Document:

exhibit10amend2013.htm

 

Exhibit 10.1

 

EXECUTION COPY

AMENDMENT AND RESTATEMENT AGREEMENT dated as of February 8, 2013 (this “Agreement”) to the Amended and Restated Credit Agreement dated as of January 27, 2012 (as amended through the date hereof, the “Existing Credit Agreement”), among J. C. PENNEY COMPANY, INC., J. C. PENNEY CORPORATION, INC., J. C. PENNEY PURCHASING CORPORATION, the financial institutions named therein as lenders, JPMORGAN CHASE BANK, N.A., as Administrative Agent, and WELLS FARGO BANK, NATIONAL ASSOCIATION, as LC Agent.

 

WHEREAS, Holdings, the Parent Borrower and Purchasing have requested that the Existing Credit Agreement be amended and restated in order to (a) increase the aggregate amount of the Commitments by $100,000,000 to an aggregate total amount of $1,850,000,000 (the “Commitment Increase”), such additional Commitments to be provided by certain financial institutions identified on Schedule I hereto (the “New Lenders” and, together with those Persons that were lenders under the Existing Credit Agreement immediately prior to the Restatement Effective Date (the “Existing Lenders”), the “Lenders”), and (b) effect certain other amendments to the Existing Credit Agreement as set forth herein and in the Restated Credit Agreement (as defined below).

 

WHEREAS, the Existing Lenders whose signatures appear below, collectively constituting the Required Lenders, each New Lender and the Administrative Agent are willing to amend and restate the Existing Credit Agreement on the terms and subject to the conditions set forth herein.

 

NOW THEREFORE, in consideration of the mutual agreements herein contained and other good and valuable consideration, the sufficiency and receipt of which are hereby acknowledged, and subject to the conditions set forth herein, the parties hereto hereby agree as follows:

 

SECTION 1. Defined Terms.  Capitalized terms used but not defined herein (including in the preamble and recitals hereto) have the meanings assigned to them in the Restated Credit Agreement.  The provisions of Section 1.03 of the Restated Credit Agreement are hereby incorporated by reference herein, mutatis and mutandis.

 

SECTION 2. Amendment and Restatement.  (a)  Effective as of the Restatement Effective Date (as defined below), (i) the Existing Credit Agreement is hereby amended and restated to be in the form of Exhibit A hereto (the Existing Credit Agreement as so amended and restated being referred to as the “Restated Credit Agreement”), (ii) Schedules 2.01, 3.06B and 3.12 attached hereto are hereby incorporated into the Restated Credit Agreement as Schedules 2.01, 3.06B and 3.12 thereto, (iii) Schedule 3.06 to the Existing Credit Agreement is deemed to be redesignated as Schedule 3.06A to the Restated Credit Agreement and (iv) Exhibit B to the Existing Credit Agreement is hereby deleted in its entirety.  Except as expressly set forth herein or in the Restated Credit Agreement, all schedules and exhibits to the Existing Credit 

 

  

  

  

  

Agreement, in the forms thereof immediately prior to the Restatement Effective Date, shall continue to be schedules and exhibits to the Restated Credit Agreement.

 

(b) Each New Lender acknowledges and agrees that, on and as of the Restatement Effective Date, such New Lender shall be a Lender under and as defined in the Restated Credit Agreement and shall have a Commitment in an amount (the “New Lender Commitment Amount”) set forth opposite its name on Schedule I hereto.  Each party hereto acknowledges and agrees that, on the Restatement Effective Date, the Applicable Percentages of the Lenders (and their participations in Letters of Credit and Swingline Loans) shall automatically be redetermined after giving effect to the Commitment Increase.  It is acknowledged that the Commitment Increase effected pursuant to this Agreement shall not reduce the amount by which the Borrower may further increase the Commitments in accordance with the terms and conditions of Section 2.22 of the Restated Credit Agreement.

 

SECTION 3. Representations and Warranties.  Each of Holdings, the Parent Borrower and Purchasing hereby represents and warrants to the Administrative Agent and to each of the Lenders as of the Restatement Effective Date that:

 

(a) This Agreement has been duly authorized by each of Holdings, the Parent Borrower and Purchasing and has been duly executed and delivered by each of Holdings, the Parent Borrower and Purchasing and constitutes a legal, valid and binding obligation of Holdings, the Parent Borrower and Purchasing, enforceable in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer or other laws affecting creditors’ rights generally and subject to general principles of equity, regardless of whether considered in a proceeding in equity or at law.

 

(b) Each of the representations and warranties of the Loan Parties set forth in the Restated Credit Agreement and the other Loan Documents is true and correct (or, in the case of any representation or warranty not qualified as to materiality, true and correct in all material respects) on and as of the date hereof, except to the extent such representations and warranties relate to an earlier date, in which case such representations and warranties are true and correct (or, in the case of any representation or warranty not qualified as to materiality, true and correct in all material respects) as of such earlier date.

 

(c) At the time of and immediately after giving effect to this Agreement and the transactions contemplated hereby, no Default shall have occurred and be continuing.

 

SECTION 4. Conditions to Effectiveness.  This Agreement and the Restated Credit Agreement shall become effective as of the date (the “Restatement Effective Date”) on which each of the following conditions is satisfied:

 

(a) The Administrative Agent shall have executed a counterpart of this Agreement and the Administrative Agent (or its counsel) shall have received from each of Holdings, the Parent Borrower, Purchasing, each New Lender and Existing Lenders 

  

  

  

  

representing the “Required Lenders” under the Existing Credit Agreement either (i) a counterpart of this Agreement signed on behalf of such party or (ii) written evidence satisfactory to the Administrative Agent (which may include telecopy or electronic transmission of a signed signature page of this Agreement) that such party has signed a counterpart of this Agreement.

 

(b) Each Loan Party and the Administrative Agent shall have entered into the Reaffirmation Agreement attached hereto as Exhibit B.

 

(c) The Administrative Agent shall have received a favorable written opinion (addressed to the Administrative Agent, the Issuing Banks and the Lenders and dated the Restatement Effective Date) of each of Skadden, Arps, Slate, Meagher & Flom LLP, special New York counsel for the Loan Parties, and Janet Dhillon, General Counsel of Holdings, covering such matters relating to the Loan Parties, the Loan Documents or the transactions contemplated hereby as the Administrative Agent or the Required Lenders shall reasonably request.  Each of Holdings, the Parent Borrower and Purchasing hereby requests such counsel to deliver such opinions.

 

(d) The Administrative Agent shall have received such documents and certificates as the Administrative Agent or its counsel may reasonably request relating to the organization, existence and good standing of each Loan Party, the authorization of the transactions contemplated hereby and any other legal matters relating to the Loan Parties, the Loan Documents or such transactions, all in form and substance reasonably satisfactory to the Administrative Agent and its counsel.

 

(e) The Administrative Agent shall have received a certificate, dated the Restatement Effective Date and signed by the President, a Vice President or a Financial Officer of the Parent Borrower, confirming compliance with the conditions set forth in paragraphs (a), (b) and (c) of Section 4.02 of the Restated Credit Agreement (in each case as though a Borrowing were being made on such date, with all references in such Section to a Borrowing or a Loan being deemed to be references to the increase in Commitments effected hereby) as of the Restatement Effective Date.

 

(f) The Administrative Agent shall have received all fees and other amounts due and payable on or prior to the Restatement Effective Date, including, to the extent invoiced at least two Business Days prior to the Restatement Effective Date, reimbursement or payment of all out-of-pocket expenses required to be reimbursed or paid by any Loan Party hereunder or under the Restated Credit Agreement or any other Loan Document.

 

(g) Prior to or concurrently with the satisfaction of the other conditions set forth in this Section, any and all loans, accrued interest and fees and other amounts invoiced to the Parent Borrower and owing under the Existing Credit Agreement shall be paid (including such accrued and unpaid participation fees and fronting fees as shall have arisen pursuant to Section 2.11(b) of the Existing Credit Agreement prior to the Restatement Effective Date, it being understood that the payment on the Restatement Effective Date of the participation fees and fronting fees accrued under Section 2.11(b) of 

 

  

  

  

  

the Existing Credit Agreement shall discharge the obligation to pay such amount with respect to the period prior to the Restatement Effective Date for the purposes of the payment due under Section 2.11(b) of the Restated Credit Agreement on the third Business Day following March 31, 2013).

 

(h) The Lenders shall have received all documentation and other information required by regulatory authorities under applicable “know your customer” and anti-money laundering rules and regulations, including the Patriot Act.

 

The Administrative Agent shall notify the Parent Borrower and the Lenders of the Restatement Effective Date, and such notice shall be conclusive and binding.

 

SECTION 5. Effect of Agreement; No Novation.  (a)  Except as expressly set forth herein, this Agreement shall not by implication or otherwise limit, impair, constitute a waiver of or otherwise affect the rights and remedies of any Loan Party, the Administrative Agent, any Issuing Bank, the Swingline Lender or any Lender under the Existing Credit Agreement or any other Loan Document (as defined in the Existing Credit Agreement), and shall not alter, modify, amend or in any way affect the Existing Credit Agreement or any other Loan Document (as defined in the Existing Credit Agreement), all of which, as amended, supplemented or otherwise modified hereby, are ratified and affirmed in all respects and shall continue in full force and effect.  Nothing herein shall be deemed to entitle any Loan Party to a consent to, or a waiver, amendment, modification or other change of, the Restated Credit Agreement or any other Loan Document in similar or different circumstances. This Agreement shall constitute a Loan Document for all purposes of the Restated Credit Agreement.  On and after the Restatement Effective Date, any reference to the Existing Credit Agreement in any Loan Document shall be deemed to be a reference to the Restated Credit Agreement.

 

(b) Neither this Agreement nor the effectiveness of the Restated Credit Agreement shall extinguish the obligations for the payment of money outstanding under the Existing Credit Agreement or discharge or release the priority of any Security Document, any other security therefor or any Guarantee thereof.  Nothing contained herein shall be construed as a substitution or novation of the Obligations outstanding under the Existing Credit Agreement or the Security Documents, which shall remain in full force and effect, except as modified hereby.

 

SECTION 6. Applicable Law.  THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.

 

SECTION 7. Counterparts.  This Agreement may be executed in any number of counterparts and by separate parties hereto on separate counterparts, each of which shall constitute an original but all of which when taken together shall constitute but one agreement.  Delivery of an executed signature page to this Agreement by facsimile or email transmission shall be effective as delivery of a manually executed counterpart of this Agreement.

  

  

  

  

SECTION 8. Expenses.  The Parent Borrower agrees to reimburse the Administrative Agent for its reasonable out-of-pocket expenses in connection with this Agreement and the transactions contemplated hereby, including the fees, charges and disbursements of Cravath, Swaine & Moore, LLP, counsel for the Administrative Agent.

 

SECTION 9. Headings.  The Section headings used herein are for convenience of reference only, are not part of this Agreement and are not to affect the construction of, or to be taken into consideration in interpreting, this Agreement.

 

[Remainder of page intentionally left blank.]

  

  

  

  

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their respective authorized officers as of the day and year first written above.

 

	
J. C. PENNEY COMPANY, INC.

	
by: /s/ Kenneth Hannah

	  	  
	  	
Name: Kenneth Hannah      

	  	
Title: Executive Vice President, 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. 

  

  

  

  

	
JPMORGAN CHASE BANK, N.A., individually

and as Administrative Agent,

	
by: /s/ Sarah L. Freedman

	  	  
	  	
Name: Sarah L. Freedman

	  	
Title: Executive Director 

 

  

  

  

  

SIGNATURE PAGE TO THE AMENDMENT AND RESTATEMENT AGREEMENT TO THE J. C. PENNEY COMPANY, INC. CREDIT AGREEMENT

 

 

 

	
Name of Lender: BANK OF AMERICA, N. A. 

 

	
by /s/ Christine Hutchinson

	  	  
	  	
Name: Christine Hutchinson

	  	
Title: Director 

 

 

	
For any Lender requiring a second signature block:

 

	
by

	  	  
	  	
Name:

	  	
Title:

 

 

  

  

  

  

 

SIGNATURE PAGE TO THE AMENDMENT AND RESTATEMENT AGREEMENT TO THE J. C. PENNEY COMPANY, INC. CREDIT AGREEMENT

 

 

 

	
Name of Lender: Barclays Bank PLC

 

	
by /s/ Ronnie Glenn

	  	  
	  	
Name: Ronnie Glenn

	  	
Title: Vice President 

 

  

  

  

  

 

SIGNATURE PAGE TO THE AMENDMENT AND RESTATEMENT AGREEMENT TO THE J. C. PENNEY COMPANY, INC. CREDIT AGREEMENT

 

 

 

	
Name of Lender: Wells Fargo Bank, National Association

 

	
by /s/ Daielle Baldinelli

	  	  
	  	
Name: Danielle Baldinelli

	  	
Title:Director

 

 

	
For any Lender requiring a second signature block:

 

	
by

	  	  
	  	
Name:

	  	
Title:

 

  

  

  

  

SIGNATURE PAGE TO THE AMENDMENT AND RESTATEMENT AGREEMENT TO THE J. C. PENNEY COMPANY, INC. CREDIT AGREEMENT

 

 

 

	
Name of Lender: UBS LOAN FINANCE LLC

 

	
by /s/ Lana Gifas

	  	  
	  	
Name: Lana Gifas

	  	
Title: Director

 

 

	
For any Lender requiring a second signature block:

 

	
by /s/ Lisa Murray 

	  	  
	  	
Name: Lisa Murray 

	  	
Title: Associate Director

 

  

  

  

  

 

SIGNATURE PAGE TO THE AMENDMENT AND RESTATEMENT AGREEMENT TO THE J. C. PENNEY COMPANY, INC. CREDIT AGREEMENT

 

 

 

	
Name of Lender: COMPASS BANK, dba BBVA COMPASS

 

	
by /s/ Ramon Garcia 

	  	  
	  	
Name: Ramon Garcia 

	  	
Title: Vice President 

 

 

  

  

  

  

 

SIGNATURE PAGE TO THE AMENDMENT AND RESTATEMENT AGREEMENT TO THE J. C. PENNEY COMPANY, INC. CREDIT AGREEMENT

 

 

 

	
Name of Lender: HSBC Bank USA, N. A. 

 

	
by /s/ Brian Gingue 

	  	  
	  	
Name: Brian Gingue 

	  	
Title: Vice President 

 

 

  

  

  

  

 

SIGNATURE PAGE TO THE AMENDMENT AND RESTATEMENT AGREEMENT TO THE J. C. PENNEY COMPANY, INC. CREDIT AGREEMENT

 

 

 

	
Name of Lender: THE ROYAL BANK OF SCOTLAND PLC

 

	
by /s/ Tracy Rahn

	  	  
	  	
Name: Tracy Rahn

	  	
Title: Director 

 

  

  

  

  

 

 

SIGNATURE PAGE TO THE AMENDMENT AND RESTATEMENT AGREEMENT TO THE J. C. PENNEY COMPANY, INC. CREDIT AGREEMENT

 

 

 

	
Name of Lender: U. S. Bank National Association

 

	
by /s/ Christopher Fudge 

	  	  
	  	
Name: Christopher Fudge

	  	
Title: Vice President

 

 

	
For any Lender requiring a second signature block:

 

	
by

	  	  
	  	
Name:

	  	
Title:

  

  

  

  

SIGNATURE PAGE TO THE AMENDMENT AND RESTATEMENT AGREEMENT TO THE J. C. PENNEY COMPANY, INC. CREDIT AGREEMENT

 

 

 

	
Name of Lender: CITIBANK, N.A. 

 

	
by /s/ Jennifer Bagley

	  	  
	  	
Name: Jennifer Bagley

	  	
Title: Vice President

 

 

	
For any Lender requiring a second signature block:

 

	
by

	  	  
	  	
Name:

	  	
Title:

  

  

  

  

SIGNATURE PAGE TO THE AMENDMENT AND RESTATEMENT AGREEMENT TO THE J. C. PENNEY COMPANY, INC. CREDIT AGREEMENT

 

 

 

	
Name of Lender: Goldman Sachs Bank USA

 

	
by /s/ Michelle Latzoni

	  	  
	  	
Name: Michelle Latzoni

	  	
Title: Authoirzed Signatory

  

  

  

  

 

SIGNATURE PAGE TO THE AMENDMENT AND RESTATEMENT AGREEMENT TO THE J. C. PENNEY COMPANY, INC. CREDIT AGREEMENT

 

 

 

	
Name of Lender: THE BANK OF NEW YORK MELLON

 

	
by /s/ Thomas J. Tarasovich, Jr. 

	  	  
	  	
Name: Thomas J. Tarasovich, Jr. 

	  	
Title: Vice President

 

 

	
For any Lender requiring a second signature block:

 

	
by

	  	  
	  	
Name:

	  	
Title:

 

  

  

  

  

 

SIGNATURE PAGE TO THE AMENDMENT AND RESTATEMENT AGREEMENT TO THE J. C. PENNEY COMPANY, INC. CREDIT AGREEMENT

 

 

 

	
Name of Lender: Standard Chartered Bank

 

	
by /s/ Johanna Minaya

	  	  
	  	
Name: Johanna Minaya

	  	
Title: Associate Director 

 

 

	
For any Lender requiring a second signature block:

 

	
by /s/ R. Reddington

	  	  
	  	
Name: R. Reddington

	  	
Title: CDV Mgr. 

 

  

  

  

  

SIGNATURE PAGE TO THE AMENDMENT AND RESTATEMENT AGREEMENT TO THE J. C. PENNEY COMPANY, INC. CREDIT AGREEMENT

 

 

 

	
Name of Lender: State Street Bank and Trust Center 

 

	
by /s/ Kimberly R. Costa

	  	  
	  	
Name: Kimberly R. Costa

	  	
Title: Vice President 

 

 

  

  

  

  

SIGNATURE PAGE TO THE AMENDMENT AND RESTATEMENT AGREEMENT TO THE J. C. PENNEY COMPANY, INC. CREDIT AGREEMENT

 

 

 

	
Name of Lender: UMB Bank, n. a. 

 

	
by /s/ James A Sangster

	  	  
	  	
Name: James A. Sangster

	  	
Title: Vice Chairman

 

 

	
For any Lender requiring a second signature block:

 

	
by

	  	  
	  	
Name:

	  	
Title:

  

  

  

  

 

SIGNATURE PAGE TO THE AMENDMENT AND RESTATEMENT AGREEMENT TO THE J. C. PENNEY COMPANY, INC. CREDIT AGREEMENT

 

 

 

	
Name of Lender: Regions Bank

 

	
by /s/ Connie Ruan 

	  	  
	  	
Name: Connie Ruan 

	  	
Title: Attorney-in-Fact

 

 

	
For any Lender requiring a second signature block:

 

	
by

	  	  
	  	
Name:

	  	
Title:

  

  

  

  

SIGNATURE PAGE TO THE AMENDMENT AND RESTATEMENT AGREEMENT TO THE J. C. PENNEY COMPANY, INC. CREDIT AGREEMENT

 

 

 

	
Name of Lender: Siemens Financial Services, Inc. 

 

	
by /s/ James Tregillies 

	  	  
	  	
Name: James Tregillies 

	  	
Title: Vice President 

 

 

	
For any Lender requiring a second signature block:

 

	
by /s/ Michael Zuri 

	  	  
	  	
Name: Michael Zuri 

	  	
Title: Portfolio Manager 

  

  

  

  

SIGNATURE PAGE TO THE AMENDMENT AND RESTATEMENT AGREEMENT TO THE J. C. PENNEY COMPANY, INC. CREDIT AGREEMENT

 

 

 

	
Name of Lender: PNC Bank, N. A. 

 

	
by /s/ Chad Greene

	  	  
	  	
Name: Chad Greene 

	  	
Title: Officer

 

 

	
For any Lender requiring a second signature block:

 

	
by

	  	  
	  	
Name:

	  	
Title:

  

  

  

  

 

SIGNATURE PAGE TO THE AMENDMENT AND RESTATEMENT AGREEMENT TO THE J. C. PENNEY COMPANY, INC. CREDIT AGREEMENT

 

 

 

	
Name of Lender: City National Bank

 

	
by /s/ David Kucblauch

	  	  
	  	
Name: David Kucblauch

	  	
Title: Vice President

 

 

	
For any Lender requiring a second signature block:

 

	
by

	  	  
	  	
Name:

	  	
Title:

  

  

  

  

SIGNATURE PAGE TO THE AMENDMENT AND RESTATEMENT AGREEMENT TO THE J. C. PENNEY COMPANY, INC. CREDIT AGREEMENT

 

 

 

	
Name of Lender: Flagstar Bank, FSB

 

	
by /s/ Willard D. Dickerson, Jr. 

	  	  
	  	
Name: Willard D. Dickerson, Jr. 

	  	
Title: Senior Vice President

 

 

	
For any Lender requiring a second signature block:

 

	
by

	  	  
	  	
Name:

	  	
Title:

  

  

  

  

SIGNATURE PAGE TO THE AMENDMENT AND RESTATEMENT AGREEMENT TO THE J. C. PENNEY COMPANY, INC. CREDIT AGREEMENT

 

 

 

	
Name of Lender: Capital One, N.A. 

 

	
by /s/ Mary Jo Hoch

	  	  
	  	
Name: Mary Jo Hoch

	  	
Title: SVP

 

 

	
For any Lender requiring a second signature block:

 

	
by

	  	 
	  	
Name:

	  	
Title:

 

 

  

  

  

  

Schedule I

 

New Lender Commitment Amount

 

	
New Lender

	
New Lender Commitment Amount

	
UBS Loan Finance LLC

	
$100,000,000

	
Total

	
$100,000,000

  

  

  

  

Schedule 2.01

Commitments

	
INSTITUTION

	
COMMITMENT

	
JPMorgan Chase Bank, N.A.

	
$187,500,000

	
Bank of America, N.A.

	
$187,500,000

	
Barclays Bank PLC

	
$187,500,000

	
Wells Fargo Bank, National Association

	
$187,500,000

	
UBS Loan Finance LLC

	
$100,000,000

	
BBVA Compass

	
$90,000,000

	
HSBC Bank USA, National Association

	
$90,000,000

	
The Royal Bank of Scotland plc

	
$75,000,000

	
U.S. Bank

	
$75,000,000

	
Citibank, N.A.

	
$60,000,000

	
Goldman Sachs Bank USA

	
$60,000,000

	
The Bank of New York Mellon

	
$45,000,000

	
Standard Chartered Bank

	
$45,000,000

	
State Street Bank and Trust Company

	
$45,000,000

	
UMB Bank, n.a.

	
$45,000,000

	
Regions Bank

	
$45,000,000

	
Siemens Financial Services, Inc.

	
$45,000,000

	
PNC Bank, National Association

	
$45,000,000

	
City National Bank

	
$32,500,000

	
Flagstar Bank, FSB

	
$32,500,000

	
The Bank of Tokyo-Mitsubishi UFJ, Ltd.

	
$30,000,000

	
Union Bank

	
$30,000,000

	
KeyBank National Association

	
$25,000,000

	
Banco Popular de Puerto Rico

	
$25,000,000

	
The Northern Trust Company

	
$25,000,000

	
Capital One, N.A.

	
$25,000,000

	
Chang Hwa Commercial Bank, Ltd.

	
$10,000,000

	
Total

	
$1,850,000,000

  

  

  

  

Schedule 3.06B

Excluded Matters

Any actions, suits or proceedings against or affecting Holdings and its Subsidiaries arising out of or relating to a claim by holders of securities issued under the indentures referred to in paragraph 1 of Schedule 6.08 (the "Indentures") that Holdings has violated Section 5.08 of the applicable Indenture by granting, or permitting each other Loan Party to grant, a lien on inventory of any Loan Party, and the matters relating thereto as described in the Holdings' 8-K, filed February 4, 2013, including the complaint seeking injunctive relief and a declaratory judgment referred to in Holdings' 8-K, filed February 4, 2013.

  

  

  

  

Schedule 3.12

Material Subsidiaries

 

	 Name	 	 	 Jurisdiction of Organization
	 J. C. Penney Corporation, Inc.	 	 	 Delaware
	 JCP Real Estate Holdings, Inc.	 	 	 Delaware
	 J. C. Penney Properties, Inc.	 	 	 Delaware

 

                                                                                                                                                                                                                

  

  

  

  

Exhibit A

 

Restated Credit Agreement

 

 

 

  

 

Exhibit A

	
AMENDED AND RESTATED CREDIT AGREEMENT

dated as of January 27, 2012

as further amended and restated as of February 8, 2013,

among

J. C. PENNEY COMPANY, INC.,

J. C. PENNEY CORPORATION, INC.,

J. C. PENNEY PURCHASING CORPORATION,

The Lenders Party Hereto,

JPMORGAN CHASE BANK, N.A.,

as Administrative Agent

and

WELLS FARGO BANK, NATIONAL ASSOCIATION,

as LC Agent

___________________________

J.P. MORGAN SECURITIES LLC,

MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED,

BARCLAYS BANK PLC and

WELLS FARGO CAPITAL FINANCE, LLC

as Joint Bookrunners and Lead Arrangers,

JPMORGAN CHASE BANK, N.A.,

as Syndication Agent

and

 

BANK OF AMERICA, N.A.,

BARCLAYS BANK PLC and

WELLS FARGO BANK, NATIONAL ASSOCIATION,

as Joint Documentation Agents

 

 

  

  

  

  

 

	 	 	

TABLE OF CONTENTS

 

 

ARTICLE I

 

Definitions

	 
	 SECTION 1.01.	 	 Defined Terms 	 1
	 SECTION 1.02.	 	 Classification of Loans and Borrowings 	 43
	 SECTION 1.03.	 	 Terms Generally 	 43
	 SECTION 1.04.	 	 Accounting Terms; GAAP 	 43
	 	 	  

ARTICLE II 

 

The Credits

	 
	 SECTION 2.01. 	 	 Commitments	 44
	 SECTION 2.02.	 	 Loans and Borrowings 	 45
	 SECTION 2.03.	 	 Requests for Revolving Borrowings 	 45
	 SECTION 2.04.	 	 Swingline Loans; Protective Advances	 46
	 SECTION 2.05. 	 	 Letters of Credit 	 49
	 SECTION 2.06. 	 	 Funding of Borrowings 	 55
	 SECTION 2.07.	 	 Interest Elections 	 56
	 SECTION 2.08.	 	 Termination and Reduction of Commitments 	 58
	 SECTION 2.09.	 	 Repayment of Loans; Evidence of Debt 	 58
	 SECTION 2.10.	 	 Prepayment of Loans 	 60
	 SECTION 2.11. 	 	 Fees	 60
	 SECTION 2.12.	 	 Interest 	 62
	 SECTION 2.13.	 	Alternate Rate of Interest 	 62
	 SECTION 2.14.	 	 Increased Costs 	 63
	 SECTION 2.15.	 	 Break Funding Payments 	 64
	 SECTION 2.16.	 	 Taxes	 65
	 SECTION 2.17.	 	 Payments Generally; Pro Rata Treatment; Sharing of Set-offs 	 69
	 SECTION 2.18.	 	 Mitigation Obligations; Replacement of Lenders 	 71
	 SECTION 2.19.	 	 Reserved	 75
	 SECTION 2.20.	 	 Borrowing Subsidiaries 	 75
	 SECTION 2.21.	 	 Defaulting Lenders 	 75
	 SECTION 2.22.	 	 Increase in Commitments 	 78
	 SECTION 2.23. 	 	 Extension of Maturity Date 	 79
	 	 	  

ARTICLE III 

 

Representations and Warranties

	 
	 SECTION 3.01.	 	 Organization; Powers 	 80
	 SECTION 3.02.	 	 Authorization; Enforceability 	 80
	 SECTION 3.03.	 	 Governmental Approvals; No Conflicts 	 81

 

  i

  

  

  

  

 

	 SECTION 3.04.	 	 Financial Condition; No Material Adverse Change	 81
	 SECTION 3.05.	 	 Properties 	 81
	 SECTION 3.06.	 	 Litigation and Environmental Matters 	 82
	 SECTION 3.07.	 	 Compliance with Laws and Agreements  	 82
	 SECTION 3.08. 	 	 Investment Company Status 	 82
	 SECTION 3.09.	 	 Taxes	 82
	 SECTION 3.10.	 	 ERISA	 83
	 SECTION 3.11.	 	 Disclosure	 83
	 SECTION 3.12. 	 	 Material Subsidiaries  	 83
	 	 	   

ARTICLE IV

 

Conditions

	 
	 SECTION 4.01.	 	 [Intentionally Omitted.] 	 84
	 SECTION 4.02.	 	 Each Credit Event  	 84
	 SECTION 4.03.	 	 Borrowing Subsidiaries 	 84
	 	 	   

ARTICLE V

 

Affirmative Covenants

	 
	 SECTION 5.01. 	 	 Financial Statements; Borrowing Base, Ratings Change and Other Information 	 85
	 SECTION 5.02.	 	 Notices of Material Events 	 88
	 SECTION 5.03.	 	 Information Regarding Collateral 	 89
	 SECTION 5.04.	 	 Existence; Conduct of Business 	 89
	 SECTION 5.05.	 	 Payment of Obligations 	 89
	 SECTION 5.06.	 	 Maintenance of Properties 	 89
	 SECTION 5.07.	 	 Insurance	 90
	 SECTION 5.08.	 	 Books and Records; Inspection Rights 	 90
	 SECTION 5.09.	 	 Compliance with Laws 	 91
	 SECTION 5.10.	 	 Use of Proceeds and Letters of Credit 	 91
	 SECTION 5.11.	 	 Additional Guarantee Parties 	 91
	 SECTION 5.12.	 	 Further Assurances 	 92
	 SECTION 5.13. 	 	 Maintenance of Ratings 	 92
	 SECTION 5.14. 	 	 Appraisals 	 92
	 SECTION 5.15. 	 	 Field Examinations 	 93
	 SECTION 5.16. 	 	 Control Agreements 	 93
	 	 	  

ARTICLE VI

 

Negative Covenants

	 
	 SECTION 6.01.	 	 Indebtedness	 95
	 SECTION 6.02.	 	 Liens	 97
	 SECTION 6.03.	 	 Fundamental Changes 	 99

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	 SECTION 6.04.	 	 Investments, Loans, Advances, Guarantees and Acquisitions	 100
	 SECTION 6.05.	 	 Asset Sales 	 102
	 SECTION 6.06.	 	 Sale and Leaseback Transactions 	 104
	 SECTION 6.07.	 	 Restricted Payments  	 105
	 SECTION 6.08. 	 	 Restrictive Agreements 	 105
	 SECTION 6.09.	 	 Transactions with Affiliates 	 107
	 SECTION 6.10.	 	 Amendments of Material Documents 	 107
	 SECTION 6.11.	 	 Fixed Charge Coverage Ratio 	 108
	 SECTION 6.12. 	 	 Restriction on Non-Material Subsidiaries 	 108
	 SECTION 6.13	 	 Certain Payments of Indebtedness 	 108
	 SECTION 6.14.	 	 Net Settlement of Convertible Indebtedness	 109
	 	 	   

ARTICLE VII

 

Events of Default

	 
	 SECTION 7.01. 	 	 Events of Default 	 109
	 	 	
 

ARTICLE VIII

 

The Administrative Agent

 

	 
	 	 	  

ARTICLE IX

  

Miscellaneous

	 
	 SECTION 9.01.	 	 Notices	 114
	 SECTION 9.02.	 	 Waivers; Amendments	 115
	 SECTION 9.03.	 	 Expenses; Indemnity; Damage Waiver 	 118
	 SECTION 9.04.	 	 Successors and Assigns 	 120
	 SECTION 9.05.	 	 Survival 	 123
	 SECTION 9.06.	 	 Integration; Effectiveness 	 123
	 SECTION 9.07.	 	 Severability	 124
	 SECTION 9.08.	 	 Right of Setoff  	 124
	 SECTION 9.09.	 	 Governing Law; Jurisdiction; Consent to Service of Process  	 124
	 SECTION 9.10.	 	 WAIVER OF JURY TRIAL 	 125
	 SECTION 9.11. 	 	 Headings 	 125
	 SECTION 9.12. 	 	 Confidentiality	 126
	 SECTION 9.13. 	 	 Interest Rate Limitation 	 127
	 SECTION 9.14. 	 	 USA Patriot Act  	 127
	 SECTION 9.15. 	 	 No Fiduciary Duty 	 127

iii

  

  

  

  

SCHEDULES:

 

Schedule 2.01                         --   Commitments

Schedule 2.05                         --   Issuing Banks

Schedule 3.06A                      --   Disclosed Matters

Schedule 3.06B                      --   Excluded Matters

Schedule 3.12                         --   Material Subsidiaries

Schedule 5.16                         --   Control Accounts

Schedule 6.01                         --   Existing Indebtedness

Schedule 6.02                         --   Existing Liens

Schedule 6.04                         --   Existing Investments

Schedule 6.08                         --   Existing Restrictions

 

EXHIBITS:

 

	
  

	
Exhibit A  --

	
Form of Assignment and Assumption

	
  

	
Exhibit B  --

	
[Intentionally Omitted.]

	
  

	
Exhibit C  --    Form of Collateral Agreement

	
  

	
Exhibit D  --

	
Form of U.S. Tax Compliance Certificate

	
  

	
Exhibit E  --    Form of Borrowing Request

	
  

	
Exhibit F  --    Form of Interest Election Request

	
  

	
Exhibit G  --   Form of Promissory Note

 

iv

  

  

  

  

AMENDED AND RESTATED CREDIT AGREEMENT dated as of January 27, 2012, as further amended and restated as of February 8, 2013 (the “Agreement”), among J. C. PENNEY COMPANY, INC., J. C. PENNEY CORPORATION, INC., J. C. PENNEY PURCHASING CORPORATION, the LENDERS party hereto, JPMORGAN CHASE BANK, N.A., as Administrative Agent, and WELLS FARGO BANK, NATIONAL ASSOCIATION, as LC Agent.

 

Holdings, the Parent Borrower, Purchasing, certain Lenders, the Administrative Agent and the LC Agent are party to the Existing Credit Agreement (as defined herein).  Pursuant to the Amendment Agreement (as defined herein), and upon the satisfaction of the conditions set forth therein, the Existing Credit Agreement shall be amended and restated in the form of this Agreement, with the effect provided in the Amendment Agreement.

The parties hereto agree as follows:

 

ARTICLE I

 

Definitions

 

SECTION 1.01. Defined Terms.  As used in this Agreement, the following terms have the meanings specified below:

 

“ABR”, when used in reference to any Loan or Borrowing, refers to whether such Loan, or the Loans comprising such Borrowing, are bearing interest at a rate determined by reference to the Alternate Base Rate.

 

“Account Debtor” means any Person obligated on an Account.

 

“Account Parties” means the Parent Borrower and Purchasing.

 

“Accounts” means “accounts” as defined in the UCC, and also means Payment Intangibles and any right to payment of a monetary obligation, whether or not earned by performance, (a) for property that has been or is to be sold, leased, licensed, assigned, or otherwise disposed of, (b) for services rendered or to be rendered or (c) arising out of the use of a credit, debit or charge card or information contained on or for use with the card.  The term “Account” does not include (i) rights to payment evidenced by chattel paper or an instrument, (ii) commercial tort claims, (iii) deposit accounts, (iv) investment property, (v) letter-of-credit rights or letters of credit, or (vi) rights to payment for money or funds advanced other than Payment Intangibles and any rights arising out of the use of a credit, debit or charge card or information contained on or for use with the card.

 

“Additional Costs” has the meaning assigned to such term in Section 2.14(c).

 

“Additional Grantor” means any Subsidiary of the Parent Borrower that is designated by the Parent Borrower, with the prior written consent of the Administrative Agent, to become a party to the Collateral Agreement for the purpose of granting a security interest in such Subsidiary’s inventory; provided that the Parent Borrower shall cause the Collateral and 

 

  

  

  

  

2

Guarantee Requirement to be satisfied with respect to such Subsidiary immediately upon such Subsidiary becoming an Additional Grantor.

 

“Adjusted LIBO Rate” means, with respect to any Eurodollar Borrowing for any Interest Period, an interest rate per annum (rounded upwards, if necessary, to the next 1/16 of 1%) equal to (a) the LIBO Rate for such Interest Period multiplied by (b) the Statutory Reserve Rate.

 

“Administrative Agent” means JPMorgan Chase Bank, N.A., in its capacity as administrative agent for the Lenders hereunder.

 

“Administrative Questionnaire” means an Administrative Questionnaire in a form supplied by the Administrative Agent.

 

“Affiliate” means, with respect to a specified Person, another Person that directly, or indirectly through one or more intermediaries, Controls or is Controlled by or is under common Control with the Person specified.

 

“Agreement” has the meaning set forth in the preamble hereto.

 

“Alternate Base Rate” means, for any day, a rate per annum equal to the greatest of (a) the Prime Rate in effect on such day, (b) the Federal Funds Effective Rate in effect on such day plus 1/2 of 1% and (c) the Adjusted LIBO Rate for a one-month Interest Period on such day (or if such day is not a Business Day, the immediately preceding Business Day) plus 1%; provided that, for the avoidance of doubt, for purposes of calculating the Alternate Base Rate, the Adjusted LIBO Rate for any day shall be based on the rate per annum appearing on the Reuters “LIBOR01” screen displaying interest rates for dollar deposits in the London interbank market (or on any successor or substitute screen provided by Reuters, or any successor to or substitute for such service, providing rate quotations comparable to those currently provided on such screen, as determined by the Administrative Agent from time to time) at approximately 11:00 a.m. London time on such day for deposits in dollars with a maturity of one month.  Any change in the Alternate Base Rate due to a change in the Prime Rate, the Federal Funds Effective Rate or the Adjusted LIBO Rate shall be effective from and including the effective date of such change in the Prime Rate, the Federal Funds Effective Rate or the Adjusted LIBO Rate, respectively.

 

“Amendment Agreement” means the Amendment and Restatement Agreement dated as of February 8, 2013, among Holdings, the Parent Borrower, Purchasing, the Lenders party thereto and the Administrative Agent.

 

“Amortization Reserve” means, on any date, a Reserve equal to the excess, if any, of (a) the aggregate amount of all payments of principal in respect of Permitted First-Lien Indebtedness and Permitted Second-Lien Indebtedness scheduled to be paid within 90 days after such date over (b) $10,000,000.

 

“Applicable Lending Office” means, for each Issuing Bank or Lender, the office or branch of such Issuing Bank or Lender (or an affiliate of such Issuing Bank or Lender) designated in an Administrative Questionnaire delivered by such Issuing Bank or Lender to the

  

  

  

  

3

Administrative Agent or such other office or branch of such Issuing Bank or Lender as such Issuing Bank or Lender may, from time to time, in accordance with the terms of this Agreement, specify to the Administrative 

Agent, the Borrowers and the Account Parties as the office or branch by which its Letters of Credit, Loans or Commitments, as applicable, are to be made and maintained.

 

“Applicable Percentage” means, with respect to any Lender, the percentage of the total Commitments represented by such Lender’s Commitment; provided that in the case of Section 2.21 when a Defaulting Lender shall exist, “Applicable Percentage” shall mean the percentage of the total Commitments (disregarding any Defaulting Lender’s Commitment) represented by such Lender’s Commitment.  If the Commitments have terminated or expired, the Applicable Percentages shall be determined based upon the Commitments most recently in effect, giving effect to any assignments.

 

“Applicable Rate” means, for any day, with respect to any ABR Loan or Eurodollar Revolving Loan, or with respect to the participation fees in respect of Stand-by Letters of Credit or the commitment fees payable hereunder, as the case may be, the applicable rate per annum set forth below under the caption “ABR Spread”, “Eurodollar Spread”, “Stand-by Letter of Credit Fee Rate” or “Commitment Fee Rate”, as the case may be, based upon the Credit Rating of Holdings assigned by Moody’s and S&P, respectively, applicable on such date:

 

	
Credit Ratings

Moody’s/S&P:

	
ABR

Spread

	
Eurodollar Spread

	
Stand-by Letter of Credit Fee Rate

	
Commitment Fee Rate

	
Category 1

≥Baa2/BBB

	
0.50%

	
1.50%

	
1.50%

	
0.250%

	
Category 2

Baa3/BBB-

	
0.75%

	
1.75%

	
1.75%

	
0.300%

	
Category 3

Ba1/BB+

	
1.00%

	
2.00%

	
2.00%

	
0.325%

	
Category 4

Ba2/BB

	
1.50%

	
2.50%

	
2.50%

	
0.400%

	
Category 5

≤Ba3/BB-

	
2.00%

	
3.00%

	
3.00%

	
0.500%

 

For purposes of the foregoing, (a) if either Moody’s or S&P shall not have in effect a Credit Rating (other than by reason of the circumstances referred to in the last sentence of this definition) the Applicable Rate shall be determined on the basis of the rating agency that does then have a Credit Rating in effect; (b) if the Credit Ratings established or deemed to be established by Moody’s and S&P shall fall within different Categories, the Applicable Rate shall be based on the higher of the two Credit Ratings unless one of the two Categories is two or more Categories lower than the other, in which case the Applicable Rate shall be determined by reference to the Category next below that of the higher of the two Credit Ratings; (c) if neither Moody’s nor S&P has in effect a Credit Rating (other than by reason of the circumstances referred to in the last sentence of this definition) the Credit Ratings shall be deemed to be those set forth in Category 5; (d) the Applicable Rate shall be deemed to be the Applicable Rate set forth in Category 5 at any time that an Event of Default has occurred and is continuing and (e) if the Credit Ratings established or deemed to have been established by Moody’s and S&P shall be changed (other than as a result of a change in the rating system of Moody’s or S&P), such change shall be effective as of the date on which it is first announced by the applicable rating agency, irrespective of when notice of such change shall have been furnished by Holdings or the 

  

  

  

  

4

Parent Borrower to the Administrative Agent and the Lenders pursuant to Section 5.01 or otherwise.  Each change in the Applicable Rate shall apply during the period commencing on the effective date of such change and ending on the date immediately preceding the effective date of the next such change.  If the rating system of Moody’s or S&P shall change, or if either such rating agency shall cease to be in the business of rating obligors, the Parent Borrower and the Required Lenders shall negotiate in good faith to amend this definition to reflect such changed rating system or the unavailability of Credit Ratings from such rating agency and, pending the effectiveness of any such amendment, the Applicable Rate shall be determined by reference to the Credit Rating most recently in effect prior to such change or cessation.

 

“Assignment and Assumption” means an assignment and assumption entered into by a Lender and an assignee (with the consent of any party whose consent is required by Section 9.04), and accepted by the Administrative Agent, in the form of Exhibit A or any other form approved by the Administrative Agent.

 

“Augmenting Lender” has the meaning set forth in Section 2.22(a).

 

“Availability” means, at any time, an amount equal to (a) the Line Cap minus (b) the total Revolving Credit Exposures.

 

“Availability Period” means the period from and including the Effective Date to but excluding the earlier of the Maturity Date and the date of termination of the Commitments.

 

“Board” means the Board of Governors of the Federal Reserve System of the United States of America.

 

“Borrowers” means the Parent Borrower and, if eligible to be a Borrower at the time in accordance with Section 2.20, each Borrowing Subsidiary.

 

“Borrowing” means (a) Revolving Loans having the same Borrowing Maturity Date and of the same Type, made, converted or continued on the same date and, in the case of Eurodollar Loans, as to which a single Interest Period is in effect, (b) a Swingline Loan or (c) a Protective Advance.

 

“Borrowing Base” means, at any time, an amount equal to:

 

	
  

	
(a)

	
85% of the Eligible Accounts, plus

 

	
  

	
(b)

	
90% of the Eligible Credit Card Receivables, plus

 

	
  

	
(c)

	
85% of the Net Orderly Liquidation Value of the Eligible Inventory, valued at Cost, of the Loan Parties on a consolidated basis, and minus

 

	
  

	
(d)

	
Reserves established by the Administrative Agent in its Permitted Discretion.

 

Notwithstanding anything contained herein to the contrary, the Administrative Agent may at any time hereafter establish additional Reserves or change any of the Reserves, in each case to the extent it deems necessary or appropriate in its Permitted Discretion; provided 

  

  

  

  

5

that, such Reserves shall not be established or changed except upon not less than five Business Days’ notice to the Parent Borrower (during which period the Administrative Agent shall be available to discuss any such proposed Reserve with the Parent Borrower); provided, further, that no such prior notice shall be required for (A) changes to any Reserves resulting solely by virtue of mathematical calculations of the amount of the Reserve in accordance with the methodology of calculation previously utilized, or (B) changes to Reserves or the establishment of additional Reserves if a Material Adverse Effect has occurred or it would be reasonably likely that a Material Adverse Effect would occur were such Reserves not changed or established prior to the expiration of such five Business Day period.  The Borrowing Base shall be determined by reference to the Borrowing Base Certificate most recently delivered to the Administrative Agent pursuant to Section 5.01(g), subject to adjustments and changes made by the Administrative Agent in its Permitted Discretion as provided above.  Notwithstanding anything contained herein to the contrary, as of any date of determination, the portion of the Borrowing Base attributable to Eligible In-Transit Inventory shall not exceed 5% of the portion of the Borrowing Base attributable to Eligible Inventory.  The Parent Borrower shall promptly upon (but in any event within 5 Business Days after) the consummation thereof give the Administrative Agent written notice of any disposition, together with such information as shall be required for the Administrative Agent to adjust the Borrowing Base to reflect such disposition, of (1) a Loan Party or (2) Collateral having a fair market value in excess of (A) $50,000,000, if at the time of such disposition the Revolving Credit Exposure (not including any LC Exposure) shall not exceed $50,000,000 and the LC Exposure shall not exceed $300,000,000, and (B) $30,000,000, at any other time.  Notwithstanding anything contained herein to the contrary, neither the definition of the term “Borrowing Base” nor any of the eligibility standards or other criteria included in the component definitions used to determine the Borrowing Base shall be waived, amended or otherwise modified with the effect that Availability would exceed the amount of Availability had no waiver, amendment or modification been made since the Restatement Effective Date, in each case without the consent of Lenders having Revolving Credit Exposures and unused Commitments representing more than 66% of the sum of the total Revolving Credit Exposures and unused Commitments at such time; provided that the foregoing shall not limit the ability of the Administrative Agent to establish, change or eliminate any Reserves in its Permitted Discretion.

 

“Borrowing Base Certificate” means a certificate, signed and certified as accurate and complete by a Financial Officer of the Parent Borrower, in respect of the Borrowing Base pursuant to Section 5.01(g), in the form previously agreed between the Administrative Agent and the Parent Borrower.

 

“Borrowing Maturity Date” means, with respect to each Loan contained in each Revolving Borrowing, the maturity specified therefor in the Borrowing Request pursuant to which such Loan was originally made in accordance with Section 2.03.

 

“Borrowing Request” means a request by a Borrower for a Revolving Borrowing in accordance with Section 2.03.

 

“Borrowing Subsidiary” means any Subsidiary with respect to which a Subsidiary Borrower Election shall have been executed and delivered as provided in Section 2.20 and with

  

  

  

  

6

respect to which a Subsidiary Borrower Termination has not been executed and delivered as provided in Section 2.20.

 

“Business Day” means any day that is not a Saturday, Sunday or other day on which commercial banks in New York City are authorized or required by law to remain closed; provided that, when used in connection with a Eurodollar Loan, the term “Business Day” shall also exclude any day on which banks are not open for dealings in dollar deposits in the London interbank market.

 

“Capital Expenditures” means, for any period, with respect to Holdings, the aggregate of all expenditures by Holdings and its consolidated Subsidiaries for the acquisition or leasing (pursuant to Capital Lease Obligations) of fixed or capital assets or additions to equipment (including replacements, capitalized repairs and improvements during such period) that are required to be capitalized under GAAP on a consolidated balance sheet of Holdings and its consolidated Subsidiaries; provided, however, that Capital Expenditures for Holdings and its consolidated Subsidiaries shall not include:

 

(a)       expenditures to the extent they are made with proceeds of the issuance of Equity Interests of Holdings,

 

(b)       expenditures with proceeds of insurance settlements, condemnation awards, eminent domain and other settlements in respect of lost (including through eminent domain), destroyed, damaged or condemned assets, equipment or other property,

 

(c)       interest capitalized during such period to the extent included in Consolidated Cash Interest Expense,

 

(d)       expenditures that are accounted for as capital expenditures of Holdings or any consolidated Subsidiary and that actually are (i) paid for by a third party (excluding Holdings or any consolidated Subsidiary thereof) and for which neither Holdings nor any Subsidiary has provided or is required to provide or incur, directly or indirectly, any consideration or obligation to such third party or any other Person (whether before, during or after such period) or (ii) contractually required to be, and are, reimbursed to the Loan Parties in cash by a third party (including landlords) during such period,

 

(e)       the book value of any asset owned by Holdings or any of its consolidated Subsidiaries prior to or during such period to the extent that such book value is included as a capital expenditure during such period as a result of Holdings or such consolidated Subsidiary reusing or beginning to reuse such asset during such period without a corresponding expenditure actually having been made in such period,

 

(f)       the purchase price of equipment purchased during such period to the extent the consideration therefor consists of any combination of (i) used or surplus equipment traded in at the time of such purchase and (ii) the proceeds of a sale of used or surplus equipment made within 90 days of the time of such purchase, in each case, in the ordinary course of business, and

  

  

  

  

7

(g)       expenditures to the extent constituting any portion of the purchase price of an acquisition of, or investment in, a business or line of business permitted under Section 6.04, which, in accordance with GAAP, are or should be capitalized under GAAP.

 

“Capital Lease Obligations” of any Person means the obligations of such Person to pay rent or other amounts under any lease of (or other arrangement conveying the right to use) real or personal property, or a combination thereof, which obligations are required to be classified and accounted for as capital leases on a balance sheet of such Person under GAAP, and the amount of such obligations shall be the capitalized amount thereof determined in accordance with GAAP.

 

“Cash Dominion Period” means (a) each period when a Specified Event of Default shall have occurred and be continuing and (b) each period beginning on a date on which Availability is less than the greater of (1) 10% of the Line Cap and (2) $125,000,000; provided that the Cash Dominion Period commencing under this clause (b) shall be discontinued when and if Availability shall have been not less than such specified level for 30 consecutive calendar days.

 

“Change in Control” means (a) the acquisition of ownership, directly or indirectly, beneficially or of record, by any Person other than Holdings or a wholly owned Subsidiary of Holdings of any Equity Interest in the Parent Borrower; (b) the acquisition of ownership, directly or indirectly, beneficially or of record, by any Person or group (within the meaning of the Securities Exchange Act of 1934 and the rules of the Securities and Exchange Commission thereunder as in effect on the Effective Date) other than any Permitted Holder or any retirement or savings plan for employees of Holdings and its Subsidiaries, of Equity Interests representing more than 42.5% of either the aggregate ordinary voting power or the aggregate equity value represented by the issued and outstanding Equity Interests in Holdings, other than pursuant to a Permitted Holding Company Reorganization; (c) occupation of a majority of the seats (other than vacant seats) on the board of directors of Holdings by Persons who were neither (i) nominated by the board of directors of Holdings, or a committee thereof, nor (ii) appointed by directors so nominated; or (d) the occurrence of any “change in control” (or similar event, however denominated) under and as defined in any indenture or other agreement or instrument evidencing, governing the rights of the holders of or otherwise relating to any Material Indebtedness.  Notwithstanding the foregoing, the acquisition by a financial institution of Equity Interests in Holdings acquired by such financial institution pursuant to an underwriting arrangement in the ordinary course of its business shall not constitute a “Change in Control”.

 

“Change in Law” means (a) the adoption of any law, rule or regulation after the Effective Date, (b) any change in any law, rule or regulation or in the interpretation or application thereof by any Governmental Authority after the Effective Date or (c) compliance by any Lender or any Issuing Bank (or, for purposes of Section 2.14(b), by any lending office of such Lender or by such Lender’s or such Issuing Bank’s holding company, if any) with any request, guideline or directive (whether or not having the force of law) of any Governmental Authority made or issued after the Effective Date; provided, however, that, notwithstanding anything herein to the contrary, (i) the Dodd-Frank Wall Street Reform and Consumer Protection Act and all requests, rules, guidelines or directives thereunder or issued in connection therewith and (ii) all requests, rules, guidelines or directives promulgated by the Bank for International 

  

  

  

  

8

Settlements, the Basel Committee on Banking Supervision (or any successor or similar authority) or the United States or foreign regulatory authorities, in each case pursuant to Basel III, shall in each case be deemed to be a “Change in Law”, regardless of the date enacted, adopted or issued.

 

“Charges” has the meaning assigned to such term in Section 9.13.

 

“Class”, when used in reference to any Loan or Borrowing, refers to whether such Loan, or the Loans comprising such Borrowing, are Revolving Loans, Swingline Loans or Protective Advances.

 

“Code” means the Internal Revenue Code of 1986, as amended from time to time.

 

“Collateral” means any and all “Collateral”, as defined in the Collateral Agreement.

 

“Collateral Access Agreement” means any landlord waiver or other agreement, in form and substance reasonably satisfactory to the Administrative Agent, between the Administrative Agent and any third party (including any bailee, consignee, customs broker or other similar Person) in possession of any Collateral or any landlord of any Loan Party for any real property where any Collateral is located.

 

“Collateral Agreement” means the Amended and Restated Guarantee and Collateral Agreement among the Guarantee Parties, the Additional Grantors and the Administrative Agent, substantially in the form of Exhibit C.

 

“Collateral and Guarantee Requirement” means the requirement that:

 

(a)  the Administrative Agent shall have received from each Loan Party either (i) a counterpart of the Collateral Agreement duly executed and delivered on behalf of such Loan Party or (ii) in the case of any Person that becomes a Loan Party after the Effective Date, a supplement to the Collateral Agreement, in substantially the form specified therein, duly executed and delivered on behalf of such Loan Party;

 

(b)  all documents and instruments, including Uniform Commercial Code financing statements, required by law or reasonably requested by the Administrative Agent to be filed, registered or recorded to create the Liens intended to be created by the Collateral Agreement and perfect such Liens to the extent required by, and with the priority required by, the Collateral Agreement, shall have been filed, registered or recorded or delivered to the Administrative Agent for filing, registration or recording;

 

(c)  the Administrative Agent shall have received a counterpart, duly executed and delivered by the applicable Loan Party and the applicable depositary bank or securities intermediary, as the case may be, of a Control Agreement with respect to each Deposit Account maintained by any Loan Party and each Securities Account maintained by any Loan Party, in each case in respect of which a Control Agreement is required by Section 5.16 or by the Collateral Agreement and the requirements of Section 5.16 and the Collateral Agreement relating to the concentration and application of collections on accounts shall have been satisfied; and

 

  

  

  

  

9

(d)  each Loan Party shall have obtained all consents and approvals required to be obtained by it in connection with the execution and delivery of each Security Document, the performance of its obligations thereunder and the granting by it of the Liens thereunder.

 

“Collateral Cooperation Agreement” means an agreement between the Administrative Agent and the trustee or the collateral agent (or equivalent agent or representative) for holders of any Permitted First-Lien Indebtedness or Permitted Second-Lien Indebtedness secured by any real property or Intellectual Property, in form and substance reasonably satisfactory to the Administrative Agent and otherwise consistent with the then existing market practice, which provides for, among other things, (a) access rights in favor of the Administrative Agent and the Loan Parties for the benefit of the Secured Parties upon the occurrence and during the continuance of an Event of Default to all locations where Collateral is located and (b) to the extent the representative of such Permitted First-Lien Indebtedness or Permitted Second-Lien Indebtedness, as applicable, has rights to do so, the non-exclusive, royalty free right of the Administrative Agent and the Secured Parties to use the Intellectual Property (as defined in the Collateral Agreement) of the Loan Parties for the purpose of enabling the Administrative Agent to exercise rights and remedies under the Loan Documents with respect to Collateral consisting of Inventory during the continuance of an Event of Default.  The execution and delivery by the Administrative Agent of a Collateral Cooperation Agreement shall be conclusive evidence that such Collateral Cooperation Agreement is reasonably satisfactory to the Administrative Agent and otherwise consistent with then existing market practice.

 

“Commitment” means, with respect to each Lender, the commitment of such Lender to make Revolving Loans and to acquire participations in Letters of Credit, Swingline Loans and Protective Advances hereunder, expressed as an amount representing the maximum aggregate amount of such Lender’s Revolving Credit Exposure hereunder, as such commitment may be (a) reduced from time to time pursuant to Section 2.08 and (b) reduced or increased from time to time pursuant to assignments by or to such Lender pursuant to Section 9.04 or pursuant to a Commitment Increase.  The initial amount of each Lender’s Commitment is set forth on Schedule 2.01, in an amendment to this Agreement entered into in connection with a Commitment Increase or in the Assignment and Assumption pursuant to which such Lender shall have assumed its Commitment, as applicable.  The initial aggregate amount of the Lenders’ Commitments on the Restatement Effective Date is $1,850,000,000.

 

“Commitment Increase” has the meaning set forth in Section 2.22(b).

 

“Commitment Letter” means the Commitment Letter dated as of March 30, 2011 among the Commitment Parties and the Parent Borrower.

 

“Commitment Parties” means the Joint Bookrunners, Lead Arrangers, Syndication Agent and Joint Documentation Agents (each as identified on the cover page of this Agreement).

 

“Concentration Account” has the meaning set forth in Section 5.16(c).

 

“Consenting Lender” has the meaning set forth in Section 2.23(b).

 

  

  

  

  

10

“Consolidated Cash Interest Expense” means, for any period, Consolidated Interest Expense during such period (excluding interest which is payable in kind, but including all commissions, discounts and other fees and charges owed with respect to letters of credit and bankers’ acceptance financing and net costs under Swap Agreements entered into to hedge interest rates to the extent such net costs are allocable to such period in accordance with GAAP (for purposes of clarification, excluding fees and expenses paid in connection with the establishment of this Agreement)), all determined on a consolidated basis in accordance with GAAP.

 

“Consolidated EBITDA” means, for any period, Consolidated Net Income for such period (disregarding any non-cash charges or credits related to any Plan, any non-qualified supplemental pension plan maintained, sponsored or contributed to by Holdings or any ERISA Affiliate, or any Multiemployer Plan) plus (a) without duplication and to the extent deducted in determining such Consolidated Net Income, the sum of (i) consolidated interest expense for such period plus (ii) consolidated financing costs associated with securitization programs for such period plus (iii) consolidated income tax expense for such period plus (iv) all amounts attributable to depreciation and amortization  for such period plus (v) any extraordinary or other non-cash charges for such period (excluding any such non-cash charge to the extent that it represents the write-down or write-off of any inventory or accounts receivable, any bad debt reserve or bad debt expense, an accrual or reserve for a potential cash payment in any future period or amortization of a prepaid cash charge that was paid in a prior period), provided that in the event Holdings or any Subsidiary makes any cash payment in respect of any such non-cash charge, such cash payment shall be deducted from Consolidated EBITDA in the period in which such payment is made, plus (vi) the amount of cash restructuring charges in respect of severance, supply chain improvements and working capital (excluding any charges in respect of inventory) incurred on or after January 29, 2012, in an aggregate amount not exceeding $125,000,000 for all periods reported on during the term of this Agreement and minus (b) without duplication and to the extent included in determining such Consolidated Net Income, the sum of (A) any extraordinary or other non-recurring gains for such period plus (B) non-cash gains for such period, all determined on a consolidated basis in accordance with GAAP.

 

“Consolidated Interest Expense” means, for any period, the interest expense (including imputed interest expense in respect of Capital Lease Obligations) of Holdings and the Subsidiaries for such period, including any interest that is capitalized rather than expensed for such period.

 

“Consolidated Net Income” means, for any period, the net income or loss of Holdings and the Subsidiaries for such period determined on a consolidated basis in accordance with GAAP; provided that there shall be excluded (a) the income (or loss) of any Person (other than Holdings) in which any other Person (other than Holdings or any Subsidiary or any director holding qualifying shares in compliance with applicable law) owns an Equity Interest, except to the extent of the amount of dividends or other distributions actually paid to Holdings or any of the Subsidiaries during such period, and (b) the income or loss of any Person accrued prior to the date it becomes a Subsidiary or is merged into or consolidated with Holdings or any Subsidiary or the date that such Person’s assets are acquired by Holdings or any Subsidiary.

 

  

  

  

  

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“Control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of a Person, whether through the ability to exercise voting power, by contract or otherwise.  “Controlling” and “Controlled” have meanings correlative thereto.

 

“Control Account” has the meaning set forth in Section 5.16(b).

 

“Control Agreement” means, with respect to any Deposit Account or Securities Account maintained by any Loan Party, a control agreement in form and substance reasonably satisfactory to the Administrative Agent, duly executed and delivered by such Loan Party and the depositary bank or the securities intermediary, as the case may be, with which such account is maintained.

 

“Cost” means the cost of purchases of Inventory, as reported on the Loan Parties’ financial stock ledger based upon the Loan Parties’ accounting practices in effect on the Effective Date or accounting practices in effect thereafter and consented to by the Administrative Agent (such consent not to be unreasonably withheld or delayed).

 

“Credit Rating” means, in the case of Moody’s, the “Corporate Family Rating” (or its equivalent) assigned by Moody’s to Holdings and, in the case of S&P, the “Issuer Credit Rating” assigned by S&P to Holdings.

 

“Customary Mandatory Prepayment Terms” means, in respect of any Indebtedness, terms requiring any obligor in respect of such Indebtedness to Pay (or offer to Pay) such Indebtedness (a) in the event of a “change in control” (or similar event), (b) in the event of an “asset sale” (or similar event, including condemnation or casualty), provided that such mandatory Payment (or offer to Pay) (i) can be avoided pursuant to customary reinvestment rights (it being understood that the terms of such Indebtedness may include additional customary means of avoiding the applicable Payment) and (ii) shall not apply to the sale or disposition of Collateral except, in the case of Permitted Second-Lien Indebtedness, on the same terms as those in the Loan Documents (subject to the relevant Intercreditor Agreement), and (c) in the case of any Indebtedness that constitutes a term loan, on account of annual “excess cash flow” on terms approved by the Administrative Agent (such approval not to be unreasonably withheld).  Holdings or the Parent Borrower may provide a certificate of a Financial Officer to the effect that the terms of any reinvestment rights or other means of avoiding the applicable Payment referred to in clause (b)(i) above are customary, and such determination shall be conclusive unless the Administrative Agent shall have objected to such determination within five Business Days following its receipt of such certificate and the draft documentation governing such Indebtedness.

 

“Customs Broker Agreement” means an agreement, in form and substance reasonably satisfactory to the Administrative Agent, among a Loan Party, a customs broker or other carrier and the Administrative Agent, in which the customs broker or other carrier acknowledges that it has control over and holds the documents evidencing ownership of the subject Inventory for the benefit of the Administrative Agent, and agrees, upon notice from the Administrative Agent, to hold and dispose of the subject Inventory solely as directed by the Administrative Agent.

 

  

  

  

  

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“Declining Lender” has the meaning set forth in Section 2.23(b).

 

“Default” means any event or condition which constitutes an Event of Default or which upon notice, lapse of time or both would, unless cured or waived, become an Event of Default.

 

“Defaulting Lender” means any Lender, as determined by the Administrative Agent, that has (a) failed to fund any portion of its Loans or participations in Letters of Credit, Protective Advances or Swingline Loans within three Business Days of the date required to be funded by it hereunder unless such Lender notifies the Administrative Agent and the Parent Borrower in writing that such failure is the result of such Lender’s determination that one or more conditions precedent to funding (each of which conditions precedent, together with any applicable default, shall be specifically identified in such writing) has not been satisfied, (b) notified any Borrower, any Account Party, the Administrative Agent, the Issuing Bank, the Swingline Lender or any Lender in writing that it does not intend to comply with any of its funding obligations under this Agreement or has made a public statement to that effect (unless such writing or public statement relates to such Lenders’ obligation to fund a Loan hereunder and states that such position is based on such Lender’s determination that a condition precedent to funding (which condition precedent, together with any applicable default, shall be specifically identified in such writing or public statement) cannot be satisfied), (c) failed, within three Business Days after request by the Administrative Agent, to confirm that it will comply with the terms of this Agreement relating to its obligations to fund prospective Loans and participations in then outstanding Letters of Credit, Protective Advances and Swingline Loans; provided that such Lender shall cease to be a Defaulting Lender pursuant to this clause (c) upon receipt of such written confirmation by the Administrative Agent and the Parent Borrower, (d) otherwise failed to pay over to the Administrative Agent or any other Lender any other amount required to be paid by it hereunder within three Business Days of the date when due, unless the subject of a good faith dispute, or (e) become the subject of a bankruptcy or insolvency proceeding, or has had a receiver, conservator, trustee or custodian appointed for it, or has taken any action in furtherance of, or indicating its consent to, approval of or acquiescence in any such proceeding or appointment or has a parent company that has become the subject of a bankruptcy or insolvency proceeding, or has had a receiver, conservator, trustee or custodian appointed for it, or has taken any action in furtherance of, or indicating its consent to, approval of or acquiescence in any such proceeding or appointment; provided that a Lender shall not be a Defaulting Lender solely by virtue of the ownership or acquisition of any equity interest in that Lender or any direct or indirect parent company thereof by a Governmental Authority so long as such ownership interest does not result in or provide such Lender with immunity from the jurisdiction of courts within the United States or from the enforcement of judgments or writs of attachment on its assets or permit such Lender (or such Governmental Authority) to reject, repudiate, disavow or disaffirm any contracts or agreements made with such Lender.

 

“Deposit Account” means any “deposit account”, within the meaning of Article 9 of the UCC, of any Loan Party.

 

“Designated Secured Obligations Reserve” means, at any time, a reserve equal to the aggregate amount of the Designated Secured Other Obligations at such time.  The Designated Secured Obligations Reserve at any time shall be determined by reference to the most recent 

  

  

  

  

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Borrowing Base Certificate delivered to the Administrative Agent pursuant to Section 5.01(g), it being understood that the Borrowing Base Certificate will include a certification of the Designated Secured Other Obligations at each delivery.

 

“Designated Secured Other Obligations” means the Designated Secured Treasury Services Obligations and the Designated Secured Swap Obligations.

 

“Designated Secured Swap Obligations” means the Secured Swap Obligations in respect of which the Parent Borrower shall have provided a written notice to the Administrative Agent designating such Secured Swap Obligations as Designated Secured Swap Obligations.

 

“Designated Secured Treasury Services Obligations” means the Secured Treasury Services Obligations in respect of which the Parent Borrower shall have provided a written notice to the Administrative Agent designating such Secured Treasury Services Obligations as Designated Secured Treasury Services Obligations.

 

“Disclosed Matters” means the actions, suits and proceedings and the environmental matters disclosed in Schedule 3.06A.

 

“Disqualified Equity Interest” means any Equity Interest in Holdings that by its terms (or by the terms of any security into which it is convertible or for which it is exchangeable, either mandatorily or at the option of the holder thereof), or upon the happening of any event or condition:

 

(a) matures or is mandatorily Payable (other than solely for Equity Interests in Holdings that do not constitute Disqualified Equity Interests and cash in lieu of fractional shares of such Equity Interests), whether pursuant to a sinking fund obligation or otherwise, prior to the Specified Date;

 

(b) is convertible or exchangeable at the option of the holder thereof for Indebtedness or Equity Interests (other than solely for Equity Interests in Holdings that do not constitute Disqualified Equity Interests and cash in lieu of fractional shares of such Equity Interests), prior to the Specified Date; or

 

(c) is Payable or is required to be Paid (other than solely for Equity Interests in Holdings that do not constitute Disqualified Equity Interests and cash in lieu of fractional shares of such Equity Interests) by Holdings or any of its Affiliates, in whole or in part, at the option of the holder thereof, prior to the Specified Date;

 

provided that clauses (a) and  (c) hereto (other than the exclusions set forth therein) shall not apply to any requirement of mandatory Payment that is contingent upon an asset disposition (or similar event, including condemnation or casualty), the incurrence of Indebtedness or a “change of control” if such mandatory Payment can be avoided through Payment of Loans or through investments by Holdings or any of its Subsidiaries in assets to be used in their businesses or if such mandatory Payment is contingent upon prior payment in full of the Obligations, and provided, further, that Equity Interests issued to any employee benefit plan, or by any such plan to any employees of Holdings or any of its Subsidiaries, shall not constitute Disqualified Equity 

  

  

  

  

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Interests solely because they may be required to be Paid in order to satisfy applicable statutory or regulatory obligations.

 

“dollars” or “$” refers to lawful money of the United States of America.

 

“Effective Date” means the date on which the conditions specified in Section 4.01 of the Existing Credit Agreement were satisfied (or waived in accordance with Section 9.02).  Each party hereto acknowledges that the Effective Date occurred on January 27, 2012.

 

“Eligible Accounts” means, as of any date of determination, the Accounts of the Loan Parties which in accordance with the terms hereof are not excluded as ineligible by virtue of one or more of the criteria set forth below. None of the following shall be Eligible Accounts:

(a) Accounts that are not subject to a perfected first-priority Lien securing the Obligations pursuant to the terms of the Collateral Agreement, or that are subject to any Lien whatsoever other than Permitted Encumbrances that do not have priority over the Lien securing the Obligations pursuant to the terms of the Collateral Agreement (provided that the Administrative Agent may in its Permitted Discretion elect to deem as an Eligible Account any Account subject to a Specified Involuntary Lien in respect of which the Administrative Agent shall have established an appropriate Reserve);

(b) Accounts (i) with respect to which the scheduled due date is more than 60 days after the original invoice date, (ii) which are unpaid more than (A) 90 days after the date of the original invoice therefor or (B) 60 days after the original due date (it being understood that, for purposes of this clause (b), the original invoice date and the original due date shall be determined without giving effect to any change in the invoice date or the  due date as a result of any Account being invoiced more than once), or (iii) which have been written off the books of a Loan Party or otherwise designated as uncollectible (in determining the aggregate amount from the same Account Debtor that is unpaid hereunder there shall be excluded the amount of any net credit balances relating to Accounts due from an Account Debtor which are unpaid more than 90 days from the date of invoice or more than 60 days from the due date);

(c) Accounts which are owing by an Account Debtor for which more than 50% of the Accounts owing from such Account Debtor and its Affiliates are ineligible hereunder;

 

(d) Accounts which are owing by an Account Debtor to the extent the aggregate amount of Accounts owing from such Account Debtor and its Affiliates to (i) such Loan Party exceeds 15% (or 20% in the case of any Investment Grade Account Debtor) of the aggregate amount of Eligible Accounts of such Loan Party or (ii) all Loan Parties exceeds 15% (or 20% in the case of any Investment Grade Account Debtor) of the aggregate amount of Eligible Accounts of all Loan Parties.

(e) Accounts with respect to which any covenant, representation, or warranty contained in this Agreement or in any applicable Security Document has been breached in any material respect or is not true in all material respects;

  

  

  

  

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(f) Accounts which (i) do not arise from the sale of goods or performance of services in the ordinary course of business, (ii) are not evidenced by an invoice or other documentation reasonably satisfactory to the Administrative Agent which has been sent to the Account Debtor, (iii) represent a progress billing, (iv) are contingent upon any Loan Party’s completion of any further performance, (v) represent a sale on a bill-and-hold, guaranteed sale, sale-and-return, sale on approval, consignment, cash-on-delivery or any other repurchase or return basis or (vi) relate to payments of interest;

(g) Accounts for which the goods giving rise to such Account have not been shipped to the Account Debtor or for which the services giving rise to such Account have not been performed by such Loan Party;

(h) Accounts with respect to which any check or other instrument of payment has been returned uncollected for any reason to the extent of such returned payment;

 

 

(i) Accounts which are owed by an Account Debtor that (i) has applied for or been the subject of a petition or application for, suffered, or consented to the appointment of, any receiver, custodian, trustee, administrator, liquidator or similar official for such Account Debtor or its assets, (ii) has had possession of all or a material part of its property taken by any receiver, custodian, trustee or liquidator, (iii) filed, or had filed against it, under any insolvency laws, any assignment, application, request or petition for liquidation, reorganization, compromise, arrangement, adjustment of debts, stay of proceedings, adjudication as bankrupt, winding-up, or voluntary or involuntary case or proceeding, (iv) has admitted in writing its inability, or is generally unable to, pay its debts as they become due, (v) has become insolvent, or (vi) ceased operation of its business; provided that, notwithstanding the foregoing, the Administrative Agent may make eligible in its Permitted Discretion up to $10,000,000 of post-petition Accounts owing by any Account Debtor that is a debtor-in-possession under Federal bankruptcy laws;

(j) Accounts which are owed by any Account Debtor which has sold all or substantially all of its assets;

(k) Accounts which are owed by an Account Debtor which (i) does not maintain its chief executive office in the United States or (ii) is not organized under any applicable law of the United States, any State of the United States or the District of Columbia unless, in any such case, such Account is backed by a letter of credit acceptable to the Administrative Agent which is in the possession of, has been assigned to and is directly drawable by the Administrative Agent; provided that the Administrative Agent may make up to $10,000,000 of such Accounts eligible in its Permitted Discretion;

 

(l) Accounts which are owed in any currency other than dollars;

(m) Accounts which are owed by any Government Authority (excluding states of the United States of America) of any country and except to the extent that the subject Account Debtor is the federal government of the United States of America and has 

 

  

  

  

  

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complied with the Federal Assignment of Claims Act of 1940, as amended (31 USC. § 3727 et seq. and 41 USC. § 15 et seq.), and any other steps necessary to perfect the Lien of the Administrative Agent in such Account have been complied with to the reasonable satisfaction of the Administrative Agent; provided that the Administrative Agent may make up to $10,000,000 of such Accounts eligible in its Permitted Discretion;

(n) Accounts which are owed by any Affiliate, employee, officer, director or stockholder of any Loan Party;

(o) Accounts which are owed by an Account Debtor or any Affiliate of such Account Debtor to which any Loan Party is indebted, but only to the extent of such indebtedness, or is subject to any security, deposit, progress payment, retainage or other similar advance made by or for the benefit of an Account Debtor, in each case to the extent thereof;

(p) Accounts which are subject to any counterclaim, deduction, defense, setoff or dispute but only to the extent of any such counterclaim, deduction, defense, setoff or dispute;

(q) Accounts which are owed by an Account Debtor located in any jurisdiction which requires filing of a “Notice of Business Activities Report” or other similar report in order to permit such Loan Party to seek judicial enforcement in such jurisdiction of payment of such Account, unless (i) such Loan Party has filed such report or qualified to do business in such jurisdiction or (ii) the Administrative Agent is satisfied in its Permitted Discretion that the failure to file such report and inability to seek judicial enforcement can be remedied without material delay or material cost;

(r) Accounts with respect to which such Loan Party has made any agreement with the Account Debtor for any reduction thereof, other than discounts and adjustments given in the ordinary course of business, or any Account which was partially paid and such Loan Party created a new receivable for the unpaid portion of such Account;

(s) Accounts which do not comply in all material respects with the requirements of all applicable laws and regulations, whether federal, provincial, territorial, state or local, including the Federal Consumer Credit Protection Act, the Federal Truth in Lending Act and Regulation Z of the Board;

(t) Accounts which are for goods that have been sold under a purchase order or pursuant to the terms of a contract or other agreement or understanding (written or oral) that indicates or purports that any Person other than such Loan Party has or has had an ownership interest in such goods, or which indicates any party other than such Loan Party as payee or remittance party;

(u) Accounts which were created on cash on delivery terms;

 

  

  

  

  

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(v) Accounts which are subject to any limitation on assignments or other security interests (whether arising by operation of law, by agreement or otherwise), unless the Administrative Agent has determined that such limitation is not enforceable;

(w) Accounts which are governed by the laws of any jurisdiction other than the United States, any State thereof or the District of Columbia; provided that the Administrative Agent may make up to $10,000,000 of such Accounts eligible in its Permitted Discretion;

(x) Accounts in respect of which the Account Debtor is a consumer within applicable consumer protection legislation;

(y) Accounts due to a Loan Party from major credit card processors, whether or not constituting Eligible Credit Card Receivables;

(z) Accounts acquired in an acquisition permitted under this Agreement and any Accounts (“Additional Accounts”) owned by an Additional Grantor that the Parent Borrower shall have elected to designate as “Collateral” under the Collateral Agreement, unless in each case the Administrative Agent shall have conducted such due diligence as the Administrative Agent may reasonably require, all of the results of the foregoing to be reasonably satisfactory to the Administrative Agent; or

(aa) Accounts which the Administrative Agent in its Permitted Discretion determines may not be paid by reason of the Account Debtor’s inability to pay.

In determining the amount of an Eligible Account, the face amount of an Account may, in the Administrative Agent’s Permitted Discretion, be reduced by, without duplication, to the extent not reflected in such face amount, (i) the amount of all accrued and actual discounts, claims, credits or credits pending, promotional program allowances, price adjustments, finance charges or other allowances (including any amount that such Loan Party may be obligated to rebate to an Account Debtor pursuant to the terms of any agreement or understanding (written or oral)) and (ii) the aggregate amount of all cash received in respect of such Account but not yet applied by such Loan Party to reduce the amount of such Account.

 

“Eligible Credit Card Receivables” means, as of any date of determination, Accounts due to a Loan Party from major credit or debit card processors (including VISA, Mastercard, American Express, Diners Club, DiscoverCard, Paymentech, LLC and Banc of America Merchant Services, LLC, but excluding GE Money Bank and any successor thereto under J. C. Penney Corporation’s existing private label credit card processor agreement) arising in the ordinary course of business (whether in respect of a credit card, debit card, prepaid card, or other payment card transaction) and which have been earned by performance, that are not excluded as ineligible by virtue of one or more of the criteria set forth below.  None of the following shall be Eligible Credit Card Receivables:

(a) Accounts that have been outstanding for more than five Business Days from the date of sale or for such longer period as may be approved by the Administrative Agent;

  

  

  

  

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(b) Accounts with respect to which a Loan Party does not have good, valid and marketable title thereto;

(c) Accounts that are not subject to a perfected first-priority Lien securing the Obligations pursuant to the terms of the Collateral Agreement, or that are subject to any Lien whatsoever other than Permitted Encumbrances that do not have priority over the Lien securing the Obligations pursuant to the terms of the Collateral Agreement (provided that the Administrative Agent may in its Permitted Discretion elect to deem as an Eligible Credit Card Receivable any Account subject to a Specified Involuntary Lien in respect of which the Administrative Agent shall have established an appropriate Reserve);

(d) Accounts which are disputed, or with respect to which a claim, counterclaim, offset or chargeback has been asserted, by the related credit card processor (but only to the extent of such dispute, counterclaim, offset or chargeback) (it being the intent that chargebacks in the ordinary course by the credit card processors shall not be deemed violative of this clause);

(e) Accounts arising from J. C. Penney Corporation’s private label credit card receivables or any other private label credit card receivables of the Loan Parties, other than Accounts owed by Persons that are not Loan Parties or Affiliates of Loan Parties and in respect of which no Person has recourse to any Loan Party through any repurchase, guarantee or other arrangement, but excluding those of GE Money Bank and any successor thereto under J. C. Penney Corporation’s existing private label credit card processor agreement; or

(f) Accounts due from major credit card processors (other than Visa, Mastercard, American Express, Diners Club, Discover, Paymentech, LLC and Banc of America Merchant Services, LLC) which the Administrative Agent determines in its Permitted Discretion to be unlikely to be collected.

 

“Eligible In-Transit Inventory” means, as of any date of determination, without duplication of other Eligible Inventory, Inventory (the purchase of which may be supported by a Letter of Credit or any other letter of credit reasonably acceptable to the Administrative Agent (which is issued by a bank reasonably acceptable to the Administrative Agent)): (a)(i) which has been delivered to a carrier in a foreign port or foreign airport for receipt by a Loan Party in the United States within 60 days of the date of determination, but which has not yet been received by a Loan Party or (ii) which has been delivered to a carrier in the United States for receipt by a Loan Party in the United States within five Business Days of the date of determination, but which has not yet been received by a Loan Party, (b) for which the purchase order is in the name of a Loan Party and title has passed to a Loan Party, (c) except as otherwise agreed by the Administrative Agent, for which the document of title or waybill reflects a Loan Party as consignee (along with delivery to a Loan Party or its customs broker of the documents of title, to the extent applicable, with respect thereto (which documents may be in electronic format)), (d) as to which the Administrative Agent has control over the documents of title, to the extent applicable, which evidence ownership of the subject Inventory (such as by the delivery of a 

 

  

  

  

  

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Customs Broker Agreement), (e) which is insured in accordance with the provisions of this Agreement and the other Loan Documents, including marine cargo insurance; and (f) which otherwise is not excluded from the definition of Eligible Inventory; provided that the Administrative Agent may, upon notice to the Parent Borrower, exclude any particular Inventory from the definition of “Eligible In-Transit Inventory” in the event that the Administrative Agent determines that such Inventory is subject to any Person’s right or claim which is (or is capable of being) senior to, or pari passu with, the Lien of the Administrative Agent (provided that the Administrative Agent may in its Permitted Discretion elect to deem as Eligible In-Transit Inventory any such Inventory subject to a Specified Involuntary Lien in respect of which the Administrative Agent shall have established an appropriate Reserve), or may otherwise adversely impact the ability of the Administrative Agent to realize upon such Inventory.

 

“Eligible Inventory” means, as of any date of determination, without duplication, (1) Eligible In-Transit Inventory and (2) Inventory comprised of finished goods, merchantable and readily saleable to the public in the ordinary course, in each case that are not excluded as ineligible by virtue of one or more of the criteria set forth below.  None of the following shall be Eligible Inventory:

(a) Inventory that is not solely owned by a Loan Party, or is leased by or is on consignment to a Loan Party, or as to which a Loan Party does not have title thereto;

(b) Inventory (other than any Eligible In-Transit Inventory) that is not located in the United States of America (or the Commonwealth of Puerto Rico);

(c) Inventory (other than any Eligible In-Transit Inventory) that is not located at a location that is owned or leased by a Loan Party, except to the extent that (i) the Parent Borrower has furnished the Administrative Agent with a Collateral Access Agreement reasonably acceptable to the Administrative Agent executed by the applicable bailee or (ii) in the event that the Parent Borrower has not furnished the Collateral Access Agreement contemplated in the foregoing clause (i), an appropriate Reserve in respect of up to 3 months’ rent has been established by the Administrative Agent in its Permitted Discretion;

(d) Inventory that is located at a distribution center, retail store or other location that is leased by a Loan Party, except to the extent that (i) an appropriate Reserve of up to 3 months’ rent has been established by the Administrative Agent in its Permitted Discretion with respect to such distribution center, retail store or other location or, in the case of any retail store in any jurisdiction not providing for a common law or statutory landlord’s lien on the personal property of tenants, which lien would be superior to that of the Administrative Agent, the Administrative Agent has in its Permitted Discretion determined that no Reserve is required, or (ii) the Parent Borrower has furnished the Administrative Agent with a Collateral Access Agreement on terms reasonably acceptable to the Administrative Agent executed by the Person owning any such distribution center, retail store or other location;

(e) Inventory that represents goods which (i) are obsolete, damaged, defective, “seconds,” classified by the Loan Parties as salvage or aged Inventory, or otherwise 

 

  

  

  

  

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unmerchantable, (ii) are classified by the Loan Parties as awaiting, or are otherwise being held for, quality control inspection, (iii) are to be returned to the vendor, (iv) are work in process, custom items or raw materials or that constitute spare parts or supplies used or consumed in the Loan Parties’ business, (v) are bill and hold goods, or (vi) are not in compliance in all material respects with all applicable standards imposed by any Governmental Authority having regulatory authority with respect thereto of which any Loan Party is aware;

(f) except as otherwise agreed by the Administrative Agent, Inventory that represents goods that do not conform in all material respects to the representations and warranties contained in this Agreement or any of the Security Documents;

(g) Inventory that is not subject to a perfected first-priority Lien securing the Obligations pursuant to the terms of the Collateral Agreement, or that is subject to any Lien whatsoever other than Permitted Encumbrances that do not have priority over the Lien securing the Obligations pursuant to the terms of the Collateral Agreement (provided that the Administrative Agent may in its Permitted Discretion elect to deem as Eligible Inventory any Inventory subject to a Specified Involuntary Lien in respect of which the Administrative Agent shall have established an appropriate Reserve);

(h) Inventory that constitutes packaging and shipping material, labels, manufacturing supplies, display items, samples, bill-and-hold goods, returned or repossessed goods (other than goods that are undamaged and able to be resold in the ordinary course of business), defective goods, unfinished goods, goods held on consignment, goods to be returned to a Loan Party’s suppliers or goods which are not of a type held for sale in the ordinary course of business;

(i) Inventory as to which casualty insurance in compliance with the provisions of Section 5.07 is not in effect;

(j) Inventory which has been sold but not yet delivered or Inventory to the extent that any Loan Party has accepted a deposit therefor;

(k) Inventory acquired in an acquisition permitted under this Agreement, and any inventory (“Additional Inventory”) owned by an Additional Grantor that the Parent Borrower shall have elected to designate as “Collateral” under the Collateral Agreement, unless in each case the Administrative Agent shall have received or conducted (i) appraisals, from appraisers reasonably satisfactory to the Administrative Agent, of such Inventory to be acquired in such acquisition or such Additional Inventory and (ii) such other due diligence as the Administrative Agent may reasonably require, all of the results of the foregoing to be reasonably satisfactory to the Administrative Agent; or

 

(l) Inventory that is located on real property subject to a Lien granted by a Loan Party in favor of any other Person to secure any Permitted First-Lien Indebtedness or Permitted Second-Lien Indebtedness, except to the extent that (i) such Loan Party has furnished the Administrative Agent with a Collateral Cooperation Agreement executed by the such Person or (ii) in the event such Loan Party has not furnished such Collateral 

  

  

  

  

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Cooperation Agreement, Reserves have been established by the Administrative Agent in its Permitted Discretion.

 

“Environmental Laws” means all laws, rules, regulations, codes, ordinances, orders, decrees, judgments, injunctions, notices or binding agreements issued, promulgated or entered into by any Governmental Authority, relating in any way to the environment, preservation or reclamation of natural resources, the management, release or threatened release of any Hazardous Material or to health and safety matters.

 

“Environmental Liability” means any liability, contingent or otherwise (including any liability for damages, costs of environmental remediation, fines, penalties or indemnities), of Holdings or any Subsidiary directly or indirectly resulting from or based upon (a) violation of any Environmental Law, (b) the generation, use, handling, transportation, storage, treatment or disposal of any Hazardous Materials, (c) exposure to any Hazardous Materials, (d) the release or threatened release of any Hazardous Materials into the environment or (e) any contract, agreement or other consensual arrangement pursuant to which liability is assumed or imposed with respect to any of the foregoing.

 

“Equity Interests” means shares of capital stock, partnership interests, membership interests in a limited liability company, beneficial interests in a trust or other equity ownership interests in a Person, and any warrants, options or other rights entitling the holder thereof to purchase or acquire any such equity interest.

 

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended from time to time, and the final rules and regulations promulgated thereunder, as from time to time in effect.

 

“ERISA Affiliate” means any trade or business (whether or not incorporated) that, together with Holdings, is treated as a single employer under Section 414(b) or (c) of the Code or, solely for purposes of Section 302 of ERISA and Section 412 of the Code, is treated as a single employer under Section 414 of the Code.

 

“ERISA Event” means (a) any “reportable event”, as defined in Section 4043 of ERISA or the regulations issued thereunder with respect to a Plan (other than an event for which the 30-day notice period is waived); (b) a failure by any Plan to satisfy the minimum funding standard (as defined in Section 412 of the Code or Section 302 of ERISA) applicable to such Plan, whether or not waived; (c) the filing pursuant to Section 412(c) of the Code or Section 302(c) of ERISA of an application for a waiver of the minimum funding standard with respect to any Plan; (d) a determination that any Plan is, or is expected to be, in “at-risk” status (as defined in Section 303(i)(4) of ERISA or Section 430(i)(4) of the Code); (e) the incurrence by Holdings or any of its ERISA Affiliates of any liability under Title IV of ERISA with respect to the termination of any Plan; (f) the receipt by Holdings or any ERISA Affiliate from the PBGC or a plan administrator of any notice relating to an intention to terminate any Plan or Plans (other than a termination initiated by Holdings or an ERISA Affiliate) or to appoint a trustee to administer any Plan; (g) the incurrence by Holdings or any of its ERISA Affiliates of any liability with respect to the withdrawal or partial withdrawal from any Plan or Multiemployer Plan; (h) the receipt by Holdings or any ERISA Affiliate of any notice, or the 

  

  

  

  

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receipt by any Multiemployer Plan from Holdings or any ERISA Affiliate of any notice, concerning the imposition of Withdrawal Liability or a determination that a Multiemployer Plan is, or is expected to be, insolvent or in reorganization, within the meaning of Title IV of ERISA or in “endangered” or “critical” status (within the meaning of Section 432 of the Code or Section 305 of ERISA); (i) the occurrence of a non-exempt “prohibited transaction” (as defined in Section 4975 of the Code or Section 406 of ERISA) with respect to which Holdings or any ERISA Affiliate is a “disqualified person” (within the meaning of Section 4975 of the Code) or a “party in interest” (within the meaning of Section 406 of ERISA) or could otherwise be liable; or (j) any other event or condition with respect to a Plan or Multiemployer Plan that could result in liability of Holdings or any ERISA Affiliate.

 

“Eurodollar”, when used in reference to any Loan or Borrowing, refers to whether such Loan, or the Loans comprising such Borrowing, are bearing interest at a rate determined by reference to the Adjusted LIBO Rate.

 

“Event of Default” has the meaning assigned to such term in Section 7.01.

 

“Excluded Account” means (i) any Deposit Account or Securities Account containing (A) cash or cash equivalents in an amount of up to $10,000,000 in any individual Deposit Account or Securities Account, but no more than $25,000,000 for all Excluded Accounts under this clause (i)(A) in the aggregate or (B) de minimis cash or cash equivalents inadvertently misapplied by the Loan Parties, (ii) any payroll, trust, fiduciary and tax withholding account funded in the ordinary course of business, (iii) any zero balance disbursement account, and (iv) any zero balance payables accounts and other Deposit Accounts used, in the ordinary course of business, solely for the payment of salaries and wages, workers’ compensation, pension benefits and similar expenses.

 

“Excluded Subsidiary” means, at any date, any Realty Company that is not a Material Subsidiary as of such date.  For purposes of determining whether a Realty Company is a Material Subsidiary, the computations required by the definition of the term “Material Subsidiary” shall be made including the accounts of all Excluded Subsidiaries.

 

“Excluded Taxes” means, with respect to the Administrative Agent, any Lender, any Issuing Bank or any other recipient of any payment to be made by or on account of any obligation of any Loan Party under this Agreement or any other Loan Document: (a) any Other Connection Taxes, (b) with respect to any payment made by or on account of any obligation of any Loan Party to a Lender, any U.S. federal withholding Tax imposed by any law in effect on the date such Lender (other than an assignee under Section 2.18(b)) becomes a party to this Agreement (or designates a new lending office), or attributable to such Lender’s failure to comply with Section 2.16(f), except to the extent that such Lender (or its assignor, if any) was entitled, at the time of designation of a new lending office (or assignment), to receive additional amounts from the Borrowers with respect to such withholding Tax under Section 2.16(a) or (c) any Taxes imposed under, or as a result of a failure to comply with, FATCA (or any version of FATCA that is substantially comparable and not materially more onerous to comply with).

 

“Existing Credit Agreement” means the Amended and Restated Credit Agreement dated as of January 27, 2012, as amended and in effect immediately prior to the Restatement

  

  

  

  

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Effective Date, among Holdings, the Account Parties, the financial institutions named therein as lenders, JPMorgan Chase Bank, N.A., as administrative agent, and Wells Fargo Bank, National Association, as LC agent.

 

“Existing Letter of Credit” means any letter of credit that is outstanding under the Existing Credit Agreement on the Restatement Effective Date and each other letter of credit that is outstanding on the Restatement Effective Date and specified by the Parent Borrower in writing to the Administrative Agent as being an Existing Letter of Credit.

 

“Existing Maturity Date” has the meaning set forth in Section 2.23(c).

 

“Extended Letter of Credit” has the meaning assigned to such term in Section 2.05(k).

 

“Extension Date” has the meaning set forth in Section 2.23(b).

 

“FATCA” means Sections 1471 through 1474 of the Code, as of the Effective Date, or any federal regulation promulgated or Revenue Ruling, Revenue Procedure, Notice, or other official interpretation issued by the IRS thereunder.

 

“Federal Funds Effective Rate” means, for any day, the weighted average (rounded upwards, if necessary, to the next 1/100 of 1%) of the rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by Federal funds brokers, as published on the next succeeding Business Day by the Federal Reserve Bank of New York, or, if such rate is not so published for any day that is a Business Day, the average (rounded upwards, if necessary, to the next 1/100 of 1%) of the quotations for such day for such transactions received by the Administrative Agent from three Federal funds brokers of recognized standing selected by it.

 

“Financial Officer” means the chief financial officer, principal accounting officer, vice president-chief accountant, treasurer, assistant treasurer or controller of Holdings or the Parent Borrower.

 

“Fitch” means Fitch, Inc.

 

“Fixed Charge Coverage Ratio” means, for any Test Period, the ratio, determined as of the end of such Test Period, of (a) Consolidated EBITDA for such Test Period minus (i) Capital Expenditures paid in cash by Holdings and its consolidated Subsidiaries during such Test Period (other than those financed with Long-Term Indebtedness (other than Loans) or with the proceeds of Sale/Leaseback Transactions entered into in accordance with Section 6.06, in each case to the extent such Indebtedness or Sale/Leaseback Transaction is incurred or consummated in connection with and for the specific purpose of financing such Capital Expenditure) and (ii) the aggregate amount of income Taxes paid in cash by Holdings and its consolidated Subsidiaries during such Test Period, to (b) Fixed Charges for such Test Period.

 

“Fixed Charges” means, for any period, without duplication, the sum of (a) Consolidated Cash Interest Expense for such period, (b) the aggregate amount of scheduled principal payments during such period in respect of Long-Term Indebtedness (including Capital 

  

  

  

  

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Lease Obligation payments) of Holdings and its consolidated Subsidiaries (but excluding (i) payments made by Holdings or any Subsidiary to Holdings or a Subsidiary, (ii) payments of principal to the extent made with the proceeds of Long-Term Indebtedness or the proceeds of any issuance or sale of Equity Interests in Holdings, in each case incurred, issued or sold, as applicable, to refinance such principal, (iii) repayments of principal of the Loans and (iv) payment of J.C. Penney Corporation, Inc.’s 9% notes due August 2012), (c) the aggregate amount of principal payments paid in cash during such period (other than scheduled principal payments and other than (i) payments made by Holdings or any Subsidiary to Holdings or a Subsidiary, (ii) payments of principal to the extent made with the proceeds of Long-Term Indebtedness incurred to refinance such principal and (iii) repayments of principal of the Loans made during such period) in respect of Long-Term Indebtedness (including Capital Lease Obligation payments) of Holdings and the Subsidiaries, to the extent that such payments reduced any scheduled principal payments that would have become due within one year after the date of the applicable payment, (d) regular scheduled dividends paid in cash in respect of the common stock of Holdings and scheduled mandatory Restricted Payments paid in cash and (e) solely for purposes of determining compliance with Section 6.07 and Section 6.13, (x) all other Restricted Payments made in cash and (y) all other repayments or prepayments of principal of Long-Term Indebtedness.

 

“Foreign Lender” means any Lender or Issuing Bank with respect to any Borrower, that (a) is not a “United States person” as defined by Section 7701(a)(30) of the Code (a “U.S. Person”), or (b) is a partnership or other entity treated as a partnership for U.S. federal income tax purposes which is a U.S. Person, but only to the extent the beneficial owners (including indirect partners if its direct partners are partnerships or other entities treated as partnerships for U.S. federal income tax purposes) are not U.S. Persons.

 

“Foreign Subsidiary” means any Subsidiary that is organized under the laws of a jurisdiction other than the United States of America or any State thereof or the District of Columbia.

 

“GAAP” means generally accepted accounting principles in the United States of America.

 

“Governmental Authority” means the government of the United States of America, any other nation or any political subdivision thereof, whether state or local, and any agency, authority, instrumentality, regulatory body, court, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government.

 

“Guarantee” of or by any Person (the “guarantor”) means any obligation, contingent or otherwise, of the guarantor guaranteeing or having the economic effect of guaranteeing any Indebtedness or other obligation of any other Person (the “primary obligor”) in any manner, whether directly or indirectly, and including any obligation of the guarantor, direct or indirect, (a) to purchase or pay (or advance or supply funds for the purchase or payment of) such Indebtedness or other obligation or to purchase (or to advance or supply funds for the purchase of) any security for the payment thereof, (b) to purchase or lease property, securities or services for the purpose of assuring the owner of such Indebtedness or other obligation of the 

  

  

  

  

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payment thereof, (c) to maintain working capital, equity capital or any other financial statement condition or liquidity of the primary obligor so as to enable the primary obligor to pay such Indebtedness or other obligation or (d) as an account party in respect of any letter of credit or letter of guaranty issued to support such Indebtedness or obligation; provided that the term Guarantee shall not include endorsements for collection or deposit in the ordinary course of business.  The amount of any Guarantee at any time shall be deemed to be (i) an amount equal to the stated or determinable amount at such time of the related primary obligation, or portion thereof, in respect of which such Guarantee is made or (ii) if the amount of such primary obligation is not stated or determinable at such time, the amount of the Guarantee shall be such guarantor’s maximum reasonably anticipated liability in respect thereof; provided that, if the terms of such Guarantee limit the amount for which such guarantor may be liable thereunder to a maximum stated or determinable amount, the amount of such Guarantee shall not in any event exceed such maximum stated or determinable amount.

 

“Guarantee Parties” means Holdings, the Parent Borrower, Purchasing, the Material Subsidiaries and each Non-Material Subsidiary that is required to satisfy the Collateral and Guarantee Requirement in order for Holdings and the Parent Borrower to remain in compliance with the provisions of Section 6.12.

 

“Hazardous Materials”  means all explosive or radioactive materials, substances or wastes and all hazardous or toxic materials, substances, wastes or other pollutants, including petroleum or petroleum distillates or by-products, asbestos or asbestos containing materials, polychlorinated biphenyls, radon gas, infectious or medical wastes and all other materials, substances or wastes of any nature regulated pursuant to any Environmental Law.

 

“Holdings” means J. C. Penney Company, Inc., a Delaware corporation.

 

“Indebtedness” of any Person means, without duplication, (a) all obligations of such Person for borrowed money, (b) all obligations of such Person evidenced by bonds, debentures, notes or similar instruments, (c) all obligations of such Person under conditional sale or other title retention agreements relating to property acquired by such Person, (d) all obligations of such Person in respect of the deferred purchase price of property or services (excluding (i) current accounts payable incurred in the ordinary course of business, (ii) any earn-out obligation contingent upon performance of an acquired business, except to the extent such obligation would be required to be reflected on a consolidated balance sheet of Holdings prepared in accordance with GAAP and (iii) accruals for payroll and other liabilities accrued in the ordinary course of business), (e) all Indebtedness of others secured by (or for which the holder of such Indebtedness has an existing right, contingent or otherwise, to be secured by) any Lien on property owned or acquired by such Person, whether or not the Indebtedness secured thereby has been assumed (provided that with respect to Indebtedness that is nonrecourse to the credit of that Person, such Indebtedness shall be taken into account only to the extent of the lesser of (x) the fair market value of the asset(s) subject to such Lien and (y) the amount of Indebtedness secured), (f) all Guarantees by such Person of Indebtedness of others, (g) all Capital Lease Obligations of such Person, (h) all obligations, contingent or otherwise, of such Person as an account party in respect of letters of credit and letters of guaranty, (i) all obligations, contingent or otherwise, of such Person in respect of bankers’ acceptances and (j) all Off-Balance Sheet Liabilities.  The Indebtedness of any Person shall include the Indebtedness

  

  

  

  

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of any other entity (including any partnership in which such Person is a general partner) to the extent such Person is liable therefor as a result of such Person’s ownership interest in or other relationship with such entity, except to the extent the terms of such Indebtedness provide that such Person is not liable therefor.  For the avoidance of doubt, any preferred Equity Interests (other than any Disqualified Equity Interests) of any Person that are convertible into common Equity Interests (other than any Disqualified Equity Interests) of such Person shall not constitute Indebtedness of such Person.

 

“Indemnified Taxes” means (a) Taxes, other than Excluded Taxes, imposed on or with respect to any payment made by or on account of any obligation of any Loan Party under any Loan Document, and (b) Other Taxes.

 

“Initial Loans” has the meaning set forth in Section 2.22(b).

 

“Intercreditor Agreement” means an intercreditor agreement among the Loan Parties, the Administrative Agent and the trustee, agent or other representative for holders of any (a) Permitted First-Lien Indebtedness secured by assets constituting Collateral or (b) Permitted Second-Lien Indebtedness secured by second-priority (or other junior-priority) Liens on any Collateral, in each case as contemplated by clause (m) of Section 6.02, which intercreditor agreement shall be consistent with the then existing market practice and reasonably acceptable to the Required Lenders (it being understood that (i) any such intercreditor agreement shall be considered approved by a Lender if made available to such Lender by the Administrative Agent (through Intralinks or similar facility) and such Lender is informed that such intercreditor agreement shall be considered approved by it if there is no objection within three Business Days, and no such objection is made and (ii) such intercreditor agreement shall be deemed accepted if approved or deemed approved by the Required Lenders).

 

“Interest Election Request” means a request by a Borrower to convert or continue a Revolving Borrowing in accordance with Section 2.07.

 

“Interest Payment Date” means (a) with respect to any ABR Loan (other than a Swingline Loan), the last day of each March, June, September and December, (b) with respect to any Eurodollar Loan, the last day of the Interest Period applicable to the Borrowing of which such Loan is a part and, in the case of a Eurodollar Borrowing with an Interest Period of more than three months’ duration, each day prior to the last day of such Interest Period that occurs at intervals of three months’ duration after the first day of such Interest Period and (c) with respect to any Swingline Loan, the day that such Loan is required to be repaid.

 

“Interest Period” means, with respect to any Eurodollar Borrowing, the period commencing on the date of such Borrowing and ending on the numerically corresponding day in the calendar month that is one, two, three or six months (or, with the consent of each Lender, nine or twelve months) thereafter, as the applicable Borrower may elect; provided that (a) if any Interest Period would end on a day other than a Business Day, such Interest Period shall be extended to the next succeeding Business Day unless, in the case of a Eurodollar Borrowing only, such next succeeding Business Day would fall in the next calendar month, in which case such Interest Period shall end on the next preceding Business Day and (b) any Interest Period pertaining to a Eurodollar Borrowing that commences on the last Business Day of a calendar

  

  

  

  

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month (or on a day for which there is no numerically corresponding day in the last calendar month of such Interest Period) shall end on the last Business Day of the last calendar month of such Interest Period.  For purposes hereof, the date of a Borrowing initially shall be the date on which such Borrowing is made and, in the case of a Revolving Borrowing, thereafter shall be the effective date of the most recent conversion or continuation of such Borrowing.

 

“Inventory” means, individually and collectively, “Inventory”, as referred to in the Collateral Agreement.

 

“Investment Grade Account Debtor” an Account Debtor that, at the time of determination, has a corporate credit rating and/or family rating, as applicable, of BBB- or higher by S&P or Baa3 or higher  by Moody’s.

 

“IRS” means the United States Internal Revenue Service.

 

“Issuing Bank” means any Lender or Affiliate of a Lender that agrees (as provided in Section 2.05(i)) to issue Letters of Credit, in its capacity as an issuer of Letters of Credit, and its respective successors and assigns in such capacity as provided in Section 2.05(i).  The initial Issuing Banks are identified in Schedule 2.05.  Subject to the consent of the Parent Borrower, which consent shall not be unreasonably withheld, any Issuing Bank may, in its discretion, arrange for one or more Letters of Credit to be issued by one or more of its Affiliates, in which case the term “Issuing Bank” shall include any such Affiliate with respect to Letters of Credit issued by such Affiliate.

 

“LC Agent” means Wells Fargo Bank, National Association.

 

“LC Disbursement” means a payment made by an Issuing Bank pursuant to a Letter of Credit.

 

“LC Exposure” means, at any time, the sum of (a) the aggregate undrawn amount of all outstanding Letters of Credit at such time plus (b) the aggregate amount of all LC Disbursements that have not yet been reimbursed by or on behalf of the Account Parties at such time.  The LC Exposure of any Lender at any time shall be its Applicable Percentage of the total LC Exposure at such time.

 

“Lender Presentation” means the Lender Presentation dated January 23, 2013 relating to the Parent Borrower and the Transactions.

 

“Lenders” means the Persons listed on Schedule 2.01 and any other Person that shall have become a party hereto pursuant to an Assignment and Assumption or pursuant to Section 2.22 or 2.23, other than any such Person that ceases to be a party hereto pursuant to an Assignment and Assumption.  Unless the context otherwise requires, the term “Lenders” includes the Swingline Lenders.

 

“Letter of Credit” means any letter of credit issued pursuant to this Agreement.  Each Existing Letter of Credit shall be deemed to constitute a Letter of Credit as of the Restatement Effective Date.  Each Letter of Credit shall be either a Trade Letter of Credit or a Stand-by Letter of Credit.

  

  

  

  

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“LIBO Rate” means, with respect to any Eurodollar Borrowing for any Interest Period, the rate appearing on Reuters Screen LIBOR01 Page (or on any successor or substitute page on such screen) at approximately 11:00 a.m., London time, two Business Days prior to the commencement of such Interest Period, as the rate for dollar deposits in the London interbank market with a maturity comparable to such Interest Period.  In the event that such rate does not appear on such page (or on any successor or substitute page on such screen or otherwise on such screen), the “LIBO Rate” shall be determined by reference to such other comparable publicly available service for displaying interest rates applicable to dollar deposits in the London interbank market as may be selected by the Administrative Agent or, in the absence of such availability, by reference to the rate at which dollar deposits of $5,000,000 and for a maturity comparable to such Interest Period are offered by the principal London office of the Administrative Agent in immediately available funds in the London interbank market at approximately 11:00 a.m., London time, two Business Days prior to the commencement of such Interest Period.

 

“Lien” means, with respect to any asset, (a) any mortgage, deed of trust, lien, pledge, hypothecation, encumbrance, charge or security interest in, on or of such asset and (b) the interest of a vendor or a lessor under any conditional sale agreement, capital lease or title retention agreement (or any financing lease having substantially the same economic effect as any of the foregoing) relating to such asset.

 

“Line Cap” means, at any time, the lesser of (a) the total Commitments and (b) the Borrowing Base then in effect.

 

“Loan” means a loan made by a Lender to a Borrower pursuant to this Agreement.

 

“Loan Document Obligations” means (a) the due and punctual payment by each Borrower and each Account Party of (i) the principal of and interest (including interest accruing during the pendency of any bankruptcy, insolvency, receivership or other similar proceeding, regardless of whether allowed or allowable in such proceeding) on the Loans, when and as due, whether at maturity, by acceleration, upon one or more dates set for prepayment or otherwise, (ii) each payment required to be made by any Borrower or any Account Party under this Agreement in respect of any Letter of Credit, when and as due, including payments in respect of reimbursement of disbursements, interest thereon and obligations to provide cash collateral, and (iii) all other monetary obligations of any Borrower or any Account Party to any of the Secured Parties under this Agreement and each of the other Loan Documents, including obligations to pay fees, expense and reimbursement obligations and indemnification obligations, whether primary, secondary, direct, contingent, fixed or otherwise (including monetary obligations incurred during the pendency of any bankruptcy, insolvency, receivership or other similar proceeding, regardless of whether allowed or allowable in such proceeding), (b) the due and punctual performance of all other obligations of each Borrower and each Account Party under or pursuant to this Agreement and each of the other Loan Documents and (c) the due and punctual payment and performance of all the obligations of each other Loan Party under or pursuant to this Agreement and each of the other Loan Documents.

  

  

  

  

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“Loan Documents” means the Amendment Agreement, this Agreement, the Collateral Agreement, the other Security Documents and, solely for purposes of Section 9.02, the Intercreditor Agreement.

 

“Loan Parties” means Holdings, the Parent Borrower, the Borrowing Subsidiaries, Purchasing, the Additional Grantors and each Material Subsidiary that is a Guarantee Party.

 

“Long-Term Indebtedness” means any Indebtedness that, in accordance with GAAP, constitutes (or, when incurred, constituted) a long-term liability.

 

“Material Adverse Effect” means (a) a materially adverse effect on the business, assets, operations or condition of Holdings and its Subsidiaries, taken as a whole, (b) a material impairment of the ability of the Loan Parties to perform their payment obligations under the Loan Documents or (c) a material impairment of the rights of or benefits available to the Lenders or the Administrative Agent under any Loan Document (other than any such impairment of rights or benefits that is primarily attributable to (i) action taken by one or more Lenders or the Administrative Agent (excluding any action against one or more Lenders or the Administrative Agent taken by Holdings, the Parent Borrower, any Borrowing Subsidiary, any Account Party, their subsidiaries or their affiliates) or (ii) circumstances that are unrelated to Holdings, the Parent Borrower, any Borrowing Subsidiary, any Account Party, their Subsidiaries or their Affiliates).

 

“Material Indebtedness” means Indebtedness (other than the Loans and Letters of Credit), or obligations in respect of one or more Swap Agreements, of any one or more of Holdings and its Subsidiaries in an aggregate principal amount exceeding $100,000,000.  For purposes of determining Material Indebtedness, the “principal amount” of the obligations of Holdings or any Subsidiary in respect of any Swap Agreement at any time shall be the maximum aggregate amount (giving effect to any netting agreements) that Holdings or such Subsidiary would be required to pay if such Swap Agreement were terminated at such time.

 

“Material Subsidiary” means, at any date of determination, any Subsidiary of Holdings that had, as of the date of the most recent financial statements delivered pursuant to Section 5.01, Net Tangible Assets representing more than 3% (or in the case of JCP Realty, Inc., 5%) of the total Net Tangible Assets of Holdings and its Subsidiaries.

 

“Maturity Date” means April 29, 2016, subject to extension pursuant to Section 2.23; provided that if such date is not a Business Day, then the Maturity Date shall be the next succeeding Business Day.

 

“Maturity Date Extension Request” has the meaning set forth in Section 2.23(a).

 

“Maximum Rate” has the meaning assigned to such term in Section 9.13.

 

“Merger” has the meaning assigned to such term in the definition of the term “Permitted Holding Company Reorganization”.

 

“Merger Subsidiary” has the meaning assigned to such term in the definition of the term “Permitted Holding Company Reorganization”.

  

  

  

  

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“Moody’s” means Moody’s Investors Service, Inc.

 

“Multiemployer Plan” means a multiemployer plan as defined in Section 4001(a)(3) of ERISA maintained, sponsored or contributed to by Holdings, the Parent Borrower, Purchasing or any ERISA Affiliate.

 

“Net Orderly Liquidation Value” means the net orderly liquidation value of Eligible Inventory, expressed as a percentage, expected to be realized at an orderly, negotiated sale held within a reasonable period of time, net of all liquidation expenses, as determined from the most recent appraisal of Inventory of the Loan Parties performed by an appraiser and on terms satisfactory to the Administrative Agent.

 

“Net Tangible Assets” means the aggregate amount at which the assets of Holdings and its Subsidiaries are reflected, in accordance with GAAP as in effect on the Effective Date, on the asset side of the consolidated balance sheet, as at the close of a monthly accounting period (selected by the Parent Borrower) ending within the 65 days next preceding the date of determination, of Holdings and its Subsidiaries (after deducting all valuation and qualifying reserves relating to such assets), except any of the following described items that may be included among such assets:

 

(a)  trademarks, patents, goodwill and similar intangibles;

 

(b)  investments in and advances to Subsidiaries; and

 

(c)  capital lease property rights,

 

after deducting from such amount current liabilities (other than deferred Tax effects) as reflected, in accordance with GAAP as in effect on the Effective Date, on such balance sheet.

 

“New Holdco” has the meaning assigned to such term in the definition of the term “Permitted Holding Company Reorganization”.

 

“Non-Core Business Segment” means any business segment or separate department of the Loan Parties which contributed less than 5% of Consolidated EBITDA of the Loan Parties as of the fiscal year immediately prior to the date of such calculation.

 

“Non-Material Subsidiary” means, at any date of determination, any Subsidiary of Holdings that is not a Material Subsidiary.

 

“Obligations” means (a) the Loan Document Obligations, (b) the Secured Swap Obligations, (c) the Secured Treasury Services Obligations and (d) the Secured Supply Chain Obligations.

 

“Off-Balance Sheet Liability” of a Person means (a) any repurchase obligation or liability of such Person with respect to accounts or notes receivable sold by such Person, (b) any indebtedness, liability or obligation under any so-called “synthetic lease” transaction entered into by such Person, or (c) any indebtedness, liability or obligation arising with respect to any other transaction which is the functional equivalent of or takes the place of borrowing but which does

  

  

  

  

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not constitute a liability on the balance sheets of such Person (other than operating leases).  For the avoidance of doubt, any preferred Equity Interests (other than any Disqualified Equity Interests) of any Person that are convertible into common Equity Interests (other than any Disqualified Equity Interests) of such Person shall not constitute an Off-Balance Sheet Liability of such Person.

 

“Original Closing Date” means April 29, 2011.

 

“Other Connection Taxes” means, with respect to the Administrative Agent, any Lender, any Issuing Bank or any other recipient of any payment to be made by or on account of any obligation of any Loan Party hereunder or under any other Loan Document, Taxes imposed as a result of a present or former connection between such recipient and the jurisdiction imposing such Tax (other than connections arising solely from such recipient having executed, delivered, or become a party to, performed its obligations or received payments under, received or perfected a security interest under, sold or assigned an interest in any Loan or Loan Document, engaged in any other transaction pursuant to, or enforced any Loan Documents).

 

“Other Taxes” means any and all present or future stamp, court or documentary Taxes or any excise, property, intangible, recording, filing or similar Taxes that arise from the execution, delivery, performance enforcement of, registration of, receipt or perfection of a security interest under, any payment made under, or otherwise with respect to, any Loan Document.

 

“Parent Borrower” means J. C. Penney Corporation, Inc., a Delaware corporation.

 

“Participant” has the meaning assigned to such term in Section 9.04(c)(i).

 

“Participant Register” has the meaning assigned to such term in Section 9.04(c)(i).

 

“Participation Amount” has the meaning assigned to such term in Section 2.05(e).

 

“Patriot Act” means the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 (Title III of Pub. L. No. 107-56 (signed into law October 26, 2001)).

 

“Pay” means, in respect of any Indebtedness or Equity Interest, to pay, prepay, purchase, repurchase, redeem, retire, cancel or terminate such Indebtedness or Equity Interest.  The words “Payment” and “Payable” shall have meanings correlative to the foregoing.

 

“Payment Intangibles” has the meaning assigned to such term in the Collateral Agreement.

 

“PBGC” means the Pension Benefit Guaranty Corporation referred to and defined in ERISA and any successor entity performing similar functions.

 

“Perfection Certificate” means a certificate in the form of Exhibit C to the Collateral Agreement or any other form approved by the Administrative Agent.

  

  

  

  

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“Permitted Discretion” means a determination made in good faith and in the exercise of reasonable (from the perspective of a secured asset-based lender) business judgment.

 

“Permitted Encumbrances” means:

 

(a)  Liens imposed by law for Taxes, assessments or governmental charges or levies that, in each case, are not overdue by more than 30 days or are being contested in compliance with Section 5.05;

 

(b)  carriers’, warehousemen’s, mechanics’, landlords’, materialmen’s, repairmen’s and other like Liens imposed by law, arising in the ordinary course of business and securing obligations that are not overdue by more than 30 days or are being contested in compliance with Section 5.05;

 

(c)  pledges and deposits made in the ordinary course of business in compliance with workers’ compensation, unemployment insurance and other social security laws or regulations;

 

(d)  pledges or deposits to secure the performance of bids, trade contracts, leases, statutory obligations, surety and appeal bonds, performance bonds and other obligations of a like nature, in each case in the ordinary course of business;

 

(e)  judgment liens in respect of judgments that do not constitute an Event of Default under clause (k) of Section 7.01;

 

(f)  easements, restrictions (including zoning restrictions), rights-of-way and other similar encumbrances on and title defects affecting real property imposed by law or arising in the ordinary course of business that do not secure any monetary obligations and do not materially detract from the value of the affected property or interfere with the ordinary conduct of business of Holdings and its Subsidiaries, taken as a whole;

 

(g)  the special property interest of a consignor in respect of goods subject to consignment;

 

(h)           Liens (i) in favor of banks, other financial institutions, securities or commodities intermediaries or brokerage arising as a matter of law encumbering deposits of cash, securities, commodities and other funds maintained with such Persons (including rights of set off) and that are within the general parameters customary in such Person’s industry, (ii) deemed to exist in connection with investments in repurchase agreements described in clause (d) of the definition of “Permitted Investments”, (iii) attaching to commodity trading accounts or other brokerage accounts in the ordinary course of business securing obligations owed to the institutions with which such accounts are maintained, (iv) that are contractual rights of setoff (x) relating to the establishment of depository relations with banks or other deposit-taking financial institutions in the ordinary course of business and not given in connection with the issuance of Indebtedness or (y) relating to pooled deposit or sweep accounts of Holdings or any of its Subsidiaries to permit satisfaction of overdraft or similar obligations incurred in the ordinary course of business and (v) that are rights of set-off (or holdbacks or reserves

  

  

  

  

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established by a credit card issuer or processor) against credit balances of Holdings or any of its Subsidiaries with credit card issuers or credit card processors or amounts owing by such credit card issuers or credit card processors to Holdings or any of its Subsidiaries, or Liens on returned merchandise in favor of such issuers or processors, in each case in the ordinary course of business, but not rights of set-off against any other property or assets of Holdings or any of its Subsidiaries pursuant to agreements with credit card issuers or credit card processors to secure the obligations of Holdings or any of its Subsidiaries to credit card issuers or credit card processors as a result of fees and chargebacks;

 

(i)           Liens of a collecting bank under Section 4-210 of the Uniform Commercial Code in effect in the relevant jurisdiction (or Section 4-208 in the case of the New York Uniform Commercial Code) on items in the course of collection;

 

(j)           Liens of sellers of goods to Holdings or a Subsidiary arising as a matter of law under Article 2 of the Uniform Commercial Code in effect in the relevant jurisdiction or similar provisions of applicable law, in each case in the ordinary course of business;

 

(k)           licenses of patents, trademarks and other intellectual property rights of Holdings or any of its Subsidiaries, in each case in the ordinary course of business and not materially interfering with the conduct of business by Holdings and its Subsidiaries, taken as a whole;

 

(l)           Liens solely on any cash earnest money deposits made by Holdings or any of its Subsidiaries in connection with any letter of intent or purchase agreement entered into by it; and

 

(m)           Liens incurred in the ordinary course of business in connection with the shipping of goods on the related goods and proceeds thereof in favor of the shipper of such goods;

 

provided that the term “Permitted Encumbrances” shall not include any Lien securing Indebtedness.

 

“Permitted First-Lien Indebtedness” means Indebtedness for borrowed money of Holdings, the Parent Borrower or a Subsidiary secured on a first-priority basis by the assets of any Loan Party; provided that (a) such Indebtedness satisfies the requirements set forth below and (b) the Parent Borrower shall have delivered to the Administrative Agent a certificate of a Financial Officer (i) designating such Indebtedness as “Permitted First-Lien Indebtedness”, (ii) specifying the initial principal amount thereof, (iii) identifying the trustee, administrative agent or collateral agent (or equivalent agent or representative of the creditors) thereunder and (iv) certifying that such Indebtedness satisfies the requirements set forth in this definition and that after giving effect to the incurrence thereof no Default or Event of Default shall have occurred and be continuing.  No Indebtedness shall be Permitted First-Lien Indebtedness at any time unless it satisfies the following requirements at such time:

 

(i) such Indebtedness (A) shall not be secured on a first-priority basis by any assets of any Loan Party other than assets that do not constitute Collateral (and 

  

  

  

  

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(I) proceeds of such assets and (II) assets (other than assets of the type referred to in clauses (i) through (iv) of Section 3.01(a) of the Collateral Agreement) related to such assets, whether or not constituting Collateral, provided that such Indebtedness may be secured on a first-priority basis by any Deposit Account used solely to deposit proceeds of the assets securing such Indebtedness as permitted by this clause (i)), (B) if secured by any assets of the type referred to in clause (II) above, shall be subject to an Intercreditor Agreement, and (C) if secured by any real property or Intellectual Property, shall be subject to a Collateral Cooperation Agreement;

 

(ii) no Subsidiary shall be an obligor under or in respect of such Indebtedness unless such Subsidiary shall be a Loan Party and shall have satisfied the Collateral and Guarantee Requirement;

 

(iii) such Indebtedness shall not mature on or prior to the Specified Date;

 

(iv) such Indebtedness shall not require any scheduled payments of principal prior to the Specified Date, other than any such scheduled payments that, during any one-year period after the date of issuance or incurrence of such Indebtedness, together with all other scheduled payments of principal in respect of Permitted First-Lien Indebtedness and Permitted Second-Lien Indebtedness during such one-year period, do not exceed the lesser of (A) $100,000,000 and (B) 10% of the initial principal amount of all Permitted First-Lien Indebtedness and Permitted Second-Lien Indebtedness outstanding at the time such Indebtedness was issued, after giving effect to such issuance; and

 

(v) such Indebtedness shall not be subject to any terms requiring any obligor of such Indebtedness to Pay (or offer to Pay) such Indebtedness other than (A) at maturity, (B) pursuant to scheduled payments of principal that comply with clause (iv) above and (C) pursuant to Customary Mandatory Prepayment Terms.

 

Notwithstanding anything to the contrary herein, any Permitted First-Lien Indebtedness may also be secured on a second-priority (or other junior priority) basis by Collateral, provided that such Permitted First-Lien Indebtedness shall satisfy the requirements set forth in the definition of “Permitted Second-Lien Indebtedness”.

 

“Permitted Holder” means Pershing Square Capital Management L.P., Vornado Realty Trust and any Affiliate of the foregoing.

 

“Permitted Holding Company Reorganization” means a transaction pursuant to which (a) a new subsidiary (“New Holdco”) is organized as a direct or indirect wholly owned Subsidiary of Holdings, (b) New Holdco organizes a new subsidiary (the “Merger Subsidiary”), which subsidiary is a wholly owned Subsidiary of New Holdco and (c) the Merger Subsidiary merges with and into Holdings (the “Merger”), pursuant to which (i) each outstanding share of capital stock of any class in Holdings is converted into one share of capital stock of the same class of New Holdco so that each Person that beneficially owned, directly or indirectly, capital stock of Holdings immediately prior to the consummation of the Merger continues to beneficially own, directly or indirectly, the same percentage of capital stock of the same class in New Holdco following the consummation of the Merger, (ii) each share of capital stock of New 

  

  

  

  

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Holdco owned by the Parent Borrower immediately prior to the consummation of the Merger is cancelled and ceases to exist immediately following the consummation of the Merger,  (iii) Holdings becomes a direct wholly owned subsidiary of New Holdco and (iv) no other Person receives any consideration; provided that no such transaction shall constitute a “Permitted Holding Company Reorganization” unless, at or prior to the consummation of the Merger, (A) New Holdco shall become a Guarantee Party and shall take all actions necessary to satisfy the Collateral and Guarantee Requirement as a Guarantee Party and (B) New Holdco, Holdings, the Parent Borrower and the Administrative Agent shall enter into an amendment to this Agreement, in form and substance reasonably satisfactory to the Administrative Agent, providing for (1) the addition of New Holdco as a party to this Agreement as a Loan Party subject to the same obligations and provisions as are applicable to Holdings hereunder, (2) the substitution of New Holdco for Holdings in the definition of the term “Change in Control” and in all contexts applicable to consolidated financial calculations and reporting requirements (including in the definition of the term “Fixed Charge Coverage Ratio”) and (3) the addition of a new paragraph in Section 6.03 to the effect that New Holdco shall not engage in any business or activity other than the ownership of all the outstanding shares of capital stock of Holdings and activities incidental thereto and that New Holdco will not acquire any assets (other than shares of capital stock of Holdings, cash and Permitted Investments) or incur any liabilities (other than liabilities under the Loan Documents and other Indebtedness permitted by this Agreement, liabilities imposed by law, including Tax liabilities, and other liabilities incidental to its existence and permitted business and activities).

 

“Permitted Indebtedness” means:

 

(a) obligations incurred by Holdings or any Subsidiary arising from agreements providing for customary indemnification, earnouts, adjustment of purchase price, non-compete, consulting or other similar obligations, in each case arising in connection with acquisitions or dispositions of any business, assets or subsidiary of Holdings or such Subsidiary; provided that such obligations would not be required to be reflected on a consolidated balance sheet of Holdings and its Subsidiaries prepared in accordance with GAAP;

 

(b) Indebtedness in respect of the financing of insurance premiums in the ordinary course of business;

 

(c) obligations in respect of deferred compensation to employees of Holdings and its Subsidiaries in the ordinary course of business;

 

(d) obligations of Holdings or any Subsidiary incurred in the ordinary course of business in respect of performance guarantees, completion guarantees, performance bonds, bid bonds, appeal bonds, surety bonds, judgment bonds, replevin bonds and similar bonds and other similar obligations to the extent any such obligations constitute Indebtedness; and

 

(e) Indebtedness incurred in the ordinary course of business in respect of cash management, netting services, automatic clearinghouse arrangements, overdraft protections and other similar arrangements and Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument of Holdings or a 

  

  

  

  

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Subsidiary drawn against insufficient funds in the ordinary course of business that is promptly repaid.

 

“Permitted Investments” means:

 

(a)  direct obligations of, or obligations the principal of and interest on which are unconditionally guaranteed by, the United States of America (or by any agency or instrumentality thereof);

 

(b)  investments in commercial paper maturing no more than one year from the date of creation thereof and having, at the time of the acquisition thereof, a credit rating of at least A2 from S&P, P2 from Moody’s or F2 from Fitch;

 

(c)  investments in certificates of deposit, banker’s acceptances and time deposits issued or guaranteed by or placed with, and money market deposit accounts issued or offered by, (i) any domestic or offshore office of any commercial bank organized under the laws of the United States of America or any State thereof, (ii) any office located within the United States of America or in a foreign jurisdiction that has a tax treaty with the United States of America of a commercial bank organized under the laws of another country or (iii) any office located in London of any commercial bank organized under the laws of the United States of America, any Asian country or any European country, in each case which, at the time of acquisition, has a combined capital and surplus and undivided profits of not less than $500,000,000; provided, however, that investments with any bank that has a combined capital and surplus and undivided profits of less than $500,000,000 are permitted if the Parent Borrower maintains a banking relationship with such bank;

 

(d)  collateralized repurchase agreements with a term of not more than 365 days and entered into with a financial institution satisfying the criteria described in clause (c) above or any Lender or any Affiliate of a Lender (i) that has a combined capital and surplus and undivided profits of not less than $500,000,000 or (ii) whose obligations under any such agreements is guaranteed by an entity that has a combined capital and surplus and undivided profits of not less than $500,000,000; and

 

(e)  money market funds that (i) comply with the criteria set forth in Securities and Exchange Commission Rule 2a-7 under the Investment Company Act of 1940 and (ii) have portfolio assets of at least $3,000,000,000; provided, that investments in any money market fund with portfolio assets of less than $3,000,000,000 are permitted if such fund has received a rating of AAA from S&P or Aaa from Moody’s.

 

“Permitted Long-Term Indebtedness” means unsecured Indebtedness for borrowed money of Holdings or the Parent Borrower; provided that (a) such Indebtedness shall mature later than, and shall not be subject to any scheduled payment of principal, mandatory sinking fund requirement or similar repayment obligation prior to, the Specified Date and (b) such Indebtedness shall not be subject to any terms requiring any obligor of such Indebtedness to Pay (or offer to Pay) such Indebtedness other than (i) pursuant to scheduled 

  

  

  

  

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payments of principal that comply with clause (a) above and (ii) pursuant to Customary Mandatory Prepayment Terms.

 

“Permitted Second-Lien Indebtedness” means Indebtedness for borrowed money of Holdings or the Parent Borrower secured on a second-priority (or other junior priority) basis by the assets of any Loan Party; provided that (a) such Indebtedness satisfies the requirements set forth below and (b) the Parent Borrower shall have delivered to the Administrative Agent a certificate of a Financial Officer (i) designating such Indebtedness as “Permitted Second-Lien Indebtedness”, (ii) specifying the initial principal amount thereof, (iii) identifying the trustee, administrative agent or collateral agent (or equivalent agent or representative of the creditors) thereunder and (iv) certifying that such Indebtedness satisfies the requirements set forth in this definition and that after giving effect to the incurrence thereof no Default or Event of Default shall have occurred and be continuing.  No Indebtedness shall be Permitted Second-Lien Indebtedness at any time unless it satisfies the following requirements at such time:

 

(i) such Indebtedness, if secured by any Collateral, shall be secured solely on a second-priority (or other junior priority) basis by such Collateral and shall be subject to an Intercreditor Agreement, and, if secured by any real property or Intellectual Property, shall be subject to a Collateral Cooperation Agreement;

 

(ii) no Subsidiary shall be an obligor under or in respect of such Indebtedness unless such Subsidiary shall be a Loan Party and shall have satisfied the Collateral and Guarantee Requirement;

 

(iii) such Indebtedness shall not mature on or prior to the Specified Date;

 

(iv) such Indebtedness shall not require any scheduled payments of principal prior to the Specified Date, other than any such scheduled payments that, during any one-year period after the date of issuance or incurrence of such Indebtedness, together with all other scheduled payments of principal in respect of Permitted First-Lien Indebtedness and Permitted Second-Lien Indebtedness during such one-year period, do not exceed the lesser of (A) $100,000,000 and (B) 10% of the initial principal amount of all Permitted First-Lien Indebtedness and Permitted Second-Lien Indebtedness outstanding at the time such Indebtedness was issued, after giving effect to such issuance; and

 

(v) such Indebtedness shall not be subject to any terms requiring any obligor of such Indebtedness to Pay (or offer to Pay) such Indebtedness other than (A) at maturity, (B) pursuant to scheduled payments of principal that comply with clause (iv) above and (C) Customary Mandatory Prepayment Terms.

 

Notwithstanding anything to the contrary herein, any Permitted Second-Lien Indebtedness may also be secured on a first-priority basis by assets of any Loan Party that do not constitute Collateral (and (A) proceeds of such assets and (B) assets (other than assets of the type referred to in clauses (i) through (iv) of Section 3.01(a) of the Collateral Agreement) related to such assets, whether or not constituting Collateral, subject to the provisions of the applicable Intercreditor Agreement, provided that such Permitted Second-Lien Indebtedness may be secured on a first-priority basis by any Deposit Account used solely to deposit proceeds of the 

  

  

  

  

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assets securing such Indebtedness that are permitted by the definition of “Permitted First-Lien Indebtedness” to be deposited in such Deposit Account), provided further that such Permitted Second-Lien Indebtedness shall satisfy the requirements set forth in the definition of “Permitted First-Lien Indebtedness”.

 

“Permitted Supply Chain Financing” has the meaning set forth in Section 6.01(k).

 

“Person” means any individual, corporation, limited liability company, trust, joint venture, association, company, partnership, unincorporated organization, Governmental Authority or other entity.

 

“Plan” means any pension plan (other than a Multiemployer Plan) subject to the provisions of Title IV of ERISA or Section 412 of the Code or Section 302 of ERISA that is maintained, sponsored or contributed to by Holdings or any ERISA Affiliate.

 

“Prime Rate” means the rate of interest per annum publicly announced from time to time by JPMorgan Chase Bank, N.A. as its prime rate in effect at its principal office in New York City; each change in the Prime Rate shall be effective from and including the date such change is publicly announced as being effective.

 

“Protective Advance” has the meaning assigned to such term in Section 2.04(b).

 

“Purchasing” means J. C. Penney Purchasing Corporation, a New York corporation.

 

“Reaffirmation Agreement” means the Reaffirmation Agreement dated as of the Restatement Effective Date, among the Loan Parties and the Administrative Agent.

 

“Realty Company” means each of JCP Realty Inc. and its Subsidiaries that is principally engaged in the business of managing and owning real estate and real estate-related interests.

 

“Recipient” means, as applicable, (a) the Administrative Agent, (b) any Lender or (c) the Issuing Bank or its beneficial owner.

 

“Refinancing Borrowing” means a Borrowing identified as such in the Borrowing Request therefor, all the proceeds of which are to be used for the purpose of refinancing one or more other Borrowings on or prior to the applicable Borrowing Maturity Date or Borrowing Maturity Dates.

 

“Register” has the meaning assigned to such term in clause (iv) of Section 9.04(b).

 

“Related Parties” means, with respect to any specified Person, such Person’s Affiliates and the respective directors, officers, employees, agents and advisors of such Person and such Person’s Affiliates.

  

  

  

  

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“Reports” means reports prepared by the Administrative Agent or another Person showing the results of appraisals, field examinations or audits with respect to the assets of any Loan Party from information furnished by or on behalf of any Loan Party, after the Administrative Agent has exercised its rights of inspection pursuant to this Agreement, which Reports have been distributed to (or are being prepared for distribution to) the Lenders by the Administrative Agent.

 

“Required Lenders” means, at any time, Lenders having Revolving Credit Exposures and unused Commitments representing more than 50% of the sum of the total Revolving Credit Exposures and unused Commitments at such time.

 

“Reserves” means the Amortization Reserves, Designated Secured Obligations Reserve and such other reserves as the Administrative Agent from time to time determines in its Permitted Discretion to maintain with respect to the Collateral or any Loan Party; provided that no reserve shall duplicate any other reserves or items that are otherwise addressed or excluded through eligibility criteria and each reserve shall bear a reasonable relationship to the criteria, event, condition or contingency giving rise to such reserve.

 

“Restatement Effective Date” has the meaning set forth in the Amendment Agreement.

 

“Restricted Payment” means (a) any dividend or other distribution (whether in cash, securities or other property) with respect to any Equity Interests in Holdings or any Subsidiary, (b) any payment (whether in cash, securities or other property), including any sinking fund or similar deposit, on account of the purchase, redemption, retirement, acquisition, cancellation or termination of any Equity Interests in Holdings or any Subsidiary, (c) any payment made in connection with the conversion of any convertible Indebtedness into Equity Interests in Holdings or any Subsidiary and that constitutes a “net settlement” in respect of any such Equity Interests that would have been issuable upon such conversion on account of the principal of such Indebtedness, or (d) any payment made on account of a “call spread” transaction relating to an issuance of Indebtedness or preferred Equity Interests convertible into Equity Interests in Holdings or any Subsidiary; provided that a dividend, distribution or payment to the extent payable in Equity Interests (other than Disqualified Equity Interests) in Holdings shall not constitute a Restricted Payment.

 

“Revolving Credit Exposure” means, with respect to any Lender at any time, the sum of the outstanding principal amount of such Lender’s Revolving Loans and its LC Exposure and Swingline Exposure at such time plus an amount equal to its Applicable Percentage of the aggregate principal amount of Protective Advances outstanding at such time.

 

“Revolving Loan” means a Loan made pursuant to Section 2.01.

 

“Rights Offering” means the issuance or distribution to holders of Equity Interests of Holdings of rights to purchase additional Equity Interests of Holdings.

 

“S&P” means Standard & Poor’s Ratings Services, a division of the McGraw-Hill Companies, Inc.

  

  

  

  

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“Sale/Leaseback Transaction” has the meaning assigned to such term in Section 6.06.

 

“Secured Parties” means (a) the Lenders, (b) the Administrative Agent, (c) the LC Agent, (d) the Issuing Banks, (e) each counterparty to any Swap Agreement with a Loan Party the obligations under which constitute Secured Swap Obligations, (f) the beneficiaries of each indemnification obligation undertaken by any Loan Party under any Loan Document, (g) any Lender to which obligations that constitute Secured Treasury Services Obligations are owed, (h) any Lender to which obligations that constitute Secured Supply Chain Obligations are owed and (i) the successors and assigns of each of the foregoing.

 

“Secured Supply Chain Obligations” means the due and punctual payment and performance of all obligations of each Loan Party to a Lender or an Affiliate of a Lender under any Permitted Supply Chain Financing, to the extent the documentation for such obligations specifically provides that such Lender or Affiliate of a Lender is entitled to the benefit of the Security Interest (as defined in the Collateral Agreement).

 

“Secured Swap Obligations” means the due and punctual payment and performance of all obligations of each Loan Party under each Swap Agreement that (a) is in effect on the Effective Date with a counterparty that is a Lender or an Affiliate of a Lender as of the Effective Date or (b) is entered into after the Effective Date with any counterparty that is a Lender or an Affiliate of a Lender at the time such Swap Agreement is entered into, except to the extent the documentation for such obligations specifically provides that such Lender or Affiliate of a Lender is not entitled to the benefit of the Security Interest (as defined in the Collateral Agreement).

 

“Secured Treasury Services Obligations” means the due and punctual payment of all monetary obligations and other liabilities of any Loan Party in respect of overdrafts and related liabilities and obligations arising from or in connection with Treasury Services, except to the extent the documentation for such obligations specifically provides that such Lender or Affiliate of a Lender is not entitled to the benefit of the Security Interest (as defined in the Collateral Agreement).

 

“Securities Account” means any “securities accounts”, within the meaning of Article 8 of the UCC, of any Loan Party.

 

“Security Documents” means the Collateral Agreement, the Collateral Access Agreements, the Collateral Cooperation Agreements, the Customs Broker Agreements, the Control Agreements, the Reaffirmation Agreement and each other security agreement or other instrument or document executed and delivered to secure the Obligations.

 

“Specified Date” means the date that is 90 days after the Maturity Date.

 

“Specified Event of Default” means an Event of Default (i) arising under clause (a) or (b) of Section 7.01, (ii) arising with respect to any Loan Party under clause (h) or (i) of Section 7.01 or (iii) resulting from the failure to comply with Section 5.01(g), 5.16 or 6.11 or any representation or warranty contained in any Borrowing Base Certificate proving to have been 

  

  

  

  

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incorrect in any material respect in a manner adverse to interests of the Lenders when made or deemed made.

 

“Specified Involuntary Lien” means any involuntary Lien that would be a Permitted Encumbrance under clause (a) or (b) of the definition of “Permitted Encumbrance” but for being overdue by more than 30 days or not being contested in accordance with Section 5.05.

 

“Stand-by Letter of Credit” means any Letter of Credit that is not a Trade Letter of Credit.

 

“Statutory Reserve Rate” means a fraction (expressed as a decimal), the numerator of which is the number one and the denominator of which is the number one minus the aggregate of the maximum reserve percentages (including any marginal, special, emergency or supplemental reserves) expressed as a decimal established by the Board to which the Administrative Agent is subject for eurocurrency funding (currently referred to as “Eurocurrency Liabilities” in Regulation D of the Board).  Such reserve percentages shall include those imposed pursuant to such Regulation D.  Eurodollar Loans shall be deemed to constitute eurocurrency funding and to be subject to such reserve requirements without benefit of or credit for proration, exemptions or offsets that may be available from time to time to any Lender under such Regulation D or any comparable regulation.  The Statutory Reserve Rate shall be adjusted automatically on and as of the effective date of any change in any reserve percentage.

 

“subsidiary” means, with respect to any Person (the “parent”) at any date, any corporation, limited liability company, partnership, association or other entity the accounts of which would be consolidated with those of the parent in the parent’s consolidated financial statements if such financial statements were prepared in accordance with GAAP as of such date, as well as any other corporation, limited liability company, partnership, association or other entity of which securities or other ownership interests representing more than 50% of the ordinary voting power or, in the case of a partnership, more than 50% of the general partnership interests are, as of such date, owned or held.

 

“Subsidiary” means any subsidiary of Holdings, including the Parent Borrower but excluding any Excluded Subsidiary.

 

“Subsidiary Borrower Election” means an agreement executed by the Parent Borrower and a Subsidiary, and delivered to the Administrative Agent, pursuant to which the Parent Borrower designates such Subsidiary to be, and such Subsidiary agrees to be, a Borrower hereunder, in accordance with Section 2.20.  Each Subsidiary Borrower Election shall be in a form reasonably satisfactory to the Administrative Agent.

 

“Subsidiary Borrower Termination” means a notice executed by the Parent Borrower and delivered to the Administrative Agent terminating a Subsidiary’s status as a Borrower hereunder in accordance with Section 2.20.

 

“Swap Agreement” means any agreement with respect to any swap, forward, future or derivative transaction or option or similar agreement involving, or settled by reference to, one or more rates, currencies, commodities, equity or debt instruments or securities, or economic, financial or pricing indices or measures of economic, financial or pricing risk or value 

  

  

  

  

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or any similar transaction or any combination of these transactions; provided that no phantom stock or similar plan providing for payments only on account of services provided by current or former directors, officers, employees or consultants of Holdings or the Subsidiaries shall be a Swap Agreement.

 

“Swingline Exposure” means, at any time, the aggregate principal amount of all Swingline Loans outstanding at such time.  The Swingline Exposure of any Lender at any time shall be its Applicable Percentage of the total Swingline Exposure at such time.

 

“Swingline Lender” means JPMorgan Chase Bank, N.A., and each other Lender that agrees to be a Swingline Lender hereunder as provided in Section 2.04(a), in each case in its capacity as a lender of Swingline Loans hereunder.

 

“Swingline Loan” means a Loan made pursuant to Section 2.04(a).

 

“Taxes” means any and all present or future taxes, levies, imposts, duties, deductions, charges or withholdings imposed by any Governmental Authority, including any interest, additions to tax or penalties applicable thereto.

 

“Test Period” means, at any time, the most recent period of 12 consecutive fiscal months of Holdings ended on or prior to such time (taken as one accounting period) for which financial statements have been (or were required to be) delivered pursuant to Section 5.01(a) or (b).

 

“Trade Letter of Credit” means any Letter of Credit issued for the purpose of providing the primary payment mechanism in connection with the purchase of any materials, goods or services by an Account Party in the ordinary course of business of such Account Party.

 

“Transactions” means the execution, delivery and performance by each Loan Party of the Loan Documents to which it is or is to be a party, the borrowing of Loans and the issuance of Letters of Credit hereunder.

 

“Treasury Services” means treasury, depositary or cash management services (including purchasing cards and stored value cards) from, or any automated clearinghouse transfer of funds to, any entity that is a Lender.

 

“Type”, when used in reference to any Loan or Borrowing, refers to whether the rate of interest on such Loan, or on the Loans comprising such Borrowing, is determined by reference to the Adjusted LIBO Rate or the Alternate Base Rate.

 

“UCC” means the Uniform Commercial Code as in effect in the State of New York or, when the laws of any other jurisdiction govern the perfection or enforcement of any security interest, the Uniform Commercial Code of such jurisdiction.

 

“U.S. Person” means a “United States person” within the meaning of Section 7701(a)(30) of the Code.

  

  

  

  

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“U.S. Tax Compliance Certificate” has the meaning assigned to such term in Section 2.16(f).

 

“Withdrawal Liability” means liability to a Multiemployer Plan as a result of a complete or partial withdrawal from such Multiemployer Plan, as such terms are defined in Part I of Subtitle E of Title IV of ERISA.

 

“Withholding Agent” has the meaning assigned to such term in Section 2.16(a).

 

SECTION 1.02. Classification of Loans and Borrowings.  For purposes of this Agreement, Loans may be classified and referred to by Class (e.g., a “Revolving Loan”) or by Type (e.g., a “Eurodollar Loan”) or by Class and Type (e.g., a “Eurodollar Revolving Loan”).  Borrowings also may be classified and referred to by Class (e.g., a “Revolving Borrowing”) or by Type (e.g., a “Eurodollar Borrowing”) or by Class and Type (e.g., a “Eurodollar Revolving Borrowing”).

 

SECTION 1.03. Terms Generally.  The definitions of terms herein shall apply equally to the singular and plural forms of the terms defined.  Whenever the context may require, any pronoun shall include the corresponding mascu­line, feminine and neuter forms.  The words “include”, “includes” and “including” shall be deemed to be followed by the phrase “without limitation”.  The word “will” shall be construed to have the same meaning and effect as the word “shall”.  Unless the context requires otherwise (a) any definition of or reference to any agreement, instrument or other document herein shall be construed as referring to such agreement, instrument or other document as from time to time amended, supplemented, restated, refinanced, replaced, extended, renewed, restructured or otherwise modified, in whole or in part (subject to any restrictions on such amendments, supplements, restatements, refinancings, replacements, extensions, renewals, restructurings or modifications set forth herein), (b) any reference herein to any Person shall be construed to include such Person’s successors and assigns, (c) the words “herein”, “hereof” and “hereunder”, and words of similar import, shall be construed to refer to this Agreement in its entirety and not to any particular provision hereof, (d) all references herein to Articles, Sections, Exhibits and Schedules shall be construed to refer to Articles and Sections of, and Exhibits and Schedules to, this Agreement and (e) the words “asset” and “property” shall be construed to have the same meaning and effect and to refer to any and all tangible and intangible assets and properties, including cash, securities, accounts and contract rights.

 

SECTION 1.04. Accounting Terms; GAAP.  (a)  Except as otherwise expressly provided herein, all terms of an accounting or financial nature shall be construed in accordance with GAAP, as in effect from time to time; provided that (i) for purposes of determining compliance with any provision of this Agreement, the determination of whether a lease is to be treated as an operating lease or capital lease shall be made without giving effect 

  

  

  

  

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to any change in accounting for leases pursuant to GAAP resulting from the implementation of proposed Accounting Standards Update (ASU) Leases (Topic 840) issued August 17, 2010, or any successor proposal and (ii) if Holdings or the Parent Borrower notifies the Administrative Agent that Holdings or the Parent Borrower requests an amendment to any provision hereof to eliminate the effect of any change occurring after the Effective Date in GAAP or in the application thereof on the operation of such provision (or if the Administrative Agent notifies Holdings or the Parent Borrower that the Required Lenders request an amendment to any provision hereof for such purpose), regardless of whether any such notice is given before or after such change in GAAP or in the application thereof, then such provision shall be interpreted on the basis of GAAP as in effect and applied immediately before such change shall have become effective until such notice shall have been withdrawn or such provision amended in accordance herewith.  It is understood that all financial computations hereunder with respect to Holdings and the Subsidiaries (including computations of Consolidated EBITDA and Net Tangible Assets and compliance with Section 6.11) shall be made excluding the accounts of all Excluded Subsidiaries.

 

(b)  All pro forma computations of the Fixed Charge Coverage Ratio required to be made hereunder giving effect to any incurrence of Indebtedness, investment, acquisition, disposition, Restricted Payment, payment in respect of Indebtedness or other transaction shall be calculated after giving pro forma effect thereto (and, in the case of any pro forma computations made hereunder to determine whether any such transaction is permitted to be consummated hereunder, to any incurrence of Indebtedness, investment, acquisition, disposition, Restricted Payment, payment in respect of Indebtedness or other such transaction consummated since the first day of the period covered by any component of such pro forma computation and on or prior to the date of such computation) as if each such transaction had occurred on the first day of the applicable Test Period, and, to the extent applicable, to the historical earnings and cash flows associated with the assets acquired or disposed of and any related incurrence or reduction of Indebtedness, all in accordance with Article 11 of Regulation S-X under the Securities Act.   If any Indebtedness bears a floating rate of interest and is being given pro forma effect, the interest on such Indebtedness shall be calculated as if the rate in effect on the date of determination had been the applicable rate for the entire period (taking into account any Swap Agreement applicable to such Indebtedness if such Swap Agreement has a remaining term in excess of 12 months).

 

ARTICLE II

 

The Credits

 

SECTION 2.01. Commitments.  Subject to the terms and conditions set forth herein, each Lender agrees to make Revolving Loans to the Borrowers from time to time during the Availability Period in an aggregate principal amount that will not result in (a) such Lender’s Revolving Credit Exposure exceeding such Lender’s Commitment or (b) the sum of the total Revolving Credit Exposures exceeding the Line Cap.  Within the foregoing

 

  

  

  

  

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limits and subject to the terms and conditions set forth herein, the Borrowers may borrow, prepay and reborrow Revolving Loans.

 

SECTION 2.02. Loans and Borrowings.  (a)  Each Revolving Loan shall be made as part of a Borrowing consisting of Revolving Loans made by the Lenders ratably in accordance with their respective Commitments.  The failure of any Lender to make any Loan required to be made by it shall not relieve any other Lender of its obligations hereunder; provided that the Commitments of the Lenders are several and no Lender shall be responsible for any other Lender’s failure to make Loans as required.

 

(b) Subject to Section 2.13, each Revolving Borrowing shall be comprised entirely of ABR Loans or Eurodollar Loans as the applicable Borrower may request in accordance herewith.  Each Swingline Loan and Protective Advance shall be an ABR Loan.  Each Lender at its option may make any Eurodollar Loan by causing any domestic or foreign branch or Affiliate of such Lender to make such Loan; provided that any exercise of such option shall not affect the obligation of the relevant Borrower to repay such Loan in accord­ance with the terms of this Agreement.

 

(c) At the commencement of each Interest Period for any Eurodollar Revolving Borrowing, such Borrowing shall be in an aggregate amount that is an integral multiple of $5,000,000 and not less than $10,000,000.  At the time that each ABR Revolving Borrowing is made, such Borrowing shall be in an aggregate amount that is an integral multiple of $5,000,000 and not less than $10,000,000; provided that an ABR Revolving Borrowing may be in an aggregate amount that is equal to the entire unused balance of the total Commitments or that is required to finance the reimbursement of an LC Disbursement as contemplated by Section 2.05(e).  Each Swingline Loan shall be in an amount that is an integral multiple of $1,000,000 and not less than $5,000,000.  Borrowings of more than one Type and Class may be outstanding at the same time; provided that there shall not at any time be more than a total of 12 Eurodollar Revolving Borrowings outstanding.

 

(d) Notwithstanding any other provision of this Agreement, no Borrower shall be entitled to request, or to elect to convert or continue, any Borrowing if the Interest Period requested with respect thereto would end after the applicable Maturity Date without the consent of the applicable Lenders.

 

SECTION 2.03. Requests for Revolving Borrowings.   To request a Revolving Borrowing, a Borrower shall notify the Administrative Agent of such request by telephone (a) in the case of a Eurodollar Borrowing, not later than 11:00 a.m., New York City time, three Business Days before the date of the proposed Borrowing or (b) in the case of an ABR Borrowing, not later than 11:00 a.m., New York City time, on the day of the proposed Borrowing; provided that any such notice given by the Parent Borrower of an ABR Revolving Borrowing to finance the reimbursement of an LC Disbursement as contemplated by Section 2.05(e) may be given not later than 10:00 a.m., New York City time, on the date of the proposed Borrowing.  Each 

  

  

  

  

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such telephonic Borrowing Request shall be irrevocable and shall be confirmed promptly by hand delivery, telecopy or electronic transmission to the Administrative Agent of a written Borrowing Request in  substantially the form of Exhibit E hereto or otherwise in a form reasonably approved by the Administrative Agent and, in any case, signed by the relevant Borrower.  Each such telephonic and written Borrowing Request shall specify the following information in compliance with Section 2.02:

 

(i) the aggregate amount of the requested Borrowing;

 

(ii) the date of such Borrowing, which shall be a Business Day;

 

(iii) whether such Borrowing is to be an ABR Borrowing or a Eurodollar Borrowing;

 

(iv) in the case of a Eurodollar Borrowing, the initial Interest Period to be applicable thereto, which shall be a period contemplated by the definition of the term “Interest Period”;

 

(v) the location and number of the relevant Borrower’s account to which funds are to be disbursed, which shall comply with the requirements of Section 2.06;

 

(vi) whether such Borrowing is a Refinancing Borrowing and, if so, specifying the Borrowing or Borrowings to be refinanced with the proceeds thereof; and

 

(vii) the maturity date for the requested Borrowing as contemplated by the definition of “Borrowing Maturity Date”.

 

If no election as to the Type of Revolving Borrowing is specified, then the requested Revolving Borrowing shall be an ABR Borrowing.  If no Interest Period is specified with respect to any requested Eurodollar Revolving Borrowing, then the relevant Borrower shall be deemed to have selected an Interest Period of one month’s duration.  If no Borrowing Maturity Date is specified with respect to any requested Revolving Borrowing, then the relevant Borrower shall be deemed to have selected a Borrowing Maturity Date that is the earlier of the Maturity Date and the day that is 364 days after the first day of such Borrowing.  Promptly following receipt of a Borrowing Request in accordance with this Section, the Administrative Agent shall advise each Lender of the details thereof and of the amount of such Lender’s Loan to be made as part of the requested Borrowing.

 

SECTION 2.04. Swingline Loans; Protective Advances.  (a)  Swingline Loans.  (i) Subject to the terms and conditions set forth herein, the Swingline Lenders agree to make Swingline Loans to the Borrowers from time to time during the Availability Period, in an aggregate principal amount at any time outstanding that will not result in (i) the aggregate principal amount of outstanding Swingline Loans exceeding $75,000,000 or (ii)  the sum of the total Revolving Credit Exposures exceeding the Line Cap; provided that no Swingline Lender shall be required to make a Swingline Loan to refinance an outstanding Swingline Loan.  Within the foregoing limits and subject to the 

  

  

  

  

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terms and conditions set forth herein, the Borrowers may borrow, prepay and reborrow Swingline Loans.

 

(ii)  To request a Swingline Loan, a Borrower shall notify the Administrative Agent and the applicable Swingline Lender of such request by telephone (confirmed by telecopy or electronic transmission), not later than 12:00 noon, New York City time, on the day of a proposed Swingline Loan.  Each such notice shall be irrevocable and shall specify the requested date (which shall be a Business Day) and amount of the requested Swingline Loan.  The applicable Swingline Lender shall make each Swingline Loan available to the relevant Borrower by means of a credit to the general deposit account of such Borrower with such Swingline Lender (or, in the case of a Swingline Loan made to finance the reimbursement of an LC Disbursement as provided in Section 2.05(e), by remittance to the applicable Issuing Bank) by 3:00 p.m., New York City time, on the requested date of such Swingline Loan.

 

(iii)  A Swingline Lender may by written notice given to the Administrative Agent not later than 10:00 a.m., New York City time, on any Business Day require the Lenders to acquire participations on such Business Day in all or a portion of such Swingline Lender’s Swingline Loans outstanding.  Such notice shall specify the aggregate amount of Swingline Loans in which Lenders will participate.  Promptly upon receipt of such notice, the Administrative Agent will give notice thereof to each Lender, specifying in such notice such Lender’s Applicable Percentage of such Swingline Loan or Loans.  Each Lender hereby absolutely and unconditionally agrees, upon receipt of notice as provided above, to pay to the Administrative Agent, for the account of the applicable Swingline Lender, such Lender’s Applicable Percentage of such Swingline Loan or Loans.  Each Lender acknowledges and agrees that its obligation to acquire participations in Swingline Loans pursuant to this paragraph is absolute and unconditional and shall not be affected by any circumstance whatsoever, including the occurrence and continuance of a Default or reduction or termination of the Commitments, and that each such payment shall be made without any offset, abatement, withholding or reduction whatsoever.  Each Lender shall comply with its obligation under this paragraph by wire transfer of immediately available funds, in the same manner as provided in Section 2.06 with respect to Loans made by such Lender (and Section 2.06 shall apply, mutatis mutandis, to the payment obligations of the Lenders), and the Administrative Agent shall promptly pay to the applicable Swingline Lender the amounts so received by it from the Lenders.  The Administrative Agent shall notify the relevant Borrower of any participations in any Swingline Loan acquired pursuant to this paragraph, and thereafter payments in respect of such Swingline Loan shall be made to the Administrative Agent and not to the applicable Swingline Lender.  Any amounts received by a Swingline Lender from a Borrower (or other party on behalf of such Borrower) in respect of a Swingline Loan of such Borrower after receipt by such Swingline Lender of the proceeds of a sale of participations therein shall be promptly remitted to the Administrative Agent; any such amounts received by the Administrative Agent shall be promptly remitted by the Administrative Agent to the Lenders that shall have made their payments pursuant to this paragraph and to such Swingline Lender, as their interests may appear; provided that any such payment so remitted shall be repaid to such Swingline Lender or to the Administrative Agent, as applicable, if and to the extent such payment is required to be refunded to such Borrower for any reason.  The purchase of participations in a Swingline Loan pursuant to this paragraph shall not relieve the relevant Borrower of any default in the payment thereof.

 

  

  

  

  

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(iv)  The Parent Borrower may designate any Lender to be a Swingline Lender hereunder subject to the prior written consent of the Administrative Agent (which consent shall not be unreasonably withheld) and such Lender.  Any such designation shall not be effective until confirmed in a written agreement signed by the Parent Borrower, the Administrative Agent and the applicable Lender.

 

(b)  Protective Advances.  (i)  Any provision of this Agreement to the contrary notwithstanding (but subject to the limitations set forth below in this Section), the Administrative Agent is authorized by the Borrowers and the Lenders, in its sole discretion (but with absolutely no obligation), and whether or not the conditions precedent set forth in Section 4.02 have been satisfied, to make Loans to the Borrowers, on behalf of the Lenders, in amounts that exceed Availability, which the Administrative Agent, in its Permitted Discretion, deems necessary or desirable (i) to preserve or protect the Collateral, or any portion thereof, (ii) to enhance the likelihood of, or maximize the amount of, repayment of the Loans and other Obligations, or (iii) to pay any other amount chargeable to or required to be paid by the Loan Parties pursuant to the terms of this Agreement, including payments of reimbursable expenses (including costs, fees, and expenses as described in Section 9.03) and other sums payable under the Loan Documents (any such Loans are herein referred to collectively as “Protective Advances”), it being agreed that no Protective Advance shall result in a Default due to the Borrowers’ failure to comply with Section 2.01 or Section 4.02 for so long as such Protective Advance remains outstanding in accordance with the terms of this Section, but solely with respect to the amount of such Protective Advance.  Protective Advances shall be secured by the Liens in favor of the Administrative Agent (for the benefit of the Secured Parties) in and to the Collateral and shall constitute Obligations hereunder.  All Protective Advances shall be ABR Borrowings and shall mature on the earlier of the Maturity Date or the Borrowing Maturity Date specified by the Parent Borrower.  The authority of the Administrative Agent to make Protective Advances is limited to an aggregate amount not to exceed 5% of the total Commitments at any time, and no Protective Advance shall cause any Lender’s Revolving Credit Exposure to exceed its Commitment, provided that the Required Lenders may at any time revoke the Administrative Agent’s authorization to make Protective Advances (it being agreed that any such revocation must be in writing and shall become effective prospectively upon the Administrative Agent’s receipt thereof).  At any time that the conditions precedent set forth in Section 4.02 have been satisfied, the Administrative Agent may request the Lenders to make a Revolving Loan to repay a Protective Advance.  At any other time the Administrative Agent may require the Lenders to fund their risk participations described in Section 2.04(b)(ii).

 

(ii)  The Administrative Agent may, not later than 10:00 a.m., New York City time, on any Business Day require the Lenders to acquire participations on such Business Day in all or a portion of the Protective Advances outstanding, specifying in such notice the aggregate amount of the Protective Advances in which the Lenders will participate and specifying for each Lender such Lender’s Applicable Percentage of such Protective Advances.  Each Lender hereby absolutely and unconditionally agrees, upon receipt of notice as provided above, to pay to the Administrative Agent such Lender’s Applicable Percentage of such Protective Advances.  Each Lender acknowledges and agrees that its obligation to acquire participations in Protective Advances pursuant to this paragraph is absolute and unconditional and shall not be affected by any circumstance whatsoever, including the occurrence and continuance of a Default or reduction or termination of the Commitments, and that each such payment shall be made without 

  

  

  

  

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any offset, abatement, withholding or reduction whatsoever.  Each Lender shall comply with its obligation under this paragraph by wire transfer of immediately available funds, in the same manner as provided in Section 2.06 with respect to Loans made by such Lender (and Section 2.06 shall apply, mutatis mutandis, to the payment obligations of the Lenders), and the Administrative Agent shall promptly apply the amounts so received by it from the Lenders to its claims against them in respect of such participations in Protective Advances.  The Administrative Agent shall notify the relevant Borrower of any participations in any Protective Advances acquired pursuant to this paragraph, and thereafter payments in respect of such Protective Advances shall be made to the Administrative Agent for the accounts of the applicable Lenders.  Any amounts received by the Administrative Agent from a Borrower (or other party on behalf of such Borrower) in respect of a Protective Advance of such Borrower after receipt of the proceeds of a sale of participations therein shall be promptly remitted by the Administrative Agent to the Lenders that shall have made their payments pursuant to this paragraph, as their interests may appear; provided that any such payment so remitted shall be repaid to the Administrative Agent if and to the extent such payment is required to be refunded to such Borrower for any reason.  The purchase of participations in a Protective Advance pursuant to this paragraph shall not relieve the relevant Borrower of any default in the payment thereof.

 

SECTION 2.05. Letters of Credit.  (a)  General.  Subject to the terms and conditions set forth herein, (i) any Account Party may request the issuance of Letters of Credit for its own account or for the account of any other Subsidiary or other direct or indirect subsidiary of Holdings or the Parent Borrower (it being understood that the applicable Account Party will remain liable hereunder for the obligations in respect of which any Letter of Credit is issued for the account of any other Subsidiary or subsidiary), in a form reasonably acceptable to the applicable Issuing Bank, at any time and from time to time during the Availability Period, and (ii) the Issuing Banks agree to issue Letters of Credit.  In the event of any inconsistency between the terms and conditions of this Agreement and the terms and conditions of any form of letter of credit application or other agreement submitted by an Account Party to, or entered into by an Account Party with, any Issuing Bank relating to any Letter of Credit, the terms and conditions of this Agreement shall control.  Notwithstanding anything herein to the contrary, neither Barclays Bank PLC nor any of its branches or Affiliates shall be required to issue any commercial letters of credit hereunder.

 

(b) Notice of Issuance, Amendment, Renewal, Extension; Certain Conditions.  To request the issuance of a Letter of Credit (or the amendment, renewal or extension of an outstanding Letter of Credit), an Account Party shall hand deliver or telecopy (or transmit by electronic communication, if arrangements for doing so have been approved by the applicable Issuing Bank) to the applicable Issuing Bank (reasonably in advance of the requested date of issuance, amendment, renewal or extension) a notice requesting the issuance of a Letter of Credit, or identifying the Letter of Credit to be amended, renewed or extended, and specifying the date of issuance, amendment, renewal or extension (which shall be a Business Day), the date on which such Letter of Credit is to expire (which shall comply with paragraph (c) of this Section), the amount of such Letter of Credit, the name and address of the beneficiary thereof and such other information as 

 

  

  

  

  

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shall be necessary to prepare, amend, renew or extend such Letter of Credit.  If requested by the applicable Issuing Bank, such Account Party also shall submit a letter of credit application on such Issuing Bank’s standard form in connection with any request for a Letter of Credit.  A Letter of Credit shall be issued, amended, renewed or extended only if (and upon issuance, amendment, renewal or extension of each Letter of Credit the applicable Account Party shall be deemed to represent and warrant that), after giving effect to such issuance, amendment, renewal or extension, (i) the LC Exposure shall not exceed $750,000,000 and (ii) the sum of the total Revolving Credit Exposures shall not exceed the Line Cap.

 

Each Issuing Bank shall provide to the LC Agent and the Administrative Agent not later than 3:00 p.m. (or promptly thereafter, if unable to do so by 3:00 p.m.), New York City time, on the first Business Day of each calendar week a report of such Issuing Bank setting forth (i) the aggregate amount of all Letters of Credit issued by such Issuing Bank that are outstanding as of 3:00 p.m. on the last Business Day of the preceding calendar week, (ii) the average daily undrawn amount of all Letters of Credit issued by such Issuing Bank for each calendar day during the period since the last calendar day covered by the preceding weekly report (or, in the case of the first weekly report, during the period from and including the Effective Date) and (iii) the aggregate amount of LC Disbursements made by such Issuing Bank and not reimbursed as of the time of such report.  In addition to providing such weekly reports, each Issuing Bank shall, from time to time upon request of the LC Agent or the Administrative Agent, provide the LC Agent and the Administrative Agent with information of the type referred to in the immediately preceding sentence on a more frequent basis.

 

The LC Agent shall provide to each Lender not later than 3:00 p.m. (or promptly thereafter, if unable to do so by 3:00 p.m.), New York City time, on the first Business Day of each calendar month a report setting forth the aggregate amount of all Letters of Credit that are outstanding as of the date of the most recent weekly reports delivered by the Issuing Banks to the Administrative Agent pursuant to clause (i) of the immediately preceding paragraph.

 

Neither the LC Agent nor the Administrative Agent nor any Issuing Bank shall have any duty or obligation at any time to monitor the LC Exposure relative to the total Commitments or the Borrowing Base and neither the LC Agent nor the Administrative Agent nor any Issuing Bank shall have any liability in respect of the issuance, amendment, renewal or extension of a Letter of Credit to the extent that such issuance, amendment, renewal or extension results in the total Revolving Credit Exposures exceeding the Line Cap.  It shall be the responsibility of the Borrowers and the Account Parties to ensure that, after giving effect to the issuance, amendment, renewal or extension of each Letter of Credit, the sum of the total Revolving Credit Exposures does not exceed the Line Cap.

 

(c) Expiration Date.  Except for Extended Letters of Credit issued in accordance with Section 2.05(k), each Letter of Credit shall expire at or prior to the close of business on the date that is five Business Days prior to the Maturity Date.

 

(d) Participations.  By the issuance of a Letter of Credit (or an amendment to a Letter of Credit increasing the amount thereof) and without any further action on the part of the applicable Issuing Bank or the Lenders, the Issuing Bank in respect of such 

  

  

  

  

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Letter of Credit hereby grants to each Lender, and each Lender hereby acquires from such Issuing Bank, a participation in such Letter of Credit equal to such Lender’s Applicable Percentage of the aggregate amount available to be drawn under such Letter of Credit.  In consideration and in furtherance of the foregoing, each Lender hereby absolutely and unconditionally agrees to pay to the Administrative Agent, for the account of the applicable Issuing Bank, such Lender’s Applicable Percentage of each LC Disbursement made by such Issuing Bank and not reimbursed by the applicable Account Party on the date due as provided in paragraph (e) of this Section, or of any reimbursement payment required to be refunded to an Account Party for any reason.  Each Lender acknowledges and agrees that its obligation to acquire participations pursuant to this paragraph in respect of Letters of Credit is absolute and unconditional and shall not be affected by any circumstance whatsoever, including any amendment, renewal or extension of any Letter of Credit or the occurrence and continuance of a Default or reduction or termination of the Commitments, and that each such payment shall be made without any offset, abatement, withholding or reduction whatsoever.

 

(e) Reimbursement.  If an Issuing Bank shall make any LC Disbursement in respect of a Letter of Credit, (i) the applicable Account Party shall reimburse such LC Disbursement by paying to such Issuing Bank an amount equal to such LC Disbursement not later than 12:00 noon, New York City time, on the date that such LC Disbursement is made, if such Account Party shall have received notice of such LC Disbursement prior to 10:00 a.m., New York City time, on such date, or, if such notice has not been received by such Account Party prior to such time on such date, then not later than 12:00 noon, New York City time, on (A) the Business Day that such Account Party receives such notice, if such notice is received prior to 10:00 a.m., New York City time, on the day of receipt, or (B) the Business Day immediately following the day that such Account Party receives such notice, if such notice is not received prior to such time on the day of receipt; provided that, if such LC Disbursement is not less than $10,000,000, the Parent Borrower may, subject to the conditions to borrowing set forth herein, request in accordance with Section 2.03 or 2.04(a) that such payment be financed with an ABR Revolving Borrowing by the Parent Borrower or a Swingline Loan to the Parent Borrower in an equivalent amount and, to the extent so financed, such Account Party’s obligation to make such payment shall be discharged and replaced by the resulting ABR Revolving Borrowing or Swingline Loan; or (ii) such Issuing Bank may, if arrangements to do so have been agreed upon in writing by the Parent Borrower, a Borrowing Subsidiary or an Account Party and such Issuing Bank, obtain reimbursement of such LC Disbursement by debiting directly from an account of the Parent Borrower, such Borrowing Subsidiary or such Account Party maintained with such Issuing Bank (or one of its Affiliates) an amount equal to such LC Disbursement; provided that the foregoing shall not be construed to prevent the applicable Account Party from reimbursing LC Disbursements of an Issuing Bank in accordance with alternate procedures agreed upon with such Issuing Bank, so long as such reimbursements are made no later than required under clause (i) above.  If such Account Party fails to make such payment when due or the applicable Issuing Bank is unable to debit the designated account of the Parent Borrower, the relevant Borrowing Subsidiary or the relevant Account Party for the full amount of the LC Disbursement, in each case as provided in the preceding sentence, the applicable Issuing Bank shall notify the LC Agent (and upon receipt of such notice the LC Agent shall notify each Lender and the Administrative Agent) of the 

  

  

  

  

 

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applicable LC Disbursement, the payment then due from such Account Party in respect thereof and (in the case of such notice from the LC Agent to each Lender) such Lender’s Applicable Percentage thereof.  Promptly following receipt of such notice, each Lender shall pay to the Administrative Agent its Applicable Percentage of the payment then due from such Account Party (the “Participation Amount”), in the same manner as provided in Section 2.06 with respect to Loans made by such Lender (and Section 2.06 shall apply, mutatis mutandis, to the payment obligations of the Lenders), and the Administrative Agent shall promptly pay to the applicable Issuing Bank the amounts so received by it from the Lenders.  Promptly following receipt by the Administrative Agent of any payment from such Account Party pursuant to this paragraph, the Administrative Agent shall distribute such payment to the applicable Issuing Bank or, to the extent that Lenders have made payments pursuant to this paragraph to reimburse such Issuing Bank, then to such Lenders and such Issuing Bank as their interests may appear.  Any payment made by a Lender pursuant to this paragraph to reimburse an Issuing Bank for any LC Disbursement (other than the funding of ABR Revolving Loans or a Swingline Loan as contemplated above) shall not constitute a Loan and shall not relieve such Account Party of its obligation to reimburse such LC Disbursement.

 

(f) Obligations Absolute.  An Account Party’s obligation to reimburse LC Disbursements as provided in paragraph (e) of this Section shall be absolute, unconditional and irrevocable, and shall be performed strictly in accordance with the terms of this Agreement under any and all circumstances whatsoever and irrespective of (i) any lack of validity or enforceability of any Letter of Credit or this Agreement, or any term or provision therein, (ii) any draft or other document presented under a Letter of Credit proving to be forged, fraudulent or invalid in any respect or any statement therein being untrue or inaccurate in any respect, (iii) payment by an Issuing Bank under a Letter of Credit against presentation of a draft or other document that does not comply with the terms of such Letter of Credit, or (iv) any other event or circumstance whatsoever, whether or not similar to any of the foregoing, that might, but for the provisions of this Section, constitute a legal or equitable discharge of, or provide a right of setoff against, such Account Party’s obligations hereunder.  Neither the LC Agent, the Administrative Agent, the Lenders nor any Issuing Bank, nor any of their respective Related Parties, shall have any liability or responsibility by reason of or in connection with the issuance or transfer of any Letter of Credit or any payment or failure to make any payment thereunder (irrespective of any of the circumstances referred to in the preceding sentence), or any error, omission, interruption, loss or delay in transmission or delivery of any draft, notice or other communication under or relating to any Letter of Credit (including any document required to make a drawing thereunder), any error in interpretation of technical terms or any consequence arising from causes beyond the control of any Issuing Bank; provided that the foregoing shall not be construed to excuse the applicable Issuing Bank from liability to the applicable Account Party to the extent of any direct damages (as opposed to consequential damages, claims in respect of which are hereby waived by such Account Party to the extent permitted by applicable law) suffered by such Account Party that are caused by the applicable Issuing Bank’s failure to exercise care when determining whether drafts and other documents presented under a Letter of Credit comply with the terms thereof.  The parties hereto expressly agree that, in the absence of bad faith, gross negligence or willful misconduct on the part of the applicable Issuing Bank (as finally 

 

  

  

  

  

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determined by a court of competent jurisdiction) or such other standard of care as shall be separately agreed to in writing by such Issuing Bank and the applicable Account Party, such Issuing Bank shall be deemed to have exercised care in each such determination.  In furtherance of the foregoing and without limiting the generality thereof, the parties agree that, with respect to documents presented which appear on their face to be in substantial compliance with the terms of a Letter of Credit, the applicable Issuing Bank may, in its sole discretion, either accept and make payment upon such documents without responsibility for further investigation, regardless of any notice or information to the contrary, or refuse to accept and make payment upon such documents if such documents are not in strict compliance with the terms of such Letter of Credit.

 

(g) Disbursement Procedures.  The applicable Issuing Bank shall, promptly following its receipt thereof, examine all documents purporting to represent a demand for payment under a Letter of Credit.  Such Issuing Bank shall promptly notify the LC Agent, the Administrative Agent and the applicable Account Party by telephone (confirmed by telecopy or electronic transmission), or by such other means of communication (if any) as have been agreed upon by such Account Party and such Issuing Bank, of such demand for payment and whether such Issuing Bank has made or will make an LC Disbursement thereunder; provided that any failure to give or delay in giving such notice shall not relieve such Account Party of its obligation to reimburse such Issuing Bank and the Lenders with respect to any such LC Disbursement.

 

(h) Interim Interest.  If an Issuing Bank shall make any LC Disbursement, then, unless the applicable Account Party shall reimburse such LC Disbursement in full on the date such LC Disbursement is made, the unpaid amount thereof shall bear interest, for each day from and including the date such LC Disbursement is made to but excluding the date that such Account Party reimburses such LC Disbursement, at the rate per annum then applicable to ABR Revolving Loans; provided that, if such Account Party fails to reimburse such LC Disbursement when due pursuant to paragraph (e) of this Section, then Section 2.12(c) shall apply.  Interest accrued pursuant to this paragraph shall be for the account of the applicable Issuing Bank, except that interest accrued on and after the date of payment by any Lender pursuant to paragraph (e) of this Section to reimburse an Issuing Bank shall be for the account of such Lender to the extent of such payment.

 

(i) Designation and Replacement of Issuing Banks.  An Account Party may designate any Lender (or Affiliate of a Lender) to be an Issuing Bank hereunder, subject to such Lender’s (or Affiliate of such Lender’s) agreement, in its sole discretion, to become an Issuing Bank.  Such Account Party shall notify the Administrative Agent of any such designation.  An Issuing Bank may be replaced at any time by written agreement between the applicable Account Party and the successor Issuing Bank (which must be a Lender or an Affiliate of a Lender), and such Persons shall give notice of the same to the Administrative Agent.  The Administrative Agent shall notify the Lenders of any such replacement of an Issuing Bank.  At the time any such replacement shall become effective, the applicable Account Party shall pay all unpaid fees accrued for the account of the replaced Issuing Bank pursuant to Section 2.11(b).  From and after the effective date of any such replacement, (i) the successor Issuing Bank shall have all the rights and obligations of an Issuing Bank under this Agreement with respect to Letters of Credit to be 

  

  

  

  

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issued thereafter and (ii) references herein to the term “Issuing Bank” shall be deemed to refer to such successor or to any previous Issuing Bank, or to such successor and all previous Issuing Banks, as the context shall require.  After the replacement of an Issuing Bank hereunder, the replaced Issuing Bank shall remain a party hereto and shall continue to have all the rights and obligations of an Issuing Bank under this Agreement with respect to Letters of Credit issued by it prior to such replacement, but shall not be required to issue additional Letters of Credit.

 

(j) Cash Collateralization.  If (i) any Event of Default shall occur and be continuing, (ii) the Administrative Agent has declared the Loans outstanding hereunder due and payable pursuant to Section 7.01 or (iii) in the case of a Defaulting Lender, there shall exist any LC Exposure that cannot be reallocated among the non-Defaulting Lenders pursuant to Section 2.21(c) then, on the Business Day that an Account Party receives notice from the Administrative Agent or the Required Lenders demanding the deposit of cash collateral pursuant to this paragraph, such Account Party shall deposit in an account with the Administrative Agent, in the name of the Administrative Agent and for the benefit of the Lenders (or, in the case of clause (iii), the non-Defaulting Lenders), an amount in cash equal to the LC Exposure (or, in the case of clause (iii), the LC Exposure of the Defaulting Lender that cannot be fully reallocated pursuant to Section 2.21(c)(i)) as of such date attributable to Letters of Credit issued for the account of such Account Party plus any accrued and unpaid interest thereon; provided that the obligation to deposit such cash collateral shall become effective immediately, and such deposit shall become immediately due and payable, without demand or other notice of any kind, upon the occurrence of any Event of Default with respect to Holdings, any Borrower or any Account Party described in clause (h) or (i) of Section 7.01; provided further that, in the case of clause (iii), an Account Party may, if approved by each applicable Issuing Bank in its sole discretion, provide other credit support in lieu of the deposit of cash collateral pursuant to this paragraph.  Such deposit shall be held by the Administrative Agent as collateral for the payment and performance of the obligations of such Account Party under this Agreement.  The Administrative Agent shall have exclusive dominion and control, including the exclusive right of withdrawal, over such account.  Other than any interest earned on the investment of such deposits, which investments shall be made at the option and request of an Account Party (and at such Account Party’s risk and expense), subject to approval by the Administrative Agent, such deposits shall not bear interest.  Interest or profits, if any, on such investments shall accumulate in such account.  Moneys in such account shall be applied by the Administrative Agent to reimburse any Issuing Bank that is not a Defaulting Lender for LC Disbursements in respect of Letters of Credit issued for the account of such Account Party for which such Issuing Bank has not been reimbursed and, to the extent not so applied, shall be held for the satisfaction of the reimbursement obligations of such Account Party for the LC Exposure at such time or, if the maturity of the Loans has been accelerated, be applied to satisfy the other Obligations.

 

(k) Extended Letters of Credit.  An Account Party may request that an Issuing Bank allow, and an Issuing Bank may (in its sole discretion) agree to allow, one or more Letters of Credit issued by it to expire later than the date that is five Business Days prior to the Maturity Date.  Any such Letter of Credit is referred to herein as an “Extended 

  

  

  

  

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Letter of Credit”.  The following provisions shall apply to any Extended Letter of Credit, notwithstanding any contrary provision set forth herein.

 

(i) The participations of each Lender in each Extended Letter of Credit shall terminate at the close of business on the date that is five Business Days prior to the Maturity Date, with the effect that Lenders shall not have any obligations to acquire participations in any LC Disbursement made thereafter or otherwise with respect to such Extended Letter of Credit, except with respect to demands for drawings submitted on or prior to such date.

 

(ii) On or prior to the date that is fifteen days prior to the Maturity Date (or on the date of any earlier termination of the Commitments), each Account Party shall deposit with each Issuing Bank an amount in cash (or other credit support approved by such Issuing Bank in its sole discretion) equal to the LC Exposure as of such date attributable to the Extended Letters of Credit issued by such Issuing Bank for the account of such Account Party.  Each such deposit shall be held by the applicable Issuing Bank in an account maintained by it as collateral for the obligations of such Account Party in respect of such Extended Letters of Credit.  Each applicable Issuing Bank shall have exclusive dominion and control, including the exclusive right of withdrawal, over such account.  Other than any interest earned on the investment of such deposits, which investments shall be made at the request of an Account Party (and at such Account Party’s risk and expense) and subject to the agreement of the relevant Issuing Bank (not to be unreasonably withheld), such deposits shall not bear interest.  Interest or profits, if any, on such investments shall accumulate in such account.  Moneys in such account shall be applied by the relevant Issuing Bank to reimburse LC Disbursements in respect of such Extended Letters of Credit issued for the account of such Account Party for which such Issuing Bank has not been reimbursed and, to the extent not so applied, shall be held for the satisfaction of any reimbursement obligations of such Account Party for such Issuing Bank’s LC Exposure at such time and, to the extent of any excess over such Issuing Bank’s LC Exposure at such time, returned to the applicable Account Party.

 

(iii) After the close of business on the date that is five Business Days prior to the Maturity Date, the fees that would have accrued pursuant to clause (i) of Section 2.11(b) (if the participations of the Lenders in the Extended Letters of Credit had not terminated) shall continue to accrue on the LC Exposure in respect of each Extended Letter of Credit and shall be payable to each applicable Issuing Bank for its own account.

 

SECTION 2.06. Funding of Borrowings.  (a)  Each Lender shall make each Loan (other than a Refinancing Borrowing) to be made by it hereunder on the proposed date thereof by wire transfer of immediately available funds by 1:00 p.m., New York City time, to the account of the Administrative Agent most recently designated by it for such purpose by notice to the Lenders; provided that Swingline Loans shall be made as provided in Section 2.04(a).  The Administrative Agent will make such Loans available to the applicable Borrower by promptly crediting the amounts so received, in like funds, to an account of such Borrower maintained with the Administrative Agent in New York City and designated by such Borrower in the applicable 

  

  

  

  

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Borrowing Request; provided that ABR Revolving Loans made to finance the reimbursement of an LC Disbursement as provided in Section 2.05(e) shall be remitted by the Administrative Agent to the applicable Issuing Bank; and provided further that Revolving Loans made to finance the reimbursement of a Protective Advance shall be retained by the Administrative Agent or, to the extent that the Lenders have made payments pursuant to Section 2.04(b)(ii) to reimburse the Administrative Agent in respect of any such Protective Advance, respectively, remitted by the Administrative Agent to such Lenders as their interests may appear.  In the case of each Refinancing Borrowing, the proceeds thereof shall be deemed to have been applied to repay the Borrowing or Borrowings specified as being refinanced thereby in the applicable Borrowing Request and no funds shall be required to be advanced by any Lender in respect of the making of any Loan included in such Refinancing Borrowing or by the applicable Borrower in respect of the repayment of any Borrowing being refinanced thereby.

 

(b) Unless the Administrative Agent shall have received notice from a Lender prior to the proposed date of any Borrowing that such Lender will not make available to the Administrative Agent such Lender’s share of such Borrowing (or, in respect of the reimbursement of an LC Disbursement under Section 2.05(e), such Lender’s Participation Amount), the Administrative Agent may assume that such Lender has made such share (or such Lender’s Participation Amount, as applicable) available on such date in accordance with paragraph (a) of this Section and may, in reliance upon such assumption, make available to the applicable Borrower (or the applicable Issuing Bank, as applicable) a corresponding amount.  In such event, if a Lender has not in fact made its share of the applicable Borrowing (or such Lender’s Participation Amount, as applicable) available to the Administrative Agent, then the applicable Lender and the applicable Borrower (or the applicable Issuing Bank, as applicable) severally agree to pay to the Administrative Agent forthwith on demand such corresponding amount with interest thereon, for each day from and including the date such amount is made available to such Borrower (or such Issuing Bank, as applicable) to but excluding the date of payment to the Administrative Agent, at (i) in the case of such Lender or such Issuing Bank, the greater of the Federal Funds Effective Rate and a rate determined by the Administrative Agent in accordance with banking industry rules on interbank compensation or (ii) in the case of such Borrower, the interest rate applicable to ABR Loans.  If (x) with respect to such Borrowing, such Lender pays such amount to the Administrative Agent, then such amount shall constitute such Lender’s Loan included in such Borrowing or (y) with respect to such reimbursement of such LC Disbursement, the applicable Account Party shall reimburse the applicable LC Disbursement before the applicable Lender or Issuing Bank reimburses the Administrative Agent as provided in this paragraph, then the Administrative Agent shall be entitled to receive or retain the amount due to it as provided above together with interest payable by such Account Party with respect to the period commencing on the date that the Administrative Agent funded its payment to the applicable Issuing Bank.

 

SECTION 2.07. Interest Elections.  (a)  Each Revolving Borrowing initially shall be of the Type specified in the applicable Borrowing Request and, in the case of a Eurodollar Revolving Borrowing, shall have an

  

  

  

  

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initial Interest Period as specified in such Borrowing Request.  Thereafter, the applicable Borrower may elect to convert such Borrowing to a different Type or to continue such Borrowing and, in the case of a Eurodollar Revolving Borrowing, may elect Interest Periods therefor, all as provided in this Section.  Such Borrower may elect different options with respect to different portions of the affected Borrowing, in which case each such portion shall be allocated ratably among the Lenders holding the Loans comprising such Borrowing, and the Loans comprising each such portion shall be considered a separate Borrowing.  This Section shall not apply to Swingline Borrowings or Protective Advances, which may not be converted or continued.

 

(b) To make an election pursuant to this Section, the relevant Borrower shall notify the Administrative Agent of such election by telephone by the time that a Borrowing Request would be required under Section 2.03 if such Borrower were requesting a Revolving Borrowing of the Type resulting from such election to be made on the effective date of such election.  Each such telephonic Interest Election Request shall be irrevocable and shall be confirmed promptly by hand delivery, telecopy or electronic transmission to the Administrative Agent of a written Interest Election Request in substantially the form of Exhibit F hereto or otherwise in a form reasonably approved by the Administrative Agent and, in each case, signed by such Borrower.

 

(c) Each telephonic and written Interest Election Request shall specify the following information in compliance with Section 2.02:

 

(i) the Borrowing to which such Interest Election Request applies and, if different options are being elected with respect to different portions thereof, the portions thereof to be allocated to each resulting Borrowing (in which case the information to be specified pursuant to clauses (iii) and (iv) below shall be specified for each resulting Borrowing);

 

(ii) the effective date of the election made pursuant to such Interest Election Request, which shall be a Business Day;

 

(iii) whether the resulting Borrowing is to be an ABR Borrowing or a Eurodollar Borrowing; and

 

(iv) if the resulting Borrowing is a Eurodollar Borrowing, the Interest Period to be applicable thereto after giving effect to such election, which shall be a period contemplated by the definition of the term “Interest Period” and which shall not extend beyond the Borrowing Maturity Date applicable to the Borrowing to which such Interest Election Request applies.

 

If any such Interest Election Request requests a Eurodollar Borrowing but does not specify an Interest Period, then the relevant Borrower shall be deemed to have selected an Interest Period of one month’s duration.

 

(d) Promptly following receipt of an Interest Election Request, the Administrative Agent shall advise each Lender of the details thereof and of such Lender’s portion of each resulting Borrowing.

  

  

  

  

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(e) If the relevant Borrower fails to deliver a timely Interest Election Request with respect to a Eurodollar Revolving Borrowing prior to the end of the Interest Period applicable thereto, then, unless such Borrowing is repaid as provided herein, at the end of such Interest Period such Borrowing shall be converted to an ABR Borrowing.  Notwithstanding any contrary provision hereof, if an Event of Default has occurred and is continuing and the Administrative Agent, at the request of the Required Lenders, so notifies the Parent Borrower, then, so long as an Event of Default is continuing (i) no outstanding Revolving Borrowing may be converted to or continued as a Eurodollar Borrowing and (ii) unless repaid, each Eurodollar Revolving Borrowing shall be converted to an ABR Borrowing at the end of the Interest Period applicable thereto.

 

SECTION 2.08. Termination and Reduction of Commitments.  (a)  Unless previously terminated, the Commitments shall termi­nate on the Maturity Date.

 

(b) The Parent Borrower may at any time terminate, or from time to time reduce, the Commitments; provided that (i) each reduction of the Commitments shall be in an amount that is an integral multiple of $1,000,000 and not less than $5,000,000 and (ii) the Parent Borrower shall not terminate or reduce the Commitments if, after giving effect to any concurrent prepayment of the Loans in accordance with Section 2.10, the sum of the Revolving Credit Exposures would exceed the Line Cap.

 

(c) The Parent Borrower shall notify the Administrative Agent of any election to terminate or reduce the Commitments under paragraph (b) of this Section at least three Business Days prior to the effective date of such termination or reduction, specifying such election and the effective date thereof.  Promptly following receipt of any notice, the Administrative Agent shall advise the Lenders of the contents thereof.  Each notice delivered by the Parent Borrower pursuant to this Section shall be irrevocable; provided that a notice of termination of the Commitments delivered by the Parent Borrower may state that such notice is conditioned upon the effectiveness of other credit facilities or other events, in which case such notice may be revoked by the Parent Borrower (by notice to the Administrative Agent on or prior to the specified effective date) if such condition is not satisfied.  Any termination or reduction of the Commitments shall be permanent.  Each reduction of the Commitments shall be made ratably among the Lenders in accordance with their respective Commitments.

 

SECTION 2.09. Repayment of Loans; Evidence of Debt.  (a)  Each Borrower hereby unconditionally promises to pay (i) to the Administrative Agent for the account of each Lender the then unpaid principal amount of each Revolving Loan owed by such Borrower to such Lender on the Maturity Date; (ii) to the Administrative Agent for the account of each Lender the then unpaid principal amount of each Revolving Loan owed by such Borrower to such Lender on the Borrowing Maturity Date applicable to such Loan; (iii) to each Swingline Lender the then unpaid principal amount of each Swingline Loan owed to such Swingline Lender by such Borrower on the earlier of the Maturity Date and the first date after such Swingline Loan is made that is the 15th or last day of a calendar month and is at least two Business Days after such Swingline 

  

  

  

  

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Loan is made; provided that on each date that a new Revolving Borrowing is made, such Borrower shall repay all Swingline Loans of such Borrower then outstanding; and (iv) to the Administrative Agent the then unpaid principal amount of each Protective Advance on the earliest of (A) the Maturity Date, (B) the day that is 30 days after the making of such Protective Advance (or if such day is not a Business Day, the next succeeding Business Day) and (C) 3 Business Days following demand by the Administrative Agent.

 

(b) Each Lender shall maintain in accordance with its usual practice an account or accounts evidencing the indebtedness of each Borrower to such Lender resulting from each Loan made by such Lender, including the amounts of principal and interest payable and paid to such Lender from time to time hereunder.

 

(c) The Administrative Agent shall maintain accounts in which it shall record (i) the amount of each Loan made hereunder, the Class and Type thereof and the Interest Period applicable thereto, (ii) the amount of any principal or interest due and payable or to become due and payable from each Borrower to each Lender hereunder and (iii) the amount of any sum received by the Administrative Agent hereunder for the account of the Lenders and each Lender’s share thereof.

 

(d) The entries made in the accounts maintained pursuant to paragraph (b) or (c) of this Section shall be prima facie evidence of the existence and amounts of the obligations recorded therein; provided that the failure of any Lender or the Administrative Agent to maintain such accounts or any error therein shall not in any manner affect the obligation of each Borrower to repay its Loans in accordance with the terms of this Agreement.

 

(e) Any Lender may request that Loans made by it be evidenced by a promissory note.  In such event, the applicable Borrower shall prepare, execute and deliver to such Lender a promissory note payable to such Lender (or, if requested by such Lender, to such Lender and its registered assigns) and in substantially the form of Exhibit G hereto.  Thereafter, the Loans evidenced by such promissory note and interest thereon shall at all times (including after assignment pursuant to Section 9.04) be represented by one or more promissory notes in such form payable to the payee named therein (or, if such promissory note is a registered note, to such payee and its registered assigns).

 

(f) On each Business Day during any Cash Dominion Period, except to the extent that during a continuing Event of Default the Administrative Agent elects, or the Required Lenders direct, amounts to be applied as set forth in Section 2.17(f), the Administrative Agent shall apply all immediately available funds credited to the Concentration Account, and the Administrative Agent may, in its Permitted Discretion, apply other amounts contained in Control Accounts, in each case, first to prepay any Protective Advances that may be outstanding, pro rata, second to prepay any Swingline Loans that may be outstanding, third to prepay any Revolving Loans that may be outstanding, it being understood that any prepayments of Revolving Loans shall be applied in accordance with Section 2.17(f) and fourth to cash collateralize outstanding LC Exposure in the manner provided in Section 2.05(j).  If the Borrowers are required to 

  

  

  

  

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provide (and have provided the required amount of) cash collateral pursuant to this Section 2.09(f), the amount of such cash collateral (to the extent not otherwise required to be maintained by any other provision of this Agreement) shall be returned to the Borrowers within two Business Days after the last day of such Cash Dominion Period.

 

SECTION 2.10. Prepayment of Loans.  (a)  Each Borrower shall have the right at any time and from time to time to prepay any of its Borrowings in whole or in part, subject to prior notice in accordance with paragraph (c) of this Section.

 

(b) In the event and on each occasion that the sum of the Revolving Credit Exposures exceeds the Line Cap (other than to the extent that Protective Advances permitted under Section 2.04 cause the sum of the Revolving Credit Exposures to exceed the Borrowing Base), the Borrowers shall prepay Borrowings (or, if no such Borrowings are outstanding, each Account Party shall deposit cash collateral in an account with the Administrative Agent pursuant to Section 2.05(j)) in an aggregate amount equal to such excess or (if approved by each applicable Issuing Bank in its sole discretion) provide other credit support for the applicable LC Exposure.

 

(c) The applicable Borrower shall notify the Administrative Agent (and, in the case of prepayment of a Swingline Loan, the applicable Swingline Lender) by telephone (confirmed by telecopy or electronic transmission) of any prepayment hereunder (other than a prepayment resulting from an application of funds pursuant to Section 2.09(f)) (i) in the case of prepayment of a Eurodollar Revolving Borrowing, not later than 11:00 a.m., New York City time, three Business Days before the date of prepayment, (ii) in the case of prepayment of an ABR Revolving Borrowing, not later than 11:00 a.m., New York City time, one Business Day before the date of prepayment or (iii) in the case of prepayment of a Swingline Loan, not later than 12:00 noon, New York City time, on the date of prepayment.  Each such notice shall be irrevocable and shall specify the prepayment date and the principal amount of each Borrowing or portion thereof to be prepaid; provided that, if a notice of prepayment is given in connection with a conditional notice of termination of the Commitments as contemplated by Section 2.08, then such notice of prepayment may be revoked if such notice of termination is revoked in accordance with Section 2.08.  Promptly following receipt of any such notice relating to a Revolving Borrowing, the Administrative Agent shall advise the Lenders of the contents thereof.  Each partial prepayment of any Revolving Borrowing shall be in an amount that would be permitted in the case of an advance of a Revolving Borrowing of the same Type as provided in Section 2.02.  Each prepayment of a Revolving Borrowing shall be applied ratably to the Loans included in the prepaid Borrowing.  Prepayments shall be accompanied by accrued interest to the extent required by Section 2.12.

 

SECTION 2.11. Fees.  (a)  The Parent Borrower agrees to pay to the Administrative Agent for the account of each Lender a commitment fee, which shall accrue at the Applicable Rate on the daily unused amount of the Commitment of such Lender during the period from and including Effective Date to but excluding the date on which such Commitment terminates.  Accrued commitment fees shall be payable in arrears on the last day of March, June, 

  

  

  

  

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September and December of each year and on the date on which the Commitments terminate, commencing on the first such date to occur after the date hereof.  All commitment fees shall be computed on the basis of a year of 360 days and shall be payable for the actual number of days elapsed (including the first day but excluding the last day).  For purposes of computing commitment fees, the Commitment of a Lender shall be deemed to be used to the extent of the outstanding Revolving Loans and LC Exposures of such Lender (and the Swingline Exposure of such Lender shall be disregarded for such purposes).

 

(b) The Parent Borrower agrees to pay (i) to the Administrative Agent for the account of each Lender a participation fee with respect to its participations in (A) Stand-by Letters of Credit, which shall accrue at the Applicable Rate, and (B) Trade Letters of Credit, which shall accrue at a rate equal to 50% of the Applicable Rate used to determine the participation fees applicable to Stand-by Letters of Credit on the determination date, in each case on the average daily amount of such Lender’s LC Exposure (excluding any portion thereof attributable to unreimbursed LC Disbursements) during the period from and including the Effective Date to but excluding the later of the date on which such Lender’s Commitment terminates and the date on which such Lender ceases to have any LC Exposure, and (ii) to each Issuing Bank a fronting fee, which shall accrue at the rate of 0.125% per annum, on the average daily amount of the LC Exposure in respect of Stand-by Letters of Credit issued by such Issuing Bank (excluding any portion thereof attributable to unreimbursed LC Disbursements) during the period from and including the Effective Date to but excluding the later of the date of termination of the Commitments and the date on which there ceases to be any LC Exposure, as well as such Issuing Bank’s standard fees with respect to the issuance, amendment, renewal or extension of any Letter of Credit or processing of drawings thereunder.  Participation fees and fronting fees accrued through and including the last day of March, June, September and December of each year shall be payable in arrears on the third Business Day following such last day, commencing on the first such date to occur after the Effective Date; provided that all such fees shall be payable on the date on which the Commitments terminate and any such fees accruing after the date on which the Commitments terminate shall be payable on demand.  Any other fees payable to any Issuing Bank pursuant to this paragraph shall be payable within 10 days after demand.  All participation fees and fronting fees shall be computed on the basis of a year of 360 days and shall be payable for the actual number of days elapsed (including the first day but excluding the last day).

 

(c) The Parent Borrower agrees to pay to the Administrative Agent, for its own account, fees payable in the amounts and at the times separately agreed upon between the Parent Borrower and the Administrative Agent.

 

(d) All fees payable hereunder shall be paid on the dates due, in immediately available funds, to the Administrative Agent (or to the applicable Issuing Bank, in the case of fees payable to it) for distribution, in the case of commitment fees and participation fees, to the Lenders.  Fees paid shall not be refundable under any circumstances.

 

  

  

  

  

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SECTION 2.12. Interest.  (a)  The Loans comprising each ABR Borrowing (including each Swingline Loan and Protective Advance) shall bear interest at the Alternate Base Rate plus the Applicable Rate.

 

(b) The Loans comprising each Eurodollar Borrowing shall bear interest at the Adjusted LIBO Rate for the Interest Period in effect for such Borrowing plus the Applicable Rate.

 

(c) Notwithstanding the foregoing, if any principal of or interest on any Loan or any fee or other amount payable by any Borrower or any Account Party hereunder is not paid when due, whether at stated maturity, upon acceleration or otherwise, such overdue amount shall bear interest, after as well as before judgment, at a rate per annum equal to (i) in the case of overdue principal of any Loan, 2% plus the rate otherwise applicable to such Loan as provided in the preceding paragraphs of this Section or (ii) in the case of any other overdue amount, 2% plus the rate applicable to ABR Loans as provided in paragraph (a) of this Section.

 

(d) Accrued interest on each Loan shall be payable in arrears on each Interest Payment Date for such Loan and, in the case of Revolving Loans, upon termination of the Commitments; provided that (i) interest accrued pursuant to paragraph (c) of this Section or in respect of Protective Advances shall be payable on demand, (ii) in the event of any repayment or prepayment of any Loan (other than a prepayment of an ABR Revolving Loan prior to the end of the Availability Period), accrued interest on the principal amount repaid or prepaid shall be payable on the date of such repayment or prepayment and (iii) in the event of any conversion of any Eurodollar Revolving Loan prior to the end of the current Interest Period therefor, accrued interest on such Loan shall be payable on the effective date of such conversion.

 

(e) All interest hereunder shall be computed on the basis of a year of 360 days, except that interest computed by reference to the Alternate Base Rate at times when the Alternate Base Rate is based on the Prime Rate shall be computed on the basis of a year of 365 days (or 366 days in a leap year), and in each case shall be payable for the actual number of days elapsed (including the first day but excluding the last day).  The applicable Alternate Base Rate or Adjusted LIBO Rate shall be determined by the Administrative Agent, and such determination shall be conclusive absent manifest error.

 

SECTION 2.13. Alternate Rate of Interest.  If prior to the commencement of any Interest Period for a Eurodollar Borrowing:

 

(a) the Administrative Agent determines (which determination shall be conclusive absent manifest error) that adequate and reasonable means do not exist for ascertaining the Adjusted LIBO Rate for such Interest Period; or

 

(b) the Administrative Agent is advised by the Required Lenders that the Adjusted LIBO Rate for such Interest Period will not adequately and fairly reflect the cost to such Lenders (or Lender) of making or maintaining their Loans (or its Loan) included in such Borrowing for such Interest Period;

 

  

  

  

  

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then the Administrative Agent shall give notice thereof to the Parent Borrower and the Lenders by telephone, telecopy or electronic transmission as promptly as practicable thereafter and, until the Administrative Agent notifies the Parent Borrower and the Lenders that the circumstances giving rise to such notice no longer exist, (i) any Interest Election Request that requests the conversion of any Revolving Borrowing to, or continuation of any Revolving Borrowing as, a Eurodollar Borrowing shall be ineffective and (ii) if any Borrowing Request requests a Eurodollar Revolving Borrowing, such Borrowing shall be made as an ABR Borrowing.

 

SECTION 2.14. Increased Costs.  (a)  Subject to Section 2.18, if any Change in Law shall:

 

(i) impose, modify or deem applicable any reserve, special deposit or similar requirement against assets of, deposits with or for the account of, or credit extended by, any Lender (except any such reserve requirement reflected in the Adjusted LIBO Rate) or any Issuing Bank;

 

(ii) subject any Recipient to any Taxes (other than (A) Indemnified Taxes, (B) Taxes described in clauses (b) and (c) of the definition of Excluded Taxes and (C) Other Connection Taxes imposed on or measured by its gross or net income, profits or revenue (however denominated and including value-added or similar Taxes), franchise Taxes in lieu of net income, profits or revenue Taxes or any branch profits Taxes imposed by the United States (or any similar Tax imposed by any other jurisdiction)) on its loans, loan principal, letters of credit, commitments, or other obligations, or its deposits, reserves, other liabilities or capital attributable thereto; or

 

(iii) impose on any Lender or any Issuing Bank or the London interbank market any other condition affecting this Agreement or Eurodollar Loans made by such Lender or any Letter of Credit or participation therein;

 

and the result of any of the foregoing shall be to increase the cost to such Lender of making or maintaining any Eurodollar Loan (or of maintaining its obligation to make any such Loan) or to increase the cost to such Lender or such Issuing Bank of participating in, issuing or maintaining any Letter of Credit or to reduce the amount of any sum received or receivable by such Lender or such Issuing Bank hereunder (whether of principal, interest or otherwise), then the relevant Borrower will pay to such Lender and the relevant Account Party will pay to such Issuing Bank, as the case may be, such additional amount or amounts as will compensate such Lender or such Issuing Bank, as the case may be, for such additional costs incurred or reduction suffered in accordance with Section 2.18.

 

(b) Subject to Section 2.18, if any Lender or any Issuing Bank determines that any Change in Law regarding capital or liquidity requirements has or would have the effect of reducing the rate of return on such Lender’s or such Issuing Bank’s capital or on the capital of such Lender’s or such Issuing Bank’s holding company, if any, as a consequence of this Agreement or the Loans made by, or participations in Letters of Credit held by, such Lender, or the Letters of Credit issued by such Issuing Bank, to a level below that which such Lender or such Issuing Bank or such Lender’s or such Issuing Bank’s holding company could have achieved but for such Change in Law (taking into 

  

  

  

  

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consideration such Lender’s or such Issuing Bank’s policies and the policies of such Lender’s or such Issuing Bank’s holding company with respect to capital adequacy and liquidity), then from time to time the relevant Borrower will pay to such Lender and the relevant Account Party will pay to such Issuing Bank, as the case may be, such additional amount or amounts as will compensate such Lender or such Issuing Bank or such Lender’s or such Issuing Bank’s holding company for any such reduction suffered in accordance with Section 2.18.

 

(c) A certificate of a Lender or an Issuing Bank setting forth the amount or amounts necessary to compensate such Lender or such Issuing Bank or its holding company, as the case may be, as specified in paragraph (a) or (b) of this Section shall be delivered to the Parent Borrower and shall be conclusive and binding on all parties hereto absent manifest error.  The relevant Borrower shall pay such Lender and the relevant Account Party shall pay such Issuing Bank, as the case may be, the amount shown as due on any such certificate (such amount hereinafter referred to as the “Additional Costs”) within 30 days after receipt thereof.

 

(d) Subject to Section 2.18, failure or delay on the part of any Lender or any Issuing Bank to demand compensation pursuant to this Section shall not constitute a waiver of such Lender’s or such Issuing Bank’s right to demand such compensation.

 

SECTION 2.15. Break Funding Payments.  In the event of (a) the payment of any principal of any Eurodollar Loan other than on the last day of an Interest Period applicable thereto (including as a result of an Event of Default), (b) the conversion of any Eurodollar Loan other than on the last day of the Interest Period applicable thereto, (c) the failure to borrow, convert, continue or prepay any Eurodollar Loan on the date specified in any notice delivered pursuant hereto (regardless of whether such notice may be revoked under Section 2.10(c) and is revoked in accordance therewith) or (d) the assignment of any Eurodollar Loan other than on the last day of the Interest Period applicable thereto as a result of a request by the Parent Borrower pursuant to Section 2.18, then, in any such event, the relevant Borrower shall compensate each Lender for the loss, cost and expense (excluding loss of anticipated profits or margin) attributable (other than loss of profit or margin) to such event.  In the case of a Eurodollar Loan, such loss, cost or expense (other than loss of profit or margin) to any Lender shall be deemed to include an amount determined by such Lender to be the excess, if any, of (i) the amount of interest which would have accrued on the principal amount of such Loan had such event not occurred, at the Adjusted LIBO Rate that would have been applicable to such Loan, for the period from the date of such event to the last day of the then current Interest Period therefor (or, in the case of a failure to borrow, convert or continue, for the period that would have been the Interest Period for such Loan), over (ii) the amount of interest which would accrue on such principal amount for such period at the interest rate which such Lender would bid were it to bid, at the commencement of such period, for dollar deposits of a comparable amount and period from other banks in the eurodollar market.  A certificate of any Lender setting forth any amount or amounts that such Lender is entitled to receive 

  

  

  

  

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pursuant to this Section shall be delivered to the Parent Borrower and shall be presumptively correct absent manifest error.  The relevant Borrower shall pay such Lender the amount shown as due on any such certificate within 30 days after receipt thereof.

 

SECTION 2.16. Taxes.  (a)  Each payment on account of any obligation of any Loan Party hereunder to any Recipient shall be made free and clear of and without deduction for Taxes, unless such deduction is required by law.  If any Loan Party or the Administrative Agent, as applicable (any such person, a “Withholding Agent”) determines, in its sole discretion exercised in good faith, that it is so required to deduct or withhold Taxes, the Withholding Agent shall make such deductions and timely pay the full amount deducted to the relevant Governmental Authority in accordance with applicable law.  If such Taxes are Indemnified Taxes, then the sum payable by the applicable Loan Party shall be increased as necessary so that after making all required deductions (including deductions applicable to additional sums payable under this Section 2.16) the Recipient receives an amount equal to the sum it would have received had no such deductions been made.

 

(b) In addition, the Borrowers and the Account Parties shall pay, or at the option of the Administrative Agent timely reimburse it for, the payment of any Other Taxes to the relevant Governmental Authorities in accordance with applicable law other than any Other Taxes imposed upon any assignment or participation of a Lender’s rights, interests and obligations hereunder or under any other Loan Document; provided that the amount such Borrower or such Account Party (as the case may be) shall be required to pay to a particular Lender in respect of Other Taxes shall not exceed 1% of the aggregate amount of the Commitment of such Lender on which such Other Taxes are imposed; provided further that if a Lender is actually aware of the application of any Other Tax to any such payment, execution, delivery or registration, such Lender shall promptly notify the Parent Borrower of such Other Tax and the relevant Borrower or the relevant Account Party (as the case may be) shall thereafter have the benefit of the provisions of Section 2.18(b).

 

(c) Each Borrower and each Account Party shall indemnify each Recipient, within 30 days after written demand therefor, for the full amount of any Indemnified Taxes (including Indemnified Taxes imposed or asserted on or attributable to amounts payable under this Section 2.16) and expenses arising therefrom or with respect thereto, whether or not such Indemnified Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority.  A certificate as to the amount of (including calculations thereof) and the basis for such payment or liability delivered to such Borrower or Account Party by the Recipient, or by the Administrative Agent on behalf of the Recipient, shall be conclusive absent manifest error.

 

(d) Each Lender shall indemnify the Administrative Agent within 10 days after demand therefor for the full amount of any Taxes attributable (but, in the case of any Indemnified Taxes, only to the extent that the Borrowers and the Account Parties have not already indemnified the Administrative Agent for such Indemnified Taxes and without 

  

  

  

  

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limiting the obligation of the Borrowers and the Account Parties to do so) to such Lender that are payable or paid by the Administrative Agent, and reasonable expenses arising therefrom or with respect thereto, whether or not such Excluded Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority.  A certificate as to the amount of such payment or liability delivered to any Lender by the Administrative Agent shall be conclusive absent manifest error.

 

(e) Within 30 days after the date a Borrower or an Account Party receives a receipt evidencing any payment of Indemnified Taxes by the relevant Borrower or the relevant Account Party (as the case may be) in respect of any payment to any Recipient, such Borrower or such Account Party (as the case may be) will furnish to the Administrative Agent, at its address referred to in Section 9.01, the original or a certified copy of such receipt or, if such a receipt is not available, a certificate of the treasurer or any assistant treasurer of such Borrower or such Account Party (as the case may be) setting forth the amount of such payment and the date on which such payment was made.

 

(f) (i) Any Lender that is entitled to an exemption from or reduction of any applicable withholding Tax with respect to payments under this Agreement shall deliver to the Parent Borrower (with a copy to the Administrative Agent), on or prior to the date on which such Lender becomes a Lender under this Agreement and at the time or times reasonably requested by the Parent Borrower or the Administrative Agent, such properly completed and executed documentation prescribed by applicable law or reasonably requested by the Parent Borrower as will permit such payments to be made without withholding or at a reduced rate.  Each Lender shall promptly notify the Parent Borrower at any time it determines that it is no longer in a position to provide any such previously delivered documentation to the Parent Borrower.  Notwithstanding anything to the contrary in the preceding two sentences, the completion, execution and submission of such documentation (other than such documentation set forth in Section 2.16(f)(ii)(A) through (E)) below shall not be required if in the Lender’s judgment such completion, execution or submission would subject such Lender to any material unreimbursed cost or expense or would materially prejudice the legal or commercial position of such Lender.

 

(ii) Without limiting the generality of the foregoing, each Lender shall, to the extent it is legally entitled to do so, deliver to the Parent Borrower and the Administrative Agent (in such number of copies as shall be requested by the Parent Borrower and the Administrative Agent) on or prior to the date on which such Lender becomes a party hereto (and from time to time thereafter upon the request of the Parent Borrower or the Administrative Agent), the following as applicable:

 

(A) in the case of a Lender that is a U.S. Person, a duly completed and executed IRS Form W-9 certifying that such Lender is exempt from U.S. federal backup withholding Tax,

 

(B) in the case of a Foreign Lender claiming eligibility for benefits of an income tax treaty to which the United States is a party, a duly completed and executed IRS Form W-8BEN,

  

  

  

  

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(C) in the case of a Foreign Lender for whom payments under this Agreement constitute income that is effectively connected with such Foreign Lender’s conduct of a trade or business in the United States, a duly completed and executed IRS Form W-8ECI,

 

(D) in the case of a Foreign Lender claiming the benefits of the exemption for portfolio interest under Section 881(c) of the Code, (x) a certificate substantially in the form of Exhibit D to the effect that such Foreign Lender is not (A) a “bank” within the meaning of Section 881(c)(3)(A) of the Code, (B) a “10 percent shareholder” of any Borrower within the meaning of Section 871(h)(3)(B) of the Code, (C) a “controlled foreign corporation” described in Section 881(c)(3)(C) of the Code and (D) the interest payments in question are not effectively connected with a U.S. trade or business conducted by such Lender (a “U.S. Tax Compliance Certificate”) and (y) duly completed and executed copies of IRS Form W-8 BEN,

 

(E) in the case of a Foreign Lender that is not the beneficial owner of payments made under any Loan Document (for example, where the Foreign Lender is a partnership or participating Lender granting a typical participation), a duly completed and executed  IRS Form W-8IMY, accompanied by a duly completed and executed Form W-8ECI, W-8BEN, U.S. Tax Compliance Certificate, Form W-9, and/or other certification documents from each beneficial owner, as applicable; provided that, if the Foreign Lender is a partnership (and not a participating Lender) and one or more beneficial owners of such Foreign Lender are claiming the portfolio interest exemption, such Foreign Lender may provide a U.S. Tax Compliance Certificate on behalf of such beneficial owners, and

 

(F) any other form prescribed by applicable law as a basis for claiming exemption from or a reduction in U.S. federal withholding tax duly completed together with such supplementary documentation as may be reasonably requested by the Parent Borrower in order to permit the Parent Borrower to determine the withholding or deduction required to be made.

 

(iii) If a payment made to a Lender under any Loan Document would be subject to U.S. federal withholding tax imposed by FATCA if such Lender were to fail to comply with the applicable reporting requirements of FATCA, such Lender shall deliver to the Withholding Agent, at the time or times prescribed by law and at such time or times reasonably requested by the Withholding Agent, such properly completed and executed documentation prescribed by applicable law and such additional documentation reasonably requested by the Withholding Agent as may be necessary for such Withholding Agent to comply with its obligations under FATCA, to determine that such Lender has or has not complied with such Lender’s obligations under FATCA and, as necessary, to determine the amount to deduct and withhold from such payment.  Solely for the purposes of this Section 2.16(f)(iii), “FATCA” shall include any amendments made to FATCA after the Effective Date.

 

Each Lender agrees that if any form or certification it previously delivered expires or becomes obsolete or inaccurate in any respect, it shall update such form or certification or promptly notify the Parent Borrower and the Administrative Agent in writing of its legal inability to do so.

  

  

  

  

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(g) If any Recipient shall become aware that it is entitled to receive a refund in respect of any Indemnified Taxes or Other Taxes as to which it has been indemnified pursuant to this Section 2.16, such Recipient shall promptly notify the Parent Borrower of the availability of such refund and shall, within 30 days after receipt of a request by the Parent Borrower, apply for such refund at the Parent Borrower’s expense.  If any Recipient receives a refund in respect of any Taxes for which such Recipient has received payment from an indemnifying party hereunder, it shall within 30 days after the receipt thereof repay the lesser of such refund and the amount paid by such indemnifying party with respect to such Taxes to the applicable indemnifying party, in each case net of all reasonable out-of-pocket expenses of such Recipient and with interest received by such Recipient from the relevant taxing authority attributable to such refund; provided that such indemnifying party, upon the request of such Recipient, as applicable, agree to return any such refund (plus interest, penalties and other charges) to such Recipient, as applicable, in the event such Issuing Bank, Lender or the Administrative Agent is required to pay such refund to any Governmental Authority.  Notwithstanding anything to the contrary in this paragraph (g), in no event will any Issuing Bank or Lender be required to pay any amount to any Loan Party the payment of which would place the Issuing Bank or such Lender in a less favorable net after-Tax position than the Issuing Bank or such Lender would have been if the indemnification payments or additional amounts giving rise to such refund had never been paid.  This Section shall not be construed to require any Recipient to make available its Tax returns (or any other information relating to its Taxes that it deems confidential) to the Loan Parties or any other Person.

 

(h) If (i) there is an appointment and acceptance of a successor Administrative Agent under Article VIII, (ii) such successor Administrative Agent (a) is not a U.S. Person or (b) is a partnership or other entity treated as a partnership for U.S. federal income tax purposes which is a U.S. person, but only to the extent the beneficial owners (including indirect partners if its direct partners are partnerships or other entities treated as partnerships for U.S. federal income tax purposes) are not U.S. persons, and (iii) such successor Administrative Agent is entitled to an exemption from or reduction of any applicable withholding Tax with respect to payments under this Agreement, then such successor Administrative Agent shall deliver to the Parent Borrower, on or prior to the date on which such successor Administrative Agent becomes an Administrative Agent under this Agreement and at the time or times reasonably requested by the Parent Borrower, such properly completed and executed documentation prescribed by applicable law or reasonably requested by the Parent Borrower as will permit such payments to be made without withholding or at a reduced rate.  Such successor Administrative Agent shall promptly notify the Parent Borrower at any time it determines that it is no longer in a position to provide any such previously delivered documentation to the Parent Borrower.  For the avoidance of doubt, any Administrative Agent that is not a U.S. Person shall not be treated as “Foreign Lender” for purposes of this Agreement.  Notwithstanding anything to the contrary in the preceding three sentences, the completion, execution and submission of such documentation described in this Section 2.16(h) shall not be required if in such successor Administrative Agent’s judgment such completion, execution or submission would subject such successor Administrative Agent to any material unreimbursed cost or expense or would materially prejudice the legal or commercial position of such successor Administrative Agent.

 

  

  

  

  

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SECTION 2.17. Payments Generally; Pro Rata Treatment; Sharing of Set-offs.  (a)  Each Borrower and each Account Party shall make each payment required to be made by it hereunder (whether of principal, interest, fees or reimbursement of LC Disbursements, or of amounts payable under Section 2.14, 2.15 or 2.16, or otherwise) prior to the time expressly required hereunder for such payment (or, if no such time is expressly required, prior to 12:00 noon, New York City time, on the date when due), in immediately available funds, without set-off or counterclaim.  Any amounts received after such time on any date may, in the discretion of the Administrative Agent, be deemed to have been received on the next succeeding Business Day for purposes of calculating interest thereon.  All such payments shall be made to the Administrative Agent at its offices at 383 Madison Avenue, New York, New York, except payments to be made directly to an Issuing Bank or a Swingline Lender as expressly provided herein and except that payments pursuant to Sections 2.14, 2.15, 2.16 and 9.03 shall be made directly to the Persons entitled thereto.  The Administrative Agent shall distribute any such payments received by it for the account of any other Person to the appropriate recipient promptly following receipt thereof.  If any payment under any Loan Document shall be due on a day that is not a Business Day, the date for payment shall be extended to the next succeeding Business Day, and, in the case of any payment accruing interest, interest thereon shall be payable for the period of such extension.  All payments under each Loan Document shall be made in dollars.  At all times during a Cash Dominion Period, solely for purposes of determining the amount of Loans available for borrowing purposes, checks (in addition to immediately available funds applied pursuant to Section 2.09(f)) from collections of items of payment and proceeds of any Collateral shall be applied in whole or in part against the Obligations on the Business Day after receipt, subject to actual collection.

 

(b) If at any time insufficient funds are received by and available to the Administrative Agent to pay fully all amounts of principal, unreimbursed LC Disbursements, interest and fees then due hereunder, such funds shall be applied (i) first, towards payment of interest and fees then due hereunder, ratably among the parties entitled thereto in accordance with the amounts of interest and fees then due to such parties, and (ii) second, towards payment of principal and unreimbursed LC Disbursements then due hereunder, ratably among the parties entitled thereto in accordance with the amounts of principal and unreimbursed LC Disbursements then due to such parties.

 

(c) If any Lender shall, by exercising any right of set-off or counterclaim or otherwise, obtain payment in respect of any principal of or interest on any of its Revolving Loans or participations in LC Disbursements, Protective Advances or Swingline Loans resulting in such Lender receiving payment of a greater proportion of the aggregate amount of its Revolving Loans and participations in LC Disbursements, Protective Advances and Swingline Loans and accrued interest thereon than the proportion received by any other Lender, then the Lender receiving such greater proportion shall purchase (for cash at face value) participations in the Revolving Loans and participations in LC Disbursements and Swingline Loans of other Lenders to the extent necessary so that the 

  

  

  

  

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benefit of all such payments shall be shared by the Lenders ratably in accordance with the aggregate amount of principal of and accrued interest on their respective Revolving Loans and participations in LC Disbursements, Protective Advances and Swingline Loans; provided that (i) if any such participations are purchased and all or any portion of the payment giving rise thereto is recovered, such participations shall be rescinded and the purchase price restored to the extent of such recovery, without interest, and (ii) the provisions of this paragraph shall not be construed to apply to any payment made by any Borrower or any Account Party pursuant to and in accordance with the express terms of this Agreement or any payment obtained by the Administrative Agent in respect of any Protective Advance or by a Lender as consideration for the assignment of or sale of a participation in any of its Loans or participations in LC Disbursements to any assignee or participant, other than to Holdings or any Subsidiary or Affiliate thereof (as to which the provisions of this paragraph shall apply).  Each of the Borrowers and each of the Account Parties consents to the foregoing and agrees, to the extent it may effectively do so under applicable law, that any Lender acquiring a participation pursuant to the foregoing arrangements may exercise against such Borrower or such Account Party (as the case may be) rights of set-off and counterclaim with respect to such participation as fully as if such Lender were a direct creditor of such Borrower or such Account Party (as the case may be) in the amount of such participation.

 

(d) Unless the Administrative Agent shall have received notice from a Borrower or an Account Party prior to the date on which any payment is due to the Administrative Agent from such Borrower or such Account Party (as the case may be) for the account of the Lenders or an Issuing Bank hereunder that such Borrower or such Account Party (as the case may be) will not make such payment, the Administrative Agent may assume that such Borrower or such Account Party (as the case may be) has made such payment on such date in accordance herewith and may, in reliance upon such assumption, distribute to the Lenders or the applicable Issuing Bank, as the case may be, the amount due.  In such event, if the relevant Borrower or the relevant Account Party (as the case may be) has not in fact made such payment, then each of the Lenders or the applicable Issuing Bank, as the case may be, severally agrees to repay to the Administrative Agent forthwith on demand the amount so distributed to such Lender or such Issuing Bank with interest thereon, for each day from and including the date such amount is distributed to it to but excluding the date of payment to the Administrative Agent, at the greater of the Federal Funds Effective Rate and a rate determined by the Administrative Agent in accordance with banking industry rules on interbank compensation.

 

(e) If any Lender shall fail to make any payment required to be made by it pursuant to Section 2.04(a)(iii), 2.04(b)(ii), 2.05(d) or (e), 2.06(b) or 2.17(d), then the Administrative Agent may, in its discretion (notwithstanding any contrary provision hereof), apply any amounts thereafter received by the Administrative Agent for the account of such Lender to satisfy such Lender’s obligations under such Sections until all such unsatisfied obligations are fully paid.

 

(f) Any proceeds of Collateral or any other amounts received by the Administrative Agent in accordance with this Agreement or another Loan Document (i) not constituting either (A) a specific payment of principal, interest, fees or other sum 

  

  

  

  

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payable under the Loan Documents (which shall be applied as specified by the Borrowers), (B) a mandatory prepayment under Section 2.10 (which shall be applied in accordance with Section 2.10), (C) amounts to be used to cash collateralize LC Exposures, (D) amounts to be applied from the Concentration Account during any Cash Dominion Period (which shall be applied in accordance with Section 2.09(f)) or (ii) after an Event of Default has occurred and is continuing and the Administrative Agent so elects or the Required Lenders so direct, shall be applied ratably to the Obligations as follows:  first, to pay any fees, indemnities, or expense reimbursements then due to the Administrative Agent, any Issuing Lender or the Swingline Lender under any Loan Document (other than in connection with Secured Swap Obligations, Secured Supply Chain Obligations and Secured Treasury Services Obligations), second, to pay any fees or expense reimbursements then due to the Lenders from the Loan Parties in respect of Loan Document Obligations, third, to pay interest due in respect of the Protective Advances, fourth, to pay the principal of the Protective Advances, fifth, to pay interest then due and payable on the Loans (other than the Protective Advances) or unreimbursed LC Disbursements ratably, sixth, to prepay principal on the Loans (other than the Protective Advances), unreimbursed LC Disbursements and (in an amount not to exceed the Designated Secured Obligations Reserve then in effect) the Designated Secured Swap Obligations and the Designated Secured Treasury Services Obligations ratably, seventh, to the payment of any other Loan Document Obligations due to the Administrative Agent or any Lender from the Loan Parties, eighth, to pay an amount to the Administrative Agent equal to one hundred three percent (103%) of the aggregate undrawn face amount of all outstanding Letters of Credit, to be held as cash collateral for such Obligations, ninth to the payment of any amounts owing with respect to Secured Swap Obligations and Secured Treasury Services Obligations, and tenth to the payment of any amounts owing with respect to Secured Supply Chain Obligations.  Notwithstanding anything to the contrary contained in this Agreement, unless so directed by the Parent Borrower, or unless an Event of Default has occurred and is continuing, neither the Administrative Agent nor any Lender shall apply any payment that it receives to a Eurodollar Loan, except (x) on the expiration date of the Interest Period applicable to any such Eurodollar Loan or (y) in the event, and only to the extent, that there are no outstanding ABR Loans and, in any such event, the Borrowers shall pay the break funding payment required in accordance with Section 2.15.  While any Event of Default is continuing, the Administrative Agent and the Lenders shall have the continuing and exclusive right to apply and reverse and reapply any and all such proceeds and payments to any portion of the Obligations in accordance with the terms of this Agreement.

 

SECTION 2.18. Mitigation Obligations; Replacement of Lenders.  (a)  If, with respect to any Lender, any Issuing Bank or the Administrative Agent, an event or circumstance occurs that would entitle such Lender or Issuing Bank or the Administrative Agent to exercise any of the rights or benefits afforded by Section 2.14 or 2.16(a), such Lender or Issuing Bank or the Administrative Agent, promptly upon becoming aware of the same, shall take all steps as may be reasonably available (including designating a different Applicable Lending Office for funding or booking its Loans hereunder or participating in Letters of Credit or assigning its rights and obligations hereunder to another of its offices, or furnishing the proper certificates under 

  

  

  

  

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any applicable Tax laws, Tax treaties, conventions and governmental regulations to the extent that such certificates are legally available to such Lender or Issuing Bank or to the Administrative Agent) to eliminate or mitigate the effects of any event resulting in the ability of such Lender or the Administrative Agent to exercise rights under any of such Sections; provided that none of any Lender, any Issuing Bank or the Administrative Agent shall be under any obligation to take any step that, in its reasonable judgment, would (i) result in its incurring Additional Costs or Taxes in performing its obligations hereunder unless the Borrowers and the Account Parties have expressly agreed to reimburse it therefor or (ii) be materially disadvantageous to such Lender or Issuing Bank or to the Administrative Agent.  Within 60 days after the occurrence of any event giving rise to any rights or benefits provided by Sections 2.14 and 2.16(a) in favor of any Lender or Issuing Bank or the Administrative Agent, such Lender or Issuing Bank or the Administrative Agent (i) will notify the Parent Borrower of such event or circumstance and (ii) provide the Parent Borrower with a certificate setting forth in reasonable detail (x) the event or circumstance giving rise to any benefit under Sections 2.14 and 2.16(a), (y) the effective date of, and the time period during which, compensation for any Additional Costs or Taxes are being claimed and (z) the determination of amount or amounts claimed thereby and detailed calculations with respect thereto; provided that, if such Lender or Issuing Bank or the Administrative Agent does not give the Parent Borrower such notice and certificate within the 60-day period set forth in this sentence, the relevant Borrower or the relevant Account Party (as the case may be) shall be required to indemnify such Lender or Issuing Bank or the Administrative Agent only for such Additional Costs and Taxes as are attributable to the period from and after the first date as of which such notice and certificate have been received by the Parent Borrower.  Such Lender or Issuing Bank or the Administrative Agent shall notify the Parent Borrower of any change in circumstances with respect to the event specified in the above-described notice and certificate as promptly as practicable after such Lender or Issuing Bank or the Administrative Agent obtains knowledge thereof.  Such certificate shall be presumptively correct absent manifest error.  Notwithstanding the foregoing, none of any Lender, any Issuing Bank or the Administrative Agent shall deliver the notice and certificate described in this paragraph (a) to the Parent Borrower in respect of any Additional Costs or Taxes unless it is then the general policy of such Lender or Issuing Bank or the Administrative Agent to pursue similar rights and remedies in similar circumstances under comparable provisions of other credit agreements.

 

(b) With respect to Sections 2.14 and 2.16, the Parent Borrower shall have the right, should any Lender request any compensation or indemnity thereunder, or if any Lender becomes a Defaulting Lender, or if any Lender is a Declining Lender, to (i) unless an Event of Default shall have occurred and be continuing, (A) promptly terminate such Lender’s Commitment by irrevocable written notice of such termination to such Lender and the Administrative Agent without the necessity of complying with Sections 2.08(b) and (c) hereof, (B) reduce the total Commitments by the amount of such Lender’s

  

  

  

  

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Commitment and (C) pay or prepay in immediately available funds all Loans owing to such Lender, accrued and unpaid interest thereon, accrued fees and all other amounts payable to it hereunder, or (ii) require such Lender to assign all its interests, rights and obligations under this Agreement, without recourse to or representation or warranty by such Lender, to an assignee in accordance with Section 9.04 (provided that the failure of any such Defaulting Lender to execute an Assignment and Assumption shall not render such assignment invalid and such assignment shall be recorded in the Register and any notes held by such Lender shall be automatically deemed cancelled upon such failure); provided that (x) such assignment shall not conflict with any statute, law, rule, regulation, order or decree of any Governmental Authority, (y) the assigning Lender shall have received from the relevant Borrower and the relevant Account Party and/or such assignee full payment in immediately available funds of the principal of and interest accrued on the Loans to the date of such assignment made by it hereunder and all other amounts owed to it hereunder that are subject to such assignment, provided that amounts payable under this clause (y) to any assigning Lender that is a Defaulting Lender shall be applied in accordance with Section 2.21(e), and (z) in the case of any such assignment resulting from a Lender being a Declining Lender, the assignee shall have agreed to the applicable Maturity Date Extension Request.

 

(c) With respect to Section 2.14 or 2.16, (i) other than with respect to Section 2.16(b), none of any Lender, any Issuing Bank or the Administrative Agent shall be entitled to exercise any right or benefit afforded thereby and neither the Borrowers nor the Account Parties shall be obligated to reimburse any Lender, any Issuing Bank or the Administrative Agent pursuant to such Sections unless (x) such Lender or Issuing Bank or the Administrative Agent has delivered to the Parent Borrower in accordance with Section 9.01 the notice and the certificate described in Section 2.18(a) hereof and (y) the Parent Borrower has had a 30-Business Day period following the receipt of such notice and certificate (if the Parent Borrower in good faith disagrees with the assertion that any payment under such Sections is due or with the amount shown as due on such certificate and so notifies the applicable Lender or Issuing Bank or the Administrative Agent of such disagreement within 10 Business Days following receipt of the notice and certificate) to negotiate with the requesting Lender or Issuing Bank or the Administrative Agent, which negotiations shall be conducted by the respective parties in good faith, and to agree upon another amount that will adequately compensate such Lender or Issuing Bank or the Administrative Agent, it being expressly understood that if the Parent Borrower does not provide the required notice of its disagreement as provided above, the relevant Borrower or the relevant Account Party (as the case may be) shall pay the amount shown as due on the certificate on the tenth Business Day following receipt thereof and further if the Parent Borrower does provide such required notice, and negotiations are entered into but do not result in agreement by the Parent Borrower and such Lender or Issuing Bank or the Administrative Agent within the 30-Business Day period, then the relevant Borrower or the relevant Account Party (as the case may be) shall pay the amount shown as due on the certificate on the last day of such period, but in either event not earlier than the date as of which the relevant Additional Costs or Taxes are incurred, (ii) other than with respect to Other Taxes, unless the appropriate notice and certificate are delivered to the Parent Borrower within the 60-day period described in Section 2.18(a), the relevant Borrower or the relevant Account Party (as the case may be) shall be liable only for Additional Costs, 

  

  

  

  

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Taxes or amounts required to be paid which are attributable to the period from and after the date such notice and certificate have been received by such Borrower or such Account Party, as applicable, (iii) neither the Borrowers nor the Account Parties shall be liable for any amounts incurred as a result of any change in an Applicable Lending Office of any Issuing Bank or Lender to the extent that such Issuing Bank or Lender shall have had knowledge at the time of such change in Applicable Lending Office that reimbursement or recoupment under Section 2.14 would arise as a result of such change, (iv) each Lender, each Issuing Bank and/or the Administrative Agent, as applicable, shall in good faith allocate all Additional Costs, Taxes and payments required to be made fairly among all its commitments (whether or not it seeks compensation from all affected Borrowers or Account Parties), (v) none of any Lender, any Issuing Bank or the Administrative Agent shall be entitled to exercise any right or benefit afforded hereby or receive any payment otherwise due under Sections 2.14 and 2.16 (including, without limitation, any repayment by any Borrower or any Account Party (as the case may be) of any refund of Taxes pursuant to Section 2.16(g)) which arises from any bad faith, gross negligence, fraud or willful misconduct of any Lender, any Issuing Bank or the Administrative Agent, or the failure of such Lender or Issuing Bank or the Administrative Agent to comply with the terms of this Agreement, (vi) if any Lender or any Issuing Bank or the Administrative Agent shall have recouped any amount or received any offsetting Tax benefit (other than a refund of Taxes as described in Section 2.16(g)) or reserve or capital benefits theretofore paid to it by any Borrower or any Account Party (as the case may be), such Lender or Issuing Bank or the Administrative Agent shall promptly pay to such Borrower or such Account Party (as the case may be) an amount equal to the amount of the recoupment received by such Lender or Issuing Bank or the Administrative Agent reduced by any reasonable out-of-pocket expenses of such Lender or the Administrative Agent attributable to such recoupment, as determined in good faith by such Lender or Issuing Bank or the Administrative Agent, and (vii) the liability of the Borrowers and the Account Parties to any Lender, any Issuing Bank or the Administrative Agent with respect to any Indemnified Taxes shall be reduced to the extent that such Lender or Issuing Bank or the Administrative Agent receives an offsetting Tax benefit (or could have received such a benefit by taking reasonable measures to receive it); provided that there shall not be any reductions pursuant to this clause (vii) with respect to any Tax benefit (x) the existence of which such Lender or Issuing Bank or Administrative Agent is unaware, (y) the claiming of which would result in any cost or Tax to such Lender or Issuing Bank or the Administrative Agent (unless the relevant Borrower or the relevant Account Party (as the case may be) shall have agreed to pay its reasonably allocable portion of such cost or Tax) and (z) unless the relevant Borrower or the relevant Account Party (as the case may be) shall agree to indemnify the applicable Lender or Issuing Bank or the Administrative Agent to the extent any Tax benefit taken into account under this clause (vii) is thereafter lost or becomes unavailable.

 

(d) In addition to their obligations under Section 2.14 hereof, each of the Lenders, each of the Issuing Banks and the Administrative Agent hereby agrees to execute and deliver, and to make any required filings of, all certificates, agreements, documents, reports, statements and other instruments as are reasonably necessary to effectuate the purposes of this Section 2.18 and Sections 2.14 and 2.16.  The Parent Borrower agrees to 

  

  

  

  

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pay all filing fees incurred by any Lender, any Issuing Bank or the Administrative Agent in performing its obligations under this Section 2.18.

 

SECTION 2.19. Reserved.

 

SECTION 2.20. Borrowing Subsidiaries.  The Parent Borrower may, at any time and from time to time so long as no Event of Default has occurred and is continuing, designate any Material Subsidiary (other than any Foreign Subsidiary) to be a Borrowing Subsidiary hereunder by delivering to the Administrative Agent a Subsidiary Borrowing Election with respect to such Material Subsidiary.  The eligibility of any Borrowing Subsidiary to borrow hereunder shall terminate when the Administrative Agent receives a Subsidiary Borrower Termination with respect to such Material Subsidiary.  Each Subsidiary Borrower Election delivered to the Administration Agent shall be duly executed on behalf of the relevant Material Subsidiary and the Parent Borrower, and each Subsidiary Borrower Termination delivered to the Administrative Agent shall be duly executed on behalf of the Parent Borrower.  The delivery of a Subsidiary Borrower Termination shall not affect any obligation of the relevant Material Subsidiary incurred in its capacity as a Borrower, and such Material Subsidiary shall continue to constitute a Borrowing Subsidiary for all purposes hereof (other than the right to borrow Loans) until all its obligations hereunder as a Borrower have been discharged and paid in full.  The Administrative Agent shall promptly give notice to the Lenders and the Issuing Banks of its receipt of any Subsidiary Borrower Election or Subsidiary Borrower Termination.

 

SECTION 2.21. Defaulting Lenders.  Notwithstanding any provision of this Agreement to the contrary, if any Lender becomes a Defaulting Lender, then the following provisions shall apply for so long as such Lender is a Defaulting Lender:

 

(a) fees shall cease to accrue on the unfunded portion of the Commitment of such Defaulting Lender pursuant to Section 2.11(a);

 

(b) the Commitment and Revolving Credit Exposure of such Defaulting Lender shall not be included in determining whether all Lenders or the Required Lenders have taken or may take any action hereunder (including any consent to any amendment or waiver pursuant to Section 9.02), provided that (i) such Defaulting Lender’s Commitment may not be increased or extended without its consent and (ii) the principal amount of, or interest or fees payable on, such Defaulting Lender’s Loans or participations in LC Disbursements may not be reduced or excused or the scheduled date of payment may not be postponed as to such Defaulting Lender without such Defaulting Lender’s consent;

 

(c) if any Swingline Exposure or LC Exposure exists, or any Protective Advance is outstanding, at the time a Lender becomes a Defaulting Lender then:

 

  

  

  

  

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(i) all or any part of such Swingline Exposure and LC Exposure and participations in Protective Advances shall be reallocated among the non-Defaulting Lenders in accordance with their respective Applicable Percentages but only to the extent (x) the sum of all non-Defaulting Lenders’ Revolving Credit Exposures plus such Defaulting Lender’s Swingline Exposure and LC Exposure and participations in Protective Advances does not exceed the total of all non-Defaulting Lenders’ Commitments (it being understood that in no event shall any non-Defaulting Lender’s Revolving Credit Exposure exceed such Lender’s Commitment as a result of such reallocation) and (y) the conditions set forth in Section 4.02 are satisfied at such time;

 

(ii) if the reallocation described in clause (i) above cannot, or can only partially, be effected, the Borrowers or the Account Parties shall within two Business Days following notice by the Administrative Agent (x) first, prepay such Swingline Exposure and Protective Advances and (y) second, cash collateralize (or, if approved by each applicable Issuing Bank in its sole discretion, otherwise provide credit support for) such Defaulting Lender’s LC Exposure (after giving effect to any partial reallocation pursuant to clause (i) above) in accordance with the procedures set forth in Section 2.05(j) for so long as such LC Exposure is outstanding;

 

(iii) if the Borrowers or the Account Parties cash collateralize, or otherwise provide credit support for, any portion of such Defaulting Lender’s LC Exposure pursuant to this paragraph (c), the Borrowers shall not be required to pay any fees to such Defaulting Lender pursuant to Section 2.11(b) with respect to such Defaulting Lender’s LC Exposure during the period such Defaulting Lender’s LC Exposure is cash collateralized or otherwise has credit support provided therefor;

 

(iv) if the LC Exposure of the non-Defaulting Lenders is reallocated pursuant to this paragraph (c), then the fees payable to the Lenders pursuant to Section 2.11(a) and Section 2.11(b) shall be adjusted in accordance with such non-Defaulting Lenders’ Applicable Percentages; and

 

(v) if any Defaulting Lender’s LC Exposure is neither cash collateralized, nor otherwise has credit support provided therefor nor is reallocated pursuant to this paragraph (c), then, without prejudice to any rights or remedies of the Issuing Bank or any Lender hereunder, all Letter of Credit fees payable under Section 2.11(b) with respect to such Defaulting Lender’s LC Exposure shall be payable to the Issuing Bank until such LC Exposure is cash collateralized, otherwise has credit support provided therefor and/or is reallocated;

 

(d) so long as any Lender is a Defaulting Lender, the Swingline Lender shall not be required to fund any Swingline Loan and the Issuing Bank shall not be required to issue, amend or increase any Letter of Credit, unless it is satisfied that the related exposure will be 100% covered by the Commitments of the non-Defaulting Lenders and/or cash collateral (or other credit support, if approved by each applicable Issuing Bank in its sole discretion) will be provided by the Borrowers or the Account Parties in accordance with Section 2.21(c), and participating interests in any such newly issued or increased Letter of Credit or newly made Swingline Loan shall be allocated 

  

  

  

  

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among non-Defaulting Lenders in a manner consistent with Section 2.21(c)(i) (and Defaulting Lenders shall not participate therein); and

 

(e) any amount payable to such Defaulting Lender hereunder (whether on account of principal, interest, fees or otherwise and including any amount that would otherwise be payable to such Defaulting Lender pursuant to Section 2.17(c), but excluding Section 2.18(b)) shall, in lieu of being distributed to such Defaulting Lender, be retained by the Administrative Agent in a segregated account (which may be invested as requested by the Parent Borrower, at the Parent Borrower’s risk and expense, subject to approval by the Administrative Agent) and, subject to any applicable requirements of law, be applied at such time or times as may be determined by the Administrative Agent (i) first, to the payment of any amounts (other than in respect of Protective Advances) owing by such Defaulting Lender to the Administrative Agent hereunder, (ii) second, pro rata, to the payment of any amounts owing by such Defaulting Lender to any Issuing Bank or Swingline Lender hereunder or to the Administrative Agent in respect of Protective Advances, (iii) third, as the Parent Borrower may request (so long as no Default has occurred and is continuing) to the funding of any Loan or the funding or cash collateralization of any participating interest in any Swingline Loan, Protective Advance or Letter of Credit in respect of which such Defaulting Lender has failed to fund its portion thereof as required by this Agreement (such amounts to be determined by the Administrative Agent in consultation with the Parent Borrower), (iv) fourth, if so determined by the Administrative Agent and the Borrowers or the Account Parties, held in such account as cash collateral for future funding obligations of the Defaulting Lender under this Agreement, (v) fifth, pro rata, to the payment of any amounts owing to the Borrowers, the Account Parties or the Lenders as a result of any judgment of a court of competent jurisdiction obtained by the Borrowers, the Account Parties or any Lender against such Defaulting Lender as a result of such Defaulting Lender’s breach of its obligations under this Agreement and (vi) sixth, to such Defaulting Lender or as otherwise directed by a court of competent jurisdiction; provided that if such payment is (x) a prepayment of the principal amount of any Loans or reimbursement obligations in respect of LC Disbursements which a Defaulting Lender has funded its participation obligations and (y) made at a time when the conditions set forth in Section 4.02 are satisfied, such payment shall be applied solely to prepay the Loans of, and reimbursement obligations owed to, all non-Defaulting Lenders pro rata prior to being applied to the prepayment of any Loans, or reimbursement obligations owed to, any Defaulting Lender.

 

           In the event that the Administrative Agent, the Borrowers, the Account Parties, the Issuing Bank and the Swingline Lender each agrees that a Defaulting Lender has adequately remedied all matters that caused such Lender to be a Defaulting Lender, then the Swingline Exposure and LC Exposure of the Lenders, and their participations in Protective Advances, shall be readjusted to reflect the inclusion of such Lender’s Commitment and on such date such Lender shall purchase at par such of the Loans of the other Lenders (other than Swingline Loans and Protective Advances) as the Administrative Agent shall determine may be necessary in order for such Lender to hold such Loans in accordance with its Applicable Percentage.  For the avoidance of doubt, no adjustments will be made retroactively with respect to fees that ceased to accrue pursuant to clause (a) above while such Lender was a Defaulting Lender or payments that were allocated pursuant to clause (e) above while such Lender was a Defaulting Lender.

 

  

  

  

  

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SECTION 2.22. Increase in Commitments.  (a)  At any time after the Restatement Effective Date, the Parent Borrower may, by written notice to the Administrative Agent (which shall promptly deliver a copy to each of the Lenders), request at any time or from time to time that the total Commitments be increased; provided that (i) the aggregate amount of each such increase pursuant to this Section 2.22 shall not be less than $50,000,000 and the aggregate amount of all such increases pursuant to this Section 2.22 shall not exceed $400,000,000, (ii) each such request of the Parent Borrower shall be deemed to be an offer to each Lender to increase its Commitment by its Applicable Percentage of the proposed increased amount and (iii) each Lender, in its sole discretion, may either (A) agree to increase its Commitment by all or a portion of the offered amount or (B) decline to increase its Commitment.  Any such notice shall set forth the amount of the requested increase in the total Commitments and the date on which such increase is requested to become effective.  In the event that the Lenders shall have agreed to increase their Commitments by an aggregate amount less than the increase in the total Commitments requested by the Parent Borrower, the Parent Borrower may arrange for one or more banks or other financial institutions (any bank or other financial institution increasing its Commitment or providing a new Commitment pursuant to this Section 2.22 being called an “Augmenting Lender”), which may include any Lender, to extend Commitments or increase its existing Commitment in an aggregate amount equal to the unsubscribed amount; provided that each Augmenting Lender, if not already a Lender (or an Affiliate of a Lender) hereunder, shall be subject to the approval of the Administrative Agent (not to be unreasonably withheld); provided further that any Commitment extended or increased pursuant to this Section 2.22 shall be in a minimum amount of $10,000,000 (or, if less, the balance of the unsubscribed amount of the requested increase in total Commitments).  Increases of Commitments and new Commitments created pursuant to this paragraph (a) shall become effective upon the execution and delivery by the Parent Borrower, the Administrative Agent and any Lenders (including any Augmenting Lenders) agreeing to increase their existing Commitments or extend new Commitments, as the case may be, of an amendment to this Agreement providing for such increased or additional Commitments.  Notwithstanding the foregoing, no increase in the total Commitments (or in the Commitment of any Lender) shall become effective under this paragraph (a) unless, on the date of such increase, the conditions set forth in Section 4.02(a) and 4.02(b) shall be satisfied (as though a Borrowing were being made on such date, with all references in such Section to a Borrowing being deemed to be references to such increase and without giving effect to the parenthetical in Section 4.02(a)) and the Administrative Agent shall have received a certificate to that effect dated such date and executed by a Financial Officer of the Parent Borrower.

 

(b) At the time that any increase in the total Commitments pursuant to paragraph (a) of this Section 2.22 (a “Commitment Increase”) becomes effective, if any Revolving Loans are outstanding, the Parent Borrower shall prepay the aggregate principal amount outstanding in respect of such Revolving Loans in accordance with Section 2.10

  

  

  

  

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(the “Initial Loans”); provided that (i) nothing in this Section 2.22 shall prevent the Parent Borrower from funding the prepayment of Initial Loans with concurrent Revolving Loans hereunder in accordance with the provisions of this Agreement, giving effect to the Commitment Increase, and (ii) no such prepayment shall be required if, after giving effect to the Commitment Increase, each Lender has the same Applicable Percentage as immediately prior to such Commitment Increase.

 

SECTION 2.23. Extension of Maturity Date.  (a)    The Parent Borrower may, by delivery of a written request (a “Maturity Date Extension Request”) to the Administrative Agent (which shall promptly deliver a copy to each of the Lenders), request that the Lenders extend the Maturity Date; provided that such request shall be made to all Lenders having the same Maturity Date on the same terms.  Such Maturity Date Extension Request shall set forth (A) any changes to interest rate margins, fees or other pricing that will apply to the extensions of credit by Lenders that elect to agree to such Maturity Date Extension Request (which may be higher or lower than those that apply before giving effect to such Maturity Date Extension Request) and (B) any covenants or other terms that will apply solely to any period after the latest Maturity Date (if any) applicable to any Lenders that have a Maturity Date earlier than the Maturity Date that will apply to Lenders that elect to agree to such Maturity Date Extension Request.  Other than the extended Maturity Date and the changes described in clauses (A) and (B) of the immediately preceding sentence, the terms applicable to Lenders that elect to agree to such Maturity Date Extension Request shall be identical to those that applied before giving effect thereto.

 

(b) Each Lender shall, by notice to the Parent Borrower and the Administrative Agent given not later than the 20th day after the date of the Administrative Agent’s receipt of the Borrower’s Maturity Date Extension Request (or such other date as the Parent Borrower and the Administrative Agent may agree; such date, the “Extension Date”), advise the Parent Borrower whether or not it agrees to the requested extension (each Lender agreeing to a requested extension being called a “Consenting Lender”, and each Lender declining to agree to a requested extension being called a “Declining Lender”).  Any Lender that has not so advised the Parent Borrower and the Administrative Agent by such Extension Date shall be deemed to have declined to agree to such extension and shall be a Declining Lender.

 

(c) The Maturity Date shall, as to the Consenting Lenders, be extended to the first anniversary of the Maturity Date theretofore in effect.  The decision to agree or withhold agreement to any Maturity Date Extension Request shall be at the sole discretion of each Lender.  The Commitment of any Declining Lender shall terminate on the Maturity Date in effect prior to giving effect to any such extension (such Maturity Date being called the “Existing Maturity Date”).  The principal amount of any outstanding Loans made by Declining Lenders, together with any accrued interest thereon and any accrued fees and other amounts payable to or for the account of such Declining Lenders hereunder, shall be due and payable on the Existing Maturity Date, and on the Existing Maturity Date the Parent Borrower shall also make such other prepayments of Loans 

  

  

  

  

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pursuant to Section 2.10 as shall be required in order that, after giving effect to the termination of the Commitments of, and all payments to, Declining Lenders pursuant to this sentence, the total Revolving Credit Exposures would not exceed the Line Cap.

 

(d) Notwithstanding the foregoing provisions of this Section 2.23, the Parent Borrower shall have the right, pursuant to Section 2.18(b), at any time prior to the Existing Maturity Date, to replace a Declining Lender with a bank or other financial institution that will agree to the applicable Maturity Date Extension Request (provided that each such bank or other financial institution, if not already a Lender (or an Affiliate of a Lender) hereunder, shall be subject to the approval of the Administrative Agent (not to be unreasonably withheld)), and any such replacement Lender shall for all purposes constitute a Consenting Lender.

 

(e) Notwithstanding the foregoing provisions of this Section 2.23, no extension of the Maturity Date pursuant to this Section 2.23 shall become effective unless, on or promptly following the Extension Date, the conditions set forth in Section 4.02 shall be satisfied (with all references in such Section to a Borrowing being deemed to be references to such extension) and the Administrative Agent shall have received a certificate to that effect dated the Extension Date and executed by a Financial Officer of the Parent Borrower.

 

ARTICLE III

 

Representations and Warranties

 

Each of Holdings, the Parent Borrower and Purchasing represents and warrants to the Lenders that:

 

SECTION 3.01. Organization; Powers.  Each of the Loan Parties is duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization, has all requisite power and authority to carry on its business as now conducted and is qualified to do business in, and is in good standing in, every jurisdiction where such qualification is required, except, in each case, where the failure to do so, individually or in the aggregate, would not result in a Material Adverse Effect.

 

SECTION 3.02. Authorization; Enforceability.  The Transactions to be entered into by each Loan Party are within such Loan Party’s organizational powers and have been duly authorized by all necessary organizational and, if required, stockholder action.  This Agreement has been duly executed and delivered by each of Holdings, the Parent Borrower and Purchasing and constitutes, and each other Loan Document to which any Loan Party is to be a party, when executed and delivered by such Loan Party, will constitute, a legal, valid and binding obligation of Holdings, the Parent Borrower, Purchasing or such Loan Party (as the case may be), enforceable in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer or other laws affecting 

  

  

  

  

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creditors’ rights generally and subject to general principles of equity, regardless of whether considered in a proceeding in equity or at law.

 

SECTION 3.03. Governmental Approvals; No Conflicts.  The Transactions (a) do not require any consent or approval of, registration or filing with, or any other action by, any Governmental Authority, except (i) such as have been obtained or made and are in full force and effect or as to which the failure to be made or obtained and to be in full force and effect would not result in a Material Adverse Effect, (ii) filings necessary to perfect Liens created under the Collateral Agreement and (iii) filings of periodic reports with the Securities and Exchange Commission, (b) will not violate any law or regulation or the charter, by-laws or other organizational documents of Holdings or any Subsidiary or any material order of any Governmental Authority applicable to such Person except, in each case, as would not reasonably be expected to have a Material Adverse Effect, (c) will not violate or result in a default under any material provision of any indenture, agreement or other instrument binding upon Holdings or any of its Subsidiaries or its assets, or give rise to a right thereunder to require any payment to be made by Holdings or any Subsidiary, and (d) will not result in the creation or imposition of any Lien on any asset of Holdings or any of its Subsidiaries, except Liens created under the Security Documents.

 

SECTION 3.04. Financial Condition; No Material Adverse Change.  (a)  Holdings has heretofore furnished to the Lenders (i) its consolidated balance sheets and statements of operations, stockholders’ equity and cash flows as of and for the fiscal year ended January 28, 2012, reported on by KPMG LLP, independent public accountants and (ii) its consolidated balance sheets and statements of operations and cash flows as of and for the fiscal quarter and the 39 weeks ended October 27, 2012, certified by its chief financial officer.  Such financial statements present fairly, in all material respects, the financial position and results of operations and cash flows of Holdings and its consolidated Subsidiaries as of such dates and for such periods in accordance with GAAP, subject to normal year end audit adjustments and the absence of certain footnotes in the case of the statements referred to in clause (ii) above.

 

(b) Since January 28, 2012, there has been no material adverse change in the business, assets, operations or condition of Holdings and its Subsidiaries, taken as a whole; provided it is understood that neither (i) the financial performance and condition reflected in the consolidated balance sheet and statement of operations of Holdings as of the 13 and 39 weeks ended October 27, 2012, nor (ii) the matters disclosed in any reports filed with the Securities and Exchange Commission by Holdings prior to January 23, 2013 constitute such material adverse change.

 

SECTION 3.05. Properties.  (a)  Each of Holdings and its Subsidiaries has good title to, or valid leasehold or other property interests in, all its real and personal property material to the business of Holdings and its Subsidiaries (taken as a whole), except for Liens permitted under Section 6.02 and minor defects in title and leases being contested, in each case, that do not

  

  

  

  

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materially interfere with its ability to conduct its business as currently conducted or to utilize such properties for their intended purposes.

 

(b) Each of Holdings and its Subsidiaries owns, or is licensed to use, all trademarks, tradenames, copyrights, patents and other intellectual property material to its business, and the use thereof by Holdings and its Subsidiaries does not infringe upon the rights of any other Person, except for any defects in ownership or licenses and any such infringements that, individually or in the aggregate, would not result in a Material Adverse Effect.

 

SECTION 3.06. Litigation and Environmental Matters.  (a)  There are no actions, suits or proceedings by or before any arbitrator or Governmental Authority pending against or, to the actual knowledge of Holdings, the Parent Borrower or Purchasing, threatened in writing against or affecting Holdings or any of its Subsidiaries (i) as to which there is a reasonable possibility of an adverse determination and that, if adversely determined, would, individually or in the aggregate, result in a Material Adverse Effect (other than the Disclosed Matters) or (ii) that involve any of the Loan Documents or the Transactions (other than as disclosed in Schedule 3.06B).

 

(b) Except for the Disclosed Matters and except with respect to any other matters that, individually or in the aggregate, would not result in a Material Adverse Effect, neither Holdings nor any of its Subsidiaries (i) has failed to comply with any Environmental Law or to obtain, maintain or comply with any permit, license or other approval required under any Environmental Law, (ii) has become subject to any Environmental Liability, (iii) has received notice of any claim with respect to any Environmental Liability or (iv) knows of any basis for any Environmental Liability.

 

(c) Since the Effective Date, there has been no change in the status of the Disclosed Matters that, individually or in the aggregate, has resulted in, or materially increased the likelihood of, a Material Adverse Effect.

 

SECTION 3.07. Compliance with Laws and Agreements.  Each of Holdings and its Subsidiaries is in compliance with all laws, regulations and orders of any Governmental Authority applicable to it or its property and all indentures, material agreements and other material instruments binding upon it or its property, except where the failure to do so, individually or in the aggregate, would not result in a Material Adverse Effect.  No Default has occurred and is continuing.

 

SECTION 3.08. Investment Company Status.  No Loan Party is an “investment company” as defined in, or subject to regulation under, the Investment Company Act of 1940.

 

SECTION 3.09. Taxes.  Each of Holdings and its Subsidiaries has timely filed or caused to be filed all Tax returns and reports required to have been filed and has paid or caused to be paid all Taxes shown to be due and 

  

  

  

  

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payable on such returns, except (a) Taxes that are being contested in good faith by appropriate proceedings and for which Holdings or such Subsidiary, as applicable, has set aside on its books adequate reserves or (b) to the extent that the failure to do so would not result in a Material Adverse Effect.

 

SECTION 3.10. ERISA.  (a)  No ERISA Event has occurred or is reasonably expected to occur that, when taken together with all other such ERISA Events for which liability is reasonably expected to occur, would result in a Material Adverse Effect.

 

(b) There has been no change in the funding status of any Plan since the last annual actuarial valuation date that would reasonably be expected to have a Material Adverse Effect.

 

SECTION 3.11. Disclosure.  Neither the Lender Presentation nor any of the other reports, certificates or other written information (other than projections (the “projections”) and other forward looking information and information of a general economic or industry nature) (collectively, the “information”) furnished by or on behalf of any Loan Party to the Administrative Agent, any Issuing Bank or any Lender in connection with the negotiation of this Agreement or any other Loan Document or delivered hereunder (as modified or supplemented by other information so furnished and taken as a whole with all such other information), when furnished or modified or supplemented, contains any untrue statement of a material fact or omits to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading.  The projections furnished by or on behalf of any Loan Party to the Administrative Agent, any Issuing Bank or any Lender in connection with the negotiation of this Agreement or delivered hereunder (as modified or supplemented by other information so furnished and taken as a whole with all other information), have been or will be prepared in good faith based upon assumptions that are reasonable at the time made and at the time the projections are made available to the Administrative Agent, any Issuing Bank or any Lender by any Loan Party (it being understood that such projections are forward looking statements which by their nature are subject to significant uncertainties and contingencies, many of which are beyond the control of the Loan Parties, and that actual results may differ, and such differences may be material, from those expressed or implied in such projections, and no assurance can be given that the projections will be realized).

 

SECTION 3.12. Material Subsidiaries.  Schedule 3.12 sets forth the name and jurisdiction of organization of each Subsidiary of Holdings that is a Material Subsidiary as of the Restatement Effective Date.

  

  

  

  

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ARTICLE IV

 

Conditions

 

SECTION 4.01. [Intentionally Omitted.]

 

SECTION 4.02. Each Credit Event.  The obligation of each Lender to make a Loan on the occasion of any Borrowing (other than a Protective Advance, but, for the avoidance of doubt, including each Loan made as part of any Refinancing Borrowing), and of each Issuing Bank to issue, amend, renew or extend any Letter of Credit, is subject to the satisfaction of the following conditions:

 

(a) The representations and warranties of the Loan Parties set forth in the Loan Documents shall be true and correct (or, in the case of any representation or warranty not qualified as to materiality, true and correct in all material respects) on and as of the date of such Borrowing or the date of issuance, amendment, renewal or extension of such Letter of Credit, as applicable, except to the extent that such representations and warranties relate to an earlier date, in which case they shall have been true and correct (or, in the case of any representation or warranty not qualified as to materiality, true and correct in all material respects) as of such earlier date.

 

(b) At the time of and immediately after giving effect to such Borrowing or the issuance, amendment, renewal or extension of such Letter of Credit, as applicable, no Default shall have occurred and be continuing.

 

(c) At the time of and immediately after giving effect to such Loan or the issuance, amendment, renewal or extension of such Letter of Credit, as applicable, the total Revolving Credit Exposures shall not exceed the Line Cap.

 

Each Borrowing and each issuance, amendment, renewal or extension of a Letter of Credit shall be deemed to constitute a representation and warranty by Holdings and the relevant Borrower or the relevant Account Party, as applicable, on the date thereof as to the matters specified in paragraphs (a), (b) and (c) of this Section.

 

SECTION 4.03. Borrowing Subsidiaries.  The obligation of each Lender to make a Loan on the occasion of the first Borrowing by a Borrowing Subsidiary is subject to receipt by the Administrative Agent of a Subsidiary Borrower Election with respect to such Borrowing Subsidiary in accordance with Section 2.20 and to the satisfaction of the following further conditions:

 

(a) If requested by the Administrative Agent or the Required Lenders, the Administrative Agent shall have received one or more favorable written opinions of counsel for such Borrowing Subsidiary reasonably acceptable to the Administrative Agent, with respect to (i) the organization and existence of such Borrowing Subsidiary, (ii) the due authorization, execution and delivery of the Subsidiary Borrower Election, (iii) the legality, validity and binding effect on such Borrowing Subsidiary of the Subsidiary Borrower Election and this Agreement as modified thereby and (iv) such other 

  

  

  

  

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matters relating to such Borrowing Subsidiary as the Administrative Agent shall reasonably request.

 

(b) The Administrative Agent shall have received such documents and certificates as the Administrative Agent or its counsel may reasonably request relating to the organization, existence and good standing of such Borrowing Subsidiary and its authorization to be a Borrower, all in form and substance reasonably satisfactory to the Administrative Agent and its counsel.

 

(c) The Lenders shall have received all documentation and other information required by regulatory authorities under applicable “know your customer” and anti-money laundering rules and regulations, including the Patriot Act, with respect to such Borrowing Subsidiary.

 

The Administrative Agent shall promptly provide to each Lender any documentation with respect to any Borrowing Subsidiary that was delivered to the Administrative Agent pursuant to this Section.

 

ARTICLE V

 

Affirmative Covenants

 

Until the Commitments have expired or been terminated and the principal of and interest on each Loan and all fees payable hereunder shall have been paid in full and all Letters of Credit shall have expired or terminated and all LC Disbursements shall have been reimbursed, each of Holdings, the Parent Borrower and Purchasing covenants and agrees with the Lenders that:

 

SECTION 5.01. Financial Statements; Borrowing Base, Ratings Change and Other Information.  The Parent Borrower will furnish to the Administrative Agent for distribution to each Lender:

 

(a) as soon as available and, in any event, within 90 days after the end of each fiscal year of Holdings, its audited consolidated balance sheets and related statements of operations, stockholders’ equity and cash flows as of the end of and for such year, setting forth in each case in comparative form the figures for the previous fiscal year, all reported on by KPMG LLP or other independent public accountants of recognized national standing (without a “going concern” or like qualification or exception and without any qualification or exception as to the scope of such audit) to the effect that such consolidated financial statements present fairly in all material respects the financial condition and results of operations of Holdings and its consolidated Subsidiaries on a consolidated basis in accordance with GAAP;

 

(b) as soon as available and, in any event, within 45 days after the end of each of the first three fiscal quarters of each fiscal year of Holdings, its consolidated balance sheets and related statements of operations, stockholders’ equity and cash flows as of the end of and for such fiscal quarter and the then elapsed portion of the fiscal year, setting forth in each case in comparative form the figures for the corresponding period or periods 

  

  

  

  

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of (or, in the case of the balance sheet, as of the end of) the previous fiscal year, all certified by one of its Financial Officers as presenting fairly in all material respects the financial condition and results of operations of Holdings and its consolidated Subsidiaries on a consolidated basis in accordance with GAAP, subject to normal year-end audit adjustments and the absence of footnotes;

 

(c) concurrently with any delivery of financial statements under clause (a) or (b) above, a certificate of a Financial Officer of Holdings or the Parent Borrower (i) certifying as to whether a Default has occurred and is continuing on the date thereof and, if a Default has occurred and is continuing on such date, specifying the details thereof and any action taken or proposed to be taken with respect thereto, (ii) setting forth a reasonably detailed calculation of the Fixed Charge Coverage Ratio (whether or not Section 6.11 shall be applicable at the time such certificate is delivered) and (iii) stating whether any change in GAAP or in the application thereof has occurred since the date of the most recent audited financial statements referred to in Section 3.04 and, if any such change has occurred, specifying the effect of such change on the financial statements accompanying such certificate;

 

(d) within 90 days after the end of each fiscal year, an annual financial forecast (in a form consistent with forecasts previously provided, including a quarterly presentation and a liquidity forecast) for Holdings and its Subsidiaries for the subsequent fiscal year (including a consolidated balance sheet of Holdings and its Subsidiaries as of the end of the prior fiscal year and consolidated statements of income and cash flows of Holdings and its Subsidiaries for such fiscal year);

 

(e) promptly after the same become publicly available, copies of all periodic and other reports, proxy statements and other materials filed by any Loan Party with the Securities and Exchange Commission, or any Governmental Authority succeeding to any or all of the functions of said Commission, or with any national securities exchange, or distributed by Holdings to its shareholders generally, as the case may be;

 

(f) promptly after any Loan Party obtains knowledge that (i) Moody’s or S&P shall have announced a change in the Credit Rating established or deemed to have been established by such rating agency, written notice of such Credit Rating change and (ii) Moody’s, S&P or Fitch shall have announced a change in the credit rating established by such rating agent with respect to this facility, written notice of such rating change;

 

(g) (i) within 15 Business Days after the last day of each fiscal month, a Borrowing Base Certificate calculating, certifying and setting forth the Borrowing Base and Availability and supporting information in connection therewith as of the last day of such fiscal month, and including a certification of the Designated Secured Other Obligations at the time of such delivery, together with such additional reports with respect to the Borrowing Base as the Administrative Agent may reasonably request, (ii) within five Business Days of the end of each week during the continuance of an Event of Default or during any period following a day on which Availability is less than the greater of (A) 12.5% of the Line Cap and (B) $150,000,000, a Borrowing Base Certificate calculating, certifying and setting forth the Borrowing Base and Availability

  

  

  

  

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and supporting information in connection therewith, in each case as of the last day of such week, together with any additional reports with respect to the Borrowing Base as the Administrative Agent may reasonably request; provided that such period shall be discontinued if no Event of Default is continuing and Availability ceases to be less than such level for 30 consecutive days; provided further that, notwithstanding the foregoing, the information that the Parent Borrower is required to deliver on a weekly basis shall be limited to (x) weekly updates of Accounts, Eligible Credit Card Receivables, Eligible In-Transit Inventory and Eligible Inventory in detail reasonably acceptable to the Administrative Agent and the Parent Borrower and (y) such other information as reasonably agreed between the Administrative Agent and the Parent Borrower, and (iii) promptly as reasonably practicable after the request therefor, such additional information concerning the Accounts or Inventory of the Loan Parties or adjustments thereto as may be reasonably requested by the Administrative Agent from time to time;

 

(h)  Concurrently with the delivery of each Borrowing Base Certificate, a certificate of a Financial Officer certifying the scheduled payment date and principal amount of each scheduled payment of principal required to be made in respect of any Indebtedness due within 120 days after the date of such Borrowing Base Certificate that would require an Amortization Reserve if due within 90 days thereafter;

 

(i) promptly upon obtaining knowledge of any such event, circumstance or change, a written notice of any event, circumstance or change that has occurred since the delivery of the most recent Borrowing Base Certificate that would (i) reduce the aggregate amount of any of the Eligible Accounts, Eligible Credit Card Receivables or Eligible Inventory or (ii) result in an aggregate amount of any of the Eligible Accounts, Eligible Credit Card Receivables or Eligible Inventory ceasing to be, as applicable, Eligible Accounts, Eligible Credit Card Receivables or Eligible Inventory, in each case by more than (A) $50,000,000, at any time that the Revolving Credit Exposure (not including any LC Exposure) shall not exceed $50,000,000 and the LC Exposure shall not exceed $300,000,000, and (B) $30,000,000, at any other time; and

 

(j) promptly following any request therefor, such other information regarding the operations, business affairs and financial condition of Holdings or any Subsidiary, or compliance with the terms of any Loan Document, as the Administrative Agent or any Lender may reasonably request (other than information which is subject to attorney-client privilege or which would result in a breach of a confidentiality obligation of Holdings or any Subsidiary to any other Person).

 

Documents required to be delivered pursuant to Section 5.01(a), (b) or (e) may be delivered electronically and if so delivered, shall be deemed to have been delivered on the earliest of the date (i) on which Holdings posts such documents, or provides a link thereto on Holdings’ website on the Internet at the website address; (ii) on which such documents are posted to the Securities and Exchange Commission’s (or any Governmental Authority succeeding to any or all of the functions of said Commission’s) website (including as part of any 10-K or 10-Q filing) or (iii) on which such documents are posted on Holdings’ behalf on IntraLinks/IntraAgency or any other Internet or intranet website, if any, to which each Lender and the Administrative Agent have access (whether a commercial, third-party website or 

  

  

  

  

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whether sponsored by the Administrative Agent); provided that (A) Holdings shall have notified the Administrative Agent of the posting of such documents and (B) in the case of documents required to be delivered pursuant to Section 5.01(a) or (b), Holdings shall deliver electronic copies of such documents to the Administrative Agent if any Lender requests that Holdings deliver such copies until a request to cease delivering copies is given by the Administrative Agent at the request of such Lender.  The Administrative Agent shall have no obligation to request the delivery of or to maintain copies of the documents referred to above, and in any event shall have no responsibility to monitor compliance by Holdings with any such request for delivery, and each Lender shall be solely responsible for requesting delivery to it or maintaining its copies of such documents.

 

SECTION 5.02. Notices of Material Events.  The Parent Borrower will furnish to the Administrative Agent for distribution to each Lender prompt written notice after any Financial Officer or other executive officer obtains knowledge of any of the following:

 

(a) the occurrence of any Default;

 

(b) the filing or commencement of any action, suit or proceeding by or before any arbitrator or Governmental Authority against or affecting Holdings, the Parent Borrower or any Subsidiary thereof that, if adversely determined, would reasonably be expected to result in a Material Adverse Effect (other than any Disclosed Matters);

 

(c) the occurrence of any ERISA Event that, alone or together with any other ERISA Events that have occurred, would result in liability of Holdings and its Subsidiaries in an aggregate amount exceeding $100,000,000;

 

(d) any Lien (other than Liens permitted under Section 6.02(a), (b) or (m)) or claim made or asserted against any of the Collateral in an amount or securing an amount in excess of $30,000,000;

 

(e) any loss, damage, or destruction to, or any condemnation or other taking by a Governmental Authority of, all or any portion of the Collateral, whether or not covered by insurance, having an aggregate fair market value in excess of $30,000,000;

 

(f) any default notice received under or with respect to any leased location or public warehouse where Collateral with a fair market value in excess of $50,000,000 is located and that is material to the conduct of the business of Holdings and its Subsidiaries taken as a whole (which shall be delivered within 5 Business Days after receipt thereof); and

 

(g) any other development that results in, or would reasonably be expected to result in, a Material Adverse Effect.

 

Each notice delivered under this Section shall be accompanied by a statement of a Financial Officer or other executive officer of the Parent Borrower setting forth the details of the event or development requiring such notice and any action taken or proposed to be taken with respect thereto.

  

  

  

  

 

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SECTION 5.03. Information Regarding Collateral.  (a)  The Parent Borrower will furnish to the Administrative Agent prompt written notice of any change (i) in the legal name of any Loan Party, (ii) in the identity or type of organization or corporate structure of any Loan Party, (iii) in the Federal Taxpayer Identification Number or other identification number of any Loan Party, (iv) in the jurisdiction of organization of any Loan Party or (v) in the address set forth in the Uniform Commercial Code financing statement filed with respect to any Loan Party (including the establishment of any such new chief executive office in respect of any Grantor that is not a registered organization) or any office or facility at which Collateral owned by it having an aggregate fair market value of more than $30,000,000 is located.  Holdings and the Parent Borrower agree not to effect or permit any change referred to in the preceding sentence unless all filings have been made under the Uniform Commercial Code or otherwise that are required in order for the Administrative Agent to continue at all times following such change to have a valid, legal and perfected security interest in all the Collateral.

 

(b) At the time of each delivery of annual financial statements with respect to the preceding fiscal year pursuant to clause (a) of Section 5.01, the Parent Borrower shall deliver to the Administrative Agent a certificate of a Financial Officer of the Parent Borrower setting forth the information required pursuant to Sections 1 (other than clause (d) thereof), 2, 7 and 8 of the Perfection Certificate or confirming that there has been no change in such information since the date of the Perfection Certificate delivered on the Effective Date or the date of the most recent certificate delivered pursuant to this Section.

 

SECTION 5.04. Existence; Conduct of Business.  Each of Holdings and the Parent Borrower will, and will cause each of its Material Subsidiaries to, (x) do or cause to be done all things necessary to preserve, renew and keep in full force and effect its legal existence and (y) except as would not reasonably be expected to have a Material Adverse Effect, take all reasonable action to preserve, renew and keep in full force and effect its rights, licenses, permits, privileges and franchises; provided that the foregoing shall not prohibit any merger, consolidation, liquidation, transfer of assets or dissolution permitted under Section 6.03 and, in the case of an asset transfer, Section 6.05.

 

SECTION 5.05. Payment of Obligations.  Each of Holdings and the Parent Borrower will, and will cause each of its Subsidiaries to, pay its obligations, including Tax liabilities, that, if not paid, would result in a Material Adverse Effect before the same shall become delinquent or in default, except where (a) the validity or amount thereof is being contested in good faith by appropriate proceedings, (b) Holdings, the Parent Borrower or such Subsidiary has set aside on its books adequate reserves with respect thereto in accordance with GAAP and (c) the failure to make payment pending such contest would not result in a Material Adverse Effect.

 

SECTION 5.06. Maintenance of Properties.  Each of Holdings and the Parent Borrower will, and will cause each of its Subsidiaries to, keep 

  

  

  

  

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and maintain all property material to the conduct of the business of Holdings and its Subsidiaries (taken as a whole) in good working order and condition, ordinary wear and tear, condemnation and casualty loss excepted, except where the failure to do so would not reasonably be expected to have a Material Adverse Effect; provided that the foregoing shall not prohibit the disposition of any property otherwise permitted by this Agreement; provided, further, that nothing in this Section shall prevent Holdings or any Subsidiary from discontinuing the operations or maintenance of any of its properties no longer deemed by Holdings or such Subsidiary, as applicable, to be useful in the conduct of its business.

 

SECTION 5.07. Insurance.  Each of Holdings and the Parent Borrower will, and will cause each of its Material Subsidiaries to, maintain, (1) with financially sound and reputable insurance companies or (2) (other than with respect to Inventory) with association or captive insurance companies or pursuant to self-insurance, (a) insurance in such amounts (with no greater risk retention) and against such risks (including physical loss or damage to the Collateral (including all Inventory constituting Collateral)) as are customarily maintained by companies of established repute engaged in the same or similar businesses operating in the same or similar locations and (b) without duplication, all insurance required to be maintained pursuant to the Collateral Agreement.   Policies maintained with respect to any Collateral shall be endorsed or otherwise amended to include a lenders’ loss payable clause in favor of the Administrative Agent and providing for losses thereunder to be payable to the Administrative Agent or its designee, provided that, unless an Event of Default or a Cash Dominion Period shall have occurred and be continuing, (A) the Administrative Agent shall turn over to the Parent Borrower any amounts received by it as loss payee under any such policies and (B) Holdings, Parent Borrower and/or the applicable Material Subsidiary shall have the sole right to make, settle and adjust claims in respect of such insurance.  Each such policy referred to in this paragraph also shall provide that it shall not be canceled, modified or not renewed (A) by reason of nonpayment of premium except upon not less than 10 days’ prior written notice thereof by the insurer to the Administrative Agent (giving the Administrative Agent the right to cure defaults in the payment of premiums) or (B) for any other reason except upon not less than 30 days’ prior written notice thereof by the insurer to the Administrative Agent.  Each Loan Party shall deliver to the Administrative Agent a copy of a certificate of insurance evidencing the required coverage on or prior to the Effective Date and promptly following each renewal or replacement of such policies thereafter.  The Parent Borrower will furnish to the Lenders, upon request of the Administrative Agent, information in reasonable detail as to the insurance so maintained.

 

SECTION 5.08. Books and Records; Inspection Rights.  Each of Holdings and the Parent Borrower will, and will cause each of its Subsidiaries to, keep proper books of record and account in accordance with GAAP.  Each of Holdings and the Parent Borrower will, and will cause each of its Subsidiaries

  

  

  

  

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to, permit any representatives designated by the Administrative Agent or any Lender, upon reasonable prior notice and without disruption of the normal and ordinary conduct of the business of Holdings, the Parent Borrower or any such Subsidiary, to visit and inspect its properties, to examine and make extracts from its books and records, and to discuss its affairs, finances and condition with its officers and, if an executive officer or a Financial Officer of the Parent Borrower has been afforded an opportunity to be present, independent accountants  (subject to such accountants’ customary policies and procedures), all at such reasonable times during normal business hours and as often as reasonably requested.  Notwithstanding anything to the contrary in this Section 5.08, none of Holdings, the Parent Borrower or any Subsidiary will be required to disclose, permit the inspection, examination or making copies or abstracts of, or discussion of, any document, information or other matter that (a) in respect of which disclosure to the Administrative Agent or any Lender (or their respective representatives or contractors) is prohibited by law or any bona fide arm’s length third party contract or (b) is subject to attorney-client or similar privilege or constitutes attorney work product; provided that each of Holdings and the Parent Borrower will, and will cause each of its Subsidiaries to, make available redacted versions of requested documents or, if unable to do so consistent with the preservation of such privilege, shall endeavor in good faith otherwise to disclose information responsive to the requests of the Administrative Agent, any Lender or any of their respective Related Parties, in a manner that will protect such privilege.

 

SECTION 5.09. Compliance with Laws.  Each of Holdings and the Parent Borrower will, and will cause each of its Subsidiaries to, comply with all laws, rules, regulations and orders of any Governmental Authority applicable to it or its property, except where the failure to do so, individually or in the aggregate, would not result in a Material Adverse Effect.

 

SECTION 5.10. Use of Proceeds and Letters of Credit.  The proceeds of the Loans will be used only for general corporate purposes, including working capital requirements, liquidity and the repayment of maturing commercial paper and other Indebtedness of the Parent Borrower and Purchasing.  No part of the proceeds of any Loan will be used, whether directly or indirectly, for any purpose that entails a violation of any of the Regulations of the Board, including Regulations T, U and X.  Letters of Credit will be issued to support obligations of the Account Parties in respect of purchases of inventory in the ordinary course of business, as well as other obligations of Holdings and its Subsidiaries incurred without violation of this Agreement.

 

SECTION 5.11. Additional Guarantee Parties.  If any Subsidiary (other than any Foreign Subsidiary or any Subsidiary, substantially all of the assets of which consist of Equity Interests in one or more Foreign Subsidiaries) becomes a Material Subsidiary or otherwise becomes a Guarantee Party after the Effective Date, Holdings and the Parent Borrower shall, within fifteen Business Days after such Subsidiary becomes a Material Subsidiary or a 

  

  

  

  

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Guarantee Party (as applicable), notify the Administrative Agent and the Lenders thereof and cause the Collateral and Guarantee Requirement to be satisfied with respect to such Subsidiary.

 

SECTION 5.12. Further Assurances.  Each of Holdings and the Parent Borrower will, and will cause each Guarantee Party and each Additional Grantor to, execute any and all further documents, financing statements, agreements and instruments, and take all such further actions, which may be required under any applicable law, or which the Administrative Agent or the Required Lenders may reasonably request, to cause the Collateral and Guarantee Requirement to be and remain satisfied, all at the expense of the Guarantee Parties and the Additional Grantors.  Holdings and the Parent Borrower also agree to provide to the Administrative Agent, from time to time upon reasonable request, evidence reasonably satisfactory to the Administrative Agent as to the perfection and priority of the Liens created or intended to be created by the Security Documents.

 

SECTION 5.13. Maintenance of Ratings.  Holdings will use commercially reasonable efforts to maintain continuously in effect (i) a Credit Rating from each of Moody’s and S&P in respect of Holdings and (ii) a credit rating of this facility from each of Moody’s, S&P and Fitch.

 

SECTION 5.14. Appraisals.  Once in each twelve month period (unless the Parent Borrower otherwise requests that additional appraisals of Inventory be conducted in the relevant twelve month period, as provided below), at the request of the Administrative Agent, the Loan Parties will provide the Administrative Agent with appraisals or updates thereof of their Inventory from an appraiser selected and engaged by the Administrative Agent, and prepared on a basis satisfactory to the Administrative Agent, such appraisals and updates to include, without limitation, information required by applicable law and regulations; provided that (a) if an Event of Default has occurred and is continuing, there shall be no limitation on the number of such appraisals and (b) if Availability on any date is less than the greater of (i) 25% of the Line Cap and (ii) $350,000,000, then two times during the twelve month period commencing with the month during which clause (b) is triggered, at the request of the Administrative Agent, the Loan Parties will provide the Administrative Agent with such appraisals.  In addition to the foregoing, the Parent Borrower may request in writing that the Administrative Agent conduct additional appraisals of Inventory from time to time in order to effect a change in the Net Orderly Liquidation Value of any of the Eligible Inventory or to evaluate and appraise any Additional Inventory.  For purposes of this Section 5.14, it is understood and agreed that a single appraisal may consist of examinations conducted at multiple relevant sites and involve one or more relevant Loan Parties and their assets.  All such appraisals shall be commenced upon reasonable notice to the Parent Borrower and performed during normal business hours of the Parent Borrower, and all reasonable out-of-pocket costs of such appraisals shall be at the sole expense of the Parent Borrower.

  

  

  

  

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SECTION 5.15. Field Examinations.  Once in each twelve month period, at the request of the Administrative Agent, the Loan Parties will permit the Administrative Agent to conduct a field examination of (a) the books and records relating to the accounts of the Loan Parties and (b) the inventory of the Loan Parties, in each case to ensure the adequacy of the Collateral included in the Borrowing Base and related reporting and control systems; provided that (i) if an Event of Default has occurred and is continuing, there shall be no limitation on the number or frequency of field examinations and (ii) if Availability on any date is less than the greater of (A) 25% of the Line Cap and (B) $350,000,000, then two times during the twelve month period commencing with the month during which clause (ii) is triggered, at the request of the Administrative Agent, the Loan Parties will permit such examinations.  For purposes of this Section 5.15, it is understood and agreed that a single field examination may be conducted at multiple relevant sites and involve one or more relevant Loan Parties and their assets.  All such field examinations shall be commenced upon reasonable advance notice to the Parent Borrower and performed during normal business hours of the Parent Borrower, and all reasonable out-of-pocket costs of such field examinations shall be at the sole expense of the Parent Borrower.

 

SECTION 5.16. Control Agreements.  (a)  If a Cash Dominion Period commences, the Loan Parties, promptly upon the request of the Administrative Agent, shall deliver to the Administrative Agent a schedule of all Deposit Accounts and Securities Accounts that are maintained by the Loan Parties, which Schedule shall include, with respect to each depository, (i) the name and address of such depository, (ii) the account number(s) maintained with such depository, and (iii) a contact person at such depository.

 

(b) Within 90 days after the Effective Date (or such later date as the Administrative Agent may reasonably agree in its sole discretion), each Loan Party shall have entered into a Control Agreement, in form and substance reasonably satisfactory to the Administrative Agent, with the bank which maintains Parent Borrower’s main concentration account (the “Concentration Account”) and with each bank with which such Loan Party maintains each other Deposit Account or Securities Account described on Schedule 5.16 (the Concentration Account and each other account subject to a Control Agreement, a “Control Account”) and shall at all times thereafter cause all such accounts to be maintained as Control Accounts.  At all times during the continuance of a Cash Dominion Period, (i) unless the Administrative Agent has given contrary instructions to the applicable bank or financial institution pursuant to the applicable Control Agreement, the Loan Parties shall cause all proceeds of Collateral received in accounts of the stores that are not Control Accounts, and all other amounts otherwise constituting or received in respect of proceeds of Collateral in Control Accounts other than the Concentration Account to be transferred to the Concentration Account within not more than 3 Business Days of receipt in such Control Accounts and (ii) the Loan Parties shall cause all proceeds of Collateral received in accounts of the stores that are not Control Accounts, and all other amounts otherwise constituting or received in respect of any Collateral that are received in accounts that are not Control Accounts, to be transferred from such non-controlled accounts to Control Accounts as soon as practicable following receipt; provided 

  

  

  

  

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that this sentence shall not apply to any Excluded Accounts.  Promptly following the commencement of any Cash Dominion Period, each Loan Party shall give notice satisfactory to the Administrative Agent to each credit card processor that processes its credit card receivables to require it to make daily transfers of the payments due from such processor to a Control Account specified by the Administrative Agent.

 

(c) Subject to the time periods specified in Section 5.16(b), during the continuance of a Cash Dominion Period, unless the Administrative Agent has given contrary instructions to the applicable bank or financial institution pursuant to the applicable Control Agreement, the Loan Parties shall cause the wire transfer on each Business Day (whether or not there are at the time outstanding Loans) of all available cash receipts to the Concentration Account, from:

 

(i) the sale of Inventory;

 

(ii) all proceeds of collections of Accounts (including in respect of credit card receivables, whether or not constituting Eligible Credit Card Receivables); and

 

(iii) each Control Account (including all cash deposited therein from each Deposit Account and each Securities Account).

 

(d) If, at any time during the continuance of a Cash Dominion Period, any cash or cash equivalents owned by any Loan Party (other than amounts contained in Excluded Accounts) are deposited to any account, or held or invested in any manner, otherwise than in a Control Account, the applicable Loan Party shall close such account, as soon as practicable following the occurrence of a Cash Dominion Period, and have all funds therein and all future deposits thereto transferred to a Control Account.  If on any date (i) Availability shall be less than 25% of the Line Cap or (ii) the Revolving Credit Exposure (not including any LC Exposure) shall exceed 50% of the Line Cap, then (A) each Loan Party shall promptly enter into an amendment to the Collateral Agreement satisfactory to the Administrative Agent pursuant to which such Loan Party shall, for the benefit of the Secured Parties grant a Lien on all its Securities Accounts which prior to such amendment shall have been excluded from the Lien of the Collateral Agreement and (B) the Loan Parties shall within 30 days after such date (or such later date as the Administrative Agent may reasonably agree in its sole discretion) enter into Control Agreements, in form and substance reasonably satisfactory to the Administrative Agent, with the applicable securities intermediaries in respect of such Securities Accounts as shall be required so that after giving effect thereto all cash or cash equivalents owned by the Loan Parties (other than amounts contained in Excluded Accounts) shall be held in Control Accounts and shall at all times thereafter cause all such accounts to be maintained as Control Accounts.

 

(e)  The Loan Parties may close Deposit Accounts, Securities Accounts or Control Accounts and/or open new Deposit Accounts, Securities Accounts or Control Accounts, subject to the execution and delivery to the Administrative Agent of appropriate Control Agreements consistent with the provisions of this Section 5.16 and otherwise reasonably satisfactory to the Administrative Agent.  The Loan Parties shall furnish the Administrative Agent with prior written notice of their intention to open or close a Control Account and the Administrative Agent shall promptly notify the Parent Borrower as to whether the 

  

  

  

  

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Administrative Agent shall require a Control Agreement with the Person with whom such account will be maintained.

 

(f) Each of Holdings and the Parent Borrower hereby acknowledges and agrees on behalf of itself and each other Loan Party that (i) the funds on deposit in the Concentration Account shall at all times continue to be collateral security for all of the Obligations and (ii) during a Cash Dominion Period, such Loan Party shall have no right of withdrawal from the Concentration Account and the funds on deposit in the Concentration Account shall be applied as provided in this Agreement and the Collateral Agreement.  In the event that any Loan Party receives or otherwise has dominion and control of any such proceeds or collections in contravention of the provisions of this Section 5.16, such proceeds and collections shall be held in trust by such Loan Party for the Administrative Agent, shall not be commingled with any of such Loan Party’s other funds or deposited in any account of such Loan Party and shall promptly be deposited into the Concentration Account or dealt with in such other fashion as such Loan Party may be instructed by the Administrative Agent.

 

(g) Any amounts received in the Concentration Account at any time when all of the Obligations then due have been and remain fully repaid (and all deposits required to be made  pursuant to Section 2.09(f) or 2.17(f) shall have been made) shall be remitted to the operating account of the Parent Borrower maintained with the Administrative Agent.

 

(h) The Administrative Agent shall not give any notice of exclusive control or similar notice for any Control Account unless a Cash Dominion Period has occurred and is continuing.  The Administrative Agent shall promptly (but in any event within two Business Days) furnish written notice to each Person with whom a Control Account is maintained of any termination of a Cash Dominion Period.

 

ARTICLE VI

 

Negative Covenants

 

Until the Commitments have expired or terminated and the principal of and interest on each Loan and all fees payable hereunder have been paid in full and all Letters of Credit have expired or terminated and all LC Disbursements shall have been reimbursed, each of Holdings, the Parent Borrower and Purchasing covenants and agrees with the Lenders that:

 

SECTION 6.01. Indebtedness.  Neither Holdings nor the Parent Borrower will, nor will they permit any Subsidiary to, create, incur, assume or permit to exist any Indebtedness, except:

 

(a) Indebtedness created under the Loan Documents;

 

(b) Indebtedness existing on the Effective Date and set forth in Schedule 6.01 and extensions, renewals, refinancings and replacements, in whole or in part, of any such Indebtedness that do not increase the outstanding principal amount thereof (other than in respect of any accrued interest, premium, fees, costs or expenses payable in connection with such extension, renewal, refinancing or replacement) or result in an earlier maturity date or decreased weighted average life thereof; provided that Indebtedness in respect of 

  

  

  

  

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which the holders thereof have the unconditional right to require the issuer thereof to effect a redemption of such Indebtedness for cash prior to the stated maturity date of such Indebtedness shall be treated as maturing on the nearest such redemption date for purposes of the foregoing calculations;

 

(c) Indebtedness of Holdings to any Subsidiary and of any Subsidiary to Holdings or any other Subsidiary; provided that any such Indebtedness owing by any Subsidiary that is not a Loan Party to any Loan Party shall be incurred in compliance with Section 6.04;

 

(d) Guarantees by Holdings of Indebtedness of any Subsidiary and by any Subsidiary of Indebtedness of (i) so long as such Subsidiary also guarantees the Obligations on a pari passu basis, any Loan Party or (ii) any other Subsidiary; provided that such Guarantees of Indebtedness of Subsidiaries that are not Loan Parties are incurred in compliance with Section 6.04;

 

(e) Permitted Indebtedness;

 

(f) Indebtedness of Holdings or any Subsidiary incurred to finance the acquisition, construction or improvement of any fixed or capital assets, including Capital Lease Obligations and any Indebtedness assumed in connection with the acquisition of any such assets or secured by a Lien on any such assets prior to the acquisition thereof, and extensions, renewals, refinancings and replacements of any such Indebtedness that do not increase the outstanding principal amount thereof (other than in respect of any accrued interest, premium, fees, costs or expenses payable in connection therewith); provided that (i) such Indebtedness is incurred prior to or within 180 days after such acquisition or the completion of such construction or improvement and (ii) the aggregate principal amount of Indebtedness permitted by this clause (f) shall not exceed $500,000,000 at any time outstanding;

 

(g) Indebtedness of any Person that becomes a Subsidiary after the Effective Date and extensions, renewals, refinancings and replacements of any such Indebtedness that do not increase the outstanding principal amount thereof (other than in respect of any accrued interest, premium, fees, costs or expenses payable in connection therewith); provided that (i) such Indebtedness exists at the time such Person becomes a Subsidiary and is not created in contemplation of or in connection with such Person becoming a Subsidiary, (ii) the aggregate principal amount of Indebtedness permitted by this clause (g) shall not exceed $500,000,000 at any time outstanding and (iii) after giving effect to such Person becoming a Subsidiary and such Indebtedness, the Fixed Charge Coverage Ratio for the Test Period in effect at the time such investment is to occur shall be not less than 1.10 to 1.00 (determined on a pro forma basis in accordance with Section 1.04(b) as of the last day of such Test Period);

 

(h) Permitted Long-Term Indebtedness;

 

(i) Permitted First-Lien Indebtedness, Permitted-Second Lien Indebtedness and any refinancings, extensions, renewals and replacements of any such Permitted First-Lien

  

  

  

  

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Indebtedness or Permitted Second-Lien Indebtedness (provided that any such refinancings, extensions, renewals and replacements shall qualify as Permitted First-Lien Indebtedness, Permitted Second-Lien Indebtedness or Permitted Long-Term Indebtedness) that do not increase the outstanding principal amount thereof (other than in respect of any accrued interest, premium, fees, costs or expenses payable in connection with such refinancing, extension, renewal or replacement), provided that the aggregate principal amount of Indebtedness permitted by this clause (i), other than refinancings, extensions, renewals and replacements that constitute Permitted Long-Term Indebtedness, shall not exceed $1,750,000,000 at any time outstanding;

 

(j) other unsecured Indebtedness in an aggregate principal amount not exceeding $250,000,000 at any time outstanding; and

 

(k) Indebtedness consisting of letters of credit, guarantees or other credit support provided in respect of trade payables of Parent Borrower or any Subsidiary, in each case issued for the benefit of any bank, financial institution or other Person that has acquired such trade payables pursuant to “supply chain” or other similar financing for vendors and suppliers of Parent Borrower or any of its Subsidiaries, so long as (i) other than in the case of Secured Supply Chain Obligations, such Indebtedness is unsecured, (ii) the terms of such trade payables shall not have been extended in connection with the Permitted Supply Chain Financing and (iii) such Indebtedness represents amounts not in excess of those which Parent Borrower or any of its Subsidiaries would otherwise have been obligated to pay to its vendor or supplier in respect of the applicable trade payables (“Permitted Supply Chain Financing”).

 

SECTION 6.02. Liens.  Neither Holdings nor the Parent Borrower will, nor will they permit any Subsidiary to, create, incur, assume or permit to exist any Lien on any property or asset now owned or hereafter acquired by it, or assign or sell any income or revenues (including accounts receivable) or rights in respect of any thereof, except:

 

(a) Liens created under the Loan Documents;

 

(b) Permitted Encumbrances;

 

(c) any Lien on any property or asset of Holdings or any Subsidiary existing on the Effective Date and set forth in Schedule 6.02; provided that (i) such Lien shall not apply to any other property or asset of Holdings or any Subsidiary and (ii) such Lien shall secure only those obligations which it secured on the Effective Date and refinancings, extensions, renewals and replacements thereof that do not increase the outstanding principal amount thereof, other than in respect of any accrued interest, premium, fees, costs or expenses payable in connection with such extension, renewal or replacement;

 

(d) any Lien existing on any property or asset prior to the acquisition thereof by Holdings or any Subsidiary or existing on any property or asset of any Person that becomes a Subsidiary after the Effective Date prior to the time such Person becomes a Subsidiary; provided that (i) such Lien is not created in contemplation of or in connection 

  

  

  

  

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with such acquisition or such Person becoming a Subsidiary, as the case may be, (ii) such Lien shall not apply to any other property or assets of Holdings or any Subsidiary and (iii) such Lien shall secure only those obligations which it secures on the date of such acquisition or the date such Person becomes a Subsidiary, as the case may be and refinancings, extensions, renewals and replacements thereof that do not increase the outstanding principal amount thereof, other than in respect of any accrued interest, premium, fees, costs or expenses payable in connection with such extension, renewal or replacement;

 

(e) Liens on fixed or capital assets acquired, constructed or improved by Holdings or any Subsidiary; provided that (i) such security interests secure Indebtedness permitted by clause (f) of Section 6.01, (ii) such security interests and the Indebtedness secured thereby are incurred prior to or within 180 days after such acquisition or the completion of such construction or improvement, (iii) the Indebtedness secured thereby does not exceed 100% of the cost of acquiring, constructing or improving such fixed or capital assets and (iv) such security interests shall not apply to any other property or assets of Holdings or any Subsidiaries;

 

(f) Liens in respect of leases or subleases granted to other Persons in the ordinary course of business and not materially interfering with the conduct of business of Holdings and its Subsidiaries, taken as a whole;

 

(g) Liens arising out of conditional sale, title retention, consignment (including “sale or return” arrangements) or similar arrangements for the sale of goods entered into by the Parent Borrower or any of its Subsidiaries in the ordinary course of business, provided that the aggregate amount of such goods shall not exceed $50,000,000;

 

(h) Liens in favor of customs and revenue authorities arising as a matter of law securing payment of customs duties in connection with the importation of goods;

 

(i) any encumbrance or restriction (including pursuant to put and call agreements or buy/sell arrangements) with respect to the Equity Interests of any joint venture or similar arrangement pursuant to the joint venture or similar agreement with respect to such joint venture or similar arrangement;

 

(j) the sale or discount, in the ordinary course of business, of accounts receivable in connection with the compromise or collection thereof and not in connection with any financing or factoring arrangement;

 

(k) Liens (other than Liens on any inventory constituting Collateral) securing Indebtedness of a Subsidiary to a Loan Party or of a Subsidiary that is not a Loan Party to another Subsidiary that is not a Loan Party;

 

(l) Liens on property subject to sale and leaseback transactions not prohibited by Section 6.06 and general intangibles related thereto;

 

(m) Liens on assets of Loan Parties that do not constitute Collateral (and (i) proceeds of such assets and (ii) assets (other than assets of the type referred to in

  

  

  

  

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clauses (i) through (iv) of Section 3.01(a) of the Collateral Agreement) related to such assets, whether or not constituting Collateral, provided that such Liens securing any Permitted First-Lien Indebtedness may attach, on a first-priority basis, to any Deposit Account used solely to deposit proceeds of the assets securing such Indebtedness as permitted by the definition of “Permitted First-Lien Indebtedness” to be deposited in such Deposit Account) and second-priority (or other junior priority) Liens on the Collateral, in each case securing Indebtedness permitted pursuant to Section 6.01(i), provided further that any such Liens on Collateral must secure only Permitted Second-Lien Indebtedness and, subject to the applicable Intercreditor Agreement, Permitted First-Lien Indebtedness; and

 

(n) other Liens (other than Liens on any Collateral (other than Specified Involuntary Liens securing obligations not in excess of $20,000,000 at any time)) securing monetary obligations, provided that (i) the sum of the aggregate amount of all monetary obligations secured by Liens pursuant to this clause (n), plus the aggregate amount of all cash consideration received on or after the Effective Date in respect of sale and leaseback transactions made in reliance on clause (b) of Section 6.06, shall not exceed 12.50% of Net Tangible Assets at any time and (ii) the aggregate book value of all assets subject to Liens pursuant to this clause (n) shall not at any time exceed $225,000,000.

 

Notwithstanding the foregoing, none of the Liens permitted pursuant to this Section 6.02 (other than (1) involuntary Permitted Encumbrances, (2) Specified Involuntary Liens securing obligations not in excess of $20,000,000 at any time and (3) those permitted under clauses (a), (c), (g), (h) or (m) above) may at any time attach to any Collateral.

 

SECTION 6.03. Fundamental Changes.  (a)  Neither Holdings nor the Parent Borrower will, nor will they permit any Subsidiary to, merge into or consolidate with any other Person, or permit any other Person to merge into or consolidate with it, or sell, transfer, lease or otherwise dispose of (in one transaction or in a series of transactions) all or substantially all of the assets of the Parent Borrower and its Subsidiaries, taken as a whole, or liquidate or dissolve, except that, if at the time thereof and immediately after giving effect thereto no Default shall have occurred and be continuing (i) any Person may merge with or into or consolidate with the Parent Borrower in a transaction in which the Parent Borrower is the surviving corporation, (ii) any Person may merge with or into or consolidate with any Subsidiary in a transaction in which the surviving entity is or becomes a Subsidiary and (if any party to such merger or consolidation is or becomes a Loan Party) is a Loan Party; provided that any such merger or consolidation involving a Person that is not a wholly owned Subsidiary immediately prior to or after giving effect to such merger or consolidation shall comply with Sections 6.04 and 6.05, as applicable, (iii) any Subsidiary (other than the Parent Borrower) may liquidate or dissolve or change its legal form if the Parent Borrower determines in good faith that such liquidation or dissolution or change in legal form is in the best interests of the Parent Borrower and its subsidiaries and is not materially disadvantageous to the Lenders; provided that, in the case of a liquidation or dissolution of a Subsidiary that is a Loan Party, the Person into which such Subsidiary is 

  

  

  

  

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liquidated or dissolved shall be a Loan Party and shall succeed to or assume all obligations of such Loan Party under the Loan Documents in a manner reasonably satisfactory to the Administrative Agent, (iv) Holdings may effect a Permitted Holding Company Reorganization, (v) any merger the sole purpose and effect of which is to reincorporate or reorganize a Person in another jurisdiction in the United States shall be permitted; provided that, if such Person is a Loan Party, the surviving entity is a Loan Party (and, if not a Loan Party before such merger, shall assume all obligations of such Loan Party under the Loan Documents in a manner reasonably satisfactory to the Administrative Agent), and (vi) a merger, dissolution, liquidation, consolidation, sale, transfer or other disposition the purpose and effect of which is to effect a transaction permitted pursuant to Section 6.05.

 

(b) Holdings will not, and will not permit any of its Subsidiaries to, engage to any extent material to Holdings and its Subsidiaries (taken as a whole) in any business other than the businesses of the type conducted by Holdings and its Subsidiaries on the Effective Date and businesses reasonably related, ancillary or complementary to the business or businesses of Holdings or any Subsidiary or any reasonable extension, development or expansion thereof.

 

SECTION 6.04. Investments, Loans, Advances, Guarantees and Acquisitions.  Neither Holdings nor the Parent Borrower will, nor will they permit any Subsidiary to, purchase, hold or acquire (including pursuant to any merger with any Person that was not a wholly owned Subsidiary prior to such merger) any Equity Interests, evidences of Indebtedness or other securities (including any option, warrant or other right to acquire any of the foregoing) of, make or hold any loans or advances to, Guarantee any obligations of, or make or hold any investment or any other interest in, any other Person, or purchase or otherwise acquire (in one transaction or a series of transactions) any assets of any other Person constituting a business unit (each referred to for purposes of this definition as an “investment”), except:

 

(a) Permitted Investments;

 

(b) investments existing on the Effective Date and set forth on Schedule 6.04, and any refinancing, replacement, renewal or extension of any such investment which does not increase the amount thereof except pursuant to the terms of such investment as of the Effective Date (as set forth on Schedule 6.04) or as otherwise permitted by another clause of this Section 6.04;

 

(c) investments by Holdings and its Subsidiaries in Equity Interests in their respective Subsidiaries;

 

(d) loans or advances made by Holdings to any Subsidiary and made by any Subsidiary to Holdings or any other Subsidiary;

 

  

  

  

  

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(e) Guarantees, subject to the limitations of Section 6.01 in the case of Indebtedness;

 

(f) investments received in connection with the bankruptcy or reorganization of, or settlement or satisfaction or partial satisfaction of delinquent accounts and disputes with, customers, suppliers and other account debtors, in each case in the ordinary course of business or upon the foreclosure with respect to any secured investment;

 

(g) extensions of trade credit in the ordinary course of business;

 

(h) investments under Swap Agreements;

 

(i) investments held by a Subsidiary acquired after the Effective Date or of a Person merged or consolidated with or into the Parent Borrower or a Subsidiary in accordance with this Agreement after the Effective Date to the extent that such investments were not made in contemplation of or in connection with such acquisition, merger or consolidation and were in existence on the date of such acquisition, merger or consolidation;

 

(j) investments in the ordinary course of business consisting of UCC Article 3 endorsements for collection or deposit and Article 4 customary trade arrangements with customers;

 

(k) promissory notes and other non-cash consideration that is permitted to be received in connection with dispositions permitted by Section 6.05(k) or 6.05(o);

 

(l) investments made in any Permitted Supply Chain Financing;

 

(m) other investments; provided that at the time of and immediately after giving effect to any such investment, (i) (A) Availability shall exceed the greater of (x) 25% of the Line Cap and (y) $350,000,000, or (B) (x) Availability shall exceed the greater of (1) 17.5% of the Line Cap and (2) $225,000,000 and (y) the Fixed Charge Coverage Ratio for the Test Period in effect at the time such investment is to occur shall be not less than 1.10 to 1.00 (determined on a pro forma basis in accordance with Section 1.04(b) as of the last day of such Test Period) and (ii) no Default shall have occurred and be continuing;

 

(n) without duplication of any other clauses of this Section 6.04, other investments that do not exceed $50,000,000 in the aggregate at any time outstanding, determined as of the date of such investment; and

 

(o) to the extent constituting investments, Restricted Payments permitted by Section 6.07 or any purchase, repurchase or other acquisition of Indebtedness permitted by Section 6.13.

 

Notwithstanding the foregoing, any investments by the Loan Parties in, and loans and advances by the Loan Parties to, and Guarantees by the Loan Parties of Indebtedness and other monetary obligations of, Subsidiaries that are not Loan Parties permitted pursuant to this Section 6.04

  

  

  

  

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(excluding all such investments, loans, advances and Guarantees existing on the Effective Date and permitted by clause (b) above) shall be subject to the condition that, at the time such investment is made and after giving effect thereto, (a) (i) Availability shall exceed the greater of (A) 25% of the Line Cap and (B) $350,000,000, or (ii) (A) Availability shall exceed the greater of (x) 17.5% of the Line Cap and (y) $225,000,000, and (B) the Fixed Charge Coverage Ratio for the Test Period in effect at the time such investment is to occur shall be not less than 1.10 to 1.00 (determined on a pro forma basis in accordance with Section 1.04(b) as of the last day of such Test Period) and (b) no Default shall have occurred and be continuing.

 

SECTION 6.05. Asset Sales.  Neither Holdings nor the Parent Borrower will, nor will they permit any Subsidiary to, sell, transfer, lease or otherwise dispose of any asset, including any Equity Interest owned by it, nor will Holdings and the Parent Borrower permit any Subsidiary to issue any additional Equity Interest in such Subsidiary (other than directors’ qualifying shares or to the extent required by applicable law) (each referred to for purposes of this definition as a “disposition”), except:

 

(a) sales of inventory, used or surplus equipment and Permitted Investments, in each case in the ordinary course of business;

 

(b) disposals of inventory pursuant to promotional or similar activities in the ordinary course of business;

 

(c) dispositions in the ordinary course of business of property no longer used or useful in the conduct of the business of Holdings and the Subsidiaries;

 

(d) dispositions to the Parent Borrower or a Subsidiary; provided that any such disposition to any Subsidiary that is not a Loan Party by any Loan Party shall, unless such disposition is made at a price and on terms and conditions not less favorable to each applicable Loan Party in any material respect than could be obtained on an arm’s-length basis from unrelated third parties, be deemed to be an investment and shall only be permitted to the extent it would be permitted under Section 6.04;

 

(e) the sale or discount (with or without recourse, and on customary or commercially reasonable terms) in the ordinary course of business of accounts receivable or notes receivable arising in the ordinary course of business, or the conversion or exchange of accounts receivable for notes receivable in the ordinary course of business;

 

(f) (i) any exchange of real property pursuant to or intended to qualify under Section 1031 (or any successor section) of the Code or (ii) dispositions of equipment in the ordinary course of business to the extent that (x) such equipment is exchanged for credit against the purchase price of similar replacement equipment or (y) the proceeds of such disposition are promptly applied to the purchase price of such replacement equipment;

 

(g) any disposition arising from condemnation or similar action with respect to any property or other assets, or voluntary exercise of termination rights under any lease, license, concession or other agreement or pursuant to buy/sell arrangements under any joint venture or similar agreement or arrangement;

  

  

  

  

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(h) the lapse or abandonment or other disposition of patents, trademarks or other intellectual property that are, in the reasonable judgment of the Parent Borrower, no longer economically practicable to maintain or useful in the conduct of the business of Holdings and the other Subsidiaries taken as a whole;

 

(i) leases, subleases, licenses or sublicenses (including the provision of software under an open source license), in each case in the ordinary course of business and which do not materially interfere with the business of Holdings and the Subsidiaries, taken as a whole;

 

(j) the unwinding of Swap Agreements;

 

(k) dispositions of accounts receivable in connection with the collection or compromise thereof;

 

(l) (i) any dividend or other Restricted Payment permitted pursuant to (or expressly not prohibited by) Section 6.07, (ii) any investment pursuant to Section 6.04 and (iii) any Lien permitted by Section 6.02;

 

(m) sales of fixed or capital assets pursuant to Section 6.06(a);

 

(n) any issuance of Equity Interests by, or disposition of Equity Interests of, any Subsidiary that is not a Material Subsidiary;

 

(o) sales and transfers (including Sale/Leaseback Transactions permitted by Section 6.06) of real estate of any Loan Party so long as (i) no Event of Default then exists or would arise therefrom, and (ii) such sale or transfer is made for fair market value and the consideration received for such sale or transfer is at least 75% cash;

 

(p) so long as no Event of Default exists or would arise as a result of the transaction, sales of a Subsidiary or any business segment which is a Non-Core Business Segment, or any portion thereof, (i) to any Person other than a Loan Party or a Subsidiary, for fair market value and so long as the consideration received for such sale or transfer is at least 75% cash or cash equivalents, or (ii) to a Subsidiary, if such sale or transfer is for fair market value and the entire consideration received for such sale or transfer is paid in cash or cash equivalents; provided that the aggregate amount of  Consolidated EBITDA attributable to all such Non-Core Business Segments or portions thereof sold in reliance on this paragraph (p) during the term of this Agreement, in each case calculated as of the fiscal year immediately prior to the date of its sale, shall not exceed $100,000,000;

 

(q) bulk sales or other dispositions of Inventory of a Loan Party not in the ordinary course of business in connection with store closings, provided that (i) any such sale or disposition is at arm’s-length, (ii) the consideration received for such sale or disposition is at least 75% cash (or, in the case of any sale, transfer or other disposition of more than 10% of the Collateral, 90% cash), and (iii) a professional liquidator acceptable to the Administrative Agent shall have been engaged in connection with any sale or other disposition of more than 10% of the Collateral;

  

  

  

  

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(r) sales, transfers and other dispositions of assets (other than Equity Interests in a Material Subsidiary) that are not permitted by any other clause of this Section, provided that (i) each such sale, transfer or disposition shall be made at fair value and for at least 75% cash consideration (or, in the case of any sale, transfer or other disposition of more than 10% of the Collateral, 90% cash consideration), (ii) at the time any such sale, transfer or other disposition is consummated and after giving effect thereto, the aggregate fair market value of all assets sold, transferred or otherwise disposed of in reliance on this clause (r) during the term of this Agreement shall not exceed 12.5% of Net Tangible Assets as of the most recent fiscal quarter end for which financial statements shall at such time have been delivered pursuant to Section 5.01(a) or (b), (iii) a professional liquidator acceptable to the Administrative Agent shall have been engaged in connection with any sale, transfer or other disposition of more than 10% of the Collateral and (iv) at the time any such sale, transfer or other disposition is consummated, no Default shall have occurred and be continuing;

 

provided that (A) all sales, transfers, leases and other dispositions permitted hereby (other than those permitted by clauses (b), (d), (h), (j) and (l) above) shall be made for fair value, and (B) no sale or transfer of any Intellectual Property (as defined in the Collateral Agreement) shall be made that would result in the loss by Holdings and the Subsidiaries of the free and unconditional use of the jcpenney name or any trade name or brand name needed for the disposition of any Eligible Inventory or prevent, delay, hinder or increase the cost of the Administrative Agent’s exercise of its rights under the license to Intellectual Property granted under the Collateral Agreement (it being understood that this clause (B) is not intended to prevent the grant of any license or Lien on Intellectual Property so long as all rights necessary to enable the Administrative Agent to exercise its rights in respect of the Collateral are reserved).  This Section shall not be construed to prohibit transfers of cash by Holdings or any of its Subsidiaries that are not prohibited by any other provision of this Agreement.

 

SECTION 6.06. Sale and Leaseback Transactions.  Neither Holdings nor the Parent Borrower will, nor will they permit any Subsidiary to, enter into any arrangement, directly or indirectly, whereby it shall sell or transfer any property (real or personal) used or useful in its business, whether now owned or hereinafter acquired, and thereafter rent or lease such property, or other property that it intends to use for substantially the same purpose or purposes as the property sold or transferred (each such transaction, a “Sale/Leaseback Transaction”), except for any such sale of fixed or capital assets that (a) is made for cash consideration in an amount not less than the cost of such fixed or capital asset and is consummated within 90 days after Holdings, the Parent Borrower or such Subsidiary, as applicable, acquires or completes the construction of such fixed or capital asset or (b) is made for cash consideration in an amount not less than the fair value of such fixed or capital asset; provided that (i) any such sale or transfer made in reliance on clause (b) is permitted by Section 6.05(o) and (ii) the sum of the aggregate amount of all cash consideration received on or after the Effective Date in respect of all sale and leaseback transactions made in reliance on clause (b), plus the aggregate amount of all monetary obligations secured by Liens pursuant to clause (n)

  

  

  

  

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of Section 6.02, shall not exceed 12.50% of Net Tangible Assets as of the date of the applicable transaction.

 

SECTION 6.07. Restricted Payments.  Neither Holdings nor the Parent Borrower will, nor will they permit any Subsidiary to, declare or make, directly or indirectly, any Restricted Payment, except:

 

(a) any wholly-owned Subsidiary may distribute any cash, property or assets to Holdings, the Parent Borrower or any other Subsidiary that is its direct or indirect parent;

 

(b) any Subsidiary may declare and pay dividends ratably with respect to its Equity Interests;

 

(c) to the extent constituting Restricted Payments, the Subsidiaries may enter into and consummate transactions permitted by Section 6.03;

 

(d) Holdings may pay cash in lieu of fractional Equity Interests;

 

(e) repurchases of Equity Interests of Holdings (i) deemed to occur on the exercise of stock options or warrants or similar rights if such Equity Interests represent the delivery of a portion of the Equity Interests subject to such options or warrants or similar rights in satisfaction of the exercise price of such stock options, warrants or similar rights (and do not involve cash consideration) or (ii) deemed to occur in the case of payment by Holdings or the Parent Borrower of withholding or similar Taxes payable by any future, present or former employee, director, manager or consultant (or any spouses, former spouses, successors, executors, administrators, heirs, legatees or distributees of any of the foregoing), in connection with the exercise or vesting of stock options, restricted stock warrants or similar rights (in lieu of a portion of the shares that otherwise would be issued upon such exercise or vesting);

 

(f) Holdings may make any additional Restricted Payments in cash; provided that, at the time of declaration (in the case of a dividend) or payment (in all other cases) and after giving effect thereto, (i) (A) Availability shall exceed the greater of (x) 25% of the Line Cap and (y) $350,000,000, or (B) (x) Availability shall exceed the greater of (1) 17.5% of the Line Cap and (2) $225,000,000, and (y) the Fixed Charge Coverage Ratio for the Test Period in effect at the time such Restricted Payment is to occur shall be not less than 1.10 to 1.00 (determined on a pro forma basis in accordance with Section 1.04(b) as of the last day of such Test Period) and (ii) no Default shall have occurred and be continuing; and

 

(g) Holdings, the Parent Borrower or any Subsidiary may make any payment on account of a “call spread” transaction relating to an issuance of Indebtedness or preferred Equity Interests convertible into Equity Interests in Holdings or any Subsidiary.

 

SECTION 6.08. Restrictive Agreements.  Neither Holdings nor the Parent Borrower will, nor will they permit any Subsidiary to, directly or 

  

  

  

  

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indirectly, enter into, incur or permit to exist any agreement or other arrangement that prohibits, restricts or imposes any condition upon (1) the ability of Holdings or any Subsidiary to create, incur or permit to exist 

any Lien upon any of its property or assets to secure the Obligations (or any Indebtedness incurred to refinance or replace the Obligations) or (2) the ability of any Loan Party (other than Holdings) to pay dividends or other distributions with respect to its Equity Interests or the ability of any Loan Party to make or repay loans or advances to a Loan Party or to Guarantee the Obligations (or any Indebtedness incurred to refinance or replace any of the Obligations); provided that (a) the foregoing shall not apply to any prohibitions, restrictions or conditions imposed (i) by law, rule, regulation or judicial order, or required by any regulatory authority having jurisdiction over Holdings or any Subsidiary or any of their respective businesses or (ii) by  any Loan Document or any related documents or agreements, (b) the foregoing shall not apply to any prohibitions, restrictions or conditions existing on the Effective Date and identified on Schedule 6.08 or to any refinancing, extension or renewal, in whole or in part, of, or any amendment, supplement or modification of, any Indebtedness or other obligation or other agreement, document or instrument existing on the Effective Date and identified on Schedule 6.08 containing any such prohibition, restriction or condition (but without expanding the scope of any such prohibition, restriction or condition in any material respect), (c) the foregoing shall not apply to prohibitions, restrictions or conditions contained in agreements relating to the direct or indirect disposition of Equity Interests of any Person, property or assets, imposing restrictions with respect to such Person, Equity Interests, property or assets pending the closing of such disposition, provided that such disposition is permitted hereunder, (d) the foregoing shall not apply to prohibitions, restrictions or conditions contained in any agreement of a Person that becomes a Subsidiary after the Effective Date which existed prior to the date that such Person became a Subsidiary; provided that such prohibitions, restrictions or conditions existed at the time that such Person became a Subsidiary and were not created in contemplation of such Person becoming a Subsidiary and do not apply to any other Subsidiary or any assets other than those of the Subsidiary so acquired, (e) clause (1) of the foregoing shall not apply to prohibitions, restrictions or conditions imposed by any agreement relating to secured Indebtedness or other obligations not prohibited by this Agreement if such prohibitions, restrictions or conditions apply only to the property or assets securing such Indebtedness or obligations and any proceeds and products thereof and after-acquired property, except as may otherwise be permitted under this Section 6.08 (it being understood that any such agreement relating to Permitted First-Lien Indebtedness or Permitted Second-Lien Indebtedness shall not prohibit, restrict or condition Liens securing the Obligations (or any Indebtedness incurred to refinance or replace any of the Obligations) on any asset or property of the type included in the Collateral), (f) clause (1) of the foregoing shall not apply to (i) customary provisions in leases and other contracts or agreements restricting the transfer, assignment, pledge or mortgage thereof, or the subletting, assignment or transfer of any property or 

  

  

  

  

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asset subject thereto, (ii) any reciprocal easement agreements containing customary provisions restricting dispositions of real property interests and (iii) Capital Lease Obligations, tax retention and other synthetic lease obligations and purchase money obligations that impose restrictions with respect to the property or assets so acquired, (g) clause (1) of the foregoing shall not apply to restrictions or conditions contained in any agreement or document governing any Permitted First-Lien Indebtedness, Permitted Second-Lien Indebtedness or Permitted Long-Term Indebtedness, provided that such restrictions and conditions permit Liens securing the Obligations (or any Indebtedness incurred to refinance or replace any of the Obligations) on any asset or property of the type included in the Collateral, (h) clause (2) of the foregoing shall not apply to restrictions or conditions contained in any agreement or document governing any Permitted First-Lien Indebtedness, Permitted Second-Lien Indebtedness or Permitted Long-Term Indebtedness that (i) require a Subsidiary to guarantee such Permitted First-Lien Indebtedness, Permitted Second-Lien Indebtedness or Permitted Long-Term Indebtedness if such Subsidiary guarantees the Obligations (or any Indebtedness incurred to refinance or replace any of the Obligations) or (ii) restrict or condition dividends, distributions or loans to Holdings, and (i) clause (2) of the foregoing shall not apply to restrictions or conditions contained in any agreement or document governing any Permitted First-Lien Indebtedness or Permitted Second-Lien Indebtedness that restrict or condition the transfer of assets (other than Collateral) securing such Indebtedness.

 

SECTION 6.09. Transactions with Affiliates.  Neither Holdings nor the Parent Borrower will, nor will they permit any Subsidiary to, sell, lease, license or otherwise transfer any assets to, or purchase, lease, license or otherwise acquire any assets from, or otherwise engage in any other transactions with, any of its Affiliates, except (a) transactions that are at prices and on terms and conditions not less favorable in any material respect to the applicable Loan Party than could be obtained on an arm’s-length basis from unrelated third parties, (b) transactions between or among the Loan Parties not involving any other Affiliate, (c) transactions between or among Subsidiaries that are not Loan Parties not involving any other Affiliates, (d) any Restricted Payment permitted by Section 6.07, (e) investment transactions with captive insurance companies and retirement plans in the ordinary course of business, (f) compensation and indemnification of, and other employment arrangements with, directors, officers and employees of Holdings or such Subsidiary entered in the ordinary course of business, (g) any loans, advances, Guarantees and other investments permitted by Section 6.04, (h) any Indebtedness permitted under Section 6.01 and (i) any disposition permitted by Section 6.05.

 

SECTION 6.10. Amendments of Material Documents.  Neither Holdings nor the Parent Borrower will, nor will they permit any Subsidiary to, amend, modify or waive any of its rights under (a) its certificate of incorporation, by-laws, operating, management or partnership agreement or other organizational documents or (b) any documents governing any Material 

  

  

  

  

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Indebtedness, in each case to the extent any such amendment, modification or waiver would be materially adverse to the Lenders.

 

SECTION 6.11. Fixed Charge Coverage Ratio.  Fixed Charge Coverage Ratio.  During any period commencing on a date (each a “Commencement Date”) on which Availability is less than the greater of (i) 10% of the Line Cap and (ii) $125,000,000, and continuing until any later date on which Availability shall have exceeded such threshold for at least 30 consecutive days, Holdings will not permit the Fixed Charge Coverage Ratio for any four fiscal-quarter period (including the four fiscal-quarter period most recently ended on or prior to the applicable Commencement Date) to be less than 1.00 to 1.00.

 

SECTION 6.12. Restriction on Non-Material Subsidiaries.  Neither Holdings nor the Parent Borrower will permit the Non-Material Subsidiaries (other than any Foreign Subsidiary or any Subsidiary substantially all of the assets of which consist of Equity Interests in one or more Foreign Subsidiaries) that have not satisfied the Collateral and Guarantee Requirement to have, in the aggregate, Net Tangible Assets representing in excess of 5% of the total Net Tangible Assets of Holdings and its Subsidiaries for a period of more than 15 days (or such longer period as the Administrative Agent may agree) after financial statements delivered pursuant to Section 5.01 demonstrate that the Non-Material Subsidiaries (other than any Foreign Subsidiary or any Subsidiary substantially all of the assets of which consist of Equity Interests in one or more Foreign Subsidiaries) that have not satisfied the Collateral and Guarantee Requirement have, in the aggregate, Net Tangible Assets representing in excess of 5% of the total Net Tangible Assets of Holdings and its Subsidiaries; provided that Foreign Subsidiaries and any Subsidiaries substantially all of the assets of which consist of Equity Interests in one or more Foreign Subsidiaries shall not have, in the aggregate, Net Tangible Assets representing in excess of 10% of the total Net Tangible Assets of Holdings and its Subsidiaries.

 

SECTION 6.13. Certain Payments of Indebtedness.  Neither Holdings nor the Parent Borrower will, nor will they permit any Subsidiary to, pay or make, directly or indirectly, any voluntary payment or other voluntary distribution (whether in cash, securities or other property) of or in respect of principal of or interest on any Long-Term Indebtedness that is also Material Indebtedness, or any voluntary payment or other voluntary distribution (whether in cash, securities or other property), including any sinking fund or similar deposit, on account of the purchase, redemption, retirement, acquisition, cancelation or termination of any such Indebtedness, except:

 

(a) refinancings of any such Long-Term Indebtedness with the proceeds of other Indebtedness permitted under Section 6.01;

 

(b) payments upon conversion of any such Indebtedness into common stock of Holdings made solely in common stock of Holdings, together with cash payments in lieu of issuance of fractional shares and payments of accrued but unpaid interest, in each case in connection with such conversion;

  

  

  

  

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(c) other payments of or in respect of any such Indebtedness made solely with (or with the proceeds of a substantially concurrent issuance and sale of) Equity Interests (other than Disqualified Equity Interests) in Holdings; and

 

(d) other payments of any such Indebtedness at any time, so long as such payments could be made in reliance on Section 6.07(f) at such time if such payment constituted a Restricted Payment.

 

SECTION 6.14. Net Settlement of Convertible Indebtedness.  Neither Holdings nor the Parent Borrower will, nor will they permit any Subsidiary to, directly or indirectly, create, incur, assume, issue or permit to exist any Indebtedness or any security convertible into Equity Interests in Holdings or any Subsidiary that provides for a “net settlement” (other than a “net settlement” at the sole discretion of the issuer of such Indebtedness or security) in respect of the Equity Interests that would have been issuable upon the conversion of such Indebtedness or security on account of the principal of such Indebtedness or security.

 

ARTICLE VII

 

Events of Default

 

SECTION 7.01. Events of Default.  If any of the following events (“Events of Default”) shall occur:

 

(a) any Borrower shall fail to pay any principal of any Loan of such Borrower or any Account Party shall fail to reimburse any LC Disbursement made in respect of a Letter of Credit issued for the account of such Account Party, in each case when and as the same shall become due and payable, whether at the due date thereof or at a date fixed for prepayment thereof or otherwise;

 

(b) any Borrower or any Account Party shall fail to pay any interest or any fee or any other amount (other than an amount referred to in clause (a) of this Article) payable by it under this Agreement or any other Loan Document, when and as the same shall become due and payable, and such failure shall continue unremedied for a period of five days;

 

(c) any representation or warranty made or deemed made by or on behalf of any Loan Party in or pursuant to any Loan Document or any amendment or modification thereof or waiver thereunder, or any material representation or warranty in any report, certificate, financial statement or other document furnished pursuant to or in connection with any Loan Document or any amendment or modification thereof or waiver thereunder, shall prove to have been incorrect in any material respect when made or deemed made;

 

(d) Holdings, the Parent Borrower or Purchasing shall fail to observe or perform any covenant, condition or agreement contained in Section 5.02 (other than clause (d), (e) 

  

  

  

  

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or (f) thereof), 5.04 (with respect to the existence of Holdings, the Parent Borrower or Purchasing), 5.10 or 5.16 or in Article VI;

 

(e) (i) Holdings or the Parent Borrower shall fail to comply with Section 5.01(g) or with clause (d), (e) or (f) of Section 5.02 or with the first sentence of Section 5.07, and such failure shall continue unremedied for a period of five Business Days, or (ii) any Loan Party shall fail to observe or perform any covenant, condition or agreement contained in any Loan Document (other than those specified in clause (a), (b), (d) or (e)(i) of this Article), and such failure shall continue unremedied for a period of 30 days after notice thereof from the Administrative Agent to the Parent Borrower (which notice will be given at the request of any Lender);

 

(f) Holdings or any Subsidiary shall fail to make any payment (whether of principal or interest and regardless of amount) in respect of any Material Indebtedness, when and as the same shall become due and payable (after giving effect to any applicable grace periods);

 

(g) any event or condition occurs that results in any Material Indebtedness becoming due prior to its scheduled maturity or that enables or permits (after giving effect to any applicable grace periods) the holder or holders of any Material Indebtedness or any trustee or agent on its or their behalf to cause any Material Indebtedness to become due, or to require the prepayment, repurchase, redemption or defeasance thereof, prior to its scheduled maturity; provided that this clause (g) shall not apply to (i) secured Indebtedness that becomes due as a result of the voluntary sale or transfer of the property or assets securing such Indebtedness and (ii) Indebtedness in respect of which the holders thereof have the unconditional right to require the issuer thereof to effect a redemption of such Indebtedness prior to the stated maturity of such Indebtedness, solely as a result of the exercise by such holders of such right;

 

(h) an involuntary proceeding shall be commenced or an involuntary petition shall be filed seeking (i) liquidation, reorganization or other relief in respect of Holdings or any Subsidiary or its debts, or of a substantial part of its assets, under any Federal, state or foreign bankruptcy, insolvency, receivership or similar law now or hereafter in effect or (ii) the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for Holdings or any Subsidiary or for a substantial part of its assets, and, in any such case, such proceeding or petition shall continue undismissed for 60 days or an order or decree approving or ordering any of the foregoing shall be entered;

 

(i) Holdings or any Subsidiary shall (i) voluntarily commence any proceeding or file any petition seeking liquidation, reorganization or other relief under any Federal, state or foreign bankruptcy, insolvency, receivership or similar law now or hereafter in effect, (ii) consent to the institution of, or fail to contest in a timely and appropriate manner, any proceeding or petition described in clause (h) of this Article, (iii) apply for or consent to the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for Holdings or any Subsidiary or for a substantial part of its assets, (iv) file an answer admitting the material allegations of a petition filed against it in any

  

  

  

  

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such proceeding, (v) make a general assignment for the benefit of creditors or (vi) take any action for the purpose of effecting any of the foregoing;

 

(j) Holdings or any Subsidiary shall become unable, admit in writing its inability or fail generally to pay its debts as they become due;

 

(k) one or more judgments for the payment of money in an aggregate amount in excess of $100,000,000 (to the extent not covered by independent third party insurance as to which the insurer has been notified of the potential claim and does not dispute coverage) shall be rendered against Holdings, any Subsidiary or any combination thereof and the same shall remain undischarged for a period of 30 consecutive days during which execution shall not be effectively stayed, or any action shall be legally taken by a judgment creditor to attach or levy upon any assets of Holdings or any Subsidiary to enforce any such judgment;

 

(l) an ERISA Event shall have occurred that, in the opinion of the Required Lenders, when taken together with all other ERISA Events that have occurred, would result in a Material Adverse Effect;

 

(m) at any time, (i) any Guarantee Party’s Guarantee under the Collateral Agreement shall cease to be in full force and effect (other than in accordance with the terms of this Agreement and the Collateral Agreement) or shall be declared to be null and void or any Guarantee Party shall repudiate its obligations under its Guarantee under the Collateral Agreement or (ii) any Lien purported to be created under the Collateral Agreement shall cease to be, or shall be asserted by any Loan Party not to be, a valid and perfected Lien on any Collateral having an aggregate fair value of $10,000,000 or more, with the priority required by the Collateral Agreement, in each case for any reason other than the failure of the Administrative Agent to file any financing statement (or amendment thereto) delivered to it for filing and except as a result of the sale or other disposition of the applicable Collateral in a transaction not prohibited under the Loan Documents; or

 

(n) a Change in Control shall occur;

 

then, and in every such event (other than an event with respect to Holdings, a Borrower or an Account Party described in clause (h) or (i) of this Article), and at any time thereafter during the continuance of such event, the Administrative Agent may, with the consent of the Required Lenders, and shall, at the request of the Required Lenders, by notice to the Parent Borrower, take either or both of the following actions, at the same or different times:  (i) terminate the Commitments, and thereupon the Commitments shall terminate immediately, and (ii) declare the Loans then outstanding to be due and payable in whole (or in part, in which case any principal not so declared to be due and payable may thereafter be declared to be due and payable), and thereupon the principal of the Loans so declared to be due and payable, together with accrued interest thereon and all fees and other obligations of the Borrowers and the Account Parties accrued hereunder, shall become due and payable immediately, without presentment, demand, protest or other notice of any kind, all of which are hereby waived by each Borrower and each Account Party; and in case of any event with respect to Holdings, a Borrower or an Account 

  

  

  

  

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Party described in clause (h) or (i) of this Article, the Commitments shall automatically terminate and the principal of the Loans then outstanding, together with accrued interest thereon and all fees and other obligations of the Borrowers and the Account Parties accrued hereunder, shall automatically become due and payable, without presentment, demand, protest or other notice of any kind, all of which are hereby waived by each Borrower and each Account Party.

 

ARTICLE VIII   

 

The Administrative Agent

 

Each of the Lenders and the Issuing Banks hereby irrevocably appoints JPMorgan Chase Bank, N.A., and its successors to serve as administrative agent under the Loan Documents and authorizes the Administrative Agent to take such actions on its behalf and to exercise such powers as are delegated to the Administrative Agent by the terms of the Loan Documents, together with such actions and powers as are reasonably incidental thereto.

 

The bank serving as the Administrative Agent hereunder shall have the same rights and powers in its capacity as a Lender as any other Lender and may exercise the same as though it were not the Administrative Agent, and such bank and its Affiliates may accept deposits from, lend money to and generally engage in any kind of business with Holdings, the Parent Borrower or any other Subsidiary or Affiliate thereof as if it were not the Administrative Agent hereunder.

 

The Administrative Agent shall not have any duties or obligations except those expressly set forth in the Loan Documents.  Without limiting the generality of the foregoing, (a) the Administrative Agent shall not be subject to any fiduciary or other implied duties, regardless of whether a Default has occurred and is continuing, (b) the Administrative Agent shall not have any duty to take any discretionary action or exercise any discretionary powers, except discretionary rights and powers expressly contemplated by the Loan Documents that the Administrative Agent is required to exercise in writing as directed by the Required Lenders (or such other number or percentage of the Lenders as shall be necessary under the circumstances as provided in Section 9.02), and (c) except as expressly set forth in the Loan Documents, the Administrative Agent shall not have any duty to disclose, and shall not be liable for the failure to disclose, any information relating to Holdings or any of its Subsidiaries that is communicated to or obtained by the bank serving as Administrative Agent or any of its Affiliates in any capacity.  The Administrative Agent shall not be liable for any action taken or not taken by it with the consent or at the request of the Required Lenders (or such other number or percentage of the Lenders as shall be necessary under the circumstances as provided in Section 9.02) or in the absence of its own bad faith, gross negligence or willful misconduct.  The Administrative Agent shall be deemed not to have knowledge of any Default unless and until written notice thereof is given to the Administrative Agent by Holdings, the Parent Borrower, Purchasing or a Lender, and the Administrative Agent shall not be responsible for or have any duty to ascertain or inquire into (i) any statement, warranty or representation made in or in connection with any Loan Document, (ii) the contents of any certificate, report or other document delivered thereunder or in connection therewith, (iii) the performance or observance of any of the covenants, agreements or other terms or conditions set forth in any Loan Document, (iv) the validity, enforceability, effectiveness or genuineness of any Loan Document or any other agreement, instrument or 

  

  

  

  

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document, or (v) the satisfaction of any condition set forth in Article IV or elsewhere in any Loan Document, other than to confirm receipt of items expressly required to be delivered to the Administrative Agent.

 

The Administrative Agent shall be entitled to rely upon, and shall not incur any liability for relying upon, any notice, request, certificate, consent, statement, instrument, document or other writing believed by it to be genuine and to have been signed or sent by the proper Person.  The Administrative Agent also may rely upon any statement made to it orally or by telephone and believed by it to be made by the proper Person, and shall not incur any liability for relying thereon.  The Administrative Agent may consult with legal counsel (who may be counsel for the Parent Borrower), independent accountants and other experts selected by it, and shall not be liable for any action taken or not taken by it in accordance with the advice of any such counsel, accountants or experts.

 

The Administrative Agent may perform any and all its duties and exercise its rights and powers by or through any one or more sub-agents appointed by the Administrative Agent.  The Administrative Agent and any such sub-agent may perform any and all its duties and exercise its rights and powers through their respective Related Parties.  The exculpatory provisions of the preceding paragraphs shall apply to any such sub-agent and to the Related Parties of the Administrative Agent and any such sub-agent, and shall apply to their respective activities in connection with the syndication of the credit facilities provided for herein as well as activities as Administrative Agent.

 

Subject to the appointment and acceptance of a successor Administrative Agent as provided in this paragraph, the Administrative Agent may resign at any time by notifying the Lenders, each Issuing Bank and the Parent Borrower.  Upon any such resignation, the Required Lenders shall have the right, with the consent of the Parent Borrower, to appoint a successor (provided, that such Parent Borrower consent (i) shall not be unreasonably withheld and (ii) shall not be required if, at the time of such appointment, an Event of Default has occurred and is continuing).  If no successor shall have been so appointed by the Required Lenders and shall have accepted such appointment within 30 days after the retiring Administrative Agent gives notice of its resignation, then the retiring Administrative Agent may, on behalf of the Lenders and the Issuing Banks, appoint a successor Administrative Agent which shall be a bank with an office in New York, New York, or an Affiliate of any such bank.  Upon the acceptance of its appointment as Administrative Agent hereunder by a successor, such successor shall succeed to and become vested with all the rights, powers, privileges and duties of the retiring Administrative Agent, and the retiring Administrative Agent shall be discharged from its duties and obligations hereunder.  The fees payable by the Parent Borrower to a successor Administrative Agent shall be the same as those payable to its predecessor unless otherwise agreed between the Parent Borrower and such successor.  After the Administrative Agent’s resignation hereunder, the provisions of this Article and Section 9.03 shall continue in effect for the benefit of such retiring Administrative Agent, its sub-agents and their respective Related Parties in respect of any actions taken or omitted to be taken by any of them while it was acting as Administrative Agent.

 

Each Lender acknowledges that it has, independently and without reliance upon the Administrative Agent or any other Lender and based on such documents and information as

  

  

  

  

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it has deemed appropriate, made its own credit analysis and decision to enter into this Agreement.  Each Lender also acknowledges that it will, independently and without reliance upon the Administrative Agent or any other Lender and based on such documents and information as it shall from time to time deem appropriate, continue to make its own decisions in taking or not taking action under or based upon this Agreement, any other Loan Document or related agreement or any document furnished hereunder or thereunder.  The Joint Bookrunners, Lead Arrangers and Syndication Agent (each as identified on the cover page of this Agreement), in their capacities as such, shall have no rights, powers, duties, liabilities, fiduciary relationships or obligations under this Agreement or any other documents related thereto.

 

Each Lender hereby agrees that (a) it has requested a copy of each Report prepared by or on behalf of the Administrative Agent; (b) the Administrative Agent (i) makes no representation or warranty, express or implied, as to the completeness or accuracy of any Report or any of the information contained therein or any inaccuracy or omission contained in or relating to a Report and (ii) shall not be liable for any information contained in any Report; (c) the Reports are not comprehensive audits or field examinations, and that any Person performing any field examination will inspect only specific information regarding the Loan Parties and will rely significantly upon the Loan Parties’ books and records, as well as on representations of the Loan Parties’ personnel and that the Administrative Agent undertakes no obligation to update, correct or supplement the Reports; (d) it will keep all Reports confidential in accordance with the requirements of Section 9.12 and strictly for its internal use, not share the Report with any Loan Party or any other Person except as otherwise permitted pursuant to this Agreement; and (e) without limiting the generality of any other indemnification provision contained in this Agreement, it will pay and protect, and indemnify, defend, and hold the Administrative Agent and any such other Person preparing a Report harmless from and against, any claims, actions, proceedings, damages, costs, expenses, and other amounts (including reasonable attorney fees) incurred as the direct or indirect result of any third parties who might obtain all or part of any Report through the indemnifying Lender.

 

Each of the Lenders hereby (a) authorizes and instructs the Administrative Agent to enter into an Intercreditor Agreement or a Collateral Cooperation Agreement, as applicable, if Indebtedness is incurred that is secured by Liens contemplated by clause (m) of Section 6.02 and (b) agrees that it will be bound by and will take no actions contrary to the provisions of such Intercreditor Agreement or such Collateral Cooperation Agreement, as applicable.

 

ARTICLE IX

 

Miscellaneous

 

SECTION 9.01. Notices.  (a)  Except in the case of notices and other communications expressly permitted to be given by telephone (and subject to paragraph (b) below), all notices and other communications provided for herein shall be in writing and shall be delivered by hand or overnight courier service, mailed by certified or registered mail or sent by telecopy, as follows:

 

(i) if to Holdings, the Parent Borrower or Purchasing, to it at J. C. Penney Corporation, Inc., 6501 Legacy Drive, Mail Code 1304, Plano, TX 75024, Attention of 

  

  

  

  

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the Treasurer (Telecopy No. (972) 431-2044), with a copy to the General Counsel of the Parent Borrower;

 

(ii) if to the Administrative Agent, to JPMorgan Chase Bank, N.A., Loan and Agency Services Group, 500 Stanton Christiana Road Ops 2, Floor 3, Newark, Delaware 19713-2107, Attention of Pranay Tyagi, Loan & Agency Services (Telecopy No. (302) 634-8799), with a copy to JPMorgan Chase Bank, N.A., 383 Madison Avenue, Floor 24, New York, New York 10179, Attention of Sarah Freedman (Telecopy No. (212) 622-6603); and

 

(iii) if to any other Lender, any Issuing Bank or any Swingline Lender, to it at its address (or telecopy number) set forth in its Administrative Questionnaire.

 

(b) Notices and other communications to the Issuing Banks and Lenders hereunder may be delivered or furnished by electronic communications pursuant to procedures approved by the Administrative Agent; provided that the foregoing shall not apply to notices pursuant to Article II unless otherwise agreed by the Administrative Agent and the applicable Issuing Bank or Lender.  The Administrative Agent, Holdings, the Parent Borrower or Purchasing may, in its discretion, agree to accept notices and other communications to it hereunder by electronic communications pursuant to procedures approved by it; provided that approval of such procedures may be limited to particular notices or communications.

 

(c) Any party hereto may change its address or telecopy number for notices and other communications hereunder by notice to the other parties hereto.  All notices and other communications given to any party hereto in accordance with the provisions of this Agreement shall be deemed to have been given on the date of receipt.

 

SECTION 9.02. Waivers; Amendments.  (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, each Issuing Bank 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 any Loan Document or consent to any departure by any Loan Party therefrom shall in any event be effective unless the same shall be permitted by paragraph (b) of this Section, and then such waiver or consent shall be effective only in the specific instance and for the purpose for which given.  Without limiting the generality of the foregoing, the making of a Loan or issuance of a Letter of Credit shall not be construed as a waiver of any Default, regardless of whether the Administrative Agent, any Lender or any Issuing Bank may have had notice or knowledge of such Default at the time.

  

  

  

  

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(b) Except as expressly contemplated by Section 2.22 or 2.23 or with respect to any amendment to this Agreement contemplated by the definition of “Permitted Holding Company Reorganization” (which amendment shall be permitted if entered into by the parties referred to therein), neither this Agreement nor any other Loan Document nor any provision hereof or thereof may be waived, amended or modified except, in the case of this Agreement, pursuant to an agreement or agreements in writing entered into by Holdings, the Borrowers, the Account Parties and the Required Lenders or, in the case of any other Loan Document, pursuant to an agreement or agreements in writing entered into by the Administrative Agent and the Loan Party or Loan Parties that are parties thereto, in each case with the consent of the Required Lenders; provided that no such agreement shall (i) increase the Commitment of any Lender without the written consent of such Lender, (ii) reduce the principal amount of any Loan or LC Disbursement or reduce the rate of interest thereon, or reduce any fees payable hereunder, without the written consent of each Lender directly affected thereby; provided that only the consent of the Required Lenders shall be necessary to amend the provisions of Section 2.12(c) providing for the default rate of interest, or to waive any obligations of any Borrower or any Account Party to pay interest at such default rate, (iii) postpone the scheduled date of payment of the principal amount of any Loan or LC Disbursement, or any interest thereon, or any fees payable hereunder, or reduce the amount of, waive or excuse any such payment, or postpone the scheduled date of expiration of any Commitment, without the written consent of each Lender directly affected thereby; provided that only the consent of the Required Lenders shall be necessary to amend the provisions of Section 2.12(c) providing for the default rate of interest, or to waive any obligations of any Borrower or any Account Party to pay interest at such default rate, (iv) change Section 2.17(b) or (c) in a manner that would alter the pro rata sharing of payments required thereby, without the written consent of each Lender, (v) change any of the provisions of this Section or the definition of “Required Lenders” or any other provision of any Loan Document specifying the number or percentage of Lenders required to waive, amend or modify any rights thereunder or make any determination or grant any consent thereunder, without the written consent of each Lender, (vi) release the Parent Borrower or Holdings from its Guarantee under the Collateral Agreement (except as expressly provided in the Collateral Agreement), or limit all or substantially all its liability in respect of such Guarantee, without the written consent of each Lender, (vii) release all or substantially all of the Loan Parties from their Guarantees under the Collateral Agreement (except as expressly provided in the Collateral Agreement), or limit all or substantially all their liability in respect of such Guarantees, without the written consent of each Lender, (viii) release all or substantially all of the Collateral from the Liens of the Collateral Agreement (except as expressly provided in Section 6.15(d) of the Collateral Agreement) without the written consent of each Lender or (ix) change Section 2.05(k)(i) in a manner that would alter the participation obligation of any Lender, without the written consent of such Lender; provided further that no such agreement shall amend, modify or otherwise affect the rights or duties of the Administrative Agent, any Issuing Bank or any Swingline Lender hereunder without the prior written consent of the Administrative Agent, such Issuing Bank or such Swingline Lender, as the case may be.  Notwithstanding the foregoing, (x) the consent of the Required Lenders shall not be required to amend this Agreement to increase the total Commitments pursuant to Section 2.22 and to make other changes incidental thereto or contemplated thereby and (y) this 

  

  

  

  

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Agreement may be amended by an agreement in writing entered into by the Parent Borrower and the Administrative Agent to cure any ambiguity, omission, defect or inconsistency; provided that, in the case of clause (y), the Lenders shall have received at least five Business Days’ prior written notice thereof and the Administrative Agent shall not have received, within five Business Days of the date of such notice to the Lenders, written notice from the Required Lenders to the effect that the Required Lenders object to such amendment.

 

(c) Notwithstanding anything to the contrary, this Agreement may be amended (or deemed amended) or amended and restated, in whole or in part, with the written consent of the Required Lenders, the Administrative Agent and the Parent Borrower to (i) add one or more additional credit facilities to this Agreement and to permit the extensions of credit from time to time outstanding hereunder and the accrued interest and fees in respect thereof to share ratably in the benefits of this Agreement and the other Loan Documents with the existing facilities and the accrued interest and fees in respect thereof, (ii) to include, as appropriate, Lenders holding such credit facilities in any required vote or action of the Required Lenders or of the Lenders of each facility under this Agreement and (iii) to provide class protection for any additional credit facilities in a manner consistent with those provided the original facilities pursuant to the provisions of this Agreement originally in effect.

 

(d) If, in connection with any proposed change, waiver, discharge or termination of or to any of the provision of this Agreement and/or any other Loan Document requiring the consent of “each Lender” or “each Lender directly affected thereby”, the consent of the Required Lenders is obtained, but the consent of other necessary Lenders is not obtained (any such Lender whose consent is necessary but not obtained being referred to herein as a “Non-Consenting Lender”), then the Parent Borrower may, upon prior written notice to the Administrative Agent and the Non-Consenting Lender, elect to replace such Non-Consenting Lender as a Lender party to this Agreement; provided that, concurrently with such replacement, (i) another bank or other entity shall agree, as of such date, to purchase (and the Non-Consenting Lender shall be obligated to sell) for cash the Loans and other Obligations due to the Non-Consenting Lender pursuant to an Assignment and Assumption and to become a Lender for all purposes under this Agreement and to assume all obligations of the Non-Consenting Lender to be terminated as of such date and to comply with the requirements of Section 9.04(b) (provided that each such bank or other entity, if not already a Lender (or an Affiliate of a Lender) hereunder, shall be subject to the approval of the Administrative Agent (not to be unreasonably withheld)), (ii) the replacement Lender shall pay the processing and recordation fee referred to in Section 9.04(b)(ii)(C), if applicable, in accordance with the terms of such Section, (iii) the replacement Lender shall grant its consent with respect to the applicable proposed change, waiver, discharge or termination and (iv) the replacement Lender shall pay to such Non-Consenting Lender in same day funds on the day of such replacement (1) all principal, interest, fees and other amounts then accrued but unpaid to such Non-Consenting Lender by the Borrowers and the Account Parties hereunder to and including the date of termination, including, without limitation, payments due to such Non-Consenting Lender under Sections 2.14 and 2.16, and (2) an amount, if any, equal to the payment which would have been due to such Non-

  

  

  

  

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Consenting Lender on the day of such replacement under Section 2.15 had the Loans of such Non-Consenting Lender been prepaid on such date rather than sold to the replacement Lender.  In connection with any such replacement, if the Non-Consenting Lender does not execute and deliver to the Administrative Agent a duly completed Assignment and Assumption and/or any other documentation necessary to reflect such replacement by the later of (a) the date on which the replacement Lender executes and delivers such Assignment and Assumption and/or such other documentation and (b) the date as of which all obligations of the Borrowers and the Account Parties owing to the Non-Consenting Lender relating to the loans and participations so assigned shall be paid in full by the replacement Lender to such Non-Consenting Lender, then such Non-Consenting Lender shall be deemed to have executed and delivered such Assignment and Assumption and/or such other documentation as of such date and the applicable Borrowers and/or Account Parties shall be entitled (but not obligated) to execute and deliver such Assignment and Assumption and/or such other documentation on behalf of such Non-Consenting Lender.

 

SECTION 9.03. Expenses; Indemnity; Damage Waiver.  (a)  The Parent Borrower and the other Loan Parties, jointly and severally, shall pay (i) all reasonable and documented out-of-pocket expenses incurred by the Administrative Agent and its Affiliates (and, solely in respect of the syndication of the credit facilities and the preparation of the initial Loan Documents, the Commitment Parties and their Related Parties), including the reasonable fees, charges and disbursements of counsel for the Administrative Agent, in connection with the syndication of the credit facilities provided for herein, the preparation and administration of the Loan Documents or any amendments, modifications or waivers of the provisions thereof (whether or not the transactions contemplated hereby or thereby shall be consummated) (provided that, notwithstanding anything herein to the contrary, the Parent Borrower shall be responsible for the fees and expenses of only one counsel to the Administrative Agent, its Affiliates, the Commitment Parties and their Related Persons (and one local counsel in each relevant jurisdiction), it being understood that this proviso applies only to this clause (a)(i)), (ii) all reasonable and documented out-of-pocket expenses incurred by each Issuing Bank in connection with the issuance, amendment, renewal or extension of any Letter of Credit or any demand for payment thereunder, (iii) all reasonable and documented out-of-pocket expenses incurred by the Administrative Agent, any Issuing Bank or any Lender, including the reasonable fees, charges and disbursements of any counsel for the Administrative Agent, any Issuing Bank or any Lender, in connection with the enforcement or protection of its rights in connection with the Loan Documents, including its rights under this Section, or in connection with the Loans made or Letters of Credit issued hereunder, including all such reasonable out-of-pocket expenses incurred during any workout, restructuring or negotiations in respect of such Loans or Letters of Credit and (iv) all reasonable fees associated with, and all reasonable and documented out-of-pocket expenses incurred by the Administrative Agent in connection with, collateral monitoring, collateral reviews, field examinations and appraisals (including reasonable fees and expenses of advisors and

  

  

  

  

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professionals engaged by the Administrative Agent relating thereto).  This Section 9.03(a) shall not apply with respect to Taxes other than any Taxes that represent losses or damages arising from any non-Tax claim.

 

(b) The Parent Borrower and the other Account Parties, jointly and severally, shall indemnify each Commitment Party, the Administrative Agent, each Issuing Bank and each Lender, and each Related Party of any of the foregoing Persons (each such Person being called an “Indemnitee”) against, and hold each Indemnitee harmless from, any and all losses, claims, damages, liabilities and related expenses, including the reasonable fees, charges and disbursements of any counsel for any Indemnitee, incurred by or asserted against any Indemnitee arising out of, in connection with, or as a result of (i) the execution or delivery of any Loan Document or any other agreement or instrument contemplated hereby, the performance by the parties to the Loan Documents of their respective obligations thereunder or the consummation of the Transactions or any other transactions contemplated hereby, (ii) any Loan or Letter of Credit or the use of the proceeds therefrom (including any refusal by an Issuing Bank to honor a demand for payment under a Letter of Credit if the documents presented in connection with such demand do not strictly comply with the terms of such Letter of Credit), (iii) in the case of each Commitment Party and its Related Parties, the Commitment Letter or their activities thereunder or (iv)  any actual or prospective claim, litigation, investigation or proceeding relating to any of the foregoing, whether based on contract, tort or any other theory and regardless of whether any Indemnitee is a party thereto; provided that such indemnity shall not, as to any Indemnitee, be available to the extent that such losses, claims, damages, liabilities or related expenses (x) arise in connection with any judgment rendered by a court of competent jurisdiction in favor of any Borrower or Account Party against such Indemnitee, (y) result from the gross negligence or willful misconduct of such Indemnitee (as finally determined by a court of competent jurisdiction) or (z) result from any dispute among the Lenders and the Administrative Agent, or any of them, other than disputes resulting from the fault of any Loan Party.  This Section 9.03(b) shall not apply with respect to Taxes other than any Taxes that represent losses or damages arising from any non-Tax claim. To the extent that the Parent Borrower or any other Account Party fails to pay any amount required to be paid by it to the Administrative Agent, any Issuing Bank or any Swingline Lender under paragraph (a) or (b) of this Section, each Lender severally agrees to pay to the Administrative Agent, the applicable Issuing Bank or the applicable Swingline Lender, as the case may be, such Lender’s Applicable Percentage (determined as of the time that the applicable unreimbursed expense or indemnity payment is sought) of such unpaid amount; provided that the unreimbursed expense or indemnified loss, claim, damage, liability or related expense, as the case may be, was incurred by or asserted against the Administrative Agent, the applicable Issuing Bank or the applicable Swingline Lender in its capacity as such.

 

(c) To the extent permitted by applicable law, neither Holdings, any Borrower, any Account Party or any other Subsidiary shall assert, and each hereby waives, any claim against any Indemnitee, on any theory of liability, for special, indirect, consequential or punitive damages (as opposed to direct or actual damages) arising out of, in connection with, or as a result of, this Agreement or any agreement or instrument 

  

  

  

  

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contemplated hereby, the Transactions, the Commitment Letter, any Loan or Letter of Credit or the use of the proceeds thereof.

 

(d) All amounts due under this Section shall be payable not later than 30 days after written demand therefor.

 

SECTION 9.04. Successors and Assigns.  (a)  The provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns permitted hereby (including any Affiliate of any Issuing Bank that issues any Letter of Credit), except that (i) neither Holdings, any Borrower nor any Account Party may assign or otherwise transfer any of its rights or obligations hereunder except in a transaction expressly permitted hereby that expressly contemplates such assignment or transfer without the prior written consent of each Lender (and any attempted assignment or transfer by Holdings, any Borrower or any Account Party without such consent shall be null and void) and (ii) no Lender may assign or otherwise transfer its rights or obligations hereunder except in accordance with this Section.  Nothing in this Agreement, expressed or implied, shall be construed to confer upon any Person (other than the parties hereto, their respective successors and assigns permitted hereby (including any Affiliate of any Issuing Bank that issues any Letter of Credit), Participants (to the extent provided in paragraph (c) of this Section) and, to the extent expressly contemplated hereby, the Related Parties of each of the Administrative Agent, any Issuing Bank and the Lenders) any legal or equitable right, remedy or claim under or by reason of this Agreement.

 

(b) (i)  Subject to the conditions set forth in paragraph (b)(ii) below, any Lender may assign to one or more assignees (other than Holdings or any Subsidiary or Affiliate thereof) all or a portion of its rights and obligations under this Agreement (including all or a portion of its Commitment and the Loans at the time owing to it); with the prior written consent (such consent not to be unreasonably withheld) of:

 

(A) the Parent Borrower, provided that no consent of the Parent Borrower shall be required for an assignment to a Lender, an Affiliate of a Lender or, if an Event of Default has occurred and is continuing, any other assignee; and

 

(B) the Administrative Agent, provided that no consent of the Administrative Agent shall be required for an assignment to an assignee that is a Lender or an Affiliate of a Lender immediately prior to giving effect to such assignment.

 

(ii) Assignments shall be subject to the following conditions:

 

(A) except in the case of an assignment to a Lender or an Affiliate of a Lender or an assignment of the entire remaining amount of the assigning Lender’s Commitment, the amount of the Commitment of the assigning Lender subject to each such assignment (determined as of the date the Assignment and Assumption 

  

  

  

  

 

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with respect to such assignment is delivered to the Administrative Agent) shall not be less than $5,000,000 unless each of the Parent Borrower and the Administrative Agent otherwise consent, provided that no such consent of the Parent Borrower shall be required if an Event of Default under clause (a), (b), (h) or (i) of Section 7.01 has occurred and is continuing;

 

(B) each partial assignment shall be made as an assignment of a proportionate part of all the assigning Lender’s rights and obligations under this Agreement;

 

(C) the parties to each assignment shall execute and deliver to the Administrative Agent an Assignment and Assumption, together with a processing and recordation fee of $3,500; provided that such fee shall not apply to any assignment made by a Lender to an Affiliate of such Lender; and

 

(D) the assignee, if it shall not be a Lender, shall deliver to the Administrative Agent an Administrative Questionnaire.

 

(iii) Subject to acceptance and recording thereof pursuant to paragraph (b)(iv) of this Section, from and after the effective date specified in each Assignment and Assumption the assignee thereunder shall be a party hereto and, to the extent of the interest assigned by such Assignment and Assumption, have the rights and obligations of a Lender under this Agreement, and the assigning Lender thereunder shall, to the extent of the interest assigned by such Assignment and Assumption, be released from its obligations under this Agreement (and, in the case of an Assignment and Assumption covering all of the assigning Lender’s rights and obligations under this Agreement, such Lender shall cease to be a party hereto but shall continue to be entitled to the benefits of Sections 2.14, 2.15, 2.16 and 9.03).  Any assignment or transfer by a Lender of rights or obligations under this Agreement that does not comply with this Section 9.04 shall be treated for purposes of this Agreement as a sale by such Lender of a participation in such rights and obligations in accordance with paragraph (c) of this Section.

 

(iv) The Administrative Agent, acting for this purpose as an agent of the Borrowers and the Account Parties, shall maintain at one of its offices a copy of each Assignment and Assumption delivered to it and a register for the recordation of the names and addresses of the Lenders, and the Commitment of, and principal amount of the Loans (and the stated interest thereon) and LC Disbursements owing to, each Lender pursuant to the terms hereof from time to time (the “Register”).  The entries in the Register shall be conclusive, and Holdings, the Borrowers, the Account Parties, the Administrative Agent, the Issuing Banks and the Lenders shall treat each Person whose name is recorded in the Register pursuant to the terms hereof as a Lender hereunder for all purposes of this Agreement, notwithstanding notice to the contrary.  The Register shall be available for inspection by the Parent Borrower, any Issuing Bank and any Lender, at any reasonable time and from time to time upon reasonable prior notice.

 

(v) Upon its receipt of a duly completed Assignment and Assumption executed by an assigning Lender and an assignee, the assignee’s completed Administrative Questionnaire (unless the assignee shall already be a Lender hereunder), the processing and recordation fee referred to in paragraph (b) of this Section and any written consent to such assignment required 

  

  

  

  

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by paragraph (b) of this Section, the Administrative Agent shall accept such Assignment and Assumption and record the information contained therein in the Register.  No assignment shall be effective for purposes of this Agreement unless it has been recorded in the Register as provided in this paragraph.

 

(vi) In the case of any assignment for which the Parent Borrower’s consent is not required, the Administrative Agent shall provide the Parent Borrower with notice promptly upon receipt of an Assignment and Assumption with respect to such assignment.

 

(c) (i)  Any Lender may, without the consent of Holdings, any Borrower, any Account Party, the Administrative Agent, any Issuing Bank or any Swingline Lender, sell participations to one or more banks or other entities (a “Participant”) in all or a portion of such Lender’s rights and obligations under this Agreement (including all or a portion of its Commitment and the Loans owing to it); provided that (A) such Lender’s obligations under this Agreement shall remain unchanged, (B) such Lender shall remain solely responsible to the other parties hereto for the performance of such obligations and (C) Holdings, the Borrowers, the Account Parties, the Administrative Agent, each Issuing Bank and the other Lenders shall continue to deal solely and directly with such Lender in connection with such Lender’s rights and obligations under this Agreement.  For any avoidance of doubt, such Lender shall be responsible for the indemnity under Section 2.16(d) with respect to any payments made to such Participant.  Any agreement or instrument pursuant to which a Lender sells such a participation shall provide that such Lender shall retain the sole right to enforce the Loan Documents and to approve any amendment, modification or waiver of any provision of the Loan Documents; provided that such agreement or instrument may provide that such Lender will not, without the consent of the Participant, agree to any amendment, modification or waiver described in the first proviso to Section 9.02(b) that directly affects such Participant.  Subject to paragraph (c)(ii) of this Section, Holdings, the Borrowers and the Account Parties agree that each Participant shall be entitled to the benefits of Sections 2.14, 2.15 and 2.16 to the same extent as if it were a Lender and had acquired its interest by assignment pursuant to paragraph (b) of this Section.  To the extent permitted by law, each Participant also shall be entitled to the benefits of Section 9.08 as though it were a Lender, provided that such Participant agrees to be subject to Sections 2.17(c) and 2.18 as though it were a Lender.  Each Lender that sells a participation, acting solely for this purpose as an agent of the Borrowers and the Account Parties, shall maintain a register on which it enters the name and address of each Participant and the principal amounts (and stated interest) of each Participant’s interest in the Loans or other obligations under this Agreement (the “Participant Register”); provided, however, that no Lender shall have any obligation to disclose all or any portion of the Participant Register to any Person (including the identity of any Participant or any information relating to a Participant’s interest in any Commitments, Loans, Letters of Credit or its other obligations under any Loan Document) except to the extent that such disclosure is necessary to establish that such Commitment, Loan, Letter of Credit or other obligation is in “registered form” under Section 5f.103-1(c) of the United States Treasury Regulations.  The entries in the Participant Register shall be conclusive absent manifest error, and such Lender, Holdings, the Borrowers, the Account Parties, the Administrative Agent, the Issuing Banks and the Lenders shall treat each 

  

  

  

  

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Person whose name is recorded in the Participant Register as the owner of such participation for all purposes of this Agreement notwithstanding any notice to the contrary.

 

(ii) A Participant shall not be entitled to receive any greater payment under Section 2.14 or 2.16 than the applicable Lender would have been entitled to receive with respect to the participation sold to such Participant, unless the sale of the participation to such Participant is made with the prior written consent of the Parent Borrower (not to be unreasonably withheld or delayed), provided that the Participant shall be subject to the provisions of Sections 2.17(c) and 2.18.

 

(d) Any Lender may at any time pledge or assign a security interest in all or any portion of its rights under this Agreement to secure obligations of such Lender, including any pledge or assignment to secure obligations to a Federal Reserve Bank, and this Section shall not apply to any such pledge or assignment of a security interest; provided that no such pledge or assignment of a security interest shall release a Lender from any of its obligations hereunder or substitute any such pledgee or assignee for such Lender as a party hereto.

 

SECTION 9.05. Survival.  All covenants, agreements, representations and warranties made by the Loan Parties in the Loan Documents and in the certificates or other instruments delivered in connection with or pursuant to this Agreement or any other Loan Document shall be considered to have been relied upon by the other parties hereto 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 such other party 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 hereunder, and shall continue in full force and effect as long as the principal of or any accrued interest on any Loan or any fee or any other amount payable under this Agreement is outstanding and unpaid (other than unasserted indemnification, tax gross up, expense reimbursement or yield protection obligations, in each case for which no claim has been made) or any Letter of Credit is outstanding (except to the extent any such Letter of Credit has had cash collateral or other credit support (satisfactory to the applicable Issuing Bank(s) in its or their sole discretion) issued therefor and the Issuing Banks have agreed (in their sole discretion) to release the Lenders from their participations in such Letters of Credit) and so long as the Commitments have not expired or terminated.  The provisions of Sections 2.14, 2.15, 2.16 and 9.03 and Article VIII shall survive and remain in full force and effect regardless of the consummation of the transactions contemplated hereby, the repayment of the Loans, the expiration or termination of the Letters of Credit and the Commitments or the termination of this Agreement or any provision hereof.

 

SECTION 9.06. Integration; Effectiveness.  This Agreement, the other Loan Documents and any separate letter agreements with respect to fees payable to the Administrative Agent constitute the entire contract among the 

  

  

  

  

124

parties relating to the subject matter hereof and supersede any and all previous agreements and understandings, oral or written, relating to the subject matter hereof.  The amendment and restatement of the Existing Credit Agreement in the form of this Agreement pursuant to the Amendment Agreement shall become effective as set forth in the Amendment Agreement.

 

SECTION 9.07. 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 9.08. 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 Borrower or any Account Party against any of and all the obligations of such Borrower or such Account Party (as the case may be) now or hereafter existing under this Agreement held by 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 2.21 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 Borrower and the relevant Account Party on or prior to the day of the exercise of such rights.

 

SECTION 9.09. Governing Law; Jurisdiction; Consent to Service of Process.  (a)  This Agreement shall be construed in accordance with and governed by the laws of the State of New York.

 

(b) Each of Holdings, the Borrowers and the Account Parties hereby irrevocably and unconditionally submits, for itself and its property, to the exclusive jurisdiction of the Supreme Court of the State of New York sitting in New York County

  

  

  

  

125

and of the United States District Court of the Southern District of New York, and any appellate court from any thereof, in any action or proceeding arising out of or relating to any Loan Document, or for recognition or enforcement of any judgment, and each of the parties hereto hereby irrevocably and unconditionally agrees that all claims in respect of any such action or proceeding may be heard and determined in such New York State or, to the extent permitted by law, in such Federal court.  Each of the parties hereto agrees that a final judgment in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law.  Nothing in this Agreement or any other Loan Document shall affect any right that the Administrative Agent, any Issuing Bank or any Lender may otherwise have to bring any action or proceeding relating to this Agreement or any other Loan Document against Holdings, a Borrower or an Account Party or any of their respective properties in the courts of any jurisdiction.

 

(c) Each of Holdings, the Borrowers and the Account Parties hereby irrevocably and unconditionally waives, to the fullest extent it may legally and effectively do so, any objection which it may now or hereafter have to the laying of venue of any suit, action or proceeding arising out of or relating to this Agreement or any other Loan Document in any court referred to in paragraph (b) of this Section.  Each of the parties hereto hereby irrevocably waives, to the fullest extent permitted by law, the defense of an inconvenient forum to the maintenance of such action or proceeding in any such court.

 

(d) Each party to this Agreement irrevocably consents to service of process in the manner provided for notices in Section 9.01.  Nothing in this Agreement 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 9.10. WAIVER OF JURY TRIAL.  EACH PARTY HERETO HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN  ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT, ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY).  EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.

 

SECTION 9.11. Headings.  Article and Section headings and the Table of Contents used herein are for convenience of reference only, are not part of this Agreement and shall not affect the construction of, or be taken into consideration in interpreting, this Agreement.

  

  

  

  

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SECTION 9.12. Confidentiality.  (a) Each of the Administrative Agent, the Issuing Banks and the Lenders agrees to maintain the confidentiality of the Information (as defined below), except that Information may be disclosed (i) to its and its Affiliates’ directors, officers, employees and agents, including accountants, legal counsel and other advisors (it being understood that the Persons to whom such disclosure is made will be informed of the confidential nature of such Information and instructed to keep such Information confidential), (ii) to the extent requested by any regulatory authority, (iii) to the extent  required by applicable laws or regulations or by any subpoena or similar legal process, (iv) to any other party to this Agreement, (v) in connection with the exercise of any remedies hereunder or any suit, action or proceeding relating to this Agreement or any other Loan Document or the enforcement of rights hereunder or thereunder, (vi) subject to an agreement containing provisions substantially the same as those of this Section, to (A) any assignee of or Participant in, or any prospective assignee of or Participant in, any of its rights or obligations under this Agreement or (B) any actual or prospective counterparty (or its advisors) to any Swap Agreement relating to the Loan Parties and their Obligations, (vii) with the consent of the Parent Borrower or (viii) to the extent such Information (A) becomes publicly available other than as a result of a breach of this Section or (B) becomes available to the Administrative Agent, any Issuing Bank or any Lender on a nonconfidential basis from a source other than Holdings, a Borrower or an Account Party.  For the purposes of this Section, “Information” means all information received from Holdings, any Borrower or any Account Party relating to Holdings, any Borrower, any Account Party or their respective business, other than any such information that is available to the Administrative Agent, any Issuing Bank or any Lender on a nonconfidential basis prior to disclosure by Holdings, any Borrower or any Account Party.  Any Person required to maintain the confidentiality of Information as provided in this Section shall be considered to have complied with its obligation to do so if such Person has exercised the same degree of care to maintain the confidentiality of such Information as such Person would accord to its own confidential information.

 

(b) Each Lender acknowledges that Information as defined in Section 9.12(a) furnished to it pursuant to this Agreement may include material non-public Information concerning the Loan Parties and their securities, and confirms that it has developed compliance procedures regarding the use of material non-public Information and that it will handle such material non-public Information in accordance with those procedures, applicable law, including Federal and state securities laws, and the terms hereof.

 

(c) All information, including waivers and amendments, furnished by the Loan Parties, their representatives or the Administrative Agent pursuant to, or in the course of administering, this Agreement will be syndicate-level information, which may contain material non-public Information about the Loan Parties and their securities.  Accordingly, each Lender represents to Holdings (on behalf of the Loan Parties) and the Administrative Agent that it has identified in its Administrative Questionnaire a credit

  

  

  

  

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contact who may receive Information that may contain material non-public Information in accordance with its compliance procedures, applicable law and the terms hereof.

 

SECTION 9.13. Interest Rate Limitation.  Notwithstanding anything herein to the contrary, if at any time the interest rate applicable to any Loan, together with all fees, charges and other amounts which are treated as interest on such Loan under applicable law (collectively the “Charges”), shall exceed the maximum lawful rate (the “Maximum Rate”) which may be contracted for, charged, taken, received or reserved by the Lender holding such Loan in accordance with applicable law, the rate of interest payable in respect of such Loan hereunder, together with all Charges payable in respect thereof, shall be limited to the Maximum Rate and, to the extent lawful, the interest and Charges that would have been payable in respect of such Loan but were not payable as a result of the operation of this Section shall be cumulated and the interest and Charges payable to such Lender in respect of other Loans or periods shall be increased (but not above the Maximum Rate therefor) until such cumulated amount, together with interest thereon at the Federal Funds Effective Rate to the date of repayment, shall have been received by such Lender.

 

SECTION 9.14. USA Patriot Act.  Each Lender hereby notifies each of the Loan Parties that pursuant to the requirements of the Patriot Act, it is required to obtain, verify and record information that identifies Loan Parties, which information includes the name and address of such Loan Parties and other information that will allow such Lender to identify such Loan Parties in accordance with the Patriot Act.

 

SECTION 9.15. No Fiduciary Duty.  The Administrative Agent, each Lender and their respective Affiliates (collectively, solely for purposes of this paragraph, the “Lenders”), may have economic interests that conflict with those of the Loan Parties, their stockholders and/or their Affiliates.  Each Loan Party agrees that nothing in the Loan Documents or otherwise will be deemed to create an advisory, fiduciary or agency relationship or fiduciary or other implied duty between any Lender, on the one hand, and such Loan Party, its stockholders or its Affiliates, on the other.  The Loan Parties acknowledge and agree that (i) the transactions contemplated by the Loan Documents (including the exercise of rights and remedies hereunder and thereunder) are arm’s-length commercial transactions between the Lenders, on the one hand, and the Loan Parties, on the other, and (ii) in connection therewith and with the process leading thereto, (x) no Lender has assumed an advisory or fiduciary responsibility in favor of any Loan Party, its stockholders or its Affiliates with respect to the transactions contemplated hereby (or the exercise of rights or remedies with respect thereto) or the process leading thereto (irrespective of whether any Lender has advised, is currently advising or will advise any Loan Party, its stockholders or its Affiliates on other matters) or any other obligation to any Loan Party except the obligations expressly set forth in the Loan Documents and (y) each Lender is acting solely as principal and not as the agent or fiduciary of any Loan Party, its management, stockholders, creditors or any 

  

  

  

  

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other Person.  Each Loan Party acknowledges and agrees that it has consulted its own legal and financial advisors to the extent it deemed appropriate and that it is responsible for making its own independent judgment with respect to such transactions and the process leading thereto.  Each Loan Party agrees that it will not claim that any Lender has rendered advisory services of any nature or respect, or owes a fiduciary or similar duty to such Loan Party, in connection with such transaction or the process leading thereto.

 

[The remainder of this page has been left blank intentionally.]

  

  

  

  

 

Exhibit B

 

Reaffirmation Agreement

 

 

  

  

  

  

Exhibit B

 

 

REAFFIRMATION AGREEMENT dated as of February 8, 2013 (this “Agreement”), among J.C. PENNEY COMPANY, INC. (“Holdings”), J.C. PENNEY CORPORATION, INC. (the “Parent Borrower”), J.C. PENNEY PURCHASING CORPORATION (“Purchasing”), the other SUBSIDIARIES of Holdings identified on the signature pages hereof (collectively, the “Reaffirming Subsidiary Loan Parties” and, together with Holdings, the Parent Borrower and Purchasing, the “Reaffirming Parties”), and JPMORGAN CHASE BANK, N.A., as administrative agent (in such capacity, the “Administrative Agent”) under the Restated Credit Agreement.

 

WHEREAS, Holdings, the Parent Borrower, Purchasing, certain Lenders (such term and each other capitalized term used but not defined herein having the meaning assigned to such term in the Restated Credit Agreement) and the Administrative Agent have entered into that certain Amendment and Restatement Agreement dated as of February 8, 2013 (the “Restatement Agreement”) to the Amended and Restated Credit Agreement dated as of January 27, 2012 (as amended through the date hereof, the “Existing Credit Agreement” and, as amended and restated by the Restatement Agreement, the “Restated Credit Agreement”), among Holdings, the Parent Borrower, Purchasing, the Lenders from time to time party thereto, the Administrative Agent and Wells Fargo Bank, National Association, as LC Agent.

 

WHEREAS, each Reaffirming Party is party to one or more of the Security Documents;

 

WHEREAS, each Reaffirming Party expects to realize, or has realized, substantial direct and indirect benefits as a result of the Restatement Agreement and the Restated Credit Agreement becoming effective and the consummation of the transactions contemplated thereby;

 

WHEREAS, the execution and delivery of this Agreement is a condition precedent to the effectiveness of the Restatement Agreement and the Restated Credit Agreement and the consummation of the transactions contemplated thereby; and

 

NOW, THEREFORE, in consideration of the foregoing and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

 

ARTICLE I

 

Reaffirmation

 

SECTION 1.01. Reaffirmation.  (a)  Each Reaffirming Party (i) hereby consents to the Restatement Agreement and the transactions contemplated thereby, (ii) hereby confirms its guarantees, pledges, grants of security interests and other agreements, as applicable, under each Security Document to which it is a party, and 

 

  

  

  

  

(iii) agrees that, after giving effect to the Restatement Agreement and the consummation of the transactions contemplated thereby, such guarantees, pledges, grants of security interests and other agreements shall continue to be in full force and effect and shall accrue to the benefit of the Secured Parties under the Restated Credit Agreement.

 

(b) Each Reaffirming Party hereby confirms and agrees that the “Obligations” (or any term of like import) as defined or referenced in the Security Documents to which such Reaffirming Party is a party will include the “Loan Document Obligations” as defined in the Restated Credit Agreement.

 

ARTICLE II

 

Miscellaneous

 

SECTION 2.01. Notices.  All notices hereunder shall be in writing and given as provided in Section 9.01 of the Restated Credit Agreement.  All communications and notices hereunder to any Reaffirming Subsidiary Loan Party shall be given to it in care of the Parent Borrower as provided in Section 6.01 of the Collateral Agreement.

 

SECTION 2.02. Security Document.  This Agreement is a Security Document executed pursuant to the Restatement Agreement.

 

SECTION 2.03. Effectiveness; Counterparts.  This Agreement shall become effective on the date when copies hereof which, when taken together, bear the signatures of each Reaffirming Party and the Administrative Agent, shall have been received by the Administrative Agent (or its counsel).  This Agreement may not be amended nor may any provision hereof be waived except pursuant to a writing signed by each of the parties hereto.  This Agreement may be executed in any number of counterparts and by separate parties hereto on separate counterparts, each of which shall constitute an original but all of which when taken together shall constitute but one agreement.  Delivery of an executed signature page to this Agreement by facsimile or email transmission shall be effective as delivery of a manually executed counterpart of this Agreement.

 

SECTION 2.04. Effect of Agreement; No Novation.  (a)Except as expressly set forth herein, this Agreement shall not, by implication or otherwise, limit, impair, constitute a waiver of or otherwise affect the rights and remedies of any Loan Party, the Administrative Agent, any Issuing Bank, the Swingline Lender or any Lender under the Existing Credit Agreement or any other Loan Document (as defined in the Existing Credit Agreement), and shall not alter, modify, amend or in any way affect the Existing Credit Agreement or any other Loan Document (as defined in the Existing Credit Agreement), all of which, as amended, supplemented or otherwise modified by the Restatement Agreement, are ratified and affirmed in all respects and shall continue in full force and effect.  Nothing herein shall be deemed to entitle any Loan Party to a consent to, or a waiver, amendment, modification or other change of, the Restated Credit Agreement or any other Loan Document in similar or different circumstances.

 

  

  

  

  

(b) Neither this Agreement nor the effectiveness of the Restatement Agreement or the Restated Credit Agreement shall extinguish the obligations for the payment of money outstanding under the Existing Credit Agreement or discharge or release the priority of any Security Document, any other security therefor or any Guarantee thereof.  Nothing contained herein shall be construed as a substitution or novation of the Obligations outstanding under the Existing Credit Agreement or the Security Documents, which shall remain in full force and effect, except as modified by the Restatement Agreement.

 

SECTION 2.05. Applicable Law.  This Agreement shall be construed in accordance with and governed by the laws of the State of New York.  Notwithstanding anything to the contrary contained herein, the provisions of Sections 9.09 and 9.10 of the Restated Credit Agreement are incorporated by reference herein, mutatis mutandis.

 

SECTION 2.06. Headings.  The Section headings used herein are for convenience of reference only, are not part of this Agreement and are not to affect the construction of, or to be taken into consideration in interpreting, this Agreement.

 

[remainder of page intentionally blank]

 

  

  

  

  

IN WITNESS WHEREOF, the parties below have caused this Agreement to be duly executed by their respective authorized officers as of the day and year first above written.

 

	
J. C. PENNEY COMPANY, INC.,

	
by: 

	  	  
	  	
Name:        

	  	
Title:

	
J. C. PENNEY CORPORATION, INC.,

	
by: 

	  	  
	  	
Name: 

	  	
Title: 

	
J. C. PENNEY PURCHASING CORPORATION,

	
by: 

	  	  
	  	
Name: 

	  	
Title: 

	
JCP REAL ESTATE HOLDINGS, INC.,

	
by: 

	  	  
	  	
Name: 

	  	
Title: 

	
J. C. PENNEY PROPERTIES, INC.,

	
by: 

	  	  
	  	
Name: 

	  	
Title:

  

  

  

  

	
JPMORGAN CHASE BANK, N.A., as Administrative Agent,

	
by

	  
	  	
Name:

	  	
Title:exhibit10reaffirmation2013.htm

 

Exhibit 10.2

 

EXECUTION COPY

REAFFIRMATION AGREEMENT dated as of February 8, 2013 (this “Agreement”), among J.C. PENNEY COMPANY, INC. (“Holdings”), J.C. PENNEY CORPORATION, INC. (the “Parent Borrower”), J.C. PENNEY PURCHASING CORPORATION (“Purchasing”), the other SUBSIDIARIES of Holdings identified on the signature pages hereof (collectively, the “Reaffirming Subsidiary Loan Parties” and, together with Holdings, the Parent Borrower and Purchasing, the “Reaffirming Parties”), and JPMORGAN CHASE BANK, N.A., as administrative agent (in such capacity, the “Administrative Agent”) under the Restated Credit Agreement.

 

WHEREAS, Holdings, the Parent Borrower, Purchasing, certain Lenders (such term and each other capitalized term used but not defined herein having the meaning assigned to such term in the Restated Credit Agreement) and the Administrative Agent have entered into that certain Amendment and Restatement Agreement dated as of February 8, 2013 (the “Restatement Agreement”) to the Amended and Restated Credit Agreement dated as of January 27, 2012 (as amended through the date hereof, the “Existing Credit Agreement” and, as amended and restated by the Restatement Agreement, the “Restated Credit Agreement”), among Holdings, the Parent Borrower, Purchasing, the Lenders from time to time party thereto, the Administrative Agent and Wells Fargo Bank, National Association, as LC Agent.

 

WHEREAS, each Reaffirming Party is party to one or more of the Security Documents;

 

WHEREAS, each Reaffirming Party expects to realize, or has realized, substantial direct and indirect benefits as a result of the Restatement Agreement and the Restated Credit Agreement becoming effective and the consummation of the transactions contemplated thereby;

 

WHEREAS, the execution and delivery of this Agreement is a condition precedent to the effectiveness of the Restatement Agreement and the Restated Credit Agreement and the consummation of the transactions contemplated thereby; and

 

NOW, THEREFORE, in consideration of the foregoing and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

 

ARTICLE I

 

Reaffirmation

 

SECTION 1.01. Reaffirmation.  (a)  Each Reaffirming Party (i) hereby consents to the Restatement Agreement and the transactions contemplated thereby, (ii) hereby confirms its guarantees, pledges, grants of security interests and other agreements, as applicable, under each Security Document to which it is a party, and 

 

  

  

  

  

(iii) agrees that, after giving effect to the Restatement Agreement and the consummation of the transactions contemplated thereby, such guarantees, pledges, grants of security interests and other agreements shall continue to be in full force and effect and shall accrue to the benefit of the Secured Parties under the Restated Credit Agreement.

 

(b) Each Reaffirming Party hereby confirms and agrees that the “Obligations” (or any term of like import) as defined or referenced in the Security Documents to which such Reaffirming Party is a party will include the “Loan Document Obligations” as defined in the Restated Credit Agreement.

 

ARTICLE II

 

Miscellaneous

 

SECTION 2.01. Notices.  All notices hereunder shall be in writing and given as provided in Section 9.01 of the Restated Credit Agreement.  All communications and notices hereunder to any Reaffirming Subsidiary Loan Party shall be given to it in care of the Parent Borrower as provided in Section 6.01 of the Collateral Agreement.

 

SECTION 2.02. Security Document.  This Agreement is a Security Document executed pursuant to the Restatement Agreement.

 

SECTION 2.03. Effectiveness; Counterparts.  This Agreement shall become effective on the date when copies hereof which, when taken together, bear the signatures of each Reaffirming Party and the Administrative Agent, shall have been received by the Administrative Agent (or its counsel).  This Agreement may not be amended nor may any provision hereof be waived except pursuant to a writing signed by each of the parties hereto.  This Agreement may be executed in any number of counterparts and by separate parties hereto on separate counterparts, each of which shall constitute an original but all of which when taken together shall constitute but one agreement.  Delivery of an executed signature page to this Agreement by facsimile or email transmission shall be effective as delivery of a manually executed counterpart of this Agreement.

 

SECTION 2.04. Effect of Agreement; No Novation.  (a)Except as expressly set forth herein, this Agreement shall not, by implication or otherwise, limit, impair, constitute a waiver of or otherwise affect the rights and remedies of any Loan Party, the Administrative Agent, any Issuing Bank, the Swingline Lender or any Lender under the Existing Credit Agreement or any other Loan Document (as defined in the Existing Credit Agreement), and shall not alter, modify, amend or in any way affect the Existing Credit Agreement or any other Loan Document (as defined in the Existing Credit Agreement), all of which, as amended, supplemented or otherwise modified by the Restatement Agreement, are ratified and affirmed in all respects and shall continue in full force and effect.  Nothing herein shall be deemed to entitle any Loan Party to a consent to, or a waiver, amendment, modification or other change of, the Restated Credit Agreement or any other Loan Document in similar or different circumstances.

 

  

  

  

  

(b) Neither this Agreement nor the effectiveness of the Restatement Agreement or the Restated Credit Agreement shall extinguish the obligations for the payment of money outstanding under the Existing Credit Agreement or discharge or release the priority of any Security Document, any other security therefor or any Guarantee thereof.  Nothing contained herein shall be construed as a substitution or novation of the Obligations outstanding under the Existing Credit Agreement or the Security Documents, which shall remain in full force and effect, except as modified by the Restatement Agreement.

 

SECTION 2.05. Applicable Law.  This Agreement shall be construed in accordance with and governed by the laws of the State of New York.  Notwithstanding anything to the contrary contained herein, the provisions of Sections 9.09 and 9.10 of the Restated Credit Agreement are incorporated by reference herein, mutatis mutandis.

 

SECTION 2.06. Headings.  The Section headings used herein are for convenience of reference only, are not part of this Agreement and are not to affect the construction of, or to be taken into consideration in interpreting, this Agreement.

 

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IN WITNESS WHEREOF, the parties below have caused this Agreement to be duly executed by their respective authorized officers as of the day and year first above written.

 

	
J. C. PENNEY COMPANY, INC.,

	
by: /s/ Kenneth Hannah

	  	  
	  	
Name:   Kenneth Hannah        

	  	
Title: Executive Vice President, 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. 

  

  

  

  

	
JPMORGAN CHASE BANK, N.A., as Administrative Agent,

	
by /s/ Sarah Freedman

	 
	  	
Name: Sarah Freedman

	  	
Title: Executive Director

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