Document:

creditagreement.htm

    
      
        	
                Exhibit
10.1

              

      

       

      
        EXECUTION
COPY

        
          

        

      

      
         

        CREDIT
AGREEMENT

         

        dated
as of April 8, 2009

         

        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

         

        WACHOVIA
BANK, NATIONAL ASSOCIATION,

        as
LC Agent

        ___________________________

         

        J.P.
MORGAN SECURITIES INC.,

        BANC
OF AMERICA SECURITIES LLC,

        BARCLAYS
CAPITAL and

        WACHOVIA BANK,
NATIONAL ASSOCIATION

        as
Joint Bookrunners and Co-Lead Arrangers,

         

        JPMORGAN
CHASE BANK, N.A.,

        as
Syndication Agent

         

        and

         

        BANK
OF AMERICA, N.A.,

        BARCLAYS
BANK PLC and

        WACHOVIA BANK,
NATIONAL ASSOCIATION,

        as
Joint Documentation Agents

         

         

          
            

          

        

      [CS&M
Reference No. 6701-806]

       

      
        
          
          

        

        
          
          

          
          

        

        
          
          

        

      

       

      TABLE
OF CONTENTS

       

       

      
        	 	
                ARTICLE
      I

                Definitions

                 

              	 
	 SECTION 1.01.  	Defined
      Terms 	  
      1
	 SECTION 1.02.	Classification of Loans and Borrowings 	 22
	 SECTION 1.03. 	Terms Generally 	 22
	 SECTION 1.04. 	Accounting Terms; GAAP 	 23
	 	
                 

                ARTICLE II

                The Credits

                 

              	 
	 SECTION 2.01.	Commitments 	 23
	 SECTION 2.02. 	Loans and Borrowings 	 23
	 SECTION 2.03. 	Requests for Revolving Borrowings	 24
	 SECTION 2.04. 	Swingline Loans	 25
	 SECTION 2.05.	Letters of Credit	 26
	 SECTION 2.06.	Funding of Borrowings	 32
	 SECTION 2.07.	Interest Elections	 33
	 SECTION 2.08.	Termination and Reduction of Commitments	 34
	 SECTION 2.09. 	Repayment of Loans; Evidence of Debt	 34
	 SECTION 2.10. 	Prepayment of Loans	 35
	 SECTION 2.11. 	Fees 	 36
	 SECTION 2.12. 	Interest	 37
	 SECTION 2.13.	Alternate Rate of Interest	 37
	 SECTION 2.14. 	Increased Costs	 38
	 SECTION 2.15. 	Break Funding Payments	 39
	 SECTION 2.16. 	Taxes	 40
	 SECTION 2.17. 	Payments Generally; Pro Rata Treatment; Sharing of
      Set-offs	 43
	 SECTION 2.18.	Mitigation Obligations; Replacement of Lenders	 44
	 SECTION 2.19.	Reserved.	 47
	 SECTION 2.20. 	Borrowing Subsidiaries	 47
	 SECTION 2.21. 	Defaulting Lenders	 47
	 	
                 

                 ARTICLE III

                Representations and Warranties

                 

              	 
	 SECTION 3.01.	Organization; Powers	 50
	 SECTION 3.02. 	Authorization; Enforceability	 50
	 SECTION 3.03.	Governmental Approvals; No Conflicts	 50
	 SECTION 3.04.	Financial Condition; No Material Adverse Change	 50
	 SECTION 3.05.	Properties 	 51

      

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          	 SECTION 3.06. 	Litigation and Environmental Matters 	 51
	 SECTION 3.07. 	Compliance with Laws and Agreements 	 51
	 SECTION 3.08. 	Investment Company Status	 51
	 SECTION 3.09.	Taxes	 51
	 SECTION 3.10.	ERISA	 52
	 SECTION 3.11.	Disclosure	 52
	 SECTION 3.12. 	Material Subsidiaries 	 52
	 	
                   

                  ARTICLE IV

                  Conditions

                   

                	 
	 SECTION 4.01. 	Effective Date	 52
	 SECTION 4.02. 	Each Credit Event 	 54
	 SECTION 4.03.	Borrowing Subsidiaries 	 54
	 	
                   

                  ARTICLE V

                  Affirmative Covenants

                   

                	 
	 SECTION 5.01. 	Financial Statements; Ratings Change and Other
      Information	 55
	 SECTION 5.02.	Notices of Material Events	 56
	 SECTION 5.03.	Information Regarding Collateral 	 57
	 SECTION 5.04. 	Existence; Conduct of Business	 58
	 SECTION 5.05.	Payment of Obligations	 58
	 SECTION 5.06.	Maintenance of Properties	 58
	 SECTION 5.07. 	Insurance	 58
	 SECTION 5.08.  	Books and Records; Inspection Rights; Inventory
      Audits 	 58
	 SECTION 5.09.	Compliance with Laws 	 59
	 SECTION 5.10.	Use of Proceeds and Letters of Credit 	 59
	 SECTION 5.11.	Additional Guarantee Parties 	 59
	 SECTION 5.12.	Further Assurances	 60
	 SECTION 5.13. 	Maintenance of Ratings 	 60
	 SECTION 5.14.	Prepayment Avoidance 	 60
	 	
                   

                  ARTICLE VI

                  Negative Covenants

                   

                	 
	 SECTION 6.01. 	Indebtedness 	 60
	 SECTION 6.02.	Liens 	 61
	 SECTION 6.03. 	Fundamental Changes 	 63
	 SECTION 6.04. 	Investments, Loans, Advances, Guarantees and
      Acquisitions	 63
	 SECTION 6.05.	Asset Sales 	 64
	 SECTION 6.06. 	Sale and Leaseback Transactions 	 65
	 SECTION 6.07.	Restricted Payments 	 65
	 SECTION 6.08. 	Restrictive Agreements 	 66

        

      

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          	 SECTION 6.09. 	Leverage Ratio	 66
	 SECTION 6.10. 	Fixed Charge Coverage Ratio	 67
	 SECTION 6.11.  	Asset Coverage Ratio 	 67
	 SECTION 6.12. 	Restriction on Non-Material Subsidiaries 	 67
	 	
                   

                   ARTICLE VII

                   Events of Default

                   

                	 
	 SECTION 7.01.	Events of Default 	 67
	 SECTION 7.02. 	Exclusion of Immaterial Subsidiaries 	 70
	 	
                   

                   ARTICLE VIII

                  The
      Administrative Agent

                   

                	 
	 	 	 
	 	
                   ARTICLE IX

                  Miscellaneous

                   

                	 
	 SECTION 9.01.	Notices	 72
	 SECTION 9.02. 	Waivers; Amendments	 73
	 SECTION 9.03. 	Expenses; Indemnity; Damage Waiver	 74
	 SECTION 9.04.	Successors and Assigns 	 76
	 SECTION 9.05. 	Survival 	 79
	 SECTION 9.06.  	Counterparts; Integration; Effectiveness 	 79
	 SECTION 9.07.	Severability	 79
	 SECTION 9.08.	Right of Setoff 	 79
	 SECTION 9.09.	Governing Law; Jurisdiction; Consent to Service of
      Process 	 80
	 SECTION 9.10.	WAIVER OF JURY TRIAL 	 81
	 SECTION 9.11.	Headings	 81
	 SECTION 9.12. 	Confidentiality	 81
	 SECTION 9.13. 	Interest Rate Limitation 	 82
	 SECTION 9.14.	USA Patriot Act 	 82
	 SECTION 9.15. 	Waiver Under Existing Credit Agreement	 82
	 	 	 

        

      

       

      
        	 SCHEDULES:
      	 
	 Schedule 2.01 -- Commitments	 
	 Schedule 2.05 -- Issuing Banks	 
	 Schedule 3.06 -- Disclosed Matters	 
	 Schedule 3.12 -- Material Subsidiaries	 
	 Schedule 6.01 -- Existing Indebtedness	 
	 Schedule 6.02 -- Existing Liens	 
	 Schedule 6.04 -- Existing Investments	 

      

       

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        Schedule 6.08
-- Existing Restrictions

        
          	 	 	 
	 EXHIBITS:
      	 	 
	 	 	 
	
                  Exhibit
      A  --

                	
                  Form
      of Assignment and Assumption

                	 
	Exhibit
      B  --	Forms
      of Opinion of Counsel to the Loan Parties	 
	Exhibit
      C  --	Form of
      Guarantee and Collateral Agreement	 
	
                  Exhibit
      D  --

                	
                  Form
      of U.S. Tax Compliance Certificate

                	 

        

         

      

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      CREDIT
AGREEMENT dated as of April 8, 2009, 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
WACHOVIA BANK, NATIONAL ASSOCIATION, as LC Agent.

       

      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 Parties”
means the Parent Borrower and Purchasing.

       

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

       

      “Additional Inventory”
means, with respect to any Additional Grantor, any inventory owned by such
Additional Grantor that the Parent Borrower and the Administrative Agent agree,
in writing, shall be deemed to be “Collateral” under the Collateral
Agreement.

       

      “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.

       

      
        
          
          

        

        
          
          

          
          

        

        
          
          

        

      

      2

      “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 Reuters BBA Libor Rates
Page 3750 (or on any successor or substitute page of such page) at
approximately 11:00 a.m. London time on such day.  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.

       

      “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 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

              	
                2.00%

              	
                3.00%

              	
                3.00%

              	
                0.50%

              
	
                Category
      2

                Baa3/BBB-

              	
                2.50%

              	
                3.50%

              	
                3.50%

              	
                0.50%

              
	
                Category
      3

                Ba1/BB+

              	
                3.00%

              	
                4.00%

              	
                4.00%

              	
                0.50%

              
	
                Category
      4

                ≤Ba2/BB

              	
                3.50%

              	
                4.50%

              	
                4.50%

              	
                0.75%

              

      

      

       

      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

       

      
        
          
          

        

        
          
          

          
          

        

        
          
          

        

        3

        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 lower 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 4; (d) the Applicable Rate shall be deemed to be the Applicable Rate
set forth in Category 4 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 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 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.

      

       

      “Asset Coverage
Certificate” means a certificate setting forth the calculation of the
Asset Coverage Ratio and signed on behalf of the Parent Borrower by a Financial
Officer.

       

      “Asset Coverage Ratio”
means, on any date, the ratio of (a) the book value of all Eligible Inventory as
of the last day of the fiscal month ended on or most recently prior to such
date, determined in accordance with GAAP as applied on a consistent basis
(including the deduction of any marked-down inventory reserves in accordance
with GAAP), to (b) the sum of (i) the total amount that Holdings and the
Subsidiaries would be required to pay (taking into account any netting
agreements) if all Swap Agreements to which they are parties were terminated as
of the last day of the fiscal month ended on or most recently prior to such date
(but only to the extent that such payment obligations constitute Obligations)
plus (ii) total Revolving Credit Exposures as of such date.

       

      “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.

       

      “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.

       

      
        
          
          

        

        
          
          

          
          

        

        
          
          

        

      

      4

      “Borrowing” means (a)
Revolving Loans 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 or (b) a Swingline Loan.

       

      “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 respect to
which a Subsidiary Borrower Termination has not been executed 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 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.

       

      “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 date
hereof) other than any retirement or savings plan for employees of Holdings and
its Subsidiaries, of Equity Interests representing more than 40% 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; or (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 nor (ii)
appointed by directors so nominated.

       

      “Change in Law” means
(a) the adoption of any law, rule or regulation after the date of this
Agreement, (b) any change in any law, rule or regulation or in the
interpretation or application thereof by any Governmental Authority after the
date of this Agreement 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 date of this
Agreement.

       

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

       

      
        
          
          

        

        
          
          

          
          

        

        
          
          

        

      

      5

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

       

      “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 Agreement”
means the 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 the form
specified therein, duly executed and delivered on behalf of such Loan
Party;

       

      (b)  at
any time other than during a Release Period, 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;
and

       

      (c)  each
Loan Party shall have obtained all consents and approvals required to be
obtained by it in connection with the execution and delivery of the Collateral
Agreement, the performance of its obligations thereunder and, at any time other
than during a Release Period, the granting by it of the Liens
thereunder.

       

      “Commitment” means,
with respect to each Lender, the commitment of such Lender to make Revolving
Loans and to acquire participations in Letters of Credit and Swingline Loans
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.  The initial amount of each Lender’s Commitment is set
forth on Schedule 2.01, 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 is
$750,000,000.

       

      “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

       

      
        
          
          

        

        
          
          

          
          

        

        
          
          

        

        6

        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-recurring non-cash charges (it being understood that
the write-down or write-off of any inventory or accounts receivable shall not be
construed to be a non-recurring non-cash charge) for such 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, and minus (b) without
duplication and to the extent included in determining such Consolidated Net
Income, any extraordinary or other non-recurring gains for such period, all
determined on a consolidated basis in accordance with GAAP.

      

       

      “Consolidated Interest
Expense” means, for any period, the excess of (a) 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 minus (b) interest income of
Holdings and the Subsidiaries for such period, all determined on a consolidated
basis in accordance with GAAP.

       

      “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 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.

       

      “Consolidated Rent
Expense” means, for any period, the rental expense in respect of stores
and other real property (other than Capital Lease Obligations) deducted in
determining Consolidated Net Income for such period.

       

      “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.

       

      “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.

       

      “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 or

       

      
        
          
          

        

        
          
          

          
          

        

        
          
          

        

        7

        Swingline Loans within three Business Days of the date
required to be funded by it hereunder,
(b) notified the Parent Borrower,
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 the effect that it does
not intend to comply with its funding obligations generally under
other agreements in which it commits to extend credit, (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 and
Swingline Loans, (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)(i) become or is insolvent or has a parent company that has
become or is insolvent or (ii) 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.

      

       

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

       

      “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 redeemable (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 redeemable (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) or is required to be repurchased 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 this
clause (c) shall not apply to any requirement of mandatory redemption or
repurchase that is contingent upon an asset disposition or the incurrence of
Indebtedness if such mandatory redemption or repurchase can be avoided through
repayment or prepayment of Loans or through investments by Holdings in assets to
be used in their businesses.

       

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

       

      
        
          
          

        

        
          
          

          
          

        

        
          
          

        

      

      8

      “Effective Date” means
the date on which the conditions specified in Section 4.01 are satisfied
(or waived in accordance with Section 9.02).

       

      “Eligible In-Transit
Inventory” means all import inventory of the Loan Parties that is in
transit from a location outside of the United States of America for which title
remains with a Loan Party and which is fully insured; provided that the
aggregate book value of all Eligible In-Transit Inventory shall not exceed 5% of
the aggregate book value of all Eligible Inventory.

       

      “Eligible Inventory”
means (a) all inventory of the Loan Parties located in the United States of
America and all Eligible In-Transit Inventory, other than consignment inventory
(including inventory subject to “sale or return” arrangements), and (b) all
Additional Inventory located in the United States of America, other than
consignment inventory (including inventory subject to “sale or return”
arrangements); provided that, unless
and until the Liens granted under the Collateral Agreement are released as
provided in Section 6.15(d) of the Collateral Agreement, any such
inventory, Eligible In-Transit Inventory or Additional Inventory shall
constitute “Eligible Inventory” only if such inventory is subject to a perfected
first-priority Lien securing the Obligations pursuant to the terms of the
Collateral Agreement.

       

      “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.

       

      
        
          
          

        

        
          
          

          
          

        

        
          
          

        

      

      9

      “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 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 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, any (a) Other
Connection Taxes, (b) U.S. federal withholding Tax imposed by a requirement of
law in effect at the time a Foreign Lender (other than an assignee under Section
2.18(b)) becomes a party to this Agreement (or designates a new lending office),
with respect to any payment made by or on account of any obligation of a
Borrower to such Foreign Lender, except to the extent that such Foreign 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

       

      
        
          
          

        

        
          
          

          
          

        

        
          
          

        

        10

        withholding
Tax under Section 2.16(a) or (c) Taxes attributable to a Lender’s failure to
comply with Section 2.16(g).

      

       

      “Existing Credit
Agreement” means the Credit Agreement dated as of April 7, 2005, as
amended, among Holdings, the Account Parties, the financial institutions named
therein as lenders, JPMorgan Chase Bank, N.A., as administrative agent, and
Wachovia Bank, National Association, as LC Agent.

       

      “Existing Indentures”
means (a) the Indenture dated as of October 1, 1982, as amended, between the
Parent Borrower and U.S. Bank National Association (successor to Bank of America
National Trust and Savings Association), as trustee and (b) the Indenture dated
as of April 1, 1994, as amended, between the Parent Borrower and U.S. Bank
National Association (successor to Bank of America National Trust and Savings
Association), as trustee.

       

      “Existing Letter of
Credit” means any letter of credit that is outstanding under the Existing
Credit Agreement on the Effective Date.

       

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

       

      “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.

       

      “Fee Receiver” means
any Person for whose account any payments of fees are made under Section 2.11(a)
or Section 2.11(b) of this Agreement.

       

      “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 period, the ratio of (a) Consolidated EBITDA plus
Consolidated Rent Expense to (b) Consolidated Interest Expense plus Consolidated
Rent Expense, in each case for such period.

       

      “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 U.S. Persons) are not U.S. Persons.

       

      
        
          
          

        

        
          
          

          
          

        

        
          
          

        

      

      11

      “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.

       

      “Funded Indebtedness”
of any Person means, at any date for the determination thereof, without
duplication, the sum of (a) the outstanding aggregate principal amount of all
Indebtedness of such Person for borrowed money or of a type described in clause
(c) or (d) of the definition of the term “Indebtedness” and (b) the
outstanding aggregate principal amount of all Indebtedness of others of the type
described in the preceding clause (a) for the payment of which such Person
is responsible or liable pursuant to a Guarantee or otherwise; provided that Funded
Indebtedness shall not include (i) any obligations under leases or any
guarantees of obligations of others under leases, (ii) any obligations of such
Person in respect of letters of credit, (iii) except as provided in clause (b)
above, any contingent obligations of such Person and (iv) any Indebtedness of
Holdings to any Subsidiary or of any Subsidiary to Holdings or any other
Subsidiary.  It is understood that for the purposes of this definition
the term “principal” when used at any date with respect to any Indebtedness
issued at a discount shall mean the amount of principal of such Indebtedness
that could be declared due and payable on that date upon the occurrence of one
or more events permitting the acceleration of such Indebtedness pursuant to the
terms of such Indebtedness.

       

      “GAAP” 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 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.

       

      “Guarantee Parties”
means Holdings, the Parent Borrower, Purchasing, the Material Subsidiaries and
each Non-Material Subsidiary that is required to satisfy the
Collateral

       

      
        
          
          

        

        
          
          

          
          

        

        
          
          

        

        12

        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 or with respect to deposits or advances of any kind, (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 current accounts payable incurred 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,
(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 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.

       

      “Indemnified Taxes”
means Taxes other than Excluded Taxes.

       

      “Information
Memorandum” means the Confidential Information Memorandum dated March
2009 relating to the Parent Borrower and the Transactions.

       

      “Intercreditor
Agreement” means an intercreditor agreement among the Loan Parties, the
Administrative Agent and the trustee, agent or other representative for holders
of any Indebtedness secured by second-priority Liens contemplated by clause (k)
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).

       

      
        
          
          

        

        
          
          

          
          

        

        
          
          

        

      

      13

      “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 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.

       

      “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
Wachovia 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.

       

      
        
          
          

        

        
          
          

          
          

        

        
          
          

        

      

      14

      “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, 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 Effective Date.  Each Letter of Credit shall be either a Trade
Letter of Credit or a Stand-by Letter of Credit.

       

      “Leverage Ratio”
means, on any date, the ratio of (a) Funded Indebtedness of Holdings and its
Subsidiaries (on a consolidated basis) as of such date to (b) Consolidated
EBITDA for the period of four consecutive fiscal quarters of Holdings ended on
such date.

       

      “LIBO Rate” means,
with respect to any Eurodollar Borrowing for any Interest Period, the rate
appearing on Reuters BBA Libor Rates Page 3750 (or on any successor or
substitute page of such service, or any successor to or substitute for such
service, providing rate quotations comparable to those currently provided on
such page of such service, as determined by the Administrative Agent from time
to time for purposes of providing quotations of interest rates applicable to
dollar deposits in the London interbank market) 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 with a maturity comparable to such
Interest Period.  In the event that such rate is not available at such
time for any reason, then the “LIBO Rate” with
respect to such Eurodollar Borrowing for such Interest Period shall be 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.

       

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

       

      “Loan Documents” means
this Agreement and the Collateral Agreement.

       

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

       

      “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 any of their
obligations under the Loan Documents or (c) a material impairment of the rights
of or benefits available to the Lenders or

       

      
        
          
          

        

        
          
          

          
          

        

        
          
          

        

        15

        the
Administrative Agent under any Loan Document (except the Collateral Agreement
during a Release Period) (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
$50,000,000.  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 then having Net
Tangible Assets representing more than 3% of the total Net Tangible Assets of
Holdings and its Subsidiaries.

       

      “Maturity Date” means
April 8, 2012.

       

      “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”.

       

      “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 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 date hereof, 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

       

      
        
          
          

        

        
          
          

          
          

        

        
          
          

        

      

      16

      (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 date hereof, on such
balance sheet.

       

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

       

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

       

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

       

      “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 not
constitute a liability on the balance sheets of such Person (other than
operating leases).

       

      “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
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.

       

      “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)).

       

      
        
          
          

        

        
          
          

          
          

        

        
          
          

        

      

      17

      “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.

       

      “Permitted
Encumbrances” means:

       

      (a)  Liens
imposed by law for Taxes, assessments or governmental charges or levies that are
not yet due 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)  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,
zoning restrictions, rights-of-way and similar encumbrances on 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
or any Subsidiary; and

       

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

       

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

       

      “Permitted Fee
Receiver” means any Fee Receiver that, with respect to any fees paid
under Section 2.11(a) or Section 2.11(b), delivers to the Parent Borrower and
the Administrative Agent, on or prior to the date on which such Fee Receiver
becomes a party hereto (and from time to time thereafter upon the request of the
Parent Borrower and the Administrative Agent, unless such Fee Receiver becomes
legally unable to do so solely as a result of a Change in Law after becoming a
party hereto), accurate and duly completed copies (in such number as requested
by the recipient) of one or more of Internal Revenue Service Forms W-9, W-8ECI,
W-8EXP, W-8BEN or W-8IMY (together with, if applicable, one of the
aforementioned forms duly completed from each direct or indirect beneficial
owner of such Fee Receiver) or any successor

       

      
        
          
          

        

        
          
          

          
          

        

        
          
          

        

      

      18

      form
thereto that entitles such Fee Receiver to a complete exemption from U.S.
withholding Tax on such payments (provided that, in the
case of the Internal Revenue Service Form W-8BEN, a Fee Receiver providing such
form shall qualify as a Permitted Fee Receiver only if such form establishes
such exemption on the basis of the “business profits” or “other income” articles
of a tax treaty to which the United States is a party and provides a U.S.
taxpayer identification number), in each case together with such supplementary
documentation as may be prescribed by applicable law to permit the Parent
Borrower or the Administrative Agent to determine whether such Fee Receiver is
entitled to such complete exemption.

       

      “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 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 “Leverage
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
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);

       

      
        
          
          

        

        
          
          

          
          

        

        
          
          

        

      

      19

      (b)  investments
in commercial paper maturing within 270 days from the date of acquisition
thereof and having, at such date of acquisition, a credit rating of at least A1
from S&P, P1 from Moody’s or F1 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 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)  fully
collateralized repurchase agreements with a term of not more than 30 days for
securities described in clause (a) above and entered into with a financial
institution satisfying the criteria described in clause (c) above;
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 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 Maturity Date.

       

      “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.

       

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

       

      
        
          
          

        

        
          
          

          
          

        

        
          
          

        

      

      20

      “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.

       

      “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.

       

      “Release Period” means
a period (a) commencing upon the release and termination of the security
interests in the Collateral pursuant to Section 6.15(d) of the Collateral
Agreement and (b) ending when Holdings and the Parent Borrower are required to
satisfy the Collateral and Guarantee Requirement as provided in Section
5.11(b).

       

      “Relevant Date” has
the meaning assigned to such term in Section 2.16.

       

      “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.

       

      “Restricted Payment”
means any dividend or other distribution (whether in cash, securities or other
property) with respect to any Equity Interests in Holdings or any Subsidiary, or
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; provided that a
dividend, distribution or payment payable solely 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.

       

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

       

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

       

      “Specified Date” means
the date that is 180 days after the Maturity Date.

       

      “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

       

      
        
          
          

        

        
          
          

          
          

        

        
          
          

        

        21

        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
(a) of which securities or other ownership interests representing more than
50% of the equity or 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, controlled or held, or (b) that is, as of such date,
otherwise Controlled, by the parent or one or more subsidiaries of the parent or
by the parent and one or more subsidiaries of the parent.

       

      “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 and acknowledged by 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 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.

       

      
        
          
          

        

        
          
          

          
          

        

        
          
          

        

      

      22

      “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, in each case in its
capacity as a lender of Swingline Loans hereunder.

       

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

       

      “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.

       

      “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.

       

      “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.

       

      “U.S. Tax Compliance
Certificate” has the meaning assigned to such term in 

      Section
2.16(g).

       

      “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.

       

      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 or
otherwise modified (subject to any restrictions on such amendments, supplements
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

       

      
        
          
          

        

        
          
          

          
          

        

        
          
          

        

        23

        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.  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, 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 date hereof 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 Sections 6.09 and 6.10) shall be made excluding the
accounts of all Excluded Subsidiaries.

       

      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 total
Commitments.  Within the foregoing 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 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

       

      
        
          
          

        

        
          
          

          
          

        

        
          
          

        

        24

        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 Maturity Date.

       

      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 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 a form approved by the Administrative Agent and 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”; and

       

      (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.

       

      
        
          
          

        

        
          
          

          
          

        

        
          
          

        

        25

        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.  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.  (a)  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 $50,000,000
or (ii) the sum of the total Revolving Credit Exposures exceeding the total
Commitments; 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 terms and conditions set forth herein, the Borrowers may borrow, prepay
and reborrow Swingline Loans.

       

      (b) 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.

       

      (c) 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

       

      
        
          
          

        

        
          
          

          
          

        

        
          
          

        

        26

        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.

      

       

      (d) 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.

       

      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, 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.

       

      (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 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

       

      
        
          
          

        

        
          
          

          
          

        

        
          
          

        

        27

        issuance,
amendment, renewal or extension, (i) the LC Exposure shall not exceed
$500,000,000 and (ii) the sum of the total Revolving Credit Exposures shall not
exceed the total Commitments.

      

       

      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 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 total Commitments.  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 total
Commitments.

       

      (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
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 

       

      
        
          
          

        

        
          
          

          
          

        

        
          
          

        

        28

        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 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 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

       

      
        
          
          

        

        
          
          

          
          

        

        
          
          

        

        29

        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 gross negligence or willful
misconduct on the part of the applicable Issuing Bank (as finally 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 

       

      
        
          
          

        

        
          
          

          
          

        

        
          
          

        

        30

        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 among the applicable Account Party,
the Administrative Agent, the replaced Issuing Bank and the successor Issuing
Bank (which must be a Lender or an Affiliate of a Lender).  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 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 

       

      
        
          
          

        

        
          
          

          
          

        

        
          
          

        

        31

        (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.  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 sole discretion of the Administrative Agent and at such
Account Party’s risk and expense, 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 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 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 option and sole discretion of
the relevant Issuing Bank and at such Account Party's risk and expense, such
deposits shall not bear interest. Interest
or profits, if any, on such investments shall accumulate in such
account.  Moneys 

       

      
        
          
          

        

        
          
          

          
          

        

        
          
          

        

        32

        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.

      

       

      (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 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.  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 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.

       

      (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

       

      
        
          
          

        

        
          
          

          
          

        

        
          
          

        

        33

        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 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,
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 a form approved by the
Administrative Agent and 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”.

       

      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.

       

      
        
          
          

        

        
          
          

          
          

        

        
          
          

        

      

      34

      (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.

       

      (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 total Commitments.

       

      (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, 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 and (ii) 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 Loan is
made; provided
that on each date that a Revolving Borrowing is made, such Borrower shall repay
all Swingline Loans of such Borrower then outstanding.

       

      
        
          
          

        

        
          
          

          
          

        

        
          
          

        

      

      35

      (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 the order of such Lender
(or, if requested by such Lender, to such Lender and its registered assigns) and
in a form approved by the Administrative Agent.  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 order of the payee named
therein (or, if such promissory note is a registered note, to such payee and its
registered assigns).

       

      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 maximum amount of Revolving Credit Exposures permitted by Section
6.11, 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.

       

      (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
(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

       

      
        
          
          

        

        
          
          

          
          

        

        
          
          

        

        36

        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, 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

       

      
        
          
          

        

        
          
          

          
          

        

        
          
          

        

        37

        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.

       

      SECTION
2.12. Interest.  (a)  The
Loans comprising each ABR Borrowing (including each Swingline Loan) 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 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 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:

       

      
        
          
          

        

        
          
          

          
          

        

        
          
          

        

        38

        (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;

       

      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 Lender or the Issuing Bank to any (or any increase in any) Other Connection
Taxes with respect to this Agreement or any other Loan Document, any Letter of
Credit, or any participation in a Letter of Credit or any Loan made or Letter of
Credit Issued by it, except any such Taxes imposed on or measured by its net
income or profits (however denominated) or franchise Taxes imposed in lieu of
net income or profits Taxes; 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 in the case of clause (ii), any
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 requirements has or would have the effect of reducing
the

       

      
        
          
          

        

        
          
          

          
          

        

        
          
          

        

        39

        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 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), 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 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 attributable to such event.  In the case of a Eurodollar Loan,
such loss, cost or expense 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 pursuant to this Section shall
be delivered to the Parent Borrower and shall be conclusive 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.

       

      
        
          
          

        

        
          
          

          
          

        

        
          
          

        

      

      40

      SECTION
2.16. Taxes.  (a)  Each
payment on account of any obligation of a Borrower or Account Party hereunder to
any Person, including the Administrative Agent, any Lender or Issuing Bank or
its beneficial owner, to which any such obligation is owed (each of the
foregoing being referred to as a “Recipient”) shall be
made free and clear of and without deduction for any Indemnified Taxes or Other
Taxes; provided
that if any applicable law (as determined in the good faith discretion of an
applicable Withholding Agent (as defined below)) requires the deduction or
withholding of any Indemnified Tax or Other Tax from any such payment
(including, for the avoidance of doubt, any such deduction or withholding
required to be made by the applicable Borrower or Account Party or the
Administrative Agent, or in the case of any Lender that is treated as a
partnership for U.S. federal income tax purposes, by such Lender for the account
of any of its direct or indirect beneficial owners), the applicable Borrower or
Account Party, the Administrative Agent, the Lender or the applicable direct or
indirect beneficial owner of a Lender (any such person, a “Withholding Agent”)
shall make such deductions and timely pay the full amount deducted to the
relevant Governmental Authority in accordance with applicable law and, if such
Tax is an Indemnified Tax, then the sum payable by the applicable Borrower or
Account 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 or
Other Taxes (including Indemnified Taxes or Other Taxes imposed or asserted on
or attributable to amounts payable under this Section 2.16) payable by such
Recipient on or with respect to any payment by or on account of any obligation
of such Borrower or Account Party hereunder and expenses arising therefrom or
with respect thereto, whether or not such Indemnified Taxes or Other 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 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 Excluded Taxes attributable to such Lender
that are payable or paid by the Administrative Agent, and reasonable expenses
arising therefrom or with

       

      
        
          
          

        

        
          
          

          
          

        

        
          
          

        

        41

        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 of any payment of Indemnified Taxes or Other 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 a receipt evidencing
payment thereof or, if such a receipt is not available, a certificate of the
treasurer or any assistant treasurer of such Borrower 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) Each
Fee Receiver shall deliver the documentation necessary for it to be a Permitted
Fee Receiver and agrees to update Internal Revenue Service Form W-9 (or its
successor form) or the applicable Internal Revenue Service Form W-8 (or its
successor form) upon any change in such Fee Receiver’s circumstances or if such
form expires or becomes inaccurate or obsolete, and to promptly notify the
Parent Borrower and the Administrative Agent if such Fee Receiver becomes
legally ineligible to provide such form.

       

      (g) Any
Foreign 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), 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 Foreign 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 below in this paragraph (g)) shall not
be required if in the Foreign Lender’s judgment such completion, execution or
submission would subject such Foreign Lender to any material unreimbursed cost
or expense or would materially prejudice the legal or commercial position of
such Foreign Lender.

       

      Without limiting the generality of the
foregoing, any Foreign 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 recipient) on or prior to the date on
which such Foreign Lender becomes a Lender under this Agreement (and from time
to time thereafter upon the request of the Parent Borrower or the Administrative
Agent), whichever of the following is applicable:

       

      (i) duly completed copies of Internal
Revenue Service Form W-8BEN, claiming eligibility for benefits of an income tax
treaty to which the United States of America is a party,

       

      
        
          
          

        

        
          
          

          
          

        

        
          
          

        

      

      42

      (ii) duly
completed copies of Internal Revenue Service Form W-8ECI,

       

      (iii) 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 copies of Internal
Revenue Service Form W-8 BEN,

       

      (iv) to
the extent a Foreign Lender 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), an Internal Revenue
Service Form W-8IMY, accompanied by a 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, or

       

      (v) 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 prescribed by applicable law to permit the
Parent Borrower to determine the withholding or deduction required to be
made.

       

      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.

       

      (h) 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 a
Borrower or an Account Party hereunder, it shall within 30 days after the
receipt thereof repay the lesser of such refund and the amount paid by such
Borrower or such Account Party (as the case may be) with respect to such Taxes
to the applicable Borrower or the applicable Account Party, as applicable, 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
Borrower or such Account Party (as the case may be), 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 

       

      
        
          
          

        

        
          
          

          
          

        

        
          
          

        

        43

        contrary
in this paragraph (h), 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.

      

       

      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 270 Park 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.

       

      (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 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
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 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 and Swingline Loans;
provided that
(i) if any such 

       

      
        
          
          

        

        
          
          

          
          

        

        
          
          

        

        44

        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 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(c), 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.

       

      SECTION
2.18. Mitigation Obligations;
Replacement of Lenders.  (a)  If, with respect to any
Lender or the Administrative Agent, an event or circumstance occurs that would
entitle such Lender or the Administrative Agent to exercise any of the rights or
benefits afforded by Section 2.14 or 2.16(a), such Lender 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 any applicable Tax laws, Tax treaties, conventions
and governmental regulations to the extent that such certificates are legally
available to such Lender or to the Administrative Agent) to eliminate or
mitigate the effects of any event resulting in the 

       

      
        
          
          

        

        
          
          

          
          

        

        
          
          

        

        45

        ability
of such Lender or the Administrative Agent to exercise rights under any of such
Sections; provided that neither
any Lender nor 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 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 the Administrative Agent, such Lender 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 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 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 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 the Administrative Agent obtains knowledge
thereof.  Such certificate shall be conclusive absent manifest
error.  Notwithstanding the foregoing, neither any Lender nor 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 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, 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 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
(x) such assignment shall not conflict with any statute, law, rule,
regulation, order or decree of any Governmental Authority and (y) the
assigning Lender shall have received from the 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).

       

      
        
          
          

        

        
          
          

          
          

        

        
          
          

        

      

      46

      (c) With
respect to Section 2.14 or 2.16, (i) other than with respect to Section 2.16(b),
neither any Lender nor 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 or the Administrative Agent
pursuant to such Sections unless (x) such Lender 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 Lender 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 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 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 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, 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 or the Administrative Agent 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) neither any Lender nor 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(h))
which arises from any gross negligence, fraud or willful misconduct of any
Lender or the Administrative Agent, or the failure of such Lender or the
Administrative Agent to comply with the terms of this Agreement, (vi) if
any Lender 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(h)) or reserve or capital benefits theretofore paid to it by any
Borrower or any Account Party (as the case may be), such Lender 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 the Administrative Agent reduced by any reasonable out-of-pocket
expenses of such 

       

      
        
          
          

        

        
          
          

          
          

        

        
          
          

        

        47

        Lender
or the Administrative Agent attributable to such recoupment, as determined in
good faith by such Lender or the Administrative Agent, and (vii) the
liability of the Borrowers and the Account Parties to any Lender or the
Administrative Agent with respect to any Indemnified Taxes shall be reduced to
the extent that such Lender 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 Administrative Agent
is unaware, (y) the claiming of which would result in any cost or Tax to
such Lender 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 Lender 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 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 pay all filing fees incurred by any Lender 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 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);

       

      
        
          
          

        

        
          
          

          
          

        

        
          
          

        

      

      48

      (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 any waiver, amendment or modification requiring
the consent of all Lenders or each affected Lender which affects such Defaulting
Lender differently than other affected Lenders, or any waiver, amendment or modification that has the
effect of increasing the Commitment of such Defaulting Lender, shall require the consent of such Defaulting
Lender;

       

      (c) if any Swingline Exposure or LC Exposure exists at the
time a Lender becomes a Defaulting Lender then:

       

      (i) all or any part of such Swingline Exposure and LC
Exposure 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 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; and

       

      (ii) if the reallocation described in clause (i) above
cannot, or can only partially, be effected, the Borrowers or the Account Parties shall within one Business Day following notice by the
Administrative Agent (x) first, prepay such Swingline Exposure and (y) second, cash
collateralize 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 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;

       

      (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; or

       

      (v) if any Defaulting Lender’s LC Exposure is neither cash
collateralized nor reallocated pursuant to this paragraph (c),
then, without prejudice to any rights or remedies of the Issuing Bank or any
Lender hereunder, all facility fees that otherwise would have been payable to
such Defaulting Lender (solely with respect to the portion of such Defaulting
Lender’s Commitment that was utilized by such LC Exposure) and 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 and/or
reallocated;

       

      
        
          
          

        

        
          
          

          
          

        

        
          
          

        

      

      49

      (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 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 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 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 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 the Issuing Bank or Swingline Lender hereunder, (iii)
third,
to the funding of any Loan or the funding or cash collateralization of any
participating interest in any Swingline Loan or Letter of Credit in respect of
which such Defaulting Lender has failed to fund its portion thereof as required
by this Agreement, as determined by the Administrative Agent, (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 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) as the Administrative
Agent shall determine may be necessary in order for such
Lender to hold such Loans in accordance with its Applicable
Percentage.

       

      
        
          
          

        

        
          
          

          
          

        

        
          
          

        

      

      50

      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 corporate powers and have been duly
authorized by all necessary corporate 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 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 applicable law or material regulation or the charter,
by-laws or other organizational documents of Holdings or any Subsidiary or any
material order of any Governmental Authority, (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 Collateral Agreement.

       

      SECTION
3.04. Financial Condition; No
Material Adverse Change.  (a)  Holdings has
heretofore furnished to the Lenders its consolidated balance sheet and
statements of income, stockholders equity and cash flows as of and for the
fiscal year ended January 31, 2009, reported on by KPMG LLP, independent public
accountants.  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.

       

      
        
          
          

        

        
          
          

          
          

        

        
          
          

        

      

      51

      (b)
Since
January 31, 2009, there has been no material adverse change in the business,
assets, operations or condition of Holdings and its Subsidiaries, taken as a
whole.

       

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

       

      (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 date of this Agreement, 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 payable on such returns, except
(a) Taxes that are being 

       

      
        
          
          

        

        
          
          

          
          

        

        
          
          

        

        52

        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) The
present value of all accumulated benefit obligations under each Plan (based on
the assumptions used for purposes of Statement of Financial Accounting Standards
No. 87) did not, as of the date of the most recent financial statements
reflecting such amounts, exceed the fair market value of the assets of such Plan
by a material amount, and the present value of all accumulated benefit
obligations of all underfunded Plans (based on the assumptions used for purposes
of Statement of Financial Accounting Standards No. 87) did not, as of the
date of the most recent financial statements reflecting such amounts, exceed the
fair market value of the assets of all such underfunded Plans by a material
amount.

       

      SECTION
3.11. Disclosure.  Neither
the Information Memorandum nor any of the other reports, financial statements,
certificates or other 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 such other information) contains any material misstatement of 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; provided that, with
respect to projected financial information, Holdings, the Parent Borrower and
Purchasing represent only that such information was prepared in good faith based
upon assumptions believed to be reasonable at the time.

       

      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 Effective Date.

       

      ARTICLE
IV

       

      Conditions

       

      SECTION
4.01. Effective
Date.  The obligations of the Lenders to make Loans and of each
Issuing Bank to issue Letters of Credit hereunder shall not become effective
until the date on which each of the following conditions is satisfied (or waived
in accordance with Section 9.02):

       

      (a) The
Administrative Agent (or its counsel) shall have received from each party hereto
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.

       

      
        
          
          

        

        
          
          

          
          

        

        
          
          

        

      

      53

      (b) The
Administrative Agent shall have received a favorable written opinion (addressed
to the Administrative Agent, the Issuing Banks and the Lenders and dated the
Effective Date) of each of Sullivan & Cromwell LLP, special New York counsel
for the Loan Parties, and Janet L. Dhillon, General Counsel of Holdings,
substantially in the form of Exhibits B-1 and B-2, and covering such other
matters relating to the Loan Parties, the Loan Documents or the Transactions as
the Required Lenders shall reasonably request.  Each of Holdings, the
Parent Borrower and Purchasing hereby requests such counsel to deliver such
opinions.

       

      (c) 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 and any other legal matters relating to the Loan Parties,
the Loan Documents or the Transactions, all in form and substance satisfactory
to the Administrative Agent and its counsel.

       

      (d) The
Administrative Agent shall have received a certificate, dated the 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) and (b) of Section 4.02.

       

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

       

      (f) The
Collateral and Guarantee Requirement shall have been satisfied and the
Administrative Agent shall have received a completed Perfection Certificate
dated the Effective Date and signed by an executive officer or Financial Officer
of the Parent Borrower, together with all attachments contemplated thereby, and
the Administrative Agent shall have received the results of a search of the
Uniform Commercial Code (or equivalent) filings made with respect to the Loan
Parties in the jurisdictions contemplated by the Perfection Certificate and
copies of the financing statements (or similar documents) disclosed by such
search and evidence reasonably satisfactory to the Administrative Agent that the
Liens indicated by such financing statements (or similar documents) are
permitted by Section 6.02 or have been released.

       

      (g) The
Administrative Agent shall have received evidence that the insurance required by
the Collateral Agreement is in effect.

       

      (h) Prior
to or concurrently with the effectiveness of the Commitments, the commitments
under the Existing Credit Agreement shall be terminated and all loans and other
amounts accrued or owing thereunder shall be paid.

       

      (i) The
Administrative Agent shall have received an initial Asset Coverage Certificate
calculating the Asset Coverage Ratio as of the last day of the most recent
fiscal month ended at least 10 days prior to the Effective Date, giving pro forma effect to any
Loans being made or Letters of Credit being issued (or, in the case of Existing
Letters of Credit, outstanding) on
the Effective Date as if such Loans were made or such Letters of Credit were
issued on the last day of such calendar month.

       

      
        
          
          

        

        
          
          

          
          

        

        
          
          

        

      

      54

      (j) 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
Effective Date, and such notice shall be conclusive and
binding.  Notwithstanding the foregoing, the obligations of the
Lenders to make Loans and of each Issuing Bank to issue Letters of Credit
hereunder shall not become effective unless each of the foregoing conditions is
satisfied (or waived pursuant to Section 9.02) at or prior to 3:00 p.m., New
York City time, on April 30, 2009 (and, in the event such conditions are not so
satisfied or waived, the Commitments shall terminate at such time).

       

      SECTION
4.02. Each Credit
Event.  The obligation of each Lender to make a Loan on the
occasion of any 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 (except (i) in the case of Borrowings made solely to refinance
maturing commercial paper issued by any of the Borrowers, the representations
and warranties made under Sections 3.04(b), 3.06(a)(i) and 3.06(c) and (ii)
in the case of any issuance, amendment, renewal or extension of a Trade Letter
of Credit, the representations and warranties made under Section 3.10(b)) shall
be true and correct 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.

       

      (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.

       

      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) and (b) 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) 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 and (iv) such other

       

      
        
          
          

        

        
          
          

          
          

        

        
          
          

        

        55

        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;
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 consistently applied;

       

      (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 of
(or, in the case of the balance sheet, as of the end of) the previous fiscal
year, all 

       

      
        
          
          

        

        
          
          

          
          

        

        
          
          

        

        56

        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
consistently applied, 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, if a
Default has occurred, specifying the details thereof and any action taken or
proposed to be taken with respect thereto, (ii) setting forth reasonably
detailed calculations demonstrating compliance with Sections 6.09 and 6.10
and (iii) stating whether any change in GAAP or in the application thereof
has occurred since the date of the 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
30 days after the end of each fiscal year, an annual financial forecast (in a
form consistent with forecasts previously provided) 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 Holdings or any
Subsidiary 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 (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) within
20 days after the end of each fiscal month, an Asset Coverage Certificate
(together with any other supplemental reporting and supporting documentation
reasonably requested by the Administrative Agent) calculating the Asset Coverage
Ratio as of the last day of such fiscal month; and

       

      (h) 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.

       

      SECTION
5.02. Notices of Material
Events.  The Parent Borrower will furnish to the Administrative
Agent for distribution to each Lender prompt written notice of the
following:

       

      
        
          
          

        

        
          
          

          
          

        

        
          
          

        

      

      57

      (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 result
in a Material Adverse Effect;

       

      (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; and

       

      (d) 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.

       

      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.  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.  The Parent Borrower also agrees promptly to notify the
Administrative Agent if any material portion of the Collateral is damaged or
destroyed.

       

      (b) Each
year, at the time of 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 and the chief legal officer of the Parent Borrower (i) setting forth the
information required pursuant to 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 and (ii) certifying that all
Uniform Commercial Code financing statements or other appropriate filings,
recordings or registrations, including all refilings, rerecordings and
reregistrations, containing a description of the Collateral have been filed of
record (or delivered to the Administrative Agent for filing or recording) in
each governmental, municipal or other appropriate office in each jurisdiction
identified pursuant to clause (i) above to
the extent necessary to protect and perfect the security interests under the
Collateral Agreement for a period of not less than 18 months after the date of
such certificate (except as noted therein with respect to any continuation
statements to be filed within such period).

       

      
        
          
          

        

        
          
          

          
          

        

        
          
          

        

      

      58

      (c) At
any time during a Release Period, the provisions of paragraphs (a) and (b) of
this Section 5.03 shall not apply.

       

      SECTION
5.04. Existence; Conduct of
Business.  Each of Holdings and the Parent Borrower will, and
will cause each of its Material Subsidiaries to, do or cause to be done all
things necessary to preserve, renew and keep in full force and effect its legal
existence and the rights, licenses, permits, privileges and franchises material
to the conduct of the business of Holdings and its Subsidiaries (taken as a
whole); provided that the
foregoing shall not prohibit any merger, consolidation, liquidation, transfer of
assets or dissolution permitted under Section 6.03.

       

      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 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
excepted; provided 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, with financially sound and reputable insurance
companies (a) insurance in such amounts (with no greater risk retention) and
against such risks 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) all insurance required to be maintained pursuant to
the Collateral Agreement.  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; Inventory Audits.  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 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 independent accountants, all at such reasonable
times and as often as reasonably requested.  Each of Holdings and the
Parent Borrower will, and will cause each of its Subsidiaries to, permit the

       

      
        
          
          

        

        
          
          

          
          

        

        
          
          

        

        59

        Administrative
Agent or any auditor that is satisfactory to the Administrative Agent, at any
time upon reasonable prior notice (but, unless an Event of Default has occurred
and is continuing, no more than once during any calendar year), to perform
audits of, conduct independent appraisals of and/or monitor the inventory of
Holdings and its Subsidiaries, provided that at any
time that at least two of Moody’s, S&P and Fitch issue ratings with respect
to this facility, of Ba2, BB and BB, respectively, or worse, then (x) the
Administrative Agent or any auditor satisfactory to the Administrative Agent
will be permitted to (i) perform audits and conduct independent appraisals of
the inventory of Holdings and its Subsidiaries but, except as provided in clause
(ii), not more frequently than once in any 365-day period, and (ii) for so long
as the aggregate Revolving Credit Exposures are more than 50% of the total
Commitments, perform ongoing audits, conduct ongoing appraisals and/or
continuously monitor the inventory of Holdings and its Subsidiaries and (y)
Holdings will furnish to the Administrative Agent for distribution to each
Lender within 20 days after the end of each fiscal month, a consolidated report
of accounts payable for Holdings and its Subsidiaries (including aging details)
as of the last day of such fiscal month and other information reasonably
requested by the Administrative Agent in form and substance satisfactory to the
Administrative Agent.

      

       

      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 (including Indebtedness under the Existing Credit
Agreement).  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.  (a)  If any Subsidiary (other than any
Foreign Subsidiary) becomes a Material Subsidiary or otherwise becomes a
Guarantee Party after the Effective Date, Holdings and the Parent Borrower
shall, within three Business Days after such Subsidiary becomes a Material
Subsidiary or a 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; provided that the
requirements of this paragraph shall not apply during a Release
Period.

       

      (b) If
a Release Period commences, Holdings and the Parent Borrower agree that at any
time thereafter, if either rating agency shall then have a Credit Rating in
effect that is worse
than Baa2 or BBB, as applicable, then Holdings and the Parent Borrower will
promptly, but in no event later than five Business Days thereafter, cause the
Collateral and Guarantee Requirement to be satisfied.

       

      
        
          
          

        

        
          
          

          
          

        

        
          
          

        

      

      60

      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.  At any time other than during a Release Period, Holdings
and the Parent Borrower also agree to provide to the Administrative Agent, from
time to time upon 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 Collateral Agreement.

       

      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. Prepayment
Avoidance.  Holdings and the Parent Borrower will, and will
cause each Subsidiary to, either repay or prepay Loans, or make investments in
assets to be used in their businesses, in each case as necessary to avoid any
mandatory redemption, repurchase or prepayment referred to in the proviso to
clause (c) of the definition of “Disqualified Equity Interest” or the proviso to
clause (h) of Section 6.01.

       

      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 date hereof and set forth in Schedule 6.01 and extensions,
renewals and replacements of any such Indebtedness that do not increase the
outstanding principal amount thereof (other than in respect of any premium or
fee payable in connection with such extension, renewal or replacement) or result
in an earlier maturity date or decreased weighted average life thereof; provided that
Indebtedness in respect of 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;

       

      
        
          
          

        

        
          
          

          
          

        

        
          
          

        

      

      61

      (c) Indebtedness
of Holdings to any Subsidiary and of any Subsidiary to Holdings or any other
Subsidiary;

       

      (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;

       

      (e) 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 and replacements of any such Indebtedness that
do not increase the outstanding principal amount thereof; provided that (i)
such Indebtedness is incurred prior to or within 90 days after such acquisition
or the completion of such construction or improvement and (ii) the aggregate
principal amount of Indebtedness permitted by this clause (e) shall not exceed
$500,000,000 at any time outstanding;

       

      (f) Indebtedness
of any Person that becomes a Subsidiary after the date hereof; 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 and (ii) the aggregate principal amount of Indebtedness permitted by
this clause (f) shall not exceed $150,000,000 at any time
outstanding;

       

      (g) Permitted
Long-Term Indebtedness;

       

      (h) Indebtedness
in an aggregate principal amount not to exceed $750,000,000 and extensions,
renewals and replacements of any such Indebtedness that do not increase the
outstanding principal amount thereof (other than in respect of any premium or
fee payable in connection with such extension, renewal or replacement), provided that such
Indebtedness (i) shall be secured on a second-priority basis only by Collateral
of the Loan Parties and shall be subject to the Intercreditor Agreement, (ii)
shall not mature on or prior to the Specified Date, (iii) shall not have terms
more restrictive, taken as a whole, than those set forth in this Agreement and
(iv) shall be subject only to mandatory prepayments, if any, that can be avoided
through repayment or prepayment of Loans or through investments by Holdings and
its consolidated Subsidiaries in assets to be used in their businesses, provided, further, that no such
Indebtedness may be incurred, extended, renewed or replaced at any time during a
Release Period; and

       

      (i) other
unsecured Indebtedness in an aggregate principal amount not exceeding
$150,000,000 at any time outstanding.

       

      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;

       

      
        
          
          

        

        
          
          

          
          

        

        
          
          

        

      

      62

      (b) Permitted
Encumbrances;

       

      (c) any
Lien on any property or asset of Holdings or any Subsidiary existing on the date
hereof 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
secures on the date hereof and extensions, renewals and replacements thereof
that do not increase the outstanding principal amount thereof, other than in
respect of any premium or fee 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 date hereof prior to the time such Person
becomes a Subsidiary; provided that
(i) such Lien is not created in contemplation of or in connection 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 extensions, renewals and replacements thereof
that do not increase the outstanding principal amount thereof, other than in
respect of any premium or fee 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 (e) of Section 6.01, (ii) such security interests and the
Indebtedness secured thereby are incurred prior to or within 90 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;

       

      (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 in accordance with the past practices of the Parent Borrower and its
Subsidiaries, provided that the
aggregate amount of such goods shall not exceed $200,000,000;

       

      (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) Liens
on accounts receivable of the Parent Borrower or any of its Subsidiaries that
arise from the securitization of such accounts receivable;

       

      
        
          
          

        

        
          
          

          
          

        

        
          
          

        

      

      63

      (j) Liens
(other than Liens on any inventory constituting Collateral) securing
Indebtedness of a Subsidiary to the Parent Borrower;

       

      (k) second-priority
Liens on the Collateral securing Indebtedness permitted pursuant to Section
6.01(h), provided that such
second-priority Liens shall not be permitted during a Release Period;
and

       

      (l) other
Liens (other than Liens on any inventory constituting Collateral) securing
monetary obligations, provided that (i) the
sum of the aggregate amount of all monetary obligations secured by Liens
pursuant to this clause (l), plus the aggregate amount of all cash consideration
received on or after the Effective Date in respect of sale leaseback
transactions made in reliance on clause (b) of Section 6.06, shall not exceed
7.50% of Net Tangible Assets at any time and (ii) the aggregate book value of
all assets subject to Liens pursuant to this clause (l) shall not at any time
exceed $225,000,000.

       

      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 into the Parent Borrower in a transaction in which the Parent
Borrower is the surviving corporation, (ii) any Person may merge into or
consolidate with any Subsidiary in a transaction in which the surviving entity
is a Subsidiary and (if any party to such merger or consolidation is a Loan
Party) is a Loan Party and (iii) any Subsidiary (other than a Loan Party) may
liquidate or dissolve if the Parent Borrower determines in good faith that such
liquidation or dissolution is in the best interests of the Parent Borrower and
is not materially disadvantageous to the Lenders; provided that any
such merger involving a Person that is not a wholly owned Subsidiary immediately
prior to such merger shall not be permitted unless also permitted by
Section 6.04.

       

      (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 businesses of the type conducted by Holdings and its Subsidiaries on
the date of execution of this Agreement and businesses reasonably related,
ancillary or complementary to the business or businesses of Holdings or any
Subsidiary.

       

      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, except:

       

      (a) Permitted
Investments;

       

      
        
          
          

        

        
          
          

          
          

        

        
          
          

        

      

      64

      (b) investments
existing on the date hereof and set forth on Schedule 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;

       

      (e) Guarantees,
subject to the limitations of Section 6.01 in the case of Indebtedness of
Subsidiaries that are not Guarantee Parties;

       

      (f) investments
received in connection with the bankruptcy or reorganization of, or settlement
of delinquent accounts and disputes with, customers and suppliers, in each case
in the ordinary course of business; and

       

      (g) other
investments; provided that at the
time of and after giving effect to any such investment, (i) Holdings and
the Parent Borrower will be in compliance on a pro forma basis with (A)
the covenants contained in Sections 6.09 and 6.10, recomputed as of the
last day of the most recently ended fiscal quarter of the Parent Borrower for
which financial statements are available and (B) the covenant contained in
Section 6.11, recomputed as of the last day of the most recently ended fiscal
month of the Parent Borrower, as if such investment and all other investments
made in reliance on this clause (g) had occurred on the first day of each
relevant period for testing such compliance and (ii) 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, 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) sales,
transfers and dispositions to the Parent Borrower or a Subsidiary;

       

      (d) transfers
and dispositions of interests in real property (including leasehold interests)
in exchange for consideration that constitutes interests in real property
(including leasehold interests) to the extent that any such transfer or
disposition qualifies as a “like-kind” exchange under Section 1031 of the
Code;

       

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

       

      (f) sales,
transfers and other dispositions of assets (other than Equity Interests in a
Subsidiary) that are not permitted by any other clause of this Section, provided that (i)
Holdings and the Parent Borrower will be in compliance on a pro forma basis with
the

       

      
        
          
          

        

        
          
          

          
          

        

        
          
          

        

        65

        covenants
contained in Sections 6.09, 6.10 and 6.11, recomputed as of the last day of
the most recently ended fiscal quarter of the Parent Borrower for which
financial statements are available as if such sale, transfer or disposition and
all other sales, transfers or dispositions made in reliance on this
clause (f) had occurred on the first day of each relevant period for
testing such compliance and (ii) no Default shall have occurred and be
continuing;

      

       

      provided that all
sales, transfers, leases and other dispositions permitted hereby (other than
those permitted by clauses (b) and (c) above) shall be made for fair
value.  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, 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(f) 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 (l)
of Section 6.02, shall not exceed 7.50% of Net Tangible Assets at any
time.

       

      SECTION
6.07. Restricted
Payments.  Neither Holdings nor the Parent Borrower will, nor
will they permit any Subsidiary to, declare or make, or agree to pay 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) Holdings
may make Restricted Payments in cash in an aggregate amount not to exceed
$250,000,000 during any fiscal year; 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) no Default has occurred and is continuing
and (ii) Holdings would be in compliance with Sections 6.09 and 6.11 after
giving effect to such Restricted Payment and any Indebtedness being incurred in
connection therewith; and

       

      (d) Holdings
may make any additional Restricted Payment in cash; provided that (i) the
amount of such Restricted Payment, together with the aggregate amount of all
other

       

      
        
          
          

        

        
          
          

          
          

        

        
          
          

        

        66

        Restricted
Payments made by Holdings after the Effective Date (other than those made
pursuant to clause (c) above), does not exceed the sum, without duplication, of
(A) 50% of Consolidated Net Income for the period (taken as one accounting
period) from the beginning of the first fiscal quarter ending after the
Effective Date to the end of Holdings’ most recently ended fiscal quarter for
which financial statements are publicly available at the time of such Restricted
Payment (or, if such Consolidated Net Income for such period is a deficit, minus
100% of such deficit); plus (B) 100% of the aggregate net cash proceeds received
by Holdings, during the period from the Effective Date to the date of such
Restricted Payment, from the issuance by Holdings of additional Equity Interests
(other than Disqualified Equity Interests or Equity Interests issued to a
Subsidiary or to an employee stock ownership plan or trust), and (ii) at the
time of declaration (in the case of a dividend) or payment (in all other cases)
and after giving effect thereto, (i) no Default has occurred and is continuing
and (ii) Holdings would be in compliance with Sections 6.09 and 6.11 after
giving effect to such Restricted Payment and any Indebtedness being incurred in
connection therewith.

      

       

      Notwithstanding the foregoing, this
Section 6.07 shall not apply at any time that (i) if both rating agencies
shall then have a Credit Rating in effect, the Credit Ratings are Baa2 and BBB,
respectively, with stable outlook or better or (ii) if only one rating
agency shall then have a Credit Rating in effect, such Credit Rating is Baa2 or
BBB, as applicable, with stable outlook or better.

       

      SECTION
6.08. Restrictive
Agreements.  Neither Holdings nor the Parent Borrower will, nor
will they permit any Subsidiary to, directly or indirectly, enter into, incur or
permit to exist any agreement or other arrangement that prohibits, restricts or
imposes any condition upon 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); provided that (a) the
foregoing shall not apply to restrictions and conditions imposed by law or by
any Loan Document, (b) the foregoing shall not apply to restrictions and
conditions existing on the date hereof identified on Schedule 6.08 or to any
refinancing, extension or renewal of, or any amendment or modification of, any
Indebtedness or other agreement existing on the date hereof containing any such
restriction or condition (but without expanding the scope of any such
restriction or condition), (c) the foregoing shall not apply to customary
restrictions and conditions contained in agreements relating to the sale of a
Subsidiary pending such sale, provided that such
restrictions and conditions apply only to the Subsidiary that is to be sold and
such sale is permitted hereunder, (d) the foregoing shall not apply to
restrictions or conditions imposed by any agreement relating to secured
Indebtedness permitted by this Agreement if such restrictions or conditions
apply only to the property or assets securing such Indebtedness and (e) the
foregoing shall not apply to customary provisions in leases and other contracts
restricting the assignment, pledge or mortgage thereof.

       

      SECTION
6.09. Leverage
Ratio.  The Leverage Ratio as of the last day of any fiscal
quarter ending during any period set forth below shall not exceed the ratio set
forth below opposite such period:

       

      
        
          
          

        

        
          
          

          
          

        

        
          
          

        

      

      67

       

      
        	
                Period

              	
                Ratio

              
	
                Effective
      Date through and including the 

                last
      day of the fiscal quarter ending on or 

                about
      January 30, 2010

                 

              	
                4.00
      to 1.00

                 

              
	
                Thereafter
      through and including the last 

                day
      of the fiscal quarter ending on or 

                about
      October 30, 2010

                 

              	
                3.50
      to 1.00

                 

              
	
                Thereafter

              	
                3.00
      to 1.00

              

      

      

       

      SECTION
6.10. Fixed Charge Coverage
Ratio.  The Fixed Charge Coverage Ratio for any period of four
consecutive fiscal quarters of Holdings ending during any period set forth below
shall not be less than the ratio set forth below opposite such
period:

       

      
        	
                Periods
      Ending

              	
                Ratio

              
	
                Effective
      Date through and including the 

                last
      day of the fiscal quarter ending on or 

                about
      October 30, 2010

                 

              	
                2.25
      to 1.00

                 

              
	
                Thereafter
      through and including the 

                last
      day of the fiscal quarter ending on or 

                about
      October 29, 2011

                 

              	
                2.50
      to 1.00

                 

              
	
                Thereafter

              	
                3.00
      to 1.00

              

      

       

      SECTION
6.11. Asset Coverage
Ratio.  The Asset Coverage Ratio as of any date shall not be
less than 3.00 to 1.00.

       

      SECTION
6.12. Restriction on Non-Material
Subsidiaries.  Neither Holdings nor the Parent Borrower will
permit, at any time, the Non-Material 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.

       

      ARTICLE
VII

       

      Events of
Default

       

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

       

      
        
          
          

        

        
          
          

          
          

        

        
          
          

        

      

      68

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

       

      (e) 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) or
(d) 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;

       

      (g) any
event or condition occurs that results in any Material Indebtedness becoming due
prior to its scheduled maturity or that enables or permits (with or without the
giving of notice, the lapse of time or both) 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;

       

      
        
          
          

        

        
          
          

          
          

        

        
          
          

        

      

      69

      (h) subject
to Section 7.02, 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) subject
to Section 7.02, 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 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) subject
to Section 7.02, 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 is rated at least “A” by A.M. Best Company, 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 other than during a Release Period, 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, 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;

       

      
        
          
          

        

        
          
          

          
          

        

        
          
          

        

        70

        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 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.

      

       

      SECTION
7.02. Exclusion of Immaterial
Subsidiaries.  At any time during a Release Period, solely for
purposes of determining whether a Default has occurred under clause (h),
(i) or (j) of Section 7.01, any reference in any such clause to any
“Subsidiary” shall be deemed to exclude any Subsidiary that is not a Material
Subsidiary affected by any event or circumstance referred to in any such clause;
provided, that
if it is necessary to exclude more than one Subsidiary from clause (h), (i)
or (j) of Section 7.01 pursuant to this Section in order to avoid a Default
thereunder, all excluded Subsidiaries shall be considered to be a single
consolidated Subsidiary for purposes of determining whether any excluded
Subsidiary is a Material Subsidiary.

       

      ARTICLE
VIII

       

      The Administrative
Agent

       

      Each
of the Lenders and the Issuing Banks hereby irrevocably appoints the
Administrative Agent as its agent 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.

       

      
        
          
          

        

        
          
          

          
          

        

        
          
          

        

      

      71

      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 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 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.

       

      
        
          
          

        

        
          
          

          
          

        

        
          
          

        

      

      72

      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 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, Co-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
of the Lenders hereby (a) authorizes and instructs the Administrative Agent
to enter into an Intercreditor Agreement if Indebtedness is incurred that is
secured by Liens contemplated by clause (k) 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.

       

      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

       

      
        
          
          

        

        
          
          

          
          

        

        
          
          

        

        73

        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 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, 1111 Fannin Street, Floor 10, Houston, Texas 77002-6925,
Attention of Thai Pham, Loan & Agency Services (Telecopy No. (713)
750-2956), with a copy to JPMorgan Chase Bank, N.A., 270 Park Avenue, Floor 4,
New York, New York 10017, Attention of Barry Bergman (Telecopy No. (212)
270-3279); 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.

       

      
        
          
          

        

        
          
          

          
          

        

        
          
          

        

      

      74

      (b) Except
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 affected thereby, (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
affected thereby, (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 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
their liability in respect of such Guarantees, without the written consent of
each Lender, (vii) 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 (viii) 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.

       

      SECTION
9.03. Expenses; Indemnity; Damage
Waiver.  (a)  The Parent Borrower and the other Loan
Parties, jointly and severally, shall pay (i) all reasonable out-of-pocket
expenses incurred by the Administrative Agent and its Affiliates, 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), (ii) all
reasonable 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 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 

       

      
        
          
          

        

        
          
          

          
          

        

        
          
          

        

        75

        during
any workout, restructuring or negotiations in respect of such Loans or Letters
of Credit and (iv) all fees associated with, and all reasonable out-of-pocket
expenses incurred by the Administrative Agent in connection with, any inventory
audit performed by the Administrative Agent or any auditor that is satisfactory
to the Administrative Agent on behalf of the Administrative Agent, as well as
any such expenses incurred by the Administrative Agent in connection with the
monitoring and independent appraisals of such inventory, in each case as
contemplated by Section 5.08.

      

       

      (b) The
Parent Borrower and the other Account Parties, jointly and severally, shall
indemnify 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), or (iii) 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.

       

      (c) 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.

       

      (d) To
the extent permitted by applicable law, neither Holdings, any Borrower nor any
Account Party 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

       

      
        
          
          

        

        
          
          

          
          

        

        
          
          

        

        76

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

      

       

      (e) 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 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 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;

       

      
        
          
          

        

        
          
          

          
          

        

        
          
          

        

      

      77

      (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;

       

      (D) the
assignee, if it shall not be a Lender, shall deliver to the Administrative Agent
an Administrative Questionnaire; and

       

      (E) any
Person that is a Fee Receiver but not a Permitted Fee Receiver shall not be an
assignee without the written consent of the Administrative Agent (whether or not
an Event of Default has occurred) (which consent may be withheld in the
Administrative Agent’s sole discretion).

       

      (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 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 may
treat each Person whose name is recorded in the Register pursuant to the terms
hereof as a Lender hereunder for all purposes of this Agreement, 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 by paragraph (b) of this
Section, the Administrative Agent shall accept such Assignment and

       

      
        
          
          

        

        
          
          

          
          

        

        
          
          

        

        78

        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 (other than any bank or
entity that would be a Fee Receiver but not a Permitted Fee Receiver, unless
such Fee Receiver receives written consent of the Administrative Agent (which
consent may be withheld in the Administrative Agent’s sole discretion)) (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 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 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”).  The entries in the Participant Register shall be
conclusive absent manifest error, and such Lender shall treat each 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.

       

      
        
          
          

        

        
          
          

          
          

        

        
          
          

        

      

      79

      (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 or any
Letter of Credit is outstanding 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. Counterparts; Integration;
Effectiveness.  This Agreement may be executed in counterparts
(and by different parties hereto on different counterparts), each of which shall
constitute an original, but all of which when taken together shall constitute a
single contract.  This 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 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.  Except as
provided in Section 4.01, this Agreement shall become effective when it shall
have been executed by the Administrative Agent and when the Administrative Agent
shall have received counterparts hereof which, when taken together, bear the
signatures of each of the other parties hereto, and thereafter shall be binding
upon and inure to the benefit of the parties hereto and their respective
successors and assigns.  Delivery of an executed counterpart of a
signature page of this Agreement by telecopy or electronic transmission shall be
effective as delivery of a manually executed counterpart of this
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

       

      
        
          
          

        

        
          
          

          
          

        

        
          
          

        

        80

        any
time and from time to time, to the fullest extent permitted by law, to set off
and apply any and all deposits (general or special, time or demand, provisional
or final) at any time held and other obligations at any time owing by such
Issuing Bank or Lender or Affiliate to or for the credit or the account of any
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.  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 nonexclusive
jurisdiction of the Supreme Court of the State of New York sitting in New York
County and of the United States District Court of the Southern District of New
York, and any appellate court from any thereof, in any action or proceeding
arising out of or relating to any Loan Document, or for recognition or
enforcement of any judgment, and each of the parties hereto hereby irrevocably
and unconditionally agrees that all claims in respect of any such action or
proceeding may be heard and determined in such New York State or, to the
extent permitted by law, in such Federal court.  Each of the parties
hereto agrees that a final judgment in any such action or proceeding shall be
conclusive and may be enforced in other jurisdictions by suit on the judgment or
in any other manner provided by law.  Nothing in this Agreement or any
other Loan Document shall affect any right that the Administrative Agent, any
Issuing Bank or any Lender may otherwise have to bring any action or proceeding
relating to this Agreement or any other Loan Document against 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.

       

      
        
          
          

        

        
          
          

          
          

        

        
          
          

        

      

      81

      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.

       

      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.

       

      
        
          
          

        

        
          
          

          
          

        

        
          
          

        

      

      82

      (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 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. Waiver Under Existing Credit
Agreement.  Each of the Lenders party hereto that is a “Lender”
under the Existing Credit Agreement hereby waives advance notice of the
termination of the commitments and prepayment of the loans under the Existing
Credit Agreement; provided that notice
thereof is provided on the Effective Date.

       

      [The
remainder of this page has been left blank intentionally.]

      

      
        
          
          

        

        
          
          

          
          

        

        
          
          

        

      

      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
above written.

       

       

      
        	
                J.
      C. PENNEY COMPANY, INC.,

                 

              
	 
      	
                by: /s/ R. B. Cavanaugh    

              
	 
      	
                Name: R.
      B. Cavanaugh
                       

              
	 
      	
                Title:
      Executive Vice President and 

                Chief
      Financial Officer 

              

      

       

      
        
          	
                           
      J. C. PENNEY CORPORATION, INC.,

                   

                
	 
      	
                  by: /s/ M. D. Porter    

                
	 
      	
                  Name: M.
      D.
      Porter                  

                
	 
      	
                  Title:
      Vice President,
Treasurer

                

        

        
 

        
          
            	
                                            
      J. C. PENNEY PURCHASING CORPORATION,

                     

                  
	 
      	
                    by: /s/ M. D. Porter    

                  
	 
      	
                    Name: M. D.
      Porter                  

                  
	 
      	
                    Title:
      Vice President, Treasurer of 

                             J. C. Penney
      Corporation, Inc.

                  

          

           

          
            	
                                            
      JPMORGAN CHASE BANK, N.A., individually

                    and as Administrative
      Agent,        

                  

             

          

          
            
              	 
      	
                      by: /s/ Barry Bergman    

                    
	 
      	
                      Name: Barry
      Bergman               

                    
	 
      	
                      Title:
      Managing Director

                    

            

             

            
              
                
                

              

              
                
                

                
                

              

              
                
                

              

            

            

              
                
                  	
                          
                            
                              WACHOVIA
      BANK, NATIONAL 

                               ASSOCIATION,
      individually and
      as  LC
      Agent,

                               

                            

                          

                        
	 
      	
                          by: /s/ Susan T. Gallagher    

                        
	 
      	
                          Name: Susan
      T.
      Gallagher                  

                        
	 
      	
                          Title:
      Director 

                        

                

                

 

                
                  
                    
                    

                  

                  
                    
                    

                  

                  
                    
                    

                  

                

              

            

          

        

      

      
         

        
          	
                  
                    
                                                                                                       
      

                    

                  

                
	
                   

                   

                   

                     
      

                	
                  SIGNATURE
      PAGE TO J.C. PENNEY COMPANY, INC. 

                  CREDIT
      AGREEMENT, DATED AS OF THE DATE 

                  FIRST
      WRITTEN ABOVE

                   

                  LENDER: Bank
      of America, N. A. 

                   

                  by: /s/ Michael B. Delaney    

                
	 
      	
                  Name: Michael
      B.
      Delaney                  

                
	 
      	
                  Title:
      Vice President

                

        

        

        
          
            
            

          

          
            
            

            
            

          

          
            
            

          

        

      

       

      
        
          	
                  
                    
                                                                                                       
      

                    

                  

                
	
                   

                   

                   

                      
      

                	
                  SIGNATURE
      PAGE TO J.C. PENNEY COMPANY, INC. 

                  CREDIT
      AGREEMENT, DATED AS OF THE DATE 

                  FIRST
      WRITTEN ABOVE

                   

                  LENDER: Barclays
      Bank PLC

                   

                  by: /s/ Russell C. Johnson    

                
	 
      	
                  Name: Russell
      C.
      Johnson                 

                
	 
      	
                  Title:
      Director

                

        

        

        
          
            
            

          

          
            
            

            
            

          

          
            
            

          

        

      

       

      
        
          	
                  
                    
                                                                                                       
      

                    

                  

                
	
                   

                   

                   

                      
      

                	
                  SIGNATURE
      PAGE TO J.C. PENNEY COMPANY, INC. 

                  CREDIT
      AGREEMENT, DATED AS OF THE DATE 

                  FIRST
      WRITTEN ABOVE

                   

                  LENDER: Compass
      Bank 

                   

                  by: /s/ Randall L. Morrison    

                
	 
      	
                  Name:
      Randall L.
      Morrison                  

                
	 
      	
                  Title:
      Managing Director

                

        

        

          
            
              
              

            

            
              
              

              
              

            

            
              
              

            

          

           

          
            
              	
                      
                        
                                                                                                           
      

                        

                      

                    
	
                       

                       

                       

                          
      

                    	
                      SIGNATURE
      PAGE TO J.C. PENNEY COMPANY, INC. 

                      CREDIT
      AGREEMENT, DATED AS OF THE DATE 

                      FIRST
      WRITTEN ABOVE

                       

                      LENDER: HSBC
      Bank USA, N.A.

                        452 FIFTH AVENUE

                        TOWER 4

                      NEW YORK, NY
      10018

                       

                      by: /s/ Elizabeth R. Peck    

                    
	 
      	
                      Name: Elizabeth
      R. Peck
                        

                    
	 
      	
                      Title:
      SVP

                    

            

            

              
                
                  
                  

                

                
                  
                  

                  
                  

                

                
                  
                  

                

              

               

              
                
                  	
                          
                            
                                                                                                               
      

                            

                          

                        
	
                           

                           

                           

                              
      

                        	
                          SIGNATURE
      PAGE TO J.C. PENNEY COMPANY, INC. 

                          CREDIT
      AGREEMENT, DATED AS OF THE DATE 

                          FIRST
      WRITTEN ABOVE

                           

                          LENDER: U.S.
      Bank National Association

                           

                          by: /s/ Veronica Morrissette    

                        
	 
      	
                          Name: Veronica
      Morrissette                 

                        
	 
      	
                          Title:
      Vice President 

                        

                

                

                  
                    
                      
                      

                    

                    
                      
                      

                      
                      

                    

                    
                      
                      

                    

                  

                   

                  
                    
                      	
                              
                                
                                                                                                                   
      

                                

                              

                            
	
                               

                               

                               

                                  
      

                            	
                              SIGNATURE
      PAGE TO J.C. PENNEY COMPANY, INC. 

                              CREDIT
      AGREEMENT, DATED AS OF THE DATE 

                              FIRST
      WRITTEN ABOVE

                               

                              LENDER: Bank
      of New York Mellon

                               

                              by: /s/ Timothy J. Glass    

                            
	 
      	
                              Name: Timothy
      J.
      Glass                  

                            
	 
      	
                              Title:
      Vice-President 

                            

                    

                    

                      
                        
                          
                          

                        

                        
                          
                          

                          
                          

                        

                        
                          
                          

                        

                      

                       

                      
                        
                          	
                                  
                                    
                                                                                                                       
      

                                    

                                  

                                
	
                                   

                                   

                                   

                                      
      

                                	
                                  SIGNATURE
      PAGE TO J.C. PENNEY COMPANY, INC. 

                                  CREDIT
      AGREEMENT, DATED AS OF THE DATE 

                                  FIRST
      WRITTEN ABOVE

                                   

                                  LENDER: Standard
      Chartered Bank

                                   

                                  by: /s/ James Hughes    

                                
	 
      	
                                  Name: James
      Hughes                  

                                
	 
      	
                                  Title:
      Director            

                                
	 	 
	 	by: /s/ Robert K. Reddington    
	 	Name:
      Robert K. Reddington
  
	 	Title:
      AVP/Credit Documentation
	 	        
      Credit Risk Control
	 	         Standard
      Chartered Bank N.Y. 
	 	 

                        

                        

                          
                            
                              
                              

                            

                            
                              
                              

                              
                              

                            

                            
                              
                              

                            

                          

                           

                          
                            
                              	
                                      
                                        
                                                                                                                           
      

                                        

                                      

                                    
	
                                       

                                       

                                       

                                          
      

                                    	
                                      SIGNATURE
      PAGE TO J.C. PENNEY COMPANY, INC. 

                                      CREDIT
      AGREEMENT, DATED AS OF THE DATE 

                                      FIRST
      WRITTEN ABOVE

                                       

                                      LENDER: State
      Street Bank and Trust Company 

                                       

                                      by: /s/ Juan G. Sierra    

                                    
	 
      	
                                      Name: Juan
      G. Sierra
                        

                                    
	 
      	
                                      Title:
      Vice President 

                                    

                            

                            

                              
                                
                                  
                                  

                                

                                
                                  
                                  

                                  
                                  

                                

                                
                                  
                                  

                                

                              

                               

                              
                                
                                  	
                                          
                                            
                                                                                                                               
      

                                            

                                          

                                        
	
                                           

                                           

                                           

                                              
      

                                        	
                                          SIGNATURE
      PAGE TO J.C. PENNEY COMPANY, INC. 

                                          CREDIT
      AGREEMENT, DATED AS OF THE DATE 

                                          FIRST
      WRITTEN ABOVE

                                           

                                          LENDER: UMB
      Bank n.a. 

                                           

                                          by: /s/ David A. Proffitt    

                                        
	 
      	
                                          Name: David
      A.
      Proffitt                  

                                        
	 
      	
                                          Title:
      Senior Vice President 

                                        

                                

                                

                                  
                                    
                                      
                                      

                                    

                                    
                                      
                                      

                                      
                                      

                                    

                                    
                                      
                                      

                                    

                                  

                                   

                                  
                                    
                                      	
                                              
                                                
                                                                                                                                   
      

                                                

                                              

                                            
	
                                               

                                               

                                               

                                                  
      

                                            	
                                              SIGNATURE
      PAGE TO J.C. PENNEY COMPANY, INC. 

                                              CREDIT
      AGREEMENT, DATED AS OF THE DATE 

                                              FIRST
      WRITTEN ABOVE

                                               

                                              LENDER: KeyBank
      National Association 

                                               

                                              by: /s/ Marianne T. Meil    

                                            
	 
      	
                                              Name: Marianne
      T.
      Meil                  

                                            
	 
      	
                                              Title:
      Senior Vice President 

                                            

                                    

                                    

                                      
                                        
                                          
                                          

                                        

                                        
                                          
                                          

                                          
                                          

                                        

                                        
                                          
                                          

                                        

                                      

                                       

                                      
                                        
                                          	
                                                  
                                                    
                                                                                                                                       
      

                                                    

                                                  

                                                
	
                                                   

                                                   

                                                   

                                                     
      

                                                	
                                                  SIGNATURE
      PAGE TO J.C. PENNEY COMPANY, INC. 

                                                  CREDIT
      AGREEMENT, DATED AS OF THE DATE 

                                                  FIRST
      WRITTEN ABOVE

                                                   

                                                  LENDER: PNC
      Bank, National Association

                                                   

                                                  by: /s/ Dale A. Stein    
      

                                                
	 
      	
                                                  Name: Dale
      A.
      Stein                  

                                                
	 
      	
                                                  Title:
      Senior Vice President 

                                                

                                        

                                        

                                          
                                            
                                              
                                              

                                            

                                            
                                              
                                              

                                              
                                              

                                            

                                            
                                              
                                              

                                            

                                          

                                           

                                          
                                            
                                              	
                                                      
                                                        
                                                                                                                                           
      

                                                        

                                                      

                                                    
	
                                                       

                                                       

                                                       

                                                          
      

                                                    	
                                                      SIGNATURE
      PAGE TO J.C. PENNEY COMPANY, INC. 

                                                      CREDIT
      AGREEMENT, DATED AS OF THE DATE 

                                                      FIRST
      WRITTEN ABOVE

                                                       

                                                      LENDER: Union
      Bank, N.A. 

                                                       

                                                      by: /s/ Donald Smith     

                                                    
	 
      	
                                                      Name: Donald
      Smith
                        

                                                    
	 
      	
                                                      Title:
      Credit Executive 

                                                    

                                            

                                            

                                              
                                                
                                                  
                                                  

                                                

                                                
                                                  
                                                  

                                                  
                                                  

                                                

                                                
                                                  
                                                  

                                                

                                              

                                               

                                              
                                                
                                                  	
                                                          
                                                            
                                                                                                                                               
      

                                                            

                                                          

                                                        
	
                                                           

                                                           

                                                           

                                                             
      

                                                        	
                                                          SIGNATURE
      PAGE TO J.C. PENNEY COMPANY, INC. 

                                                          CREDIT
      AGREEMENT, DATED AS OF THE DATE 

                                                          FIRST
      WRITTEN ABOVE

                                                           

                                                          LENDER: Banco
      Popular de Puerto Rico  

                                                           

                                                          by: /s/ Hector  J.
      Gonzalez    

                                                        
	 
      	
                                                          Name: Hector J. Gonzalez                  

                                                        
	 
      	
                                                          Title:
      Vice President

                                                        

                                                

                                                

                                                  
                                                    
                                                      
                                                      

                                                    

                                                    
                                                      
                                                      

                                                      
                                                      

                                                    

                                                    
                                                      
                                                      

                                                    

                                                  

                                                   

                                                  
                                                    
                                                      	
                                                              
                                                                
                                                                                                                                                   
      

                                                                

                                                              

                                                            
	
                                                               

                                                               

                                                               

                                                                  
      

                                                            	
                                                              SIGNATURE
      PAGE TO J.C. PENNEY COMPANY, INC. 

                                                              CREDIT
      AGREEMENT, DATED AS OF THE DATE 

                                                              FIRST
      WRITTEN ABOVE

                                                               

                                                              LENDER: The
      Northern Trust Company 

                                                               

                                                              by: /s/ Morgan A. Lyons    

                                                            
	 
      	
                                                              Name: Morgan
      A.
      Lyons                  

                                                            
	 
      	
                                                              Title:
      Vice President

                                                            

                                                    

                                                    

                                                      
                                                        
                                                          
                                                          

                                                        

                                                        
                                                          
                                                          

                                                          
                                                          

                                                        

                                                        
                                                          
                                                          

                                                        

                                                      

                                                       

                                                      
                                                        
                                                          	
                                                                  
                                                                    
                                                                                                                                                       
      

                                                                    

                                                                  

                                                                
	
                                                                   

                                                                   

                                                                   

                                                                     
      

                                                                	
                                                                  SIGNATURE
      PAGE TO J.C. PENNEY COMPANY, INC. 

                                                                  CREDIT
      AGREEMENT, DATED AS OF THE DATE 

                                                                  FIRST
      WRITTEN ABOVE

                                                                   

                                                                  LENDER: Citibank,
      N.A.

                                                                   

                                                                  by: /s/ John McQuiston     

                                                                
	 
      	
                                                                  Name: John
      McQuiston                 

                                                                
	 
      	
                                                                  Title: Vice
      President & Director

                                                                

                                                        

                                                        

                                                          
                                                            
                                                              
                                                              

                                                            

                                                            
                                                              
                                                              

                                                              
                                                              

                                                            

                                                            
                                                              
                                                              

                                                            

                                                          

                                                           

                                                          
                                                            
                                                              	
                                                                      
                                                                        
                                                                                                                                                           
      

                                                                        

                                                                      

                                                                    
	
                                                                       

                                                                       

                                                                       

                                                                         
      

                                                                    	
                                                                      SIGNATURE
      PAGE TO J.C. PENNEY COMPANY, INC. 

                                                                      CREDIT
      AGREEMENT, DATED AS OF THE DATE 

                                                                      FIRST
      WRITTEN ABOVE

                                                                       

                                                                      LENDER: The
      Bank of Tokyo-Mitsubishi UFJ, LTD. 

                                                                       

                                                                      by: /s/ D. Barnell    

                                                                    
	 
      	
                                                                      Name: D.
      Barnell                  

                                                                    
	 
      	
                                                                      Title:
      Authorized Signatory

                                                                    

                                                            

                                                            

                                                              
                                                                
                                                                  
                                                                  

                                                                

                                                                
                                                                  
                                                                  

                                                                  
                                                                  

                                                                

                                                                
                                                                  
                                                                  

                                                                

                                                              

                                                               

                                                              
                                                                
                                                                  	
                                                                          
                                                                            
                                                                                                                                                               
      

                                                                            

                                                                          

                                                                        
	
                                                                           

                                                                           

                                                                           

                                                                             
      

                                                                        	
                                                                          SIGNATURE
      PAGE TO J.C. PENNEY COMPANY, INC. 

                                                                          CREDIT
      AGREEMENT, DATED AS OF THE DATE 

                                                                          FIRST
      WRITTEN ABOVE

                                                                           

                                                                          LENDER: Capital
      One, N.A. 

                                                                           

                                                                          by: /s/ Mary Jo Hoch    

                                                                        
	 
      	
                                                                          Name: Mary
      Jo
      Hoch                  

                                                                        
	 
      	
                                                                          Title:
      SVP

                                                                        

                                                                

                                                                

                                                                  
                                                                    
                                                                      
                                                                      

                                                                    

                                                                    
                                                                      
                                                                      

                                                                      
                                                                      

                                                                    

                                                                    
                                                                      
                                                                      

                                                                    

                                                                  

                                                                   

                                                                  
                                                                    
                                                                      	
                                                                              
                                                                                
                                                                                                                                                                   
      

                                                                                

                                                                              

                                                                            
	
                                                                               

                                                                               

                                                                               

                                                                                 
      

                                                                            	
                                                                              SIGNATURE
      PAGE TO J.C. PENNEY COMPANY, INC. 

                                                                              CREDIT
      AGREEMENT, DATED AS OF THE DATE 

                                                                              FIRST
      WRITTEN ABOVE

                                                                               

                                                                              LENDER: Chang
      Hwa Commercial, Ltd., New York Branch 

                                                                               

                                                                              by: /s/ Jim C.Y. Chen     

                                                                            
	 
      	
                                                                              Name: Jim
      C.Y. Chen        

                                                                            
	 
      	
                                                                              Title:
      V. P. and General Managerguaranteeagreement.htm

    Exhibit
10.2

     

    EXECUTION
COPY

     

     

     

     

     

     

    GUARANTEE
AND COLLATERAL AGREEMENT

     

    dated
as of

     

    April
8, 2009,

     

    among

     

    J.
C. PENNEY COMPANY, INC.,

    J.
C. PENNEY CORPORATION, INC.,

    J.
C. PENNEY PURCHASING CORPORATION,

    

    

    the
Subsidiaries of J. C. Penney Company, Inc.

    identified
herein,

     

    and

     

    JPMORGAN
CHASE BANK, N.A.,

    as
Administrative Agent

     

    
      
        
        

      

      
        
        

        
        

      

      
        
        

      

    

     

    Table of
Contents

    
    

     

    
      	 	 	 Page
	 	
              ARTICLE I 

              Definitions

               

            	 
	 SECTION 1.01.	Credit
      Agreement	 1
	 SECTION 1.02.	Other
      Defined Terms	 1
	 	
               

               ARTICLE II

              Guarantee

               

            	 
	 SECTION
      2.01.	Guarantee 	 3
	 SECTION
      2.02.	Guarantee of
      Payment; Continuing Guarantee	 3
	 SECTION
      2.03.	No
      Limitations, Etc.	 3
	 SECTION
      2.04.  	Reinstatement 	 4
	 SECTION
      2.05.	Agreement To
      Pay; Subrogation	 4
	 SECTION
      2.06.	Information	 5
	 	
               

               ARTICLE
      III

              Security
      Interest

               

            	 
	 SECTION
      3.01.	Security
      Interest 	 5
	 SECTION
      3.02. 	Representations and Warranties	 6
	 SECTION
      3.03. 	Covenants	 7
	 	
               

               ARTICLE
      IV

              Remedies

               

            	 
	 SECTION
      4.01.	Remedies upon
      Default 	 9
	 SECTION
      4.02. 	Application
      of Proceeds 	 10
	 	
               

              ARTICLE
      V

              Indemnity,
      Subrogation and Subordination

               

            	 
	 SECTION
      5.01. 	Indemnity and
      Subrogation	 11
	 SECTION
      5.02.	Contribution
      and Subrogation	 11
	 SECTION
      5.03. 	Subordination 	 12
	 	
               

              ARTICLE
      VI

              Miscellaneous

            	 
	 	 	 

    

     

     

    
      
        
        

      

      
        
        

        
        

      

      
        
        

      

    

     

    
    

     

    
      	 SECTION 6.01. 	Notices	 12
	 SECTION
      6.02. 	Rights
      Absolute 	 12
	 SECTION
      6.03. 	Survival of
      Agreement 	 12
	 SECTION
      6.04. 	Binding
      Effect; Several Agreement	 13
	 SECTION
      6.05.	Successors
      and Assigns	 13
	 SECTION
      6.06. 	Administrative Agent’s Fees and Expenses;
      Indemnification	 13
	 SECTION
      6.07.	Administrative Agent Appointed Attorney-in-Fact	 14
	 SECTION
      6.08.	Applicable
      Law	 15
	 SECTION
      6.09. 	Waivers;
      Amendment 	 15
	 SECTION
      6.10.	WAIVER OF
      JURY TRIAL 	 15
	 SECTION
      6.11.	Severability 	 16
	 SECTION
      6.12. 	Counterparts	 16
	 SECTION
      6.13. 	Headings	 16
	 SECTION
      6.14.  	Jurisdiction;
      Consent to Service of Process	 16
	 SECTION
      6.15. 	Termination
      or Release	 17
	 SECTION
      6.16. 	Additional
      Guarantors	 17
	 SECTION
      6.17.	Additional
      Grantors	 18
	 SECTION
      6.18.	Right of
      Setoff 	 18
	 	 	 
	 SCHEDULE I 	Subsidiary Grantors	 
	 SCHEDULE II  	Subsidiary Guarantors	 
	 SCHEDULE III  	Insurance Requirements	 
	 	 	 
	 EXHIBIT A 	Form of
      Guarantee Supplement	 
	 EXHIBIT B   	Form of
      Grantor Supplement	 
	 EXHIBIT C	Form of
      Perfection Certificate	 

    

     

                                        

    ii

     

    
      
        
        

      

      
        
        

        
        

      

      
        
        

      

    

    

    GUARANTEE
AND COLLATERAL AGREEMENT dated as of April 8, 2009, among J. C. PENNEY COMPANY,
INC. (“Holdings”), J. C.
PENNEY CORPORATION, INC. (the “Parent Borrower”), J.
C. PENNEY PURCHASING CORPORATION (“Purchasing”), the
Subsidiaries of J. C. Penney Company, Inc. identified herein and JPMORGAN CHASE
BANK, N.A., as Administrative Agent.

     

     

    ARTICLE
I

     

    Definitions

     

    SECTION
1.01.  Credit
Agreement.  (a)  Capitalized terms used in this
Agreement and not otherwise defined herein have the meanings specified in the
Credit Agreement (as defined herein).  All terms defined in the New
York UCC (as defined herein) and not defined in this Agreement have the meanings
specified therein; the term “instrument” shall have the meaning specified in
Article 9 of the New York UCC.

     

    (b) The
rules of construction specified in Section 1.03 of the Credit Agreement also
apply to this Agreement.

     

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

     

    “Collateral” has the
meaning assigned to such term in Section 3.01.

     

    “Credit Agreement”
means the Credit Agreement dated as of April 8, 2009, among Holdings, the Parent
Borrower, Purchasing, the Lenders party thereto, JPMorgan Chase Bank, N.A., as
Administrative Agent and Wachovia Bank, National Association, as LC
Agent.

     

    “Grantors” means
Holdings, the Parent Borrower, Purchasing and the Subsidiary
Grantors.

     

    “Guarantors” means
Holdings, the Parent Borrower, Purchasing and the Subsidiary
Guarantors.

     

    “Inventory” means all
inventory of any Grantor other than consignment inventory.

     

    “Loan Document
Obligations” means (a) the due and punctual payment by each Borrower and
each Account Party of (i) the principal of and interest (including interest
accruing during the pendency of any bankruptcy, insolvency, receivership or
other similar proceeding, regardless of whether allowed or allowable in such
proceeding) on the Loans, when and as due, whether at maturity, by acceleration,
upon one or more dates set for prepayment or otherwise, (ii) each payment
required to be made by any Borrower or any Account Party under the Credit
Agreement in respect of any Letter of 

     

    
      
        
        

      

      
        
        

        
        

      

      
        
        

      

      Credit,
when and as due, including payments in respect of reimbursement of
disbursements, interest thereon and obligations to provide cash collateral, and
(iii) all other monetary obligations of any Borrower or any Account Party to any
of the Secured Parties under the Credit Agreement and each of the other Loan
Documents, including obligations to pay fees, expense and reimbursement
obligations and indemnification obligations, whether primary, secondary, direct,
contingent, fixed or otherwise (including monetary obligations incurred during
the pendency of any bankruptcy, insolvency, receivership or other similar
proceeding, regardless of whether allowed or allowable in such proceeding), (b)
the due and punctual performance of all other obligations of each Borrower and
each Account Party under or pursuant to the Credit Agreement and each of the
other Loan Documents and (c) the due and punctual payment and performance of all
the obligations of each other Loan Party under or pursuant to this Agreement and
each of the other Loan Documents.

    

     

    “New York UCC” means
the Uniform Commercial Code as from time to time in effect in the State of New
York.

     

    “Obligations” means
(a) Loan Document Obligations, (b) the due and punctual payment and
performance of all obligations of each Loan Party under each Swap Agreement that
(i) is in effect on the Effective Date with a counterparty that is a Lender or
an Affiliate of a Lender as of the Effective Date or (ii) is entered into after
the Effective Date with any counterparty that is a Lender or an Affiliate of a
Lender at the time such Swap Agreement is entered into and (c) the due and
punctual payment of all monetary obligations and other liabilities of any Loan
Party in respect of overdrafts and related liabilities and obligations arising
from or in connection with Treasury Services, to the extent, in the case of
clauses (b) and (c) above, the documentation for such obligations specifically
provides that such Lender or Affiliate of a Lender is entitled to the benefit of
the Security Interest hereunder.

     

    “Parties” means the
Grantors and the Guarantors.

     

    “Perfection
Certificate” means a certificate substantially in the form of Exhibit C,
completed and supplemented with the schedules and attachments contemplated
thereby, and duly executed by a Financial Officer of the Parent
Borrower.

     

    “Proceeds” has the
meaning specified in Section 9-102 of the New York UCC.

     

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

     

    “Security Interest”
has the meaning assigned to such term in Section 3.01.

    2

    
      
        
        

      

      
        
        

        
        

      

      
        
        

      

    

    “Subsidiary Grantors”
means (a) the Subsidiaries identified on Schedule I and (b) each Additional
Grantor that becomes a party to this Agreement as contemplated by Section
6.17.

     

    “Subsidiary
Guarantors” means (a) the Subsidiaries identified on Schedule II and
(b) each other Subsidiary that becomes a party to this Agreement as contemplated
by Section 6.16.

     

    “Subsidiary Parties”
means the Subsidiary Grantors and the Subsidiary Guarantors.

     

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

     

    ARTICLE
II

     

    Guarantee

     

    SECTION
2.01. Guarantee.  Each
Guarantor unconditionally guarantees, jointly with the other Guarantors and
severally, as a primary obligor and not merely as a surety, the due and punctual
payment and performance of the Obligations.  Each Guarantor further
agrees that the Obligations may be extended or renewed, in whole or in part,
without notice to or further assent from it, and that it will remain bound upon
its guarantee notwithstanding any extension or renewal of any
Obligation.  Each of the Guarantors waives presentment to, demand of
payment from and protest to any Loan Party of any of the Obligations, and also
waives notice of acceptance of its guarantee and notice of protest for
nonpayment.

     

    SECTION
2.02. Guarantee of
Payment.  Each of the Guarantors further agrees that its
guarantee hereunder constitutes a guarantee of payment when due and not of
collection, and waives any right to require that any resort be had by the
Administrative Agent or any other Secured Party to any security held for the
payment of the Obligations or to any balance of any deposit account or credit on
the books of the Administrative Agent or any other Secured Party in favor of any
Borrower, any Account Party or any other Person.

     

    SECTION
2.03. No Limitations,
Etc.  (a)  Except for termination of a Guarantor’s
obligations hereunder as expressly provided in Section 6.15, the obligations of
each Guarantor hereunder shall not be subject to any reduction, limitation,
impairment or termination for any reason, including any claim of waiver,
release, surrender, alteration or compromise, and shall not be subject to any
defense or setoff, counterclaim, recoupment or termination whatsoever by reason
of the invalidity, illegality or unenforceability of the Obligations or
otherwise, other than the defense of payment of such obligations in accordance
with the terms thereof.  Without limiting the generality of the
foregoing, the obligations of each Guarantor hereunder shall not be discharged
or impaired or otherwise affected by (i) the failure of the Administrative
Agent or any other 

     

    3

    
      
        
        

      

      
        
        

        
        

      

      
        
        
Secured
Party to assert any claim or demand or to enforce any right or remedy under the
provisions of any Loan Document or otherwise; (ii) any rescission, waiver,
amendment or modification of, or any release from any of the terms or provisions
of, any Loan Document or any other agreement, including with respect to any
other Guarantor under this Agreement; (iii) the release of any security
held by the Administrative Agent or any other Secured Party for the Obligations
or any of them; (iv) any default, failure or delay, wilful or otherwise, in
the performance of the Obligations; or (v) any other act or omission that may or
might in any manner or to any extent vary the risk of any Guarantor or otherwise
operate as a discharge of any Guarantor as a matter of law or equity (other than
the payment in full in cash of all the Obligations).  Each Guarantor
expressly authorizes the Secured Parties to take and hold security for the
payment and performance of the Obligations, to exchange, waive or release any or
all such security (with or without consideration), to enforce or apply such
security and direct the order and manner of any sale thereof in their sole
discretion or to release or substitute any one or more other guarantors or
obligors upon or in respect of the Obligations, all without affecting the
obligations of any Guarantor (in its capacity as such)
hereunder.

    

     

    (b) To
the fullest extent permitted by applicable law, each Guarantor waives any
defense based on or arising out of any defense of any Loan Party or the
unenforceability of the Obligations or any part thereof from any cause, or the
cessation from any cause of the liability of any Loan Party, other than the
payment in full in cash of all the Obligations.  The Administrative
Agent and the other Secured Parties may, at their election, foreclose on any
security held by one or more of them by one or more judicial or nonjudicial
sales, accept an assignment of any such security in lieu of foreclosure,
compromise or adjust any part of the Obligations, make any other accommodation
with any Loan Party or exercise any other right or remedy available to them
against any Loan Party, without affecting or impairing in any way the liability
of any Guarantor (in its capacity as such) hereunder except to the extent the
Obligations have been paid in full in cash.  To the fullest extent
permitted by applicable law, each Guarantor (in its capacity as such) waives any
defense arising out of any such election even though such election operates,
pursuant to applicable law, to impair or to extinguish any right of
reimbursement or subrogation or other right or remedy of such Guarantor against
any Loan Party, as the case may be, or any security.

     

    SECTION
2.04. Reinstatement.  Each
of the Guarantors agrees that its guarantee hereunder shall continue to be
effective or be reinstated, as the case may be, if at any time payment, or any
part thereof, of any Obligation is rescinded or must otherwise be restored to
any Loan Party by the Administrative Agent or any other Secured Party upon the
bankruptcy or reorganization of any Loan Party or otherwise.

     

    SECTION
2.05. Agreement To Pay;
Subrogation.  In furtherance of the foregoing and not in
limitation of any other right that the Administrative Agent or any other Secured
Party has at law or in equity against any Guarantor by virtue hereof, upon the
failure of any Loan Party to pay any Obligation when and as the same shall
become due, whether at maturity, by acceleration, after notice of prepayment or
otherwise, each Guarantor hereby promises to and will forthwith pay, or cause to
be paid, to the Administrative Agent for distribution to the applicable Secured
Parties in cash the 

     

    4

    
      
        
        

      

      
        
        

        
        

      

      
        
        
amount
of such unpaid Obligation.  Upon payment by any Guarantor of any sums
to the Administrative Agent as provided above, all rights of such Guarantor
against such Loan Party or any other Guarantor arising as a result thereof by
way of right of subrogation, contribution, reimbursement, indemnity or otherwise
shall in all respects be subject to Article V.

    

     

    SECTION
2.06. Information.  Each
Guarantor assumes all responsibility for being and keeping itself informed of
each Loan Party’s financial condition and assets, and of all other circumstances
bearing upon the risk of nonpayment of the Obligations and the nature, scope and
extent of the risks that such Guarantor assumes and incurs hereunder, and agrees
that none of the Administrative Agent or the other Secured Parties will have any
duty to advise such Guarantor of information known to it or any of them
regarding such circumstances or risks.

     

    ARTICLE
III

     

    Security
Interest

     

    SECTION
3.01. Security
Interest.  (a)  As security for the payment or
performance, as the case may be, in full of the Obligations, each Grantor hereby
assigns and pledges to the Administrative Agent, its successors and assigns, for
the ratable benefit of the Secured Parties, and hereby grants to the
Administrative Agent, its successors and assigns, for the ratable benefit of the
Secured Parties, a security interest (the “Security Interest”)
in, all its right, title or interest in or to (i) any and all of the Inventory
now owned or at any time hereafter acquired by such Grantor or in which such
Grantor now has or at any time in the future may acquire any right, title or
interest and (ii) all Proceeds and products of any and all of the foregoing and
all collateral security and guarantees given by any Person with respect to the
foregoing (collectively, the “Collateral”).

     

    (b) Each
Grantor hereby irrevocably authorizes the Administrative Agent at any time and
from time to time to file in any relevant jurisdiction any initial financing
statements with respect to the Collateral or any part thereof and amendments
thereto that contain the information required by Article 9 of the Uniform
Commercial Code of each applicable jurisdiction for the filing of any financing
statement or amendment, including whether such Grantor is an organization, the
type of organization and any organizational identification number issued to such
Grantor.  Each Grantor agrees to provide such information to the
Administrative Agent promptly upon request.

     

    (c) Each
Grantor also ratifies its authorization for the Administrative Agent to file in
any relevant jurisdiction any initial financing statements or amendments thereto
if filed prior to the date hereof.

     

    (d) The
Security Interest is granted as security only and shall not subject the
Administrative Agent or any other Secured Party to, or in any way alter or
modify, any obligation or liability of any Grantor with respect to or arising
out of the Collateral.

     

    5

     

    
      
        
        

      

      
        
        

        
        

      

      
        
        

      

    

    SECTION
3.02. Representations and
Warranties.  The Grantors jointly and severally represent and
warrant to the Administrative Agent and the other Secured Parties
that:

     

    (a) Each
Grantor has good and valid rights in and title to the Collateral with respect to
which it has purported to grant a Security Interest hereunder and has full power
and authority to grant to the Administrative Agent the Security Interest in such
Collateral pursuant hereto and to execute, deliver and perform its obligations
in accordance with the terms of this Agreement, without the consent or approval
of any other Person other than any consent or approval that has been
obtained.

     

    (b) The
Perfection Certificate has been duly prepared, completed and executed and the
information set forth therein, including the exact legal name of each Grantor,
is correct and complete as of the Effective Date.  The Uniform
Commercial Code financing statements or other appropriate filings, recordings or
registrations containing a description of the Collateral that have been prepared
by the Administrative Agent based upon the information provided to the
Administrative Agent in the Perfection Certificate for filing in each
governmental, municipal or other office specified in Schedule 6 to the
Perfection Certificate, as modified, delivered, prepared or supplemented from
time to time pursuant to the Credit Agreement (or specified by notice from the
Parent Borrower to the Administrative Agent after the Effective Date in the case
of filings, recordings or registrations required by 

    Section 5.03(a)
or 5.12 of the Credit Agreement), are all the filings, recordings and
registrations that are necessary to establish a legal, valid and perfected
security interest in favor of the Administrative Agent (for the ratable benefit
of the Secured Parties) in respect of all Collateral in which the Security
Interest may be perfected by filing, recording or registration in the United
States (or any political subdivision thereof), and no further or subsequent
filing, refiling, recording, rerecording, registration or reregistration is
necessary in any such jurisdiction, except as provided under applicable law with
respect to the filing of continuation statements.

     

    (c) The
Security Interest constitutes (i) a legal and valid security interest in
all the Collateral securing the payment and performance of the Obligations and
(ii) subject to the filings described in Section 3.02(b), a perfected
security interest in all Collateral in which a security interest may be
perfected by filing, recording or registering a financing statement or analogous
document in the United States (or any political subdivision thereof) pursuant to
the Uniform Commercial Code or other applicable law in such
jurisdictions.  The Security Interest is and shall be prior to any
other Lien on any of the Collateral, other than Permitted Encumbrances that have
priority as a matter of law and Liens expressly permitted pursuant to clause (c)
of Section 6.02 of the Credit Agreement.

     

    (d) The
Collateral is owned by the Grantors free and clear of any Lien, other than
Permitted Encumbrances and Liens expressly permitted pursuant to clause (c) of
Section 6.02 of the Credit Agreement.  None of the Grantors has
filed or consented to the filing of any financing statement or analogous
document under the Uniform Commercial Code or any other applicable laws covering
any Collateral, which financing statement or analogous document, assignment,
security agreement or similar instrument

    6

    
      
        
        

      

      
        
        

        
        

      

      
        
        
is
still in effect, except, in each case, for Permitted Encumbrances and Liens
expressly permitted pursuant to clause (c) of Section 6.02 of the Credit
Agreement.

    

     

    (e) Notwithstanding
the foregoing, the representations and warranties set forth in this Section as
to perfection and priority of the Security Interest in Proceeds are limited to
the extent provided in Section 9-315 of the Uniform Commercial
Code.

     

    SECTION
3.03. Covenants.  (a)  Each
Grantor agrees to maintain, at its own cost and expense, such complete and
accurate records with respect to the Collateral owned by it as is consistent
with its current practices and in accordance with such prudent and standard
practices used in industries that are the same as or similar to those in which
such Grantor is engaged, but in any event to include accounting records
indicating all payments and proceeds received with respect to any part of the
Collateral, and, at such time or times as the Administrative Agent may
reasonably request, promptly to prepare and deliver to the Administrative Agent
a duly certified schedule or schedules in form and detail reasonably
satisfactory to the Administrative Agent showing the identity, amount and
location of any and all Inventory.

     

    (b) Each
Grantor shall, at its own expense, take any and all actions necessary to defend
title to the Collateral against all Persons and to defend the Security Interest
of the Administrative Agent in the Collateral and the priority thereof against
any Lien that is not expressly permitted pursuant to clause (c) of
Section 6.02 of the Credit Agreement.

     

    (c) Each
Grantor agrees, at its own expense, to execute, acknowledge, deliver and cause
to be duly filed all such further instruments and documents and take all such
actions as the Administrative Agent may from time to time reasonably request to
better assure, preserve, protect and perfect the Security Interest and the
rights and remedies created hereby, including the payment of any fees and taxes
required in connection with the execution and delivery of this Agreement, the
granting of the Security Interest and the filing of any financing statements or
other documents in connection herewith or therewith.

     

    (d) The
Administrative Agent and such Persons as the Administrative Agent may reasonably
designate shall have the right, upon reasonable prior notice and without
disruption of the normal and ordinary conduct of business of Holdings or the
Parent Borrower, to inspect the Collateral, all records related thereto (and to
make extracts and copies from such records) and the premises upon which any of
the Collateral is located, to discuss the Grantors’ affairs with the officers of
the Grantors and their independent accountants and to verify under reasonable
procedures, in accordance with Section 5.03 of the Credit Agreement, the
validity, amount, quality, quantity, value, condition and status of, or any
other matter relating to, the Collateral.  The Administrative Agent
shall have the absolute right to share any information it gains from such
inspection or verification with any Secured Party.

     

    (e) At
its option, the Administrative Agent may discharge past due taxes, assessments,
charges, fees, Liens, security interests or other encumbrances at any
time

    7

    
      
        
        

      

      
        
        

        
        

      

      
        
        
levied
or placed on the Collateral and not permitted pursuant to Section 6.02 of
the Credit Agreement or this Agreement, and may pay for the maintenance and
preservation of the Collateral to the extent any Grantor fails to do so as
required by the Credit Agreement or this Agreement, and each Grantor jointly and
severally agrees to reimburse the Administrative Agent on demand for any payment
made or any expense incurred by the Administrative Agent pursuant to the
foregoing authorization; provided that nothing
in this paragraph shall be interpreted as excusing any Grantor from the
performance of, or imposing any obligation on the Administrative Agent or any
Secured Party to cure or perform, any covenants or other promises of any Grantor
with respect to taxes, assessments, charges, fees, Liens, security interests or
other encumbrances and maintenance as set forth herein or in the other Loan
Documents.

    

     

    (f) Each
Grantor shall remain liable to observe and perform all the conditions and
obligations to be observed and performed by it under each contract, agreement or
instrument relating to the Collateral, all in accordance with the terms and
conditions thereof, and each Grantor jointly and severally agrees to indemnify
and hold harmless the Administrative Agent and the Secured Parties from and
against any and all liability for such performance.

     

    (g) None
of the Grantors shall (i) make or permit to be made a pledge or hypothecation of
the Collateral or (ii) grant any other Lien in respect of the Collateral, except
as expressly permitted by the Credit Agreement.  None of the Grantors
shall make or permit to be made any transfer of the Collateral, except
that, unless and until the Administrative Agent shall notify the Grantors
that an Event of Default shall have occurred and be continuing and that during
the continuance thereof the Grantors shall not sell, convey, lease, assign,
transfer or otherwise dispose of any Collateral (which notice may be given by
telephone if promptly confirmed in writing), the Grantors may use and dispose of
the Collateral in any lawful manner not inconsistent with the provisions of this
Agreement, the Credit Agreement or any other Loan Document; provided that,
on or prior to the date of any transfer or any other disposition of Inventory
permitted by the Credit Agreement by any Grantor to any Subsidiary, the Parent
Borrower shall deliver to the Administrative Agent an Asset Coverage
Certificate.

     

    (h) The
Grantors, at their own expense, shall maintain or cause to be maintained
insurance covering physical loss or damage to the Collateral in accordance with
the requirements set forth in Schedule III hereto and Section 5.07 of the
Credit Agreement.  Each Grantor irrevocably makes, constitutes and
appoints the Administrative Agent (and all officers, employees or agents
designated by the Administrative Agent) as such Grantor’s true and lawful agent
(and attorney-in-fact) for the purpose, during the continuance of an Event of
Default, of (i) making, settling and adjusting claims in respect of Collateral
under policies of insurance, endorsing the name of such Grantor on any check,
draft, instrument or other item of payment for the proceeds of such policies of
insurance and (ii) making all determinations and decisions with respect
thereto.  In the event that any Grantor at any time or times shall
fail to obtain or maintain any of the policies of insurance required hereby or
to pay any premium in whole or part relating thereto, the Administrative Agent
may, without waiving or releasing any obligation or liability of the Grantors
hereunder or any Event of Default, in its sole discretion, obtain 

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and
maintain such policies of insurance and pay such premium and take any other
actions with respect thereto as the Administrative Agent reasonably deems
advisable.  All sums disbursed by the Administrative Agent in
connection with this paragraph, including reasonable attorneys’ fees, court
costs, expenses and other charges relating thereto, shall be payable, upon
demand, by the Grantors to the Administrative Agent and shall be additional
Obligations secured hereby.

    

     

    ARTICLE
IV

     

    Remedies

     

    SECTION
4.01. Remedies upon
Default.  Upon the occurrence and during the continuance of an
Event of Default, each Grantor agrees, upon the demand of the Administrative
Agent, to make the Collateral available to the Administrative Agent, and it is
agreed that the Administrative Agent shall have the right, with or without
legal process and with or without prior notice or demand for performance, to
take possession of the Collateral and without liability for trespass to enter
any premises where the Collateral may be located for the purpose of taking
possession of or removing the Collateral and, generally, to exercise any and all
rights afforded to a secured party under the Uniform Commercial Code or other
applicable law.  Without limiting the generality of the foregoing,
each Grantor agrees that the Administrative Agent shall have the right, subject
to the mandatory requirements of applicable law, to sell or otherwise dispose of
all or any part of the Collateral at a public or private sale, for cash, upon
credit or for future delivery as the Administrative Agent shall deem
appropriate.  Upon consummation of any such sale the Administrative
Agent shall have the right to assign, transfer and deliver to the purchaser or
purchasers thereof the Collateral so sold.  Each such purchaser at any
sale of the Collateral shall hold the property sold absolutely, free from any
claim or right on the part of any Grantor, and each Grantor hereby waives (to
the extent permitted by law) all rights of redemption, stay and appraisal which
such Grantor now has or may at any time in the future have under any rule of law
or statute now existing or hereafter enacted.

     

    The
Administrative Agent shall give the applicable Grantors 10 days’ written
notice (which each Grantor agrees is reasonable notice within the meaning of
Section 9-611 of the New York UCC or its equivalent in other
jurisdictions) of the Administrative Agent’s intention to make any sale of
Collateral.  Such notice, in the case of a public sale, shall state
the time and place for such sale.  Any such public sale shall be held
at such time or times within ordinary business hours and at such place or places
as the Administrative Agent may fix and state in the notice (if any) of such
sale.  At any such sale, the Collateral, or any portion thereof, to be
sold may be sold in one lot as an entirety or in separate parcels, as the
Administrative Agent may (in its sole and absolute discretion)
determine.  The Administrative Agent shall not be obligated to make
any sale of any Collateral if it shall determine not to do so, regardless of the
fact that notice of sale of such Collateral shall have been
given.  The Administrative Agent may, without notice or publication,
adjourn any public or private sale or cause the same to be adjourned from time
to time by announcement at the time and place fixed for sale, and such sale may,

     

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without
further notice, be made at the time and place to which the same was so
adjourned.  In case any sale of all or any part of the Collateral is
made on credit or for future delivery, the Collateral so sold may be retained by
the Administrative Agent until the sale price is paid by the purchaser or
purchasers thereof, but the Administrative Agent shall not incur any liability
in case any such purchaser or purchasers shall fail to take up and pay for the
Collateral so sold and, in case of any such failure, such Collateral may be sold
again upon like notice.  At any public (or, to the extent permitted by
law, private) sale made pursuant to this Agreement, any Secured Party may bid
for or purchase, free (to the extent permitted by law) from any right of
redemption, stay, valuation or appraisal on the part of any Grantor (all said
rights being also hereby waived and released to the extent permitted by law),
the Collateral or any part thereof offered for sale and may (with the consent of
the Administrative Agent) make payment on account thereof by using any
Obligation then due and payable to such Secured Party from any Grantor as a
credit against the purchase price, and such Secured Party may, upon compliance
with the terms of sale, hold, retain and dispose of such property without
further accountability to any Grantor therefor.  For purposes hereof,
a written agreement to purchase the Collateral or any portion thereof shall be
treated as a sale thereof; the Administrative Agent shall be free to carry out
such sale pursuant to such agreement and no Grantor shall be entitled to the
return of the Collateral or any portion thereof subject thereto, notwithstanding
the fact that after the Administrative Agent shall have entered into such an
agreement all Events of Default shall have been remedied and the Obligations
paid in full, in which case any excess proceeds thereof shall be disposed of as
set forth in Section 4.02 hereof.  As an alternative to exercising the
power of sale herein conferred upon it, the Administrative Agent may proceed by
a suit or suits at law or in equity to foreclose this Agreement and to sell the
Collateral or any portion thereof pursuant to a judgment or decree of a court or
courts having competent jurisdiction or pursuant to a proceeding by a
court-appointed receiver.  Any sale pursuant to the provisions of this
Section 4.01 shall be deemed to conform to the commercially reasonable
standards as provided in Section 9-610(b) of the New York UCC or its
equivalent in other jurisdictions.

    

     

    SECTION
4.02. Application of
Proceeds.  The Administrative Agent shall apply the proceeds of
any collection or sale of Collateral, including any Collateral consisting of
cash, as follows:

     

    FIRST,
to the payment of all costs and expenses incurred by the Administrative Agent in
connection with such collection or sale or otherwise in connection with this
Agreement, any other Loan Document or any of the Obligations, including all
court costs and the fees and expenses of its agents and legal counsel, the
repayment of all advances made by the Administrative Agent hereunder or under
any other Loan Document on behalf of any Grantor and any other costs or expenses
incurred in connection with the exercise of any right or remedy hereunder or
under any other Loan Document;

     

    SECOND,
to the payment in full of the Obligations (the amounts so applied to be
distributed among the Secured Parties pro rata in accordance with the amounts of
the Obligations owed to them on the date of any such distribution);
and

     

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    THIRD,
to the Grantors, their successors or assigns, or as a court of competent
jurisdiction may otherwise direct.

     

    The
Administrative Agent shall have absolute discretion as to the time of
application of any such proceeds, moneys or balances in accordance with this
Agreement.  Upon any sale of Collateral by the Administrative Agent
(including pursuant to a power of sale granted by statute or under a judicial
proceeding), the receipt of the Administrative Agent or of the officer making
the sale shall be a sufficient discharge to the purchaser or purchasers of the
Collateral so sold and such purchaser or purchasers shall not be obligated to
see to the application of any part of the purchase money paid over to the
Administrative Agent or such officer or be answerable in any way for the
misapplication thereof.

     

    ARTICLE
V

     

    Indemnity, Subrogation and
Subordination

     

    SECTION
5.01. Indemnity and
Subrogation.  In addition to all such rights of indemnity and
subrogation as the Guarantors may have under applicable law (but subject to
Section 5.03), each of the Borrowers and each of the Account Parties agrees that
(a) in the event a payment shall be made by any Guarantor under this
Agreement in respect of any Obligation of a Borrower or an Account Party, such
Borrower or such Account Party (as the case may be) shall indemnify such
Guarantor for the full amount of such payment and such Guarantor shall be
subrogated to the rights of the Person to whom such payment shall have been made
to the extent of such payment and (b) in the event any assets of any Grantor
shall be sold pursuant to this Agreement to satisfy in whole or in part an
Obligation of a Borrower or an Account Party, such Borrower or Account Party (as
the case may be) shall indemnify such Grantor in an amount equal to the greater
of the book value or the fair market value of the assets so sold.

     

    SECTION
5.02. Contribution and
Subrogation.  Each Guarantor and Grantor (a “Contributing Party”)
agrees (subject to Section 5.03) that, in the event a payment shall be made
by any other Guarantor hereunder in respect of any Obligation or assets of any
other Grantor (other than Holdings or the Parent Borrower) shall be sold
pursuant to this Agreement to satisfy any Obligation of a Borrower or an Account
Party  and such other Guarantor or Grantor (the “Claiming Party”)
shall not have been fully indemnified by the Borrowers or the Account Parties as
provided in Section 5.01, the Contributing Party shall indemnify the
Claiming Party in an amount equal to the amount of such payment or the greater
of the book value or the fair market value of such assets, as the case may be,
in each case multiplied by a fraction of which the numerator shall be the net
worth of the Contributing Party on the date hereof and the denominator shall be
the aggregate net worth of all the Guarantors and Grantors on the date hereof
(or, in the case of any Guarantor or Grantor becoming a party hereto pursuant to
Section 6.16 or Section 6.17, respectively, the date of the supplement
hereto executed and delivered by such Guarantor or Grantor).  Any
Contributing Party making any payment to a Claiming 

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Party
pursuant to this Section 5.02 shall (subject to Section 5.03) be subrogated
to the rights of such Claiming Party under Section 5.01 to the extent of
such payment.

    

     

    SECTION
5.03. Subordination.  (a)  Notwithstanding
any provision of this Agreement to the contrary, all rights of the Guarantors
and Grantors under Sections 5.01 and 5.02 and all other rights of the
Guarantors and Grantors of indemnity, contribution or subrogation under
applicable law or otherwise shall be fully subordinated to the indefeasible
payment in full in cash of the Obligations.  No failure on the part of
any Borrower, any Account Party or any Guarantor or Grantor to make the payments
required by Sections 5.01 and 5.02 (or any other payments required under
applicable law or otherwise) shall in any respect limit the obligations and
liabilities of any Guarantor or Grantor with respect to its obligations
hereunder, and each Guarantor and Grantor shall remain liable for the full
amount of the obligations of such Guarantor or Grantor hereunder.

     

    (b) Each
of the Guarantors and Grantors hereby agrees that all Indebtedness and other
monetary obligations owed by it to, or to it by, any other Guarantor, Grantor or
any other Subsidiary shall be fully subordinated to the payment in full in cash
of the Obligations.

     

    ARTICLE
VI

     

    Miscellaneous

     

    SECTION
6.01. Notices.  All
communications and notices hereunder shall (except as otherwise expressly
permitted herein) be in writing and given as provided in Section 9.01 of
the Credit Agreement.  All communications and notices hereunder to any
Subsidiary Party shall be given to it in care of the Parent Borrower as provided
in Section 9.01 of the Credit Agreement.

     

    SECTION
6.02. Rights
Absolute.  All rights of the Administrative Agent hereunder,
the Security Interest and all obligations of each Guarantor and Grantor
hereunder shall be absolute and unconditional irrespective of (a) any lack
of validity or enforceability of the Credit Agreement, any other Loan Document,
any agreement with respect to any of the Obligations or any other agreement or
instrument relating to any of the foregoing, (b) any change in the time,
manner or place of payment of, or in any other term of, all or any of the
Obligations, or any other amendment or waiver of or any consent to any departure
from the Credit Agreement, any other Loan Document or any other agreement or
instrument, (c) any exchange, release or non-perfection of any Lien on
other collateral, or any release or amendment or waiver of or consent under or
departure from any guarantee, securing or guaranteeing all or any of the
Obligations, or (d) any other circumstance that might otherwise constitute
a defense available to, or a discharge of, any Guarantor or Grantor in respect
of the Obligations or this Agreement.

     

    SECTION
6.03. Survival of
Agreement.  All covenants, agreements, representations and
warranties made by the Loan Parties in the Loan Documents and in 

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the
certificates or other instruments prepared or delivered in connection with or
pursuant to this Agreement or any other Loan Document shall be considered to
have been relied upon by the Lenders and shall survive the execution and
delivery of the Loan Documents and the making of any Loans and issuance of any
Letters of Credit, regardless of any investigation made by any Lender or on its
behalf and notwithstanding that the Administrative Agent, any Issuing Bank or
any Lender may have had notice or knowledge of any Default or incorrect
representation or warranty at the time any credit is extended under the Credit
Agreement, and shall continue in full force and effect as long as the principal
of or any accrued interest on any Loan or any fee or any other amount payable
under any Loan Document is outstanding and unpaid or any Letter of Credit is
outstanding and so long as the Commitments have not expired or
terminated.

    

     

    SECTION
6.04. Binding Effect; Several
Agreement.  This Agreement shall become effective as to any
Party when a counterpart hereof executed on behalf of such Party shall have been
delivered to the Administrative Agent and a counterpart hereof shall have been
executed on behalf of the Administrative Agent, and thereafter shall be binding
upon such Party and the Administrative Agent and their respective permitted
successors and assigns, and shall inure to the benefit of such Party, the
Administrative Agent and the other Secured Parties and their respective
successors and assigns, except that no Party shall have the right to assign or
transfer its rights or obligations hereunder or any interest herein or in the
Collateral (and any such assignment or transfer shall be void) except as
expressly contemplated by this Agreement or the Credit
Agreement.  This Agreement shall be construed as a separate agreement
with respect to each Party and may be amended, modified, supplemented, waived or
released with respect to any Party without the approval of any other Party and
without affecting the obligations of any other Party hereunder.

     

    SECTION
6.05. Successors and
Assigns.  Whenever in this Agreement any of the parties hereto
is referred to, such reference shall be deemed to include the permitted
successors and assigns of such party; and all covenants, promises and agreements
by or on behalf of any Guarantor or Grantor or the Administrative Agent that are
contained in this Agreement shall bind and inure to the benefit of their
respective successors and assigns.

     

    SECTION
6.06. Administrative Agent’s Fees
and Expenses; Indemnification.  (a)  The parties
hereto agree that the Administrative Agent shall be entitled to reimbursement of
its expenses incurred hereunder as provided in Section 9.03 of the Credit
Agreement.

     

    (b) Without
limitation of its indemnification obligations under the other Loan Documents,
each Guarantor and Grantor jointly and severally agrees to indemnify the
Administrative Agent and the other Indemnitees (as defined in Section 9.03
of the Credit Agreement) against, and hold each Indemnitee harmless from, any
and all losses, claims, damages, liabilities and related expenses, including the
fees, charges and disbursements of any counsel for any Indemnitee, incurred by
or asserted against any Indemnitee arising out of, in connection with, or as a
result of, the execution, delivery or performance of this Agreement or any
claim, litigation, investigation or proceeding

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relating
hereto, or to the Collateral, whether or not 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 Guarantor or Grantor against such Indemnitee, (y) result from the
gross negligence or wilful misconduct of such Indemnitee 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.

    

     

    (c) Any
such amounts payable as provided hereunder shall be additional Obligations
secured hereby.  The provisions of this Section 6.06 shall remain
operative and in full force and effect regardless of the termination of this
Agreement or any other Loan Document, the consummation of the transactions
contemplated hereby, the repayment of any of the Obligations, the invalidity or
unenforceability of any term or provision of this Agreement or any other Loan
Document, or any investigation made by or on behalf of the Administrative Agent
or any other Secured Party.  All amounts due under this
Section 6.06 shall be payable not later than 30 days after written demand
therefor.

     

    SECTION
6.07. Administrative Agent
Appointed Attorney-in-Fact.  Each Guarantor and Grantor hereby
appoints the Administrative Agent the attorney-in-fact of such Guarantor or
Grantor during the continuance of an Event of Default for the purpose of
carrying out the provisions of this Agreement and taking any action and
executing any instrument that the Administrative Agent may reasonably deem
necessary or advisable to accomplish the purposes hereof, which appointment is
irrevocable and coupled with an interest.  Without limiting the
generality of the foregoing, the Administrative Agent shall have the right, upon
the occurrence and during the continuance of an Event of Default, with full
power of substitution either in the Administrative Agent’s name or in the name
of such Guarantor or Grantor (a) to receive, endorse, assign and/or deliver
any and all notes, acceptances, checks, drafts, money orders or other evidences
of payment relating to the Collateral or any part thereof; (b) to demand,
collect, receive payment of, give receipt for and give discharges and releases
of all or any of the Collateral; (c) to sign the name of any Grantor on any
invoice or bill of lading relating to any of the Collateral; (d) to
commence and prosecute any and all suits, actions or proceedings at law or in
equity in any court of competent jurisdiction to collect or otherwise realize on
all or any of the Collateral or to enforce any rights in respect of any
Collateral; (e) to settle, compromise, compound, adjust or defend any
actions, suits or proceedings relating to all or any of the Collateral; and
(f) to use, sell, assign, transfer, pledge, make any agreement with respect
to or otherwise deal with all or any of the Collateral, and to do all other acts
and things necessary to carry out the purposes of this Agreement, as fully and
completely as though the Administrative Agent were the absolute owner of the
Collateral for all purposes; provided that nothing
herein contained shall be construed as requiring or obligating the
Administrative Agent to make any commitment or to present or file any claim or
notice, or to take any action with respect to the Collateral or any part thereof
or the moneys due or to become due in respect thereof or any property covered
thereby, other than to exercise commercially reasonable care in the custody and
preservation of any Collateral in its possession.  The Administrative
Agent and the Parent Borrower

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acknowledge
that the exercise of the powers granted to the Administrative Agent herein to
deal with or dispose of the Collateral on a basis in keeping with orderly
business proceedings designed to preserve the value of the Collateral to
customers of the Grantor would be commercially reasonable.

    

     

    SECTION
6.08. Applicable
Law.  This Agreement shall be construed in accordance with and
governed by the laws of the State of New York.

     

    SECTION
6.09. Waivers;
Amendment.  (a)  No failure or delay by the
Administrative Agent, any Issuing Bank or any Lender in exercising any right or
power hereunder or under any other Loan Document shall operate as a waiver
thereof, nor shall any single or partial exercise of any such right or power, or
any abandonment or discontinuance of steps to enforce such a right or power,
preclude any other or further exercise thereof or the exercise of any other
right or power.  The rights and remedies of the Administrative Agent,
the Issuing Banks and the Lenders hereunder and under the other Loan Documents
are cumulative and are not exclusive of any rights or remedies that they would
otherwise have.  No waiver of any provision of this Agreement or
consent to any departure by any Party therefrom shall in any event be effective
unless the same shall be permitted by paragraph (b) of this Section, and
then such waiver or consent shall be effective only in the specific instance and
for the purpose for which given.  Without limiting the generality of
the foregoing, the making of a Loan or issuance of a Letter of Credit shall not
be construed as a waiver of any Default, regardless of whether the
Administrative Agent, any Lender or any Issuing Bank may have had notice or
knowledge of such Default at the time.  No notice or demand on any
Party in any case shall entitle any Party to any other or further notice or
demand in similar or other circumstances.

     

    (b) Neither
this Agreement nor any provision hereof may be waived, amended or modified
except pursuant to an agreement or agreements in writing entered into by the
Administrative Agent and the Parties with respect to which such waiver,
amendment or modification is to apply, subject to any consent required in
accordance with Section 9.02 of the Credit Agreement.

     

    SECTION
6.10. WAIVER OF JURY
TRIAL.  EACH PARTY HERETO HEREBY WAIVES, TO THE FULLEST EXTENT
PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY
LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS
AGREEMENT, ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY
(WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY).  EACH PARTY
HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER
PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT,
IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND
(B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO
ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND
CERTIFICATIONS IN THIS SECTION.

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    SECTION
6.11. Severability.  Any
provision of this Agreement held to be invalid, illegal or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such invalidity, illegality or unenforceability without affecting the validity,
legality and enforceability of the remaining provisions hereof; and the
invalidity of a particular provision in a particular jurisdiction shall not
invalidate such provision in any other jurisdiction.

     

    SECTION
6.12. Counterparts.  This
Agreement may be executed in counterparts (and by different parties hereto on
different counterparts), each of which shall constitute a single contract
(subject to Section 6.04), and shall become effective as provided in
Section 6.04.  Delivery of an executed signature page to this
Agreement by telecopy or electronic transmission shall be effective as delivery
of a manually executed counterpart of this Agreement.

     

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

     

    SECTION
6.14. Jurisdiction; Consent to
Service of Process.  (a)  Each of the Parties hereby
irrevocably and unconditionally submits, for itself and its property, to the
nonexclusive jurisdiction of the Supreme Court of the State of New York sitting
in New York County and of the United States District Court of the Southern
District of New York, and any appellate court from any thereof, in any action or
proceeding arising out of or relating to any Loan Document, or for recognition
or enforcement of any judgment, and each of the parties hereto hereby
irrevocably and unconditionally agrees that all claims in respect of any such
action or proceeding may be heard and determined in such New York State or,
to the extent permitted by law, in such Federal court.  Each of the
parties hereto agrees that a final judgment in any such action or proceeding
shall be conclusive and may be enforced in other jurisdictions by suit on the
judgment or in any other manner provided by law.  Nothing in this
Agreement or any other Loan Document shall affect any right that the
Administrative Agent, any Issuing Bank or any Lender may otherwise have to bring
any action or proceeding relating to this Agreement or any other Loan Document
against any Guarantor or Grantor or its respective properties in the courts of
any jurisdiction.

     

    (b) Each
of the Parties hereby irrevocably and unconditionally waives, to the fullest
extent it may legally and effectively do so, any objection which it may now or
hereafter have to the laying of venue of any suit, action or proceeding arising
out of or relating to this Agreement or any other Loan Document in any court
referred to in paragraph (a) of this Section.  Each of the parties
hereto hereby irrevocably waives, to the fullest extent permitted by law, the
defense of an inconvenient forum to the maintenance of such action or proceeding
in any such court.

     

    (c) Each
party to this Agreement irrevocably consents to service of process in the manner
provided for notices in Section 6.01.  Nothing in this Agreement
or any other Loan Document will affect the right of any party to this Agreement
to serve process in any other manner permitted by law.

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    SECTION
6.15. Termination or
Release.  (a)  This Agreement, the Guarantees made
herein, the Security Interest and all other security interests granted hereby
shall terminate when all the Loan Document Obligations have been paid in full
and the Lenders have no further commitment to lend under the Credit Agreement,
the LC Exposure has been reduced to zero and no Issuing Bank has any further
obligations to issue Letters of Credit under the Credit Agreement.

     

    (b) A
Subsidiary Party shall automatically be released from its obligations hereunder
and, in the case of a Subsidiary Party that is a Subsidiary Grantor, the
Security Interest in the Collateral of such Subsidiary Grantor shall be
automatically released upon the consummation of any transaction not prohibited
by the Credit Agreement as a result of which such Subsidiary Party ceases to be
a Subsidiary of Holdings; provided that the
Required Lenders shall have consented to such transaction (to the extent
required by the Credit Agreement) and the terms of such consent did not provide
otherwise; provided further that, after
giving effect to such release, there is no Default under the Credit
Agreement.

     

    (c) Upon
any sale or other transfer by any Grantor of any Collateral that is not
prohibited by the Credit Agreement to any Person that is not a Grantor, or upon
the effectiveness of any written consent to the release of the Security Interest
granted hereby in any Collateral pursuant to Section 9.02 of the Credit
Agreement, the Security Interest in such Collateral shall be automatically
released; provided that after
giving effect to such release, there is no Default under the Credit
Agreement.

     

    (d) Notwithstanding
anything herein to the contrary, the Security Interest shall be released at any
time when (i) Holdings has a Credit Rating of (A) Baa1 with stable outlook or
better from Moody’s or (B) BBB+ with stable outlook or better from S&P;
provided that
if the Credit Ratings are not at the same level, the lower Credit Rating is not
more than one notch worse than the higher Credit Rating, (ii) no Default has
occurred and is continuing or would result from such release and (iii) the
Administrative Agent shall have received a certificate from a Financial Officer
of Holdings or the Parent Borrower confirming that the conditions in this
paragraph (d) are satisfied.

     

    (e) In
connection with any termination or release pursuant to paragraph (a), (b),
(c) or (d) above, the Administrative Agent shall execute and deliver to any
Grantor at such Grantor’s expense, all documents that such Grantor shall
reasonably request to evidence such termination or release.  Any
execution and delivery of documents pursuant to this Section 6.15 shall be
without recourse to or warranty by the Administrative Agent.

     

    SECTION
6.16. Additional
Guarantors.  (a)  Pursuant to, and to the extent
provided in, Section 5.11 of the Credit Agreement, additional Subsidiaries
may be required to enter into this Agreement as Guarantors.  Upon
execution and delivery by the Administrative Agent and any such Subsidiary of an
instrument in the form of Exhibit A hereto, such Subsidiary shall become a
Subsidiary Guarantor hereunder with the same force and effect as if originally
named as a Subsidiary Guarantor herein.

    17

    
      
        
        

      

      
        
        

        
        

      

      
        
        

      

    

    (b) In
the event of a Permitted Holding Company Reorganization, New Holdco is required
to enter in this Agreement as a Guarantor.  Upon execution and
delivery by the Administrative Agent and New Holdco of an instrument in form and
substance similar to Exhibit A hereto, New Holdco shall become a Guarantor
hereunder with the same force and effect as if originally named a Guarantor
herein.

     

    (c) The
execution and delivery of any such instrument described in paragraph (a) or (b)
above shall not require the consent of any other party hereto.  The
rights and obligations of each party hereunder shall remain in full force and
effect notwithstanding the addition of any new Guarantee Party as a party to
this Agreement.

     

    SECTION
6.17. Additional
Grantors.  Pursuant to the terms of the Credit Agreement,
Additional Grantors may enter into this Agreement as Subsidiary
Grantors.  Upon execution and delivery by the Administrative Agent and
any such Additional Grantor of an instrument in the form of Exhibit B hereto,
such Additional Grantor shall become an a Subsidiary Grantor hereunder with the
same force and effect as if originally named as an Subsidiary Grantor
herein.  The execution and delivery of any such instrument shall not
require the consent of any other party hereto.  The rights and
obligations of each party hereto shall remain in full force and effect
notwithstanding the addition of any new Subsidiary Grantor as a party to this
Agreement.

     

    SECTION
6.18. Right of
Setoff.  If an Event of Default shall have occurred and be
continuing and the Loans have become due and payable, each Issuing Bank and
Lender and each of its Affiliates is hereby authorized at any time and from time
to time, to the fullest extent permitted by law, to set off and apply any and
all deposits (general or special, time or demand, provisional or final) at any
time held and other obligations at any time owing by such Issuing Bank or Lender
or Affiliate to or for the credit or the account of any Guarantor against any of
and all the obligations of such Guarantor now or hereafter existing under this
Agreement owed to such Issuing Bank or Lender, irrespective of whether or not
such Issuing Bank or Lender shall have made any demand under this Agreement and
although such obligations may be unmatured.  The rights of each
Issuing Bank and Lender under this Section are in addition to other rights and
remedies (including other rights of setoff) which such Issuing Bank or Lender
may have.  Any Lender or Issuing Bank exercising its rights under this
Section shall give notice thereof to the relevant Guarantor on or prior to the
day of the exercise of such rights.

     

    [The
remainder of this page has been left blank intentionally.]

     

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    IN
WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of the
day and year first above written.

     

     

     

    
      	
               
      

            	
              J.
      C. PENNEY COMPANY, INC.,

               

              by /s/ R. B. Cavanaugh    

                   Name: R. B. Cavanaugh

                   Title: Executive Vice President
      and 

                           
       Chief Financial Officer 

            

    

     

    
    

    
       

       

      
        	
                 
      

              	
                J.
      C. PENNEY CORPORATION, INC.,

                 

                by /s/ M. D. Porter    
      

                     Name: M. D. Porter 

                     Title: Vice President,
      Treasurer 

              

      

       

      
      

      
         

         

        
          	
                   
      

                	
                  J.
      C. PENNEY PURCHASING CORPORATION,

                   

                  by /s/ M. D. Porter    
      

                       Name: M. D. Porter 

                       Title: Vice President, Treasurer
      of 

                              
         J. C. Penney Corporation,
Inc.

                

        

         

        
        

        
           

           

          
            	
                     
      

                  	
                    EACH
      OF THE SUBSIDIARIES LISTED ON SCHEDULES I AND II HERETO,

                     

                    by /s/ M. D. Porter    
      

                         Name: M. D. Porter 

                         Title: Vice President,
      Treasurer of 

                                  
       J. C. Penney Corporation, Inc. 

                  

          

           

          
          

          
19

          
            
              
              

            

            
              
              

              
              

            

            
              
              

            

          

        

      

    

    

    
 

    
      	
               
      

            	
              JPMORGAN
      CHASE BANK, N.A., as 

              Administrative Agent, 

               

              by  /s/ Barry Bergman    

                   Name: Barry Bergman 

                   Title: Managing
  Director

            

    

    
      	
               
      

            	
                   
      

                    

            

    

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    20

    
    

     

    
      
        
        

      

      
        
        

        
        

      

      
        
        

      

    

    SCHEDULE I

    to the Guarantee and 

    Collateral Agreement

     

    Subsidiary
Grantors

     

    JCP
Real Estate Holdings, Inc.

    

    J.
C. Penney Properties, Inc.

     

    
      
        
        

      

      
        
        

        
        

      

      
        
        

      

    

    SCHEDULE II

    to the
Guarantee and 

    Collateral Agreement

     

    Subsidiary
Guarantors

     

    JCP
Real Estate Holdings, Inc.

    

    J.
C. Penney Properties, Inc.

     

    
      
        
        

      

      
        
        

        
        

      

       

      
        SCHEDULE III

        to the
Guarantee and 

        Collateral Agreement

      

       

    

     

    Insurance
Requirements

     

    (a)  Each
Grantor will maintain (or cause to be maintained on its behalf), with
financially sound and reputable insurance companies, insurance with respect to
all Inventory constituting Collateral, in such amounts as are customarily
maintained by companies in the same or similar business operating in the same or
similar locations.

     

    (b)  Policies maintained with
respect to any Collateral shall be endorsed or otherwise amended to include (i)
a lenders’ loss payable clause in favor of the Administrative Agent and
providing for losses thereunder to be payable to the Administrative Agent or its
designee and (ii) such other provisions as the Administrative Agent may
reasonably require from time to time to protect the interests of the
Lenders.  Each such policy referred to in this paragraph also shall
provide that it shall not be canceled, modified or not renewed (i) by reason of
nonpayment of premium except upon not less than 10 days’ prior written notice
thereof by the insurer to the Administrative Agent (giving the Administrative
Agent the right to cure defaults in the payment of premiums) or (ii) for any
other reason except upon not less than 30 days’ prior written notice thereof by
the insurer to the Administrative Agent.  Each Grantor shall deliver
to the Administrative Agent a copy of a certificate of insurance evidencing the
required coverage on or prior to the Effective Date and upon each renewal or
replacement of such policies thereafter.

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