EXHIBIT 10.2
 
EXECUTION COPY
 
 
AMENDED AND RESTATED GUARANTEE AND COLLATERAL AGREEMENT
 
dated as of
 
January 27, 2012
 
among
 
J. C. PENNEY COMPANY, INC.,
J. C. PENNEY CORPORATION, INC.,
J. C. PENNEY PURCHASING CORPORATION,

the Subsidiaries of J. C. Penney Company, Inc.
identified herein,
 
and
 
JPMORGAN CHASE BANK, N.A.,
as Administrative Agent

 
 
 
 
 

   Table of Contents        Page  
ARTICLE I
 Definitions
 
   SECTION 1.01. Credit Agreement  1  SECTION 1.02. Other Defined Terms  1  
 
 ARTICLE II
Guarantee
 
   SECTION 2.01. Guarantee   3  SECTION 2.02. Guarantee of Payment  4  SECTION
2.03. No Limitations, Etc.  4  SECTION 2.04.   Reinstatement   5  SECTION 2.05.
Agreement To Pay; Subrogation  5  SECTION 2.06. Information  5  
 
ARTICLE III
Security Interest
 
   SECTION 3.01. Security Interest   5  SECTION 3.02.  Representations and
Warranties  7  SECTION 3.03.  Covenants  9  
 
ARTICLE IV
Remedies
 
   SECTION 4.01. Remedies upon Default   12  SECTION 4.02.  Application of
Proceeds   13  
 
ARTICLE V
Indemnity, Subrogation and Subordination
 
   SECTION 5.01.  Indemnity and Subrogation  15  SECTION 5.02. Contribution and
Subrogation  15  SECTION 5.03.  Subordination   16  
 
ARTICLE VI
Miscellaneous
       

 
 
 
 
 
 
 
 

 SECTION 6.01.  Notices  16  SECTION 6.02.  Rights Absolute   16  SECTION 6.03. 
Survival of Agreement   17  SECTION 6.04.  Binding Effect; Several Agreement  17
 SECTION 6.05. Successors and Assigns  17  SECTION 6.06.  Administrative Agent’s
Fees and Expenses; Indemnification  17  SECTION 6.07. Administrative Agent
Appointed Attorney-in-Fact  18  SECTION 6.08. Applicable Law  18  SECTION 6.09. 
Waivers; Amendment   18  SECTION 6.10. WAIVER OF JURY TRIAL   19  SECTION 6.11.
Severability   19  SECTION 6.12.  Counterparts  19  SECTION 6.13.  Headings  20
 SECTION 6.14.   Jurisdiction; Consent to Service of Process  20  SECTION 6.15. 
Termination or Release  20  SECTION 6.16.  Additional Guarantors  21  SECTION
6.17. Additional Grantors  21  SECTION 6.18. Right of Setoff   22  SECTION 6.19.
Existing Collateral Agreement  22        SCHEDULE I  Subsidiary Grantors  
 SCHEDULE II   Subsidiary Guarantors          EXHIBIT A  Form of Guarantee
Supplement    EXHIBIT B    Form of Grantor Supplement    EXHIBIT C Form of
Perfection Certificate  

 
                                    
ii
 

 
 
 
 

AMENDED AND RESTATED GUARANTEE AND COLLATERAL AGREEMENT dated as of January 27,
2012 (this “Agreement”), among J. C. PENNEY COMPANY, INC. (“Holdings”), J. C.
PENNEY CORPORATION, INC. (the “Parent Borrower”), J. C. PENNEY PURCHASING
CORPORATION (“Purchasing”), the Subsidiaries of Holdings identified on the
signature pages hereof and JPMORGAN CHASE BANK, N.A., as administrative agent
for the Lenders and the Issuing Banks (each as defined in the Credit Agreement
(as defined below)) (in such capacity, the “Administrative Agent”).
 
Reference is made to (a) the Existing Credit Agreement (as defined in the Credit
Agreement referred to below) and (b) the Amended and Restated Guarantee and
Collateral Agreement dated as of April 29, 2011 (as amended through the date
hereof, the “Existing Collateral Agreement”) among Holdings, the Parent
Borrower, Purchasing, each subsidiary of Holdings listed on Schedule I thereto
and the Administrative Agent.  The Existing Credit Agreement is being amended
and restated pursuant to and in accordance with the Credit Agreement.  The
amendment and restatement of the Existing Credit Agreement pursuant to the
Credit Agreement is conditioned upon, among other things, the execution and
delivery of this Agreement in order to amend and restate the Existing Collateral
Agreement.
 
ARTICLE I
 
Definitions
 
SECTION 1.01.  Credit Agreement.  (a)  Capitalized terms used in this Agreement
and not otherwise defined herein have the meanings specified in the Credit
Agreement (as defined herein).  All terms defined in the New York UCC (as
defined herein) and not defined in this Agreement have the meanings specified
therein; the term “instrument” shall have the meaning specified in Article 9 of
the New York UCC.
 
(b) The rules of construction specified in Section 1.03 of the Credit Agreement
also apply to this Agreement.
 
SECTION 1.02. Other Defined Terms.  As used in this Agreement, the following
terms have the meanings specified below:
 
“Accounts” means all accounts of any Grantor.
 
“Collateral” has the meaning assigned to such term in Section 3.01.
 
“Collateral Report” means any certificate (including any Borrowing Base
Certificate), report or other document delivered by any Grantor to the
Administrative Agent or any Lender with respect to the Collateral pursuant to
any Loan Document.
 
“Copyrights” means, with respect to any Person, all of the following now owned
or hereafter acquired by such Person:  (a) all copyright rights in any work
subject
 
 
 
 
 
to the copyright laws of the United States of America or any other country,
whether as author, assignee, transferee or otherwise, and (b) all registrations
and applications for registration of any such copyright in the United States of
America or any other country, including registrations, recordings, supplemental
registrations and pending applications for registration in the United States
Copyright Office (or any similar office in any other country).
 
“Credit Agreement” means the Amended and Restated Credit Agreement dated as of
January 27, 2012, among Holdings, the Parent Borrower, Purchasing, the Lenders
party thereto, JPMorgan Chase Bank, N.A., as Administrative Agent and Wells
Fargo Bank, National Association, as LC Agent.
 
“Grantors” means Holdings, the Parent Borrower, Purchasing and the Subsidiary
Grantors.
 
“Guarantors” means Holdings, the Parent Borrower, Purchasing and the Subsidiary
Guarantors.
 
“Intellectual Property” means all Patents, Copyrights, Trademarks and trade
secrets.
 
“Inventory” means all inventory of any Grantor other than consignment inventory.
 
“Loan Document Obligations” has the meaning assigned to such term in the Credit
Agreement.
 
“New York UCC” means the Uniform Commercial Code as from time to time in effect
in the State of New York.
 
“Obligations” has the meaning assigned to such term in the Credit Agreement.
 
“Parties” means the Grantors and the Guarantors.
 
“Patents” means, with respect to any Person, all of the following now owned or
hereafter acquired by such Person:  (a) all letters patent of the United States
of America or the equivalent thereof in any other country, all registrations and
recordings thereof, and all applications for letters patent of the United States
of America or the equivalent thereof in any other country, including
registrations, recordings and pending applications in the United States Patent
and Trademark Office or any similar offices in any other country, and (b) all
reissues, continuations, divisions, continuations-in-part, renewals or
extensions thereof.
 
“Payment Intangibles” means payment intangibles arising from the sale of
inventory or arising out of a credit card, debit card, prepaid card, or other
payment card transaction.
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“Perfection Certificate” means a certificate substantially in the form of
Exhibit C, completed and supplemented with the schedules and attachments
contemplated thereby, and duly executed by an executive officer or a Financial
Officer of the Parent Borrower or the applicable Additional Grantor(s).
 
“Proceeds” has the meaning specified in Section 9-102 of the New York UCC.
 
“Secured Parties” has the meaning assigned to such term in the Credit Agreement.
 
“Security Interest” has the meaning assigned to such term in Section 3.01.
 
“Subsidiary Grantors” means (a) the Subsidiaries identified on Schedule I and
(b) each Additional Grantor that becomes a party to this Agreement as
contemplated by Section 6.17.
 
“Subsidiary Guarantors” means (a) the Subsidiaries identified on Schedule II and
(b) each other Subsidiary that becomes a party to this Agreement as contemplated
by Section 6.16.
 
“Subsidiary Parties” means the Subsidiary Grantors and the Subsidiary
Guarantors.
 
“Trademarks” means, with respect to any Person, all of the following now owned
or hereafter acquired by such Person: (a) all trademarks, service marks, trade
names, trade dress, logos and other similar source or business identifiers, all
registrations and recordings thereof, and all registration and recording
applications filed in connection therewith, including registrations and
registration applications in the United States Patent and Trademark Office or
any similar offices in any State of the United States of America or any other
country or any political subdivision thereof, and all extensions or renewals
thereof and (b) all goodwill connected with the use thereof or symbolized
thereby.
 
ARTICLE II
 
Guarantee
 
SECTION 2.01. Guarantee.  Each Guarantor unconditionally guarantees, jointly
with the other Guarantors and severally, as a primary obligor and not merely as
a surety, the due and punctual payment and performance of the Obligations.  Each
Guarantor further agrees that the Obligations may be extended or renewed, in
whole or in part, without notice to or further assent from it, and that it will
remain bound upon its guarantee notwithstanding any extension or renewal of any
Obligation.  Each of the Guarantors waives presentment to, demand of payment
from and protest to any Loan Party of any of the Obligations, and also waives
notice of acceptance of its guarantee and notice of protest for nonpayment.
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SECTION 2.02. Guarantee of Payment.  Each of the Guarantors further agrees that
its guarantee hereunder constitutes a guarantee of payment when due and not of
collection, and waives any right to require that any resort be had by the
Administrative Agent or any other Secured Party to any security held for the
payment of the Obligations or to any balance of any deposit account or credit on
the books of the Administrative Agent or any other Secured Party in favor of any
Borrower, any Account Party or any other Person.
 
SECTION 2.03. No Limitations, Etc.  (a)  Except for termination of a Guarantor’s
obligations hereunder as expressly provided in Section 6.15, the obligations of
each Guarantor hereunder shall not be subject to any reduction, limitation,
impairment or termination for any reason, including any claim of waiver,
release, surrender, alteration or compromise, and shall not be subject to any
defense or setoff, counterclaim, recoupment or termination whatsoever by reason
of the invalidity, illegality or unenforceability of the Obligations or
otherwise, other than the defense of payment of such obligations in accordance
with the terms thereof.  Without limiting the generality of the foregoing, the
obligations of each Guarantor hereunder shall not be discharged or impaired or
otherwise affected by (i) the failure of the Administrative Agent or any other
Secured Party to assert any claim or demand or to enforce any right or remedy
under the provisions of any Loan Document or otherwise; (ii) any rescission,
waiver, amendment or modification of, or any release from any of the terms or
provisions of, any Loan Document or any other agreement, including with respect
to any other Guarantor under this Agreement; (iii) the release of any security
held by the Administrative Agent or any other Secured Party for the Obligations
or any of them; (iv) any default, failure or delay, willful or otherwise, in the
performance of the Obligations; or (v) any other act or omission that may or
might in any manner or to any extent vary the risk of any Guarantor or otherwise
operate as a discharge of any Guarantor as a matter of law or equity (other than
the payment in full of all the Loan Document Obligations (other than unasserted
indemnification, tax gross up, expense reimbursement or yield protection
obligations, in each case for which no claim has been made)).  Each Guarantor
expressly authorizes the Secured Parties to take and hold security for the
payment and performance of the Obligations, to exchange, waive or release any or
all such security (with or without consideration), to enforce or apply such
security (in accordance with the Loan Documents) and direct the order and manner
of any sale thereof in their sole discretion or to release or substitute any one
or more other guarantors or obligors upon or in respect of the Obligations, in
each case in accordance with the Loan Documents, all without affecting the
obligations of any Guarantor (in its capacity as such) hereunder.
 
(b) To the fullest extent permitted by applicable law, each Guarantor waives any
defense based on or arising out of any defense of any Loan Party or the
unenforceability of the Obligations or any part thereof from any cause, or the
cessation from any cause of the liability of any Loan Party, other than the
payment in full of all the Loan Document Obligations (other than unasserted
indemnification, tax gross up, expense reimbursement or yield protection
obligations, in each case for which no claim has been made).  The Administrative
Agent and the other Secured Parties may, at their election, and in each case in
accordance with the Loan Documents, foreclose on any security held by one or
more of them by one or more judicial or nonjudicial sales, accept
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an assignment of any such security in lieu of foreclosure, compromise or adjust
any part of the Obligations, make any other accommodation with any Loan Party or
exercise any other right or remedy available to them against any Loan Party,
without affecting or impairing in any way the liability of any Guarantor (in its
capacity as such) hereunder except to the extent the Loan Document Obligations
have been paid in full (other than unasserted indemnification, tax gross up,
expense reimbursement or yield protection obligations, in each case for which no
claim has been made).  To the fullest extent permitted by applicable law, each
Guarantor (in its capacity as such) waives any defense arising out of any such
election even though such election operates, pursuant to applicable law, to
impair or to extinguish any right of reimbursement or subrogation or other right
or remedy of such Guarantor against any Loan Party, as the case may be, or any
security.
 
SECTION 2.04. Reinstatement.  Each of the Guarantors agrees that its guarantee
hereunder shall continue to be effective or be reinstated, as the case may be,
if at any time payment, or any part thereof, of any Obligation is rescinded or
must otherwise be restored to any Loan Party by the Administrative Agent or any
other Secured Party upon the bankruptcy or reorganization of any Loan Party or
otherwise.
 
SECTION 2.05. Agreement To Pay; Subrogation.  In furtherance of the foregoing
and not in limitation of any other right that the Administrative Agent or any
other Secured Party has at law or in equity against any Guarantor by virtue
hereof, upon the failure of any Loan Party to pay any Obligation when and as the
same shall become due, whether at maturity, by acceleration, after notice of
prepayment or otherwise, each Guarantor hereby promises to and will forthwith
pay, or cause to be paid, to the Administrative Agent for distribution to the
applicable Secured Parties in cash the amount of such unpaid Obligation.  Upon
payment by any Guarantor of any sums to the Administrative Agent as provided
above, all rights of such Guarantor against such Loan Party or any other
Guarantor arising as a result thereof by way of right of subrogation,
contribution, reimbursement, indemnity or otherwise shall in all respects be
subject to Article V.
 
SECTION 2.06. Information.  Each Guarantor assumes all responsibility for being
and keeping itself informed of each Loan Party’s financial condition and assets,
and of all other circumstances bearing upon the risk of nonpayment of the
Obligations and the nature, scope and extent of the risks that such Guarantor
assumes and incurs hereunder, and agrees that none of the Administrative Agent
or the other Secured Parties will have any duty to advise such Guarantor of
information known to it or any of them regarding such circumstances or risks.
 
ARTICLE III
 
Security Interest
 
SECTION 3.01. Security Interest.  (a)  As security for the payment or
performance, as the case may be, in full of the Obligations, each Grantor hereby
assigns
5
 
 
 
 
and pledges to the Administrative Agent, its successors and assigns, for the
ratable benefit of the Secured Parties, and hereby grants to the Administrative
Agent, its successors and assigns, for the ratable benefit of the Secured
Parties, a security interest (the “Security Interest”) in, all of its right,
title and interest in, to and under any and all of the following assets now
owned or at any time hereafter acquired by such Grantor or in, to or under which
such Grantor now has or at any time hereafter may acquire any right, title or
interest (collectively, the “Collateral”):
 
(i)  all Accounts;
 
(ii) all Deposit Accounts and all cash credited thereto, including, without
limitation, the Concentration Account and the Control Accounts and all cash
credited thereto;
 
(iii) all Inventory;
 
(iv) all Payment Intangibles;
 
(v) all books and records pertaining to any and/or all of the Collateral; and
 
(vi) to the extent not otherwise included, all Proceeds and products of any and
all of the foregoing and all supporting obligations given by any Person with
respect to the foregoing.
 
Anything herein to the contrary notwithstanding, in no event shall the security
interest granted under this Section 3.01 attach to and the term “Collateral”
shall not include (A) any lease, license, contract, or agreement (or any of its
rights or interests thereunder) if and to the extent that the grant of the
security interest shall, after giving effect to Sections 9-406, 9-407, 9-408 or
9-409 of the UCC (or any successor provision or provisions) or any other
applicable law, require the consent of any other Person or constitute or result
in (1) the abandonment, invalidation or unenforceability of any right, title or
interest of any Grantor therein or (2) a breach or termination pursuant to the
terms of, or a default under, any such lease, license, contract, property rights
or agreement; (B) any lease, license, contract, or agreement (or any of its
rights or interests thereunder) if and to the extent that any applicable law or
regulation prohibits the creation of a security interest thereon (other than to
the extent that any such term would be rendered ineffective pursuant to Sections
9-406, 9-407, 9-408 or 9-409 of the UCC (or any successor provision or
provisions) of any relevant jurisdiction or any other applicable law or
principles of equity); (C) any Deposit Accounts specifically and exclusively
used (1) for payroll, payroll taxes, workers’ compensation or unemployment
compensation, pension benefits and other similar expenses to or for the benefit
of any Grantor’s employees and accrued and unpaid employee compensation
(including salaries, wages, benefits and expense reimbursements), (2) as zero
balance deposit accounts, (3) for trust or fiduciary purposes in the ordinary
course of business and (4) for all taxes required to be collected or withheld
(including, without limitation, federal and state withholding taxes (including
the employer’s share thereof), taxes owing to any governmental unit thereof,
sales, use
6
 
 
 
 
and excise taxes, customs duties, import duties and independent customs brokers’
charges) for which any Grantor may become liable; and (D) any interest of a
Grantor in any “Bank Property” (as defined in that certain Amended and Restated
Consumer Credit Card Program Agreement dated November 5, 2009, by and between J.
C. Penney Corporation, Inc. and GE Money Bank (as in effect on the date hereof,
the “GE Agreement”)).
 
(b) Each Grantor hereby irrevocably authorizes the Administrative Agent at any
time and from time to time to file in any relevant jurisdiction any initial
financing statements with respect to the Collateral or any part thereof and
amendments thereto that (i) indicate the Collateral by any description that
reasonably approximates the description of such Collateral contained in this
Agreement and (ii) contain the information required by Article 9 of the Uniform
Commercial Code of each applicable jurisdiction for the filing of any financing
statement or amendment, including whether such Grantor is an organization, the
type of organization and any organizational identification number issued to such
Grantor.  Each Grantor agrees to provide such information to the Administrative
Agent promptly upon request.
 
(c) Each Grantor also ratifies its authorization for the Administrative Agent to
file in any relevant jurisdiction any initial financing statements or amendments
thereto if filed prior to the date hereof.
 
(d) The Security Interest is granted as security only and shall not subject the
Administrative Agent or any other Secured Party to, or in any way alter or
modify, any obligation or liability of any Grantor with respect to or arising
out of the Collateral.
 
SECTION 3.02. Representations and Warranties.  The Grantors jointly and
severally represent and warrant to the Administrative Agent and the other
Secured Parties that:
 
(a) Each Grantor has good and valid rights in and title to the Collateral with
respect to which it has purported to grant a Security Interest hereunder and has
full power and authority to grant to the Administrative Agent the Security
Interest in such Collateral pursuant hereto and to execute, deliver and perform
its obligations in accordance with the terms of this Agreement, without the
consent or approval of any other Person other than any consent or approval that
has been obtained.
 
(b) The Perfection Certificate has been duly prepared, completed and executed
and the information set forth therein, including the exact legal name of each
Grantor, is correct and complete as of the Effective Date.  The Uniform
Commercial Code financing statements or other appropriate filings, recordings or
registrations containing a description of the Collateral that have been prepared
by the Administrative Agent based upon the information provided to the
Administrative Agent in the Perfection Certificate for filing in each
governmental, municipal or other office specified in Schedule 6 to the
Perfection Certificate, as modified, delivered, prepared or supplemented from
time to time pursuant to the Credit Agreement (or specified by notice from the
Parent Borrower to the Administrative Agent after the Effective Date in the case
7
 
 
 
 
of filings, recordings or registrations required by Section 5.03(a), 5.11 or
5.12 of the Credit Agreement), are all the filings, recordings and registrations
that are necessary to establish a legal, valid and perfected security interest
in favor of the Administrative Agent (for the ratable benefit of the Secured
Parties) in respect of all Collateral in which the Security Interest may be
perfected by filing, recording or registration in the United States (or any
political subdivision thereof) and, to the extent applicable, the Commonwealth
of Puerto Rico, and no further or subsequent filing, refiling, recording,
rerecording, registration or reregistration is necessary in any such
jurisdiction, except as provided under applicable law with respect to the filing
of continuation statements.
 
(c) The Security Interest constitutes (i) a legal and valid security interest in
all the Collateral securing the payment and performance of the Obligations and
(ii) subject to the filings described in Section 3.02(b), a perfected security
interest in all Collateral in which a security interest may be perfected by
filing, recording or registering a financing statement or analogous document in
the United States (or any political subdivision thereof) and, to the extent
applicable, the Commonwealth of Puerto Rico pursuant to the Uniform Commercial
Code or other applicable law in the United States (or any political subdivision
thereof) and, to the extent applicable, the Commonwealth of Puerto Rico.  The
Security Interest is and shall be prior to any other Lien on any of the
Collateral, other than Permitted Encumbrances that have priority as a matter of
law and Liens expressly permitted pursuant to clauses (c) and (h) of
Section 6.02 of the Credit Agreement.
 
(d) The Collateral is owned by the Grantors free and clear of any Lien, other
than involuntary Permitted Encumbrances, Specified Involuntary Liens securing
obligations not in excess of $20,000,000 at any time and Liens expressly
permitted pursuant to clauses (a), (c), (g), (h) and (m) of Section 6.02 of the
Credit Agreement.  None of the Grantors has filed or consented to the filing of
(i) any financing statement or analogous document under the Uniform Commercial
Code or any other applicable laws covering any Collateral except any such
filings made pursuant to the GE Agreement, or (ii) any assignment in which any
Grantor assigns any Collateral or any security agreement or similar instrument
covering any Collateral with any foreign governmental, municipal or other
office, which financing statement or analogous document, assignment, security
agreement or similar instrument is still in effect, except, in each case, for
involuntary Permitted Encumbrances, Specified Involuntary Liens securing
obligations not in excess of $20,000,000 at any time and Liens expressly
permitted pursuant to clauses (a), (c), (g), (h) and (m) of Section 6.02 of the
Credit Agreement.
 
(e) To the knowledge of each Grantor, (i) each Grantor owns, licenses or
otherwise has the rights to use, all Patents, Trademarks, Copyrights or other
Intellectual Property material to the preparing for sale or sale of the
Inventory, (ii) the use thereof by each Grantor for any such purpose does not
infringe upon the rights of any other Person and (iii) no such Intellectual
Property (other than Intellectual Property rights granted to such Grantor under
license agreements with third parties) is subject to any Lien or other
restriction (other than (A) any such Lien or other restriction with respect to
which a waiver or release has been obtained or (B) any such Lien or restriction
permitted under the Credit Agreement), in each case except to the extent (1) of
any defects in ownership
8
 
 
 
 
or licenses and any such infringements that, individually or in the aggregate,
would not result in a Material Adverse Effect or (2) that the failure to have
such rights, such infringement or such Lien or restriction would not materially
adversely affect the exercise of the Administrative Agent’s rights with respect
to such Intellectual Property to prepare for sale or to sell any Inventory under
Article IV.
 
(f) Notwithstanding the foregoing, the representations and warranties set forth
in this Section as to perfection and priority of the Security Interest in
Proceeds are limited to the extent provided in Section 9-315 of the Uniform
Commercial Code.
 
SECTION 3.03. Covenants.  (a)  Each Grantor agrees to maintain, at its own cost
and expense, such complete and accurate records with respect to the Collateral
owned by it as is in accordance with such prudent and standard practices used in
industries that are the same as or similar to those in which such Grantor is
engaged, but in any event to include accounting records indicating all payments
and proceeds received with respect to any part of the Collateral, and, at such
time or times as the Administrative Agent may reasonably request, promptly to
prepare and deliver to the Administrative Agent a duly certified schedule or
schedules in form and detail reasonably satisfactory to the Administrative Agent
showing the identity, amount and location of any and all Inventory.
 
(b) (i) Each Grantor shall, at its own expense, take any and all commercially
reasonable actions to defend title to the Collateral against all Persons and to
defend the Security Interest of the Administrative Agent in the Collateral and
the priority thereof against any Lien other than involuntary Permitted
Encumbrances, Specified Involuntary Liens securing obligations not in excess of
$20,000,000 at any time and Liens expressly permitted by clauses (a), (c), (g),
(h) and (m) of Section 6.02 of the Credit Agreement (and, in the case of the
priority of the Security Interest of the Administrative Agent, other than
Permitted Encumbrances that have priority as a matter of law, Specified
Involuntary Liens securing obligations not in excess of $20,000,000 at any time
and those Liens expressly permitted pursuant to clauses (c) and (h) of Section
6.02 of the Credit Agreement).
 
(ii) Each Grantor shall, at its own expense, use commercially reasonable efforts
to cause each bill of lading (or similar electronic document referring to the
goods represented by such bill of lading) to bear the following legend:
 
THE GOODS REFERENCED IN THIS [BILL OF LADING] ARE SUBJECT TO THE LIEN OF
JPMORGAN CHASE BANK, N.A., AS ADMINISTRATIVE AGENT.
 
(c) (i) Each Grantor agrees, at its own expense, to execute, acknowledge,
deliver and cause to be duly filed all such further instruments and documents
and take all such actions as the Administrative Agent may from time to time
reasonably request to better assure, preserve, protect and perfect the Security
Interest and the rights and remedies created hereby, including the payment of
any fees and taxes required in connection with the execution and delivery of
this Agreement, the granting of the
9
 
 
 
 
Security Interest and the filing of any financing statements or other documents
in connection herewith or therewith.
 
(ii) If any account described on Schedule 5.16 of the Credit Agreement shall at
any time be a Securities Account, (A) the Parent Borrower shall, promptly upon
becoming aware of the same, notify the Administrative Agent thereof and each
Grantor shall, as promptly as practicable, enter into an amendment to this
Agreement satisfactory to the Administrative Agent pursuant to which such
Grantor shall, for the benefit of the Secured Parties, grant a Lien on such
Securities Account and the Securities Entitlements (as defined in Article 8 of
the UCC) credited thereto and (B) such Grantor shall, within 30 days after such
date (or such later date as the Administrative Agent may reasonably agree in its
sole discretion), enter into a Control Agreement, in form and substance
reasonably satisfactory to the Administrative Agent, with the applicable
securities intermediary in respect of such Securities Account.
 
(d) At its option, the Administrative Agent may discharge past due taxes,
assessments, charges, fees, Liens, security interests or other encumbrances at
any time levied or placed on the Collateral and not permitted pursuant to
Section 6.02 of the Credit Agreement or this Agreement, and may pay for the
maintenance and preservation of the Collateral to the extent any Grantor fails
to do so as required by the Credit Agreement or this Agreement, and each Grantor
jointly and severally agrees to reimburse the Administrative Agent on demand for
any payment made or any expense incurred by the Administrative Agent pursuant to
the foregoing authorization; provided that nothing in this paragraph shall be
interpreted as excusing any Grantor from the performance of, or imposing any
obligation on the Administrative Agent or any Secured Party to cure or perform,
any covenants or other promises of any Grantor with respect to taxes,
assessments, charges, fees, Liens, security interests or other encumbrances and
maintenance as set forth herein or in the other Loan Documents.  The
Administrative Agent will give notice to the Parent Borrower of any exercise of
the Administrative Agent’s rights or powers pursuant to this paragraph (d);
provided that any failure to give or delay in giving such notice shall not
operate as a waiver of, or preclude any other or further exercise of, such
rights or powers or the exercise of any other right or power pursuant to this
Agreement.
 
(e) Each Grantor shall remain liable to observe and perform all the conditions
and obligations to be observed and performed by it under each contract,
agreement or instrument relating to the Collateral, all in accordance with the
terms and conditions thereof, to the same extent as if the Security Interest had
not been granted to the Administrative Agent in the Collateral, and each Grantor
jointly and severally agrees to indemnify and hold harmless the Administrative
Agent and the Secured Parties from and against any and all liability for such
performance.
 
(f) None of the Grantors shall (i) make or permit to be made a pledge or
hypothecation of the Collateral or (ii) grant any other Lien in respect of the
Collateral, except as expressly permitted by the Credit Agreement.  None of the
Grantors shall make or permit to be made any transfer of the Collateral, except
that, unless and until the
10
 
 
 
 
Administrative Agent shall notify the Grantors that an Event of Default shall
have occurred and be continuing and that during the continuance thereof the
Grantors shall not sell, convey, lease, assign, transfer or otherwise dispose of
any Collateral (which notice may be given by telephone if promptly confirmed in
writing), the Grantors may use and dispose of the Collateral in any lawful
manner not inconsistent with the provisions of this Agreement, the Credit
Agreement or any other Loan Document.
 
(g) The Grantors, at their own expense, shall maintain or cause to be maintained
insurance covering physical loss or damage to the Collateral in accordance with
the requirements set forth in Section 5.07 of the Credit Agreement.  Each
Grantor irrevocably makes, constitutes and appoints the Administrative Agent
(and all officers, employees or agents designated by the Administrative Agent)
as such Grantor’s true and lawful agent (and attorney-in-fact) for the purpose,
during the continuance of an Event of Default, of (i) making, settling and
adjusting claims in respect of Collateral under policies of insurance, endorsing
the name of such Grantor on any check, draft, instrument or other item of
payment for the proceeds of such policies of insurance and (ii) making all
determinations and decisions with respect thereto.  In the event that any
Grantor at any time or times shall fail to obtain or maintain any of the
policies of insurance required hereby or to pay any premium in whole or part
relating thereto, the Administrative Agent may, without waiving or releasing any
obligation or liability of the Grantors hereunder or any Event of Default, in
its sole discretion, obtain and maintain such policies of insurance and pay such
premium and take any other actions with respect thereto as the Administrative
Agent reasonably deems advisable.  All sums disbursed by the Administrative
Agent in connection with this paragraph, including reasonable attorneys’ fees,
court costs, expenses and other charges relating thereto, shall be payable, upon
demand, by the Grantors to the Administrative Agent and shall be additional
Obligations secured hereby.
 
(h) Upon the occurrence and during the continuance of any Event of Default, none
of the Grantors will, without the Administrative Agent’s prior written consent
(which shall be deemed given if the Administrative Agent has not responded
within 5 Business Days of a written request therefor), grant any extension of
the time of payment of any Accounts or Payment Intangibles included in the
Collateral, compromise, compound or settle the same for less than the full
amount thereof, release, wholly or partly, any Person liable for the payment
thereof or allow any credit or discount whatsoever thereon, other than
extensions, compromises, settlements, releases, credits or discounts granted or
made in the ordinary course of business and consistent with its current
practices and in accordance with such prudent and standard practice used in
industries that are the same as or similar to those in which such Grantor is
engaged.
 
(i) Upon the occurrence and during the continuance of any Event of Default, each
of the Grantors will collect and enforce, in accordance with past practices and
in the ordinary course of business, all amounts due to such Grantor under the
Accounts and Payment Intangibles owned by it.  Such Grantor will deliver to the
Administrative Agent promptly upon its reasonable request after the occurrence
and during the continuance of an Event of Default duplicate invoices with
respect to each Account and, to the extent applicable, each Payment Intangible
owned by it, bearing such
11
 
 
 
 
language of assignment as the Administrative Agent shall reasonably specify in
connection with its exercise of remedies hereunder.
 
ARTICLE IV
 
Remedies
 
SECTION 4.01. Remedies upon Default.  Each Grantor agrees that (a) upon the
occurrence and during the continuance of an Event of Default and upon the demand
of the Administrative Agent, it will make the Collateral available to the
Administrative Agent, and it is agreed that the Administrative Agent shall have
the right, to the extent permitted by applicable law, with or without legal
process and with or without prior notice or demand for performance, to take
possession of the Collateral and without liability for trespass to enter any
premises where the Collateral may be located for the purpose of taking
possession of or removing the Collateral and, generally, to exercise any and all
rights afforded to a secured party under the Uniform Commercial Code or other
applicable law and (b) upon the occurrence and during the continuance of a
Specified Event of Default and at the other times provided for in the Credit
Agreement, the Administrative Agent shall have the right to institute a Cash
Dominion Period to the extent permitted under the Credit Agreement.  Without
limiting the generality of the foregoing, each Grantor agrees that the
Administrative Agent shall have the right, subject to the mandatory requirements
of applicable law, to sell or otherwise dispose of all or any part of the
Collateral at a public or private sale, for cash, upon credit or for future
delivery as the Administrative Agent shall deem appropriate.  Upon consummation
of any such sale the Administrative Agent shall have the right to assign,
transfer and deliver to the purchaser or purchasers thereof the Collateral so
sold.  Each such purchaser at any sale of the Collateral shall hold the property
sold absolutely, free from any claim or right on the part of any Grantor, and
each Grantor hereby waives (to the extent permitted by law) all rights of
redemption, stay and appraisal which such Grantor now has or may at any time in
the future have under any rule of law or statute now existing or hereafter
enacted.
 
The Administrative Agent shall give the applicable Grantors 10 days’ written
notice (which each Grantor agrees is reasonable notice within the meaning of
Section 9-612 of the New York UCC or its equivalent in other jurisdictions) of
the Administrative Agent’s intention to make any sale of Collateral.  Such
notice, in the case of a public sale, shall state the time and place for such
sale.  Any such public sale shall be held at such time or times within ordinary
business hours and at such place or places as the Administrative Agent may fix
and state in the notice (if any) of such sale.  At any such sale, the
Collateral, or any portion thereof, to be sold may be sold in one lot as an
entirety or in separate parcels, as the Administrative Agent may (in its sole
and absolute discretion) determine.  The Administrative Agent shall not be
obligated to make any sale of any Collateral if it shall determine not to do so,
regardless of the fact that notice of sale of such Collateral shall have been
given.  The Administrative Agent may, without notice or publication, adjourn any
public or private sale or cause the same to be adjourned from time to time by
announcement at the time and place fixed for sale, and such sale may,
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without further notice, be made at the time and place to which the same was so
adjourned.  In case any sale of all or any part of the Collateral is made on
credit or for future delivery, the Collateral so sold may be retained by the
Administrative Agent until the sale price is paid by the purchaser or purchasers
thereof, but the Administrative Agent shall not incur any liability in case any
such purchaser or purchasers shall fail to take up and pay for the Collateral so
sold and, in case of any such failure, such Collateral may be sold again upon
like notice.  At any public (or, to the extent permitted by law, private) sale
made pursuant to this Agreement, any Secured Party may bid for or purchase, free
(to the extent permitted by law) from any right of redemption, stay, valuation
or appraisal on the part of any Grantor (all said rights being also hereby
waived and released to the extent permitted by law), the Collateral or any part
thereof offered for sale and may (with the consent of the Administrative Agent)
make payment on account thereof by using any Obligation then due and payable to
such Secured Party from any Grantor as a credit against the purchase price, and
such Secured Party may, upon compliance with the terms of sale, hold, retain and
dispose of such property without further accountability to any Grantor
therefor.  For purposes hereof, a written agreement to purchase the Collateral
or any portion thereof shall be treated as a sale thereof; the Administrative
Agent shall be free to carry out such sale pursuant to such agreement and no
Grantor shall be entitled to the return of the Collateral or any portion thereof
subject thereto, notwithstanding the fact that after the Administrative Agent
shall have entered into such an agreement all Events of Default shall have been
remedied and the Obligations paid in full, in which case any excess proceeds
thereof shall be disposed of as set forth in Section 4.02 hereof.  As an
alternative to exercising the power of sale herein conferred upon it, the
Administrative Agent may proceed by a suit or suits at law or in equity to
foreclose this Agreement and to sell the Collateral or any portion thereof
pursuant to a judgment or decree of a court or courts having competent
jurisdiction or pursuant to a proceeding by a court-appointed receiver.  Any
sale pursuant to the provisions of this Section 4.01 shall be deemed to conform
to the commercially reasonable standards as provided in Section 9-610(b) of the
New York UCC or its equivalent in other jurisdictions.
 
SECTION 4.02. Application of Proceeds.  The Administrative Agent shall apply the
proceeds of any collection or sale of Collateral, including any Collateral
consisting of cash, as specified in Section 2.17(f) of the Credit
Agreement.  The Administrative Agent shall have absolute discretion as to the
time of application of any such proceeds, moneys or balances in accordance with
this Agreement and the Credit Agreement.  Upon any sale of Collateral by the
Administrative Agent (including pursuant to a power of sale granted by statute
or under a judicial proceeding), the receipt of the Administrative Agent or of
the officer making the sale shall be a sufficient discharge to the purchaser or
purchasers of the Collateral so sold and such purchaser or purchasers shall not
be obligated to see to the application of any part of the purchase money paid
over to the Administrative Agent or such officer or be answerable in any way for
the misapplication thereof.
 
SECTION 4.03. Grantor’s Obligations Upon Default.  Upon the request of the
Administrative Agent after the occurrence and during the continuance of an Event
of Default, each Grantor will:
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(a) assemble and make available to the Administrative Agent all books and
records relating to the Collateral at any place or places reasonably specified
by the Administrative Agent, whether at a Grantor’s premises or elsewhere;
 
(b) permit the Administrative Agent, by the Administrative Agent’s
representatives and agents, to enter any premises where all or any part of the
Collateral, or the books and records relating thereto, or both, are located, to
take possession of and/or remove all or any part of the Collateral or to make
copies of the books and records relating thereto, or both, and to conduct sales
of the Collateral, in accordance with the terms hereof, any applicable
Collateral Access Agreements and applicable law, without any obligation to pay
the Grantor for such use and occupancy;
 
(c) at its own expense, cause the independent certified public accountants then
engaged by each Grantor to prepare and deliver to the Administrative Agent, at
any time, and from time to time, promptly upon the Administrative Agent’s
request, the following reports with respect to the Accounts and Payment
Intangibles of the applicable Grantor: (i) a reconciliation of all Accounts and
Payment Intangibles; (ii) an aging of all Accounts and Payment Intangibles;
(iii) trial balances; and (iv) a test verification of such Accounts and Payment
Intangibles.
 
SECTION 4.04. Grant of License to Use Intellectual Property.  Solely for the
purpose of enabling the Administrative Agent to exercise rights and remedies
under this Agreement during the continuance of an Event of Default with respect
to Collateral consisting of Inventory, each Grantor hereby (a) grants to the
Administrative Agent a nonexclusive license (exercisable without payment of
royalty or other compensation to the Grantor) to use, license or sublicense
during the continuance of an Event of Default any Intellectual Property rights
now owned or hereafter acquired by such Grantor, including in such license
reasonable access to all media in which any of the licensed items may be
recorded or stored and to all computer software and programs used for the
compilation or printout thereof, solely for the purposes of preparing for sale
and selling (including by affixing Trademarks owned by or licensed to such
Grantor to) any of such Grantor’s Inventory directly to any Person (in the case
of Intellectual Property licensed to such Grantor by a third party, to the
extent permitted under the Intellectual Property licenses granting such Grantor
rights in such Intellectual Property), which license shall be irrevocable prior
to the Termination Point (as defined below) and (b) agrees that, subject to the
foregoing and in connection therewith, during the continuance of an Event of
Default, the Administrative Agent may sell Inventory which bears any Trademark
owned by or licensed to such Grantor (to the extent permitted under the
Intellectual Property licenses granting such Grantor rights in such Trademark)
and any Inventory that is covered by any Copyright owned by or licensed to such
Grantor (to the extent permitted under the Intellectual Property licenses
granting such Grantor rights in such Copyright), and the Administrative Agent
may affix any appropriate Trademark owned by or licensed to such Grantor (to the
extent permitted under the Intellectual Property license granting such Grantor
rights in such Trademark) and sell such Inventory as provided herein; provided
in each case that (i) such license shall be subject to the rights of any
licensee under a license permitted by the last proviso of Section 6.05 of the
Credit Agreement or by Section 6.02(b) of the Credit Agreement, in each case
granted while no Event of
14
 
 
 
 
Default was continuing, or under any licenses existing as of the date hereof,
(ii) in connection with any such sale of Inventory or otherwise, such licensed
or sublicensed Trademarks shall only be used in association with goods or
services of a quality and nature consistent with the quality and reputation with
which such Trademarks were associated when used by such Grantor prior to the
exercise of the license rights set forth herein, and (iii) no license shall be
granted under this Section 4.04 to the extent that such grant would violate or
constitute a default under any agreement to which any Grantor is a party.  Such
license and rights to use such Intellectual Property of any Grantor shall
terminate automatically without notice or other action, when all the Loan
Document Obligations have been paid in full (other than unasserted
indemnification, tax gross up, expense reimbursement or yield protection
obligations, in each case for which no claim has been made) and the Lenders have
no further commitment to lend under the Credit Agreement, the LC Exposure has
been reduced to zero and no Issuing Bank has any further obligations to issue
Letters of Credit under the Credit Agreement (the “Termination Point”).  The use
of such license by the Administrative Agent may only be exercised upon the
occurrence and during the continuance of an Event of Default, provided that any
license, sublicense or other transaction entered into by the Administrative
Agent in accordance herewith shall be binding upon the Grantors notwithstanding
any subsequent cure of an Event of Default.
 
 
ARTICLE V
 
Indemnity, Subrogation and Subordination
 
SECTION 5.01. Indemnity and Subrogation.  In addition to all such rights of
indemnity and subrogation as the Guarantors may have under applicable law (but
subject to Section 5.03), each of the Borrowers and each of the Account Parties
agrees that (a) in the event a payment shall be made by any Guarantor under this
Agreement in respect of any Obligation of a Borrower or an Account Party, such
Borrower or such Account Party (as the case may be) shall indemnify such
Guarantor for the full amount of such payment and such Guarantor shall be
subrogated to the rights of the Person to whom such payment shall have been made
to the extent of such payment and (b) in the event any assets of any Grantor
shall be sold pursuant to this Agreement to satisfy in whole or in part an
Obligation of a Borrower or an Account Party, such Borrower or Account Party (as
the case may be) shall indemnify such Grantor in an amount equal to the greater
of the book value or the fair market value of the assets so sold.
 
SECTION 5.02. Contribution and Subrogation.  Each Guarantor and Grantor (a
“Contributing Party”) agrees (subject to Section 5.03) that, in the event a
payment shall be made by any other Guarantor hereunder in respect of any
Obligation or assets of any other Grantor (other than Holdings or the Parent
Borrower) shall be sold pursuant to this Agreement to satisfy any Obligation of
a Borrower or an Account Party and such other Guarantor or Grantor (the
“Claiming Party”) shall not have been fully indemnified by the Borrowers or the
Account Parties as provided in Section 5.01, the Contributing Party shall
indemnify the Claiming Party in an amount equal to the amount
15
 
 
 
 
of such payment or the greater of the book value or the fair market value of
such assets, as the case may be, in each case multiplied by a fraction of which
the numerator shall be the net worth of the Contributing Party on the date
hereof and the denominator shall be the aggregate net worth of all the
Guarantors and Grantors on the date hereof (or, in the case of any Guarantor or
Grantor becoming a party hereto pursuant to Section 6.16 or Section 6.17,
respectively, the date of the supplement hereto executed and delivered by such
Guarantor or Grantor).  Any Contributing Party making any payment to a Claiming
Party pursuant to this Section 5.02 shall (subject to Section 5.03) be
subrogated to the rights of such Claiming Party under Section 5.01 to the extent
of such payment.
 
SECTION 5.03. Subordination.  (a)  Notwithstanding any provision of this
Agreement to the contrary, all rights of the Guarantors and Grantors under
Sections 5.01 and 5.02 and all other rights of the Guarantors and Grantors of
indemnity, contribution or subrogation under applicable law or otherwise shall
be fully subordinated to the indefeasible payment in full in cash of the
Obligations.  No failure on the part of any Borrower, any Account Party or any
Guarantor or Grantor to make the payments required by Sections 5.01 and 5.02 (or
any other payments required under applicable law or otherwise) shall in any
respect limit the obligations and liabilities of any Guarantor or Grantor with
respect to its obligations hereunder, and each Guarantor and Grantor shall
remain liable for the full amount of the obligations of such Guarantor or
Grantor hereunder.
 
(b) Each of the Guarantors and Grantors hereby agrees that all Indebtedness and
other monetary obligations owed by it to, or to it by, any other Guarantor,
Grantor or any other Subsidiary shall be fully subordinated to the payment in
full in cash of the Obligations.
 
ARTICLE VI
 
Miscellaneous
 
SECTION 6.01. Notices.  All communications and notices hereunder shall (except
as otherwise expressly permitted herein) be in writing and given as provided in
Section 9.01 of the Credit Agreement.  All communications and notices hereunder
to any Subsidiary Party shall be given to it in care of the Parent Borrower as
provided in Section 9.01 of the Credit Agreement.
 
SECTION 6.02. Rights Absolute.  All rights of the Administrative Agent
hereunder, the Security Interest and all obligations of each Guarantor and
Grantor hereunder shall be absolute and unconditional irrespective of (a) any
lack of validity or enforceability of the Credit Agreement, any other Loan
Document (other than this Agreement), any other agreement with respect to any of
the Obligations or any other agreement or instrument relating to any of the
foregoing, (b) any change in the time, manner or place of payment of, or in any
other term of, all or any of the Obligations, or any other amendment or waiver
of or any consent to any departure from the Credit Agreement, any other Loan
Document or any other agreement or instrument, (c) any
16
 
 
 
 
exchange, release or non-perfection of any Lien on other collateral, or any
release or amendment or waiver of or consent under or departure from any
guarantee, securing or guaranteeing all or any of the Obligations, or (d) any
other circumstance that might otherwise constitute a defense available to, or a
discharge of, any Guarantor or Grantor in respect of the Obligations or this
Agreement, other than payment in full of the Loan Document Obligations (other
than unasserted indemnification, tax gross up, expense reimbursement or yield
protection obligations, in each case for which no claim has been made).
 
SECTION 6.03. Survival of Agreement.  All covenants, agreements, representations
and warranties made by the Loan Parties in the Loan Documents and in the
certificates or other instruments prepared or delivered in connection with or
pursuant to this Agreement or any other Loan Document shall be considered to
have been relied upon by the Lenders and shall survive the execution and
delivery of the Loan Documents and the making of any Loans and issuance of any
Letters of Credit, regardless of any investigation made by any Lender or on its
behalf and notwithstanding that the Administrative Agent, any Issuing Bank or
any Lender may have had notice or knowledge of any Default or incorrect
representation or warranty at the time any credit is extended under the Credit
Agreement, and shall continue in full force and effect until terminated as
provided in Section 6.15(a).
 
SECTION 6.04. Binding Effect; Several Agreement.  This Agreement shall become
effective as to any Party when a counterpart hereof executed on behalf of such
Party shall have been delivered to the Administrative Agent and a counterpart
hereof shall have been executed on behalf of the Administrative Agent, and
thereafter shall be binding upon such Party and the Administrative Agent and
their respective permitted successors and assigns, and shall inure to the
benefit of such Party, the Administrative Agent and the other Secured Parties
and their respective successors and assigns, except that no Party shall have the
right to assign or transfer its rights or obligations hereunder or any interest
herein or in the Collateral (and any such assignment or transfer shall be void)
except as expressly contemplated by this Agreement or the Credit
Agreement.  This Agreement shall be construed as a separate agreement with
respect to each Party and may be amended, modified, supplemented, waived or
released with respect to any Party without the approval of any other Party and
without affecting the obligations of any other Party hereunder.
 
SECTION 6.05. Successors and Assigns.  Whenever in this Agreement any of the
parties hereto is referred to, such reference shall be deemed to include the
permitted successors and assigns of such party; and all covenants, promises and
agreements by or on behalf of any Guarantor or Grantor or the Administrative
Agent that are contained in this Agreement shall bind and inure to the benefit
of their respective successors and assigns.
 
SECTION 6.06. Administrative Agent’s Fees and Expenses; Indemnification.  The
parties hereto agree that the Administrative Agent shall be entitled to
reimbursement of its expenses incurred hereunder and indemnification, in each
case as provided in Section 9.03 of the Credit Agreement.
17
 
 
 
 
SECTION 6.07. Administrative Agent Appointed Attorney-in-Fact.  Each Guarantor
and Grantor hereby appoints the Administrative Agent the attorney-in-fact of
such Guarantor or Grantor during the continuance of an Event of Default for the
purpose of carrying out the provisions of this Agreement and taking any action
and executing any instrument that the Administrative Agent may reasonably deem
necessary or advisable to accomplish the purposes hereof, which appointment is
irrevocable and coupled with an interest.  Without limiting the generality of
the foregoing, the Administrative Agent shall have the right, upon the
occurrence and during the continuance of an Event of Default, with full power of
substitution either in the Administrative Agent’s name or in the name of such
Guarantor or Grantor (a) to receive, endorse, assign and/or deliver any and all
notes, acceptances, checks, drafts, money orders or other evidences of payment
relating to the Collateral or any part thereof; (b) to demand, collect, receive
payment of, give receipt for and give discharges and releases of all or any of
the Collateral; (c) to sign the name of any Grantor on any invoice or bill of
lading relating to any of the Collateral; (d) to commence and prosecute any and
all suits, actions or proceedings at law or in equity in any court of competent
jurisdiction to collect or otherwise realize on all or any of the Collateral or
to enforce any rights in respect of any Collateral; (e) to settle, compromise,
compound, adjust or defend any actions, suits or proceedings relating to all or
any of the Collateral; and (f) to use, sell, assign, transfer, pledge, make any
agreement with respect to or otherwise deal with all or any of the Collateral,
and to do all other acts and things necessary to carry out the purposes of this
Agreement, as fully and completely as though the Administrative Agent were the
absolute owner of the Collateral for all purposes; provided that nothing herein
contained shall be construed as requiring or obligating the Administrative Agent
to make any commitment or to present or file any claim or notice, or to take any
action with respect to the Collateral or any part thereof or the moneys due or
to become due in respect thereof or any property covered thereby, other than to
exercise commercially reasonable care in the custody and preservation of any
Collateral in its possession.  The Administrative Agent and the Parent Borrower
acknowledge that the exercise of the powers granted to the Administrative Agent
herein to deal with or dispose of the Collateral on a basis in keeping with
orderly business proceedings designed to preserve the value of the Collateral to
customers of the Grantor would be commercially reasonable.
 
SECTION 6.08. Applicable Law.  This Agreement shall be construed in accordance
with and governed by the laws of the State of New York.
 
SECTION 6.09. Waivers; Amendment.  (a)  No failure or delay by the
Administrative Agent, any Issuing Bank or any Lender in exercising any right or
power hereunder or under any other Loan Document shall operate as a waiver
thereof, nor shall any single or partial exercise of any such right or power, or
any abandonment or discontinuance of steps to enforce such a right or power,
preclude any other or further exercise thereof or the exercise of any other
right or power.  The rights and remedies of the Administrative Agent, the
Issuing Banks and the Lenders hereunder and under the other Loan Documents are
cumulative and are not exclusive of any rights or remedies that they would
otherwise have.  No waiver of any provision of this Agreement or consent to any
departure by any Party therefrom shall in any event be effective unless the same
shall be permitted by paragraph (b) of this Section, and then such waiver or
consent
18
 
 
 
 
shall be effective only in the specific instance and for the purpose for which
given. Without limiting the generality of the foregoing, the making of a Loan or
issuance of a Letter of Credit shall not be construed as a waiver of any
Default, regardless of whether the Administrative Agent, any Lender or any
Issuing Bank may have had notice or knowledge of such Default at the time.  No
notice or demand on any Party in any case shall entitle any Party to any other
or further notice or demand in similar or other circumstances.
 
(b) Neither this Agreement nor any provision hereof may be waived, amended or
modified except pursuant to an agreement or agreements in writing entered into
by the Administrative Agent and the Parties with respect to which such waiver,
amendment or modification is to apply, subject to any consent required in
accordance with Section 9.02 of the Credit Agreement.
 
SECTION 6.10. WAIVER OF JURY TRIAL.  EACH PARTY HERETO (INCLUDING, FOR THE
AVOIDANCE OF DOUBT, THE ADMINISTRATIVE AGENT) HEREBY WAIVES, TO THE FULLEST
EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN
ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS
AGREEMENT, ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY
(WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY).  EACH PARTY HERETO
(INCLUDING, FOR THE AVOIDANCE OF DOUBT, THE ADMINISTRATIVE AGENT) (A) CERTIFIES
THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED,
EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF
LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT
AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY,
AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.
 
SECTION 6.11. Severability.  Any provision of this Agreement held to be invalid,
illegal or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such invalidity, illegality or unenforceability
without affecting the validity, legality and enforceability of the remaining
provisions hereof; and the invalidity of a particular provision in a particular
jurisdiction shall not invalidate such provision in any other jurisdiction.
 
SECTION 6.12. Counterparts.  This Agreement may be executed in counterparts (and
by different parties hereto on different counterparts), each of which shall
constitute a single contract (subject to Section 6.04), and shall become
effective as provided in Section 6.04.  Delivery of an executed signature page
to this Agreement by telecopy or electronic transmission shall be effective as
delivery of a manually executed counterpart of this Agreement.
19
 
 
 
 
SECTION 6.13. Headings.  Article and Section headings used herein are for the
purpose of reference only, are not part of this Agreement and are not to affect
the construction of, or to be taken into consideration in interpreting, this
Agreement.
 
SECTION 6.14. Jurisdiction; Consent to Service of Process.  (a)  Each of the
Parties and the Administrative Agent hereby irrevocably and unconditionally
submits, for itself and its property, to the nonexclusive jurisdiction of the
Supreme Court of the State of New York sitting in New York County and of the
United States District Court of the Southern District of New York, and any
appellate court from any thereof, in any action or proceeding arising out of or
relating to any Loan Document, or for recognition or enforcement of any
judgment, and each of the parties hereto hereby irrevocably and unconditionally
agrees that all claims in respect of any such action or proceeding may be heard
and determined in such New York State or, to the extent permitted by law, in
such Federal court.  Each of the parties hereto (including, for the avoidance of
doubt, the Administrative Agent) agrees that a final judgment in any such action
or proceeding shall be conclusive and may be enforced in other jurisdictions by
suit on the judgment or in any other manner provided by law.  Nothing in this
Agreement or any other Loan Document shall affect any right that the
Administrative Agent, any Issuing Bank or any Lender may otherwise have to bring
any action or proceeding relating to this Agreement or any other Loan Document
against any Guarantor or Grantor or its respective properties in the courts of
any jurisdiction.
 
(b) Each of the Parties and the Administrative Agent hereby irrevocably and
unconditionally waives, to the fullest extent it may legally and effectively do
so, any objection which it may now or hereafter have to the laying of venue of
any suit, action or proceeding arising out of or relating to this Agreement or
any other Loan Document in any court referred to in paragraph (a) of this
Section.  Each of the parties hereto (including, for the avoidance of doubt, the
Administrative Agent) hereby irrevocably waives, to the fullest extent permitted
by law, the defense of an inconvenient forum to the maintenance of such action
or proceeding in any such court.
 
(c) Each party to this Agreement (including, for the avoidance of doubt, the
Administrative Agent) irrevocably consents to service of process in the manner
provided for notices in Section 6.01.  Nothing in this Agreement or any other
Loan Document will affect the right of any party to this Agreement to serve
process in any other manner permitted by law.
 
SECTION 6.15. Termination or Release.  (a)  This Agreement, the Guarantees made
herein, the Security Interest and all other security interests granted hereby
shall automatically terminate when all the Loan Document Obligations have been
paid in full (other than unasserted indemnification, tax gross up, expense
reimbursement or yield protection obligations, in each case for which no claim
has been made) and the Lenders have no further commitment to lend under the
Credit Agreement, the LC Exposure has been reduced to zero and no Issuing Bank
has any further obligations to issue Letters of Credit under the Credit
Agreement.
20
 
 
 
 
(b) A Subsidiary Party shall automatically be released from its obligations
hereunder and, in the case of a Subsidiary Party that is a Subsidiary Grantor,
the Security Interest in the Collateral of such Subsidiary Grantor shall be
automatically released upon the consummation of any transaction not prohibited
by the Credit Agreement as a result of which such Subsidiary Party ceases to be
a Subsidiary of Holdings.
 
(c) Upon any sale or other transfer by any Grantor of any Collateral that is not
prohibited by the Credit Agreement to any Person that is not a Grantor, or upon
the effectiveness of any written consent to the release of the Security Interest
granted hereby in any Collateral pursuant to Section 9.02 of the Credit
Agreement, the Security Interest in such Collateral shall be automatically
released.
 
(d) In connection with any termination or release pursuant to paragraph (a), (b)
or (c) above, the Administrative Agent shall execute and deliver to any Grantor
at such Grantor’s expense, all documents that such Grantor shall reasonably
request to evidence such termination or release and shall authorize the filing
of any applicable documents evidencing such termination or release (including,
without limitation, UCC termination statements).  Any execution and delivery of
documents pursuant to this Section 6.15 shall be without recourse to or warranty
by the Administrative Agent.
 
SECTION 6.16. Additional Guarantors.  (a)  Pursuant to, and to the extent
provided in, Section 5.11 of the Credit Agreement, additional Subsidiaries may
be required to enter into this Agreement as Guarantors.  Upon execution and
delivery by the Administrative Agent and any such Subsidiary of an instrument in
the form of Exhibit A hereto, such Subsidiary shall become a Subsidiary
Guarantor hereunder with the same force and effect as if originally named as a
Subsidiary Guarantor herein.
 
(b) In the event of a Permitted Holding Company Reorganization, New Holdco is
required to enter in this Agreement as a Guarantor.  Upon execution and delivery
by the Administrative Agent and New Holdco of an instrument in form and
substance similar to Exhibit A hereto, New Holdco shall become a Guarantor
hereunder with the same force and effect as if originally named a Guarantor
herein.
 
(c) The execution and delivery of any such instrument described in paragraph (a)
or (b) above shall not require the consent of any other party hereto.  The
rights and obligations of each party hereunder shall remain in full force and
effect notwithstanding the addition of any new Guarantee Party as a party to
this Agreement.
 
SECTION 6.17. Additional Grantors.  Pursuant to the terms of the Credit
Agreement, Additional Grantors may enter into this Agreement as Subsidiary
Grantors.  Upon execution and delivery by the Administrative Agent and any such
Additional Grantor of an instrument in the form of Exhibit B hereto, such
Additional Grantor shall become an a Subsidiary Grantor hereunder with the same
force and effect as if originally named as an Subsidiary Grantor herein.  The
execution and delivery of any such instrument shall not require the consent of
any other party hereto or any Secured Party.  
21
 
 
 
 
The rights and obligations of each party hereto shall remain in full force and
effect notwithstanding the addition of any new Subsidiary Grantor as a party to
this Agreement.
 
SECTION 6.18. Right of Setoff.  If an Event of Default shall have occurred and
be continuing, each Issuing Bank and Lender and each of its Affiliates is hereby
authorized at any time and from time to time, to the fullest extent permitted by
law, to set off and apply any and all deposits (general or special, time or
demand, provisional or final) at any time held and other obligations at any time
owing by such Issuing Bank or Lender to or for the credit or the account of any
Guarantor against any of and all the obligations of such Guarantor now or
hereafter existing under this Agreement owed to such Issuing Bank or Lender,
irrespective of whether or not such Issuing Bank or Lender shall have made any
demand under this Agreement and although such obligations may be unmatured;
provided that in the event that any Defaulting Lender shall exercise any such
right of set-off, (x) all amounts so set off shall be paid over immediately to
the Administrative Agent for further application in accordance with the
provisions of Section 4.02 and, pending such payment, shall be segregated by
such Defaulting Lender from its other funds and deemed held in trust for the
benefit of the Administrative Agent and the Lenders and (y) the Defaulting
Lender shall provide promptly to the Administrative Agent a statement describing
in reasonable detail the Obligations owing to such Defaulting Lender as to which
it exercised such right of set-off.  The rights of each Issuing Bank and Lender
under this Section are in addition to other rights and remedies (including other
rights of setoff) which such Issuing Bank or Lender may have.  Any Lender or
Issuing Bank exercising its rights under this Section shall give notice thereof
to the relevant Guarantor on or prior to the day of the exercise of such rights.
 
SECTION 6.19. Existing Collateral Agreement.  Effective on the Effective Date,
the Existing Collateral Agreement is hereby amended and restated in its entirety
hereby.  The amendment and restatement of the Existing Collateral Agreement
hereby shall not be construed to discharge or otherwise affect any obligations
of the Loan Parties accrued or otherwise owing under the Existing Collateral
Agreement that have not been paid, it being understood that such obligations
shall continue as obligations hereunder.  Without limiting the generality of the
foregoing, this Agreement is not intended to constitute a novation of the
Existing Collateral Agreement.
 
[The remainder of this page has been left blank intentionally.]
 
22

 
 
 
 
 

IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of
the day and year first above written.
 
J. C. PENNEY COMPANY, INC.,
 
 
by  /s/ Michael P. Dastugue

 
 
Name: Michael P. Dastugue

 
Title: Executive Vice President and
Chief Financial Officer

 
J. C. PENNEY CORPORATION, INC.,
 
 
by  /s/ Michael D. Porter

 
Name: Michael D. Porter

 
Title: Vice President, Treasurer

 
J. C. PENNEY PURCHASING CORPORATION,
 
 
by  /s/ Michael D. Porter

 
Name: Michael D. Porter

 
Title: Vice President, Treasurer of
        J. C. Penney Corporation, Inc.

 
JCP REAL ESTATE HOLDINGS, INC.,
 
 
by  /s/ Michael D. Porter

 
Name: Michael D. Porter

 
Title: Vice President, Treasurer of
        J. C. Penney Corporation, Inc.

 

J. C. PENNEY PROPERTIES, INC.,
 
 
by  /s/ Michael D. Porter

 
Name: Michael D. Porter

 
Title: Vice President, Treasurer of
        J. C. Penney Corporation, Inc.

 
23
 
 
 
 
 

JPMORGAN CHASE BANK, N.A., as
Administrative Agent,
 
 
by  /s/ Sarah L. Freedman

 
 Name: Sarah L. Freedman

 
 Title: Vice President

 

 
 
 
 
 
SCHEDULE I
to the Guarantee and
Collateral Agreement

Subsidiary Grantors
 
JCP Real Estate Holdings, Inc.

J. C. Penney Properties, Inc.

 
 
 
 
 
SCHEDULE II
to the Guarantee and
Collateral Agreement

Subsidiary Guarantors
 
JCP Real Estate Holdings, Inc.

J. C. Penney Properties, Inc.

 
 
 
 
 
EXHIBIT A
to the Guarantee and
Collateral Agreement
 

GUARANTEE SUPPLEMENT NO. __ dated as of [●], to the Amended and Restated
Guarantee and Collateral Agreement dated as of January 27, 2012, among J. C.
PENNEY COMPANY, INC., a Delaware corporation (“Holdings”), J. C. PENNEY
CORPORATION, INC., a Delaware corporation (the “Parent Borrower”), J. C.
PURCHASING CORPORATION, a New York corporation (“Purchasing”), each subsidiary
of Holdings listed on Schedule I thereto (together with Holdings, the Parent
Borrower and Purchasing, the “Parties”)), and JPMORGAN CHASE BANK, N.A.,
(“JPMCB”), as administrative agent (in such capacity, the “Administrative
Agent”) for the Secured Parties (as defined therein).
 
A.  Reference is made to the Amended and Restated Credit Agreement dated as of
January 27, 2012 (as amended, supplemented or otherwise modified from time to
time, the “Credit Agreement”), among Holdings, the Parent Borrower, Purchasing,
the lenders from time to time party thereto (the “Lenders”), the Administrative
Agent and Wells Fargo Bank, National Association, as LC Agent.
 
B.  Capitalized terms used herein and not otherwise defined herein shall have
the meanings assigned to such terms in the Credit Agreement and the Collateral
Agreement referred to therein.
 
C.  The Parties have entered into the Collateral Agreement in order to induce
the Lenders to make Loans and the Issuing Banks to issue Letters of
Credit.  Section 6.16 of the Collateral Agreement provides that additional
Subsidiaries of Holdings may become Subsidiary Guarantors under the Collateral
Agreement by execution and delivery of an instrument in the form of this
Supplement.  The undersigned Subsidiary (the “New Subsidiary”) is executing this
Supplement in accordance with the requirements of the Credit Agreement to become
a Subsidiary Guarantor under the Collateral Agreement in order to induce the
Lenders to make additional Loans and the Issuing Banks to issue additional
Letters of Credit and as consideration for Loans previously made and Letters of
Credit previously issued.
 
Accordingly, the Administrative Agent and the New Subsidiary agree as follows:
 
SECTION 1.  In accordance with Section 6.16 of the Collateral Agreement, the New
Subsidiary by its signature below becomes a Subsidiary Guarantor (and
accordingly, becomes a Guarantor) under the Collateral Agreement with the same
force and effect as if originally named therein as a Guarantor and the New
Subsidiary hereby (a) agrees to all the terms and provisions of the Collateral
Agreement applicable to it as a Guarantor thereunder and (b) represents and
warrants that the representations and warranties made by it as a Guarantor
thereunder are true and correct on and as of the date hereof.  Each reference to
a “Loan Party”, “Subsidiary Guarantor” or “Guarantor” in
 
 
 
 
the Collateral Agreement shall be deemed to include the New Subsidiary.  The
Collateral Agreement is hereby incorporated herein by reference.
 
SECTION 2.  The New Subsidiary represents and warrants to the Administrative
Agent and the other Secured Parties that this Supplement has been duly
authorized, executed and delivered by it and constitutes its legal, valid and
binding obligation, enforceable against it in accordance with its terms.
 
SECTION 3.  This Supplement may be executed in counterparts (and by different
parties hereto on different counterparts), each of which shall constitute an
original, but all of which when taken together shall constitute a single
contract.  This Supplement shall become effective when (a) the Administrative
Agent shall have received a counterpart of this Supplement that bears the
signature of the New Subsidiary and (b) the Administrative Agent has executed a
counterpart hereof.  Delivery of an executed signature page to this Supplement
by facsimile or electronic transmission shall be as effective as delivery of a
manually signed counterpart of this Supplement.
 
SECTION 4.  Except as expressly supplemented hereby, the Collateral Agreement
shall remain in full force and effect.
 
SECTION 5.  THIS SUPPLEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE LAWS OF THE STATE OF NEW YORK.
 
SECTION 6.  In case any one or more of the provisions contained in this
Supplement should be held invalid, illegal or unenforceable in any respect, the
validity, legality and enforceability of the remaining provisions contained
herein and in the Collateral Agreement shall not in any way be affected or
impaired thereby (it being understood that the invalidity of a particular
provision in a particular jurisdiction shall not in and of itself affect the
validity of such provision in any other jurisdiction). The parties hereto 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 7.  All communications and notices hereunder shall be in writing and
given as provided in Section 6.01 of the Collateral Agreement.
 
SECTION 8.  The New Subsidiary agrees that the Administrative Agent shall be
entitled to reimbursement for its expenses in connection with this Supplement,
in each case as provided in Section 9.03 of the Credit Agreement.
2
 
 
 
 
 

IN WITNESS WHEREOF, the New Subsidiary and the Administrative Agent have duly
executed this Supplement to the Collateral Agreement as of the day and year
first above written.
 

 
[Name Of New Subsidiary],
by 
       Name:
       Title:
 
 
 
 
JPMORGAN CHASE BANK, N.A., as Administrative Agent,
by 
Name:
Title:
 
 

3

 
 
 
 
 
EXHIBIT B
to the Guarantee and
Collateral Agreement
 

GRANTOR SUPPLEMENT NO. __ dated as of [●], to the Amended and Restated Guarantee
and Collateral Agreement dated as of January 27, 2012, among J. C. PENNEY
COMPANY, INC., a Delaware corporation (“Holdings”), J. C. PENNEY CORPORATION,
INC., a Delaware corporation (the “Parent Borrower”), J. C. PURCHASING
CORPORATION, a New York corporation (“Purchasing”), each subsidiary of Holdings
listed on Schedule I thereto (together with Holdings, the Parent Borrower and
Purchasing, the “Parties”)), and JPMORGAN CHASE BANK, N.A., (“JPMCB”), as
administrative agent (in such capacity, the “Administrative Agent”) for the
Secured Parties (as defined therein).
 
A.  Reference is made to the Amended and Restated Credit Agreement dated as of
January 27, 2012 (as amended, supplemented or otherwise modified from time to
time, the “Credit Agreement”), among Holdings, the Parent Borrower, Purchasing,
the lenders from time to time party thereto (the “Lenders”), the Administrative
Agent and Wells Fargo Bank, National Association, as LC Agent.
 
B.  Capitalized terms used herein and not otherwise defined herein shall have
the meanings assigned to such terms in the Credit Agreement and the Collateral
Agreement referred to therein.
 
C.  The Parties have entered into the Collateral Agreement in order to induce
the Lenders to make Loans and the Issuing Banks to issue Letters of
Credit.  Section 6.17 of the Collateral Agreement provides that Additional
Grantors may become Subsidiary Grantors under the Collateral Agreement by
execution and delivery of an instrument in the form of this Supplement.  The
undersigned Additional Grantor (the “New Subsidiary”) is executing this
Supplement in accordance with the requirements of the Credit Agreement to become
a Subsidiary Grantor under the Collateral Agreement in order to induce the
Lenders to make additional Loans and the Issuing Banks to issue additional
Letters of Credit and as consideration for Loans previously made and Letters of
Credit previously issued.
 
Accordingly, the Administrative Agent and the New Subsidiary agree as follows:
 
SECTION 1.  In accordance with Section 6.17 of the Collateral Agreement, the New
Subsidiary by its signature below becomes a Subsidiary Grantor (and accordingly,
becomes a Grantor) under the Collateral Agreement with the same force and effect
as if originally named therein as a Grantor and the New Subsidiary hereby (a)
agrees to all the terms and provisions of the Collateral Agreement applicable to
it as a Subsidiary Grantor thereunder and (b) represents and warrants that the
representations and warranties made by it as a Subsidiary Grantor thereunder are
true and correct on and as of the date hereof.  In furtherance of the foregoing,
the New Subsidiary,
 
 
 
 
as security for the payment or performance, as the case may be, in full of the
Obligations, hereby assigns and pledges to the Administrative Agent, its
successors and assigns, for the ratable benefit of the Secured Parties, and
hereby grants to the Administrative Agent, its successors and assigns, for the
ratable benefit of the Secured Parties, a security interest in, all of its
right, title and interest in, to and under the Collateral of the New
Subsidiary.  Each reference to a “Loan Party”, “Subsidiary Grantor” or “Grantor”
in the Collateral Agreement shall be deemed to include the New Subsidiary.  The
Collateral Agreement is hereby incorporated herein by reference.
 
SECTION 2.  The New Subsidiary represents and warrants to the Administrative
Agent and the other Secured Parties that this Supplement has been duly
authorized, executed and delivered by it and constitutes its legal, valid and
binding obligation, enforceable against it in accordance with its terms.
 
SECTION 3.  This Supplement may be executed in counterparts (and by different
parties hereto on different counterparts), each of which shall constitute an
original, but all of which when taken together shall constitute a single
contract.  This Supplement shall become effective when (a) the Administrative
Agent shall have received a counterpart of this Supplement that bears the
signature of the New Subsidiary and (b) the Administrative Agent has executed a
counterpart hereof.  Delivery of an executed signature page to this Supplement
by facsimile or electronic transmission shall be as effective as delivery of a
manually signed counterpart of this Supplement.
 
SECTION 4.  The New Subsidiary hereby represents and warrants that Schedule I
attached hereto is a completed Perfection Certificate in the form of Exhibit C
to the Collateral Agreement (but solely with respect to such New Subsidiary and
its assets and not with respect to any other Grantor or its assets) dated the
date hereof and signed by an executive officer or Financial Officer of the New
Subsidiary.
 
SECTION 5.  Except as expressly supplemented hereby, the Collateral Agreement
shall remain in full force and effect.
 
SECTION 6.  THIS SUPPLEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE LAWS OF THE STATE OF NEW YORK.
 
SECTION 7.  In case any one or more of the provisions contained in this
Supplement should be held invalid, illegal or unenforceable in any respect, the
validity, legality and enforceability of the remaining provisions contained
herein and in the Collateral Agreement shall not in any way be affected or
impaired thereby (it being understood that the invalidity of a particular
provision in a particular jurisdiction shall not in and of itself affect the
validity of such provision in any other jurisdiction). The parties hereto 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.
2
 
 
 
 
SECTION 8.  All communications and notices hereunder shall be in writing and
given as provided in Section 6.01 of the Collateral Agreement.
 
SECTION 9.  The New Subsidiary agrees that the Administrative Agent shall be
entitled to reimbursement for its expenses in connection with this Supplement,
in each case as provided in Section 9.03 of the Credit Agreement.
3

 
 
 
 
 

IN WITNESS WHEREOF, the New Subsidiary and the Administrative Agent have duly
executed this Supplement to the Collateral Agreement as of the day and year
first above written.
 

 
[Name Of New Subsidiary],
by 
       Name:
       Title:
 
 
 
 
JPMORGAN CHASE BANK, N.A., as Administrative Agent,
by 
Name:
Title:
 
 

 
 
 
 
 
SCHEDULE I
to Grantor Supplement No. ­­__
to the Guarantee and
Collateral Agreement
 

SCHEDULE I

 
 
 
 
 
EXHIBIT C
to the Guarantee and
Collateral Agreement

PERFECTION CERTIFICATE
 
Reference is made to the Amended and Restated Credit Agreement dated as of
January 27, 2012 (as amended, supplemented or otherwise modified from time to
time, the “Credit Agreement”), among J. C. Penney Company, Inc. (“Holdings”), J.
C. Penney Corporation, Inc. (the “Parent Borrower”), J. C. Penney Purchasing
Corporation (“Purchasing”), the lenders from time to time party thereto (the
“Lenders”), JPMorgan Chase Bank, as administrative agent (the “Administrative
Agent”), and Wells Fargo Bank, National Association, as LC Agent.  Capitalized
terms used but not defined herein have the meanings assigned in the Credit
Agreement or the Collateral Agreement referred to therein, as applicable.  [As
used herein the term “Grantors” shall mean Holdings, the Parent Borrower,
Purchasing, the Subsidiary Grantors and, to the extent there are any Additional
Grantors, such Additional Grantors.] [As used herein the term “Grantors” means
[each Additional Grantor].]

The undersigned, an executive officer or Financial Officer of [the Parent
Borrower] [applicable Additional Grantor(s)], hereby certifies to the
Administrative Agent and each other Secured Party as follows:

1.           Names.  (a)  The exact legal name of each Grantor, as such name
appears in its respective certificate of formation, is as follows:
 
Exact Legal Name of Each Grantor
       

 
(b)  Set forth below is each other legal name each Grantor has had in the past
five years, together with the date of the relevant change:
 
Grantor
Other Legal Name in Past 5 Years
Date of Name Change
                       

 
 
 
 
 
(c)  No Grantor has changed its identity or corporate structure in any way
within the past five years. Changes in identity or corporate structure would
include mergers, consolidations and acquisitions, as well as any change in the
form, nature or jurisdiction of corporate organization.
 
(d)  The following is a list of all other names (including trade names or
similar appellations) used by each Grantor or any of its divisions or other
business units in connection with the conduct of its business or the ownership
of its properties at any time during the past five years:
 
Grantor
Other Name Used
               

 
(e)  Set forth below is the organizational identification number, if any, issued
by the jurisdiction of formation of each Grantor:
 
Grantor
Organizational Identification Number
               

 
(f)  Set forth below is the Federal Taxpayer Identification Number of each
Grantor:
 
Grantor
Federal Taxpayer Identification Number
               

 
 
 
 
 
2.  Current Locations.  (a)  The chief executive office of each Grantor is
located at the address set forth opposite its name below:

Grantor
Mailing Address
County
State
                       

(b) The jurisdiction of formation of each Grantor is set forth opposite its name
below:

Grantor
Jurisdiction
           

(c) Set forth below opposite the name of each Grantor are all the locations
where the Grantor maintains any Inventory not identified above:

Grantor
Mailing Address
County
State
                       

(d) Set forth below opposite the name of each Grantor are all the locations
where the Grantor maintains any books or records relating to any Collateral not
identified above:

Grantor
Mailing Address
County
State
                       

(e) Set forth below are the names and addresses of all Persons other than a
Grantor (and other than any international transportation service provider to
whom Inventory has been temporarily delivered for final receipt by a Grantor or
any port authority while inventory is pending clearance and entry into U.S.
commerce) that have possession of any of Inventory with an aggregate fair market
value of more than $30,000,000 as of [December 31, 2011].
 
Name
Mailing Address
County
State
                       

 
 
 
 
3.  Unusual Transactions.  All Inventory has been acquired by the Grantors in
the ordinary course of business.
 
4.  File Search Reports.  File search reports have been obtained from each
Uniform Commercial Code filing office identified with respect to each Grantor in
Section 2(b) hereof, and such search reports reflect no liens against any of the
Collateral other than those permitted under the Credit Agreement.
 
5.  UCC Filings.  UCC financing statements in substantially the form of Schedule
5 hereto have been prepared for filing in the proper Uniform Commercial Code
filing office in the jurisdiction in which each Grantor is organized as set
forth with respect to such Grantor in Section 2(b) hereof.
 
6.  Schedule of Filings.  Attached hereto as Schedule 6 is a schedule setting
forth, with respect to the filings described in Section 5 above, each filing and
the filing office in which such filing is to be made.

7.  Deposit Accounts.  Set forth on Schedule 7 is a complete and correct list of
all Deposit Accounts maintained by each Grantor that meet the description set
forth on Schedule 5.16 of the Credit Agreement as of the date hereof (the
“Initial Control Accounts”).  The amounts received in the Initial Control
Accounts represent more than 95% of the aggregate proceeds from the sale of
Inventory and the collections of Accounts (including in respect of credit card
receivables, whether or not constituting Eligible Credit Card Receivables) of
the Grantors.

8.  Securities Accounts.  None of the accounts described on Schedule 5.16 of the
Credit Agreement are Securities Accounts as of the date hereof.

 
 
 
 
 

IN WITNESS WHEREOF, the undersigned has duly executed this certificate on this
_____ day of ______, 2012.
 
[J. C. PENNEY CORPORATION, INC. ][ADDITIONAL GRANTOR],
 
by
__________________________
Name:
Title:
 

 
 
 
 
 

SCHEDULE 5

UCC Financing Statements

 
 
 
 
 

SCHEDULE 6

UCC Filings and Filing Offices

 
 
 
 
 

SCHEDULE 7

Initial Control Accounts