-------------
corporation or convey or transfer its properties and assets substantially as an
entirety to any person, unless:
(i) the corporation formed by such consolidation or into which JCPenney
is merged or the person which acquires by conveyance or transfer the
properties and assets of JCPenney substantially as an entirety shall be a
corporation organized and existing under the laws of the United States of
America or any State or the District of Columbia, and shall expressly
assume, by an instrument in writing (delivered to the Lenders) the due and
punctual payment of the principal and interest, if any, on all the Loans
and all other amounts payable by JCPenney under this Agreement and all the
rights, interests and other obligations of JCPenney under this Agreement;
(ii) immediately after giving effect to such transaction, (x) the
representations and warranties set forth in Article III shall be true and
correct in all material respects on the date of such transaction with the
same effect as if made on and as of such date, except to the extent such
representations and warranties expressly relate to an earlier date and (y)
no Event of Default or Default shall have occurred and be continuing; and
(iii) JCPenney shall have delivered an Officer's Certificate stating
that such consolidation, merger,
62
conveyance or transfer and such written instrument comply with this
Section 6.04(a).
(b) Funding shall not consolidate with or merge into any other
corporation or convey or transfer its properties and assets substantially as an
entirety to any person, except that Funding may merge into JCPenney or a direct
or indirect wholly-owned Subsidiary of JCPenney subject to the satisfaction of
the following conditions:
(i) the corporation formed by such consolidation or into which
Funding is merged or the person which acquires by conveyance or transfer
the properties and assets of Funding substantially as an entirety shall
expressly assume, by an instrument in writing (delivered to the Lenders)
the due and punctual payment of the principal and interest, if any, on all
the Loans and all other amounts payable by Funding under this Agreement
and all the rights, interests and other obligations of Funding under this
Agreement;
(ii) immediately after giving effect to such transaction, (x) the
representations and warranties set forth in Article III shall be true and
correct in all material respects on the date of such transaction with the
same effect as if made on and as of such date, except to the extent such
representations and warranties expressly relate to an earlier date and (y)
no Event of Default or Default shall have occurred and be continuing; and
(iii) Funding shall have delivered an Officer's Certificate stating
that such consolidation, merger, conveyance or transfer and such written
instrument comply with this Section 6.04(b).
SECTION 6.05. Limitations on Liens--Funding. Funding will not, and
------------------------------
will not permit any of its Subsidiaries to, create or assume any Lien upon any
of the property of Funding or any such Subsidiary, whether now owned or
hereafter acquired, in connection with the borrowing of money or the acquisition
or construction of property; provided, however, that nothing in this Section
-------- -------
6.05 shall prevent or be deemed to prohibit:
(a) Funding or any of its Subsidiaries from acquiring property subject
to a Lien existing thereon at the time of acquisition, and assuming the
same, or from creating a Lien on property being constructed or
63
acquired to secure a portion of the cost or purchase price thereof,
provided, however, that (i) any such Lien shall cover solely fixed assets
-------- -------
or other physical properties and (ii) such property is not or shall not
thereby become encumbered in an amount in excess of two-thirds of the
lesser of the cost and fair value thereof (as determined in good faith by
the board of directors of Funding);
(b) any Subsidiary of Funding from creating a Lien upon all or any part
of its property in favor of Funding or a wholly-owned Subsidiary of
Funding to secure indebtedness owed by such Subsidiary to Funding or a
wholly-owned Subsidiary;
(c) Liens existing on all or any part of the assets of a Subsidiary of
Funding at the time it shall become such a Subsidiary;
(d) Funding or any of its Subsidiaries from extending, renewing or
refunding any Lien permitted by the foregoing provisions of this Section
6.05 upon the same property theretofore subject thereto in connection with
the extension, renewal or refunding of the indebtedness secured thereby;
(e) Liens arising under workmen's compensation laws, unemployment
insurance laws and old age pensions or other social security benefits or
other similar laws;
(f) Liens securing the performance of bids, tenders, leases, contracts,
statutory obligations, surety and appeal bonds, and other obligations of
like nature, incurred in the ordinary course of business;
(g) Liens imposed by law, such as carriers', warehouseman's,
mechanics', materialmen's and vendors' liens, incurred in good faith in
the ordinary course of business with respect to obligations not then
delinquent, or that are being contested in good faith by appropriate
proceedings for which adequate reserves have been established;
(h) Liens for taxes to the extent nonpayment thereof shall be permitted
by Section 5.03 hereof;
(i) Liens incidental to the normal conduct of the business of Funding
and its Subsidiaries or the
64
ownership of their property and not securing Funded Indebtedness
(including zoning restrictions, easements, licenses, reservations,
restrictions on the use of real property or minor irregularities incident
thereto and with respect to leasehold interests, Liens that are incurred,
created, assumed or permitted to exist and arise by, through or under or
are asserted by a landlord or owner of the leased property, with or
without consent of the lessee) which do not in the aggregate materially
impair the value or use of the property used in the business of Funding
and its Subsidiaries taken as a whole, or the use of such property for the
purpose for which such property is held;
(j) Liens arising from capitalized lease obligations, such Liens not to
extend to any other property of Funding;
(k) Liens in respect of litigation or other similar proceedings in an
amount not to exceed $500,000,000 on an aggregate basis (i) the validity
of which is being currently contested on a timely basis in good faith by
appropriate proceedings (provided that the enforcement of any Liens
arising out of such proceedings shall be stayed during such proceedings)
and (ii) for which adequate reserves shall have been established;
(l) Liens in respect of leases or subleases granted to other persons in
the ordinary course of business and not materially interfering with the
conduct of business of Funding and its Subsidiaries;
(m) Liens arising out of conditional sale, title retention, consignment
or similar arrangements for the sale of goods entered into by Funding or
any of its Subsidiaries in the ordinary course of business in accordance
with the past practices of Funding and its Subsidiaries; or
(n) Liens in favor of customs and revenue authorities arising as a
matter of law securing payment of customs duties in connection with the
importation of goods.
SECTION 6.06. Conduct of Funding's Business. (a) Funding will not,
------------------------------
and will not permit any Subsidiary of Funding to, engage in any business other
than dealing in Receivables and Penney Supplier Receivables, making Invest-
65
ments as permitted by paragraph (c) below, financing the acquisition of
Receivables and Penney Supplier Receivables and making of such Investments, and
any activities incidental or related to the foregoing. Receivables at any time
acquired by Funding and its Subsidiaries from JCPenney and its Subsidiaries,
together with Receivables previously acquired from JCPenney and its Subsidiaries
and then owned by Funding and its Subsidiaries, shall be reasonably
representative of the then outstanding Receivables which have arisen in the
business of JCPenney and those Subsidiaries of JCPenney from which such
Receivables have been or are being acquired; provided, however, that Receivables
-------- -------
at any time acquired and owned by Funding and its Subsidiaries may exclude any
type or types of Receivables which are sold or assigned by JCPenney and its
Subsidiaries to one or more third parties if in the opinion of Funding's board
of directors such type or types of Receivables may be serviced more efficiently
or economically by any such third party than by JCPenney, Funding or any such
Subsidiary.
(b) Funding will not, and will not permit any of its subsidiaries to,
make any loan or advance to JCPenney or any Subsidiary of JCPenney (other than
Funding or a Subsidiary of Funding) except on a basis which in the opinion of
Funding's board of directors reasonably reflects sound credit practices at the
time of such loan or advance.
(c) Funding will not, and will not permit any of its subsidiaries to,
make any Investments, directly or indirectly, other than
(i) Investments in Receivables;
(ii) loans and advances to JCPenney and its Subsidiaries;
(iii) Investments in wholly-owned Subsidiaries of Funding or
Investments by any Subsidiary of Funding in Funding;
(iv) Investments in Penney Supplier Receivables; and,
(v) Investments in any direct and indirect obligations of the United
States of America or any agency thereof having a maturity not in excess of
ten years from the date of purchase; obligations having a maturity not in
excess of ten years from the date of purchase of any county, municipality
or state of the United States of America and having any of the three
66
highest ratings assigned by any nationally recognized organization
regularly engaged in rating the investment quality of such obligations;
open market commercial paper; bankers' acceptances; certificates of
deposit; and other obligations which, in the opinion of Funding's board of
directors, are similar in risk, quality and maturity to any of the
foregoing.
ARTICLE VII. EVENTS OF DEFAULT
In case of the happening of any of the following events ("Events of
Default"):
(a) (i) any representation or warranty made or deemed made pursuant to
this Agreement shall prove to have been false or misleading in any
respect, or (ii) any material representation, warranty, statement or
information contained in any report, certificate, financial statement or
other instrument furnished in connection with or pursuant to this
Agreement shall prove to have been false or misleading in any respect; and
---
only if, in both subsection (i) and subsection (ii), such falsehood or
misleading matter would result in a Material Adverse Effect when so made,
deemed made or furnished;
(b) default shall be made in the payment of any principal of any Loan
when and as the same shall become due and payable, whether at the due date
thereof or at a date fixed for prepayment thereof or by acceleration
thereof or otherwise, and such default shall continue unremedied for one
Business Day;
(c) default shall be made in the payment of any interest on any Loan or
any Fee or any other amount (other than an amount referred to in (b)
above) due under this Agreement, when and as the same shall become due and
payable, and such default shall continue unremedied for a period of five
Business Days;
(d) default shall be made in the due observance or performance by the
Borrowers of any covenant, condition or agreement contained in Section
5.01(a), 5.05 or 5.10 or in Article VI and such default shall continue
unremedied for a period of five Business Days;
67
(e) default shall be made in the due observance or performance by any
Borrower or Restricted Subsidiary of any covenant, condition or agreement
contained in this Agreement (other than those specified in (b), (c) or (d)
above) and such default shall continue unremedied for a period of 30 days
after notice thereof from the Agent or any Lender to such Borrower or, if
such default is able to be cured and such Borrower is using its best
efforts to cure such default, such longer period as is reasonably required
to cure such default;
(f) any Borrower or Restricted Subsidiary shall (i) fail to pay any
principal or interest, regardless of amount, due in respect of any
indebtedness for borrowed money in a principal amount in excess of
$50,000,000, when and as the same shall become due and payable (after the
expiration of any applicable grace period), and (unless such indebtedness
is already due and payable at the time of such default) such default
results in an acceleration of such indebtedness and in either case is not
cured within five Business Days thereafter or (ii) fail to observe or
perform any other term, covenant, condition or agreement contained in any
agreement or instrument evidencing or governing any such indebtedness if
any failure referred to in this clause (ii) results in an acceleration of
such indebtedness that is not annulled or rescinded within 15 days after
the date of such acceleration;
(g) an involuntary proceeding shall be commenced or an involuntary
petition shall be filed in a court of competent jurisdiction seeking (i)
relief in respect of any Borrower or Material Subsidiary, or of a
substantial part of the property or assets of any Borrower or Material
Subsidiary, under Title 11 of the United States Code, as now constituted
or hereafter amended, or any other Federal or state bankruptcy,
insolvency, receivership or similar law, (ii) the appointment of a
receiver, trustee, custodian, sequestrator, conservator or similar
official for any Borrower or Material Subsidiary or for a substantial part
of the property or assets of any Borrower or Material Subsidiary or (iii)
the winding-up or liquidation of any Borrower or Material Subsidiary; and
such proceeding or petition shall continue undismissed for 60 days or an
order or decree approving or ordering any of the foregoing shall be
entered;
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(h) any Borrower or Material Subsidiary shall (i) voluntarily commence
any proceeding or file any petition seeking relief under Title 11 of the
United States Code, as now constituted or hereafter amended, or any other
Federal or state bankruptcy, insolvency, receivership or similar law, (ii)
consent to the institution of, or fail to contest in a timely and
appropriate manner, any proceeding or the filing of any petition described
in (g) above, (iii) apply for or consent to the appointment of a receiver,
trustee, custodian, sequestrator, conservator or similar official for any
Borrower or Material Subsidiary or for a substantial part of the property
or assets of any Borrower or Material Subsidiary, (iv) file an answer
admitting the material allegations of a petition filed against it in any
such proceeding, (v) make a general assignment for the benefit of
creditors, (vi) admit in writing its inability or fail generally to pay
its debts as they become due or (vii) take any action for the purpose of
effecting any of the foregoing;
(i) one or more judgments for the payment of money in an aggregate
amount in excess of $100,000,000 shall be rendered against any Borrower,
any Restricted Subsidiary or any combination of Borrowers and Restricted
Subsidiaries and the same shall remain undischarged for a period of 30
consecutive Business Days during which execution shall not be effectively
stayed, or any action shall be legally taken by a judgment creditor to
levy upon assets or properties of any Borrower or Restricted Subsidiary to
enforce any such judgment;
(j) a Reportable Event or Reportable Events, or a failure to make a
required installment or other payment (within the meaning of Section
412(n)(l) of the Code), shall have occurred with respect to any Plan or
Plans that reasonably could be expected to result in liability of the
Borrowers to the PBGC or to any Plan or Plans in an aggregate amount
exceeding $200,000,000 and, within 30 days after the reporting of any such
Reportable Event to the Agent or after the receipt by the Agent of the
statement required pursuant to Section 5.06, the Agent shall have notified
the Borrowers in writing that (i) the Required Lenders have made a
determination that, on the basis of such Reportable Event or Reportable
Events or the failure to make a required payment, there are reasonable
grounds (A) for the termination
69
of such Plan or Plans by the PBGC, (B) for the appointment by the
appropriate United States District Court of a trustee to administer such
Plan or Plans or (C) for the imposition of a lien in favor of a Plan and
(ii) as a result thereof an Event of Default exists hereunder; or a
trustee shall be appointed by a United States District Court to administer
any such Plan or Plans; or the PBGC shall institute proceedings to
terminate any Plan or Plans;
(k) Funding (or any permitted successor thereto under Section 6.04(b))
shall cease to be a direct or indirect wholly-owned subsidiary of JCPenney
(unless Funding or such permitted successor shall be merged into
JCPenney); or
(l) an Event of Default shall occur under the Tranche B Credit
Agreement.
then, and in every such event (other than an event described in paragraph (g)
or (h) above), and at any time thereafter during the continuance of such event,
the Agent, at the request of the Required Lenders, shall, by notice to the
Borrowers, take either or both of the following actions, at the same or
different times: (x) terminate forthwith the Commitments and (y) declare the
Loans then outstanding to be forthwith due and payable in whole or in part,
whereupon the principal of the Loans so declared to be due and payable, together
with accrued interest thereon and any unpaid accrued Fees and all other
liabilities of the Borrowers accrued hereunder, shall become forthwith due and
payable, without presentment, demand, protest or any other notice of any kind,
all of which are hereby expressly waived by the Borrowers, anything contained
herein to the contrary notwithstanding; and in any event described in paragraph
(g) or (h) above, the Commitments shall automatically and immediately terminate
and the principal of the Loans then outstanding, together with accrued interest
thereon and any unpaid accrued Fees and all other liabilities of the Borrowers
accrued hereunder, shall automatically and immediately become due and payable,
without presentment, demand, protest or any other notice of any kind, all of
which are hereby expressly waived by the Borrowers, anything contained herein to
the contrary notwithstanding.
ARTICLE VIII. THE AGENT
In order to expedite the transactions contemplated by this Agreement,
each Lender hereby appoints the Agent to act as its agent hereunder. Each of
the Lenders hereby
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irrevocably authorizes the Agent to take such actions on behalf of such Lender
and to exercise such powers as are specifically delegated to the Agent by the
terms and provisions hereof, together with such actions and powers as are
reasonably incidental thereto. The Agent is hereby expressly authorized by the
Lenders, without hereby limiting any implied authority, (a) to receive on behalf
of the Lenders all payments of principal of and interest on the Loans and all
other amounts due to the Lenders hereunder, and promptly to distribute to each
Lender its proper share of each payment so received; (b) to give notice on
behalf of each of the Lenders to the Borrowers of any Event of Default specified
in this Agreement of which the Agent has actual knowledge acquired in connection
with its agency hereunder; and (c) to distribute to each Lender copies of all
notices, financial statements and other materials delivered by the Borrowers
pursuant to this Agreement as received by the Agent.
The Agent and its directors, officers, employees and agents shall not
be liable as such for any action taken or omitted by any of them, or be
responsible for any statement, warranty or representation herein or the contents
of any document delivered in connection herewith, except in each case to the
extent of its or his own gross negligence or wilful misconduct in connection
therewith, or be required to ascertain or to make any inquiry concerning the
performance or observance by the Borrowers of any of the terms, conditions,
covenants or agreements contained in this Agreement. The Agent shall not be
responsible to the Lenders for the due execution, genuineness, validity,
enforceability or effectiveness of this Agreement or any other instruments or
agreements; provided, however, that the Agent shall be responsible for its own
-------- -------
due execution of this Agreement and any other instrument or agreement relating
to this Agreement. The Agent shall in all cases be fully protected in acting,
or refraining from acting, in accordance with written instructions signed by the
Required Lenders (or, when expressly required hereby, all the Lenders) and,
except as otherwise specifically provided herein, such instructions and any
action or inaction pursuant thereto shall be binding on all the Lenders. The
Agent shall, in the absence of knowledge to the contrary, be entitled to rely on
any instrument or document believed by it in good faith to be genuine and
correct and to have been signed or sent by the proper person or persons. The
Agent and its directors, officers, employees and agents shall not have any
responsibility to any Borrower on account of the failure of or delay in
performance or breach by any Lender of any of its obligations hereunder or to
any Lender on account of the failure of or delay in performance or breach by any
other
71
Lender or any Borrower of any of its respective obligations hereunder or in
connection herewith. The Agent may execute any and all of its duties hereunder
by or through agents of recognized standing or employees and shall be entitled
to rely upon the advice of legal counsel of recognized standing selected by it
with respect to all matters arising hereunder and shall not be liable for any
action taken or suffered in good faith by it in accordance with the advice of
such counsel.
The Lenders hereby acknowledge that the Agent shall be under no duty to
take any discretionary action permitted to be taken by it pursuant to the
provisions of this Agreement unless it shall be requested in writing to do so by
the Required Lenders.
Subject to the appointment and acceptance of a successor Agent as
provided below, the Agent may resign at any time by notifying the Lenders and
the Borrowers. Upon any such resignation, the Required Lenders shall have the
right to appoint a successor; provided, however, that any such appointment shall
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be subject to the prior written consent of JCPenney (which consent shall not be
unreasonably withheld so long as such successor shall be (i) a bank with a
rating of Aa2 or better from Xxxxx'x or a rating of AA or better from S&P, or an
Affiliate of any such bank, or (ii) any Co-Agent). If no successor shall have
been so appointed by the Required Lenders and shall have accepted such
appointment within 30 days after the retiring Agent gives notice of its
resignation, then the retiring Agent may, on behalf of the Lenders, appoint a
successor Agent; provided, however, that any such appointment shall be subject
-------- -------
to the prior written consent of JCPenney (which consent shall not be
unreasonably withheld so long as such successor shall be (i) a bank with a
rating of Aa2 or better from Xxxxx'x or a rating of AA or better from S&P, or an
Affiliate of any such bank, or (ii) any Co-Agent). Upon the acceptance of any
appointment as Agent hereunder by a permitted successor, such successor shall
succeed to and become vested with all the rights, powers, privileges and duties
of the retiring Agent and the retiring Agent shall be discharged from its duties
and obligations as Agent hereunder. After an Agent's resignation hereunder, the
provisions of this Article and Section 9.05 shall continue in effect for its
benefit in respect of any actions taken or omitted to be taken by it while it
was acting as Agent.
The Borrowers shall have the right to replace any Agent requesting
compensation under Section 2.19, but only in accordance with the provisions of
Section 2.20(b).
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With respect to the Loans made by it hereunder, the Agent (and any
Lender appointed as a successor Agent) in its individual capacity and not as
Agent shall have the same rights and powers as any other Lender and may exercise
the same as though it were not the Agent (or such successor Agent) and the Agent
and its Affiliates (and any such successor Agent and its Affiliates) may accept
deposits from, lend money to and generally engage in any kind of business with
any Borrower or Subsidiary or any Affiliate of any Borrower as if the Agent (or
such successor Agent) were not an Agent.
Each Lender agrees (i) to reimburse the Agent, on demand, in the amount
of its pro rata share (based on its Commitment hereunder) of any expenses (other
than expenses in connection with the negotiation, preparation and closing of
this Agreement) incurred for the benefit of the Lenders by the Agent, including
counsel fees and compensation of agents and employees paid for services rendered
on behalf of the Lenders, which shall not have been reimbursed by the Borrowers
and (ii) to indemnify and hold harmless the Agent and any of its directors,
officers, employees or agents, on demand, in the amount of such pro rata share,
from and against any and all liabilities, taxes, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements of any
kind or nature whatsoever which may be imposed on, incurred by or asserted
against it in its capacity as an Agent or any of them in any way relating to or
arising out of this Agreement or any action taken or omitted by it or any of
them under this Agreement, to the extent the same shall not have been reimbursed
by the Borrowers; provided that no Lender shall be liable to the Agent for any
--------
portion of such liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements resulting from the gross
negligence or wilful misconduct of the Agent or any of its directors, officers,
employees or agents.
Each Lender acknowledges that it has, independently and without
reliance upon the Agent or any other Lender and based on such documents and
information as it has deemed appropriate, made its own credit analysis and
decision to enter into this Agreement. Each Lender also acknowledges that it
will, independently and without reliance upon the Agent or any other Lender and
based on such documents and information as it shall from time to time deem
appropriate, continue to make its own decisions in taking or not taking action
under or based upon this Agreement, any related agreement or any document
furnished hereunder or thereunder.
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No Co-Agent shall have any duties or responsibilities hereunder in its
capacity as such.
ARTICLE IX. MISCELLANEOUS
SECTION 9.01. Notices. Notices and other communications provided for
--------
herein shall be in writing and shall be delivered by hand or overnight courier
service, mailed or sent by telex, graphic scanning or other telegraphic
communications equipment, as follows:
(a) if to X.X. Xxxxxx, to it at X.X. Penney Company, Inc., 0000 Xxxxxx
Xxxxx, Mail Code 1304, Plano, TX 75024-3698, Attention of Treasurer
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
With a copy to: General Counsel - X.X. Xxxxxx Company, Inc., at the same
address;
(b) if to Funding, to it at X.X. Penney Funding Corporation, 6501
Legacy Drive, Mail Code 1304, Plano, TX 75024-3698, Attention of President
Telephone: (000) 000-0000
Telecopy: (000) 000-0000 With a copy to: General Counsel - X.X.
Xxxxxx Company, Inc., at the same address.
(c) if to the Agent, to it at Xxxxxx Guaranty Trust Company of New
York, 00 Xxxx Xxxxxx, 00xx Xxxxx, Xxx Xxxx, XX 00000, Attention of Xx.
Xxxxx Xxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
(d) if to a Lender, to it at its address (or telecopy number) set forth
in Schedule 2.01.
All notices and other communications given to any party hereto in accordance
with the provisions of this Agreement shall be deemed to have been given on the
date of receipt if delivered by hand or overnight courier service or sent by
telex, telecopy or other telegraphic communications equipment, or on the date
five Business Days after dispatch by certified or registered mail if mailed, in
each case delivered, sent or mailed (properly addressed) to such party as
provided in this Section 9.01 or in accordance with the latest unrevoked
direction from such party given in accordance with this Section 9.01.
SECTION 9.02. Survival of Agreement. All covenants, agreements,
----------------------
representations and warranties made by any
74
Borrower herein and in the certificates or other instruments prepared or
delivered in connection with or pursuant to this Agreement shall be considered
to have been relied upon by the Lenders and shall survive the making by the
Lenders of the Loans, regardless of any investigation made by the Lenders or on
their behalf, and shall continue in full force and effect as long as the
principal of or any accrued interest on any Loan or any Fee or any other amount
payable under this Agreement is outstanding and unpaid and so long as the
Commitments have not been terminated.
SECTION 9.03. Binding Effect. This Agreement shall become effective
---------------
when it shall have been executed by each of the Borrowers and the Agent and when
the Agent shall have received copies hereof which, when taken together, bear the
signatures of each Lender, and thereafter shall be binding upon and inure to the
benefit of the Borrowers, the Agent and each Lender and their respective
successors and permitted assigns in accordance with its terms, except that no
Borrower shall have any right to assign or delegate any of its respective rights
or duties hereunder or any interest herein without the prior consent of all the
Lenders.
SECTION 9.04. Successors and Assigns. (a) Whenever in this Agreement
-----------------------
any of the parties hereto is referred to, such reference shall be deemed to
include the successors and permitted assigns of such party; and all covenants,
promises and agreements by or on behalf of any Borrower, the Agent or the
Lenders that are contained in this Agreement shall bind and inure to the benefit
of their respective successors and permitted assigns.
(b) Each Lender may assign to an Eligible Assignee, at the expense of
the assignor and/or the assignee, all or a portion of its interests, rights and
obligations under this Agreement (including all or a portion of its Commitment
and the Loans at the time owing to it); provided, however, that (i) except in
-------- -------
the case of an assignment by a Lender to an Affiliate of such Lender which is a
bank or bank holding company, the Borrowers and the Agent must give their prior
written consent to such assignment (which consent in each case shall not be
unreasonably withheld), (ii) the amount of the Commitment of the assigning
Lender subject to such assignment (determined as of the date of such assignment)
shall not be less than $20,000,000 (or the remaining amount of the Commitment of
such Lender), (iii) other than the case of an assignment by a Lender of the
remaining amount of the Commitment of such Lender, no Lender shall make more
than two assignments under this Section 9.04(b) after the Closing Date and prior
to the
75
Maturity Date, (iv) the parties to each such assignment shall execute and
deliver to the Agent an instrument evidencing such assignment (the "Assignment
Instrument") and a processing and recordation fee of $2,500 (which fee shall not
in any event be an obligation of the Borrowers) and (v) as of the date of such
assignment, except with the prior written consent of JCPenney, (x) the assignee
shall not have any right, and shall have no knowledge that such assignment would
result in its having the right, to request compensation pursuant to Section 2.13
or 2.19 after giving effect to such assignment in excess of any compensation to
which the assigning Lender would have been entitled under such Sections and (y)
the parties to such assignment shall have no knowledge that such assignment (A)
would cause it to be unlawful for any party thereto to make or maintain any
Eurodollar Loan or to give effect to its obligations as contemplated hereby with
respect to any Eurodollar Loan or (B) would cause any Borrower to incur any
liability under Section 2.15. Upon acceptance and recording pursuant to
paragraph (d) of this Section 9.04, from and after the effective date specified
in each Assignment Instrument, which effective date shall be at least five days
after the execution thereof, (A) the assignee thereunder shall be a party hereto
and, to the extent of the interest assigned by such Assignment Instrument, shall
have the rights and obligations of, and shall for all purposes be, a Lender
under this Agreement and (B) the assigning Lender thereunder shall, to the
extent of the interest assigned by such Assignment Instrument, be released from
its obligations under this Agreement (and, in the case of an Assignment
Instrument covering all or the remaining portion of an assigning Lender's rights
and obligations under this Agreement, such Lender shall cease to be a party
hereto (but, subject to Section 2.20, shall continue to be entitled to the
benefits of Sections 2.13, 2.15, 2.19 and 9.05, as well as to any Fees accrued
for its account hereunder and not yet paid)). Notwithstanding the foregoing,
any Lender assigning any portion of its rights and obligations under this
Agreement may retain any Competitive Loans made by it outstanding at such time,
and in such case shall retain its rights hereunder in respect of any Loans so
retained until such Loans have been repaid in full in accordance with this
Agreement. No assignment may be made by any Lender except in accordance with
the provisions of this Section 9.04(b).
(c) By executing and delivering an Assignment Instrument, the assignee
thereunder shall be deemed to confirm to and agree with the other parties hereto
as follows: (i) such assignee confirms that it has received a copy of this
Agreement, together with copies of the most
76
recent financial statements delivered pursuant to Section 5.04 and such other
documents and information as it has deemed appropriate to make its own credit
analysis and decision to enter into such Assignment Instrument; (ii) such
assignee will independently and without reliance upon the Agent, the assigning
Lender or any other Lender and based on such documents and information as it
shall deem appropriate at the time, continue to make its own credit decisions in
taking or not taking action under this Agreement; (iii) such assignee appoints
and authorizes the Agent to take such action as agent on its behalf and to
exercise such powers under this Agreement as are delegated to the Agent by the
terms hereof, together with such powers as are reasonably incidental thereto;
and (iv) such assignee agrees that it will perform in accordance with their
terms all the obligations which by the terms of this Agreement are required to
be performed by it as a Lender.
(d) The Agent shall retain a copy of each Assignment Instrument
delivered to it and a register for the recordation of the name and address of,
and the Commitment of, each Lender from time to time (the "Register"). The
entries in the Register shall be conclusive in the absence of manifest error and
the Borrowers, the Agent and the Lenders may treat each person whose name is
recorded in the Register pursuant to the terms hereof as a Lender hereunder for
all purposes of this Agreement. The Register shall be available for inspection
by any Borrower or any Lender, at any reasonable time and from time to time upon
reasonable prior notice.
(e) Each Lender may without the consent of the Borrowers or the Agent
sell participations to one or more banks or other entities in all or a portion
of its rights and obligations under this Agreement (including all or a portion
of its Commitment and the Loans owing to it); provided, however, that (i) such
-------- -------
Lender's obligations under this Agreement shall remain unchanged, (ii) such
Lender shall remain solely responsible to the other parties hereto for the
performance of such obligations, (iii) the participating banks or other entities
shall not be entitled to the benefit of the provisions contained in Sections
2.13, 2.15, 2.19 and 9.05 and (iv) the Borrowers, the Agent and the other
Lenders shall continue to deal solely and directly with such Lender in
connection with such Lender's rights and obligations under this Agreement, and
such Lender shall retain the sole right to enforce the obligations of the
Borrowers relating to the Loans and to approve any amendment, modification or
waiver of any provision of this Agreement (other than any amendments,
modifications or waivers decreasing any fees payable
77
hereunder or the amount of principal of or the rate at which interest is payable
on the Loans, or extending any scheduled principal payment date or date fixed
for the payment of interest on the Loans, that would affect the Lender in
question and its participants).
(f) Any Lender or participant may, in connection with any assignment
or participation or proposed assignment or participation pursuant to this
Section 9.04, disclose to the assignee or participant or proposed assignee or
participant any information relating to any Borrower furnished to such Lender by
or on behalf of such Borrower; provided that, prior to any such disclosure of
--------
information designated by such Borrower as confidential, each such assignee or
participant or proposed assignee or participant shall execute an agreement
whereby such assignee or participant shall agree to preserve the confidentiality
of such confidential information in accordance with Section 9.15.
(g) Any Lender may at any time, without the consent of any other party
hereto, assign all or any portion of its rights under this Agreement and any
notes issued to it to a Federal Reserve Bank provided that no such assignment
--------
shall release a Lender from any of its obligations hereunder. In order to
facilitate such an assignment to a Federal Reserve Bank, the Borrower shall, at
the request of the assigning Lender, promptly execute and deliver to the
assigning Lender a note with terms in accordance with this Agreement, in a form
reasonably acceptable to the Agent and the Borrower, evidencing the Loans made
to the Borrower by the assigning Lender hereunder.
SECTION 9.05. Expenses; Indemnity. (a) The Borrowers agree, jointly
--------------------
and severally, to pay all reasonable out-of-pocket expenses incurred by the
Agent in connection with the negotiation, preparation and closing of this
Agreement, including the reasonable fees and disbursements of Xxxxx Xxxx and
Xxxxxxxx, special counsel for the Agent, and, only with the written consent of
the Borrowers prior to any incurrence, all reasonable out-of-pocket expenses
incurred by the Agent in connection with any amendment, modification or waiver
of this Agreement. The Borrowers agree, jointly and severally, to pay all
reasonable out-of-pocket costs and expenses of the Agent and Lenders, as well as
the allocated costs of in-house counsel, in connection with the collection or
enforcement of this Agreement.
(b) The Borrowers agree, jointly and severally, to indemnify the
Agent, X.X. Xxxxxx Securities Inc., each Lender and each of their respective
directors, officers and
78
employees (each such person being called an "Indemnitee") against, and to hold
each Indemnitee harmless from, any and all losses, claims, damages, liabilities
and related expenses, including reasonable counsel fees and expenses, incurred
by or asserted against any Indemnitee arising as a result of (i) any breach by
any Borrower of any of its obligations under this Agreement or any agreement or
instrument contemplated hereby, (ii) the use of the proceeds of the Loans or
(iii) any claim, litigation, investigation or proceeding relating to any of the
foregoing, if any Indemnitee is at any time a party thereto; provided that such
--------
indemnity shall not, as to any Indemnitee, be available to the extent that such
losses, claims, damages, liabilities or related expenses (x) arise in connection
with any judgment rendered by a court of competent jurisdiction in favor of any
Borrower and against such Indemnitee, (y) result from the gross negligence or
wilful misconduct of such Indemnitee (or, if such Indemnitee is a Lender or the
Agent, any of its directors, officers or employees) or (z) result from any
disputes among the Lenders and the Agent, or any of them, other than disputes
resulting from the fault of a Borrower.
(c) The provisions of this Section 9.05 shall remain operative and in
full force and effect regardless of the expiration of the term of this
Agreement, the consummation of the transactions contemplated hereby, the
repayment of any of the Loans, the invalidity or unenforceability of any term or
provision of this Agreement, or any investigation made by or on behalf of the
Agent or the Lender. All amounts due under this Section 9.05 shall be payable
on written demand therefor.
SECTION 9.06. Right of Setoff. If an Event of Default shall have
----------------
occurred and be continuing and any three Lenders representing at least
$50,000,000 in aggregate amount of the Commitments have requested the Agent, in
writing, in accordance with the provisions of Article VII, to declare the Loan
to be forthwith due and payable, each Lender 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 indebtedness at any time owing by such Lender
to or for the credit or the account of any Borrower against any of and all the
obligations of such Borrower now or hereafter existing under this Agreement held
by such Lender (other than obligations purchased after such Event of Default
shall have become known to such Lender), irrespective of whether or not such
Lender shall have made any demand under this Agreement and although such
obligations may be unmatured. The rights of each Lender under this
79
Section are in addition to other rights and remedies (including other rights of
setoff) which such Lender may have. Any Lender exercising its rights under this
Section shall give notice thereof to JCPenney concurrently with or prior to the
exercise of such rights.
SECTION 9.07. APPLICABLE LAW. THIS AGREEMENT SHALL BE CONSTRUED IN
---------------
ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK.
SECTION 9.08. Waivers; Amendment. (a) No failure or delay of the
-------------------
Agent or Lender in exercising any power or right hereunder 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 Agent, the Lenders and the
Borrowers hereunder are cumulative and are not exclusive of any rights or
remedies which they would otherwise have. No waiver of any provision of this
Agreement or consent to any departure by any Borrower therefrom shall in any
event be effective unless the same shall be permitted by paragraph (b) below,
and then such waiver or consent shall be effective only in the specific instance
and for the purpose for which given. No notice or demand on any Borrower in any
case shall entitle such Borrower 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 Borrowers and the Required Lenders; provided, however, that
-------- -------
no such agreement shall (i) decrease the principal amount of, or extend the
maturity of or any scheduled principal payment date or date for the payment of
any interest on any Loan, or waive or excuse any such payment or any part
thereof, or decrease the rate of interest on any Loan, without the prior written
consent of each Lender affected thereby, (ii) change the Commitment or decrease
the Facility Fees of any Lender without the prior written consent of such
Lender, or (iii) amend or modify the provisions of Section 2.16 or Section 9.03,
the provisions of this Section or the definition of the "Required Lenders",
without the prior written consent of each Lender; provided further that no such
-------- -------
agreement shall amend, modify or otherwise affect the rights or duties of the
Agent hereunder without the prior written consent of the Agent. Each Lender
shall be bound by any waiver, amendment or modification authorized by this
Section,
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and any consent by any Lender pursuant to this Section shall bind any subsequent
assignee of such Lender.
SECTION 9.09. Interest and Charges. Notwithstanding any other
---------------------
provision in this Agreement, no Lender shall ever be entitled to receive,
collect or apply, as interest on any amount owing to such Lender under this
Agreement or in connection herewith, any amount in excess of the Maximum Amount.
If any Lender ever receives, collects or applies, as interest, any such excess,
such excess shall be deemed a partial repayment of principal and treated
hereunder as such; and if principal is paid in full, any remaining excess shall
be paid to the appropriate Borrower. In determining whether or not the interest
paid or payable, under any specific contingency, exceeds the Maximum Amount, the
Borrowers and the Lenders shall, to the maximum extent permitted under
applicable law, (i) characterize any nonprincipal payment as an expense, fee or
premium rather than as interest, (ii) exclude voluntary prepayments and the
effect thereof, and (iii) amortize, prorate, allocate and spread in equal parts,
the total amount of interest throughout the entire contemplated term of this
Agreement so that the interest rate is uniform throughout the entire period that
any amount is outstanding under or in connection with this Agreement; provided,
--------
however, that if any obligation owing to a Lender hereunder or in connection
-------
herewith is paid and performed in full prior to the end of the full contemplated
term thereof, and if the interest received by such Lender on such obligation for
its actual term exceeds the Maximum Amount with respect thereto, such Lender
shall refund to the appropriate Borrower the amount of such excess or credit the
amount of such excess against the total principal amount of all amounts owing to
such Lender hereunder or in connection herewith, and, in such event, such Lender
shall not be subject to any penalties provided by any laws for contracting for,
charging or receiving interest in excess of the Maximum Amount.
SECTION 9.10. Entire Agreement. This written Agreement together with
-----------------
the letter agreement with respect to payment of fees dated November 7, 1996
represent the final agreement among the parties with respect to the subject
matter hereof and may not be contradicted by evidence of prior, contemporaneous,
or subsequent oral agreements of the parties. There are no unwritten oral
agreements among the parties with respect to the subject matter hereof.
SECTION 9.11. Severability. In the event any one or more of the
-------------
provisions contained in this Agreement should be held invalid, illegal or
unenforceable in any respect, the
81
validity, legality and enforceability of the remaining provisions contained
herein and therein shall not in any way be affected or impaired thereby. The
parties shall endeavor in good-faith negotiations to replace the invalid,
illegal or unenforceable provisions with valid provisions the economic effect of
which comes as close as possible to that of the invalid, illegal or
unenforceable provisions.
SECTION 9.12. Counterparts. This Agreement may be executed in two or
-------------
more counterparts, each of which shall constitute an original but all of which
when taken together shall constitute but one contract, and shall become
effective as provided in Section 9.03.
SECTION 9.13. Headings. Article and Section headings and the Table of
---------
Contents used herein are for convenience 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 9.14. Jurisdiction; Consent to Service of Process. (a) Each
----------------------------------- --------
Borrower hereby irrevocably and unconditionally submits, for itself and its
property, to the nonexclusive jurisdiction of any New York State court or
Federal court of the United States of America sitting in New York City, and any
appellate court from any thereof, in any action or proceeding arising out of or
relating to this Agreement, 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.
Subject to the foregoing and to paragraph (b) below, nothing in this Agreement
shall affect any right that any party hereto may otherwise have to bring any
action or proceeding relating to this Agreement against any other party hereto
in the courts of any jurisdiction.
(b) Each Borrower 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 in any New York State or
Federal court. Each of the parties hereto hereby irrevocably waives, to the
fullest extent
82
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 9.01. Nothing in this
Agreement will affect the right of any party to this Agreement to serve process
in any other manner permitted by law.
SECTION 9.15. Confidentiality. Notwithstanding anything contained in
----------------
this Agreement to the contrary, the Lenders and the Agent shall hold in
confidence all agreements, statements, reports and information that are not in
the public domain concerning the Borrowers and their Subsidiaries that the Agent
or any Lender receives pursuant to or in connection with this Agreement. The
Agent and each of the Lenders shall not distribute any such confidential
information to other persons except (a) to its counsel, its Affiliates, its
examiners, regulatory authorities and prospective assignees of, or participants
in, its interest herein and their respective counsel (each of which shall be
instructed to hold the same in confidence, and in the case of any prospective
assignee or prospective participant, shall execute an agreement to such effect
pursuant to Section 9.04(f) as a condition to receiving a copy of this Agreement
and becoming an assignee or participant hereunder), (b) pursuant to legal
process, (c) in connection with litigation against or by the Lenders and/or the
Agent arising in connection with this Agreement or (d) with the prior written
consent of the Borrowers. The Agent and each of the Lenders shall give prior or
contemporaneous notice to the Borrowers of any disclosure by it of confidential
information pursuant to clause (b) or (c) above.
SECTION 9.16. Liability of Borrowers. Except as expressly provided in
-----------------------
this Agreement, the obligations of each Borrower hereunder shall be several
obligations with respect to Loans made to it.
SECTION 9.17. No Collateral. Each of the Lenders represents to the
-------------
Agent and each of the other Lenders that it in good faith is not relying upon
any Margin Stock as collateral in the extension or maintenance of the credit
provided for in this Agreement.
IN WITNESS WHEREOF, the Borrowers, the Agent, the Co-Agents and the
Lenders have caused this Agreement to be duly executed by their respective
authorized officers as of the day and year first above written.
83
X.X. XXXXXX COMPANY, INC.
By /s/ Xxxxxx X. Xxxxxxxxx
------------------------
Title: Vice President & Treasurer
X.X. XXXXXX FUNDING CORPORATION
By /s/ Xxxxx X. Xxxxxx
------------------------
Title: Vice President & Treasurer
XXXXXX GUARANTY TRUST COMPANY OF
NEW YORK, as Lender and as Agent
By /s/ Xxxxx X. Xxxx
------------------------
Title: Vice President
CREDIT SUISSE
By /s/ Xxxxx X. Xxxxx
------------------------
Title: Member & Senior Management
By /s/ Xxxxxx X. Xxxxx
------------------------
Title: Associate
BANK OF AMERICA ILLINOIS
By /s/ Xxxxxx Xxx
------------------------
Title: Vice President
BANKERS TRUST COMPANY
By /s/ Xxxxxxx XxXxxxxx
------------------------
Title: Vice President
84
THE CHASE MANHATTAN BANK
By /s/ Xxxx X. Xxxxxx
------------------------
Title: Vice President
CITIBANK, N.A.
By /s/ Jolie Xxxxxx
-------------------------
Title: Vice President
NATIONSBANK OF TEXAS, N.A.
By /s/ Xxxxxx Xxxxxx
-------------------------
Title: Senior Vice President
THE BANK OF NEW YORK
By /s/ Xxxxxxxxx Xxxx
------------------------
Title: Vice President
THE BANK OF TOKYO-MITSUBISHI, LTD.
By /s/ X. Xxxxxx
------------------------
Title: Vice President & Manager
THE CANADIAN IMPERIAL BANK OF COMMERCE
By /s/ Xxxxx X. Xxxxxxx
------------------------
Title: Authorized Signatory
By /s/ Xxxxxxxxxx X. Xxxxxxx
---------------------------
Title: Authorized Signatory
85
CORESTATES BANK, N.A.
By /s/ Xxxxxx Xxxxxxxx
------------------------
Title: Vice President
FLEET BANK
By /s/ Xxxxxx X. Xxxxxxx
------------------------
Title: Vice President
PNC BANK, NATIONAL ASSOCIATION
By /s/ Xxxxx X. Xxxx
------------------------
Title: Senior Vice President
ROYAL BANK OF CANADA
By /s/ Xxxxx X. Xxxx
------------------------
Title: Manager, Corporate Banking
UNION BANK OF SWITZERLAND
By /s/ Xxxxxxx X. Xxxxxx
------------------------
Title: Managing Director
By /s/ Xxxxxx X. Xxxxxxxxxx
-------------------------
Title: Assistant Vice President
WACHOVIA BANK OF GEORGIA, N.A.
By /s/ Xxxxx X. Xxxxxxxxx
------------------------
Title: Senior Vice President
86
THE FIRST NATIONAL BANK OF BOSTON
By /s/ Xxxxxxx X. Xxxxxxxx
------------------------
Title: Division Executive
BANQUE NATIONALE DE PARIS
By /s/ Xxxxx X. Xxxx
------------------------
Title: Banking Officer
DAI-ICHI KANGYO BANK, LTD.
By /s/ Masayoshi Komaki
------------------------
Title: Assistant Vice President
THE FIRST NATIONAL BANK OF CHICAGO
By /s/ Xxxxxxxxx X. Xxxxxxxxx
---------------------------
Title: Assistant Vice President
FIRST UNION NATIONAL BANK OF
NORTH CAROLINA
By /s/ Xxxx X. Xxxxxxx
------------------------
Title: Senior Vice President
THE FUJI BANK, LTD.
By /s/ Xxxxx Xxxxxx
------------------------
Title: Senior Vice President
87
MELLON BANK, N.A.
By /s/ Xxxx X. Xxxxxxx
------------------------
Title: Assistant Vice President
NATIONAL AUSTRALIA BANK, LIMITED
A.C.N. 004044937
By /s/ Xxxxxx X. Xxxxxxxx
------------------------
Title: Vice President
THE SAKURA BANK, LIMITED
NEW YORK BRANCH
By /s/ Xxxxxxxx Xxxxxxx
------------------------
Title: Senior Vice President
SUNTRUST BANK
By /s/ Xxxxxx Xxxxxx
------------------------
Title: Vice President
XXXXX FARGO BANK, N.A.
By /s/ Xxx Xxxxxx
------------------------
Title: Assistant Vice-President
BANK OF HAWAII
By /s/ Xxxxxx X. Xxxxxxxx
------------------------
Title: Vice President
88
BANK ONE TEXAS, N.A.
By /s/ Xxxxx Xxxx
------------------------
Title: Assistant Vice President
BARCLAYS BANK PLC
By /s/ Xxxx Xxxxxxxx
------------------------
Title: Associate Director
COMPAGNIE FINANCIERE DE CIC ET DE
L'UNION EUROPEENNE
By /s/ Xxxxxx Xxxxxxxx
------------------------
Title: Vice President
By /s/ Xxxx Xxxxxxx
------------------------
Title: Vice President
CREDIT AGRICOLE
By /s/ W. Xxxxx Xxxxxx
------------------------
Title: First Vice President
THE HONGKONG SHANGHAI BANKING
CORPORATION LIMITED
By /s/ Xxxxx Xxxxx
------------------------
Title: Vice President
By /s/ X.X. Xxxxxxx
------------------------
Title: Senior Vice President
THE INDUSTRIAL BANK OF JAPAN
TRUST COMPANY
By /s/ Akijiro Yoshino
------------------------
Title: Executive Vice President
THE INDUSTRIAL BANK OF JAPAN,
LIMITED, HOUSTON OFFICE
(Authorized Representative)
89
THE LONG-TERM CREDIT BANK OF JAPAN,
LTD., NEW YORK BRANCH
By /s/ Xxxxxx Xxxxxx
------------------------
Title: Joint General Manager
THE NORTHERN TRUST COMPANY
By /s/ Xxxxx F.T. Monhart
------------------------
Title: Vice President
NORWEST BANK MINNESOTA,
NATIONAL ASSOCIATION
By /s/ Xxxxx X. Xxxxxx
------------------------
Title: Vice President
INSTITUTO BANCARIO SAN PAOLO
DI TORINO SPA-NEW YORK
By /s/ Xxxxxx Xxxxxxx
------------------------
Title: First Vice President
By /s/ Xxxxxxx X. XxXxxxxx
------------------------
Title: First Vice President
THE SANWA BANK LTD.
By /s/ Xxxxxx X. Xxxxx
------------------------
Title: Vice President
90
THE SUMITOMO BANK, LTD.
By /s/ Xxxxxxxxx Xxxx
------------------------
Title: General Manager
UNITED STATES NATIONAL BANK
OF OREGON
By /s/ Xxxxx X. Xxxxxx
------------------------
Title: Vice President
YASUDA TRUST AND BANKING CO., LTD.
By /s/ Xxxxxx Xxxxxx
------------------------
Title: Deputy General Manager
UNITED MISSOURI BANK, N.A.
By /s/ Xxxxx X. Xxxxxxxx
------------------------
Title: Divisional Executive Vice
President
FIRSTAR BANK MILWAUKEE, N.A.
By /s/ Xxxxx Xxxxxxxxxx
------------------------
Title: Vice President
FIRST SECURITY BANK
OF UTAH, N.A.
By /s/ Xxxx X. Xxxxxxxxx
------------------------
Title: Vice President
HIBERNIA NATIONAL BANK
By /s/ Xxxxxx X. Xxxxxx
------------------------
Title: Vice President
91
EXHIBIT A-1
FORM OF COMPETITIVE BID REQUEST
Xxxxxx Guaranty Trust Company of New York
00 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: [ ] [Date]
Dear Sirs:
The undersigned, [ ] (the "Borrower"), refers to the Revolving Credit
Agreement dated as of December 16, 1993, as amended and restated as of December
7, 1994, as amended as of December 6, 1995, as amended and restated as of
December 3, 1996 and as further amended, modified, extended or restated from
time to time (the "Credit Agreement"), among X.X. Xxxxxx Company, Inc.
("JCPenney"), X.X. Penney Funding Corporation ("Funding"), the Lenders and
Xxxxxx Guaranty Trust Company of New York, as Agent and Bank of America
Illinois, Bankers Trust Company, The Chase Manhattan Bank, Citibank, N.A.,
Credit Suisse and NationsBank of Texas, N.A., as Co-Agents. Capitalized terms
used but not defined herein shall have the meanings assigned to such terms in
the Credit Agreement. The Borrower hereby gives you notice pursuant to Section
2.03(a) of the Credit Agreement that it requests a Competitive Borrowing under
the Credit Agreement, and in that connection set forth below the terms on which
such Competitive Borrowing is requested to be made:
(A) Date of Competitive Borrowing
(which is a Business Day)
-------------
(B) Principal Amount of Competitive
Borrowing/1/
-------------
(C) Interest rate basis/2/
-------------
------------------
/1/ Not less than $25,000,000 (and in integral multiples of $5,000,000) or, if
less, an aggregate principal amount equal to the Total Commitment on the date of
such Borrowing minus the outstanding aggregate principal amount on such date of
all Competitive Loans
/2/ Eurodollar Loan, Fixed Rate Loan or CD Loan
92
(D) Interest Period and the last
day thereof/3/
-------------
Upon acceptance of any or all of the Loans offered by the Lenders in response
to this request, the Borrower shall be deemed to have represented and warranted,
except as otherwise provided in Section 4.01, that the conditions to lending
specified in Section 4.01(b) and (c) of the Credit Agreement have been
satisfied.
Very truly yours,
By
---------------------------------
Title: [Responsible Officer]/4/
--------------------------
/3/ Which shall be subject to the definition of "Interest Period" and end not
later than the Maturity Date
/4/Chairman, vice chairman, president, chief financial officer, treasurer or
controller of such corporation or any executive or senior vice president of such
corporation.
1
EXHIBIT A-2
FORM OF NOTICE OF COMPETITIVE BID REQUEST
[Name of Lender]
[Address]
[Date]
Attention: [ ]
Dear Sirs:
Reference is made to the Revolving Credit Agreement dated as of December
16, 1993, as amended and restated as of December 7, 1994, as amended as of
December 6, 1995, as amended and restated as of December 3, 1996 and as further
amended, modified, extended or restated from time to time (the "Credit
Agreement"), among X.X. Xxxxxx Company, Inc. ("JCPenney"), X.X. Penney Funding
Corporation ("Funding"), the Lenders and Xxxxxx Guaranty Trust Company of New
York, as Agent and Bank of America Illinois, Bankers Trust Company, The Chase
Manhattan Bank, Citibank, N.A., Credit Suisse and NationsBank of Texas, N.A., as
Co-Agents. Capitalized terms used but not defined herein shall have the
meanings assigned to such terms in the Credit Agreement. [ ]/1/ made a
Competitive Bid Request on [ ], 19[ ], pursuant to Section 2.03(a) of the
Credit Agreement, and in that connection you are invited to submit a Competitive
Bid by [time], on [date]./2/ Your Competitive Bid must comply with Section
2.03(b) of the Credit Agreement and the terms set forth below on which the
Competitive Bid Request was made:
(A) Date of Competitive Borrowing
-------------
(B) Principal Amount of Competitive
Borrowing
-------------
--------------------
/1/ JCPenney or Funding.
/2/ The Competitive Bid must be received by the Agent: (i) in the case of
Eurodollar Loans or CD Loans, not later than 9:00 a.m., New York City time,
three Business Days before the proposed Competitive Borrowing, and (ii) in the
case of Fixed Rate Loans, not later than 9:00 a.m., New York City time, on the
day of a proposed Competitive Borrowing
2
(C) Interest rate basis
-------------
(D) Interest Period and the last
day thereof
-------------
Very truly yours,
XXXXXX GUARANTY TRUST COMPANY
OF NEW YORK, as Agent,
By
---------------------------------
Title:
1
EXHIBIT A-3
FORM OF COMPETITIVE BID
Xxxxxx Guaranty Trust Company of New York
00 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
[Date]
Attention: [ ]
Dear Sirs:
The undersigned, [name of Lender], refers to the Revolving Credit Agreement
dated as of December 16, 1993, as amended and restated as of December 7, 1994,
as amended as of December 6, 1995, as amended and restated as of December 3,
1996 and as further amended, modified, extended or restated from time to time
(the "Credit Agreement"), among X.X. Xxxxxx Company, Inc. ("JCPenney"), X.X.
Penney Funding Corporation ("Funding"), the Lenders and Xxxxxx Guaranty Trust
Company of New York, as Agent and Bank of America Illinois, Bankers Trust
Company, The Chase Manhattan Bank, Citibank, N.A. and NationsBank of Texas,
N.A., as Co-Agents. Capitalized terms used but not defined herein shall have
the meanings assigned to such terms in the Credit Agreement. The undersigned
hereby makes a Competitive Bid pursuant to Section 2.03(b) of the Credit
Agreement, in response to the Competitive Bid Request made by [ ]/1/ on
[ ], 19[ ], and in that connection sets forth below the terms on
which such Competitive Bid is made:
(A) Principal Amount/2/
-------------
(B) Competitive Bid Rate[s]/3/
-------------
------------------
/1/ JCPenney or Funding.
/2/ An integral multiple of $5,000,000 (unless equal to the requested
Competitive Borrowing) and not greater than the requested Competitive Borrowing.
Multiple bids will be accepted by the Agent.
/3/ One or more rates; i.e., LIBO Rate + or - ___%, in the case of Eurodollar
----
Loans, Adjusted CD Rate + or - ___%, in the case of CD Loans, or ____%, in the
case of Fixed Rate Loans.
2
(C) Interest Rate Period and last
day thereof
-------------
The undersigned hereby confirms that it will, subject only to the
conditions set forth in the Credit Agreement, extend credit to the Borrower upon
acceptance by the Borrower of this bid in accordance with Section 2.03(d) of the
Credit Agreement.
Very truly yours,
[NAME OF LENDER]
By
-----------------------------------
Title:
1
EXHIBIT A-4
FORM OF STANDBY BORROWING REQUEST
Xxxxxx Guaranty Trust Company of New York
00 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
[Date]
Attention: [ ]
Dear Sirs:
The undersigned, [ ] (the "Borrower"), refers to the Revolving Credit
Agreement dated as of December 16, 1993, as amended and restated as of December
7, 1994, as amended as of December 6, 1995, as amended and restated as of
December 3, 1996 and as further amended, modified, extended or restated from
time to time (the "Credit Agreement"), among X.X. Penney Company, Inc.
("JCPenney"), X.X. Xxxxxx Funding Corporation ("Funding"), the Lenders and
Xxxxxx Guaranty Trust Company of New York, as Agent and Bank of America
Illinois, Bankers Trust Company, The Chase Manhattan Bank, Citibank, N.A.,
Credit Suisse and Nationsbank of Texas, N.A., as Co-Agents. Capitalized terms
used but not defined herein shall have the meanings assigned to such terms in
the Credit Agreement. The Borrower hereby gives you notice pursuant to Section
2.04 of the Credit Agreement that it requests a Standby Borrowing under the
Credit Agreement, and in that connection sets forth below the terms on which
such Standby Borrowing is requested to be made:
(A) Date of Standby Borrowing
(which is a Business Day)
-------------
(B) Principal Amount of Standby
Borrowing/1/
-------------
(C) Interest rate basis/2/
-------------
------------------
/1/ Not less than $25,000,000 (and in integral multiples of $5,000,000) or, if
less, an aggregate principal amount equal to the remaining available balance of
the Total Commitment.
/2/ Eurodollar Loan or ABR Loan. Notice under Section 2.04 is necessary to
refinance a Standby Borrowing with a Eurodollar Borrowing. In the absence of
such a notice,
2
(D) Interest Period and the Last
day thereof/3/
-------------
Upon acceptance of any or all of the Loans made by the Lenders in response
to this request, the Borrower shall be deemed to have represented and warranted,
except as otherwise provided in Section 4.01, that the conditions to lending
specified in Section 4.01(b) and (c) of the Credit Agreement have been
satisfied; provided, however, that in the case of a refinancing of a Standby
-------- -------
Borrowing with a new Standby Borrowing that does not increase the outstanding
aggregate principal amount of the Loans of any Lender, the Borrower shall not be
subject to the satisfaction of any of the Section 4.01 conditions.
Very truly yours,
By
------------------------------------
Title: [Responsible Officer]/4/
-----------------------
unless the Borrowing is repaid at the end of the applicable Interest Period, the
Borrower shall be deemed to have given notice of an election to refinance such
Borrowing with an ABR Borrowing of 5 days' duration.
/3/ Which shall be subject to the definition of "Interest Period" and end not
later than the Maturity Date.
/4/ Chairman, vice chairman, president, chief financial officer, treasurer, or
controller of such corporation or any executive or senior vice president of such
corporation.
1
EXHIBIT B
[INTENTIONALLY OMITTED]
1
EXHIBIT C
GUARANTY
--------
This Guaranty Agreement is executed as of this 3rd
day of December, 1996, by X.X. Xxxxxx Company, Inc., a
Delaware corporation ("Guarantor"), in favor of X.X.
Penney Funding Corporation, a Delaware corporation
("Funding"), and the lenders ("") (as defined below).
RECITALS:
--------
WHEREAS, Funding is a wholly-owned subsidiary of Guarantor;
WHEREAS, Funding and Guarantor have entered into those certain 364-Day and
Five-Year Revolving Credit Agreements (collectively, the "Agreements") dated as
of December 16, 1993, as amended and restated with new Lenders as of December 7,
1994, as amended as of December 6, 1995, as amended and restated as of December
3, 1996 and as further amended, modified, extended or restated from time to time
with the written consent of the Guarantor (the "Restated Agreements"), among
Guarantor, Funding, Xxxxxx Guaranty Trust Company of New York, as agent for the
Lenders, Bank of America Illinois, Bankers Trust Company, The Chase Manhattan
Bank, Citibank, N.A., Credit Suisse and Nationsbank of Texas, N.A., as co-agents
for the Lenders, and certain other financial institutions named in the Restated
Agreements (collectively, the "Lenders") in amounts not to exceed One Billion
Five Hundred Million Dollars ($1,500,000,000) and One Billion Five Hundred
Million Dollars ($1,500,000,000), respectively; and
WHEREAS, Guarantor is willing to guarantee any borrowings of Funding under
the Restated Agreements on the terms set forth herein;
NOW, THEREFORE, in consideration of the premises, Guarantor hereby agrees
as follows:
1. Subject to the terms and conditions of subordination set forth in this
Guaranty, Guarantor hereby unconditionally guarantees in favor of the Lenders,
the prompt payment when
2
due of all interest, principal, and other amounts owing under the Restated
Agreements (collectively, the "Guaranteed Debt"). This is an unconditional
guaranty of payment, and in the event of default by Funding in the payment of
interest, principal, or any other amounts payable under the Guaranteed Debt, the
Lenders may proceed directly against Guarantor to enforce this Guaranty
(including by the institution of legal proceedings) without first proceeding
against Funding.
2. Guarantor acknowledges that it has received and will receive a direct
or indirect benefit from the making of this Guaranty and the creation of the
Guaranteed Debt.
3. a. The Guaranteed Debt shall be subordinated and subject in right of
payment to the prior payment in full of any and all other indebtedness for
borrowed money incurred, created, assumed, or otherwise guaranteed by Guarantor
(collectively referred to as the Guarantor's "Senior Debt").
b. In the event of (1) any dissolution or winding-up or total or partial
liquidation or reorganization of Guarantor, whether voluntary or involuntary, or
any bankruptcy, insolvency, receivership, or similar proceeding relative to
Guarantor, or (2) any default in the payment of principal (including any
acceleration or required prepayments or amortization) of or interest on any
Senior Debt of Guarantor, then, subject to the provisions of subsection d.
below, the Lenders shall not be entitled to receive any payment under this
Guaranty on account of the Guaranteed Debt unless and until all Senior Debt
shall have been paid in full or otherwise discharged.
c. For purposes of determining the priority of payments between the Senior
Debt and the Guaranteed Debt, in the event that the Guaranteed Debt, or any part
thereof, is declared due and payable prior to its stated maturity, all principal
of and interest and any other amounts due on all Senior Debt outstanding at the
time of such declaration as to the Guaranteed Debt shall first have been paid in
full, before any payment is made by Guarantor upon the Guaranteed Debt.
d. In no event shall any Lender be required by this subordination to refund
any amounts paid to it pursuant to this Guaranty on account of the Guaranteed
Debt prior to the events specified in subsections b. and c. above, and prior to
such events the Lenders shall be entitled to be paid hereunder as agreed and to
collect any sums due such Lenders hereunder by any lawful means.
3
e. The provisions of this Section are for the purpose of defining the
relative rights of the holders of any Senior Debt, on the one hand, and the
Lenders, on the other hand, against Guarantor, and nothing herein shall impair,
as between the Guarantor and the Lenders, the obligation of Guarantor, which is
unconditional and absolute, to guarantee the prompt payment when due of the
Guaranteed Debt in accordance with the terms and provisions thereof; nor shall
anything herein prevent the Lenders from exercising all remedies otherwise
permitted by applicable law upon default hereunder, subject to the rights, if
any, under this Section of any Senior Debt holder.
4. The substantive laws of the State of New York shall govern the
validity, construction, enforcement, and interpretation of this Guaranty.
IN WITNESS WHEREOF, Guarantor has executed and delivered this Guaranty as
of the date first written above.
X.X. XXXXXX COMPANY, INC.,
a Delaware corporation, as Guarantor,
By /s/
---------------------------------
Name: Xxxxxx X. Xxxxxxxxx
Title: Vice President & Treasurer
4
EXHIBIT D
---------
PRICING SCHEDULE
The "Facility Fee Percentage" and "Euro-Dollar Margin" for any day are
the respective percentages set forth below in the applicable row under the
column corresponding to the Category that exists on such day:
================================================================
Category I II III IV V VI
================================================================
Facility 0.065% 0.070% 0.080% 0.100% 0.1750% 0.250%
Fee
Percentage
----------------------------------------------------------------
Euro- 0.1350% 0.1550% 0.170% 0.200% 0.3750% 0.500%
Dollar
Margin
===============================================================
For purposes of this Schedule, the following terms have the following
meanings:
"Category I" exists at any date if, at such date, the Index Debt is rated
at least A+ by S&P or A1 by Moody's.
"Category II" exists at any date if, at such date, (i) the Index Debt is
rated at least A by S&P or A2 by Moody's and (ii) Category I does not exist.
"Category III" exists at any date if, at such date, (i) the Index Debt is
rated at least A- by S&P or A3 by Moody's and (ii) neither Category I nor
Category II exists.
"Category IV" exists at any date if, at such date, (i) the Index Debt is
rated at least BBB+ by S&P or Baa1 by Moody's and (ii) none of Category I,
Category II and Category III exists.
"Category V" exists at any date if, at such date, (i) the Index Debt is
rated at least BBB- by S&P or Baa3 by Moody's and (ii) none of Category I,
Category II, Category III and Category IV exists.
5
"Category VI" exists at any date if, at such date, (i) the Index Debt is
rated below BBB- by S&P or below Baa3 by Moody's and (ii) no other Category
exists.
"Category" refers to the determination of which of Category I, Category
II, Category III, Category IV, Category V or Category VI exists at any date.
"Moody's" means Xxxxx'x Investors Services, Inc.
"S&P" means Standard & Poor's Ratings Services.
For purposes of the foregoing, (i) if no rating for the Index Debt shall
be available from either rating agency, (other than because (a) such rating
agency shall no longer be in the business of rating corporate debt obligations
or (b) of any other reason outside the control of JCPenney and Funding), such
rating agency shall be deemed to have established a rating in Category VI and
(ii) if any rating established or deemed to have been established by Moody's or
S&P shall be changed (other than as a result of a change in the rating system of
either Moody's or S&P), such change shall be effective as of the date on which
such change is first publicly announced by the rating agency making such change.
If the rating system of either Moody's or S&P shall change prior to the Maturity
Date, or if either such rating agency shall cease to be in the business of
rating corporate debt obligations or shall no longer have in effect a rating for
any reason outside the control of JCPenney and Funding, the Borrowers and the
Lenders shall negotiate in good faith to amend the references to specific
ratings in this definition to reflect such changed rating system or the absence
of such a rating. Pending agreement on any such amendment, (i) if the rating
system of one such rating agency shall remain unchanged, or if a rating shall be
available from one such rating agency, the Facility Fee Percentage and the Euro-
Dollar Margin shall be determined by reference to the rating established by such
rating agency, (ii) if no rating for the Index Debt shall be available from
either rating agency then (A) for 60 days, the Facility Fee Percentage and the
Euro-Dollar Margin shall be determined by reference to the rating or ratings
most recently available, (B) after 60 days, the Facility Fee Percentage and the
Euro-Dollar Margin shall be determined by reference to Category V (or Category
VI if such Percentage or Margin shall have been determined by reference to
Category V or VI under clause (A) above) and (C) after 180 days, the Facility
Fee Percentage or Euro-Dollar Margin shall be determined by reference to
Category VI.
In the case of split ratings from S&P and Moody's, the rating to be used
to determine Categories is the higher of the two (e.g., A+/A2 results in
---
Category I); provided that in the event the split is more than one full ratings
--------
"notch", the average rating (or the higher of the two intermediate ratings)
shall be used (e.g., A+/A3 results in
----
6
Category II, as does A+/Baa1); and provided further that if at any date the
----------------
Index Debt is rated BB+ or lower by S&P or Ba1 or lower by Moody's, the Facility
Fee Percentage and the Euro-Dollar Margin shall be determined by reference to
Category VI; and provided further that the Facility Fee Percentage and the Euro-
----------------
Dollar Margin shall be determined by reference to Category III from December 3,
1996 until such time thereafter as the ratings by S&P and Moody's of the Index
Debt are either affirmed or changed.
SCHEDULE 2.01
LENDERS
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Name of Lender and Address for Notices /1/ Commitment
------------------ ------------------- --- ----------
Applicable Lending
------------------
Office /1/
------ ---
Xxxxxx Guaranty Trust $87,500,000
Company of New York
Credit Suisse $75,000,000
Bank of America Illinois $62,500,000
Bankers Trust Company $62,500,000
The Chase Manhattan Bank $62,500,000
Citibank, N.A. $62,500,000
NationsBank of Texas, N.A. $62,500,000
The Bank of New York $50,000,000
The Bank of Tokyo-Mitsubishi, LTD. $50,000,000
The Canadian Imperial $50,000,000
Bank of Commerce
Corestates Bank, N.A. $50,000,000
Fleet Bank $50,000,000
PNC Bank, National $50,000,000
Association
Royal Bank of Canada $50,000,000
Union Bank of Switzerland $50,000,000
Wachovia Bank of Georgia, N.A. $50,000,000
The First National Bank $28,750,000
of Boston
Banque Nationale de Paris $28,750,000
Dai-Ichi Kangyo Bank, LTD. $28,750,000
The First National Bank of Chicago $28,750,000
-----------------
/1/ As per Agent's Administrative Questionnaires.
First Union National Bank $28,750,000
of North Carolina
The Fuji Bank, LTD. $28,750,000
Mellon Bank, N.A. $28,750,000
National Australia Bank, $28,750,000
Limited
The Sakura Bank, Limited $28,750,000
New York Branch
SunTrust Bank $28,750,000
Xxxxx Fargo Bank, N.A. $28,750,000
Bank of Hawaii $15,000,000
Bank One Texas, N.A. $15,000,000
Barclays Bank PLC $15,000,000
Compagnie Financiere de CIC $15,000,000
et de L'Union Europeenne
Credit Agricole $15,000,000
The HongKong Shanghai Banking $15,000,000
Corporation Limited
The Industrial Bank of Japan $15,000,000
Trust Company
The Long Term Credit Bank of $15,000,000
Japan, LTD., New York Branch
The Northern Trust Company $15,000,000
Norwest Bank Minnesota, $15,000,000
National Association
Instituto Bancario San Paolo $15,000,000
Di Torino Spa-New York
The Sanwa Bank, LTD. $15,000,000
The Sumitomo Bank, LTD. $15,000,000
United States National $15,000,000
Bank of Oregon
Yasuda Trust and Banking $15,000,000
Company, LTD.
UMB Bank, n.a. $10,000,000
Firstar Bank Milwaukee, N.A. $ 8,750,000
First Security Bank of Utah, N.A. $ 7,500,000
Hibernia National Bank $ 7,500,000
SCHEDULE 3.06
MATERIAL ADVERSE CHANGE
-----------------------
None
SCHEDULE 3.08
RESTRICTED SUBSIDIARIES
-----------------------
X. X. Xxxxxx Life Insurance Company
X. X. Penney Properties, Inc.
Thrift Drug, Inc.
SCHEDULE 3.09
MATERIAL LITIGATION
-------------------
None
