<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the 52 weeks ended January 28, 1995 Commission file number 1-4947-1
J. C. Penney Funding Corporation
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(Exact name of registrant as specified in its charter)
DELAWARE 51-0101524
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(State of incorporation) (I.R.S. Employer ID No.)
6501 LEGACY DRIVE, PLANO, TEXAS 75024-3698
- ---------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (214) 431-1000
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Securities registered pursuant to Section 12(b) of the Act: None
- -----------------------------------------------------------
Securities registered pursuant to Section 12(g) of the Act: None
- -----------------------------------------------------------
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes /x/ No .
---- ----
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of the registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. /x/
State the aggregate market value of the voting stock held by non-
affiliates of the registrant: None
Indicate the number of shares outstanding of each of the registrant's
classes of common stock, as of the latest practicable date: 500,000 shares of
Common Stock of $100 par value, as of March 20, 1995.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of Registrant's 1994 Annual Report ("1994 Annual Report") are
incorporated into Parts I, II, and IV. Portions of J. C. Penney Company, Inc.'s
1994 Annual Report to Stockholders ("JCPenney's 1994 Annual Report") are
incorporated into Part I.
THE REGISTRANT MEETS THE CONDITIONS SET FORTH IN GENERAL INSTRUCTION
J(1)(A) AND (B) OF FORM 10-K AND IS THEREFORE FILING THIS FORM WITH THE
REDUCED DISCLOSURE FORMAT.
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PART I
1. BUSINESS.
J. C. Penney Funding Corporation ("Funding"), which was incorporated in
Delaware in 1964, is a wholly-owned subsidiary of J. C. Penney Company, Inc.
("JCPenney"), also incorporated in Delaware. Funding's executive offices are
located in JCPenney's offices in Plano, Texas. Its business consists of
financing a portion of JCPenney's operations through loans to JCPenney, the
purchase of customer receivable balances that arise from the retail credit sales
of JCPenney, or a combination of both. No receivables have been purchased by
Funding since 1985.
JCPenney is a major retailer, with department stores in all 50 states and
Puerto Rico. The dominant portion of JCPenney's business consists of providing
merchandise and services to consumers through department stores that include
catalog departments. JCPenney markets predominantly family apparel, jewelry,
shoes, accessories, and home furnishings. JCPenney's total revenues for the 52
weeks ended January 28, 1995 were $21.1 billion and net income was $1,057
million. Pursuant to the terms of financing agreements between Funding and
JCPenney, payments from JCPenney to Funding are designed to produce earnings
sufficient to cover Funding's fixed charges, principally interest on borrowings,
at a coverage ratio mutually agreed upon between Funding and JCPenney. (See
"Loan Agreement" and "Receivables Agreement", below.) The earnings to fixed
charges coverage ratio has historically been, and in fiscal 1994 was, at least
1.5 to 1.
Operations of Funding. To finance the operations of JCPenney as described
under "Business" above, Funding sells its short-term notes (commercial paper) to
investors through dealer-placed programs. The short-term notes are guaranteed on
a subordinated basis by JCPenney. Funding has, from time to time, issued long-
term debt in public and private markets in the United States and abroad. Prior
to April 3, 1992, Funding issued commercial paper and master notes to investors
on a direct issue basis. Funding also has in place arrangements for short-term
bank borrowings. Short-term debt in fiscal 1994 averaged $1,990 million compared
to $1,347 million in fiscal 1993 and $1,146 million in fiscal 1992. Short-term
debt rates averaged 4.6 percent in fiscal 1994, compared to 3.2 percent in
fiscal 1993 and 3.7 percent in fiscal 1992. Interest expense increased in fiscal
1994 compared to fiscal 1993 and 1992 largely due to higher borrowing levels and
higher short-term interest rates.
Credit Operations of JCPenney. Virtually all types of merchandise and
services sold by JCPenney in the United States and Puerto Rico may be purchased
on JCPenney's revolving credit card. In addition, JCPenney accepts American
Express, Discover, MasterCard, and Visa at JCPenney stores, catalog, and drug
stores
2
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throughout the 50 states and in Puerto Rico. For additional information
respecting the credit card operations of JCPenney, see "Net interest expense and
credit operations" (page 23), which appears in the section of JCPenney's 1994
Annual Report entitled "Management's Discussion and Analysis of Financial
Condition and Results of Operations", "Receivables" (page 30), which appears in
the section of JCPenney's 1994 Annual Report entitled "Notes to Financial
Statements", and "Credit Operations", "Pre-tax cost of JCPenney credit card",
"Credit sales", and "Key JCPenney credit card information" (page 41), which
appear in the section of JCPenney's 1994 Annual Report entitled "Supplemental
Information (Unaudited)", on the pages indicated in the parenthetical
references, which are incorporated by reference herein.
Funding has never incurred any losses from JCPenney's retail credit
operation since, pursuant to the Receivables Agreement, JCPenney itself
administers the customer receivables when sold to Funding, receives all finance
charge revenue on those customer receivables, and bears all related costs.
Loan Agreement. Funding and JCPenney are parties to a Loan Agreement, dated
as of January 28, 1986, as amended ("Loan Agreement"), which provides for
unsecured loans to be made from time to time by Funding to JCPenney for the
general business purposes of JCPenney, subject to the terms and conditions of
the Loan Agreement. The loans may be either senior loans or subordinated loans,
at the election of JCPenney, provided that, without the consent of the Board of
Directors of Funding, the principal amount of loans outstanding at any time
under the Loan Agreement may not exceed specified limits. Currently such limits
may not exceed $4 billion in the aggregate for all loans and $500 million in the
aggregate for all subordinated loans. The terms of each loan under the Loan
Agreement shall be as agreed upon at the time of such loan by Funding and
JCPenney, provided that Funding may require upon demand that any loan be paid,
and JCPenney may prepay without premium any loan, in whole or in part at any
time. Under the terms of the Loan Agreement, JCPenney and Funding agree from
time to time upon a mutually-acceptable earnings coverage of Funding's interest
and other fixed charges. If at the end of each fiscal quarter during which a
loan was outstanding, the earnings coverage of Funding's interest and other
fixed charges is less than the agreed upon ratio, JCPenney will pay to Funding
an additional amount sufficient to provide for such coverage to be not less than
the agreed upon ratio. In the event that JCPenney and Funding have not agreed
upon a mutually acceptable ratio for any fiscal quarter, that applicable
quarterly payment with respect to such period will include an amount equal to
the excess, if any, of one and one-half percent of the daily average of the
aggregate principal amount outstanding on all loans during such period, over the
aggregate amount of interest accrued on all such loans during such period.
3
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Receivables Agreement. Since December 1, 1985, JCPenney has not sold an
undivided interest in any of its customer receivables to Funding. The
Receivables Agreement between Funding and JCPenney, as amended ("Receivables
Agreement"), continues to be in full force and effect and while no purchases of
JCPenney customer receivables by Funding are presently contemplated, JCPenney
may again commence sales of its customer receivables to Funding.
The Receivables Agreement sets forth the terms and provisions governing
sales of customer receivables (other than specified types of customer
receivables immaterial in amount) by JCPenney to Funding. At the end of each
monthly accounting period, JCPenney may sell to Funding an undivided interest in
its undefaulted customer receivables which are not sold or contracted to be sold
by JCPenney to anyone other than Funding. Settlements are made as of the end of
each such monthly accounting period with respect to collections, defaults, and
other adjustments to customers' accounts occurring during that month.
The purchase price for the customer receivables acquired by Funding from
JCPenney is equal to the aggregate dollar amount of such customer receivables.
JCPenney pays to Funding at the end of each monthly accounting period a discount
in an amount agreed upon from time to time. In the event of a failure to agree
as to the amount of the discount, the amount to be paid is one-half of one
percent of the average daily closing balance of conveyed customer receivables
held by Funding during such monthly accounting period less the average daily
closing balance of the Contract Reserve Account during such period.
In addition, at the time of purchase of customer receivables from JCPenney,
Funding withholds from the purchase price, and adds to the Contract Reserve
Account, the lesser of (i) five percent of the amount of customer receivables
then being purchased, or (ii) the amount, if any, by which the amount in the
Contract Reserve Account is less than five percent of the total amount of
customer receivables then owned by Funding. If the amount in the Contract
Reserve Account should exceed five percent of the total amount of customer
receivables owned by Funding at the end of any monthly accounting period, such
excess is to be paid to JCPenney in accordance with the Receivables Agreement.
If any portion of a customer receivable becomes more than 180 days past due or
if the customer is, in the judgment of JCPenney, unable to make further payment,
such customer receivable is considered to be in default for the purposes of the
Receivables Agreement and is charged against the Contract Reserve Account.
Collections with respect to any such defaulted customer receivable are credited
to the Contract Reserve Account. As described above, all bad debts written off
to date have been covered by the Contract Reserve Account.
4
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Funding acquires all of JCPenney's right, title, and interest in and to the
undivided portion of the customer receivables being conveyed to it. All sales of
customer receivables to Funding are without recourse to JCPenney. However, in
the event of returned, rejected, or repossessed merchandise to which any
previously conveyed undefaulted customer receivable relates, or in the event of
a breach of a warranty made by JCPenney in the Receivables Agreement to which
any previously conveyed undefaulted customer receivable relates, JCPenney is
obligated to pay to Funding the amount by which Funding has been damaged. Either
party has the right at any time to terminate the further sale or purchase, as
the case may be, of customer receivables under the Receivables Agreement.
Certain state laws provide for recording or other notice formalities in
connection with the assignment of accounts receivable. Funding does not deem it
appropriate to utilize such procedures in connection with customer receivables
purchased from JCPenney. In the event of the bankruptcy or receivership of
JCPenney, it is possible that creditors of JCPenney might be deemed to have
superior rights to some or all of the customer receivables previously purchased
by Funding.
Committed Bank Credit Facilities. Committed bank credit facilities
available to Funding as of January 28, 1995, amounted to $2.5 billion. In 1994,
Funding entered into two syndicated revolving credit facility agreements. These
facilities include a $1.5 billion, 364-day revolver and a $1.0 billion, five-
year revolver with a group of 42 domestic and international banks. These
facilities, which replaced the $1.25 billion existing credit line, support
commercial paper borrowing arrangements. Neither of the borrowing facilities was
in use as of January 28, 1995. (See page 8 of Funding's 1994 Annual Report which
is incorporated herein by reference.)
Employment. Funding has had no employees since April 30, 1992.
General. Legislation regulating consumer credit has been enacted in all
states and federally. Funding's operations have not been affected by such
legislation since Funding does not deal directly with consumers.
2. PROPERTIES.
Funding owns no physical properties.
3. LEGAL PROCEEDINGS.
Funding has no material legal proceedings pending against it.
5
<PAGE>
PART II
5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.
JCPenney owns all of Funding's outstanding common stock. Funding's common
stock is not traded, and no dividends have been, or are currently intended to
be, declared by Funding on its common stock.
8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
The Balance Sheets of Funding as of January 28, 1995, January 29, 1994, and
January 30, 1993, and the related statements of income, reinvested earnings, and
cash flows for the years then ended, appearing on pages 3 through 5 of Funding's
1994 Annual Report, together with the related notes and the Independent
Auditors' Report of KPMG Peat Marwick LLP, independent certified public
accountants, appearing on page 6 of Funding's 1994 Annual Report, the
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" appearing on page 2 thereof, the section of Funding's 1994 Annual
Report entitled "Five Year Financial Summary" appearing on page 7 thereof, and
the unaudited quarterly financial highlights ("Quarterly Data") appearing on
page 8 thereof, are incorporated herein by reference in response to Item 8 of
Form 10-K.
9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
Funding has had no change in or disagreements with its independent
certified public accountants on accounting and financial disclosure.
PART IV
14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.
(a)(1) All Financial Statements.
See Item 8 of this Form 10-K for financial statements
incorporated by reference to Funding's 1994 Annual Report.
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(a)(2) Financial Statement Schedules.
All schedules have been omitted as they are inapplicable or not
required under the rules, or the information has been submitted
in the financial statements or in the notes to the financial
statements incorporated by reference to Funding's 1994 Annual
Report.
(a)(3) Exhibits.
See separate Exhibit Index on pages G-1 through G-4.
(b) Reports on Form 8-K filed during the fourth quarter of fiscal
1994.
None.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
J. C. PENNEY FUNDING CORPORATION
(Registrant)
By /s/ D. A. McKay
---------------------
D. A. McKay
Chairman of the Board
Dated: April 17, 1995
7
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Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURES TITLE DATE
---------- ----- ----
<S> <C> <C>
/s/ D. A. McKay
- ------------------------
D. A. McKay Chairman of the Board April 17, 1995
(principal executive
officer); Director
S. F. Walsh*
- ------------------------
S. F. Walsh President April 17, 1995
(principal financial
officer); Director
L. A. Gispanski*
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L. A. Gispanski Controller (principal April 17, 1995
accounting officer);
Director
R. B. Cavanaugh*
- ------------------------
R. B. Cavanaugh Director April 17, 1995
R. E. Northam*
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R. E. Northam Director April 17, 1995
*By /s/ D. A. McKay
--------------------
D. A. McKay
Attorney-in-fact
</TABLE>
8
<PAGE>
EXHIBIT INDEX
Exhibit
3. Articles of Incorporation and Bylaws
(a) Certificate of Incorporation of Funding, effective April 13, 1964
(incorporated by reference to Exhibit 3(a) to Funding's Annual
Report on Form 10-K for the 52 weeks ended January 29, 1994*).
(b) Certificate of Amendment of Certificate of Incorporation, effective
January 1, 1969 (incorporated by reference to Exhibit 3(b) to
Funding's Annual Report on Form 10-K for the 52 weeks ended January
29, 1994*).
(c) Certificate of Amendment of Certificate of Incorporation, effective
August 11, 1987 (incorporated by reference to Exhibit 3(c) to
Funding's Annual Report on Form 10-K for the 52 weeks ended January
29, 1994*).
(d) Certificate of Amendment of Certificate of Incorporation, effective
April 10, 1988 (incorporated by reference to Exhibit 3(d) to
Funding's Annual Report on Form 10-K for the 52 weeks ended January
29, 1994*).
(e) Bylaws of Funding, as amended to September 1, 1976 (incorporated by
reference to Exhibit 3(e) to Funding's Annual Report on Form 10-K for
the 52 weeks ended January 29, 1994*).
4. Instruments defining the rights of security holders, including indentures
(a) Issuing and Paying Agency Agreement dated as of March 16, 1992,
between J. C. Penney Funding Corporation and Morgan Guaranty Trust
Company of New York (incorporated by reference to Exhibit 4(a) to
Funding's Current Report on Form 8-K, Date of Report - April 3,
1992*).
G-1
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EXHIBIT INDEX
Exhibit
(b) Guaranty dated as of February 13, 1992, executed by J. C. Penney
Company, Inc. (incorporated by reference to Exhibit 4(b) to Funding's
Current Report on Form 8-K, Date of Report - April 3, 1992*).
(c) Amendment and Restatement Agreement dated as of December 7, 1994,
relating to the 364-day Revolving Credit Agreement dated as of
December 16, 1993, among J. C. Penney Company, Inc., J. C. Penney
Funding Corporation, the Lenders party thereto, Morgan Guaranty Trust
Company of New York, as Agent for the Lenders, and Bankers Trust
Company, Chemical Bank and Credit Suisse, as Co-Agents for the
Lenders.
(d) Amendment and Restatement Agreement dated as of December 7, 1994,
relating to the five-year Revolving Credit Agreement dated as of
December 16, 1993, among J. C. Penney Company, Inc., J. C. Penney
Funding Corporation, the Lenders party thereto, Morgan Guaranty Trust
Company of New York, as Agent for the Lenders, and Bankers Trust
Company, Chemical Bank and Credit Suisse, as Co-Agents for the
Lenders.
(e) Commercial Paper Dealer Agreement dated March 16, 1992 between J. C.
Penney Funding Corporation and J. P. Morgan Securities Inc.
(incorporated by reference to Exhibit 10(a) to Funding's Current
Report on Form 8-K, Date of Report - April 3, 1992*).
(f) Commercial Paper Dealer Agreement dated March 16, 1992 between J. C.
Penney Funding Corporation and The First Boston Corporation
(incorporated by reference to Exhibit 10(b) to Funding's Current
Report on Form 8-K, Date of Report - April 3, 1992*).
(g) Commercial Paper Dealer Agreement dated May 3, 1994 between J. C.
Penney Funding Corporation and Merrill Lynch Money Markets Inc.
(h) Commercial Paper Dealer Agreement dated January 25, 1995 between J.
C. Penney Funding Corporation and Morgan Stanley & Co., Incorporated.
Instruments evidencing long-term debt, previously issued but now fully
prepaid, have not been filed as exhibits hereto because none of the debt
authorized under any such instrument exceeded 10 percent of the total
assets of the Registrant. The Registrant
G-2
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EXHIBIT INDEX
Exhibit
agrees to furnish a copy of any of its long-term debt instruments to the
Securities and Exchange Commission upon request.
10. Material Contracts
THE CORPORATION HAS NO COMPENSATORY PLANS OR ARRANGEMENTS REQUIRED TO
BE FILED AS EXHIBITS TO THIS REPORT PURSUANT TO ITEM 14(c) OF THIS
REPORT.
(a) Amended and Restated Receivables Agreement dated as of January 29,
1980 between J. C. Penney Company, Inc. and J. C. Penney Financial
Corporation (incorporated by reference to Exhibit 10(a) to Funding's
Annual Report on Form 10-K for the 52 weeks ended January 29, 1994*).
(b) Amendment No. 1 to Amended and Restated Receivables Agreement dated
as of January 25, 1983 between J. C. Penney Company, Inc. and J. C.
Penney Financial Corporation (incorporated by reference to Exhibit
10(b) to Funding's Annual Report on Form 10-K for the 52 weeks ended
January 29, 1994*).
(c) Loan Agreement dated as of January 28, 1986 between J. C. Penney
Company, Inc. and J. C. Penney Financial Corporation (incorporated by
reference to Exhibit 1 to Funding's Current Report on Form 8-K, Date
of Report - January 28, 1986*).
(d) Amendment No. 1 to Loan Agreement dated as of January 28, 1986
between J. C. Penney Company, Inc. and J. C. Penney Financial
Corporation (incorporated by reference to Exhibit 1 to Funding's
Current Report on Form 8-K, Date of Report - December 31, 1986*).
(e) Line of Credit Agreement dated as of July 1, 1994, between J. C.
Penney Funding Corporation and J. C. Penney Chile, Inc.
* SEC file number 1-4947-1
13. Annual Report to Security Holders
Excerpt from Funding's 1994 Annual Report.
23. Consent of Independent Certified Public Accountants
G-3
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EXHIBIT INDEX
Exhibit
24. Power of Attorney
27. Financial Data Schedule
Financial Data Schedule for the 52 week period ended January 28,
1995.
99. Additional Exhibits
Excerpt from JCPenney's 1994 Annual Report to Stockholders.
G-4
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Exhibit 4(c)
CONFORMED COPY
AMENDMENT AND RESTATEMENT AGREEMENT dated as of December 7,
1994 (the "Amendment"), relating to the 364-day Revolving Credit
Agreement dated as of December 16, 1993 (the "Credit Agreement"),
among J. C. PENNEY COMPANY, INC. ("JCPenney"), J. C. PENNEY
FUNDING CORPORATION ("Funding"), the Lenders party thereto,
MORGAN GUARANTY TRUST COMPANY OF NEW YORK, as Agent for the
Lenders, and BANKERS TRUST COMPANY, CHEMICAL BANK and CREDIT
SUISSE, as Co-Agents for the Lenders.
The Borrowers, the Lenders, the Agent and the Co-Agents desire to (i)
amend the Credit Agreement in order to extend the term thereof, revise certain
pricing terms, modify various covenants, reconstitute the Lenders party thereto,
make certain reallocations of Commitments and effect other changes thereto and
(ii) restate the Credit Agreement, as so amended, in each case on the terms and
subject to the conditions hereinafter set forth. Capitalized terms used but not
defined herein shall have the meanings assigned to them in the Credit Agreement.
Accordingly, the Borrowers, the Lenders, the Agent and the Co-Agents
hereby agree as follows:
SECTION 1. Amendment and Restatement of Credit Agreement. On and as
---------------------------------------------
of the Effective Date (as hereinafter defined), the Credit Agreement, including
the Exhibits and Schedules thereto, shall be amended and restated in the form of
Exhibit A to this Amendment.
SECTION 2. Interest and Fees. Notwithstanding the amendment of the
-----------------
Credit Agreement effected hereby, all interest and Fees accruing under the
Credit Agreement at any time prior to the Effective Date shall accrue and be
payable at the rates (including the Facility Fee Percentage and the Standby
Margin) in effect during the applicable periods under the Credit Agreement prior
to the Effective Date and the amendment of the Credit Agreement hereby, and all
interest and Fees accruing under the Credit Agreement on or after the Effective
Date shall accrue and be payable at the rates (including the Facility Fee
Percentage and the Standby Margin) in effect under the Credit Agreement after
giving effect to this Amendment.
<PAGE>
2
SECTION 3. Actions on Effective Date. (a) On the Effective Date, the
-------------------------
Borrowers will prepay, in accordance with Section 2.12 of the Credit Agreement,
except that the Borrower shall not be required to give notice pursuant to
Section 2.12(a), all Standby Loans which are outstanding as of the opening of
business on the Effective Date. Any Standby Loans made on the Effective Date
shall be made by such institutions as are Lenders after giving effect to this
Amendment and shall be allocated among such Lenders in accordance with their
respective Commitments after giving effect to this Amendment.
(b) On the Effective Date, the Borrowers will make payment in full of
all Fees, indemnities and reimbursements, if any, under the Credit Agreement
(including, without limitation, any amounts owed to any Lender by either
Borrower under Section 2.15) which have accrued to the Effective Date and are
owed to any Lender. The Commitment of any Lender which ceases to be a Lender as
a result of this Amendment shall be deemed to have been terminated in full as of
the Effective Date.
(c) On the Effective Date, the Agent and its Affiliates (as
applicable) shall have received for their own accounts all fees due and payable
to them and in such amounts as have been previously agreed upon in writing
between the Borrowers and the Agent in connection with the Credit Agreement as
amended hereunder.
SECTION 4. Effectiveness. This Amendment shall become effective on
-------------
the first Business Day occurring on or after December 7, 1994 (the "Effective
Date") on which each of the following conditions has been satisfied:
(a) Each Borrower, each Lender under the Credit Agreement (including
Lenders which cease to be such or first become such as a result of this
Amendment), the Agent and each Co-Agent shall have executed counterparts
hereof, and each Borrower, each Lender which is a Lender after the
effectiveness of this Amendment ("Restated Agreement Lenders") and the
Agent shall have executed counterparts of Exhibit A hereto, and, in each
case, such executed counterparts shall have been received by the Agent.
(b) The Borrowers shall have performed their obligations under
Section 3 hereof.
<PAGE>
3
(c) The Agent shall have received a certificate from a Responsible
Officer of each Borrower, dated the Effective Date, and certifying that the
representations and warranties set forth in Article III of the Credit
Agreement, as amended and restated hereby (the "Restated Agreement") shall
be true and correct in all material respects on and as of the Effective
Date with the same effect as though made on and as of such date, except to
the extent such representations and warranties expressly relate to an
earlier date.
(d) The Agent shall have received a certificate from a Responsible
Officer of each Borrower, dated the Effective Date, and certifying that on
the Effective Date, the Borrowers shall be in compliance with all the terms
and provisions set forth herein or in the Restated Agreement on its part to
be observed or performed, and no Event of Default or Default shall have
occurred and be continuing.
(e) The Agent shall have received a favorable written opinion of
Charles R. Lotter, General Counsel for the Borrowers, dated the Effective
Date and addressed to the Restated Agreement Lenders, to the effect set
forth in Exhibit B hereto, and the Borrowers hereby instruct such counsel
to deliver such opinion to the Agent.
(f) The Agent shall have received (i) a copy of the certificate or
articles of incorporation, including all amendments thereto, of each
Borrower, certified as of a recent date by the Secretary of State of the
state of its incorporation, and a certificate as to the good standing of
such Borrower as of a recent date, from such Secretary of State; (ii) a
certificate of the Secretary or Assistant Secretary of each Borrower dated
the Effective Date and certifying (A) that attached thereto is a true and
complete copy of the by-laws of such Borrower as in effect on the Effective
Date and at all times since a date prior to the date of the resolutions
described in clause (B) below, (B) that attached thereto is a true and
complete copy of resolutions duly adopted by the Board of Directors of such
Borrower authorizing the execution, delivery and performance of the
Restated Agreement and the borrowings thereunder, and that such resolutions
have not been modified, rescinded or amended and are in full force and
effect, (C) that the certificate or articles
<PAGE>
4
of incorporation of such Borrower have not been amended since the date of
the last amendment thereto shown on the certificate of good standing
furnished pursuant to clause (i) above, and (D) as to the incumbency and
specimen signature of each officer executing this Amendment or the Restated
Agreement or any other document delivered in connection herewith on behalf
of such Borrower and (iii) a certificate of another officer of each
Borrower as to the incumbency and specimen signature of the Secretary or
Assistant Secretary executing the certificate pursuant to (ii) above.
(g) The Agent shall have received a certificate, dated the Effective
Date and signed by a Responsible Officer of each Borrower, confirming
compliance with the conditions precedent set forth in paragraphs (c) and
(d) of this Section.
(h) The Agent shall have received the fully-executed subordinated
Guaranty of the obligations of Funding by JCPenney, dated the Effective
Date, in favor of the Lenders and attached hereto as Exhibit C.
SECTION 5. Applicable Law. THIS AMENDMENT SHALL BE CONSTRUED IN
---------------
ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK.
SECTION 6. Counterparts. This Amendment may be executed in two or
-------------
more counterparts, each of which shall constitute an original, but all of which
when taken together shall constitute but one contract.
SECTION 7. Expenses. The Borrowers agree to reimburse the Agent for
---------
its reasonable out-of-pocket expenses in connection with this Amendment,
including the
<PAGE>
5
reasonable fees, charges and disbursements of Cravath, Swaine & Moore, special
counsel for the Agent.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be duly executed by their respective authorized officers as of the day and year
first written above.
J. C. PENNEY COMPANY, INC.,
by
/s/ Leo A. Gispanski
--------------------------
Name: Leo A. Gispanski
Title: Vice President &
Treasurer
J. C. PENNEY FUNDING CORPORATION,
by
/s/ Donald A. McKay
-------------------------
Name: Donald A. McKay
Title: Chairman of the
Board
MORGAN GUARANTY TRUST COMPANY OF NEW YORK,
individually and as Agent,
by
/s/ Stephen B. King
-------------------------
Name: Stephen B. King
Title: Vice President
<PAGE>
BANKERS TRUST COMPANY, individually and as Co-Agent,
by
/s/ Bruce D. Glasson
------------------------------
Name: Bruce D. Glasson
Title: Managing Director
CHEMICAL BANK, individually and as Co-Agent,
by
/s/ Meredith L. Vanden Handel
------------------------------
Name: Meredith L. Vanden
Handel
Title: Vice President
CREDIT SUISSE, individually and as Co-Agent,
by
/s/ Stephen M. Flynn
------------------------------
Name: Stephen M. Flynn
Title: Member of Senior
Management
by
/s/ Maria N. Gaspara
------------------------------
Name: Maria N. Gaspara
Title: Associate
ABN AMRO BANK N.V.,
by
/s/ Laurie C. Tuzo
------------------------------
Name: Laurie C. Tuzo
Title: Vice President
by
/s/ Ronald A. Mahle
------------------------------
Name: Ronald A. Mahle
Title: Group Vice President
BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION,
by
/s/ Jody B. Schneider
------------------------------
Name: Jody B. Schneider
Title: Vice President
<PAGE>
THE FIRST NATIONAL BANK OF BOSTON,
by
/s/ Bethann R. Halligan
------------------------------
Name: Bethann R. Halligan
Title: Director
BANK OF HAWAII,
by
/s/ Peter S. Ho
------------------------------
Name: Peter S. Ho
Title: Vice President
THE BANK OF NEW YORK,
by
/s/ Gregory L. Batson
------------------------------
Name: Gregory L. Batson
Title: Assistant Vice
President
BANK OF TOKYO, LTD., acting by and through its Dallas
Agency, as a Lender,
by
/s/ John M. Mearns
------------------------------
Name: John M. Mearns
Title: Vice President
BANK ONE, TEXAS, N.A.,
by
/s/ Scott Rhea
------------------------------
Name: Scott Rhea
Title: Banking Officer
BANQUE NATIONALE DE PARIS, Houston Agency,
by
/s/ Henry F. Setina
------------------------------
Name: Henry F. Setina
Title: Vice President
<PAGE>
CIBC, INC.,
by
/s/ David Balderach
------------------------------
Name: David Balderach
Title: Vice President
CITIBANK, N.A.,
by
/s/ Arnold J. Ziegel
------------------------------
Name: Arnold J. Ziegel
Title: Authorized Signer
CREDIT LYONNAIS NEW YORK BRANCH,
by
/s/ Robert Ivosevich
------------------------------
Name: Robert Ivosevich
Title: Senior Vice President
THE DAI-ICHI KANGYO BANK, LTD., NEW YORK BRANCH,
by
/s/ Kiyoshi Miyake
-----------------------------
Name: Kiyoshi Miyake
Title: Vice President and
Group Leader
FIRST INTERSTATE BANK OF CALIFORNIA,
by
/s/ William J. Baird
------------------------------
Name: William J. Baird
Title: Vice President
by
/s/ Wendy V. C. Purcell
------------------------------
Name: Wendy V. C. Purcell
Title: Assistant Vice President
THE FIRST NATIONAL BANK OF CHICAGO,
by
/s/ Ted Wozniak
------------------------------
Name: Ted Wozniak
Title: Vice President
<PAGE>
FIRST SECURITY BANK OF UTAH, N.A.,
by
/s/ Stephen L. Goalen
-----------------------------
Name: Stephen L. Goalen
Title: Senior Vice President
FIRST UNION NATIONAL BANK OF NORTH CAROLINA,
by
/s/ A. Kimball Collins
------------------------------
Name: A. Kimball Collins
Title: Assistant Vice President
FIRSTAR BANK MILWAUKEE, N.A.,
by
/s/ Timothy W. Somers
------------------------------
Name: Timothy W. Somers
Title: Assistant Vice President
THE FUJI BANK, LIMITED, Houston Agency,
by
/s/ David Kelley
------------------------------
Name: David Kelley
Title: Vice President and
Senior Manager
INDUSTRIAL BANK OF JAPAN TRUST COMPANY,
by
/s/ Takeshi Kawano
------------------------------
Name: Takeshi Kawano
Title: Senior Vice President
and Senior Manager
THE LONG-TERM CREDIT BANK OF JAPAN, LIMITED, New York
Branch,
by
/s/ Satoru Otsubo
------------------------------
Name: Satoru Otsubo
Title: Joint General Manager
<PAGE>
MELLON BANK, N.A.,
by
/s/ Lisa M. Pellow
------------------------------
Name: Lisa M. Pellow
Title: Vice President
THE MITSUBISHI BANK, LIMITED,
by
/s/ Shoji Honda
------------------------------
Name: Shoji Honda
Title: General Manager
NATIONAL WESTMINSTER BANK PLC, New York Branch,
by
/s/ Stephen R. Parker
------------------------------
Name: Stephen R. Parker
Title: Vice President
NATIONAL WESTMINSTER BANK PLC, Nassau Branch,
by
/s/ Stephen R. Parker
------------------------------
Name: Stephen R. Parker
Title: Vice President
NATIONSBANK OF TEXAS, N.A.,
by
/s/ Sharon L. McCarty
------------------------------
Name: Sharon L. McCarty
Title: Assistant Vice President
NBD BANK, N.A.
by
/s/ D. Andrew Bateman
------------------------------
Name: D. Andrew Bateman
Title: First Vice President
THE NORTHERN TRUST COMPANY,
by
/s/ Sara Clissold
------------------------------
Name: Sara Clissold
Title: Officer
<PAGE>
NORWEST BANK MINNESOTA, N.A.,
by
/s/ Perry G. Pelos
------------------------------
Name: Perry G. Pelos
Title: Vice President
PNC BANK, NATIONAL ASSOCIATION,
by
/s/ Gregory T. Gaschler
------------------------------
Name: Gregory T. Gaschler
Title: Vice President
ROYAL BANK OF CANADA,
by
/s/ Everett M. Harner
------------------------------
Name: Everett M. Harner
Title: Manager
ISTITUTO BANCARIO SAN PAOLO DI TORINO, SpA,
by
/s/ William J. DeAngelo
------------------------------
Name: William J. DeAngelo
Title: First Vice President
by
/s/ Robert S. Wurster
------------------------------
Name: Robert S. Wurster
Title: First Vice President
THE SANWA BANK LIMITED, Dallas Agency,
by
/s/ Robert S. Smith
------------------------------
Name: Robert S. Smith
Title: Assistant Vice President
SOCIETE GENERALE, Southwest Agency,
by
/s/ Louis P. Laville, III
------------------------------
Name: Louis P. Laville, III
Title: Vice President
<PAGE>
THE SUMITOMO BANK, LTD., Houston Agency,
by
/s/ Tatsuo Ueda
------------------------------
Name: Tatsuo Ueda
Title: General Manager
SUNBANK, NATIONAL ASSOCIATION,
by
/s/ J. Carol Doyle
------------------------------
Name: J. Carol Doyle
Title: First Vice President
SWISS BANK CORPORATION, Cayman Islands Branch,
by
/s/ Nancy A. Russell
------------------------------
Name: Nancy A. Russell
Title: Associate Director
by
/s/ William A. McDonnell
------------------------------
Name: William A. McDonnell
Title: Associate Director
UNION BANK OF SWITZERLAND, Houston Agency,
by
/s/ Dan O. Boyle
------------------------------
Name: Dan O. Boyle
Title: Vice President
by
/s/ Jean Claude de Roche
------------------------------
Name: Jean Claude de Roche
Title: Assistant Vice President
UNITED MISSOURI BANK, N.A.,
by
/s/ Walter Beck, Jr.
------------------------------
Name: Walter Beck, Jr.
Title: Executive Vice President
<PAGE>
UNITED STATES NATIONAL BANK OF OREGON,
by
/s/ Blake R. Howells
------------------------------
Name: Blake R. Howells
Title: Assistant Vice President
WACHOVIA BANK OF GEORGIA, N.A.,
by
/s/ Douglas L. Williams
------------------------------
Name: Douglas L. Williams
Title: Senior Vice President
<PAGE>
5
reasonable fees, charges and disbursements of Cravath, Swaine & Moore, special
counsel for the Agent.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be duly executed by their respective authorized officers as of the day and year
first written above.
J. C. PENNEY COMPANY, INC.,
by
/s/ Leo A. Gispanski
--------------------------
Name: Leo A. Gispanski
Title: Vice President &
Treasurer
J. C. PENNEY FUNDING CORPORATION,
by
/s/ Donald A. McKay
-------------------------
Name: Donald A. McKay
Title: Chairman of the
Board
MORGAN GUARANTY TRUST COMPANY OF NEW YORK,
individually and as Agent,
by
/s/
-------------------------
Name: Stephen B. King
Title: Vice President
<PAGE>
5
reasonable fees, charges and disbursements of Cravath, Swaine & Moore, special
counsel for the Agent.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be duly executed by their respective authorized officers as of the day and year
first written above.
J. C. PENNEY COMPANY, INC.,
by
/s/
--------------------------
Name: Leo A. Gispanski
Title: Vice President &
Treasurer
J. C. PENNEY FUNDING CORPORATION,
by
/s/
-------------------------
Name: Donald A. McKay
Title: Chairman of the
Board
MORGAN GUARANTY TRUST COMPANY OF NEW YORK,
individually and as Agent,
by
/s/ Stephen B. King
-------------------------
Name: Stephen B. King
Title: Vice President
<PAGE>
BANKERS TRUST COMPANY, individually and as Co-Agent,
by
/s/ Bruce D. Glasson
------------------------------
Name: Bruce D. Glasson
Title: Managing Director
CHEMICAL BANK, individually and as Co-Agent,
by
/s/
------------------------------
Name: Meredith L. Vanden
Handel
Title: Vice President
CREDIT SUISSE, individually and as Co-Agent,
by
------------------------------
Name:
Title:
by
------------------------------
Name:
Title:
ABN AMRO BANK N.V.,
by
------------------------------
Name:
Title:
by
------------------------------
Name:
Title:
BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION,
by
------------------------------
Name: Jody B. Schneider
Title: Vice President
<PAGE>
BANKERS TRUST COMPANY, individually and as Co-Agent,
by
------------------------------
Name:
Title:
CHEMICAL BANK, individually and as Co-Agent,
by
/s/ Meredith L. Vanden Handel
------------------------------
Name: Meredith L. Vanden
Handel
Title: Vice President
CREDIT SUISSE, individually and as Co-Agent,
by
------------------------------
Name:
Title:
by
------------------------------
Name:
Title:
ABN AMRO BANK N.V.,
by
------------------------------
Name:
Title:
by
------------------------------
Name:
Title:
BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION,
by
------------------------------
Name: Jody B. Schneider
Title: Vice President
<PAGE>
BANKERS TRUST COMPANY, individually and as Co-Agent,
by
------------------------------
Name:
Title:
CHEMICAL BANK, individually and as Co-Agent,
by
------------------------------
Name: Meredith L. Vanden
Handel
Title: Vice President
CREDIT SUISSE, individually and as Co-Agent,
by
/s/ Stephen M. Flynn
------------------------------
Name: Stephen M. Flynn
Title: Member of Senior
Management
by
/s/ Maria N. Gaspara
------------------------------
Name: Maria N. Gaspara
Title: Associate
ABN AMRO BANK N.V.,
by
------------------------------
Name:
Title:
by
------------------------------
Name:
Title:
BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION,
by
------------------------------
Name: Jody B. Schneider
Title: Vice President
<PAGE>
BANKERS TRUST COMPANY, individually and as Co-Agent,
by
------------------------------
Name:
Title:
CHEMICAL BANK, individually and as Co-Agent,
by
------------------------------
Name: Meredith L. Vanden
Handel
Title: Vice President
CREDIT SUISSE, individually and as Co-Agent,
by
------------------------------
Name:
Title:
by
------------------------------
Name:
Title:
ABN AMRO BANK N.V.,
by
/s/ Laurie C. Tuzo
------------------------------
Name: Laurie C. Tuzo
Title: Vice President
by
/s/ Ronald A. Mahle
------------------------------
Name: Ronald A. Mahle
Title: Group Vice President
BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION,
by
------------------------------
Name: Jody B. Schneider
Title: Vice President
<PAGE>
BANKERS TRUST COMPANY, individually and as Co-Agent,
by
------------------------------
Name:
Title:
CHEMICAL BANK, individually and as Co-Agent,
by
------------------------------
Name: Meredith L. Vanden
Handel
Title: Vice President
CREDIT SUISSE, individually and as Co-Agent,
by
------------------------------
Name:
Title:
by
------------------------------
Name:
Title:
ABN AMRO BANK N.V.,
by
------------------------------
Name:
Title:
by
------------------------------
Name:
Title:
BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION,
by
/s/ Jody B. Schneider
------------------------------
Name: Jody B. Schneider
Title: Vice President
<PAGE>
THE FIRST NATIONAL BANK OF BOSTON,
by
/s/ Bethann R. Halligan
------------------------------
Name: Bethann R. Halligan
Title: Director
BANK OF HAWAII,
by
------------------------------
Name:
Title:
THE BANK OF NEW YORK,
by
------------------------------
Name:
Title:
BANK OF TOKYO, LTD., acting by and through its Dallas
Agency, as a Lender,
by
------------------------------
Name: John M. Mearns
Title: Vice President
BANK ONE, TEXAS, N.A.,
by
------------------------------
Name:
Title:
BANQUE NATIONALE DE PARIS, Houston Agency,
by
------------------------------
Name: Henry F. Setina
Title: Vice President
CIBC, INC.,
by
------------------------------
Name:
Title:
<PAGE>
THE FIRST NATIONAL BANK OF BOSTON,
by
------------------------------
Name:
Title:
BANK OF HAWAII,
by
/s/ Peter S. Ho
------------------------------
Name: Peter S. Ho
Title: Vice President
THE BANK OF NEW YORK,
by
------------------------------
Name:
Title:
President
BANK OF TOKYO, LTD., acting by and through its Dallas
Agency, as a Lender,
by
------------------------------
Name: John M. Mearns
Title: Vice President
BANK ONE, TEXAS, N.A.,
by
------------------------------
Name:
Title:
BANQUE NATIONALE DE PARIS, Houston Agency,
by
------------------------------
Name: Henry F. Setina
Title: Vice President
CIBC, INC.,
by
------------------------------
Name:
Title:
<PAGE>
THE FIRST NATIONAL BANK OF BOSTON,
by
------------------------------
Name:
Title:
BANK OF HAWAII,
by
------------------------------
Name:
Title:
THE BANK OF NEW YORK,
by
/s/ Gregory L. Batson
------------------------------
Name: Gregory L. Batson
Title: Assistant Vice
President
BANK OF TOKYO, LTD., acting by and through its Dallas
Agency, as a Lender,
by
------------------------------
Name: John M. Mearns
Title: Vice President
BANK ONE, TEXAS, N.A.,
by
------------------------------
Name:
Title:
BANQUE NATIONALE DE PARIS, Houston Agency,
by
------------------------------
Name: Henry F. Setina
Title: Vice President
CIBC, INC.,
by
-----------------------------
Name:
Title:
<PAGE>
THE FIRST NATIONAL BANK OF BOSTON,
by
------------------------------
Name:
Title:
BANK OF HAWAII,
by
------------------------------
Name:
Title:
THE BANK OF NEW YORK,
by
------------------------------
Name:
Title:
BANK OF TOKYO, LTD., acting by and through its Dallas
Agency, as a Lender,
by
/s/ John M. Mearns
------------------------------
Name: John M. Mearns
Title: Vice President
BANK ONE, TEXAS, N.A.,
by
------------------------------
Name:
Title:
BANQUE NATIONALE DE PARIS, Houston Agency,
by
------------------------------
Name: Henry F. Setina
Title: Vice President
CIBC, INC.,
by
------------------------------
Name:
Title:
<PAGE>
THE FIRST NATIONAL BANK OF BOSTON,
by
------------------------------
Name:
Title:
BANK OF HAWAII,
by
------------------------------
Name:
Title:
THE BANK OF NEW YORK,
by
------------------------------
Name:
Title:
BANK OF TOKYO, LTD., acting by and through its Dallas
Agency, as a Lender,
by
------------------------------
Name: John M. Mearns
Title: Vice President
BANK ONE, TEXAS, N.A.,
by
/s/ Scott Rhea
------------------------------
Name: Scott Rhea
Title: Banking Officer
BANQUE NATIONALE DE PARIS, Houston Agency,
by
------------------------------
Name:
Title:
CIBC, INC.,
by
------------------------------
Name:
Title:
<PAGE>
THE FIRST NATIONAL BANK OF BOSTON,
by
------------------------------
Name:
Title:
BANK OF HAWAII,
by
------------------------------
Name:
Title:
THE BANK OF NEW YORK,
by
------------------------------
Name:
Title:
BANK OF TOKYO, LTD., acting by and through its Dallas
Agency, as a Lender,
by
------------------------------
Name: John M. Mearns
Title: Vice President
BANK ONE, TEXAS, N.A.,
by
------------------------------
Name:
Title:
BANQUE NATIONALE DE PARIS, Houston Agency,
by
/s/ Henry F. Setina
------------------------------
Name: Henry F. Setina
Title: Vice President
CIBC, INC.,
by
------------------------------
Name:
Title:
<PAGE>
THE FIRST NATIONAL BANK OF BOSTON,
by
------------------------------
Name:
Title:
BANK OF HAWAII,
by
------------------------------
Name:
Title:
THE BANK OF NEW YORK,
by
------------------------------
Name:
Title:
BANK OF TOKYO, LTD., acting by and through its Dallas
Agency, as a Lender,
by
------------------------------
Name: John M. Mearns
Title: Vice President
BANK ONE, TEXAS, N.A.,
by
------------------------------
Name:
Title:
BANQUE NATIONALE DE PARIS, Houston Agency,
by
------------------------------
Name: Henry F. Setina
Title: Vice President
CIBC, INC.,
by
/s/ David Balderach
------------------------------
Name: David Balderach
Title: Vice President
<PAGE>
CITIBANK, N.A.,
by
/s/ Arnold J. Ziegel
------------------------------
Name: Arnold J. Ziegel
Title: Authorized Signer
CREDIT LYONNAIS NEW YORK BRANCH,
by
------------------------------
Name:
Title:
THE DAI-ICHI KANGYO BANK, LTD., NEW YORK BRANCH,
by
-----------------------------
Name: Kiyoshi Miyake
Title:
FIRST INTERSTATE BANK OF CALIFORNIA,
by
------------------------------
Name:
Title:
THE FIRST NATIONAL BANK OF CHICAGO,
by
------------------------------
Name: Ted Wozniak
Title: Vice President
FIRST SECURITY BANK OF UTAH, N.A.,
by
------------------------------
Name:
Title:
<PAGE>
CITIBANK, N.A.,
by
------------------------------
Name:
Title:
CREDIT LYONNAIS NEW YORK BRANCH,
by
/s/ Robert Ivosevich
------------------------------
Name: Robert Ivosevich
Title: Senior Vice President
THE DAI-ICHI KANGYO BANK, LTD., NEW YORK BRANCH,
by
-----------------------------
Name: Kiyoshi Miyake
Title:
FIRST INTERSTATE BANK OF CALIFORNIA,
by
------------------------------
Name:
Title:
THE FIRST NATIONAL BANK OF CHICAGO,
by
------------------------------
Name: Ted Wozniak
Title: Vice President
FIRST SECURITY BANK OF UTAH, N.A.,
by
------------------------------
Name:
Title:
<PAGE>
CITIBANK, N.A.,
by
------------------------------
Name:
Title:
CREDIT LYONNAIS NEW YORK BRANCH,
by
------------------------------
Name:
Title:
THE DAI-ICHI KANGYO BANK, LTD., NEW YORK BRANCH,
by
/s/ Kiyoshi Miyake
-----------------------------
Name: Kiyoshi Miyake
Title: Vice President and Group Leader
FIRST INTERSTATE BANK OF CALIFORNIA,
by
------------------------------
Name:
Title:
THE FIRST NATIONAL BANK OF CHICAGO,
by
------------------------------
Name: Ted Wozniak
Title: Vice President
FIRST SECURITY BANK OF UTAH, N.A.,
by
------------------------------
Name:
Title:
<PAGE>
CITIBANK, N.A.,
by
------------------------------
Name:
Title:
CREDIT LYONNAIS NEW YORK BRANCH,
by
------------------------------
Name:
Title:
THE DAI-ICHI KANGYO BANK, LTD., NEW YORK BRANCH,
by
-----------------------------
Name: Kiyoshi Miyake
Title:
FIRST INTERSTATE BANK OF CALIFORNIA,
by
/s/ William J. Baird
------------------------------
Name: William J. Baird
Title: Vice President
by
/s/ Wendy V. C. Purcell
------------------------------
Name: Wendy V. C. Purcell
Title: Assistant Vice President
THE FIRST NATIONAL BANK OF CHICAGO,
by
------------------------------
Name: Ted Wozniak
Title: Vice President
FIRST SECURITY BANK OF UTAH, N.A.,
by
------------------------------
Name:
Title:
<PAGE>
CITIBANK, N.A.,
by
------------------------------
Name:
Title:
CREDIT LYONNAIS NEW YORK BRANCH,
by
------------------------------
Name:
Title:
THE DAI-ICHI KANGYO BANK, LTD., NEW YORK BRANCH,
by
-----------------------------
Name: Kiyoshi Miyake
Title:
FIRST INTERSTATE BANK OF CALIFORNIA,
by
------------------------------
Name:
Title:
THE FIRST NATIONAL BANK OF CHICAGO,
by
/s/ Ted Wozniak
------------------------------
Name: Ted Wozniak
Title: Vice President
FIRST SECURITY BANK OF UTAH, N.A.,
by
------------------------------
Name:
Title:
<PAGE>
CITIBANK, N.A.,
by
-----------------------------
Name:
Title:
CREDIT LYONNAIS NEW YORK BRANCH, LTD., NEW YORK BRANCH,
by
------------------------------
Name:
Title:
THE DAI-ICHI KANGYO BANK
by
------------------------------
Name: Kiyoshi Miyake
Title:
FIRST INTERSTATE BANK OF CALIFORNIA,
by
------------------------------
Name:
Title:
THE FIRST NATIONAL BANK OF CHICAGO,
by
------------------------------
Name: Ted Wozniak
Title: Vice President
FIRST SECURITY BANK OF UTAH, N.A.
by
/s/ Stephen L. Goalen
------------------------------
Name: Stephen L. Goalen
Title: Senior Vice President
<PAGE>
FIRST UNION NATIONAL BANK OF NORTH CAROLINA,
by
/s/ A. Kimball Collins
------------------------------
Name: A. Kimball Collins
Title: Assistant Vice President
FIRSTAR BANK MILWAUKEE, N.A.,
by
------------------------------
Name: Timothy W. Somers
Title: Assistant Vice President
THE FUJI BANK, LIMITED, Houston Agency,
by
------------------------------
Name:
Title:
INDUSTRIAL BANK OF JAPAN TRUST COMPANY,
by
------------------------------
Name:
Title:
THE LONG-TERM CREDIT BANK OF JAPAN, LIMITED, New York
Branch,
by
------------------------------
Name:
Title:
MELLON BANK, N.A.,
by
------------------------------
Name:
Title:
<PAGE>
FIRST UNION NATIONAL BANK OF NORTH CAROLINA,
by
------------------------------
Name:
Title:
by
------------------------------
Name:
Title:
FIRSTAR BANK MILWAUKEE, N.A.,
by
/s/ Timothy W. Somers
------------------------------
Name: Timothy W. Somers
Title: Assistant Vice President
THE FUJI BANK, LIMITED, Houston Agency,
by
------------------------------
Name:
Title:
INDUSTRIAL BANK OF JAPAN TRUST COMPANY,
by
------------------------------
Name:
Title:
THE LONG-TERM CREDIT BANK OF JAPAN, LIMITED, New York
Branch,
by
------------------------------
Name:
Title:
MELLON BANK, N.A.,
by
------------------------------
Name:
Title:
<PAGE>
FIRST UNION NATIONAL BANK OF NORTH CAROLINA,
by
------------------------------
Name:
Title:
by
------------------------------
Name:
Title:
FIRSTAR BANK MILWAUKEE, N.A.,
by
------------------------------
Name: Timothy W. Somers
Title: Assistant Vice President
THE FUJI BANK, LIMITED, Houston Agency,
by
/s/ David Kelley
------------------------------
Name: David Kelley
Title: Vice President & Senior Management
INDUSTRIAL BANK OF JAPAN TRUST COMPANY,
by
------------------------------
Name:
Title:
THE LONG-TERM CREDIT BANK OF JAPAN, LIMITED, New York
Branch,
by
------------------------------
Name:
Title:
MELLON BANK, N.A.,
by
------------------------------
Name:
Title:
<PAGE>
FIRST UNION NATIONAL BANK OF NORTH CAROLINA,
by
------------------------------
Name:
Title:
by
------------------------------
Name:
Title:
FIRSTAR BANK MILWAUKEE, N.A.,
by
------------------------------
Name: Timothy W. Somers
Title: Assistant Vice President
THE FUJI BANK, LIMITED, Houston Agency,
by
------------------------------
Name:
Title:
INDUSTRIAL BANK OF JAPAN TRUST COMPANY,
by
/s/ Takeshi Kawano
------------------------------
Name: Takeshi Kawano
Title: Senior Vice President &
Senior Management
THE LONG-TERM CREDIT BANK OF JAPAN, LIMITED, New York
Branch,
by
------------------------------
Name:
Title:
MELLON BANK, N.A.,
by
------------------------------
Name:
Title:
<PAGE>
FIRST UNION NATIONAL BANK OF NORTH CAROLINA,
by
------------------------------
Name:
Title:
by
------------------------------
Name:
Title:
FIRSTAR BANK MILWAUKEE, N.A.,
by
------------------------------
Name: Timothy W. Somers
Title: Assistant Vice President
THE FUJI BANK, LIMITED, Houston Agency,
by
------------------------------
Name:
Title:
INDUSTRIAL BANK OF JAPAN TRUST COMPANY,
by
------------------------------
Name:
Title:
THE LONG-TERM CREDIT BANK OF JAPAN, LIMITED, New York
Branch,
by
/s/ Satoru Otsubo
------------------------------
Name: Satoru Otsubo
Title: Joint General Manager
MELLON BANK, N.A.,
by
------------------------------
Name:
Title:
<PAGE>
FIRST UNION NATIONAL BANK OF NORTH
CAROLINA,
by
------------------------------
Name:
Title:
by
------------------------------
Name:
Title:
FIRSTAR BANK MILWAUKEE, N.A.,
by
------------------------------
Name: Timothy W. Somers
Title: Assistant Vice President
THE FUJI BANK, LIMITED, Huston
Agency,
by
------------------------------
Name:
Title:
INDUSTRIAL BANK OF JAPAN TRUST
COMPANY,
by
------------------------------
Name:
Title:
THE LONG-TERM CREDIT BANK OF JAPAN,
LIMITED, New York Branch,
by
------------------------------
Name:
Title:
MELLON BANK, N.A.,
by
/s/ Lisa M. Pellow
------------------------------
Name: Lisa M. Pellow
Title: Vice President
<PAGE>
THE MITSUBISHI BANK, LIMITED,
by
/s/ Shoji Honda
------------------------------
Name: Shoji Honda
Title: General Manager
NATIONAL WESTMINSTER BANK PLC, New York Branch,
by
------------------------------
Name: David L. Smith
Title: Vice President
NATIONAL WESTMINSTER BANK PLC, Nassau Branch,
by
------------------------------
Name: David L. Smith
Title: Vice President
NATIONSBANK OF TEXAS, N.A.,
by
------------------------------
Name:
Title:
NBD BANK, N.A.
by
------------------------------
Name:
Title:
by
------------------------------
Name: William J. McCaffrey
Title: Second Vice President
THE NORTHERN TRUST COMPANY,
by
------------------------------
Name: Martin G. Alston
Title: Vice president
<PAGE>
THE MITSUBISHI BANK, LIMITED,
by
------------------------------
Name:
Title:
NATIONAL WESTMINSTER BANK PLC, New York Branch,
by
/s/ Stephen R. Parker
------------------------------
Name: Stephen R. Parker
Title: Vice President
NATIONAL WESTMINSTER BANK PLC, Nassau Branch,
by
/s/ Stephen R. Parker
------------------------------
Name: Stephen R. Parker
Title: Vice President
NATIONSBANK OF TEXAS, N.A.,
by
------------------------------
Name:
Title:
NBD BANK, N.A.
by
------------------------------
Name:
Title:
by
------------------------------
Name: William J. McCaffrey
Title: Second Vice President
THE NORTHERN TRUST COMPANY,
by
------------------------------
Name: Martin G. Alston
Title: Vice president
<PAGE>
THE MITSUBISHI BANK, LIMITED,
by
------------------------------
Name:
Title:
NATIONAL WESTMINSTER BANK PLC, New York Branch,
by
------------------------------
Name: David L. Smith
Title: Vice President
NATIONAL WESTMINSTER BANK PLC, Nassau Branch,
by
------------------------------
Name: David L. Smith
Title: Vice President
NATIONSBANK OF TEXAS, N.A.,
by
/s/ Sharon L. McCarty
------------------------------
Name: Sharon L. McCarty
Title: Assistant Vice President
NBD BANK, N.A.
by
------------------------------
Name:
Title:
by
------------------------------
Name: William J. McCaffrey
Title: Second Vice President
THE NORTHERN TRUST COMPANY,
by
------------------------------
Name: Martin G. Alston
Title: Vice president
<PAGE>
THE MITSUBISHI BANK, LIMITED,
by
------------------------------
Name:
Title:
NATIONAL WESTMINSTER BANK PLC, New York Branch,
by
------------------------------
Name: David L. Smith
Title: Vice President
NATIONAL WESTMINSTER BANK PLC, Nassau Branch,
by
------------------------------
Name: David L. Smith
Title: Vice President
NATIONSBANK OF TEXAS, N.A.,
by
------------------------------
Name:
Title:
NBD BANK, N.A.
by
/s/ D. Andrew Bateman
------------------------------
Name: D. Andrew Bateman
Title: First Vice President
by
------------------------------
Name: William J. McCaffrey
Title: Second Vice President
THE NORTHERN TRUST COMPANY,
by
------------------------------
Name: Martin G. Alston
Title: Vice president
<PAGE>
THE MITSUBISHI BANK, LIMITED,
by
------------------------------
Name:
Title:
NATIONAL WESTMINSTER BANK PLC, New York Branch,
by
------------------------------
Name: David L. Smith
Title: Vice President
NATIONAL WESTMINSTER BANK PLC, Nassau Branch,
by
------------------------------
Name: David L. Smith
Title: Vice President
NATIONSBANK OF TEXAS, N.A.,
by
------------------------------
Name:
Title:
NBD BANK, N.A.
by
------------------------------
Name:
Title:
by
------------------------------
Name: William J. McCaffrey
Title: Second Vice President
THE NORTHERN TRUST COMPANY,
by
/s/ Sara Clissold for Martin Alston
------------------------------
Name: Martin G. Alston
Title: Vice president
<PAGE>
NORWEST BANK MINNESOTA, N.A.,
by
/s/ Perry G. Pelos
------------------------------
Name: Perry G. Pelos
Title: Vice President
PNC BANK, NATIONAL ASSOCIATION,
by
------------------------------
Name:
Title:
ROYAL BANK OF CANADA,
by
------------------------------
Name:
Title:
ISTITUTO BANCARIO SAN PAOLO DI
TORINO, SpA,
by
------------------------------
Name:
Title:
by
------------------------------
Name: Robert S. Wurster
Title: First Vice President
THE SANWA BANK LIMITED, Dallas Agency,
by
------------------------------
Name: Robert S. Smith
Title: Assistant Vice President
SOCIETE GENERALE, Southwest Agency,
by
------------------------------
Name: Louis P. Laville, III
Title: Vice President
<PAGE>
NORWEST BANK MINNESOTA, N.A.,
by
------------------------------
Name:
Title:
PNC BANK, NATIONAL ASSOCIATION,
by
/s/ Gregory T. Gaschler
------------------------------
Name: Gregory T. Gaschler
Title: Vice President
ROYAL BANK OF CANADA,
by
------------------------------
Name:
Title:
ISTITUTO BANCARIO SAN PAOLO DI
TORINO, SpA,
by
------------------------------
Name:
Title:
by
------------------------------
Name: Robert S. Wurster
Title: First Vice President
THE SANWA BANK LIMITED, Dallas Agency,
by
------------------------------
Name: Robert S. Smith
Title: Assistant Vice President
SOCIETE GENERALE, Southwest Agency,
by
------------------------------
Name: Louis P. Laville, III
Title: Vice President
<PAGE>
NORWEST BANK MINNESOTA, N.A.,
by
------------------------------
Name:
Title:
PNC BANK, NATIONAL ASSOCIATION,
by
------------------------------
Name:
Title:
ROYAL BANK OF CANADA,
by
/s/ E. M. Harner
------------------------------
Name: E. M. Harner
Title: Manager
ISTITUTO BANCARIO SAN PAOLO DI
TORINO, SpA,
by
------------------------------
Name:
Title:
by
------------------------------
Name: Robert S. Wurster
Title: First Vice President
THE SANWA BANK LIMITED, Dallas Agency,
by
------------------------------
Name: Robert S. Smith
Title: Assistant Vice President
SOCIETE GENERALE, Southwest Agency,
by
------------------------------
Name: Louis P. Laville, III
Title: Vice President
<PAGE>
NORWEST BANK MINNESOTA, N.A.,
by
------------------------------
Name:
Title:
PNC BANK, NATIONAL ASSOCIATION,
by
------------------------------
Name:
Title:
ROYAL BANK OF CANADA,
by
------------------------------
Name:
Title:
ISTITUTO BANCARIO SAN PAOLO DI
TORINO, SpA,
by
/s/ William J. DeAngelo
------------------------------
Name: William J. DeAngelo
Title: First Vice President
by
------------------------------
Name: Robert S. Wurster
Title: First Vice President
THE SANWA BANK LIMITED, Dallas
Agency,
by
------------------------------
Name: Robert S. Smith
Title: Assistant Vice President
SOCIETE GENERALE, Southwest Agency,
by
------------------------------
Name: Louis P. Laville, III
Title: Vice President
<PAGE>
NORWEST BANK MINNESOTA, N.A.,
by
------------------------------
Name:
Title:
PNC BANK, NATIONAL ASSOCIATION,
by
------------------------------
Name:
Title:
ROYAL BANK OF CANADA,
by
------------------------------
Name:
Title:
ISTITUTO BANCARIO SAN PAOLO DI
TORINO, SpA,
by
------------------------------
Name:
Title:
by
------------------------------
Name: Robert S. Wurster
Title: First Vice President
THE SANWA BANK LIMITED, Dallas
Agency,
by
/s/ Robert S. Smith
------------------------------
Name: Robert S. Smith
Title: Assistant Vice President
SOCIETE GENERALE, Southwest Agency,
by
------------------------------
Name: Louis P. Laville, III
Title: Vice President
<PAGE>
NORWEST BANK MINNESOTA, N.A.,
by
------------------------------
Name:
Title:
PNC BANK, NATIONAL ASSOCIATION,
by
------------------------------
Name:
Title:
ROYAL BANK OF CANADA,
by
------------------------------
Name:
Title:
ISTITUTO BANCARIO SAN PAOLO DI
TORINO, SpA,
by
------------------------------
Name:
Title:
by
------------------------------
Name: Robert S. Wurster
Title: First Vice President
THE SANWA BANK LIMITED, Dallas
Agency,
by
------------------------------
Name: Robert S. Smith
Title: Assistant Vice President
SOCIETE GENERALE, Southwest Agency,
by
/s/ Louis P. Laville, III
------------------------------
Name: Louis P. Laville, III
Title: Vice President
<PAGE>
THE SUMITOMO BANK, LTD., Houston Agency,
by
/s/ Tatsuo Ueda
------------------------------
Name: Tatsuo Ueda
Title: General Manager
SUNBANK, NATIONAL ASSOCIATION,
by
------------------------------
Name:
Title:
SWISS BANK CORPORATION, Cayman
Islands Branch,
by
------------------------------
Name:
Title:
by
------------------------------
Name:
Title:
UNION BANK OF SWITZERLAND,
Houston Agency,
by
------------------------------
Name:
Title:
by
------------------------------
Name:
Title:
UNITED MISSOURI BANK, N.A.,
by
------------------------------
Name: Walter Beck, Jr.
Title: Executive Vice President
<PAGE>
THE SUMITOMO BANK, LTD., Houston Agency,
by
------------------------------
Name:
Title:
SUNBANK, NATIONAL ASSOCIATION,
by
/s/ J. Carol Doyle
------------------------------
Name: J. Carol Doyle
Title: First Vice President
SWISS BANK CORPORATION, Cayman
Islands Branch,
by
------------------------------
Name:
Title:
by
------------------------------
Name:
Title:
UNION BANK OF SWITZERLAND,
Houston Agency,
by
------------------------------
Name:
Title:
by
------------------------------
Name:
Title:
UNITED MISSOURI BANK, N.A.,
by
------------------------------
Name: Walter Beck, Jr.
Title: Executive Vice President
<PAGE>
THE SUMITOMO BANK, LTD., Houston Agency,
by
------------------------------
Name:
Title:
SUNBANK, NATIONAL ASSOCIATION,
by
------------------------------
Name:
Title:
SWISS BANK CORPORATION
by
/s/ Nancy A. Russell
------------------------------
Name: Nancy A. Russell
Title: Associate Director
Merchant Banking
by
/s/ William A. McDonnell
------------------------------
Name: William A. McDonnell
Title: Associate Director
Merchant Banking
UNION BANK OF SWITZERLAND,
Houston Agency,
by
------------------------------
Name:
Title:
by
------------------------------
Name:
Title:
UNITED MISSOURI BANK, N.A.,
by
------------------------------
Name: Walter Beck, Jr.
Title: Executive Vice President
<PAGE>
THE SUMITOMO BANK, LTD., Houston Agency,
by
------------------------------
Name:
Title:
SUNBANK, NATIONAL ASSOCIATION,
by
------------------------------
Name:
Title:
SWISS BANK CORPORATION, Cayman
Islands Branch,
by
------------------------------
Name:
Title:
by
------------------------------
Name:
Title:
UNION BANK OF SWITZERLAND,
Houston Agency,
by
------------------------------
Name: Dan O. Boyle
Title: Vice President
by
/s/ Jean Claude de Roche
------------------------------
Name: Jean Claude de Roche
Title: Assistant Vice President
UNITED MISSOURI BANK, N.A.,
by
------------------------------
Name: Walter Beck, Jr.
Title: Executive Vice President
<PAGE>
THE SUMITOMO BANK, LTD., Houston Agency,
by
------------------------------
Name:
Title:
SUNBANK, NATIONAL ASSOCIATION,
by
------------------------------
Name:
Title:
SWISS BANK CORPORATION, Cayman
Islands Branch,
by
------------------------------
Name:
Title:
by
------------------------------
Name:
Title:
UNION BANK OF SWITZERLAND,
Houston Agency,
by
------------------------------
Name:
Title:
by
------------------------------
Name:
Title:
UNITED MISSOURI BANK, N.A.,
by
/s/ Walter Beck, Jr.
------------------------------
Name: Walter Beck, Jr.
Title: Executive Vice President
<PAGE>
UNITED STATES NATIONAL BANK OF OREGON,
by
/s/ Blake R. Howells
------------------------------
Name: Blake R. Howells
Title: Assistant Vice President
WACHOVIA BANK OF GEORGIA, N.A.,
by
------------------------------
Name:
Title:
<PAGE>
UNITED STATES NATIONAL BANK OF OREGON,
by
------------------------------
Name:
Title:
WACHOVIA BANK OF GEORGIA, N.A.,
by
/s/ Douglas L. Williams
------------------------------
Name: Douglas L. Williams
Title: Senior Vice President
<PAGE>
CONFORMED COPY
EXHIBIT A
TO THE AMENDMENT AND
RESTATEMENT AGREEMENT
- --------------------------------------------------------------------------------
J. C. PENNEY COMPANY, INC.
J. C. PENNEY FUNDING CORPORATION
____________________
$1,500,000,000
364-DAY REVOLVING CREDIT AGREEMENT
Dated as of December 16, 1993,
As Amended and Restated as of December 7, 1994
____________________
MORGAN GUARANTY TRUST COMPANY OF NEW YORK,
as Agent,
BANKERS TRUST COMPANY, CHEMICAL BANK, and
CREDIT SUISSE,
as Co-Agents,
and
BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION and NATIONSBANK OF TEXAS, N.A.,
as Lead Managers
- --------------------------------------------------------------------------------
[CS&M Ref. No. 1385-280]
<PAGE>
TABLE OF CONTENTS
Article Section Page
- ------- ------- ----
I. DEFINITIONS
1.01 Defined Terms...................................... 1
1.02 Terms Generally.................................... 21
II. THE CREDITS
2.01 Commitments........................................ 22
2.02 Loans.............................................. 23
2.03 Competitive Bid Procedure.......................... 25
2.04 Standby Borrowing Procedure........................ 28
2.05 Refinancings....................................... 29
2.06 Fees............................................... 30
2.07 Repayment of Loans; Evidence of the Borrowers'
Obligations........................................ 30
2.08 Interest on Loans.................................. 31
2.09 Default Interest................................... 32
2.10 Alternate Rate of Interest......................... 32
2.11 Termination and Reduction of Commitments........... 33
2.12 Prepayment......................................... 34
2.13 Reserve Requirements; Change in Circumstances...... 35
2.14 Change in Legality................................. 36
2.15 Indemnity.......................................... 37
2.16 Pro Rata Treatment................................. 39
2.17 Sharing of Setoffs................................. 39
2.18 Payments........................................... 40
2.19 Taxes.............................................. 41
2.20 Mitigation; Duties of Lenders and the Agent........ 44
III. REPRESENTATIONS AND WARRANTIES
3.01 Organization; Powers............................... 48
3.02 Authorization...................................... 48
3.03 Enforceability..................................... 48
3.04 Governmental Approvals............................. 49
3.05 Financial Statements............................... 49
3.06 No Material Adverse Change......................... 49
3.07 Title to Properties; Possession Under Leases....... 49
3.08 Restricted Subsidiaries............................ 50
<PAGE>
Article Section Page
- ------- ------- ----
3.09 Litigation; Compliance with Laws................... 50
3.10 Agreements......................................... 50
3.11 Federal Reserve Regulations........................ 51
3.12 Investment Company Act; Public Utility Holding
Company Act........................................ 51
3.13 Use of Proceeds.................................... 51
3.14 Tax Returns........................................ 51
3.15 No Material Misstatements.......................... 52
3.16 Employee Benefit Plans............................. 52
3.17 Support Agreements................................. 52
IV. CONDITIONS OF LENDING
4.01 All Borrowings..................................... 53
4.02 First Borrowing [INTENTIONALLY OMITTED] ........... 53
V. AFFIRMATIVE COVENANTS
5.01 Existence; Businesses and Properties............... 54
5.02 Insurance.......................................... 54
5.03 Obligations and Taxes.............................. 54
5.04 Financial Statements, Reports, etc................. 55
5.05 Litigation and Other Notices....................... 56
5.06 ERISA.............................................. 57
5.07 Maintaining Records; Access to Properties and
Inspections........................................ 57
5.08 Use of Proceeds.................................... 58
5.09 Pari-Passu......................................... 58
5.10 Support Agreements................................. 58
VI. NEGATIVE COVENANTS
6.01 Limitation on Liens--JCPenney...................... 59
6.02 Limitations on Senior Funded Indebtedness.......... 62
6.03 Limitations with Respect to Restricted
Subsidiaries....................................... 62
6.04 Mergers, Consolidations, Sales of Assets and
Acquisitions....................................... 64
6.05 Limitations on Liens--Funding...................... 66
6.06 Conduct of Funding's Business...................... 68
VII. EVENTS OF DEFAULT........................................ 69
VIII. THE AGENT................................................ 73
<PAGE>
Article Section Page
- ------- ------- ----
IX. MISCELLANEOUS
9.01 Notices............................................ 76
9.02 Survival of Agreement.............................. 77
9.03 Binding Effect..................................... 78
9.04 Successors and Assigns............................. 78
9.05 Expenses; Indemnity................................ 81
9.06 Right of Setoff.................................... 82
9.07 Applicable Law..................................... 83
9.08 Waivers; Amendment................................. 83
9.09 Interest and Charges............................... 84
9.10 Entire Agreement................................... 84
9.11 Severability....................................... 85
9.12 Counterparts....................................... 85
9.13 Headings........................................... 85
9.14 Jurisdiction; Consent to Service of Process........ 85
9.15 Confidentiality.................................... 86
9.16 Liability of Borrowers............................. 87
Exhibit A-1 Form of Competitive Bid Request
Exhibit A-2 Form of Notice of Competitive Bid Request
Exhibit A-3 Form of Competitive Bid
Exhibit A-4 Form of Standby Borrowing Request
Exhibit B Form of Opinion [INTENTIONALLY OMITTED]
Exhibit C Form of Guaranty
Schedule 2.01 Commitments
Schedule 3.08 Restricted Subsidiaries
Schedule 3.09 Material Litigation
<PAGE>
CONFORMED COPY
EXHIBIT A
TO THE AMENDMENT AND
RESTATEMENT AGREEMENT
364-DAY REVOLVING CREDIT AGREEMENT dated as of December 16,
1993, as amended and restated as of December 7, 1994 (the
"Agreement"), among J. C. PENNEY COMPANY, INC. a Delaware
corporation ("JCPenney"), J. C. PENNEY FUNDING CORPORATION, a
Delaware corporation ("Funding"), the lenders listed in Schedule
2.01 (as of any date, together with any permitted assigns
hereunder on such date, the "Lenders"), MORGAN GUARANTY TRUST
COMPANY OF NEW YORK ("Morgan"), as agent for the Lenders (in such
capacity, the "Agent") and BANKERS TRUST COMPANY, CHEMICAL BANK
and CREDIT SUISSE, as co-agents for the Lenders (in such
capacity, the "Co-Agents").
The Borrowers (as herein defined) have requested the Lenders to extend
credit to the Borrowers in order to enable them to borrow on a standby revolving
credit basis on and after the Closing Date (as herein defined) and at any time
and from time to time prior to the Maturity Date (as herein defined) an
aggregate principal amount not in excess of $1,500,000,000 at any time
outstanding. The Borrowers have also requested the Lenders to provide a
procedure pursuant to which the Borrowers may invite the Lenders to bid on an
uncommitted basis on borrowings by the Borrowers scheduled to mature on or prior
to the Maturity Date. The proceeds of such borrowings are to be used for
general corporate purposes, including, without limitation, working capital
requirements, liquidity and the repayment of maturing commercial paper and other
indebtedness of the Borrowers. The Lenders will extend such credit to the
Borrowers on the terms and subject to the conditions herein set forth.
Accordingly, the Borrowers, the Lenders, the Agent and the Co-Agents
agree as follows:
ARTICLE I. DEFINITIONS
SECTION 1.01. Defined Terms. As used in this Agreement, the
--------------
following terms shall have the meanings specified below:
"ABR Borrowing" shall mean a Borrowing comprised of ABR Loans.
-------------
<PAGE>
2
"ABR Loan" shall mean any Standby Loan bearing interest at a rate
--------
determined by reference to the Alternate Base Rate in accordance with the
provisions of Article II.
"Adjusted CD Rate" shall mean, with respect to any CD Borrowing
----------------
requested by any Borrower pursuant to Section 2.03(a) for any Interest Period,
an interest rate per annum (rounded upwards, if necessary, to the next 1/100 of
1%) equal to the sum of (a) a rate per annum equal to the product of (i) the
Fixed CD Rate in effect for such Interest Period and (ii) Statutory Reserves,
plus (b) the Assessment Rate. For purposes hereof, the term "Fixed CD Rate"
shall mean the arithmetic average (rounded upwards, if necessary, to the next
1/100 of 1%) of the prevailing rates per annum bid at or about 10:00 a.m., New
York City time, to the Agent on the first Business Day of the Interest Period
applicable to such CD Borrowing by three New York City negotiable certificate of
deposit dealers of recognized standing selected by the Agent for the purchase at
face value of negotiable certificates of deposit of major United States money
center banks in a principal amount approximately equal to the product of (x) the
aggregate principal amount of such CD Borrowing as specified in the related
Competitive Bid Request and (y) the percentage which the Agent's Commitment
represents of the Total Commitment and with a maturity comparable to such
Interest Period.
"Additional Costs" shall mean, with respect to any Lender, any
----------------
increased costs or reduction in amounts received or receivable or reduction in
return on capital incurred or suffered by such Lender and in respect of which
such Lender is entitled to request compensation in accordance with Section 2.13.
"Administrative Fees" shall have the meaning assigned to such term in
-------------------
Section 2.06(b).
"Affiliate" shall mean, when used 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.
"Alternate Base Rate" shall mean, for any day, a rate per annum
-------------------
(rounded upwards, if necessary, to the next 1/16 of 1%) equal to the greater of
(a) the Prime Rate on such day, and (b) the Federal Funds Effective Rate in
effect on such day plus 0.50%. For purposes hereof, "Federal Funds
<PAGE>
3
Effective Rate" shall mean, for any day, the weighted average of the rates on
overnight Federal funds transactions with members of the Federal Reserve System
arranged by Federal funds brokers, as published on the next succeeding Business
Day by the Federal Reserve Bank of New York, or, if such rate is not so
published for any day which is a Business Day, the average of the rates quoted
to the Agent on such day for such transactions by three Federal funds brokers of
recognized standing selected by it. If for any reason the Agent shall have
determined (which determination shall be conclusive absent manifest error) that
it is unable to ascertain the Federal Funds Effective Rate for any reason,
including the inability or failure of the Agent to obtain sufficient quotations
in accordance with the terms hereof, the Alternate Base Rate shall be determined
without regard to clause (b) of the first sentence of this definition until the
circumstances giving rise to such inability no longer exist. Any change in the
Alternate Base Rate due to a change in the Prime Rate shall be effective on the
date such change is announced publicly.
"Applicable Lending Office" shall mean, for each Lender and for each
-------------------------
Type of Loan, the office or branch of such Lender (or of an Affiliate of such
Lender) designated for such Type of Loan opposite such Lender's name on Schedule
2.01 or such other office or branch of such Lender (or of an Affiliate of such
Lender) as such Lender may from time to time, in accordance with the terms of
this Agreement, specify to the Agent and the Borrowers as the office or branch
by which its Loans of such Type are to be made and maintained.
"Assessment Rate" shall mean for any date the then current net annual
---------------
assessment rate (rounded upwards, if necessary, to the next 1/100 of 1%)
actually employed by the Agent in determining amounts payable by the Agent to
the Federal Deposit Insurance Corporation (or any successor) for insurance by
such Corporation (or such successor) of time deposits made in dollars at the
Agent's domestic offices.
"Board" shall mean the Board of Governors of the Federal Reserve
-----
System of the United States.
"Borrowers" shall mean JCPenney and Funding.
---------
"Borrowing" shall mean a group of Loans of a single Type made by the
---------
Lenders (or, in the case of a Competitive Borrowing, by the Lender or Lenders
whose
<PAGE>
4
Competitive Bids have been accepted pursuant to Section 2.03) to the same
Borrower on a single date and as to which a single Interest Period is in effect.
"Business Day" shall mean any day (other than a day which is a
------------
Saturday, Sunday or legal holiday in the State of New York) on which banks are
open for business in New York City; provided, however, that, when used in
-------- -------
connection with a Eurodollar Loan, the term "Business Day" shall also exclude
any day on which banks are not open for dealings in dollar deposits in the
London interbank market.
"CD Borrowing" shall mean a Competitive Borrowing comprised of CD
------------
Loans.
"CD Loan" shall mean any Competitive Loan bearing interest at a rate
-------
determined by reference to the Adjusted CD Rate in accordance with the
provisions of Article II.
"Closing Date" shall mean December 7, 1994.
------------
"Code" shall mean the Internal Revenue Code of 1986, as the same may
----
be amended from time to time.
"Commitment" shall mean, with respect to each Lender, the commitment
----------
of such Lender hereunder as set forth as of the Closing Date in Schedule 2.01
hereto and, thereafter, in the Register (or as otherwise determined by the
parties hereto in the event of manifest error in the Register), as such Lender's
Commitment may be permanently terminated or reduced from time to time pursuant
to Section 2.11. The Commitment of each Lender shall automatically and
permanently terminate on the Maturity Date if not terminated earlier pursuant to
the terms hereof.
"Commitment Termination Date" shall have the meaning assigned to such
---------------------------
term in Section 2.11(d).
"Competitive Bid" shall mean an offer by a Lender to make a
---------------
Competitive Loan pursuant to Section 2.03.
"Competitive Bid Rate" shall mean, as to any Competitive Bid made by a
--------------------
Lender pursuant to Section 2.03(b), (a) in the case of a Eurodollar Competitive
Loan or a CD Loan, the Competitive Margin, and (b) in the
<PAGE>
5
case of a Fixed Rate Loan, the fixed rate of interest offered by the Lender
making such Competitive Bid.
"Competitive Bid Request" shall mean a request made pursuant to
-----------------------
Section 2.03 in the form of Exhibit A-1.
"Competitive Borrowing" shall mean a Borrowing consisting of a
---------------------
Competitive Loan or concurrent Competitive Loans from the Lender or Lenders
whose Competitive Bids for such Borrowing have been accepted under the bidding
procedure described in Section 2.03 by the Borrower requesting such Borrowing.
"Competitive Loan" shall mean a Loan from a Lender to a Borrower
----------------
pursuant to the bidding procedure described in Section 2.03. Each Competitive
Loan shall be a Eurodollar Competitive Loan, a CD Loan or a Fixed Rate Loan.
"Competitive Margin" shall mean, as to any Eurodollar Competitive Loan
------------------
or CD Loan, the margin (expressed as a percentage rate per annum in the form of
a decimal to no more than four decimal places) to be added to or subtracted from
the LIBO Rate or the Adjusted CD Rate, as applicable, in order to determine the
interest rate applicable to such Eurodollar Competitive Loan or CD Loan, as
specified in the Competitive Bid relating to such Eurodollar Competitive Loan or
CD Loan.
"Control" shall mean the possession, directly or indirectly, of the
-------
power to direct or cause the direction of the management or policies of a
person, whether through the ownership of voting securities, by contract or
otherwise, and "Controlling" and "Controlled" shall have meanings correlative
thereto.
"Default" shall mean any event or condition which upon notice, lapse
-------
of time or both would constitute an Event of Default.
"dollars" or "$" shall mean lawful money of the United States of
--------------
America.
"Eligible Assignee" shall mean (a) a commercial bank organized under
-----------------
the laws of the United States, or any state thereof, and having total assets in
excess of $1,000,000,000; (b) a commercial bank organized under the laws of any
other country which is a member of the Organization for Economic Cooperation and
Development, or a
<PAGE>
6
political subdivision of any such country, and having total assets in excess of
$1,000,000,000, provided that such bank is acting through a branch or agency
located in the country in which it is organized or another country which is
described in this clause; and (c) the central bank of any country which is a
member of the Organization for Economic Cooperation and Development.
"ERISA" shall mean the Employee Retirement Income Security Act of
-----
1974, as the same may be amended from time to time, and the rules and
regulations promulgated thereunder, as from time to time in effect.
"ERISA Affiliate" shall mean any trade or business (whether or not
---------------
incorporated) that is a member of a group of which any Borrower is a member and
which is treated as a single employer under Section 414 of the Code.
"Eurodollar Borrowing" shall mean a Borrowing comprised of Eurodollar
--------------------
Loans.
"Eurodollar Competitive Loan" shall mean any Competitive Loan bearing
---------------------------
interest at a rate determined by reference to the LIBO Rate in accordance with
the provisions of Article II.
"Eurodollar Loan" shall mean any Eurodollar Competitive Loan or
---------------
Eurodollar Standby Loan.
"Eurodollar Standby Loan" shall mean any Standby Loan bearing interest
-----------------------
at a rate determined by reference to the LIBO Rate in accordance with the
provisions of Article II.
"Event of Default" shall have the meaning assigned to such term in
----------------
Article VII.
"Facility Fee" shall have the meaning assigned to such term in Section
------------
2.06(a).
"Facility Fee Percentage" shall mean on any date the applicable
-----------------------
percentage set forth below based upon the
<PAGE>
7
ratings by Moody's and S&P, respectively, applicable on such date to the Index
Debt:
<TABLE>
<CAPTION>
Category 1 Percentage
- ---------- ----------
<S> <C>
AA- or better by S&P
AND
Aa3 or better by Moody's 0.0500%
<CAPTION>
Category 2
- ----------
<S> <C>
A+ or better by S&P
OR
A1 or better by Moody's
AND
Category 1 does not apply 0.0600%
<CAPTION>
Category 3
- ----------
<S> <C>
A- or better by S&P
OR
A3 or better by Moody's
AND
neither Category 1 nor
Category 2 applies 0.0700%
<CAPTION>
Category 4
- ----------
<S> <C>
BBB or better by S&P
AND
Baa2 or better by Moody's
AND
neither Category 1,
Category 2 nor Category 3
applies 0.1000%
<CAPTION>
Category 5
- ----------
<S> <C>
Lower than BBB, or
unrated, by S&P
OR
Lower than Baa2, or
unrated, by Moody's
AND
neither Category 1,
Category 2, Category 3 nor
Category 4 applies 0.1500%
</TABLE>
<PAGE>
8
For purposes of the foregoing, (i) if no rating for the Index Debt shall be
available from either rating agency, (other than because (a) such rating agency
shall no longer be in the business of rating corporate debt obligations or (b)
of any other reason outside the control of JCPenney and Funding), such rating
agency shall be deemed to have established a rating in Category 5 and (ii) if
any rating established or deemed to have been established by Moody's or S&P
shall be changed (other than as a result of a change in the rating system of
either Moody's or S&P), such change shall be effective as of the date on which
such change is first publicly announced by the rating agency making such change.
If the rating system of either Moody's or S&P shall change prior to the Maturity
Date, or if either such rating agency shall cease to be in the business of
rating corporate debt obligations or shall no longer have in effect a rating for
any reason outside the control of JCPenney and Funding, the Borrowers and the
Lenders shall negotiate in good faith to amend the references to specific
ratings in this definition to reflect such changed rating system or the absence
of such a rating. Pending agreement on any such amendment, (i) if the rating
system of one such rating agency shall remain unchanged, or if a rating shall be
available from one such rating agency, the Facility Fee Percentage shall be
determined by reference to the rating established by such rating agency, (ii) if
no rating for the Index Debt shall be available from either rating agency then
(A) for 60 days, the Facility Fee Percentage shall be determined by reference to
the rating or ratings most recently available, (B) after 60 days, the Facility
Fee Percentage shall be determined by reference to Category 4 (or Category 5 if
such Percentage shall have been determined by reference to Category 4 under
clause (A) above) and (C) after 180 days, the Facility Fee Percentage shall be
determined by reference to Category 5.
"Fees" shall mean the Facility Fees and the Administrative Fees.
----
"Fixed Rate Borrowing" shall mean a Competitive Borrowing comprised of
--------------------
Fixed Rate Loans.
"Fixed Rate Loan" shall mean any Competitive Loan bearing interest at
---------------
a fixed percentage rate per annum (expressed in the form of a decimal to no more
than four decimal places) specified by the Lender making such Loan in its
related Competitive Bid.
<PAGE>
9
"Funded Indebtedness" of any corporation shall mean, at any date for
-------------------
the determination thereof, without duplication, the outstanding aggregate
principal amount of (a) all indebtedness created, incurred or assumed by such
corporation (including, in the case of any Borrower, the Loans made to such
Borrower) which by its terms is not payable on demand and which matures by its
terms, or which by its terms such corporation has the right at its option to
renew or extend to a date, more than one year after the date of determination,
whether outstanding on the Closing Date or thereafter created, incurred or
assumed (including the current portion of any indebtedness which shall
constitute Funded Indebtedness at the time of its incurrence), and which is (i)
for money borrowed or (ii) evidenced by a note or similar instrument given in
connection with the acquisition of any business, properties or assets, including
securities, (b) any indebtedness of others of the kinds described in the
preceding clause (a) for the payment of which such corporation is responsible or
liable as guarantor or otherwise and (c) amendments, renewals and refundings of
any such indebtedness; provided, however, that such term shall not include any
-------- -------
obligations under leases or any guarantees of obligations of others under
leases. It is understood that for the purposes of this definition the term
"principal" when used at any date with respect to any indebtedness issued at a
discount shall mean the amount of principal of such indebtedness that could be
declared due and payable on that date upon the occurrence of one or more events
permitting the acceleration of such indebtedness pursuant to the terms of such
indebtedness.
"GAAP" shall mean United States generally accepted accounting
----
principles, applied on a consistent basis.
"Governmental Authority" shall mean any court or governmental agency,
----------------------
authority, instrumentality or regulatory body, in each case whether Federal,
state, local or foreign.
"Indenture" shall mean the Indenture dated as of April 1, 1994,
---------
between JCPenney and Bank of America National Trust and Savings Association, as
trustee.
"Index Debt" shall mean JCPenney's senior unsecured, non credit-
----------
enhanced, publicly held long-term indebtedness.
<PAGE>
10
"Interest Payment Date" shall mean, with respect to any Loan, the last
---------------------
day of the Interest Period applicable thereto and, in the case of a Eurodollar
Loan with an Interest Period of more than three months' duration or a CD Loan or
Fixed Rate Loan with an Interest Period of more than 90 days' duration, each day
that would have been an Interest Payment Date for such Loan had successive
Interest Periods of three months' duration or 90 days' duration, as the case may
be, been applicable to such Loan and, in addition, the date of any refinancing
or conversion of such Loan with or to a Loan of a different Type.
"Interest Period" shall mean (a) as to any Eurodollar Borrowing that
---------------
is a Standby Borrowing, the period commencing on the date of such Borrowing or
on the last day of the immediately preceding Interest Period applicable to such
Borrowing, as the case may be, and ending on the numerically corresponding day
(or, if there is no numerically corresponding day, on the last day) in the
calendar month that is 1, 2, 3, 6 or, subject to availability from each Lender,
12 months thereafter, as the Borrower requesting such Borrowing may elect, (b)
as to any ABR Borrowing, the period commencing on the date of such Borrowing and
ending on the date specified in the related Standby Borrowing Request (which
date shall in no event be later than 5 Business Days after the date of such
Borrowing), (c) as to any Eurodollar Borrowing that is a Competitive Borrowing,
the period commencing on the date of such Borrowing and ending on the date
specified in the Competitive Bids in which the offers to make the Eurodollar
Competitive Loans comprising such Borrowing were extended (which date shall be
(A) the numerically corresponding day (or, if there is no numerically
corresponding day, the last day) in the calendar month that is 1, 2, 3, 6, 9 or
12 months after the date of such Borrowing or (B) such other date as shall be
specified in such Competitive Bids) and (d) as to any CD Borrowing or Fixed Rate
Borrowing, the period specified in the Competitive Bids in which the offers to
make the CD Loans or Fixed Rate Loans comprising such Borrowing were extended,
commencing on the date of such Borrowing (which period shall be a period of 30,
60, 90, 180 or 360 days' duration or such other duration as shall be specified
in such Competitive Bids); provided, however, that (x) if any Interest Period
-------- -------
would end on a day other than a Business Day, such Interest Period shall be
extended to the next succeeding Business Day unless, in the case of Eurodollar
Loans only, such next succeeding Business Day would fall in the next calendar
month, in which case such Interest Period shall end on the
<PAGE>
11
next preceding Business Day, (y) no Interest Period may be selected that ends
later than the Maturity Date then in effect and (z) the Interest Period for any
ABR Loan or CD Loan made in lieu of, or resulting from the conversion of, a
Eurodollar Loan pursuant to Section 2.10 or 2.14 shall be determined in
accordance with the provisions of such Section. Interest shall accrue from and
including the first day of an Interest Period to but excluding the last day of
such Interest Period.
"Investment" means, with respect to each of Funding and its
----------
Subsidiaries only, any acquisition of any of the capital stock of any
corporation, or any acquisition of indebtedness of, or any capital contribution,
loan or advance to, or any guarantee of an obligation of, any person, except (i)
any loan or advance made in connection with the lease, purchase or construction
of office space for Funding or any of its Subsidiaries or the purchase of
materials, supplies, services or equipment for the offices of Funding or any of
its Subsidiaries and (ii) any guarantee or endorsement made in the ordinary
course of business in connection with the deposit of items for collection or any
guarantee of an obligation of an agent or an employee of Funding or any of its
Subsidiaries that is required to meet applicable legal requirements.
"LIBO Rate" shall mean, with respect to any Eurodollar Borrowing for
---------
any Interest Period, an interest rate per annum (rounded upwards, if necessary,
to the next 1/16 of 1%) equal to the average of the rates at which dollar
deposits approximately equal in principal amount to (i) in the case of a Standby
Borrowing, each LIBO Reference Lender's portion of such Eurodollar Borrowing and
(ii) in the case of a Competitive Borrowing, the principal amounts that would
have been each LIBO Reference Lender's portion of such Competitive Borrowing had
such Competitive Borrowing been a Standby Borrowing, and for a maturity
comparable to such Interest Period are offered to the principal London office of
the applicable LIBO Reference Lender in immediately available funds in the
London interbank market at approximately 11:00 a.m., London time, two Business
Days prior to the commencement of such Interest Period.
"LIBO Reference Lenders" shall mean Morgan Guaranty Trust Company of
----------------------
New York, Credit Suisse and NBD Bank, N.A., or such other or additional Lenders
as the Borrowers, the Agent and the Required Lenders shall designate in writing
as "LIBO Reference Lenders".
<PAGE>
12
"Lien" shall mean, with respect to any asset, any mortgage, lien,
----
pledge or security interest in or on such asset.
"Loan" shall mean a Competitive Loan or a Standby Loan, whether made
----
as a Eurodollar Loan, a CD Loan, a Fixed Rate Loan or an ABR Loan, as permitted
hereby.
"Margin Stock" shall have the meaning given such term under
------------
Regulation U.
"Material Adverse Effect" shall mean (a) a materially adverse effect
-----------------------
on the business, assets or financial condition of (i) JCPenney and the
Restricted Subsidiaries, taken as a whole, or (ii) Funding and its Subsidiaries,
taken as a whole, (b) a material impairment of the ability of any Borrower to
perform any of its obligations under this Agreement or (c) a material impairment
of the rights of or benefits available to the Lenders under this Agreement
(other than any such impairment of rights or benefits that is primarily
attributable to (x) action taken by or against one or more Lenders (excluding
any action against one or more Lenders taken by any Borrower or Restricted
Subsidiary) or (y) circumstances that are unrelated to any Borrower).
"Maturity Date" shall mean December 6, 1995.
-------------
"Maximum Amount" shall mean, with respect to any amount owing to any
--------------
Lender under this Agreement or in connection herewith, the maximum amount of
interest that such Lender is permitted to charge under applicable law on such
amount.
"Moody's" shall mean Moody's Investors Service, Inc. and any successor
-------
thereto that is a nationally recognized rating agency.
"Multiemployer Plan" shall mean a multiemployer plan as defined in
------------------
Section 4001(a)(3) of ERISA to which any Borrower or any ERISA Affiliate (other
than one considered an ERISA Affiliate only pursuant to subsection (m) or (o) of
Section 414 of the Code) is making or accruing an obligation to make
contributions, or has within any of the preceding five plan years made or
accrued an obligation to make contributions.
"Net Tangible Assets" means the aggregate amount at which the assets
-------------------
of JCPenney and all Restricted Subsidi-
<PAGE>
13
aries are reflected, in accordance with GAAP as in effect on the Closing Date,
on the asset side of the consolidated balance sheet, as at the close of a
monthly accounting period (selected by JCPenney) ending within the 65 days next
preceding the date of determination, of JCPenney and the Restricted Subsidiaries
(after deducting all valuation and qualifying reserves relating to said assets),
except any of the following described items that may be included among said
assets:
(a) trademarks, patents, goodwill and similar intangibles;
(b) investments in and advances to Non-Restricted Subsidiaries; and
(c) capital lease property rights,
after deducting from such amount current liabilities (other than deferred tax
effects) as reflected, in accordance with GAAP as in effect on the Closing Date,
on such balance sheet.
"Non-Restricted Subsidiary" shall mean any Subsidiary other than the
-------------------------
Restricted Subsidiaries.
"Officer's Certificate" of any corporation shall mean a certificate
---------------------
signed by a Responsible Officer of such corporation.
"PBGC" shall mean the Pension Benefit Guaranty Corporation referred to
----
and defined in ERISA.
"Penney Supplier" means any person that supplies goods or services to
---------------
JCPenney or any Subsidiary.
"Penney Supplier Receivables" means the obligations of Penney
---------------------------
Suppliers for the payment of money for goods or services sold by JCPenney or any
Subsidiary to Penney Suppliers for use in goods or services to be supplied to
JCPenney or any Subsidiary.
"person" shall mean any individual, corporation, partnership, joint
------
venture, association, joint-stock company, trust, unincorporated organization or
Governmental
Authority.
<PAGE>
14
"Plan" shall mean any pension plan (other than a Multiemployer Plan)
----
subject to the provisions of Title IV of ERISA or Section 412 of the Code that
is maintained for employees of any Borrower or ERISA Affiliate.
"Prime Rate" means the rate of interest publicly announced by Morgan
----------
Guaranty Trust Company of New York in New York City from time to time as its
Prime Rate.
"Principal Property" means all real property and tangible personal
------------------
property owned by JCPenney or a Restricted Subsidiary constituting a part of any
store, warehouse or distribution center located within one of the 50 states of
the United States or the District of Columbia, exclusive of motor vehicles,
mobile materials-handling equipment and other rolling stock, cash registers and
other point of sale recording devices and related equipment, and data processing
and other office equipment; provided, however, that such term shall not include
-------- -------
any such property constituting a part of any such store, warehouse or
distribution center unless the net book value of all real property (including
leasehold improvements) and store fixtures constituting a part of such store,
warehouse or distribution center exceeds .25% of Stockholders' Equity.
"Receivables" means the obligations of customers for the payment of
-----------
money arising under agreements between such customers and JCPenney or any
Subsidiary.
"Register" shall have the meaning assigned to such term in
--------
Section 9.04(d).
"Regulation G" shall mean Regulation G of the Board as from time to
------------
time in effect and all official rulings and interpretations thereunder or
thereof.
"Regulation U" shall mean Regulation U of the Board as from time to
------------
time in effect and all official rulings and interpretations thereunder or
thereof.
"Regulation X" shall mean Regulation X of the Board as from time to
------------
time in effect and all official rulings and interpretations thereunder or
thereof.
"Reportable Event" shall mean any reportable event as defined in
----------------
Section 4043(b) of ERISA or the regulations issued thereunder with respect to a
Plan (other than a Plan
<PAGE>
15
maintained by an ERISA Affiliate which is considered an ERISA Affiliate only
pursuant to subsection (m) or (o) of Section 414 of the Code).
"Required Lenders" shall mean, at any time, (a) for the purposes of
----------------
terminating the Commitments pursuant to clause (x) of Article VII, Lenders
having Commitments representing at least 66-2/3% of the Total Commitment, (b)
for purposes of acceleration pursuant to clause (y) of Article VII, Lenders
holding Loans representing at least 66-2/3% of the aggregate principal amount of
the Loans outstanding and (c) for all other purposes, Lenders having Commitments
representing greater than 50% of the Total Commitment or, if the Commitments
shall have been terminated, Lenders holding Loans representing greater than 50%
of the aggregate principal amount of the Loans outstanding.
"Responsible Officer" of any corporation shall mean the chairman, vice
-------------------
chairman, president, chief financial officer, treasurer or controller of such
corporation or any executive or senior vice president of such corporation.
"Restricted Subsidiary" means any Subsidiary of JCPenney (other than
---------------------
Funding) which JCPenney shall, by an Officer's Certificate of JCPenney, have
designated as a Restricted Subsidiary and the designation of which as a
Restricted Subsidiary shall not have been cancelled by an Officer's Certificate
of JCPenney; provided, however, that neither the designation of a Subsidiary as
-------- -------
a Restricted Subsidiary nor the cancellation of such designation shall be
operative if the immediate effect of such designation or cancellation shall be
to make Net Tangible Assets less than 200% of the Senior Funded Indebtedness of
JCPenney and the Restricted Subsidiaries on a pro forma basis (eliminating
intercompany items); and provided, further, that any Officer's Certificate
-------- -------
designating a Subsidiary as a Restricted Subsidiary or cancelling such
designation shall set forth the Net Tangible Assets and Senior Funded
Indebtedness of JCPenney and its Restricted Subsidiaries on a pro forma basis
(eliminating intercompany items) and show compliance with the first proviso of
this paragraph. Any such designation or cancellation of such designation may be
made more than once with respect to any Subsidiary.
"S&P" shall mean Standard & Poor's Ratings Group and any successor
---
thereto that is a nationally recognized rating agency.
<PAGE>
16
"SEC" shall mean the Securities and Exchange commission.
---
"Senior Funded Indebtedness" of JCPenney shall mean any Funded
--------------------------
Indebtedness of JCPenney unless in any instrument or instruments evidencing or
securing such Funded Indebtedness or pursuant to which the same is outstanding,
or in any amendment, renewal, extension or refunding of such Funded
Indebtedness, it is provided that such Funded Indebtedness is subordinate in
right of payment to the Loans (a) in the event of any dissolution or winding-up
or total or partial liquidation or reorganization of JCPenney, whether voluntary
or involuntary, or any bankruptcy, insolvency, receivership or similar
proceedings relative to JCPenney and (b) in the event of any default in the
payment of principal (including any required prepayments or amortization) of or
interest on any Loans of JCPenney. "Senior Funded Indebtedness" of any
Restricted Subsidiary means any Funded Indebtedness of such Restricted
Subsidiary and the aggregate preference on involuntary liquidation of any class
of stock of such Restricted Subsidiary ranking, either as to payment of
dividends or distribution of assets, prior to any other class of stock of such
Restricted Subsidiary.
"Standby Borrowing" shall mean a Borrowing consisting of simultaneous
-----------------
Standby Loans from each of the Lenders.
"Standby Borrowing Request" shall mean a request made pursuant to
-------------------------
Section 2.04 in the form of Exhibit A-4.
"Standby Loans" shall mean the revolving loans made by the Lenders to
-------------
the Borrowers pursuant to Section 2.04. Each Standby Loan shall be a Eurodollar
Standby Loan or an ABR Loan.
"Standby Margin" shall mean on any date, with respect to each Standby
--------------
Loan made as part of any Eurodollar Standby Borrowing or ABR Borrowing, as the
case may be, the applicable percentage, based upon the ratings applicable on
such date to the Index Debt, set forth (a) in Table A below if the aggregate
principal amount of the Loans outstanding on such date does not exceed 50% of
the Total Commitment on such date and (b) in Table B below if the aggregate
principal amount of the Loans outstanding on such date exceeds 50% of the Total
Commitment on such date:
<PAGE>
17
<TABLE>
<CAPTION>
Table A:
-------
Eurodollar ABR
Borrowing Borrowing
----------- ----------
<S> <C> <C>
Category 1
- ----------
AA- or better by S&P
AND 0.1500% 0%
Aa3 or better by Moody's
Category 2
- ----------
A+ or better by S&P
OR
A1 or better by Moody's
AND 0.1900% 0%
Category 1 does not apply
Category 3
- ----------
A- or better by S&P
OR
A3 or better by Moody's
AND
neither Category 1 nor 0.2300% 0%
Category 2 applies
Category 4
- ----------
BBB or better by S&P
AND
Baa2 or better by Moody's
AND
neither Category 1,
Category 2 nor Category 3 0.3250% 0%
applies
</TABLE>
<PAGE>
18
<TABLE>
<CAPTION>
Eurodollar ABR
Borrowing Borrowing
----------- ----------
<S> <C> <C>
Category 5
- ----------
Lower than BBB, or unrated,
by S&P
OR
Lower than Baa2, or unrated,
by Moody's
AND
neither Category 1,
Category 2, Category 3 0.4000% 0%
nor Category 4 applies
</TABLE>
<TABLE>
<CAPTION>
Table B:
-------
Eurodollar ABR
Borrowing Borrowing
----------- ----------
<S> <C> <C>
Category 1
- ----------
AA- or better by S&P
AND 0.2000% 0%
Aa3 or better by Moody's
Category 2
- ----------
A+ or better by S&P
OR
A1 or better by Moody's
AND 0.2400% 0%
Category 1 does not apply
Category 3
- ----------
A- or better by S&P
OR
A3 or better by Moody's
AND
neither Category 1 nor 0.2800% 0%
Category 2 applies
</TABLE>
<PAGE>
19
<TABLE>
<CAPTION>
Eurodollar ABR
Borrowing Borrowing
----------- ----------
<S> <C> <C>
Category 4
- ----------
BBB or better by S&P
AND
Baa2 or better by Moody's
AND
neither Category 1,
Category 2 nor Category 3 0.3750% 0%
applies
Category 5
- ----------
Lower than BBB, or unrated,
by S&P
OR
Lower than Baa2, or unrated,
by Moody's
AND
neither Category 1,
Category 2, Category 3 0.4750% 0%
nor Category 4 applies
</TABLE>
For purposes of the foregoing, (i) if no rating for the Index Debt shall be
available from either rating agency, (other than because (a) such rating agency
shall no longer be in the business of rating corporate debt obligations or (b)
of any other reason outside the control of JCPenney and Funding), such rating
agency shall be deemed to have established a rating in Category 5 and (ii) if
any rating established or deemed to have been established by Moody's or S&P
shall be changed (other than as a result of a change in the rating system of
either Moody's or S&P), such change shall be effective as of the date on which
such change is first publicly announced by the rating agency making such change.
If the rating system of either Moody's or S&P shall change prior to the Maturity
Date, or if either such rating agency shall cease to be in the business of
rating corporate debt obligations or shall no longer have in effect a rating for
any reason outside the control of JCPenney and Funding, the Borrowers and the
Lenders shall negotiate in good faith to amend the references to specific
ratings in this definition to reflect such changed rating system or the absence
of such a rating. Pending agreement on any such amendment, (i) if the rating
system of one such rating agency shall remain unchanged, or if a rating shall be
available from one such rating agency, the Standby Margin shall be determined by
reference to the rating established by such rating agency, (ii) if no rating for
the Index Debt
<PAGE>
20
shall be available from either rating agency then (A) for 60 days, the Standby
Margin shall be determined by reference to the rating or ratings most recently
available, (B) after 60 days, the Standby Margin shall be determined by
reference to Category 4 (or Category 5 if such Margin shall have been determined
by reference to Category 4 under clause (A) above) and (C) after 180 days, the
Standby Margin shall be determined by reference to Category 5.
"Statutory Reserves" shall mean a fraction (expressed as a decimal),
------------------
the numerator of which is the number one and the denominator of which is the
number one minus the aggregate of the actual reserve percentages (including any
marginal, special, emergency or supplemental reserves) expressed as a decimal
established by the Board and any other banking authority to which the Agent is
subject for new negotiable nonpersonal time deposits in dollars of over $100,000
with maturities approximately equal to the applicable Interest Period.
Statutory Reserves shall be adjusted automatically on and as of the effective
date of any change in any reserve percentage.
"Stockholders' Equity" means the sum, as at the close of a monthly
--------------------
accounting period (selected by JCPenney) ending within the 65 days next
preceding the date of determination, of (a) the aggregate of capital, capital
stock, capital surplus, capital in excess of par value of stock, reinvested
earnings, earned surplus and net income retained for use in the business
(however the foregoing may be designated), after deducting the cost of shares of
capital stock of JCPenney held in its treasury, of JCPenney and its consolidated
Subsidiaries, determined in accordance with GAAP, plus (b) the amount reflected
in such determination as deferred tax effects.
"Subsidiary" means (a) any corporation of which JCPenney, directly or
----------
indirectly, owns more than 50% of the outstanding stock which at the time shall
have by the terms thereof ordinary voting power to elect directors of such
corporation, irrespective of whether or not at the time stock of any other class
or classes of such corporation shall have or might have voting power by reason
of the happening of any contingency, or (b) any such corporation of which such
percentage of shares of outstanding stock of the character described in the
foregoing clause (a) shall at the time be owned, directly or indirectly, (i) by
JCPenney and one or more Subsidiaries as defined in the foregoing clause (a) or
(ii) by one or more such Subsidiaries.
<PAGE>
21
"Support Agreements" shall mean (a) the Amended and Restated
------------------
Receivables Agreement dated as of January 29, 1980, between JCPenney and Funding
(formerly J. C. Penney Financial Corporation), as amended by Amendment No. 1
thereto dated as of January 25, 1983, (b) the Loan Agreement dated as of January
28, 1986, between JCPenney and Funding, as amended by Amendment No. 1 thereto
dated as of December 26, 1986, in each case as amended or modified from time to
time in compliance with Section 5.10 and (c) the subordinated Guaranty of the
obligations of Funding dated as of December 7, 1994, executed by JCPenney in
favor of the Lenders and attached hereto as Exhibit C.
"Taxes" shall mean, with respect to any Lender or Agent, any and all
-----
U.S. Federal income taxes after application of any relevant treaty or convention
and all interest and penalties with respect thereto, attributable to any payment
made by any Borrower hereunder to such Lender or Agent.
"Total Commitment" shall mean at any time the aggregate amount of the
----------------
Lenders' Commitments, as in effect at such time.
"Tranche A Credit Agreement" shall mean the $1,000,000,000 Revolving
--------------------------
Credit Agreement dated the Closing Date among the Borrowers, the financial
institutions named therein as lenders (which include certain of the Lenders),
Morgan Guaranty Trust Company of New York as Agent for the Lenders, and Bankers
Trust Company, Chemical Bank, and Credit Suisse as Co-Agents for the Lenders, as
such agreement may be amended from time to time.
"Transactions" shall have the meaning assigned to such term in
------------
Section 3.02.
"Type", when used in respect of any Loan or Borrowing, shall refer to
----
the Rate by reference to which interest on such Loan or on the Loans comprising
such Borrowing is determined. For purposes hereof, "Rate" shall include the
LIBO Rate, the Adjusted CD Rate, and the Alternate Base Rate and, in the case of
any Fixed Rate Loan, the fixed percentage rate per annum specified by the Lender
making such Loan in its related Competitive Bid.
SECTION 1.02. Terms Generally. The definitions in Section 1.01 shall
----------------
apply equally to both the singular and plural forms of the terms defined.
Whenever the context may
<PAGE>
22
require, any pronoun shall include the corresponding masculine, feminine and
neuter forms. The words "include", "includes" and "including" shall be deemed
to be followed by the phrase "without limitation". All references herein to
Articles, Sections, Exhibits and Schedules shall be deemed references to
Articles and Sections of, and Exhibits and Schedules to, this Agreement unless
the context shall otherwise require. Except as otherwise expressly provided
herein, all terms of an accounting or financial nature shall be construed in
accordance with GAAP, as in effect from time to time; provided, however, that,
-------- -------
for purposes of determining compliance with any covenant set forth in Article
VI, such terms shall be construed in accordance with GAAP as in effect on the
date of this Agreement applied on a basis consistent with the application used
in preparing JCPenney's audited consolidated financial statements referred to in
Section 3.05.
ARTICLE II. THE CREDITS
SECTION 2.01. Commitments. Subject to the terms and conditions and
------------
relying upon the representations and warranties herein set forth, each Lender
agrees, severally and not jointly, to make Standby Loans to the Borrowers at any
time and from time to time on and after the Closing Date and until the earlier
of the Maturity Date and the termination of the Commitment of such Lender, in an
aggregate principal amount at any time outstanding not to exceed such Lender's
Commitment, subject, however, to the conditions that (a) at no time shall the
outstanding aggregate principal amount of all Loans made by all Lenders exceed
the Total Commitment and (b) at all times the outstanding aggregate principal
amount of all Standby Loans made by each Lender to a Borrower shall equal the
product of (i) the percentage which its Commitment represents of the Total
Commitment times (ii) the outstanding aggregate principal amount of all Standby
Loans made to such Borrower pursuant to Section 2.04. Subject to Section
2.03(h), any Lender may at its discretion make Competitive Loans in an aggregate
principal amount up to the amount of the Total Commitment of the Lenders
hereunder. Each Lender's Commitment as of the Closing Date is set forth
opposite its respective name in Schedule 2.01 and, after the Closing Date, each
Lender's Commitment shall be set forth opposite its respective name in the
Register. Such Commitments may be terminated, reduced or extended from time to
time pursuant to Section 2.11.
<PAGE>
23
Within the foregoing limits, the Borrowers may borrow, pay or prepay
and reborrow hereunder, on and after the Closing Date and prior to the Maturity
Date, subject to the terms, conditions and limitations set forth herein.
SECTION 2.02. Loans. (a) Each Standby Loan shall be made as part of
------
a Borrowing consisting of Loans made by the Lenders ratably in accordance with
their Commitments; provided, however, that the failure of any Lender to make any
-------- -------
Standby Loan shall not by itself relieve any other Lender of its obligation to
lend hereunder (it being understood, however, that no Lender shall be
responsible for the failure of any other Lender to make any Loan required to be
made by such other Lender). Each Competitive Loan shall be made in accordance
with the procedures set forth in Section 2.03. The Standby Loans or Competitive
Loans comprising any Borrowing shall be (i) in the case of Competitive Loans, in
an aggregate principal amount which is an integral multiple of $5,000,000 and
not less than $25,000,000 (or, if less, an aggregate principal amount equal to
the Total Commitment on the date of such Borrowing minus the outstanding
aggregate principal amount on such date of all Competitive Loans) and (ii) in
the case of Standby Loans, in an aggregate principal amount which is an integral
multiple of $5,000,000 and not less than $25,000,000 (or an aggregate principal
amount equal to the remaining available balance of the Total Commitment).
(b) Subject to Sections 2.10 and 2.14, each Competitive Borrowing
shall be comprised entirely of Eurodollar Competitive Loans, CD Loans or Fixed
Rate Loans, and each Standby Borrowing shall be comprised entirely of Eurodollar
Standby Loans or ABR Loans, as the Borrower requesting such Competitive
Borrowing or Standby Borrowing may specify pursuant to Section 2.03 or 2.04, as
the case may be.
(c) Subject to Section 2.05, each Lender shall make each Loan to be
made by it hereunder on the proposed date thereof by wire transfer of
immediately available funds to the Agent in New York, New York, not later than
12:00 noon, New York City time (11:00 a.m., New York City time, in the case of a
Eurodollar Loan), and the Agent shall by 2:00 p.m., New York City time, credit
the amounts so received to the general deposit account of the Borrower of such
Loan with the Agent or, if a Borrowing shall not occur on such date because any
condition precedent herein specified shall not have been met, return the amounts
so
<PAGE>
24
received to the respective Lenders. Competitive Loans shall be made by the
Lender or Lenders whose Competitive Bids therefor are accepted pursuant to
Section 2.03 in the amounts so accepted and Standby Loans shall be made by the
Lenders pro rata in accordance with Section 2.16. Unless the Agent shall have
received notice from a Lender prior to the date of any Borrowing that such
Lender will not make available to the Agent such Lender's portion of such
Borrowing, the Agent may assume that such Lender has made such portion available
to it on the date of such Borrowing in accordance with this paragraph (c) and
may, in reliance upon such assumption, make a corresponding amount available on
such date to the Borrower requesting such Borrowing. If and to the extent that
such Lender shall not have made such portion available to the Agent, such Lender
and such Borrower severally agree to pay or repay to the Agent forthwith on
demand such corresponding amount together with interest thereon, for each day
from the date such amount is made available to such Borrower until the date such
amount is repaid to the Agent at (i) in the case of such Borrower, the interest
rate applicable at the time to the Loans comprising such Borrowing and (ii) in
the case of such Lender, the Federal Funds Effective Rate; provided, however,
-------- -------
that such Borrower shall not in any event have any liability in respect of such
repayment under Section 2.15. If such Lender shall pay to the Agent such
corresponding amount, such amount shall constitute such Lender's Loan as part of
such Borrowing for purposes of this Agreement.
(d) Notwithstanding any other provision of this Agreement, no
Borrower shall be entitled to request any Borrowing if the Interest Period
requested with respect thereto would end after the Maturity Date.
(e) The Loans of each Type made by each Lender shall be made through
and maintained at such Lender's Applicable Lending Office for Loans of such
Type. Any Lender may change its Applicable Lending Office for any Type of Loans
without the prior written consent of JCPenney so long as (i) such Lender shall
have no knowledge that such change would cause it to be unlawful for such Lender
to make or maintain any Eurodollar Loan or to give effect to its obligations as
contemplated hereby with respect to any Eurodollar Loan and (ii) such Lender
shall not be entitled to recoupment, reimbursement or indemnification in
accordance with the terms and conditions of Sections 2.13 and 2.15 to the extent
that such Lender shall have had knowledge
<PAGE>
25
at the time of such change in Applicable Lending Office that such entitlement
would arise as a result of such change.
SECTION 2.03. Competitive Bid Procedure. (a) In order to request
--------------------------
Competitive Bids, a Borrower shall hand deliver, telex or telecopy to the Agent
a duly completed Competitive Bid Request in the form of Exhibit A-1 hereto, to
be received by the Agent (i) in the case of a Eurodollar Borrowing or a CD
Borrowing, not later than 11:00 a.m., New York City time, four Business Days
before a proposed Competitive Borrowing and (ii) in the case of a Fixed Rate
Borrowing, not later than 11:00 a.m., New York City time, one Business Day
before a proposed Competitive Borrowing. No ABR Loan shall be requested in, or
made pursuant to, a Competitive Bid Request. A Competitive Bid Request that
does not conform substantially to the format of Exhibit A-1 shall be rejected
and the Agent shall promptly notify the appropriate Borrower of such rejection
by telex or telecopier. Such request shall in each case refer to this Agreement
and specify (x) that the Borrowing then being requested is to be a Eurodollar
Borrowing, a CD Borrowing or a Fixed Rate Borrowing, (y) the date of such
Borrowing (which shall be a Business Day) and the aggregate principal amount
thereof (which shall be, subject to the third sentence of Section 2.02(a), in a
minimum principal amount of $25,000,000 and in an integral multiple of
$5,000,000 and (z) the Interest Period with respect thereto (which may not end
after the Maturity Date). Promptly after its receipt of a Competitive Bid
Request that is not rejected as aforesaid, the Agent shall invite by telex or
telecopier (in the form set forth in Exhibit A-2 hereto) the Lenders to bid, on
the terms and conditions of this Agreement, to make Competitive Loans pursuant
to the Competitive Bid Request.
(b) The Agent may, in its sole discretion, make one or more
Competitive Bids to the appropriate Borrower responsive to such Borrower's
Competitive Bid Request. Each Competitive Bid by the Agent must be submitted to
the Borrower via telex or telecopier, in the form of Exhibit A-3 hereto, (i) in
the case of a Eurodollar Borrowing or CD Borrowing, not later than 8:30 a.m.,
New York City time, three Business Days before a proposed Competitive Borrowing
and (ii) in the case of a Fixed Rate Borrowing, not later than 8:30 a.m., New
York City time, on the day of a proposed Competitive Borrowing. Each Lender
may, in its sole discretion, make one or more Competitive Bids to the
appropriate Borrower responsive to such Borrower's Competitive Bid Request.
Each Competitive Bid by a Lender
<PAGE>
26
must be received by the Agent via telex or telecopier, in the form of Exhibit A-
3 hereto, (i) in the case of a Eurodollar Borrowing or CD Borrowing, not later
than 9:00 a.m., New York City time, three Business Days before a proposed
Competitive Borrowing and (ii) in the case of a Fixed Rate Borrowing, not later
than 9:00 a.m., New York City time, on the day of a proposed Competitive
Borrowing. Multiple bids will be accepted by the Agent. Competitive Bids that
do not conform substantially to the format of Exhibit A-3 may be rejected by the
Agent after conferring with, and upon the instruction of, the Borrower
requesting such Competitive Bids, and the Agent shall notify the Lender making
such nonconforming bid of such rejection as soon as practicable. Each
Competitive Bid shall refer to this Agreement and specify (x) the principal
amount (which shall be in an integral multiple of $5,000,000 (unless such
principal amount shall equal the entire principal amount of the Competitive
Borrowing requested by such Borrower) and which may equal such entire principal
amount) of the Competitive Loan or Loans that the Lender is willing to make to
the Borrower requesting such Competitive Bid, (y) the Competitive Bid Rate or
Rates at which the Lender is prepared to make the Competitive Loan or Loans and
(z) the Interest Period and the last day thereof. If any Lender shall elect not
to make a Competitive Bid, such Lender shall so notify the Agent via telex or
telecopier (A) in the case of a Eurodollar Borrowing or a CD Borrowing, not
later than 9:00 a.m., New York City time, three Business Days before a proposed
Competitive Borrowing and (B) in the case of a Fixed Rate Borrowing, not later
than 9:00 a.m., New York City time, on the day of a proposed Competitive
Borrowing; provided, however, that failure by any Lender to give such notice
-------- -------
shall not cause such Lender to be obligated to make any Competitive Loan as part
of such Competitive Borrowing. A Competitive Bid submitted by a Lender pursuant
to this paragraph (b) shall be irrevocable.
(c) The Agent shall notify the appropriate Borrower by telex or
telecopier not later than (i) in the case of a Eurodollar Borrowing or a CD
Borrowing, 10:00 a.m., New York City time, three Business Days before the
proposed Competitive Borrowing and (ii) in the case of a Fixed Rate Borrowing,
10:00 a.m., New York City time, on the day of the proposed Competitive Borrowing
of all the Competitive Bids made, the Competitive Bid Rate and the principal
amount of each Competitive Loan in respect of which a Competitive Bid was made
and the identity of the Lender that made each bid. The Agent shall send a copy
of
<PAGE>
27
all Competitive Bids to such Borrower for its records as soon as practicable
after completion of the bidding process set forth in this Section 2.03.
(d) The appropriate Borrower may in its sole and absolute discretion,
subject only to the provisions of this paragraph (d) and paragraph (h) below,
accept or reject any Competitive Bid referred to in paragraph (c) above. Such
Borrower shall notify the Agent by telex or telecopier not later than (i) in the
case of a Eurodollar Borrowing or a CD Borrowing, 11:30 a.m., New York City
time, three Business Days before the proposed Competitive Borrowing and (ii) in
the case of a Fixed Rate Borrowing, not later than 11:30 a.m., New York City
time, on the day of the proposed Competitive Borrowing whether and to what
extent it has decided to accept or reject any or all of the bids referred to in
paragraph (c) above; provided, however, that (v) the failure by such Borrower to
-------- -------
give such notice shall be deemed to be a rejection of all the bids referred to
in paragraph (c) above, (w) such Borrower shall not accept a bid made at a
particular Competitive Bid Rate if it has decided to reject a bid made at a
lower Competitive Bid Rate, (x) the aggregate amount of the Competitive Bids
accepted by such Borrower shall not exceed the principal amount specified in the
related Competitive Bid Request, (y) if such Borrower shall accept a bid or bids
made at a particular Competitive Bid Rate but the amount of such bid or bids
shall cause the total amount of bids to be accepted by such Borrower to exceed
the amount specified in the related Competitive Bid Request, then such Borrower
shall accept a portion of such bid or bids in an amount equal to the amount
specified in the related Competitive Bid Request less the amount of all other
Competitive Bids accepted with respect to such Competitive Bid Request, which
acceptance, in the case of multiple bids at such Competitive Bid Rate, shall be
made pro rata in accordance with the amount of each such bid at such Competitive
Bid Rate, and (z) except pursuant to clause (y) above, no bid shall be accepted
for a Competitive Loan unless the principal amount of such Competitive Loan is
in an integral multiple of $5,000,000 or is equal to the entire principal amount
of the Competitive Borrowing being requested by such Borrower; provided further,
-------- -------
however, that if a Competitive Loan must be in an amount less than $5,000,000
- -------
because of the provisions of clause (y) above, such Competitive Loan may be for
a minimum of $1,000,000 or any integral multiple thereof, and in calculating the
pro rata allocation of acceptances of portions of multiple bids at a particular
Competitive Bid
<PAGE>
28
Rate pursuant to clause (y) the amounts shall be rounded to integral multiples
of $1,000,000 in a manner which shall be in the discretion of such Borrower. A
notice given pursuant to this paragraph (d) by the appropriate Borrower shall be
irrevocable.
(e) The Agent shall promptly notify each bidding Lender whether or
not its Competitive Bid has been accepted (and if so, in what amount and at what
Competitive Bid Rate) by telex or telecopier sent by the Agent, and each
successful bidder will thereupon become bound, subject to the other applicable
conditions hereof, to make the Competitive Loan in respect of which its bid has
been accepted.
(f) The Borrowers shall not make more than 10 Competitive Bid
Requests during any 30-day period.
(g) All notices required by this Section 2.03 shall be given in
accordance with Section 9.01.
(h) At no time shall the outstanding aggregate principal amount of
all Competitive Loans made by all Lenders exceed the Total Commitment in effect
at such time.
(i) The Agent shall hold in confidence each Competitive Bid received
by the Agent until such Competitive Bid has been disclosed to the appropriate
Borrower pursuant to paragraph (d) above.
SECTION 2.04. Standby Borrowing Procedure. In order to request a
----------------------------
Standby Borrowing, a Borrower shall hand deliver, telex or telecopy a Standby
Borrowing Request in the form of Exhibit A-4 to the Agent (a) in the case of a
Standby Borrowing that is a Eurodollar Borrowing, not later than 11:00 a.m., New
York City time, three Business Days before a proposed borrowing and (b) in the
case of an ABR Borrowing, not later than 10:00 a.m., New York City time, on the
day of a proposed borrowing. A Borrower shall be deemed to have given a Standby
Borrowing Request if it (i) notifies an officer of the Agent identified in
Section 9.01 by telephone of the content of such Standby Borrowing Request not
later than the relevant time set forth above for delivery thereof and (ii)
delivers such Standby Borrowing Request to Agent as soon as practicable;
provided, however, that a Borrower shall not have any right to receive the
- -------- -------
proceeds of a Standby Borrowing unless the Agent has received the related
written Standby Borrowing Request.
<PAGE>
29
Such notice shall be irrevocable and shall in each case specify (i) whether the
Borrowing then being requested is to be a Eurodollar Borrowing or an ABR
Borrowing; (ii) the date of such Standby Borrowing (which shall be a Business
Day) and the amount thereof; and (iii) the Interest Period with respect thereto.
If no election as to the Type of Standby Borrowing is specified in any such
notice, then the requested Standby Borrowing shall be an ABR Borrowing. If no
Interest Period with respect to any Standby Borrowing is specified in any such
notice, then the Borrower requesting such Borrowing shall be deemed to have
selected an Interest Period of one month's duration, in the case of a Eurodollar
Borrowing, or five days' duration, in the case of an ABR Borrowing. If a
Borrower shall not have given notice in accordance with this Section 2.04 of its
election to refinance a Standby Borrowing of such Borrower prior to the end of
the Interest Period in effect for such Borrowing, then such Borrower shall
(unless such Borrowing is repaid at the end of such Interest Period) be deemed
to have given notice of an election to refinance such Borrowing with an ABR
Borrowing. The Agent shall promptly advise the Lenders of any notice given
pursuant to this Section 2.04 and of each Lender's portion of the requested
Borrowing.
SECTION 2.05. Refinancings. Any Borrower may refinance all or any
-------------
part of any Borrowing of such Borrower with a Borrowing of the same or a
different Type made pursuant to Section 2.03 or Section 2.04, subject to the
conditions and limitations set forth herein and elsewhere in this Agreement,
including refinancings of Competitive Borrowings with Standby Borrowings and
Standby Borrowings with Competitive Borrowings. Any Borrowing or part thereof
so refinanced shall be deemed to be repaid in accordance with Section 2.07 with
the proceeds of a new Borrowing hereunder and the proceeds of the new Borrowing,
to the extent they do not exceed the principal amount of the Borrowing being
refinanced, shall not be paid by the Lenders to the Agent or by the Agent to the
appropriate Borrower pursuant to Section 2.02(c); provided, however, that (i) if
-------- -------
the principal amount extended by a Lender in a refinancing is greater than the
principal amount extended by such Lender in the Borrowing being refinanced, then
such Lender shall pay such difference to the Agent for distribution to the
Lenders described in (ii) below, (ii) if the principal amount extended by a
Lender in the Borrowing being refinanced is greater than the principal amount
being extended by such Lender in the refinancing, the Agent shall return the
difference to such Lender out of amounts received
<PAGE>
30
pursuant to (i) above and (iii) to the extent any Lender fails to pay to the
Agent amounts due from it pursuant to (i) above, any Loan or portion thereof
being refinanced shall not be deemed repaid in accordance with Section 2.07 and
shall be payable by the Borrower to which such Loan was made; provided, however,
-------- -------
that such Borrower shall not have any liability under Section 2.15 in respect of
any of its payment obligations under this clause (iii).
SECTION 2.06. Fees. (a) The Borrowers agree, jointly and severally,
-----
to pay to each Lender, through the Agent, on each March 31, June 30, September
30 and December 31 and on the date on which the Commitment of such Lender shall
be terminated as provided herein, a facility fee (a "Facility Fee") at a rate
per annum equal to the Facility Fee Percentage from time to time in effect on
the amount of the Commitment of such Lender, whether used or unused, from time
to time in effect during the preceding quarter (or shorter period commencing on
the Closing Date and/or ending with the Maturity Date or the Commitment
Termination Date with respect to each Lender or any earlier date on which the
Commitment of such Lender shall be terminated). All Facility Fees shall be
computed in arrears on the basis of the actual number of days elapsed in a year
of 360 days. The Facility Fee due to each Lender shall commence to accrue on
the Closing Date (or, if later, the date on which such Lender became a Lender)
and shall cease to accrue on the earlier of the Maturity Date and the
termination of the Commitment of such Lender as provided herein.
(b) The Borrowers agree, jointly and severally, to pay to the Agent
from time to time, for its own account, agent and administrative fees (the
"Administrative Fees") at such times and in such amounts as have been previously
agreed upon in writing between the Borrowers and the Agent.
(c) All Fees shall be paid on the dates due in immediately available
funds. Once paid, none of the Fees shall be refundable, except in the event of
manifest error.
SECTION 2.07. Repayment of Loans; Evidence of the Borrowers'
----------------------------------------------
Obligations. Subject to Section 4.01, the outstanding principal balance of each
- ------------
Competitive Loan and Standby Loan made by any Lender shall be payable (i) except
in the case of ABR Loans, on the last day of the Interest Period applicable to
such Loan and (ii) on the Commitment Termination Date with respect to such
Lender. Each
<PAGE>
31
Competitive Loan and each Standby Loan shall bear interest from the date thereof
on the outstanding principal balance thereof as set forth in Section 2.08. With
respect to each Lender, the entries made in the accounts maintained by the Agent
and such Lender shall be prima facie evidence of the existence and amounts of
the monetary obligations payable by any Borrower to such Lender in respect of
the Loans made by such Lender to such Borrower; provided that the failure to
--------
maintain any such accounts or any error therein shall not affect the obligations
of the Borrowers hereunder.
SECTION 2.08. Interest on Loans. (a) Subject to the provisions of
------------------
Section 2.09, the Loans comprising each Eurodollar Borrowing shall bear interest
(computed on the basis of the actual number of days elapsed over a year of 360
days) at a rate per annum on any date of determination equal to (i) in the case
of each Eurodollar Standby Loan, the LIBO Rate for the Interest Period in effect
for such Borrowing plus the Standby Margin for such date, and (ii) in the case
of each Eurodollar Competitive Loan, the LIBO Rate for the Interest Period in
effect for such Loan plus the Competitive Margin offered by the Lender making
such Loan and accepted by the Borrower requesting such Loan pursuant to Section
2.03. The LIBO Rate for each Interest Period shall be determined by the Agent
in consultation with the LIBO Reference Lenders, and such determination shall be
conclusive absent manifest error. The Agent shall promptly advise the Borrowers
and each Lender of such determination.
(b) Subject to the provisions of Section 2.09, the Loans comprising
each ABR Borrowing shall bear interest (computed on the basis of the actual
number of days elapsed over a year of 365 or 366 days, as the case may be) at a
rate per annum equal to the Alternate Base Rate. The Alternate Base Rate shall
be determined by the Agent, and such determination shall be conclusive absent
manifest error. The Agent shall promptly advise the Borrowers and each Lender
of such determination.
(c) Subject to the provisions of Section 2.09, the Loans comprising
each CD Borrowing shall bear interest (computed on the basis of the actual
number of days elapsed over a year of 360 days) at a rate per annum equal to the
Adjusted CD Rate for the Interest Period in effect for such Borrowing plus, in
the case of each such Loan, the Competitive Margin offered by the Lender making
such Loan and accepted by the Borrower requesting such Borrowing pursuant to
Section 2.03, provided, however, that any CD Loan made
-------- -------
<PAGE>
32
pursuant to Section 2.10 or 2.14 shall bear interest (computed as described in
this paragraph) at a rate per annum on any date of determination equal to the
Adjusted CD Rate for the Interest Period applicable to such CD Loan plus the
Standby Margin for such date.
(d) Subject to the provisions of Section 2.09, each Fixed Rate Loan
shall bear interest at a rate per annum (computed on the basis of the actual
number of days elapsed over a year of 360 days) equal to the fixed rate of
interest offered by the Lender making such Loan and accepted by the Borrower
requesting the applicable Fixed Rate Borrowing pursuant to Section 2.03.
(e) Interest on each Borrowing shall be payable on each applicable
Interest Payment Date.
SECTION 2.09. Default Interest. If any Borrower shall default in the
-----------------
payment of the principal of or interest on any Loan or any other amount becoming
due hereunder, whether by scheduled maturity, notice of prepayment, acceleration
or otherwise, such Borrower shall on demand from time to time from the Agent pay
interest, to the extent permitted by applicable law, on such defaulted amount
from the date on which the Agent first notifies such Borrower that it will be
required to pay interest pursuant to this Section on such defaulted amount up to
(but not including) the date of actual payment (after as well as before
judgment) at a rate per annum (computed on the basis of the actual number of
days elapsed over a year of 365 or 366 days, as the case may be) equal to the
Alternate Base Rate plus 2%.
SECTION 2.10. Alternate Rate of Interest. In the event, and on each
---------------------------
occasion, that on the day two Business Days prior to the commencement of any
Interest Period for a Eurodollar Borrowing the LIBO Reference Lenders shall have
determined and communicated to the Agent that dollar deposits in the principal
amounts of the Eurodollar Loans comprising such Borrowing are not generally
available in the London interbank market, or that the rates at which such dollar
deposits are being offered will not adequately and fairly reflect the cost to
any Lender of making or maintaining its Eurodollar Loan during such Interest
Period, or that reasonable means do not exist for ascertaining the LIBO Rate,
the Agent shall, as soon as practicable thereafter, give written or telex notice
of such determination to the Borrowers and the Lenders. In the
<PAGE>
33
event of any such determination, until the Agent shall have advised the
Borrowers and the Lenders that the circumstances giving rise to such notice no
longer exist, (i) any request by any Borrower for a Competitive Borrowing
pursuant to Section 2.03 shall be of no force and effect and shall be denied by
the Agent and (ii) any request by any Borrower for a Eurodollar Borrowing
pursuant to Section 2.04 shall be deemed to be a request for (A) an ABR
Borrowing having an Interest Period of five days' duration and (B) a refinancing
of such ABR Borrowing with an ABR Borrowing or a CD Borrowing, as such Borrower
shall elect by notice to the Agent not later than 11:00 a.m., New York City
time, one Business Day before such refinancing, comprised of Loans having an
Interest Period that is, when added to the Interest Period for the ABR Borrowing
being refinanced, equal to (in the case of an ABR Borrowing) or as close as
possible to (in the case of a CD Borrowing) the Interest Period requested by
such Borrower in connection with such Eurodollar Borrowing. The parties hereto
shall have the same rights and obligations in respect of a deemed request for a
CD Borrowing or an ABR Borrowing pursuant to this Section and the CD Loans and
ABR Loans made pursuant thereto, and the Commitments shall be utilized by such
CD Loans and such ABR Loans, as if such Borrowing were a Standby Borrowing
requested, and such Loans were Standby Loans made, pursuant to Section 2.04.
Each determination by the LIBO Reference Lenders hereunder shall be conclusive
absent manifest error.
SECTION 2.11. Termination and Reduction of Commitments. (a) Any
-----------------------------------------
Commitment that has not been terminated prior to the Maturity Date shall be
automatically terminated on the Maturity Date.
(b) Except as provided in Section 2.20 hereof, upon at least 5
Business Days' prior irrevocable written or telex notice to the Agent, JCPenney
may at any time in whole permanently terminate, or from time to time in part
permanently reduce, the Total Commitment; provided, however, that each partial
-------- -------
reduction of the Total Commitment shall be in an integral multiple of $5,000,000
and in a minimum principal amount of $25,000,000 or, if less, the Total
Commitment then in effect.
(c) Except as provided in Section 2.20, each reduction in the Total
Commitment hereunder shall be made ratably among the Lenders in accordance with
their respective Commitments. Subject to Section 9.09, the
<PAGE>
34
Borrowers shall pay to the Agent for the account of the Lenders, on the date of
each termination or reduction, the Facility Fees accrued through the date of
such termination or reduction.
(d) The Commitment of each Lender shall automatically and permanently
terminate on December 6, 1995 (the "Commitment Termination Date"); provided,
--------
however, that the Commitment Termination Date with respect to any Lender shall
- -------
not be extended under any circumstances to a date later than the Maturity Date.
SECTION 2.12. Prepayment. (a) Each Borrower shall have the right at
-----------
any time and from time to time to prepay any Standby Borrowing or any
Competitive Borrowing of such Borrower, in whole or in part, subject to the
requirements of Section 2.15 but otherwise without premium or penalty, upon
giving written or telex notice (or telephone notice promptly confirmed by
written or telex notice) to the Agent before 10:00 a.m., New York City time, one
Business Day prior to such prepayment; provided, however, that each partial
-------- -------
prepayment shall be in an amount which is an integral multiple of $5,000,000 and
not less than $25,000,000.
(b) On the date of any termination or reduction of the Commitments
pursuant to Section 2.11, the Borrowers shall pay or prepay so much of the
Standby Borrowings as shall be necessary in order that the aggregate principal
amount of the Standby Loans outstanding will not exceed the Total Commitment
after giving effect to such termination or reduction.
(c) Each notice of prepayment shall specify the prepayment date and
the principal amount of each Borrowing (or portion thereof) to be prepaid, shall
be irrevocable and shall commit the Borrower giving such notice to prepay such
Borrowing (or portion thereof) by the amount stated therein on the date stated
therein. All prepayments under this Section 2.12 shall be subject to Section
2.15 but otherwise without premium or penalty. All prepayments under this
Section 2.12 shall be accompanied by accrued interest on the principal amount
being prepaid to the date of payment.
<PAGE>
35
SECTION 2.13. Reserve Requirements; Change in Circumstances. Subject
------------------------------- --------------
to the procedures and limitations of Section 2.20:
(a) Notwithstanding any other provision herein, if after the date of
this Agreement any change in applicable law or regulation or in the
interpretation or administration thereof by any governmental authority charged
with the interpretation or administration thereof (whether or not having the
force of law) shall change the basis of taxation of payments to any Lender of
the principal of or interest on any Eurodollar Loan, CD Loan or Fixed Rate Loan
made by such Lender or any Fees or other amounts payable hereunder (other than
changes in respect of taxes imposed on such Lender by the jurisdiction in which
such Lender is organized, has its principal office or maintains its Applicable
Lending Office for such Loan or by any political subdivision or taxing authority
in any such jurisdiction), or shall impose, modify or deem applicable any
reserve, special deposit or similar requirement against assets of, deposits with
or for the account of or credit extended by such Lender, or shall impose on such
Lender or the London interbank market any other condition affecting this
Agreement or any Eurodollar Loan, CD Loan or Fixed Rate Loan made by such
Lender, and the result of any of the foregoing shall be to increase the cost to
such Lender of making or maintaining any Eurodollar Loan, CD Loan or Fixed Rate
Loan or to reduce the amount of any sum received or receivable by such Lender
hereunder (whether of principal, interest or otherwise) by an amount deemed by
such Lender in its reasonable judgment to be material, then such additional
amount or amounts as will compensate such Lender for such additional costs
incurred or reduction suffered will be paid to such Lender in accordance with
Section 2.20 (i) if such additional costs or reduction shall relate to a
particular Loan, by the Borrower to which such Loan was made and (ii) otherwise,
by JCPenney. Notwithstanding the foregoing, no Lender shall be entitled to
request compensation under this paragraph with respect to any Loan if it shall
have been aware that the change giving rise to such request had been adopted or
enacted at the earlier of the time at which the Lender became a party to this
Agreement or, with respect to a Competitive Loan, the time of submission of the
Competitive Bid pursuant to which such Competitive Loan shall have been made.
(b) If the adoption after the Closing Date of any law, rule,
regulation or guideline regarding capital adequacy, or any change after the
Closing Date in any of the
<PAGE>
36
foregoing or in the interpretation or administration of any of the foregoing by
any governmental authority, central bank or comparable agency charged with the
interpretation or administration thereof, or compliance by any Lender (or any
Applicable Lending Office of such Lender) with any request or directive
regarding capital adequacy (whether or not having the force of law) made or
issued after the Closing Date by any such authority, central bank or comparable
agency, has or would have the effect of reducing the rate of return on such
Lender's capital as a consequence of this Agreement or the Loans made by such
Lender pursuant hereto to a level below that which such Lender could have
achieved but for such adoption, change or compliance (taking into consideration
such Lender's policies with respect to capital adequacy) by an amount deemed by
such Lender in its reasonable judgment to be material, then subject to Section
2.20 hereof, from time to time such additional amount or amounts as will
compensate such Lender for any such reduction suffered will be paid to such
Lender in accordance with Section 2.20 (i) if such reduction shall relate to a
particular Loan, by the Borrower to which such Loan was made and (ii) otherwise,
by JCPenney.
SECTION 2.14. Change in Legality. (a) Notwithstanding any other
-------------------
provision herein, if any change after the Closing Date in any law or regulation
or in the interpretation thereof by any Governmental Authority charged with the
administration or interpretation thereof shall make it unlawful for any Lender
to make or maintain any Eurodollar Loan or to give effect to its obligations as
contemplated hereby with respect to any Eurodollar Loan, then, by written notice
to the Borrowers and to the Agent, such Lender may:
(i) declare that Eurodollar Loans will not thereafter be made by such
Lender hereunder, whereupon such Lender shall not submit a Competitive Bid
in response to a request for Competitive Loans and any request by any
Borrower for a Standby Borrowing comprised of Eurodollar Loans shall, as to
such Lender only, be deemed a request for an ABR Loan or a CD Loan, as such
Borrower shall elect by notice to the Agent not later than 11:00 a.m., New
York City time, one Business Day before such Borrowing, having an Interest
Period equal to (in the case of an ABR Loan) or as close as possible to (in
the case of a CD Loan) the Interest Period applicable to such Eurodollar
Loans unless such declaration shall be subsequently withdrawn; and
<PAGE>
37
(ii) require that all outstanding Eurodollar Loans made by it be
converted to ABR Loans or to CD Loans, in which event all such Eurodollar
Loans shall be automatically converted to ABR Loans or, if JCPenney shall
so notify the Agent on the date of such conversion and the Agent shall have
determined that the Adjusted CD Rate can be determined for the Interest
Period in question, to CD Loans as of the effective date of such notice as
provided in paragraph (b) below.
In the event any Lender shall exercise its rights under (i) or (ii) above, all
payments and prepayments of principal that would otherwise have been applied to
repay the Eurodollar Loans that would have been made by such Lender or the
converted Eurodollar Loans of such Lender shall instead be applied to repay the
ABR Loans or CD Loans made by such Lender in lieu of, or resulting from the
conversion of, such Eurodollar Loans. The parties hereto shall have the same
rights and obligations in respect of a deemed request for a CD Loan pursuant to
clause (i) above and any CD Loan made pursuant to paragraph (a) above, and the
Commitments shall be utilized by any such CD Loan, as if such CD Loan were a
Standby Loan requested and made pursuant to Section 2.04.
(b) For purposes of this Section 2.14, a notice to the Borrowers by
any Lender shall be effective as to each Eurodollar Loan, if lawful, on the last
day of the Interest Period currently applicable to such Eurodollar Loan; in all
other cases such notice shall be effective on the date of receipt by the
Borrowers (in which case the ABR Loan or CD Loan resulting from the conversion
of such Eurodollar Loan pursuant to clause (ii) of paragraph (a) above shall
have an Interest Period equal to (in the case of an ABR Loan) or as close as
possible to (in the case of a CD Loan) the Interest Period applicable to such
Eurodollar Loan).
SECTION 2.15. Indemnity. Each Borrower agrees to indemnify the Agent
----------
and each Lender against any reasonable out-of-pocket loss or expense which the
Agent and/or such Lender may sustain or incur as a consequence of (a) any
failure by such Borrower to fulfill on the date of any borrowing hereunder the
applicable conditions set forth in Article IV, (b) any failure by such Borrower
to borrow or to refinance or continue any Loan hereunder after irrevocable
notice of such borrowing, refinancing or continuation has been given pursuant to
Section 2.03 or 2.04, (c) any payment, prepayment or conversion of a Eurodollar
Loan, CD Loan or Fixed Rate Loan made to such Borrower that is
<PAGE>
38
required by any other provision of this Agreement or otherwise made or deemed
made on a date other than the last day of the Interest Period applicable thereto
or (d) any default in payment or prepayment of the principal amount of any
Eurodollar Loan, CD Loan or Fixed Rate Loan made to such Borrower or any part
thereof or interest accrued thereon, as and when due and payable (at the due
date thereof, whether by scheduled maturity, acceleration, irrevocable notice of
prepayment or otherwise), after the expiration of the applicable grace period,
including, in each such case, any reasonable out-of-pocket loss or expense
sustained or incurred in liquidating or employing deposits from third parties
acquired to effect or maintain such Loan or any part thereof as a Eurodollar
Loan, CD Loan or Fixed Rate Loan. Such loss or reasonable expense shall include
an amount equal to the excess, if any, as reasonably determined by the Agent
and/or such Lender, of (i) its cost of obtaining the funds for the Loan being
paid, prepaid, converted or not borrowed (based on the LIBO Rate or Adjusted CD
Rate or, in the case of a Fixed Rate Loan, the fixed rate of interest applicable
thereto) for the period from the date of such payment, prepayment or failure to
borrow to the last day of the Interest Period for such Loan (or, in the case of
a failure to borrow, the Interest Period for such Loan which would have
commenced on the date of such failure) over (ii) the amount of interest (as
reasonably determined in good faith by the Agent and/or such Lender) that would
be realized by the Agent and/or such Lender in reemploying the funds so paid,
prepaid or not borrowed for such period or Interest Period, as the case may be;
provided, however, that with respect to any Eurodollar Loan or CD Loan for which
- -------- -------
the corresponding LIBO Rate or Adjusted CD Rate, as the case may be, is
available for the period or Interest Period in question, the amount of interest
realized in reemploying such funds shall be computed at such LIBO Rate or
Adjusted CD Rate, as the case may be, at the time of the applicable payment,
prepayment or failure to borrow. In order to exercise its rights under this
Section, the Agent and/or a Lender shall deliver to the appropriate Borrower a
certificate setting forth any amount or amounts which the Agent and/or such
Lender is entitled to receive pursuant to this Section. Such Borrower shall
have a 30-Business Day period following the receipt of such certificate (if such
Borrower in good faith disagrees with the assertion that any payment under such
section is due or with the amount shown as due on such certificate and so
notifies the Agent and/or such Lender of such disagreement within 10 Business
Days following receipt of such certificate) to negotiate with the
<PAGE>
39
Agent and/or such Lender, which negotiations shall be conducted by the
respective parties in good faith, and to agree upon another amount that will
adequately compensate the Agent and/or such Lender, it being expressly
understood that if such Borrower does not provide the required notice of its
disagreement as provided above, such Borrower shall pay the amount shown as due
on the certificate on the tenth Business Day following receipt thereof and
further if such Borrower does provide such required notice, and negotiations are
entered into but do not result in agreement by such Borrower and the Agent
and/or such Lender within the 30-Business Day period, then such Borrower shall
pay the amount shown as due on the certificate on the last day of such period.
SECTION 2.16. Pro Rata Treatment. Except as required under Sections
-------------------
2.14 and 2.20(b), each Standby Borrowing, each payment or prepayment of
principal of any Standby Borrowing, each payment of interest on the Standby
Loans, each payment of the Facility Fees, each reduction of the Commitments and
each refinancing of any Borrowing with a Standby Borrowing of any Type, shall be
allocated pro rata among the Lenders in accordance with their respective
Commitments (or, if such Commitments shall have expired or been terminated, in
accordance with the respective principal amounts of their outstanding Standby
Loans). Each payment of principal of any Competitive Borrowing shall be
allocated pro rata among the Lenders participating in such Borrowing in
accordance with the respective principal amounts of their outstanding
Competitive Loans comprising such Borrowing. Each payment of interest on any
Competitive Borrowing shall be allocated pro rata among the Lenders
participating in such Borrowing in accordance with the respective amounts of
accrued and unpaid interest on their outstanding Competitive Loans comprising
such Borrowing. For purposes of determining the available Commitments of the
Lenders at any time, each outstanding Competitive Borrowing shall be deemed to
utilize the Commitments of each of the Lenders pro rata in accordance with their
respective Commitments. Each Lender agrees that in computing such Lender's
portion of any Borrowing to be made hereunder, the Agent may, in its discretion,
round each Lender's percentage of such Borrowing to the next higher or lower
whole dollar amount.
SECTION 2.17. Sharing of Setoffs. Each Lender agrees that if it
-------------------
shall, through the exercise of a right of banker's lien, setoff or counterclaim
against any Borrower, or pursuant to a secured claim under Section 506 of Title
11
<PAGE>
40
of the United States Code or other security or interest arising from, or in lieu
of, such secured claim, received by such Lender under any applicable bankruptcy,
insolvency or other similar law or otherwise, or by any other means, obtain
payment (voluntary or involuntary) in respect of any Standby Loan or Loans as a
result of which the unpaid principal portion of its Standby Loans shall be
proportionately less than the unpaid principal portion of the Standby Loans of
any other Lender, it shall be deemed simultaneously to have purchased from such
other Lender at face value, and shall promptly pay to such other Lender the
purchase price for, a participation in the Standby Loans of such other Lender,
so that the aggregate unpaid principal amount of the Standby Loans and
participations in the Standby Loans held by each Lender shall be in the same
proportion to the aggregate unpaid principal amount of all Standby Loans then
outstanding as the principal amount of its Standby Loans prior to such exercise
of banker's lien, setoff or counterclaim or other event was to the principal
amount of all Standby Loans outstanding prior to such exercise of banker's lien,
setoff or counterclaim or other event; provided, however, that, if any such
-------- -------
purchase or purchases or adjustments shall be made pursuant to this Section
2.17 and the payment giving rise thereto shall thereafter be recovered, such
purchase or purchases or adjustments shall be rescinded to the extent of such
recovery and the purchase price or prices or adjustment restored without
interest. The Borrowers expressly consent to the foregoing arrangements and
agree that, subject to Section 9.06, any Lender holding a participation in a
Standby Loan deemed to have been so purchased may exercise any and all rights of
banker's lien, setoff or counterclaim with respect to any and all moneys owing
by any Borrowers to such Lender by reason thereof as fully as if such Lender had
made a Standby Loan directly to the Borrower in the amount of such
participation.
SECTION 2.18. Payments. (a) Each Borrower shall make each payment
---------
(including principal of or interest on any Borrowing or any Fees or other
amounts) required to be made by it hereunder not later than 12:00 (noon), New
York City time (11:00 a.m., New York City time, in the case of any payment to be
made to the Agent), on the date when due in dollars to the Agent at account
number 006-035280 (ref: JCPenney) maintained by the Agent with Chemical Bank,
270 Park Avenue, New York, New York 10017, in each case in immediately available
funds.
<PAGE>
41
(b) Whenever any payment (including principal of or interest on any
Borrowing or any Fees or other amounts) hereunder shall become due, or otherwise
would occur, on a day that is not a Business Day, such payment may be made on
the next succeeding Business Day, and such extension of time shall in such case
be included in the computation of interest or Fees, if applicable.
SECTION 2.19. Taxes. (a) If any Borrower shall be required by
-----
reason of any change occurring after the date of this Agreement in applicable
law or regulation or tax treaty or in the interpretation or administration
thereof by any Governmental Authority charged with the interpretation or
administration thereof (whether or not having force of law) (a "Change of Law")
to deduct any Taxes from or in respect of any sum payable by it hereunder to any
Lender or to the Agent, then except as otherwise provided in this Section 2.19
and subject to Section 2.20, (i) the sum payable shall be increased by the
amount necessary so that after making all required deductions (including
deductions applicable to additional sums payable under this Section 2.19) such
Lender or the Agent (as the case may be) shall receive an amount equal to the
sum it would have received had no such deductions been made, (ii) such Borrower
shall make such deductions and (iii) such Borrower shall pay the full amount
deducted to the relevant taxing authority or other Governmental Authority in
accordance with applicable law.
(b) In addition, the Borrowers agree, jointly and severally, to pay
any present or future stamp or documentary taxes or any other excise or property
taxes, charges or similar levies which arise from any payment made hereunder or
from the execution, delivery or registration of, or otherwise with respect to,
this Agreement (hereinafter referred to as "Other Taxes") other than any Other
Taxes imposed upon any assignment or participation of a Lender's rights,
interests and obligations hereunder; provided, however, that the amount the
-------- -------
Borrowers shall be required to pay to a particular Lender in respect of Other
Taxes shall not exceed 1% of the aggregate amount of the Loans or, if
applicable, the Commitment of such Lender on which such Other Taxes are imposed
and provided further, however, that if a Lender is actually aware of the
---------------- -------
application of any Other Tax to any such payment, execution, delivery or
registration, such Lender shall promptly notify the Borrowers of such Other Tax
and the Borrowers shall thereafter have the benefit of the provisions of Section
2.20(b).
<PAGE>
42
(c) Within 30 days after the date of any payment of Taxes withheld by
any Borrower in respect of any payment to any Lender or the Agent, such Borrower
will furnish to the Agent, at its address referred to in Section 9.01, the
original or a certified copy of a receipt evidencing payment thereof or, if such
a receipt is not available, a certificate of the treasurer or any assistant
treasurer of such Borrower setting forth the amount of such payment and the date
on which such payment was made.
(d) Without prejudice to the survival of any other agreement
contained herein, the agreements and obligations contained in this Section 2.19
shall survive the payment in full of the principal of and interest on all Loans
made hereunder.
(e) On the Closing Date (or, in the case of an entity that becomes a
Lender after the Closing Date, on the date such entity becomes a Lender) and
thereafter as required by applicable law, each Lender that is organized under
the laws of a jurisdiction outside the United States shall deliver to JCPenney
and the Agent such certificates, documents or other evidence, and any amendments
or supplements to such certificates, documents or other evidence, as required by
the Code or Treasury Regulations issued pursuant thereto, including Internal
Revenue Service Form 1001 or Form 4224 and any other certificate or statement of
exemption required by Treasury Regulation Section 1.1441-1, 1.1441-2, 1.441-4(a)
or 1.1441-6(c) or any similar or successor provision, properly completed and
duly executed by such Lender (or the Agent) establishing that payments made
under this Agreement to such Lender (or to the Agent) are (i) not subject to
withholding under the Code because such payments are effectively connected with
the conduct by such Lender (or the Agent) of a trade or business in the United
States or (ii) totally exempt from United States tax under a provision of an
applicable tax treaty. Unless JCPenney and the Agent have received forms or
other documents satisfactory to them indicating that payments hereunder are not
subject to Taxes or are subject to such Taxes at a rate reduced by an applicable
tax treaty, the appropriate Borrower shall withhold Taxes from such payments at
the applicable statutory rate in the case of payments to or for any Lender (or
to the Agent) organized under the laws of a jurisdiction outside the United
States.
(f) The Borrowers shall not be required to pay any additional amounts
to any Lender (or to the Agent)
<PAGE>
43
pursuant to paragraph (a) above if the obligation to pay such additional amounts
would not have arisen but for a failure by such Lender (or the Agent) to comply
with the provisions of paragraph (e) above unless such failure results from a
change occurring after the date of this Agreement in applicable law or
regulation or tax treaty or in the interpretation or administration thereof by
any Governmental Authority charged with the interpretation or administration
thereof (whether or not having force of law).
(g) The Borrowers shall not be liable under this Section 2.19 to any
Lender or to the Agent that has changed the location of its principal office or
any of its Applicable Lending Offices after the date (the "Relevant Date") on
which it first becomes a party to this Agreement (a "Change in Location") for
any Taxes that would have not been imposed but for a Change of Law enacted,
promulgated or effective before the Relevant Date, but only to the extent such
Taxes exceed the amount the Borrowers were required to pay such Lender or the
Agent pursuant to this Section 2.19 immediately prior to such Change in
Location.
(h) If any Lender or the Agent shall become aware that it is entitled
to receive a refund in respect of Taxes indemnified and paid by the Borrower,
such Lender or the Agent shall promptly notify the Borrowers of the availability
of such refund and shall, within 30 days after receipt of a request by JCPenney,
apply for such refund at JCPenney's expense. If any Lender or the Agent
receives a refund in respect of any Taxes for which such Lender or the Agent has
received payment from any Borrower hereunder, it shall within 30 days after
receipt thereof repay the lesser of such refund and the amount paid by the
Borrowers with respect to such Taxes to the appropriate Borrower, in each case
net of all reasonable out-of-pocket expenses of such Lender or the Agent and
with interest received by such Lender or the Agent from the relevant taxing
authority attributable to such refund; provided, however, that such Borrower,
-------- -------
upon the request of such Lender or the Agent, agrees to return such refund (plus
interest, penalties or other charges) to such Lender or the Agent in the event
such Lender or the Agent is required to repay such refund to any Governmental
Authority.
(i) Each Lender and the Agent severally (but not jointly) represents
and warrants to the Borrowers that, as of the date such person becomes a party
to this Agreement, payments made by the Borrowers to such Lender or to the
<PAGE>
44
Agent in connection with the Agreement are effectively connected with the
conduct by such Lender or the Agent of a trade or business in the United States.
SECTION 2.20. Mitigation; Duties of Lenders and Agent. (a) If, with
--------------------------------- ------
respect to any Lender or the Agent, an event or circumstance occurs that would
entitle such Lender or the Agent to exercise any of the rights or benefits
afforded by Section 2.13 or 2.19(a), such Lender or the Agent, promptly upon
becoming aware of the same, shall take all steps as may be reasonably available
(including, as may be applicable, designating a different Applicable Lending
Office, making the affected Type of Loan through an Affiliate, or furnishing the
proper certificates under any applicable tax laws, tax treaties, conventions,
and governmental regulations to the extent that such certificates are legally
available to such Lender or to the Agent) to eliminate or mitigate the effects
of any event resulting in the ability of such Lender or the Agent to exercise
rights under any of such Sections; provided, however, that, no Lender or the
-------- -------
Agent shall be under any obligation to take any step that, in its reasonable
judgment, would (i) result in its incurring Additional Costs or taxes in
performing its obligations hereunder unless the Borrowers have expressly agreed
to reimburse it therefor or (ii) be materially disadvantageous to such Lender or
to the Agent. Within 60 days after the occurrence of any event giving rise to
any rights or benefits provided by Sections 2.13 and 2.19(a) in favor of any
Lender or the Agent, such Lender or the Agent (i) will notify the Borrowers of
such event or circumstance and (ii) provide the Borrowers with a certificate
setting forth in reasonable detail (x) the event or circumstance giving rise to
any benefit under Sections 2.13 and 2.19(a), (y) the effective date of, and the
time period during which, compensation for any Additional Costs or Taxes are
being claimed and (z) the determination of amount or amounts claimed thereby and
detailed calculations with respect thereto; provided, however, that if such
-------- -------
Lender or the Agent does not give the Borrowers such notice and certificate
within the 60-day period set forth in this sentence, the Borrowers shall be
required to indemnify such Lender or the Agent only for such Additional Costs
and Taxes as are attributable to the period from and after the first date as of
which such notice and certificate have been received by the Borrowers. Such
Lender or the Agent shall notify the Borrowers of any change in circumstances
with respect to the event specified in the above-described notice and
certificate as promptly as
<PAGE>
45
practicable after such Lender or the Agent obtains knowledge thereof. Such
certificate shall be conclusive absent manifest error. Notwithstanding the
foregoing, no Lender or Agent shall deliver the notice and certificate described
in this paragraph (a) to the Borrowers in respect of any Additional Costs or
Taxes unless it is then the general policy of such Lender or the Agent to pursue
similar rights and remedies in similar circumstances under comparable provisions
of other credit agreements.
(b) With respect to Sections 2.13 and 2.19, the Borrowers shall have
the right, should any Lender request any compensation or indemnity thereunder,
to (i) unless an Event of Default shall have occurred and be continuing, (A)
promptly terminate such Lender's Commitment by irrevocable written or telex
notice of such termination to such Lender and the Agent without the necessity of
complying with Sections 2.11(b) and (c) hereof, (B) reduce the Total Commitments
by the amount of such Lender's Commitment, and (C) pay or prepay in immediately
available funds all Loans made by such Lender hereunder, together with accrued
and unpaid interest thereon and all other amounts owed to such Lender hereunder,
including under Section 2.15 in connection with any such prepayment or (ii)
require such Lender to assign its Commitment, without recourse to or
representation or warranty by such Lender, to another Lender or assignee
acceptable to the Borrowers and with the consent of the Agent, which consent
shall not be unreasonably withheld; provided, however, that (x) such assignment
-------- -------
shall not conflict with any statute, law, rule, regulation, order or decree of
any Governmental Authority and (y) the assigning Lender shall have received from
the Borrowers and/or such assignee full payment in immediately available funds
of the principal of and interest accrued to the date of such payment on the
Loans made by it hereunder to the extent that such Loans are subject to such
assignment and all other amounts owed to it hereunder. The Borrowers shall have
the right, should the Agent request any compensation or indemnity under such
Sections, to require the Agent to assign its rights and obligations hereunder to
a successor Agent with the consent of the Required Lenders, which consent shall
not be unreasonably withheld.
(c) With respect to Sections 2.13 or 2.19 (i) other than with respect
to Section 2.19(b), no Lender or Agent shall be entitled to exercise any right
or benefit afforded thereby and no Borrower shall be obligated to reimburse any
Lender or the Agent pursuant to such Sections
<PAGE>
46
unless (x) such Lender or the Agent has delivered to the Borrowers in accordance
with Section 9.01 the notice and the certificate described in Section 2.20(a)
hereof and (y) the affected Borrower has had a 30-Business Day period following
the receipt of such notice and certificate (if such Borrower in good faith
disagrees with the assertion that any payment under such Sections is due or with
the amount shown as due on such certificate and so notifies the Lender or the
Agent of such disagreement within 10 Business Days following receipt of the
notice and certificate) to negotiate with the requesting Lender or the Agent,
which negotiations shall be conducted by the respective parties in good faith,
and to agree upon another amount that will adequately compensate such Lender or
the Agent, it being expressly understood that if such Borrower does not provide
the required notice of its disagreement as provided above, such Borrower shall
pay the amount shown as due on the certificate on the tenth Business Day
following receipt thereof and further if such Borrower does provide such
required notice, and negotiations are entered into but do not result in
agreement by such Borrower and such Lender or the Agent within the 30-Business
Day period, then such Borrower shall pay the amount shown as due on the
certificate on the last day of such period, but in either event not earlier than
the date as of which the relevant Additional Costs or Taxes are incurred, (ii)
other than with respect to Other Taxes, unless the appropriate notice and
certificate are delivered to the Borrowers within the 60-day period described in
Section 2.20(a), the Borrowers shall be liable only for Additional Costs, Taxes
or amounts required to be paid which are attributable to the period from and
after the date such notice and certificate have been received by the Borrowers,
(iii) the Borrowers' liability for any amounts incurred as a result of any
change in Applicable Lending Office shall be limited as set forth in Section
2.02(e), (iv) in no event shall the Borrowers be liable for any taxes (other
than Other Taxes) that would not have been imposed but for a connection between
such Lender or the Agent (other than by reason of the activities contemplated by
this Agreement) and the relevant taxing jurisdiction, (v) each Lender or the
Agent shall in good faith allocate all Additional Costs, Taxes, and payments
required to be made fairly among all its commitments and credit extensions
(whether or not it seeks compensation from all affected borrowers), (vi) no
Lender or Agent shall be entitled to exercise any right or benefit afforded
hereby or receive any payment otherwise due under Sections 2.13 or 2.19
(including without limitation, any repayment by a Borrower of any refund of
Taxes pursuant to Section 2.19(h))
<PAGE>
47
which arises from any gross negligence, fraud or wilful misconduct of any Lender
or the Agent, or the failure of such Lender or the Agent to comply with the
terms of this Agreement, (vii) if a Lender or the Agent shall have recouped any
amount or received any offsetting tax benefit (other than a refund of Taxes as
described in Section 2.19(h)) or reserve or capital benefits theretofore paid to
it by such Borrower, such Lender or the Agent shall promptly pay to such
Borrower an amount equal to the amount of the recoupment received by such Lender
or the Agent reduced by any reasonable out-of-pocket expenses of such Lender or
the Agent attributable to such recoupment, as determined in good faith by such
Lender or the Agent, and (viii) the liability of either Borrower to any Lender
or the Agent with respect to any taxes shall be reduced to the extent that such
Lender or the Agent receives an offsetting tax benefit (or could have received
such a benefit by taking reasonable measures to receive it); provided, however,
-------- -------
that there shall not be any reductions pursuant to this clause (viii) with
respect to any tax benefit (x) the existence of which such Lender or the Agent
is unaware, (y) the claiming of which would result in any cost or tax to such
Lender or the Agent (unless such Borrower shall have agreed to pay its
reasonably allocable portion of such cost or tax) and (z) unless such Borrower
shall agree to indemnify the Lender or the Agent to the extent any tax benefit
taken into account under this clause (viii) is thereafter lost or becomes
unavailable.
(d) In addition to their obligations under Section 2.19 hereof, each
of the Lenders and the Agent hereby agree to execute and deliver, and to make
any required filings of, all certificates, agreements, documents, reports,
statements and other instruments as are reasonably necessary to effectuate the
purposes of this Section 2.20 and Sections 2.13 and 2.19. The Borrowers agree,
jointly and severally, to pay all filing fees incurred by any Lender or the
Agent in performing its obligations under this Section 2.20.
<PAGE>
48
ARTICLE III. REPRESENTATIONS AND WARRANTIES
The Borrowers represent and warrant to each of the Lenders that:
SECTION 3.01. Organization; Powers. Each of the Borrowers and the
---------------------
Restricted Subsidiaries (a) is a corporation duly organized, validly existing
and in good standing under the laws of the jurisdiction of its organization, (b)
has all requisite power and authority to own its property and assets and to
carry on its business as now conducted and as proposed to be conducted, (c) is
qualified to do business in every jurisdiction where such qualification is
required, except where the failure so to qualify would not result in a Material
Adverse Effect, and (d) in the case of each Borrower, has the corporate power
and authority to execute, deliver and perform its obligations under this
Agreement and each other agreement or instrument contemplated hereby to which it
is or will be a party and to borrow hereunder.
SECTION 3.02. Authorization. The execution, delivery and performance
--------------
by each Borrower of this Agreement and the borrowings hereunder (collectively,
the "Transactions") (a) have been duly authorized by all requisite corporate
and, if required, stockholder action and (b) will not (i) violate (A) any
applicable provision of law, statute, material rule or material regulation, or
of the certificate or articles of incorporation or other constitutive documents
or by-laws of JCPenney, Funding or any Restricted Subsidiary, (B) any applicable
material order of any Governmental Authority or (C) any provision of any
indenture, agreement or other instrument to which JCPenney, Funding or any
Restricted Subsidiary is a party or by which any of them or any of their
property is or may be bound, (ii) be in conflict with, result in a breach of or
constitute (alone or with notice or lapse of time or both) a default under any
such indenture, agreement or other instrument or (iii) result in the creation or
imposition of any Lien upon or with respect to any property or assets now owned
or hereafter acquired by JCPenney, Funding or any Restricted Subsidiary.
SECTION 3.03. Enforceability. This Agreement has been duly executed
---------------
and delivered by each Borrower and constitutes a legal, valid and binding
obligation of such Borrower enforceable against such Borrower in accordance with
its terms, except as enforceability may be limited by
<PAGE>
49
(a) any applicable bankruptcy, insolvency, reorganization, moratorium,
fraudulent transfer, or similar laws relating to or affecting creditors' rights
generally and (b) general principles of equity.
SECTION 3.04. Governmental Approvals. No action, consent or approval
-----------------------
of, registration or filing with, or any other action by, any Governmental
Authority is or will be required in connection with the Transactions, except (a)
such as have been made or obtained and are in full force and effect or as to
which the failure to be made or obtained and in full force and effect would not
result in a Material Adverse Effect and (b) such periodic and current reports,
if any, as (i) are required to disclose the Transactions and (ii) will be filed
with the SEC on a timely basis.
SECTION 3.05. Financial Statements. Each of JCPenney and Funding has
---------------------
heretofore furnished to the Lenders its consolidated balance sheets and related
consolidated statements of income and cash flows (a) as of and for the fiscal
year ended January 30, 1994, audited by and accompanied by the opinion of KPMG
Peat Marwick, independent public accountants, and (b) as of and for the fiscal
quarter and the portion of the fiscal year ended October 29, 1994, as filed by
JCPenney or Funding, as the case may be, with the SEC on Form 10-Q in respect of
such fiscal quarter. Such financial statements fairly present the financial
position, results of operations and cash flows of JCPenney and its Subsidiaries,
or of Funding and its Subsidiaries, as the case may be, in accordance with GAAP,
subject, in the case of the financial statements referred to in clause (b)
above, to normal year-end audit adjustments.
SECTION 3.06. No Material Adverse Change. Except as previously
---------------------------
disclosed to the Lenders in writing, as of the Closing Date, there has been no
material adverse change in the business, assets, operations or financial
condition of JCPenney, Funding or JCPenney and the Restricted Subsidiaries taken
as a whole since January 30, 1994.
SECTION 3.07. Title to Properties; Possession Under Leases. (a)
------------------------------- -------------
Each of the Borrowers and the Restricted Subsidiaries has good and marketable
title to all its Principal Properties, except for minor defects in title and
other restrictions that do not interfere with its ability to conduct its
business as currently conducted or to utilize such Principal Properties for
their intended purposes. All
<PAGE>
50
the Principal Properties are free and clear of Liens, other than Liens expressly
permitted by Section 6.01.
(b) Each of the Borrowers and the Restricted Subsidiaries has valid
leasehold interests in all the material properties that it purports to hold
under lease, except for restrictions that do not interfere with its ability to
conduct its business as currently conducted or to utilize such properties for
their intended purposes. Each of the Borrowers and the Restricted Subsidiaries
has complied with all material obligations under all material leases to which it
is a party and all such leases are in full force and effect, except in each case
for provisions of such leases that are being contested in good faith in the
ordinary course of the Borrower's business. Each of the Borrowers and the
Restricted Subsidiaries enjoys peaceful and undisturbed possession under all
such material leases.
SECTION 3.08. Restricted Subsidiaries. Schedule 3.08 sets forth as
------------------------
of the Closing Date a list of all the Restricted Subsidiaries and the percentage
ownership interest of JCPenney therein. JCPenney owns, free and clear of all
Liens, all the issued and outstanding shares of the capital stock of Funding,
and all such outstanding shares are validly issued, fully paid and
nonassessable.
SECTION 3.09. Litigation; Compliance with Laws. (a) Except as set
---------------------------------
forth in Schedule 3.09 or as subsequently disclosed in writing to the Lenders,
there are not any actions, suits or proceedings at law or in equity or by or
before any Governmental Authority now pending or, to the knowledge of any
Borrower, threatened against or affecting JCPenney or Funding or any Restricted
Subsidiary or any business, property or rights of any such person (i) which
involve this Agreement or the Transactions or (ii) as to which there is a
reasonable possibility of an adverse determination and which, if adversely
determined, would, individually or in the aggregate, result in a Material
Adverse Effect.
(b) None of the Borrowers or the Restricted Subsidiaries is in
violation of any law, rule or regulation, or in default with respect to any
judgment, writ, injunction or decree of any Governmental Authority, where such
violation or default would result in a Material Adverse Effect.
SECTION 3.10. Agreements. (a) None of the Borrowers or the
-----------
Restricted Subsidiaries is a party to any
<PAGE>
51
agreement or instrument or subject to any corporate restriction that has
resulted or would result in a Material Adverse Effect.
(b) None of the Borrowers or the Restricted Subsidiaries is in
default in any manner under any provision of any indenture or other agreement or
instrument evidencing indebtedness for money borrowed, or any other material
agreement or instrument to which it is a party or by which it or any of its
material properties or material assets are bound, where such default would
result in a Material Adverse Effect.
SECTION 3.11. Federal Reserve Regulations. (a) None of the
----------------------------
Borrowers or the Subsidiaries is engaged principally, or as one of its important
activities, in the business of extending credit for the purpose of purchasing or
carrying Margin Stock.
(b) No part of the proceeds of any Loan will be used, whether
directly or indirectly, and whether immediately, incidentally or ultimately, (i)
to purchase or carry Margin Stock or to extend credit to others for the purpose
of purchasing or carrying Margin Stock or to refund indebtedness originally
incurred for such purpose, or (ii) for any purpose which entails a violation of,
or which is inconsistent with, the provisions of the Regulations of the Board,
including Regulation G, U or X.
SECTION 3.12. Investment Company Act; Public Utility Holding Company
------------------------------ -----------------------
Act. None of the Borrowers is (a) an "investment company" as defined in, or
- ----
subject to regulation under, the Investment Company Act of 1940 or (b) a
"holding company" as defined in, or subject to regulation under, the Public
Utility Holding Company Act of 1935.
SECTION 3.13. Use of Proceeds. The Borrowers will use the proceeds
----------------
of the Loans only for the purposes specified in the preamble to this Agreement.
SECTION 3.14. Tax Returns. Each of the Borrowers and the Restricted
------------
Subsidiaries has filed or caused to be filed all Federal, state and local tax
returns required to have been filed by it and has paid or caused to be paid all
taxes shown to be due and payable on such returns or on any assessments received
by it, except taxes that are being contested in good faith by appropriate
proceedings and for
<PAGE>
52
which the appropriate Borrower or Restricted Subsidiary shall have set aside on
its books adequate reserves.
SECTION 3.15. No Material Misstatements. No information, report,
--------------------------
financial statement, exhibit or schedule furnished by or on behalf of any
Borrower to the Agent or any Lender in connection with the negotiation of this
Agreement or included herein or delivered pursuant hereto contained, contains or
will contain any material misstatement of fact or omitted, omits or will omit to
state any material fact necessary to make the statements therein, in the light
of the circumstances under which they were, are or will be made, not misleading.
SECTION 3.16. Employee Benefit Plans. During the immediately
----------------------
preceding six-year period with respect to the Plans, there were no: (a)
violations known to the Borrowers of ERISA, or (b) Reportable Events (other than
a Reportable Event for which the PBGC has waived the 30-day notice requirement
of Section 4043(a) of ERISA), that would, individually or in the aggregate,
result in a Material Adverse Effect. The present value of all benefit
liabilities under each Plan (based on the assumptions used to fund such Plan)
does not exceed the value of the assets of such Plan. None of the Borrowers or
the ERISA Affiliates has made contributions to any Multiemployer Plan within the
past five years, and such contributions are not now being made or expected to be
required.
SECTION 3.17. Support Agreements. The Support Agreements have been
-------------------
duly executed and delivered by JCPenney and, where applicable, Funding and, as
of the Closing Date, are in full force and effect in accordance with their
terms. A complete and correct copy of each Support Agreement as in effect on
the Closing Date has previously been furnished to each Lender and to the Agent.
<PAGE>
53
ARTICLE IV. CONDITIONS OF LENDING
The obligations of the Lenders to make Loans hereunder are subject to
the satisfaction of the following conditions:
SECTION 4.01. All Borrowings. Subject to the provisions of the last
---------------
sentence of this Section 4.01, on the date of each Borrowing:
(a) The Agent shall have received such notice of such Borrowing as is
required by Section 2.03 or Section 2.04, as applicable.
(b) The representations and warranties set forth in Article III
hereof (except, in the case of all Borrowings hereunder, the representation
set forth in Section 3.06) shall be true and correct in all material
respects on and as of the date of such Borrowing with the same effect as
though made on and as of such date, except to the extent such
representations and warranties expressly relate to an earlier date.
(c) At the time of and immediately after such Borrowing, no Event of
Default or Default shall have occurred and be continuing.
Each Borrowing (other than any new Borrowing described in the last sentence of
this Section 4.01) shall be deemed to constitute a representation and warranty
by the Borrowers on the date of such Borrowing as to the matters specified in
paragraphs (b) and (c) of this Section 4.01. Notwithstanding the other
provisions of this Section 4.01, the refinancing of any Borrowing with a new
Borrowing that does not increase the outstanding aggregate principal amount of
the Loans of any Lender shall not be subject to the satisfaction of any of the
foregoing conditions.
SECTION 4.02. First Borrowing. [INTENTIONALLY OMITTED].
----------------
ARTICLE V. AFFIRMATIVE COVENANTS
The Borrowers covenant and agree with each Lender that, so long as
this Agreement shall remain in effect or the principal of or interest on any
Loan, any Fees or any other expenses or amounts payable under this Agreement
shall
<PAGE>
54
be unpaid, unless the Required Lenders shall otherwise consent in writing, each
of the Borrowers will, and will cause each of the Restricted Subsidiaries to:
SECTION 5.01. Existence; Businesses and Properties. (a) Do or cause
-------------------------------------
to be done all things necessary to preserve, renew and keep in full force and
effect its legal existence, except as would not cause a Default under Section
6.04 or otherwise cause an Event of Default under this Agreement.
(b) Do or cause to be done all things necessary to obtain, preserve,
renew, extend and keep in full force and effect the rights, licenses, permits,
franchises, authorizations, patents, copyrights, trademarks and trade names
material to the conduct of its business; maintain and operate such business in
substantially the manner in which it is presently conducted and operated; comply
in all material respects with all applicable laws, rules, regulations and orders
of any Governmental Authority, whether now in effect or hereafter enacted;
except in each case where the failure to do so would not result in a Material
Adverse Effect; and at all times maintain and preserve all property material to
the conduct of its business and keep such property in good repair, working order
and condition and from time to time make, or cause to be made, all needful and
proper repairs, renewals, additions, improvements and replacements thereto
necessary in order that the business carried on in connection therewith may be
properly conducted at all times; provided, however, that nothing in this
-------- -------
paragraph (b) shall prevent any Borrower or Restricted Subsidiary from
discontinuing the operation and maintenance of any of its properties no longer
deemed useful in the conduct of its business.
SECTION 5.02. Insurance. Maintain insurance and/or self insurance
----------
programs in force that adequately protect the Principal Properties and the
public liability exposures of the Borrowers, as may be required by law, and as
is customary with companies in the same or similar businesses or of the same
general financial net worth.
SECTION 5.03. Obligations and Taxes. Pay and discharge promptly when
----------------------
due all taxes, assessments and governmental charges or levies imposed upon it or
upon its income or profits or in respect of its properties, before the same
shall become delinquent or in default, as well as all lawful claims for labor,
materials and supplies or
<PAGE>
55
otherwise which, if unpaid, might give rise to a Lien upon such properties or
any material part thereof; provided, however, that such payment and discharge
-------- -------
shall not be required with respect to any such tax, assessment, charge, levy or
claim so long as (a) the validity or amount thereof shall be contested in good
faith by appropriate proceedings and (b) the applicable Borrower has made
appropriate reserves therefor as required by GAAP.
SECTION 5.04. Financial Statements, Reports, etc. In the case of the
-----------------------------------
Borrowers, furnish to the Agent for distribution to the Lenders:
(a) as soon as available and in any event within 120 days after the
end of each fiscal year, a copy of the reports filed by each of JCPenney
and Funding with the SEC on Form 10-K in respect of such fiscal year,
accompanied by JCPenney's annual report in respect of such fiscal year or,
if either of JCPenney or Funding is not required to file such a report in
respect of such fiscal year, the consolidated balance sheets and related
consolidated statements of income and cash flows of JCPenney and its
Subsidiaries, or of Funding and its Subsidiaries, as the case may be, as of
the close of such fiscal year, all audited by KPMG Peat Marwick or other
independent public accountants of recognized national standing and
accompanied by an opinion of such accountants (which shall be in scope and
substance reasonably satisfactory to the Required Lenders) to the effect
that such consolidated financial statements fairly present the financial
position, results of operations and cash flows of JCPenney and its
Subsidiaries or of Funding and its Subsidiaries, as the case may be, in
accordance with GAAP;
(b) as soon as available and in any event within 60 days after the end
of each of the first three quarterly periods of each fiscal year, a copy of
the quarterly reports filed by each of JCPenney and Funding with the SEC on
Form 10-Q in respect of such quarterly period, or if either of JCPenney or
Funding is not required to file such a report in respect of such quarterly
period, the consolidated balance sheets and related consolidated statements
of income and cash flows of JCPenney and its Subsidiaries, or of Funding
and its Subsidiaries, as the case may be, as of the close of such fiscal
quarter, certified by its chief financial officer, treasurer or controller
as fairly
<PAGE>
56
presenting the financial position, results of operations and cash flows of
JCPenney and its Subsidiaries or of Funding and its Subsidiaries, as the
case may be, in accordance with GAAP, subject to normal year-end audit
adjustments;
(c) concurrently with any delivery of financial statements by JCPenney
or Funding under (a) above (whether contained in a report filed with the
SEC or otherwise), a certificate of its chief financial officer, president,
treasurer or controller (i) stating that no Event of Default or Default has
occurred or, if such an Event of Default or Default has occurred,
specifying the nature and extent thereof and any corrective action taken or
proposed to be taken with respect thereto and (ii) with respect to
JCPenney, setting forth computations in reasonable detail demonstrating
compliance with the covenant contained in Section 6.02;
(d) promptly after the same become publicly available, copies of all
documents and reports that any Borrower may be required to file with the
SEC pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934,
as amended, or with any Governmental Authority succeeding to any of or all
the functions of the SEC;
(e) promptly after the execution and delivery thereof by the parties
thereto, copies of all agreements and other instruments that have the
effect of amending, modifying or waiving any provision of a Support
Agreement; and
(f) promptly, from time to time, such other documents and information
regarding the operations, business affairs and financial condition of any
Borrower or Restricted Subsidiary, or compliance with the terms of this
Agreement, as the Agent or any Lender may reasonably request.
SECTION 5.05. Litigation and Other Notices. Furnish to the Agent
-----------------------------
prompt written notice of the following promptly after becoming aware thereof:
(a) any Event of Default or Default, specifying the nature and extent
thereof and the corrective action (if any) proposed to be taken with
respect thereto;
<PAGE>
57
(b) the filing or commencement of, or any threat or notice of
intention of any person to file or commence, any action, suit or
proceeding, whether at law or in equity or by or before any Governmental
Authority, against any Borrower or Restricted Subsidiary which, if
adversely determined, would result in a Material Adverse Effect; and
(c) any development that has resulted in, or would result in, a
Material Adverse Effect.
SECTION 5.06. ERISA. (a) Comply in all material respects with the
------
applicable provisions of ERISA and (b) furnish to the Agent and each Lender (i)
as soon as possible, and in any event within 30 days after any Responsible
Officer of any Borrower or ERISA Affiliate either knows or has reason to know
that any Reportable Event has occurred that alone or together with any other
Reportable Events could reasonably be expected to result in liability of the
Borrowers and/or the Restricted Subsidiaries to the PBGC in an aggregate amount
exceeding $200,000,000, a statement of a Responsible Officer of JCPenney setting
forth details as to such Reportable Event and the action proposed to be taken
with respect thereto, together with a copy of the notice, if any, of such
Reportable Event given to the PBGC, (ii) promptly after receipt thereof, a copy
of any notice that any Borrower or ERISA Affiliate receives from the PBGC
relating to the intention of the PBGC to terminate any Plan or Plans (other than
a Plan maintained by an ERISA Affiliate which is considered an ERISA Affiliate
only pursuant to subsection (m) or (o) of Section 414 of the Code) or to appoint
a trustee to administer any Plan or Plans and (iii) within 10 days after the due
date for filing with the PBGC pursuant to Section 412(n) of the Code of a notice
of failure to make a required installment or other payment with respect to a
Plan, a statement of a Responsible Officer of JCPenney setting forth details as
to such failure and the action proposed to be taken with respect thereto,
together with a copy of such notice given to the PBGC. Any failure to comply
with applicable provisions of ERISA shall not be deemed to be material, unless
such failure or failures would result in a Material Adverse Effect.
SECTION 5.07. Maintaining Records; Access to Properties and
------------------------------ --------------
Inspections. Maintain all financial records in accordance with GAAP and permit
- ------------
any representatives designated by any Lender to (a) visit and inspect the
financial records and the Principal Properties of any
<PAGE>
58
Borrower or Restricted Subsidiary during business hours upon reasonable notice,
(b) make extracts from and copies of such financial records, (c) discuss the
affairs, finances and condition of any Borrower or Restricted Subsidiary with
the chief financial officer, treasurer or any assistant treasurer of any
Borrower or Restricted Subsidiary and (d) discuss the affairs, finances and
condition of any Borrower or Restricted Subsidiary with such person's
independent accountants in the presence of any of the chief financial officer,
treasurer or any assistant treasurer of such person. No such inspection,
discussion or other right granted under this Section 5.07 and exercised by any
Lender shall disrupt the normal and ordinary conduct of business of any Borrower
or Restricted Subsidiary, and all costs and expenses incurred in connection
therewith, shall, prior to the occurrence and continuance of an Event of
Default, be borne by the Lender exercising such right.
SECTION 5.08. Use of Proceeds. Use the proceeds of the Loans only
----------------
for the purposes set forth in the preamble to this Agreement.
SECTION 5.09. Pari-Passu. Ensure that (a) the payment obligations of
-----------
any Borrower under this Agreement will at all times rank at least equally and
ratably in all respects with the claims of any other unsecured creditor of such
Borrower and (b) the proceeds of any Loan made to Funding will be used for the
purpose of making either (i) Investments of the type referred to in clause (v)
of Section 6.06(c) or (ii) loans to JCPenney constituting senior unsecured
indebtedness of JCPenney, and not for any other purpose.
SECTION 5.10. Support Agreements. Ensure that (a) each Support
-------------------
Agreement remains in full force and effect in accordance with its terms and (b)
no amendment or modification is made to any Support Agreement or any of the
terms thereof, and no waiver is given or agreed to be given by or on behalf of
Funding with respect to any of its rights under any Support Agreement, which
would have a Material Adverse Effect.
ARTICLE VI. NEGATIVE COVENANTS
Each Borrower covenants and agrees with each Lender and the Agent, so
long as this Agreement shall remain in effect or the principal of or interest on
any Loan, any
<PAGE>
59
Fees or any other expenses or amounts payable under this Agreement shall be
unpaid, unless the Required Lenders shall otherwise consent in writing, as
follows:
SECTION 6.01. Limitation on Liens--JCPenney. JCPenney will not, and
------------------------------
will not permit any Restricted Subsidiary to, issue, assume or guarantee any
notes, bonds, debentures or other similar evidences of indebtedness for money
borrowed (referred to in this Section 6.01 as "indebtedness") secured by any
Lien upon any Principal Property, or shares of capital stock or evidences of
indebtedness for money borrowed issued by any Restricted Subsidiary and owned by
JCPenney or any Restricted Subsidiary, whether owned on the Closing Date or
thereafter acquired, without making effective provision whereby the Loans made
to JCPenney are secured by such Lien equally and ratably with any and all other
indebtedness thereby secured, so long as such indebtedness shall be so secured;
provided, however, that the foregoing restriction shall not apply to
- -------- -------
indebtedness secured by any of the following:
(i) Liens on any property existing at the time of acquisition thereof
by JCPenney or any Restricted Subsidiary;
(ii) Liens on property of a corporation existing at the time such
corporation is merged into or consolidated with JCPenney or any Restricted
Subsidiary or at the time of a sale, lease or other disposition of the
properties of such corporation (or a division thereof) as an entirety or
substantially as an entirety to JCPenney or any Restricted Subsidiary,
provided that such Lien as a result of such merger, consolidation, sale,
--------
lease or other disposition is not extended to property owned by JCPenney or
such Restricted Subsidiary immediately prior thereto;
(iii) Liens on property of a corporation existing at the time such
corporation first becomes a Restricted
Subsidiary;
(iv) Liens securing indebtedness of a Restricted Subsidiary to
JCPenney or to another Restricted Subsidiary;
(v) Liens on property to secure all or part of the cost of acquiring,
substantially repairing or altering, constructing, developing or
substantially
<PAGE>
60
improving such property, or to secure indebtedness incurred to provide
funds for any such purpose or for reimbursement of funds previously
expended for any such purpose, provided that the commitment of the creditor
to extend the credit secured by any such Lien shall have been obtained not
later than twelve months after the later of (a) the completion of the
acquisition, substantial repair or alteration, construction, development or
substantial improvement of such property or (b) the placing in operation of
such property or of such property as so substantially repaired or altered,
constructed, developed or substantially improved;
(vi) Liens securing indebtedness payable on demand or not more than
one year after the date as of which the determination is made (excluding
any indebtedness renewable or extendable at the option of the debtor for a
period or periods ending more than one year after the date as of which such
determination is made), which indebtedness in accordance with GAAP would be
included among current liabilities; or
(vii) any extension, renewal or replacement (or successive
extensions, renewals or replacements), in whole or in part, of any Lien
referred to in the foregoing clauses (i) through (vi), inclusive; provided,
--------
however, that the principal amount of indebtedness secured thereby and not
-------
otherwise authorized by said clauses (i) through (vi), inclusive, shall not
exceed the principal amount of indebtedness, plus any premium or fee
payable in connection with any such extension, renewal or replacement, so
secured at the time of such extension, renewal or replacement;
(viii) Liens arising under workmen's compensation laws, unemployment
insurance laws and old age pensions or other social security benefits or
other similar laws;
(ix) Liens securing the performance of bids, tenders, leases,
contracts, statutory obligations, surety and appeal bonds, and other
obligations of like nature, incurred in the ordinary course of business;
(x) Liens imposed by law, such as carriers', warehouseman's,
mechanics', materialmen's and vendors' liens, incurred in good faith in the
ordinary course of business with respect to obligations not then
<PAGE>
61
delinquent, or that are being contested in good faith by appropriate
proceedings for which adequate reserves have been established;
(xi) Liens for taxes to the extent nonpayment thereof shall be
permitted by Section 5.03 hereof;
(xii) Liens incidental to the normal conduct of the business of
JCPenney and its Restricted Subsidiaries or the ownership of their property
and not securing Funded Indebtedness (including zoning restrictions,
easements, licenses, reservations, restrictions on the use of real property
or minor irregularities incident thereto and with respect to leasehold
interests, Liens that are incurred, created, assumed or permitted to exist
and arise by, through or under or are asserted by a landlord or owner of
the leased property, with or without consent of the lessee) which do not in
the aggregate materially impair the value or use of the property used in
the business of JCPenney and its Restricted Subsidiaries taken as a whole,
or the use of such property for the purpose for which such property is
held;
(xiii) Liens arising from capitalized lease obligations, such Liens
not to extend to any other property of JCPenney;
(xiv) Liens in respect of litigation or other similar proceedings in
an amount not to exceed $500,000,000 on an aggregate basis (i) the validity
of which is being currently contested on a timely basis in good faith by
appropriate proceedings (provided that the enforcement of any Liens arising
out of such proceedings shall be stayed during such proceedings) and (ii)
for which adequate reserves shall have been established;
(xv) Liens in respect of leases or subleases granted to other persons
in the ordinary course of business and not materially interfering with the
conduct of business of JCPenney and its Restricted Subsidiaries;
(xvi) Liens arising out of conditional sale, title retention,
consignment or similar arrangements for the sale of goods entered into by
JCPenney or any of its Restricted Subsidiaries in the ordinary course of
<PAGE>
62
business in accordance with the past practices of JCPenney and its
Restricted Subsidiaries; or
(xvii) Liens in favor of customs and revenue authorities arising as a
matter of law securing payment of customs duties in connection with the
importation of goods.
Notwithstanding the provisions of the immediately preceding sentence,
JCPenney or any Restricted Subsidiary may issue, assume or guarantee
indebtedness secured by Liens which would otherwise be subject to the
restrictions of this Section in an aggregate amount which, together with all
attributable debt (as defined in Section 5.09(b) of the Indenture) outstanding
pursuant to Section 5.09(b) of the Indenture, all Senior Funded Indebtedness
outstanding pursuant to the second sentence of Section 6.03(a), the capitalized
amount of all capitalized leases referred to in Section 6.05(j), and all
indebtedness outstanding pursuant to this sentence, does not exceed 5% of
Stockholders' Equity.
SECTION 6.02. Limitations on Senior Funded Indebtedness. JCPenney
------------------------------------------
will not, and will not permit any Restricted Subsidiary to, issue, assume or
guarantee any Senior Funded Indebtedness (otherwise than in connection with any
renewal, extension or refunding of Senior Funded Indebtedness which does not,
except for any premium or fee payable in connection with such renewal, extension
or refunding, increase the unpaid principal amount of Senior Funded Indebtedness
outstanding), or sell, transfer or otherwise dispose of any Senior Funded
Indebtedness of a Restricted Subsidiary, unless, after giving effect thereto and
to the retirement of any Senior Funded Indebtedness to be retired substantially
concurrently therewith, Net Tangible Assets shall be at least 200% of Senior
Funded Indebtedness of JCPenney and the Restricted Subsidiaries (eliminating
intercompany items).
SECTION 6.03. Limitations with Respect to Restricted Subsidiaries.
----------------------------------------------------
(a) JCPenney will not permit any Restricted Subsidiary to issue, assume or
guarantee any Senior Funded Indebtedness; provided, however, that the foregoing
-------- -------
restriction shall not apply to any of the following:
(i) Senior Funded Indebtedness secured by a Lien permitted under the
first sentence of Section 6.01;
<PAGE>
63
(ii) Senior Funded Indebtedness of a corporation existing at the
time such corporation is merged into or consolidated with a Restricted
Subsidiary or at the time of a sale, lease or other disposition of the
properties of such corporation (or a division thereof) as an entirety or
substantially as an entirety to a Restricted Subsidiary;
(iii) Senior Funded Indebtedness of a corporation existing at the
time such corporation first becomes a Restricted Subsidiary:
(iv) Senior Funded Indebtedness of a Restricted Subsidiary to or
held by JCPenney or another Restricted Subsidiary; or
(v) any extension, renewal or replacement (or successive
extensions, renewals or replacements), in whole or in part, of any Senior
Funded Indebtedness referred to in the foregoing clauses (i) through (iv),
inclusive; provided, however, that the principal amount or the aggregate
-------- -------
preference on involuntary liquidation, as the case may be, of Senior Funded
Indebtedness issued pursuant to such extension, renewal or replacement and
not otherwise authorized by said clauses (i) through (iv), inclusive, shall
not exceed the principal amount or the aggregate preference on involuntary
liquidation, as the case may be, of the Senior Funded Indebtedness so
extended, renewed or replaced, plus any premium or fee payable in
connection with any such extension, renewal or replacement.
Notwithstanding the provisions of the immediately preceding sentence,
any Restricted Subsidiary may issue, assume or guarantee Senior Funded
Indebtedness which would otherwise be subject to the restrictions of this
Section 6.03(a) in an aggregate amount which, together with all indebtedness
outstanding pursuant to the second sentence of Section 6.01, all attributable
debt (as defined in Section 5.09(b) of the Indenture) outstanding pursuant to
Section 5.09(b) of the Indenture and all Senior Funded Indebtedness of the
Restricted Subsidiaries outstanding pursuant to this sentence, does not exceed
5% of Stockholders' Equity.
(b) JCPenney will not, and will not permit any Restricted Subsidiary
to, (i) sell or transfer (except to JCPenney or a Restricted Subsidiary) any
Senior Funded
<PAGE>
64
Indebtedness of a Restricted Subsidiary, except Senior Funded Indebtedness
secured by a Lien permitted under the provisions of the first sentence of
Section 6.01 and except to carry out a transaction permitted by Section 6.03(c)
or (ii) sell or transfer (except, in each case, to the extent, if any, required
to qualify directors of a Restricted Subsidiary under applicable law or to
permit any person to maintain his proportionate interest in a Restricted
Subsidiary or except to effect dissolution of any such Restricted Subsidiary or
to carry out a transaction permitted by Section 6.03(c) or except to JCPenney or
a Restricted Subsidiary) any shares of common stock of a Restricted Subsidiary,
unless all the common stock of such Restricted Subsidiary at the time owned by
JCPenney and the Restricted Subsidiaries shall be sold or transferred at the
same time and unless thereafter Net Tangible Assets shall be at least 200% of
Senior Funded Indebtedness of JCPenney and the Restricted Subsidiaries
(eliminating intercompany items).
(c) JCPenney will not permit any Restricted Subsidiary to sell or
otherwise dispose of its assets substantially as an entirety or consolidate with
or merge into any other corporation, unless the corporation to which such assets
shall be sold or otherwise disposed of or which shall be formed by or result
from such consolidation or merger shall be JCPenney or any Restricted Subsidiary
or unless thereafter Net Tangible Assets shall be at least 200% of Senior Funded
Indebtedness of JCPenney and the Restricted Subsidiaries (eliminating
intercompany items).
SECTION 6.04. Mergers, Consolidations, Sales of Assets and
--------------------------------------------
Acquisitions. (a) JCPenney shall not consoli-date with or merge into any other
- -------------
corporation or convey or transfer its properties and assets substantially as an
entirety to any person, unless:
(i) the corporation formed by such consolidation or into which
JCPenney is merged or the person which acquires by conveyance or transfer
the properties and assets of JCPenney substantially as an entirety shall be
a corporation organized and existing under the laws of the United States of
America or any State or the District of Columbia, and shall expressly
assume, by an instrument in writing (delivered to the Lenders) the due and
punctual payment of the principal and interest, if any, on all the Loans
and all other amounts payable by JCPenney under this Agreement and all the
rights,
<PAGE>
65
interests and other obligations of JCPenney under this Agreement;
(ii) immediately after giving effect to such transaction, (x) the
representations and warranties set forth in Article III shall be true and
correct in all material respects on the date of such transaction with the
same effect as if made on and as of such date, except to the extent such
representations and warranties expressly relate to an earlier date and (y)
no Event of Default or Default shall have occurred and be continuing; and
(iii) JCPenney shall have delivered an Officer's Certificate stating
that such consolidation, merger, conveyance or transfer and such written
instrument comply with this Section 6.04(a).
(b) Funding shall not consolidate with or merge into any other
corporation or convey or transfer its properties and assets substantially as an
entirety to any person, except that Funding may merge into JCPenney or a direct
or indirect wholly-owned Subsidiary of JCPenney subject to the satisfaction of
the following conditions:
(i) the corporation formed by such consolidation or into which Funding
is merged or the person which acquires by conveyance or transfer the
properties and assets of Funding substantially as an entirety shall
expressly assume, by an instrument in writing (delivered to the Lenders)
the due and punctual payment of the principal and interest, if any, on all
the Loans and all other amounts payable by Funding under this Agreement and
all the rights, interests and other obligations of Funding under this
Agreement;
(ii) immediately after giving effect to such transaction, (x) the
representations and warranties set forth in Article III shall be true and
correct in all material respects on the date of such transaction with the
same effect as if made on and as of such date, except to the extent such
representations and warranties expressly relate to an earlier date and (y)
no Event of Default or Default shall have occurred and be continuing; and
(iii) Funding shall have delivered an Officer's Certificate stating
that such consolidation, merger,
<PAGE>
66
conveyance or transfer and such written instrument comply with this Section
6.04(b).
SECTION 6.05. Limitations on Liens--Funding. Funding will not, and
------------------------------
will not permit any of its Subsidiaries to, create or assume any Lien upon any
of the property of Funding or any such Subsidiary, whether now owned or
hereafter acquired, in connection with the borrowing of money or the acquisition
or construction of property; provided, however, that nothing in this Section
-------- -------
6.05 shall prevent or be deemed to prohibit:
(a) Funding or any of its Subsidiaries from acquiring property subject
to a Lien existing thereon at the time of acquisition, and assuming the
same, or from creating a Lien on property being constructed or acquired to
secure a portion of the cost or purchase price thereof, provided, however,
-------- -------
that (i) any such Lien shall cover solely fixed assets or other physical
properties and (ii) such property is not or shall not thereby become
encumbered in an amount in excess of two-thirds of the lesser of the cost
and fair value thereof (as determined in good faith by the board of
directors of Funding);
(b) any Subsidiary of Funding from creating a Lien upon all or any
part of its property in favor of Funding or a wholly-owned Subsidiary of
Funding to secure indebtedness owed by such Subsidiary to Funding or a
wholly-owned Subsidiary;
(c) Liens existing on all or any part of the assets of a Subsidiary of
Funding at the time it shall become such a Subsidiary;
(d) Funding or any of its Subsidiaries from extending, renewing or
refunding any Lien permitted by the foregoing provisions of this Section
6.05 upon the same property theretofore subject thereto in connection with
the extension, renewal or refunding of the indebtedness secured thereby;
(e) Liens arising under workmen's compensation laws, unemployment
insurance laws and old age pensions or other social security benefits or
other similar laws;
<PAGE>
67
(f) Liens securing the performance of bids, tenders, leases,
contracts, statutory obligations, surety and appeal bonds, and other
obligations of like nature, incurred in the ordinary course of business;
(g) Liens imposed by law, such as carriers', warehouseman's,
mechanics', materialmen's and vendors' liens, incurred in good faith in the
ordinary course of business with respect to obligations not then
delinquent, or that are being contested in good faith by appropriate
proceedings for which adequate reserves have been established;
(h) Liens for taxes to the extent nonpayment thereof shall be
permitted by Section 5.03 hereof;
(i) Liens incidental to the normal conduct of the business of Funding
and its Subsidiaries or the ownership of their property and not securing
Funded Indebtedness (including zoning restrictions, easements, licenses,
reservations, restrictions on the use of real property or minor
irregularities incident thereto and with respect to leasehold interests,
Liens that are incurred, created, assumed or permitted to exist and arise
by, through or under or are asserted by a landlord or owner of the leased
property, with or without consent of the lessee) which do not in the
aggregate materially impair the value or use of the property used in the
business of Funding and its Subsidiaries taken as a whole, or the use of
such property for the purpose for which such property is held;
(j) Liens arising from capitalized lease obligations, such Liens not
to extend to any other property of Funding;
(k) Liens in respect of litigation or other similar proceedings in an
amount not to exceed $500,000,000 on an aggregate basis (i) the validity of
which is being currently contested on a timely basis in good faith by
appropriate proceedings (provided that the enforcement of any Liens arising
out of such proceedings shall be stayed during such proceedings) and (ii)
for which adequate reserves shall have been established;
<PAGE>
68
(l) Liens in respect of leases or subleases granted to other persons
in the ordinary course of business and not materially interfering with the
conduct of business of Funding and its Subsidiaries;
(m) Liens arising out of conditional sale, title retention,
consignment or similar arrangements for the sale of goods entered into by
Funding or any of its Subsidiaries in the ordinary course of business in
accordance with the past practices of Funding and its Subsidiaries; or
(n) Liens in favor of customs and revenue authorities arising as a
matter of law securing payment of customs duties in connection with the
importation of goods.
SECTION 6.06. Conduct of Funding's Business. (a) Funding will not,
------------------------------
and will not permit any Subsidiary of Funding to, engage in any business other
than dealing in Receivables and Penney Supplier Receivables, making Investments
as permitted by paragraph (c) below, financing the acquisition of Receivables
and Penney Supplier Receivables and making of such Investments, and any
activities incidental or related to the foregoing. Receivables at any time
acquired by Funding and its Subsidiaries from JCPenney and its Subsidiaries,
together with Receivables previously acquired from JCPenney and its Subsidiaries
and then owned by Funding and its Subsidiaries, shall be reasonably
representative of the then outstanding Receivables which have arisen in the
business of JCPenney and those Subsidiaries of JCPenney from which such
Receivables have been or are being acquired; provided, however, that Receivables
-------- -------
at any time acquired and owned by Funding and its Subsidiaries may exclude any
type or types of Receivables which are sold or assigned by JCPenney and its
Subsidiaries to one or more third parties if in the opinion of Funding's board
of directors such type or types of Receivables may be serviced more efficiently
or economically by any such third party than by JCPenney, Funding or any such
Subsidiary.
(b) Funding will not, and will not permit any of its subsidiaries to,
make any loan or advance to JCPenney or any Subsidiary of JCPenney (other than
Funding or a Subsidiary of Funding) except on a basis which in the opinion of
Funding's board of directors reasonably reflects sound credit practices at the
time of such loan or advance.
<PAGE>
69
(c) Funding will not, and will not permit any of its subsidiaries to,
make any Investments, directly or indirectly, other than
(i) Investments in Receivables;
(ii) loans and advances to JCPenney and its Subsid-
iaries;
(iii) Investments in wholly-owned Subsidiaries of Funding or
Investments by any Subsidiary of Funding in Funding;
(iv) Investments in Penney Supplier Receivables;
and,
(v) Investments in any direct and indirect obligations of the United
States of America or any agency thereof having a maturity not in excess of
ten years from the date of purchase; obligations having a maturity not in
excess of ten years from the date of purchase of any county, municipality
or state of the United States of America and having any of the three
highest ratings assigned by any nationally recognized organization
regularly engaged in rating the investment quality of such obligations;
open market commercial paper; bankers' acceptances; certificates of
deposit; and other obligations which, in the opinion of Funding's board of
directors, are similar in risk, quality and maturity to any of the
foregoing.
ARTICLE VII. EVENTS OF DEFAULT
In case of the happening of any of the following events ("Events of
Default"):
(a) (i) any representation or warranty made or deemed made pursuant to
this Agreement shall prove to have been false or misleading in any respect,
or (ii) any material representation, warranty, statement or information
contained in any report, certificate, financial statement or other
instrument furnished in connection with or pursuant to this Agreement shall
prove to have been false or misleading in any respect; and only if, in both
---
subsection (i) and subsection (ii), such falsehood or misleading matter
would result
<PAGE>
70
in a Material Adverse Effect when so made, deemed made or furnished;
(b) default shall be made in the payment of any principal of any Loan
when and as the same shall become due and payable, whether at the due date
thereof or at a date fixed for prepayment thereof or by acceleration
thereof or otherwise, and such default shall continue unremedied for one
Business Day;
(c) default shall be made in the payment of any interest on any Loan
or any Fee or any other amount (other than an amount referred to in (b)
above) due under this Agreement, when and as the same shall become due and
payable, and such default shall continue unremedied for a period of five
Business Days;
(d) default shall be made in the due observance or performance by the
Borrowers of any covenant, condition or agreement contained in Section
5.01(a), 5.05 or 5.10 or in Article VI and such default shall continue
unremedied for a period of five Business Days;
(e) default shall be made in the due observance or performance by any
Borrower or Restricted Subsidiary of any covenant, condition or agreement
contained in this Agreement (other than those specified in (b), (c) or (d)
above) and such default shall continue unremedied for a period of 30 days
after notice thereof from the Agent or any Lender to such Borrower or, if
such default is able to be cured and such Borrower is using its best
efforts to cure such default, such longer period as is reasonably required
to cure such default;
(f) any Borrower or Restricted Subsidiary shall (i) fail to pay any
principal or interest, regardless of amount, due in respect of any
indebtedness for borrowed money in a principal amount in excess of
$50,000,000, when and as the same shall become due and payable (after the
expiration of any applicable grace period), and (unless such indebtedness
is already due and payable at the time of such default) such default
results in an acceleration of such indebtedness and in either case is not
cured within five Business Days thereafter or (ii) fail to observe or
perform any other term, covenant, condition or agreement contained in any
agreement or instrument evidencing or governing any such indebtedness if
any failure referred to in this
<PAGE>
71
clause (ii) results in an acceleration of such indebtedness that is not
annulled or rescinded within 15 days after the date of such acceleration;
(g) an involuntary proceeding shall be commenced or an involuntary
petition shall be filed in a court of competent jurisdiction seeking (i)
relief in respect of any Borrower or Restricted Subsidiary, or of a
substantial part of the property or assets of any Borrower or Restricted
Subsidiary, under Title 11 of the United States Code, as now constituted or
hereafter amended, or any other Federal or state bankruptcy, insolvency,
receivership or similar law, (ii) the appointment of a receiver, trustee,
custodian, sequestrator, conservator or similar official for any Borrower
or Restricted Subsidiary or for a substantial part of the property or
assets of any Borrower or Restricted Subsidiary or (iii) the winding-up or
liquidation of any Borrower or Restricted Subsidiary; and such proceeding
or petition shall continue undismissed for 60 days or an order or decree
approving or ordering any of the foregoing shall be entered;
(h) any Borrower or Restricted Subsidiary shall (i) voluntarily
commence any proceeding or file any petition seeking relief under Title 11
of the United States Code, as now constituted or hereafter amended, or any
other Federal or state bankruptcy, insolvency, receivership or similar law,
(ii) consent to the institution of, or fail to contest in a timely and
appropriate manner, any proceeding or the filing of any petition described
in (g) above, (iii) apply for or consent to the appointment of a receiver,
trustee, custodian, sequestrator, conservator or similar official for any
Borrower or Restricted Subsidiary or for a substantial part of the property
or assets of any Borrower or Restricted Subsidiary, (iv) file an answer
admitting the material allegations of a petition filed against it in any
such proceeding, (v) make a general assignment for the benefit of
creditors, (vi) admit in writing its inability or fail generally to pay its
debts as they become due or (vii) take any action for the purpose of
effecting any of the foregoing;
(i) one or more judgments for the payment of money in an aggregate
amount in excess of $100,000,000 shall be rendered against any Borrower,
any Restricted Subsidiary or any combination of Borrowers and
<PAGE>
72
Restricted Subsidiaries and the same shall remain undischarged for a period
of 30 consecutive Business Days during which execution shall not be
effectively stayed, or any action shall be legally taken by a judgment
creditor to levy upon assets or properties of any Borrower or Restricted
Subsidiary to enforce any such judgment;
(j) a Reportable Event or Reportable Events, or a failure to make a
required installment or other payment (within the meaning of Section
412(n)(l) of the Code), shall have occurred with respect to any Plan or
Plans that reasonably could be expected to result in liability of the
Borrowers to the PBGC or to any Plan or Plans in an aggregate amount
exceeding $200,000,000 and, within 30 days after the reporting of any such
Reportable Event to the Agent or after the receipt by the Agent of the
statement required pursuant to Section 5.06, the Agent shall have notified
the Borrowers in writing that (i) the Required Lenders have made a
determination that, on the basis of such Reportable Event or Reportable
Events or the failure to make a required payment, there are reasonable
grounds (A) for the termination of such Plan or Plans by the PBGC, (B) for
the appointment by the appropriate United States District Court of a
trustee to administer such Plan or Plans or (C) for the imposition of a
lien in favor of a Plan and (ii) as a result thereof an Event of Default
exists hereunder; or a trustee shall be appointed by a United States
District Court to administer any such Plan or Plans; or the PBGC shall
institute proceedings to terminate any Plan or Plans;
(k) Funding (or any permitted successor thereto under Section 6.04(b))
shall cease to be a direct or indirect wholly-owned subsidiary of JCPenney
(unless Funding or such permitted successor shall be merged into JCPenney);
or
(l) an Event of Default shall occur under the Tranche A Credit
Agreement.
then, and in every such event (other than an event described in paragraph (g) or
(h) above), and at any time thereafter during the continuance of such event, the
Agent, at the request of the Required Lenders, shall, by notice to the
Borrowers, take either or both of the following actions, at the same or
different times: (x) terminate forthwith the
<PAGE>
73
Commitments and (y) declare the Loans then outstanding to be forthwith due and
payable in whole or in part, whereupon the principal of the Loans so declared to
be due and payable, together with accrued interest thereon and any unpaid
accrued Fees and all other liabilities of the Borrowers accrued hereunder, shall
become forthwith due and payable, without presentment, demand, protest or any
other notice of any kind, all of which are hereby expressly waived by the
Borrowers, anything contained herein to the contrary notwithstanding; and in any
event described in paragraph (g) or (h) above, the Commitments shall
automatically and immediately terminate and the principal of the Loans then
outstanding, together with accrued interest thereon and any unpaid accrued Fees
and all other liabilities of the Borrowers accrued hereunder, shall
automatically and immediately become due and payable, without presentment,
demand, protest or any other notice of any kind, all of which are hereby
expressly waived by the Borrowers, anything contained herein to the contrary
notwithstanding.
ARTICLE VIII. THE AGENT
In order to expedite the transactions contemplated by this Agreement,
each Lender hereby appoints the Agent to act as its agent hereunder. Each of
the Lenders hereby irrevocably authorizes the Agent to take such actions on
behalf of such Lender and to exercise such powers as are specifically delegated
to the Agent by the terms and provisions hereof, together with such actions and
powers as are reasonably incidental thereto. The Agent is hereby expressly
authorized by the Lenders, without hereby limiting any implied authority, (a) to
receive on behalf of the Lenders all payments of principal of and interest on
the Loans and all other amounts due to the Lenders hereunder, and promptly to
distribute to each Lender its proper share of each payment so received; (b) to
give notice on behalf of each of the Lenders to the Borrowers of any Event of
Default specified in this Agreement of which the Agent has actual knowledge
acquired in connection with its agency hereunder; and (c) to distribute to each
Lender copies of all notices, financial statements and other materials delivered
by the Borrowers pursuant to this Agreement as received by the Agent.
The Agent and its directors, officers, employees and agents shall not
be liable as such for any action taken or omitted by any of them, or be
responsible for any
<PAGE>
74
statement, warranty or representation herein or the contents of any document
delivered in connection herewith, except in each case to the extent of its or
his own gross negligence or wilful misconduct in connection therewith, or be
required to ascertain or to make any inquiry concerning the performance or
observance by the Borrowers of any of the terms, conditions, covenants or
agreements contained in this Agreement. The Agent shall not be responsible to
the Lenders for the due execution, genuineness, validity, enforceability or
effectiveness of this Agreement or any other instruments or agreements;
provided, however, that the Agent shall be responsible for its own due execution
- -------- -------
of this Agreement and any other instrument or agreement relating to this
Agreement. The Agent shall in all cases be fully protected in acting, or
refraining from acting, in accordance with written instructions signed by the
Required Lenders and, except as otherwise specifically provided herein, such
instructions and any action or inaction pursuant thereto shall be binding on all
the Lenders. The Agent shall, in the absence of knowledge to the contrary, be
entitled to rely on any instrument or document believed by it in good faith to
be genuine and correct and to have been signed or sent by the proper person or
persons. The Agent and its directors, officers, employees and agents shall not
have any responsibility to any Borrower on account of the failure of or delay in
performance or breach by any Lender of any of its obligations hereunder or to
any Lender on account of the failure of or delay in performance or breach by any
other Lender or any Borrower of any of its respective obligations hereunder or
in connection herewith. The Agent may execute any and all of its duties
hereunder by or through agents of recognized standing or employees and shall be
entitled to rely upon the advice of legal counsel of recognized standing
selected by it with respect to all matters arising hereunder and shall not be
liable for any action taken or suffered in good faith by it in accordance with
the advice of such counsel.
The Lenders hereby acknowledge that the Agent shall be under no duty
to take any discretionary action permitted to be taken by it pursuant to the
provisions of this Agreement unless it shall be requested in writing to do so by
the Required Lenders.
Subject to the appointment and acceptance of a successor Agent as
provided below, the Agent may resign at any time by notifying the Lenders and
the Borrowers. Upon any such resignation, the Required Lenders shall have the
<PAGE>
75
right to appoint a successor; provided, however, that any such appointment shall
-------- -------
be subject to the prior written consent of JCPenney (which consent shall not be
unreasonably withheld so long as such successor shall be (i) a bank with a
rating of Aa2 or better from Moody's or a rating of AA or better from S&P, or an
Affiliate of any such bank, or (ii) any Co-Agent). If no successor shall have
been so appointed by the Required Lenders and shall have accepted such
appointment within 30 days after the retiring Agent gives notice of its
resignation, then the retiring Agent may, on behalf of the Lenders, appoint a
successor Agent; provided, however, that any such appointment shall be subject
-------- -------
to the prior written consent of JCPenney (which consent shall not be
unreasonably withheld so long as such successor shall be (i) a bank with a
rating of Aa2 or better from Moody's or a rating of AA or better from S&P, or an
Affiliate of any such bank, or (ii) any Co-Agent). Upon the acceptance of any
appointment as Agent hereunder by a permitted successor, such successor shall
succeed to and become vested with all the rights, powers, privileges and duties
of the retiring Agent and the retiring Agent shall be discharged from its duties
and obligations as Agent hereunder. After an Agent's resignation hereunder, the
provisions of this Article and Section 9.05 shall continue in effect for its
benefit in respect of any actions taken or omitted to be taken by it while it
was acting as Agent.
The Borrowers shall have the right to replace any Agent requesting
compensation under Section 2.19, but only in accordance with the provisions of
Section 2.20(b).
With respect to the Loans made by it hereunder, the Agent (and any
Lender appointed as a successor Agent) in its individual capacity and not as
Agent shall have the same rights and powers as any other Lender and may exercise
the same as though it were not the Agent (or such successor Agent) and the Agent
and its Affiliates (and any such successor Agent and its Affiliates) may accept
deposits from, lend money to and generally engage in any kind of business with
any Borrower or Subsidiary or any Affiliate of any Borrower as if the Agent (or
such successor Agent) were not an Agent.
Each Lender agrees (i) to reimburse the Agent, on demand, in the
amount of its pro rata share (based on its Commitment hereunder) of any expenses
(other than expenses in connection with the negotiation, preparation and closing
of this Agreement) incurred for the benefit of the Lenders
<PAGE>
76
by the Agent, including counsel fees and compensation of agents and employees
paid for services rendered on behalf of the Lenders, which shall not have been
reimbursed by the Borrowers and (ii) to indemnify and hold harmless the Agent
and any of its directors, officers, employees or agents, on demand, in the
amount of such pro rata share, from and against any and all liabilities, taxes,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind or nature whatsoever which may be imposed
on, incurred by or asserted against it in its capacity as an Agent or any of
them in any way relating to or arising out of this Agreement or any action taken
or omitted by it or any of them under this Agreement, to the extent the same
shall not have been reimbursed by the Borrowers; provided that no Lender shall
--------
be liable to the Agent for any portion of such liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
resulting from the gross negligence or wilful misconduct of the Agent or any of
its directors, officers, employees or agents.
Each Lender acknowledges that it has, independently and without
reliance upon the Agent or any other Lender and based on such documents and
information as it has deemed appropriate, made its own credit analysis and
decision to enter into this Agreement. Each Lender also acknowledges that it
will, independently and without reliance upon the Agent or any other Lender and
based on such documents and information as it shall from time to time deem
appropriate, continue to make its own decisions in taking or not taking action
under or based upon this Agreement, any related agreement or any document
furnished hereunder or thereunder.
ARTICLE IX. MISCELLANEOUS
SECTION 9.01. Notices. Notices and other communications provided for
--------
herein shall be in writing and shall be delivered by hand or overnight courier
service, mailed or
<PAGE>
77
sent by telex, graphic scanning or other telegraphic communications equipment,
as follows:
(a) if to J.C. Penney, to it at J.C. Penney Company, Inc., 6501 Legacy
Drive, Mail Code 1304, Plano, TX 75024-3698, Attention of Treasurer
Telephone: (214) 431-2011
Telecopy: (214) 431-2044
With a copy to: General Counsel - J.C. Penney Company, Inc., at the same
address;
(b) if to Funding, to it at J.C. Penney Funding Corporation, 6501
Legacy Drive, Mail Code 1304, Plano, TX 75024-3698, Attention of President
Telephone: (214) 431-2011
Telecopy: (214) 431-2044
With a copy to: General Counsel - J.C. Penney Company, Inc., at the same
address.
(c) if to the Agent, to it at Morgan Guaranty Trust Company of New
York, 60 Wall Street, 22nd Floor, New York, NY 10260, Attention of Mr.
Stephen B. King
Telephone: (212) 648-7415
Telecopy: (212) 648-5336
(d) if to a Lender, to it at its address (or telecopy number) set
forth in Schedule 2.01.
All notices and other communications given to any party hereto in accordance
with the provisions of this Agreement shall be deemed to have been given on the
date of receipt if delivered by hand or overnight courier service or sent by
telex, telecopy or other telegraphic communications equipment, or on the date
five Business Days after dispatch by certified or registered mail if mailed, in
each case delivered, sent or mailed (properly addressed) to such party as
provided in this Section 9.01 or in accordance with the latest unrevoked
direction from such party given in accordance with this Section 9.01.
SECTION 9.02. Survival of Agreement. All covenants, agreements,
----------------------
representations and warranties made by any Borrower herein and in the
certificates or other instruments prepared or delivered in connection with or
pursuant to this Agreement shall be considered to have been relied upon by the
Lenders and shall survive the making by the Lenders of the Loans, regardless of
any investigation made by the Lenders or on their behalf, and shall continue in
<PAGE>
78
full force and effect as long as the principal of or any accrued interest on any
Loan or any Fee or any other amount payable under this Agreement is outstanding
and unpaid and so long as the Commitments have not been terminated.
SECTION 9.03. Binding Effect. This Agreement shall become effective
---------------
when it shall have been executed by each of the Borrowers and the Agent and when
the Agent shall have received copies hereof which, when taken together, bear the
signatures of each Lender, and thereafter shall be binding upon and inure to the
benefit of the Borrowers, the Agent and each Lender and their respective
successors and permitted assigns in accordance with its terms, except that no
Borrower shall have any right to assign or delegate any of its respective rights
or duties hereunder or any interest herein without the prior consent of all the
Lenders.
SECTION 9.04. Successors and Assigns. (a) Whenever in this
-----------------------
Agreement any of the parties hereto is referred to, such reference shall be
deemed to include the successors and permitted assigns of such party; and all
covenants, promises and agreements by or on behalf of any Borrower, the Agent
or the Lenders that are contained in this Agreement shall bind and inure to the
benefit of their respective successors and permitted assigns.
(b) Each Lender may assign to an Eligible Assignee, at the expense of
the assignor and/or the assignee, all or a portion of its interests, rights and
obligations under this Agreement (including all or a portion of its Commitment
and the Loans at the time owing to it); provided, however, that (i) except in
-------- -------
the case of an assignment by a Lender to an Affiliate of such Lender which is a
bank or bank holding company, the Borrowers and the Agent must give their prior
written consent to such assignment, (ii) the amount of the Commitment of the
assigning Lender subject to such assignment (determined as of the date of such
assignment) shall not be less than $20,000,000 (or the remaining amount of the
Commitment of such Lender), (iii) other than the case of an assignment by a
Lender of the remaining amount of the Commitment of such Lender, no Lender shall
make more than two assignments under this Section 9.04(b) after the Closing Date
and prior to the Maturity Date, (iv) the parties to each such assignment shall
execute and deliver to the Agent an instrument evidencing such assignment (the
"Assignment Instrument") and a processing and recordation fee of $2,500 (which
fee shall not in any event be an obligation of the Borrowers) and
<PAGE>
79
(v) as of the date of such assignment, except with the prior written consent of
JCPenney, (x) the assignee shall not have any right, and shall have no knowledge
that such assignment would result in its having the right, to request
compensation pursuant to Section 2.13 or 2.19 after giving effect to such
assignment in excess of any compensation to which the assigning Lender would
have been entitled under such Sections and (y) the parties to such assignment
shall have no knowledge that such assignment (A) would cause it to be unlawful
for any party thereto to make or maintain any Eurodollar Loan or to give effect
to its obligations as contemplated hereby with respect to any Eurodollar Loan or
(B) would cause any Borrower to incur any liability under Section 2.15. Upon
acceptance and recording pursuant to paragraph (e) of this Section 9.04, from
and after the effective date specified in each Assignment Instrument, which
effective date shall be at least five days after the execution thereof, (A) the
assignee thereunder shall be a party hereto and, to the extent of the interest
assigned by such Assignment Instrument, shall have the rights and obligations
of, and shall for all purposes be, a Lender under this Agreement and (B) the
assigning Lender thereunder shall, to the extent of the interest assigned by
such Assignment Instrument, be released from its obligations under this
Agreement (and, in the case of an Assignment Instrument covering all or the
remaining portion of an assigning Lender's rights and obligations under this
Agreement, such Lender shall cease to be a party hereto (but, subject to Section
2.20, shall continue to be entitled to the benefits of Sections 2.13, 2.15, 2.19
and 9.05, as well as to any Fees accrued for its account hereunder and not yet
paid)). Notwithstanding the foregoing, any Lender assigning any portion of its
rights and obligations under this Agreement may retain any Competitive Loans
made by it outstanding at such time, and in such case shall retain its rights
hereunder in respect of any Loans so retained until such Loans have been repaid
in full in accordance with this Agreement. No assignment may be made by any
Lender except in accordance with the provisions of this Section 9.04(b).
(c) By executing and delivering an Assignment Instrument, the
assignee thereunder shall be deemed to confirm to and agree with the other
parties hereto as follows: (i) such assignee confirms that it has received a
copy of this Agreement, together with copies of the most recent financial
statements delivered pursuant to Section 5.04 and such other documents and
information as it has deemed appropriate to make its own credit analysis and
<PAGE>
80
decision to enter into such Assignment Instrument; (ii) such assignee will
independently and without reliance upon the Agent, the assigning Lender or any
other Lender and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in taking or
not taking action under this Agreement; (iii) such assignee appoints and
authorizes the Agent to take such action as agent on its behalf and to exercise
such powers under this Agreement as are delegated to the Agent by the terms
hereof, together with such powers as are reasonably incidental thereto; and (iv)
such assignee agrees that it will perform in accordance with their terms all the
obligations which by the terms of this Agreement are required to be performed by
it as a Lender.
(d) The Agent shall retain a copy of each Assignment Instrument
delivered to it and a register for the recordation of the name and address of,
and the Commitment of, each Lender from time to time (the "Register"). The
entries in the Register shall be conclusive in the absence of manifest error and
the Borrowers, the Agent and the Lenders may treat each person whose name is
recorded in the Register pursuant to the terms hereof as a Lender hereunder for
all purposes of this Agreement. The Register shall be available for inspection
by any Borrower or any Lender, at any reasonable time and from time to time upon
reasonable prior notice.
(e) Each Lender may without the consent of the Borrowers or the Agent
sell participations to one or more banks or other entities in all or a portion
of its rights and obligations under this Agreement (including all or a portion
of its Commitment and the Loans owing to it); provided, however, that (i) such
-------- -------
Lender's obligations under this Agreement shall remain unchanged, (ii) such
Lender shall remain solely responsible to the other parties hereto for the
performance of such obligations, (iii) the participating banks or other entities
shall not be entitled to the benefit of the provisions contained in Sections
2.13, 2.15, 2.19 and 9.05 and (iv) the Borrowers, the Agent and the other
Lenders shall continue to deal solely and directly with such Lender in
connection with such Lender's rights and obligations under this Agreement, and
such Lender shall retain the sole right to enforce the obligations of the
Borrowers relating to the Loans and to approve any amendment, modification or
waiver of any provision of this Agreement (other than any amendments,
modifications or waivers decreasing any fees payable hereunder or the amount
<PAGE>
81
of principal of or the rate at which interest is payable on the Loans, or
extending any scheduled principal payment date or date fixed for the payment of
interest on the Loans, that would affect the Lender in question and its
participants).
(f) Any Lender or participant may, in connection with any assignment
or participation or proposed assignment or participation pursuant to this
Section 9.04, disclose to the assignee or participant or proposed assignee or
participant any information relating to any Borrower furnished to such Lender by
or on behalf of such Borrower; provided that, prior to any such disclosure of
--------
information designated by such Borrower as confidential, each such assignee or
participant or proposed assignee or participant shall execute an agreement
whereby such assignee or participant shall agree to preserve the confidentiality
of such confidential information in accordance with Section 9.15.
(g) Any Lender may at any time, without the consent of any other
party hereto, assign all or any portion of its rights under this Agreement and
any notes issued to it to a Federal Reserve Bank provided that no such
--------
assignment shall release a Lender from any of its obligations hereunder. In
order to facilitate such an assignment to a Federal Reserve Bank, the Borrower
shall, at the request of the assigning Lender, promptly execute and deliver to
the assigning Lender a note with terms in accordance with this Agreement, in a
form reasonably acceptable to the Agent and the Borrower, evidencing the Loans
made to the Borrower by the assigning Lender hereunder.
SECTION 9.05. Expenses; Indemnity. (a) The Borrowers agree, jointly
--------------------
and severally, to pay all reasonable out-of-pocket expenses incurred by the
Agent in connection with the negotiation, preparation and closing of this
Agreement, including the reasonable fees and disbursements of Cravath, Swaine &
Moore, special counsel for the Agent, and, only with the written consent of the
Borrowers prior to any incurrence, all reasonable out-of-pocket expenses
incurred by the Agent in connection with any amendment, modification or waiver
of this Agreement. The Borrowers agree, jointly and severally, to pay all
reasonable out-of-pocket costs and expenses of the Agent and Lenders, as well as
the allocated costs of in-house counsel, in connection with the collection or
enforcement of this Agreement.
<PAGE>
82
(b) The Borrowers agree, jointly and severally, to indemnify the
Agent, J.P. Morgan Securities Inc., each Lender and each of their respective
directors, officers and employees (each such person being called an
"Indemnitee") against, and to hold each Indemnitee harmless from, any and all
losses, claims, damages, liabilities and related expenses, including reasonable
counsel fees and expenses, incurred by or asserted against any Indemnitee
arising as a result of (i) any breach by any Borrower of any of its obligations
under this Agreement or any agreement or instrument contemplated hereby, (ii)
the use of the proceeds of the Loans or (iii) any claim, litigation,
investigation or proceeding relating to any of the foregoing, if any Indemnitee
is at any time a party thereto; provided that such indemnity shall not, as to
--------
any Indemnitee, be available to the extent that such losses, claims, damages,
liabilities or related expenses (x) arise in connection with any judgment
rendered by a court of competent jurisdiction in favor of any Borrower and
against such Indemnitee, (y) result from the gross negligence or wilful
misconduct of such Indemnitee (or, if such Indemnitee is a Lender or the Agent,
any of its directors, officers or employees) or (z) result from any disputes
among the Lenders and the Agent, or any of them, other than disputes resulting
from the fault of a Borrower.
(c) The provisions of this Section 9.05 shall remain operative and in
full force and effect regardless of the expiration of the term of this
Agreement, the consummation of the transactions contemplated hereby, the
repayment of any of the Loans, the invalidity or unenforceability of any term or
provision of this Agreement, or any investigation made by or on behalf of the
Agent or the Lender. All amounts due under this Section 9.05 shall be payable
on written demand therefor.
SECTION 9.06. Right of Setoff. If an Event of Default shall have
----------------
occurred and be continuing and any three Lenders representing at least
$50,000,000 in aggregate amount of the Commitments have requested the Agent, in
writing, in accordance with the provisions of Article VII, to declare the Loan
to be forthwith due and payable, each Lender is hereby authorized at any time
and from time to time, to the fullest extent permitted by law, to set off and
apply any and all deposits (general or special, time or demand, provisional or
final) at any time held and other indebtedness at any time owing by such Lender
to or for the credit or the account of any Borrower against any of and all
<PAGE>
83
the obligations of such Borrower now or hereafter existing under this Agreement
held by such Lender (other than obligations purchased after such Event of
Default shall have become known to such Lender), irrespective of whether or not
such Lender shall have made any demand under this Agreement and although such
obligations may be unmatured. The rights of each Lender under this Section are
in addition to other rights and remedies (including other rights of setoff)
which such Lender may have. Any Lender exercising its rights under this Section
shall give notice thereof to JCPenney concurrently with or prior to the exercise
of such rights.
SECTION 9.07. Applicable Law. THIS AGREEMENT SHALL BE CONSTRUED IN
---------------
ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK.
SECTION 9.08. Waivers; Amendment. (a) No failure or delay of the
-------------------
Agent or Lender in exercising any power or right hereunder shall operate as a
waiver thereof, nor shall any single or partial exercise of any such right or
power, or any abandonment or discontinuance of steps to enforce such a right or
power, preclude any other or further exercise thereof or the exercise of any
other right or power. The rights and remedies of the Agent, the Lenders and the
Borrowers hereunder are cumulative and are not exclusive of any rights or
remedies which they would otherwise have. No waiver of any provision of this
Agreement or consent to any departure by any Borrower therefrom shall in any
event be effective unless the same shall be permitted by paragraph (b) below,
and then such waiver or consent shall be effective only in the specific instance
and for the purpose for which given. No notice or demand on any Borrower in any
case shall entitle such Borrower to any other or further notice or demand in
similar or other circumstances.
(b) Neither this Agreement nor any provision hereof may be waived,
amended or modified except pursuant to an agreement or agreements in writing
entered into by the Borrowers and the Required Lenders; provided, however, that
-------- -------
no such agreement shall (i) decrease the principal amount of, or extend the
maturity of or any scheduled principal payment date or date for the payment of
any interest on any Loan, or waive or excuse any such payment or any part
thereof, or decrease the rate of interest on any Loan, without the prior written
consent of each Lender affected thereby, (ii) change the Commitment or decrease
the Facility Fees of any Lender without the prior written consent of such
<PAGE>
84
Lender, or (iii) amend or modify the provisions of Section 2.16 or Section 9.03,
the provisions of this Section or the definition of the "Required Lenders",
without the prior written consent of each Lender; provided further that no such
-------- -------
agreement shall amend, modify or otherwise affect the rights or duties of the
Agent hereunder without the prior written consent of the Agent. Each Lender
shall be bound by any waiver, amendment or modification authorized by this
Section, and any consent by any Lender pursuant to this Section shall bind any
subsequent assignee of such Lender.
SECTION 9.09. Interest and Charges. Notwithstanding any other
---------------------
provision in this Agreement, no Lender shall ever be entitled to receive,
collect or apply, as interest on any amount owing to such Lender under this
Agreement or in connection herewith, any amount in excess of the Maximum Amount.
If any Lender ever receives, collects or applies, as interest, any such excess,
such excess shall be deemed a partial repayment of principal and treated
hereunder as such; and if principal is paid in full, any remaining excess shall
be paid to the appropriate Borrower. In determining whether or not the interest
paid or payable, under any specific contingency, exceeds the Maximum Amount, the
Borrowers and the Lenders shall, to the maximum extent permitted under
applicable law, (i) characterize any nonprincipal payment as an expense, fee or
premium rather than as interest, (ii) exclude voluntary prepayments and the
effect thereof, and (iii) amortize, prorate, allocate and spread in equal parts,
the total amount of interest throughout the entire contemplated term of this
Agreement so that the interest rate is uniform throughout the entire period that
any amount is outstanding under or in connection with this Agreement; provided,
--------
however, that if any obligation owing to a Lender hereunder or in connection
- -------
herewith is paid and performed in full prior to the end of the full contemplated
term thereof, and if the interest received by such Lender on such obligation for
its actual term exceeds the Maximum Amount with respect thereto, such Lender
shall refund to the appropriate Borrower the amount of such excess or credit the
amount of such excess against the total principal amount of all amounts owing to
such Lender hereunder or in connection herewith, and, in such event, such Lender
shall not be subject to any penalties provided by any laws for contracting for,
charging or receiving interest in excess of the Maximum Amount.
SECTION 9.10. Entire Agreement. This written Agreement together with
-----------------
the letter agreement with respect to
<PAGE>
85
payment of fees of even date herewith represent the final agreement among the
parties with respect to the subject matter hereof and may not be contradicted by
evidence of prior, contemporaneous, or subsequent oral agreements of the
parties. There are no unwritten oral agreements among the parties with respect
to the subject matter hereof.
SECTION 9.11. Severability. In the event any one or more of the
-------------
provisions contained in this Agreement should be held invalid, illegal or
unenforceable in any respect, the validity, legality and enforceability of the
remaining provisions contained herein and therein shall not in any way be
affected or impaired thereby. The parties shall endeavor in good-faith
negotiations to replace the invalid, illegal or unenforceable provisions with
valid provisions the economic effect of which comes as close as possible to that
of the invalid, illegal or unenforceable provisions.
SECTION 9.12. Counterparts. This Agreement may be executed in two or
-------------
more counterparts, each of which shall constitute an original but all of which
when taken together shall constitute but one contract, and shall become
effective as provided in Section 9.03.
SECTION 9.13. Headings. Article and Section headings and the Table
---------
of Contents used herein are for convenience of reference only, are not part of
this Agreement and are not to affect the construction of, or to be taken into
consideration in interpreting, this Agreement.
SECTION 9.14. Jurisdiction; Consent to Service of Process. (a) Each
----------------------------------- --------
Borrower hereby irrevocably and unconditionally submits, for itself and its
property, to the nonexclusive jurisdiction of any New York State court or
Federal court of the United States of America sitting in New York City, and any
appellate court from any thereof, in any action or proceeding arising out of or
relating to this Agreement, or for recognition or enforcement of any judgment,
and each of the parties hereto hereby irrevocably and unconditionally agrees
that all claims in respect of any such action or proceeding may be heard and
determined in such New York State or, to the extent permitted by law, in such
Federal court. Each of the parties hereto agrees that a final judgment in any
such action or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by law.
Subject to the foregoing and to paragraph (b) below, nothing in this Agreement
shall affect any right that any party
<PAGE>
86
hereto may otherwise have to bring any action or proceeding relating to this
Agreement against any other party hereto in the courts of any jurisdiction.
(b) Each Borrower hereby irrevocably and unconditionally waives, to
the fullest extent it may legally and effectively do so, any objection which it
may now or hereafter have to the laying of venue of any suit, action or
proceeding arising out of or relating to this Agreement in any New York State or
Federal court. Each of the parties hereto hereby irrevocably waives, to the
fullest extent permitted by law, the defense of an inconvenient forum to the
maintenance of such action or proceeding in any such court.
(c) Each party to this Agreement irrevocably consents to service of
process in the manner provided for notices in Section 9.01. Nothing in this
Agreement will affect the right of any party to this Agreement to serve process
in any other manner permitted by law.
SECTION 9.15. Confidentiality. Notwithstanding anything contained in
----------------
this Agreement to the contrary, the Lenders and the Agent shall hold in
confidence all agreements, statements, reports and information that are not in
the public domain concerning the Borrowers and their Subsidiaries that the Agent
or any Lender receives pursuant to or in connection with this Agreement. The
Agent and each of the Lenders shall not distribute any such confidential
information to other persons except (a) to its counsel, its Affiliates, its
examiners, regulatory authorities and prospective assignees of, or participants
in, its interest herein and their respective counsel (each of which shall be
instructed to hold the same in confidence, and in the case of any prospective
assignee or prospective participant, shall execute an agreement to such effect
pursuant to Section 9.04(f) as a condition to receiving a copy of this Agreement
and becoming an assignee or participant hereunder), (b) pursuant to legal
process, (c) in connection with litigation against or by the Lenders and/or the
Agent arising in connection with this Agreement or (d) with the prior written
consent of the Borrowers. The Agent and each of the Lenders shall give prior or
contemporaneous notice to the Borrowers of any disclosure by it of confidential
information pursuant to clause (b) or (c) above.
<PAGE>
87
SECTION 9.16. Liability of Borrowers. Except as expressly provided
-----------------------
in this Agreement, the obligations of each Borrower hereunder shall be several
obligations with respect to Loans made to it.
IN WITNESS WHEREOF, the Borrowers, the Agent, the Co-Agents and the
Lenders have caused this Agreement to be duly executed by their respective
authorized officers as of the day and year first above written.
J. C. PENNEY COMPANY, INC.,
by
/s/ Leo A. Gispanski
----------------------------
Name: Leo A. Gispanski
Title: Vice President &
Treasurer
J. C. PENNEY FUNDING CORPORATION,
by
/s/ Donald A. McKay
----------------------------
Name: Donald A. McKay
Title: Chairman of the Board
<PAGE>
88
MORGAN GUARANTY TRUST COMPANY OF NEW YORK, individually
and as Agent,
by
/s/ Stephen B. King
------------------------------
Name: Stephen B. King
Title: Vice President
<PAGE>
89
BANKERS TRUST COMPANY, individually and as Co-Agent,
by
/s/ Bruce D. Glasson
------------------------------
Name: Bruce D. Glasson
Title: Managing Director
CHEMICAL BANK, individually and as Co-Agent,
by
/s/ Meredith L. Vanden Handel
------------------------------
Name: Meredith L. Vanden
Handel
Title: Vice President
CREDIT SUISSE, individually and as Co-Agent,
by
/s/ Stephen M. Flynn
------------------------------
Name: Stephen M. Flynn
Title: Member of Senior
Management
by
/s/ Maria N. Gaspara
------------------------------
Name: Maria N. Gaspara
Title: Associate
ABN AMRO BANK N.V.,
by
/s/ Laurie C. Tuzo
------------------------------
Name: Laurie C. Tuzo
Title: Vice President
by
/s/ Ronald A. Mahle
------------------------------
Name: Ronald A. Mahle
Title: Group Vice President
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION,
by
/s/ Jody B. Schneider
------------------------------
Name: Jody B. Schneider
Title: Vice President
<PAGE>
90
THE FIRST NATIONAL BANK OF BOSTON,
by
/s/ Bethann R. Halligan
------------------------------
Name: Bethann R. Halligan
Title: Director
BANK OF HAWAII,
by
/s/ Peter S. Ho
------------------------------
Name: Peter S. Ho
Title: Vice President
THE BANK OF NEW YORK,
by
/s/ Gregory L. Batson
------------------------------
Name: Gregory L. Batson
Title: Assistant Vice
President
BANK OF TOKYO, LTD., acting by and
through its Dallas Agency, as a
Lender,
by
/s/ John M. Mearns
------------------------------
Name: John M. Mearns
Title: Vice President
BANK ONE, TEXAS, N.A.,
by
/s/ Scott Rhea
------------------------------
Name: Scott Rhea
Title: Banking Officer
BANQUE NATIONALE DE PARIS, Houston
Agency,
by
/s/ Henry F. Setina
------------------------------
Name: Henry F. Setina
Title: Vice President
<PAGE>
91
CITIBANK, N.A.,
by
/s/ Arnold J. Ziegel
------------------------------
Name: Arnold J. Ziegel
Title: Authorized Signer
CREDIT LYONNAIS NEW YORK BRANCH,
by
/s/ Robert Ivosevich
------------------------------
Name: Robert Ivosevich
Title: Senior Vice President
THE DAI-ICHI KANGYO BANK, LTD., NEW
YORK BRANCH,
by
/s/ Kiyoshi Miyake
------------------------------
Name: Kiyoshi Miyake
Title: Vice President and
Group Leader
FIRST INTERSTATE BANK OF
CALIFORNIA,
by
/s/ William J. Baird
------------------------------
Name: William J. Baird
Title: Vice President
by
/s/ Wendy V. C. Purcell
------------------------------
Name: Wendy V. C. Purcell
Title: Assistant Vice President
THE FIRST NATIONAL BANK OF CHICAGO,
by
/s/ Ted Wozniak
------------------------------
Name: Ted Wozniak
Title: Vice President
FIRST SECURITY BANK OF UTAH, N.A.,
by
/s/ Stephen L. Goalen
------------------------------
Name: Stephen L. Goalen
Title: Senior Vice President
<PAGE>
92
FIRST UNION NATIONAL BANK OF NORTH
CAROLINA,
by
/s/ A. Kimball Collins
------------------------------
Name: A. Kimball Collins
Title: Assistant Vice President
FIRSTAR BANK MILWAUKEE, N.A.,
by
/s/ Timothy W. Somers
------------------------------
Name: Timothy W. Somers
Title: Assistant Vice President
THE FUJI BANK, LIMITED, Houston
Agency,
by
/s/ David Kelley
------------------------------
Name: David Kelley
Title: Vice President and
Senior Manager
INDUSTRIAL BANK OF JAPAN TRUST
COMPANY,
by
/s/ Takeshi Kawano
------------------------------
Name: Takeshi Kawano
Title: Senior Vice President
and Senior Manager
THE LONG-TERM CREDIT BANK OF JAPAN,
LIMITED, New York Branch,
by
/s/ Satoru Otsubo
------------------------------
Name: Satoru Otsubo
Title: Joint General Manager
MELLON BANK, N.A.,
by
/s/ Lisa M. Pellow
------------------------------
Name: Lisa M. Pellow
Title: Vice President
<PAGE>
93
THE MITSUBISHI BANK, LIMITED,
by
/s/ Shoji Honda
------------------------------
Name: Shoji Honda
Title: General Manager
NATIONAL WESTMINSTER BANK PLC, New
York Branch,
by
/s/ Stephen R. Parker
------------------------------
Name: Stephen R. Parker
Title: Vice President
NATIONAL WESTMINSTER BANK PLC,
Nassau Branch,
by
/s/ Stephen R. Parker
------------------------------
Name: Stephen R. Parker
Title: Vice President
NATIONSBANK OF TEXAS, N.A.,
by
/s/ Sharon L. McCarty
------------------------------
Name: Sharon L. McCarty
Title: Assistant Vice President
NBD BANK, N.A.
by
/s/ D. Andrew Bateman
------------------------------
Name: D. Andrew Bateman
Title: First Vice President
THE NORTHERN TRUST COMPANY,
by
/s/ Sara Clissold
------------------------------
Name: Sara Clissold
Title: Officer
NORWEST BANK MINNESOTA, N.A.,
by
/s/ Perry G. Pelos
------------------------------
Name: Perry G. Pelos
Title: Vice President
<PAGE>
94
PNC BANK, NATIONAL ASSOCIATION,
by
/s/ Gregory T. Gaschler
------------------------------
Name: Gregory T. Gaschler
Title: Vice President
ROYAL BANK OF CANADA,
by
/s/ Everett M. Harner
------------------------------
Name: Everett M. Harner
Title: Manager
ISTITUTO BANCARIO SAN PAOLO DI
TORINO, SpA,
by
/s/ William J. DeAngelo
------------------------------
Name: William J. DeAngelo
Title: First Vice President
by
/s/ Robert S. Wurster
------------------------------
Name: Robert S. Wurster
Title: First Vice President
THE SANWA BANK LIMITED, Dallas
Agency,
by
/s/ Robert S. Smith
------------------------------
Name: Robert S. Smith
Title: Assistant Vice President
SOCIETE GENERALE, Southwest Agency,
by
/s/ Louis P. Laville, III
------------------------------
Name: Louis P. Laville, III
Title: Vice President
THE SUMITOMO BANK, LTD., Houston
Agency,
by
/s/ Tatsuo Ueda
------------------------------
Name: Tatsuo Ueda
Title: General Manager
<PAGE>
95
SUNBANK, NATIONAL ASSOCIATION,
by
/s/ J. Carol Doyle
------------------------------
Name: J. Carol Doyle
Title: First Vice President
SWISS BANK CORPORATION, Cayman
Islands Branch,
by
/s/ Nancy A. Russell
------------------------------
Name: Nancy A. Russell
Title: Associate Director
by
/s/ William A. McDonnell
------------------------------
Name: William A. McDonnell
Title: Associate Director
UNION BANK OF SWITZERLAND,
Houston Agency,
by
/s/ Dan O. Boyle
------------------------------
Name: Dan O. Boyle
Title: Vice President
by
/s/ Jean Claude de Roche
------------------------------
Name: Jean Claude de Roche
Title: Assistant Vice President
UNITED MISSOURI BANK, N.A.,
by
/s/ Walter Beck, Jr.
------------------------------
Name: Walter Beck, Jr.
Title: Executive Vice President
UNITED STATES NATIONAL
BANK OF OREGON,
by
/s/ Blake R. Howells
-----------------------------------
Name: Blake R. Howells
Title: Assistant Vice President
<PAGE>
96
WACHOVIA BANK OF GEORGIA, N.A.,
by
/s/ Douglas L. Williams
------------------------------
Name: Douglas L. Williams
Title: Senior Vice President
<PAGE>
87
SECTION 9.16. Liability of Borrowers. Except as expressly provided
-----------------------
in this Agreement, the obligations of each Borrower hereunder shall be several
obligations with respect to Loans made to it.
IN WITNESS WHEREOF, the Borrowers, the Agent, the Co-Agents and the
Lenders have caused this Agreement to be duly executed by their respective
authorized officers as of the day and year first above written.
J. C. PENNEY COMPANY, INC.,
by
/s/ Leo A. Gispanski
----------------------------
Name: Leo A. Gispanski
Title: Vice President &
Treasurer
J. C. PENNEY FUNDING CORPORATION,
by
/s/ Donald A. McKay
----------------------------
Name: Donald A. McKay
Title: Chairman of the Board
<PAGE>
88
MORGAN GUARANTY TRUST COMPANY OF NEW YORK, individually
and as Agent,
by
/s/ Stephen B. King
------------------------------
Name: Stephen B. King
Title: Vice President
<PAGE>
89
BANKERS TRUST COMPANY, individually and as Co-Agent,
by
/s/ Bruce D. Glasson
------------------------------
Name: Bruce D. Glasson
Title: Managing Director
CHEMICAL BANK, individually and as Co-Agent,
by
------------------------------
Name: Meredith L. Vanden
Handel
Title: Vice President
CREDIT SUISSE, individually and as Co-Agent,
by
------------------------------
Name:
Title:
by
------------------------------
Name:
Title:
ABN AMRO BANK N.V.,
by
------------------------------
Name:
Title:
by
------------------------------
Name:
Title:
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION,
by
------------------------------
Name: Jody B. Schneider
Title: Vice President
<PAGE>
89
BANKERS TRUST COMPANY, individually and as Co-Agent,
by
------------------------------
Name:
Title:
CHEMICAL BANK, individually and as Co-Agent,
by
/s/ Meredith L. Vanden Handel
------------------------------
Name: Meredith L. Vanden
Handel
Title: Vice President
CREDIT SUISSE, individually and as Co-Agent,
by
------------------------------
Name:
Title:
by
------------------------------
Name:
Title:
ABN AMRO BANK N.V.,
by
------------------------------
Name:
Title:
by
------------------------------
Name:
Title:
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION,
by
------------------------------
Name: Jody B. Schneider
Title: Vice President
<PAGE>
89
BANKERS TRUST COMPANY, individually and as Co-Agent,
by
------------------------------
Name:
Title:
CHEMICAL BANK, individually and as Co-Agent,
by
------------------------------
Name: Meredith L. Vanden
Handel
Title: Vice President
CREDIT SUISSE, individually and as Co-Agent,
by
/s/ Stephen M. Flynn
------------------------------
Name: Stephen M. Flynn
Title: Member of Senior Management
by
/s/ Maria N. Gaspara
------------------------------
Name: Maria N. Gaspara
Title: Associate
ABN AMRO BANK N.V.,
by
------------------------------
Name:
Title:
by
------------------------------
Name:
Title:
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION,
by
------------------------------
Name: Jody B. Schneider
Title: Vice President
<PAGE>
89
BANKERS TRUST COMPANY, individually and as Co-Agent,
by
------------------------------
Name:
Title:
CHEMICAL BANK, individually and as Co-Agent,
by
------------------------------
Name: Meredith L. Vanden
Handel
Title: Vice President
CREDIT SUISSE, individually and as Co-Agent,
by
------------------------------
Name:
Title:
by
------------------------------
Name:
Title:
ABN AMRO BANK N.V.,
by
/s/ Laurie C. Tuzo
------------------------------
Name: Laurie C. Tuzo
Title: Vice President
by
/s/ Ronald A. Mahle
------------------------------
Name: Ronald A. Mahle
Title: Group Vice President
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION,
by
------------------------------
Name: Jody B. Schneider
Title: Vice President
<PAGE>
89
BANKERS TRUST COMPANY, individually and as Co-Agent,
by
------------------------------
Name:
Title:
CHEMICAL BANK, individually and as Co-Agent,
by
------------------------------
Name: Meredith L. Vanden
Handel
Title: Vice President
CREDIT SUISSE, individually and as Co-Agent,
by
------------------------------
Name:
Title:
by
------------------------------
Name:
Title:
ABN AMRO BANK N.V.,
by
------------------------------
Name:
Title:
by
------------------------------
Name:
Title:
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION,
by
/s/ Jody B. Schneider
------------------------------
Name: Jody B. Schneider
Title: Vice President
<PAGE>
90
THE FIRST NATIONAL BANK OF BOSTON,
by
/s/ Bethann R. Halligan
------------------------------
Name: Bethann R. Halligan
Title: Director
BANK OF HAWAII,
by
------------------------------
Name:
Title:
THE BANK OF NEW YORK,
by
------------------------------
Name:
Title:
BANK OF TOKYO, LTD., acting by and
through its Dallas Agency, as a
Lender,
by
------------------------------
Name: John M. Mearns
Title: Vice President
BANK ONE, TEXAS, N.A.,
by
------------------------------
Name:
Title:
BANQUE NATIONALE DE PARIS, Houston
Agency,
by
------------------------------
Name:
Title:
CITIBANK, N.A.,
by
------------------------------
Name:
Title:
<PAGE>
90
THE FIRST NATIONAL BANK OF BOSTON,
by
------------------------------
Name:
Title:
BANK OF HAWAII,
by
/s/ Peter S. Ho
------------------------------
Name: Peter S. Ho
Title: Vice President
THE BANK OF NEW YORK,
by
------------------------------
Name:
Title:
BANK OF TOKYO, LTD., acting by and
through its Dallas Agency, as a
Lender,
by
------------------------------
Name: John M. Mearns
Title: Vice President
BANK ONE, TEXAS, N.A.,
by
------------------------------
Name:
Title:
BANQUE NATIONALE DE PARIS, Houston
Agency,
by
------------------------------
Name:
Title:
CITIBANK, N.A.,
by
------------------------------
Name:
Title:
<PAGE>
90
THE FIRST NATIONAL BANK OF BOSTON,
by
------------------------------
Name:
Title:
BANK OF HAWAII,
by
------------------------------
Name:
Title:
THE BANK OF NEW YORK,
by
/s/ Gregory L. Batson
------------------------------
Name: Gregory L. Batson
Title: Assistant Vice
President
BANK OF TOKYO, LTD., acting by and
through its Dallas Agency, as a
Lender,
by
------------------------------
Name: John M. Mearns
Title: Vice President
BANK ONE, TEXAS, N.A.,
by
------------------------------
Name:
Title:
BANQUE NATIONALE DE PARIS, Houston
Agency,
by
------------------------------
Name:
Title:
CITIBANK, N.A.,
by
------------------------------
Name:
Title:
<PAGE>
90
THE FIRST NATIONAL BANK OF BOSTON,
by
------------------------------
Name:
Title:
BANK OF HAWAII,
by
------------------------------
Name:
Title:
THE BANK OF NEW YORK,
by
------------------------------
Name:
Title:
BANK OF TOKYO, LTD., acting by and
through its Dallas Agency, as a
Lender,
by
/s/ John M. Mearns
------------------------------
Name: John M. Mearns
Title: Vice President
BANK ONE, TEXAS, N.A.,
by
------------------------------
Name:
Title:
BANQUE NATIONALE DE PARIS, Houston
Agency,
by
------------------------------
Name:
Title:
CITIBANK, N.A.,
by
------------------------------
Name:
Title:
<PAGE>
90
THE FIRST NATIONAL BANK OF BOSTON,
by
------------------------------
Name:
Title:
BANK OF HAWAII,
by
------------------------------
Name:
Title:
THE BANK OF NEW YORK,
by
------------------------------
Name:
Title:
BANK OF TOKYO, LTD., acting by and
through its Dallas Agency, as a
Lender,
by
------------------------------
Name: John M. Mearns
Title: Vice President
BANK ONE, TEXAS, N.A.,
by
/s/ Scott Rhea
------------------------------
Name: Scott Rhea
Title: Banking Officer
BANQUE NATIONALE DE PARIS, Houston
Agency,
by
------------------------------
Name:
Title:
CITIBANK, N.A.,
by
------------------------------
Name:
Title:
<PAGE>
90
THE FIRST NATIONAL BANK OF BOSTON,
by
------------------------------
Name:
Title:
BANK OF HAWAII,
by
------------------------------
Name:
Title:
THE BANK OF NEW YORK,
by
------------------------------
Name:
Title:
BANK OF TOKYO, LTD., acting by and
through its Dallas Agency, as a
Lender,
by
------------------------------
Name: John M. Mearns
Title: Vice President
BANK ONE, TEXAS, N.A.,
by
------------------------------
Name:
Title:
BANQUE NATIONALE DE PARIS, Houston
Agency,
by
/s/ Henry F. Setina
------------------------------
Name: Henry F. Setina
Title: Vice President
CITIBANK, N.A.,
by
------------------------------
Name:
Title:
<PAGE>
90
THE FIRST NATIONAL BANK OF BOSTON,
by
------------------------------
Name:
Title:
BANK OF HAWAII,
by
------------------------------
Name:
Title:
THE BANK OF NEW YORK,
by
------------------------------
Name:
Title:
BANK OF TOKYO, LTD., acting by and
through its Dallas Agency, as a
Lender,
by
------------------------------
Name: John M. Mearns
Title: Vice President
BANK ONE, TEXAS, N.A.,
by
------------------------------
Name:
Title:
BANQUE NATIONALE DE PARIS, Houston
Agency,
by
------------------------------
Name:
Title:
CITIBANK, N.A.,
by
/s/ Arnold J. Ziegel
------------------------------
Name: Arnold J. Ziegel
Title: Authorized Signer
<PAGE>
91
CREDIT LYONNAIS NEW YORK BRANCH,
by
/s/ Robert Ivosevich
------------------------------
Name: Robert Ivosevich
Title: Senior Vice President
THE DAI-ICHI KANGYO BANK, LTD., NEW
YORK BRANCH,
by
------------------------------
Name: Kiyoshi Miyake
Title:
FIRST INTERSTATE BANK OF
CALIFORNIA,
by
------------------------------
Name:
Title:
THE FIRST NATIONAL BANK OF CHICAGO,
by
------------------------------
Name: Ted Wozniak
Title: Vice President
FIRST SECURITY BANK OF UTAH, N.A.,
by
------------------------------
Name:
Title:
FIRST UNION NATIONAL BANK OF NORTH
CAROLINA,
by
------------------------------
Name:
Title:
by
------------------------------
Name:
Title:
<PAGE>
91
CREDIT LYONNAIS NEW YORK BRANCH,
by
------------------------------
Name:
Title:
THE DAI-ICHI KANGYO BANK, LTD., NEW
YORK BRANCH,
by
/s/ Kiyoshi Miyake
------------------------------
Name: Kiyoshi Miyake
Title: VP & Group Leader
FIRST INTERSTATE BANK OF
CALIFORNIA,
by
------------------------------
Name:
Title:
THE FIRST NATIONAL BANK OF CHICAGO,
by
------------------------------
Name: Ted Wozniak
Title: Vice President
FIRST SECURITY BANK OF UTAH, N.A.,
by
------------------------------
Name:
Title:
FIRST UNION NATIONAL BANK OF NORTH
CAROLINA,
by
------------------------------
Name:
Title:
by
------------------------------
Name:
Title:
<PAGE>
91
CREDIT LYONNAIS NEW YORK BRANCH,
by
------------------------------
Name:
Title:
THE DAI-ICHI KANGYO BANK, LTD., NEW
YORK BRANCH,
by
------------------------------
Name: Kiyoshi Miyake
Title:
FIRST INTERSTATE BANK OF
CALIFORNIA,
by
/s/ William J. Baird
------------------------------
Name: William J. Baird
Title: Vice President
by
/s/ Wendy V. C. Purcell
------------------------------
Name: Wendy V. C. Purcell
Title: Assistant Vice President
THE FIRST NATIONAL BANK OF CHICAGO,
by
------------------------------
Name: Ted Wozniak
Title: Vice President
FIRST SECURITY BANK OF UTAH, N.A.,
by
------------------------------
Name:
Title:
FIRST UNION NATIONAL BANK OF NORTH
CAROLINA,
by
------------------------------
Name:
Title:
by
------------------------------
Name:
Title:
<PAGE>
91
CREDIT LYONNAIS NEW YORK BRANCH,
by
------------------------------
Name:
Title:
THE DAI-ICHI KANGYO BANK, LTD., NEW
YORK BRANCH,
by
------------------------------
Name: Kiyoshi Miyake
Title:
FIRST INTERSTATE BANK OF
CALIFORNIA,
by
------------------------------
Name:
Title:
THE FIRST NATIONAL BANK OF CHICAGO,
by
/s/ Ted Wozniak
------------------------------
Name: Ted Wozniak
Title: Vice President
FIRST SECURITY BANK OF UTAH, N.A.,
by
------------------------------
Name:
Title:
FIRST UNION NATIONAL BANK OF NORTH
CAROLINA,
by
------------------------------
Name:
Title:
by
------------------------------
Name:
Title:
<PAGE>
91
CREDIT LYONNAIS NEW YORK BRANCH,
by
------------------------------
Name:
Title:
THE DAI-ICHI KANGYO BANK, LTD., NEW
YORK BRANCH,
by
------------------------------
Name: Kiyoshi Miyake
Title:
FIRST INTERSTATE BANK OF
CALIFORNIA,
by
------------------------------
Name:
Title:
THE FIRST NATIONAL BANK OF CHICAGO,
by
------------------------------
Name: Ted Wozniak
Title: Vice President
FIRST SECURITY BANK OF UTAH, N.A.,
by
/s/ Stephen L. Goalen
------------------------------
Name: Stephen L. Goalen
Title: Senior Vice President
FIRST UNION NATIONAL BANK OF NORTH
CAROLINA,
by
------------------------------
Name:
Title:
by
------------------------------
Name:
Title:
<PAGE>
91
CREDIT LYONNAIS NEW YORK BRANCH,
by
------------------------------
Name:
Title:
THE DAI-ICHI KANGYO BANK, LTD., NEW
YORK BRANCH,
by
------------------------------
Name: Kiyoshi Miyake
Title:
FIRST INTERSTATE BANK OF
CALIFORNIA,
by
------------------------------
Name:
Title:
THE FIRST NATIONAL BANK OF CHICAGO,
by
------------------------------
Name: Ted Wozniak
Title: Vice President
FIRST SECURITY BANK OF UTAH, N.A.,
by
------------------------------
Name:
Title:
FIRST UNION NATIONAL BANK OF NORTH
CAROLINA,
by
/s/ A. Kimball Collins
------------------------------
Name: A. Kimball Collins
Title: Assistant Vice President
by
------------------------------
Name:
Title:
<PAGE>
92
FIRSTAR BANK MILWAUKEE, N.A.,
by
/s/ Timothy W. Somers
------------------------------
Name: Timothy W. Somers
Title: Assistant Vice President
THE FUJI BANK, LIMITED, Houston
Agency,
by
------------------------------
Name:
Title:
INDUSTRIAL BANK OF JAPAN TRUST
COMPANY,
by
------------------------------
Name:
Title:
THE LONG-TERM CREDIT BANK OF JAPAN,
LIMITED, New York Branch,
by
------------------------------
Name:
Title:
MELLON BANK, N.A.,
by
------------------------------
Name:
Title:
THE MITSUBISHI BANK, LIMITED,
by
------------------------------
Name:
Title:
<PAGE>
92
FIRSTAR BANK MILWAUKEE, N.A.,
by
------------------------------
Name: Timothy W. Somers
Title: Assistant Vice President
THE FUJI BANK, LIMITED, Houston
Agency,
by
/s/ David Kelley
------------------------------
Name: David Kelley
Title: Vice President &
Senior Manager
INDUSTRIAL BANK OF JAPAN TRUST
COMPANY,
by
------------------------------
Name:
Title:
THE LONG-TERM CREDIT BANK OF JAPAN,
LIMITED, New York Branch,
by
------------------------------
Name:
Title:
MELLON BANK, N.A.,
by
------------------------------
Name:
Title:
THE MITSUBISHI BANK, LIMITED,
by
------------------------------
Name:
Title:
<PAGE>
92
FIRSTAR BANK MILWAUKEE, N.A.,
by
------------------------------
Name: Timothy W. Somers
Title: Assistant Vice President
THE FUJI BANK, LIMITED, Houston
Agency,
by
------------------------------
Name:
Title:
INDUSTRIAL BANK OF JAPAN TRUST
COMPANY,
by
/s/ Takeshi Kawano
------------------------------
Name: Takeshi Kawano
Title: Senior Vice President &
Senior Manager
THE LONG-TERM CREDIT BANK OF JAPAN,
LIMITED, New York Branch,
by
------------------------------
Name:
Title:
MELLON BANK, N.A.,
by
------------------------------
Name:
Title:
THE MITSUBISHI BANK, LIMITED,
by
------------------------------
Name:
Title:
<PAGE>
92
FIRSTAR BANK MILWAUKEE, N.A.,
by
------------------------------
Name: Timothy W. Somers
Title: Assistant Vice President
THE FUJI BANK, LIMITED, Houston
Agency,
by
------------------------------
Name:
Title:
INDUSTRIAL BANK OF JAPAN TRUST
COMPANY,
by
------------------------------
Name:
Title:
THE LONG-TERM CREDIT BANK OF JAPAN,
LIMITED, New York Branch,
by
/s/ Satoru Otsubo
------------------------------
Name: Satoru Otsubo
Title: Joint General Manager
MELLON BANK, N.A.,
by
------------------------------
Name:
Title:
THE MITSUBISHI BANK, LIMITED,
by
------------------------------
Name:
Title:
<PAGE>
92
FIRSTAR BANK MILWAUKEE, N.A.,
by
------------------------------
Name: Timothy W. Somers
Title: Assistant Vice President
THE FUJI BANK, LIMITED, Houston
Agency,
by
------------------------------
Name:
Title:
INDUSTRIAL BANK OF JAPAN TRUST
COMPANY,
by
------------------------------
Name:
Title:
THE LONG-TERM CREDIT BANK OF JAPAN,
LIMITED, New York Branch,
by
------------------------------
Name:
Title:
MELLON BANK, N.A.,
by
/s/ Lisa M. Pellow
------------------------------
Name: Lisa M. Pellow
Title: Vice President
THE MITSUBISHI BANK, LIMITED,
by
------------------------------
Name:
Title:
<PAGE>
92
FIRSTAR BANK MILWAUKEE, N.A.,
by
------------------------------
Name: Timothy W. Somers
Title: Assistant Vice President
THE FUJI BANK, LIMITED, Houston
Agency,
by
------------------------------
Name:
Title:
INDUSTRIAL BANK OF JAPAN TRUST
COMPANY,
by
------------------------------
Name:
Title:
THE LONG-TERM CREDIT BANK OF JAPAN,
LIMITED, New York Branch,
by
------------------------------
Name:
Title:
MELLON BANK, N.A.,
by
------------------------------
Name:
Title:
THE MITSUBISHI BANK, LIMITED,
by
/s/ Shoji Honda
------------------------------
Name: Shoji Honda
Title: General Manager
<PAGE>
93
NATIONAL WESTMINSTER BANK PLC, New
York Branch,
by
/s/ Stephen R. Parker
------------------------------
Name: Stephen R. Parker
Title: Vice President
NATIONAL WESTMINSTER BANK PLC,
Nassau Branch,
by
/s/ Stephen R. Parker
------------------------------
Name: Stephen R. Parker
Title: Vice President
NATIONSBANK OF TEXAS, N.A.,
by
------------------------------
Name:
Title:
NBD BANK, N.A.
by
------------------------------
Name:
Title:
by
------------------------------
Name: William J. McCaffrey
Title: Second Vice President
THE NORTHERN TRUST COMPANY,
by
------------------------------
Name: Martin G. Alston
Title: Vice President
NORWEST BANK MINNESOTA, N.A.,
by
------------------------------
Name:
Title:
<PAGE>
93
NATIONAL WESTMINSTER BANK PLC, New
York Branch,
by
------------------------------
Name: David L. Smith
Title: Vice President
NATIONAL WESTMINSTER BANK PLC,
Nassau Branch,
by
------------------------------
Name: David L. Smith
Title: Vice President
NATIONSBANK OF TEXAS, N.A.,
by
/s/ Sharon McCarty
------------------------------
Name: Sharon McCarty
Title: Assistant Vice President
NBD BANK, N.A.
by
------------------------------
Name:
Title:
by
------------------------------
Name: William J. McCaffrey
Title: Second Vice President
THE NORTHERN TRUST COMPANY,
by
------------------------------
Name: Martin G. Alston
Title: Vice President
NORWEST BANK MINNESOTA, N.A.,
by
------------------------------
Name:
Title:
<PAGE>
93
NATIONAL WESTMINSTER BANK PLC, New
York Branch,
by
------------------------------
Name: David L. Smith
Title: Vice President
NATIONAL WESTMINSTER BANK PLC,
Nassau Branch,
by
------------------------------
Name: David L. Smith
Title: Vice President
NATIONSBANK OF TEXAS, N.A.,
by
------------------------------
Name:
Title:
NBD BANK, N.A.
by
/s/ D. Andrew Bateman
------------------------------
Name: D. Andrew Bateman
Title: First Vice President
by
------------------------------
Name: William J. McCaffrey
Title: Second Vice President
THE NORTHERN TRUST COMPANY,
by
------------------------------
Name: Martin G. Alston
Title: Vice President
NORWEST BANK MINNESOTA, N.A.,
by
------------------------------
Name:
Title:
<PAGE>
93
NATIONAL WESTMINSTER BANK PLC, New
York Branch,
by
------------------------------
Name: David L. Smith
Title: Vice President
NATIONAL WESTMINSTER BANK PLC,
Nassau Branch,
by
------------------------------
Name: David L. Smith
Title: Vice President
NATIONSBANK OF TEXAS, N.A.,
by
------------------------------
Name:
Title:
NBD BANK, N.A.
by
------------------------------
Name:
Title:
by
------------------------------
Name: William J. McCaffrey
Title: Second Vice President
THE NORTHERN TRUST COMPANY,
by
/s/ Sara Clissold for
Martin G. Alston
------------------------------
Name: Martin G. Alston
Title: Vice President
NORWEST BANK MINNESOTA, N.A.,
by
------------------------------
Name:
Title:
<PAGE>
93
NATIONAL WESTMINSTER BANK PLC, New
York Branch,
by
------------------------------
Name: David L. Smith
Title: Vice President
NATIONAL WESTMINSTER BANK PLC,
Nassau Branch,
by
------------------------------
Name: David L. Smith
Title: Vice President
NATIONSBANK OF TEXAS, N.A.,
by
------------------------------
Name:
Title:
NBD BANK, N.A.
by
------------------------------
Name:
Title:
by
------------------------------
Name: William J. McCaffrey
Title: Second Vice President
THE NORTHERN TRUST COMPANY,
by
------------------------------
Name: Martin G. Alston
Title: Vice President
NORWEST BANK MINNESOTA, N.A.,
by
/s/ Perry G. Pelos
------------------------------
Name: Perry G. Pelos
Title: Vice President
<PAGE>
94
PNC BANK, NATIONAL ASSOCIATION,
by
/s/ Gregory T. Gaschler
------------------------------
Name: Gregory T. Gaschler
Title: Vice President
ROYAL BANK OF CANADA,
by
------------------------------
Name:
Title:
ISTITUTO BANCARIO SAN PAOLO DI
TORINO, SpA,
by
------------------------------
Name:
Title:
by
------------------------------
Name: Robert S. Wurster
Title: First Vice President
THE SANWA BANK LIMITED, Dallas
Agency,
by
------------------------------
Name: Robert S. Smith
Title: Assistant Vice President
SOCIETE GENERALE, Southwest Agency,
by
------------------------------
Name: Louis P. Laville, III
Title: Vice President
THE SUMITOMO BANK, LTD., Houston
Agency,
by
------------------------------
Name:
Title:
<PAGE>
94
PNC BANK, NATIONAL ASSOCIATION,
by
------------------------------
Name:
Title:
ROYAL BANK OF CANADA,
by
/s/ E. M. Harner
------------------------------
Name: E. M. Harner
Title: Manager
ISTITUTO BANCARIO SAN PAOLO DI
TORINO, SpA,
by
------------------------------
Name:
Title:
by
------------------------------
Name: Robert S. Wurster
Title: First Vice President
THE SANWA BANK LIMITED, Dallas
Agency,
by
------------------------------
Name: Robert S. Smith
Title: Assistant Vice President
SOCIETE GENERALE, Southwest Agency,
by
------------------------------
Name: Louis P. Laville, III
Title: Vice President
THE SUMITOMO BANK, LTD., Houston
Agency,
by
------------------------------
Name:
Title:
<PAGE>
94
PNC BANK, NATIONAL ASSOCIATION,
by
------------------------------
Name:
Title:
ROYAL BANK OF CANADA,
by
------------------------------
Name:
Title:
ISTITUTO BANCARIO SAN PAOLO DI
TORINO, SpA,
by
/s/ William J. DeAngelo
------------------------------
Name: William J. DeAngelo
Title: First Vice President
by
------------------------------
Name: Robert S. Wurster
Title: First Vice President
THE SANWA BANK LIMITED, Dallas
Agency,
by
------------------------------
Name: Robert S. Smith
Title: Assistant Vice President
SOCIETE GENERALE, Southwest Agency,
by
------------------------------
Name: Louis P. Laville, III
Title: Vice President
THE SUMITOMO BANK, LTD., Houston
Agency,
by
------------------------------
Name:
Title:
<PAGE>
94
PNC BANK, NATIONAL ASSOCIATION,
by
------------------------------
Name:
Title:
ROYAL BANK OF CANADA,
by
------------------------------
Name:
Title:
ISTITUTO BANCARIO SAN PAOLO DI
TORINO, SpA,
by
------------------------------
Name:
Title:
by
------------------------------
Name: Robert S. Wurster
Title: First Vice President
THE SANWA BANK LIMITED, Dallas
Agency,
by
/s/ Robert S. Smith
------------------------------
Name: Robert S. Smith
Title: Assistant Vice President
SOCIETE GENERALE, Southwest Agency,
by
------------------------------
Name: Louis P. Laville, III
Title: Vice President
THE SUMITOMO BANK, LTD., Houston
Agency,
by
------------------------------
Name:
Title:
<PAGE>
94
PNC BANK, NATIONAL ASSOCIATION,
by
------------------------------
Name:
Title:
ROYAL BANK OF CANADA,
by
------------------------------
Name:
Title:
ISTITUTO BANCARIO SAN PAOLO DI
TORINO, SpA,
by
------------------------------
Name:
Title:
by
------------------------------
Name: Robert S. Wurster
Title: First Vice President
THE SANWA BANK LIMITED, Dallas
Agency,
by
------------------------------
Name: Robert S. Smith
Title: Assistant Vice President
SOCIETE GENERALE, Southwest Agency,
by
/s/ Louis P. Laville, III
------------------------------
Name: Louis P. Laville, III
Title: Vice President
THE SUMITOMO BANK, LTD., Houston
Agency,
by
------------------------------
Name:
Title:
<PAGE>
94
PNC BANK, NATIONAL ASSOCIATION,
by
------------------------------
Name:
Title:
ROYAL BANK OF CANADA,
by
------------------------------
Name:
Title:
ISTITUTO BANCARIO SAN PAOLO DI
TORINO, SpA,
by
------------------------------
Name:
Title:
by
------------------------------
Name: Robert S. Wurster
Title: First Vice President
THE SANWA BANK LIMITED, Dallas
Agency,
by
------------------------------
Name: Robert S. Smith
Title: Assistant Vice President
SOCIETE GENERALE, Southwest Agency,
by
------------------------------
Name: Louis P. Laville, III
Title: Vice President
THE SUMITOMO BANK, LTD., Houston
Agency,
by
/s/ Tatsuo Ueda
------------------------------
Name: Tatsuo Ueda
Title: General Manager
<PAGE>
95
SUNBANK, NATIONAL ASSOCIATION,
by
/s/ J. Carol Doyle
------------------------------
Name: J. Carol Doyle
Title: First Vice President
SWISS BANK CORPORATION, Cayman
Islands Branch,
by
------------------------------
Name:
Title:
by
------------------------------
Name:
Title:
UNION BANK OF SWITZERLAND,
Houston Agency,
by
------------------------------
Name:
Title:
by
------------------------------
Name:
Title:
UNITED MISSOURI BANK, N.A.,
by
------------------------------
Name: Walter Beck, Jr.
Title: Executive Vice President
UNITED STATES NATIONAL
BANK OF OREGON,
by
-----------------------------------
Name: Blake R. Howells
Title: Assistant Vice President
<PAGE>
95
SUNBANK, NATIONAL ASSOCIATION,
by
------------------------------
Name:
Title:
SWISS BANK CORPORATION, Cayman
Islands Branch,
by
/s/ Nancy A. Russell
------------------------------
Name: Nancy A. Russell
Title: Associate Director
Merchant Banking
by
/s/ William A. McDonnell
------------------------------
Name: William A. McDonnell
Title: Associate Director
Merchant Banking
UNION BANK OF SWITZERLAND,
Houston Agency,
by
------------------------------
Name:
Title:
by
------------------------------
Name:
Title:
UNITED MISSOURI BANK, N.A.,
by
------------------------------
Name: Walter Beck, Jr.
Title: Executive Vice President
UNITED STATES NATIONAL
BANK OF OREGON,
by
-----------------------------------
Name: Blake R. Howells
Title: Assistant Vice President
<PAGE>
95
SUNBANK, NATIONAL ASSOCIATION,
by
------------------------------
Name:
Title:
SWISS BANK CORPORATION, Cayman
Islands Branch,
by
------------------------------
Name:
Title:
by
------------------------------
Name:
Title:
UNION BANK OF SWITZERLAND,
Houston Agency,
by
------------------------------
Name: Dan O. Boyle
Title: Vice President
by
/s/ Jean Claude de Roche
------------------------------
Name: Jean Claude de Roche
Title: Assistant Vice President
UNITED MISSOURI BANK, N.A.,
by
------------------------------
Name: Walter Beck, Jr.
Title: Executive Vice President
UNITED STATES NATIONAL
BANK OF OREGON,
by
-----------------------------------
Name: Blake R. Howells
Title: Assistant Vice President
<PAGE>
95
SUNBANK, NATIONAL ASSOCIATION,
by
------------------------------
Name:
Title:
SWISS BANK CORPORATION, Cayman
Islands Branch,
by
------------------------------
Name:
Title:
by
------------------------------
Name:
Title:
UNION BANK OF SWITZERLAND,
Houston Agency,
by
------------------------------
Name:
Title:
by
------------------------------
Name:
Title:
UNITED MISSOURI BANK, N.A.,
by
/s/ Walter Beck, Jr.
------------------------------
Name: Walter Beck, Jr.
Title: Executive Vice President
UNITED STATES NATIONAL
BANK OF OREGON,
by
-----------------------------------
Name: Blake R. Howells
Title: Assistant Vice President
<PAGE>
95
SUNBANK, NATIONAL ASSOCIATION,
by
------------------------------
Name:
Title:
SWISS BANK CORPORATION, Cayman
Islands Branch,
by
------------------------------
Name:
Title:
by
------------------------------
Name:
Title:
UNION BANK OF SWITZERLAND,
Houston Agency,
by
------------------------------
Name:
Title:
by
------------------------------
Name:
Title:
UNITED MISSOURI BANK, N.A.,
by
------------------------------
Name: Walter Beck, Jr.
Title: Executive Vice President
UNITED STATES NATIONAL
BANK OF OREGON,
by
/s/ Blake R. Howells
-----------------------------------
Name: Blake R. Howells
Title: Assistant Vice President
<PAGE>
96
WACHOVIA BANK OF GEORGIA, N.A.,
by
/s/ Douglas L. Williams
------------------------------
Name: Douglas L. Williams
Title: Senior Vice President
<PAGE>
EXHIBIT A-1
FORM OF COMPETITIVE BID REQUEST
Morgan Guaranty Trust Company of New York
60 Wall Street
New York, New York 10260
[Date]
Attention: [ ]
Dear Sirs:
The undersigned, [ ] (the "Borrower"), refers to the
Revolving Credit Agreement dated as of December 16, 1993 (as it may hereafter be
amended, modified, extended or restated from time to time, the "Credit
Agreement"), to which it is a party. Capitalized terms used but not defined
herein shall have the meanings assigned to such terms in the Credit Agreement.
The Borrower hereby gives you notice pursuant to Section 2.03(a) of the Credit
Agreement that it requests a Competitive Borrowing under the Credit Agreement,
and in that connection sets forth below the terms on which such Competitive
Borrowing is requested to be made:
(A) Date of Competitive Borrowing
(which is a Business Day)
-----------------------------
(B) Principal Amount of
Competitive Borrowing /1/
-----------------------------
(C) Interest rate basis /2/
-----------------------------
(D) Interest Period and the last
day thereof /3/
-----------------------------
Upon acceptance of any or all of the Loans offered by the Lenders in
response to this request, the Borrower
- --------------------
/1/ Not less than $25,000,000 (and in integral multiples of $5,000,000)
or, if less, an aggregate principal amount equal to the Total
Commitment on the date of such Borrowing minus the outstanding
aggregate principal amount on such date of all Competitive Loans.
/2/ Eurodollar Loan, Fixed Rate Loan or CD Loan.
/3/ Which shall be subject to the definition of "Interest Period" and end
not later than the Maturity Date.
<PAGE>
shall be deemed to have represented and warranted, except as otherwise provided
in Section 4.01, that the conditions to lending specified in Section 4.01(b) and
(c) of the Credit Agreement have been satisfied.
Very truly yours,
by
--------------------------------
Title: [Responsible Officer]/4/
- --------------
/4/Chairman, vice chairman, president, chief financial officer, treasurer or
controller of such corporation or any executive or senior vice president of such
corporation.
<PAGE>
EXHIBIT A-2
FORM OF NOTICE OF COMPETITIVE BID REQUEST
[Name of Lender]
[Address]
[Date]
Attention: [ ]
Dear Sirs:
Reference is made to the Revolving Credit Agreement dated as of
December 16, 1993 (as it may hereafter be amended, modified, extended or
restated from time to time, the "Credit Agreement"), among J. C. Penney Company,
Inc. ("JCPenney"), J. C. Penney Funding Corporation ("Funding"), the Lenders and
Morgan Guaranty Trust Company of New York, as Agent. Capitalized terms used but
not defined herein shall have the meanings assigned to such terms in the Credit
Agreement. [ ]/1/made a Competitive Bid Request on [ ],
19[ ], pursuant to Section 2.03(a) of the Credit Agreement, and in that
connection you are invited to submit a Competitive Bid by [time], on [date]./2/
Your Competitive Bid must comply with Section 2.03(b) of the Credit Agreement
and the terms set forth below on which the Competitive Bid Request was made:
(A) Date of Competitive Borrowing
---------------------------
(B) Principal amount of
Competitive Borrowing
---------------------------
(C) Interest rate basis
---------------------------
- --------------------
/1/ JCPenney or Funding.
/2/ The Competitive Bid must be received by the Agent: (i) in the case of
Eurodollar Loans or CD Loans, not later than 9:00 a.m., New York City time,
three Business Days before the proposed Competitive Borrowing, and (ii) in the
case of Fixed Rate Loans, not later than 9:00 a.m., New York City time, on the
day of a proposed Competitive Borrowing.
<PAGE>
(D) Interest Period and the last
day thereof
-------------------------
Very truly yours,
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK, as Agent,
By
-----------------------------
Title:
<PAGE>
EXHIBIT A-3
FORM OF COMPETITIVE BID
Morgan Guaranty Trust Company of New York
60 Wall Street
New York, New York 10260
[Date]
Attention: [ ]
Dear Sirs:
The undersigned, [name of Lender], refers to the Revolving Credit
Agreement dated as of December 16, 1993 (as it may hereafter be amended,
modified, extended or restated from time to time, the "Credit Agreement"), among
J. C. Penney Company, Inc. ("JCPenney"), J. C. Penney Funding Corporation
("Funding"), the Lenders and Morgan Guaranty Trust Company of New York, as
Agent. Capitalized terms used but not defined herein shall have the meanings
assigned to such terms in the Credit Agreement. The undersigned hereby makes a
Competitive Bid pursuant to Section 2.03(b) of the Credit Agreement, in response
to the Competitive Bid Request made by [ ]/1/on [ ], 19[
],
- ---------------------
/1/JCPenney or Funding.
<PAGE>
and in that connection sets forth below the terms on which such Competitive Bid
is made:
(A) Principal Amount/2/
-------------------------
(B) Competitive Bid Rate[s]/3/
-------------------------
(C) Interest Period and last
day thereof
-------------------------
The undersigned hereby confirms that it will, subject only to the
conditions set forth in the Credit Agreement, extend credit to the Borrower upon
acceptance by the Borrower of this bid in accordance with Section 2.03(d) of the
Credit Agreement.
Very truly yours,
[NAME OF LENDER],
by
-------------------------
Title:
- ---------------------
/2/ An integral multiple of $5,000,000 (unless equal to the requested
Competitive Borrowing) and not greater than the requested
Competitive Borrowing. Multiple bids will be accepted by the Agent.
/3/ One or more rates; i.e., LIBO Rate + or - ____%, in the case of
----
Eurodollar Loans, Adjusted CD Rate + or - ____%, in the case of CD
Loans, or ____%, in the case of Fixed Rate Loans.
<PAGE>
EXHIBIT A-4
FORM OF STANDBY BORROWING REQUEST
Morgan Guaranty Trust Company of New York
60 Wall Street
New York, New York 10260
[Date]
Attention: [ ]
Dear Sirs:
The undersigned, [ ] (the "Borrower"), refers to the Revolving
Credit Agreement dated as of December 16, 1993 (as it may hereafter be amended,
modified, extended or restated from time to time, the "Credit Agreement"), to
which it is a party. Capitalized terms used but not defined herein shall have
the meanings assigned to such terms in the Credit Agreement. The Borrower
hereby gives you notice pursuant to Section 2.04 of the Credit Agreement that it
requests a Standby Borrowing under the Credit Agreement, and in that connection
sets forth below the terms on which such Standby Borrowing is requested to be
made:
(A) Date of Standby Borrowing
(which is a Business Day)
--------------------------
(B) Principal Amount of
Standby Borrowing/1/
--------------------------
- -----------------
/1/ Not less than $25,000,000 (and in integral multiples of $5,000,000)
or, if less, an aggregate principal amount equal to the remaining available
balance of the Total Commitment.
<PAGE>
(C) Interest rate basis/2/
(D) Interest Period and the Last
day thereof/3/
Upon acceptance of any or all of the Loans made by the Lenders in
response to this request, the Borrower shall be deemed to have represented and
warranted, except as otherwise provided in Section 4.01, that the conditions to
lending specified in Section 4.01(b) and (c) of the Credit Agreement have been
satisfied; provided, however, that in the case of a refinancing of a Standby
-------- -------
Borrowing with a new Standby Borrowing that does not increase the outstanding
aggregate principal amount of the Loans of any Lender, the Borrower shall not be
subject to the satisfaction of any of the Section 4.01 conditions.
Very truly yours,
by
________________________________
Title: [Responsible Officer]/4/
- ----------------------
/2/ Eurodollar Loan or ABR Loan. Notice under Section 2.04 is necessary
to refinance a Standby Borrowing with a Eurodollar Borrowing. In the absence of
such a notice, unless the Borrowing is repaid at the end of the applicable
Interest Period, the Borrower shall be deemed to have given notice of an
election to refinance such Borrowing with an ABR Borrowing of 5 days' duration.
/3/Which shall be subject to the definition of "Interest Period" and end
not later than the Maturity Date.
/4/Chairman, vice chairman, president, chief financial officer,
treasurer or controller of such corporation or any executive or senior vice
president of such corporation.
<PAGE>
EXHIBIT B
[INTENTIONALLY OMITTED]
<PAGE>
EXHIBIT C
FORM OF GUARANTY
GUARANTY
--------
This Guaranty Agreement is executed as of this 7th day of
December, 1994, by J. C. Penney Company, Inc., a Delaware
corporation ("Guarantor"), in favor of J. C. Penney Funding
Corporation, a Delaware corporation ("Funding"), and the
lenders("") (as defined below).
RECITALS:
--------
WHEREAS, Funding is a wholly-owned subsidiary of Guarantor;
WHEREAS, Funding and Guarantor have entered into those certain 364-Day
and Five-Year Revolving Credit Agreements (collectively, the "Agreements") dated
as of December 16, 1993, as amended and restated with new Lenders as of December
7, 1994 (the "Restated Agreements"), among Guarantor, Funding, Morgan Guaranty
Trust Company of New York, as agent for the Lenders, Bankers Trust Company,
Chemical Bank and Credit Suisse, as co-agents for the Lenders, and certain other
financial institutions named in the Restated Agreements (collectively, the
"Lenders") in amounts not to exceed One Billion Five Hundred Million Dollars
($1,500,000,000) and One Billion Dollars ($1,000,000,000), respectively; and
<PAGE>
2
WHEREAS, Guarantor is willing to guarantee any borrowings of Funding
under the Restated Agreements on the terms set forth herein.
NOW, THEREFORE, in consideration of the premises, Guarantor hereby
agrees as follows:
1. Subject to the terms and conditions of subordination set forth in
this Guaranty, Guarantor hereby unconditionally guarantees in favor of the
Lenders, the prompt payment when due of all interest, principal, and other
amounts owing under the Restated Agreements (collectively, the "Guaranteed
Debt"). This is an unconditional guaranty of payment, and in the event of
default by Funding in the payment of interest, principal, or any other amounts
payable under the Guaranteed Debt, the Lenders may proceed directly against
Guarantor to enforce this Guaranty (including by the institution of legal
proceedings) without first proceeding against Funding.
2. Guarantor acknowledges that it has received and will receive a
direct or indirect benefit from the making of this Guaranty and the creation of
the Guaranteed Debt.
3. (a) The Guaranteed Debt shall be subordinated and subject in right
of payment to the prior payment in full of any and all other indebtedness for
borrowed money
<PAGE>
3
incurred, created, assumed, or otherwise guaranteed by Guarantor (collectively
referred to as the Guarantor's "Senior Debt").
(b) In the event of (i) any dissolution or winding-up or total or
partial liquidation or reorganization of Guarantor, whether voluntary or
involuntary, or any bankruptcy, insolvency, receivership, or similar proceeding
relative to Guarantor, or (ii) any default in the payment of principal
(including any acceleration or required prepayments or amortization) of or
interest on any Senior Debt of Guarantor, then, subject to the provisions of
subsection (d) below, the Lenders shall not be entitled to receive any payment
under this Guaranty on account of the Guaranteed Debt unless and until all
Senior Debt shall have been paid in full or otherwise discharged.
(c) For purposes of determining the priority of payments between the
Senior Debt and the Guaranteed Debt, in the event that the Guaranteed Debt, or
any part thereof, is declared due and payable prior to its stated maturity, all
principal of and interest and any other amounts due on all Senior Debt
outstanding at the time of such declaration as to the Guaranteed Debt shall
first have been paid in full, before any payment is made by Guarantor upon the
Guaranteed Debt.
<PAGE>
4
(d) In no event shall any Lender be required by this subordination to
refund any amounts paid to it pursuant to this Guaranty on account of the
Guaranteed Debt prior to the events specified in subsections (b) and (c) above,
and prior to such events the Lenders shall be entitled to be paid hereunder as
agreed and to collect any sums due such Lenders hereunder by any lawful means.
(e) The provisions of this Section are for the purpose of defining
the relative rights of the holders of any Senior Debt, on the one hand, and the
Lenders, on the other hand, against Guarantor, and nothing herein shall impair,
as between the Guarantor and the Lenders, the obligation of Guarantor, which is
unconditional and absolute, to guarantee the prompt payment when due of the
Guaranteed Debt in accordance with the terms and provisions thereof; nor shall
anything herein prevent the Lenders from exercising all remedies otherwise
permitted by applicable law upon default hereunder, subject to the rights, if
any, under this Section of any Senior Debt holder.
<PAGE>
5
4. The substantive laws of the State of New York shall govern the
validity, construction, enforcement, and interpretation of this Guaranty.
IN WITNESS WHEREOF, Guarantor has executed and delivered this Guaranty
as of the date first written above.
J. C. PENNEY COMPANY, INC.,
a Delaware corporation, as
Guarantor,
by
------------------------
Name: Leo A. Gispanski
Title: Vice President &
Treasurer
<PAGE>
SCHEDULE 2.01
LENDERS
-------
<TABLE>
<CAPTION>
Name of Lender and
- ------------------
Applicable Lending Office Address for Notices Commitment
- ------------------------- ------------------- ----------
<S> <C> <C>
ABN AMRO Bank N.V. ABN AMRO Bank N.V. $27,000,000
Three Riverway, Three Riverway,
Suite 1600 Suite 1600
Houston, TX 77056 Houston, TX 77056
For Business/Credit Matters
---------------------------
Attention: Laurie Tuzo
Telephone: (713) 964-3360
Fax: (713) 629-7533
For Administrative Matters
---------------------------
Attention: Patricia Baker
or
Belinda Rowell
Telephone: (713) 964-3331
Fax: (713) 629-7533
For Business/Credit Matters
---------------------------
Bank of America Bank of America NT & SA $48,000,000
National Trust and Savings 333 Clay Street
Association Suite 4550
2200 Ross Avenue Houston, TX 77002
Suite 3000 Attn: Andrew J. Welch
Dallas, TX 75201-2831 Telephone: (214) 969-2063
(Business)
Telefax: (214) 969-0998
Jody B. Schneider,
Vice President (Credit)
Telephone: (713) 651-4976
(Business)
(713) 651-4865 (Credit)
Telex: 67652 BANKMER SFO
Fax: (713) 651-4841
For Administrative Matters
--------------------------
Bank of America NT&SA
ABA #12100 358
Global Payments Operations #5693
Concord, CA 94520
Attention: Camille Gibbey
Telephone: (510) 675-7759
Telex: 34346 BANKMER SFO
Fax: (510) 675-7531
</TABLE>
<PAGE>
2
<TABLE>
<CAPTION>
Name of Lender and
- ------------------
Applicable Lending Office Address for Notices Commitment
- ------------------------- ------------------- ----------
<S> <C> <C>
The First National Bank The First National Bank $27,000,000
of Boston of Boston
100 Federal Street 100 Federal Street
Mail Stop 01-21-01 Mail Stop 01-21-01
Boston, MA 02100 Boston, MA 02100
For Business/Credit Matters
---------------------------
Attention: Bethann R.
Halligan
Telephone: (617) 434-0144
Fax: (617) 434-0630/6685
For Administrative Matters
--------------------------
Attention: Michele Taglione
Telephone: (617) 434-4039
Fax: (617) 434-0630/6685
Bank of Hawaii Bank of Hawaii $27,000,000
130 Merchant Street 130 Merchant Street
20th Floor 20th Floor
Honolulu, HI 96813 Honolulu, HI 96813
For Business/Credit Matters
---------------------------
Attention: Peter Ho
Telephone: (808) 537-8439
Fax: (808) 537-8301
The Bank of New York The Bank of New York $27,000,000
One Wall Street One Wall Street
Southern Division Southern Division
22nd Floor 22nd Floor
New York, NY 10024 New York, NY 10024
For Business/Credit Matters
---------------------------
Attention: Steven M. Ross
Telephone: (212) 635-1336
Fax: (212) 635-6434
The Bank of Tokyo, Ltd. The Bank of Tokyo, Ltd. $27,000,000
Dallas Agency Dallas Agency
2001 Ross Avenue, LB 118, 2001 Ross Avenue, lb 118
3150 Trammell Crow Center 3150 Trammell Crow Center
Dallas, TX 75201 Dallas, TX 75201
</TABLE>
<PAGE>
3
<TABLE>
<CAPTION>
Name of Lender and
- ------------------
Applicable Lending Office Address for Notices Commitment
- ------------------------- ------------------- ----------
<S> <C> <C>
For Business/Credit Matters
---------------------------
Attention: J. M. Mearns,
Vice President and Manager
Telephone: (214) 954-1200
Fax: (214) 954-1007
For Administrative Matters
--------------------------
Attention: Brenda Trader
Telephone: (214) 954-1200
Fax: (214) 954-1007
Bank One, Texas, N.A. Bank One, Texas, N.A. $12,000,000
1717 Main Street 1717 Main Street
Dallas, TX 75201 Dallas, TX 75201
For Business/Credit Matters
---------------------------
Attention: Scott Rhea
Third Floor
Telephone: (214) 290-2637
Fax: (214) 290-2683
For Administrative Matters
--------------------------
Attention: Lisa Peterson
Telephone: (214) 290-2614
Fax: (214) 290-2683
Bankers Trust Company Bankers Trust Company $60,000,000
130 Liberty Street P.O. Box 318
New York, NY 10008 Church Street Station
New York, NY 10008-0318
For Business/Credit Matters
---------------------------
Attention: Katherine Judge
Corporate Finance Credit
Telephone: (212) 250-4969
Fax: (212) 250-7478
For Administrative Matters
--------------------------
Attention: John Jeffcoat
Telephone: (212) 250-8195
Fax: (212) 250-7351
</TABLE>
<PAGE>
4
<TABLE>
<CAPTION>
Name of Lender and
- ------------------
Applicable Lending Office Address for Notices Commitment
- ------------------------- ------------------- ----------
<S> <C> <C>
Banque Nationale de Paris BNP $27,000,000
Houston Agency 717 North Harwood, Suite
717 N. Harwood St. 2630
Suite 2630 Dallas, TX 75201
Dallas, TX 75201
For Business/Credit Matters
---------------------------
Attention: Henry F. Setina
Telephone: (214) 969-7388
Fax: (214) 969-0060
For Administrative Matters
--------------------------
Attention: Donna Rose
Telephone: (713) 951-1240
Telex: 166085 BNPHTX
Fax: (713) 659-1414
Chemical Bank Chemical Bank $60,000,000
270 Park Avenue, 270 Park Avenue,
10th Floor 10th Floor
New York, NY 10017 New York, NY 10017
For Business/Credit Matters
---------------------------
Attention: Meredith L.
Vanden Handel
Telephone: (212) 270-2999
Fax: (212) 270-9856
For Administrative Matters
--------------------------
Attention: Sheila Hamilton
Telephone: (212) 270-2322
Fax: (212) 682-8937
Citibank, N.A. Citibank, N.A. $39,000,000
399 Park Avenue, 399 Park Avenue,
12th Floor 12th Floor
New York, NY 10043 New York, NY 10043
For Business/Credit Matters
---------------------------
Attention: Arnold Ziegel, MD
Telephone: (212) 599-3763
Fax: (212) 793-7585
Attention: Robert A. Snell
Telephone: (212) 559-3215
Fax: (212) 793-7585/7590
</TABLE>
<PAGE>
5
<TABLE>
<CAPTION>
Name of Lender and
- ------------------
Applicable Lending Office Address for Notices Commitment
- ------------------------- ------------------- ----------
<S> <C> <C>
For Administrative Matters
--------------------------
Attention: Stephance L.
Tackors
Telephone (212) 559-3944
Fax: (212) 793-7585/7590
Credit Lyonnais Dallas Credit Lyonnais Dallas $39,000,000
500 North Akard Suite 3210 500 North Akard, Suite 3210
Dallas, TX 75201 Dallas, TX 75201
For Business/Credit Matters
---------------------------
Attention: Samuel Hill
Telephone: (214) 954-3500
Telex: 682 9274 CRLYDAL
Fax: (214) 954-3312
For Administrative Matters
--------------------------
Attention: Judy Gordon
Telephone: (214) 954-3500
Telex: 682 9274 CRLYDAL
Fax: (214) 954-3312
For Business/Credit Matters
---------------------------
Credit Suisse Credit Suisse $60,000,000
1100 Lousiana, Suite 4750 1100 Louisiana, Suite 4750
Houston, TX 77002 Houston, TX 77002
Attention: James P. Moran
Docs. to: Telephone: (713) 751-0300
Maria Gaspara Fax: (713) 751-0702
633 West Fifth Street
64th Floor For Administrative Matters
Los Angeles, CA 90071 --------------------------
Attention: Rita Asa
Telephone: (213) 955-8284
Fax: (213) 955-8245
For Business/Credit Matters
---------------------------
DKB DKB $39,000,000
1100 Louisiana 1100 Louisiana
Suite 4940 Suite 4940
Houston, TX 77002 Houston, TX 77002
For Business/Credit Matters
---------------------------
Attention: Kelton G.
Glasscock
Telephone: (713) 654-5055
Fax: (713) 654-1667
</TABLE>
<PAGE>
6
<TABLE>
<CAPTION>
Name of Lender and
- ------------------
Applicable Lending Office Address for Notices Commitment
- ------------------------- ------------------- ----------
<S> <C> <C>
First Interstate Bank of For Business/Credit Matters $39,000,000
California ---------------------------
707 Wilshire Blvd., W29-23
Los Angeles, CA 90017 First Interstate Bank of
California
U.S. Banking Division
707 Wilshire Blvd., W16-13
Los Angeles, CA 90017
Attention: William J. Baird
Telephone: (213) 614-5540
Fax: (213) 614-2569
For Administrative Matters
--------------------------
First Interstate Bank of
California
707 Wilshire Blvd., W29-23
Los Angeles, CA 90017
Attention: Carol Collins or
Irene Zao
Telephone: (213) 580-6166/6148
Fax: (213) 488-9909/9959
The First National Bank The First National Bank $39,000,000
of Chicago of Chicago
One First National Plaza One First National Plaza
Suite 0374; 1-10 Suite 0374; 1-10
Chicago, IL 60676 Chicago, IL 60676
For Business/Credit Matters
---------------------------
Attention: Ted Wozniak
Telephone: (312) 732-1032
Telex: 4330253
Fax: (312) 732-3885
For Administrative Matters
--------------------------
Attention: John Loizzo
Telephone: (312) 732-4118
Telex: 4330253
Fax: (312) 732-4840
First Security Bank First Security Bank $12,000,000
of Utah, N.A. of Utah, N.A.
Commercial Banking Commercial Banking Division
Division 15 East 100 South,
15 East 100 South, 2nd Floor
2nd Floor Salt Lake City, UT 84111
Salt Lake City, UT 84111
</TABLE>
<PAGE>
7
<TABLE>
<CAPTION>
Name of Lender and
- ------------------
Applicable Lending Office Address for Notices Commitment
- ------------------------- ------------------- ----------
<S> <C> <C>
For Business/Credit Matters
-----------------------------
Attention: Judy Callister
Telephone: (801) 246-5561
Fax: (801) 246-5532
For Administrative Matters
--------------------------
Attention: Trish Sanders
Telephone: (801) 246-5575
Fax: (801) 246-5532
First Union National Bank First Union National Bank $39,000000
of North Carolina of North Carolina
301 South College Street, 301 South College Street,
One First Union Center TW-10 One First Union Center TW-10
Charlotte, NC 28288-0745 Charlotte, NC 28288-0745
For Business/Credit Matters
-----------------------------
Attention: E. Mark
Stubblefield
Telephone: (704) 383-7650
Fax: (704) 374-2802
For Administrative Matters
---------------------------
Attention: Perry Brown,
U.S. Banking
Telephone: (704)374-6613
Fax: (704) 374-2802
Firstar Bank Milwaukee, N.A. Firstar Bank Milwaukee, N.A. $21,000,000
777 East Wisconsin Avenue 777 East Wisconsin Avenue
Milwaukee, WI 53202 Milwaukee, WI 53202
U.S. Banking Division
For Business/Credit Matters
---------------------------
Attention: Timothy W. Somers
Telephone: (414) 765-6077
Fax: (414) 765-5062
For Administrative Matters
--------------------------
Attention: Jane Gumina
Telephone: (414) 765-4647
Fax: (414) 765-5062
The Fuji Bank, Ltd. The Fuji Bank, Ltd. $39,000,000
One Houston Center One Houston Center
Suite 4100, Suite 4100,
1221 Mckinney Street 1221 Mckinney Street
</TABLE>
<PAGE>
8
<TABLE>
<CAPTION>
Name of Lender and
- ------------------
Applicable Lending Office Address for Notices Commitment
- ------------------------- ------------------- ----------
<S> <C> <C>
Houston, TX 77010 Houston, TX 77010
For Business/Credit Matters
---------------------------
Attention: Jay Fort
Telephone: (713) 759-1800
Telex: 790026 FUJIBANK HOU
Fax: (713) 759-0048
For Administrative Matters
-----------------------------
Attention: Jenny Lin
Telephone: (713) 650-7821
Telex: 790026 FUJIBANK HOU
Fax: (713) 759-0048
The Industrial Bank The Industrial Bank $39,000,000
of Japan of Japan
MCORP Plaza MCORP Plaza
Suite 4850 Suite 4850
Houston, TX 77002 Houston, TX 77002
For Business/Credit Matters
-----------------------------
Attention: W. Lynn Williford
Telephone: (713) 651-9444
Fax: (713) 651-9209
The Industrial Bank of
Japan Trust Company
245 Park Avenue
New York, NY 10167
Attention: Linda Muscarella
Telephone: (212) 309-1872
Fax: (212) 856-9450
For Administrative Matters
-----------------------------
Attention: Agnes Aberin
Telephone: (212) 309-6793
Telex: 175597 IBJTC
Fax: (212) 557-3581
Istituto Bancario Istituto Bancario $27,000,000
San Paolo Di Torino San Paolo Di Torino
SpA-New York SpA-New York
245 Park Avenue 245 Park Avenue
35th Floor 35th Floor
New York, NY 10167 New York, NY 10167
For Business/Credit Matters
---------------------------
</TABLE>
<PAGE>
9
<TABLE>
<CAPTION>
Name of Lender and
- ------------------
Applicable Lending Office Address for Notices Commitment
- ------------------------- ------------------- ----------
<S> <C> <C>
Attention: Robert S.
Wurster
Telephone: (212) 692-3160
Telex: 220045 SPAOL UR
Fax: (212) 599-5303
For Administrative Matters
--------------------------
Attention: Daniele Sarp
Telephone: (212) 692-3195
Telex: 220045 SPAOL UR
Fax: (212) 599-5303
The Long-Term Credit Bank The Long-Term Credit Bank $27,000,000
of Japan, Limited of Japan, Limited
Texas Commerce Tower Texas Commerce Tower
Suite 4700 West Suite 4700 West
2200 Ross Avenue 2200 Ross Avenue
Dallas, TX 75201 Dallas, TX 75201
For Business/Credit Matters
-----------------------------
Attention: R. Bruce Frey
Telephone: (214) 969-5352
Fax: (214) 969-5357
For Administrative Matters
-----------------------------
Attention: Robert Pacifici
Telephone: (212) 335-4801
Telex: 425722 LTCBNY
Fax: (212) 608-3452
Mellon Bank, N.A. Mellon Bank, N.A. $39,000,000
Room 4438 Room 4438
One Mellon Bank Center One Mellon Bank Center
Pittsburgh, PA 15258-001 Pittsburgh, PA 15258-001
For Business/Credit Matters
-----------------------------
Attention: Lisa M. Pellow,
Global Corporate Banking
Telephone: (412) 236-2790
Fax: (412) 236-1914
For Administrative Matters
-----------------------------
Attention: Tracy Stevens,
Loan Administration
Telephone: (412) 234-8285
Fax: (412) 234-5049
The Mitsubishi Bank, Ltd. The Mitsubishi Bank, Ltd. $39,000,000
</TABLE>
<PAGE>
10
<TABLE>
<CAPTION>
Name of Lender and
- ------------------
Applicable Lending Office Address for Notices Commitment
- ------------------------- ------------------- ----------
<S> <C> <C>
Houston Agency Houston Agency
1100 Louisiana Street 1100 Louisiana Street
Suite 2800 Suite 2800
Houston, TX 77002-5216 Houston, TX 77002-5216
For Business/Credit Matters
---------------------------
Attention: Michael A. Innes
Telephone: (713) 655-3807
Fax: (713) 658-0116
National Westminster National Westminster $39,000,000
Bank Plc, Bank Plc,
600 Travis Street 600 Travis Street
Texas Commerce Tower Texas Commerce Tower
#6070 #6070
Houston, TX 77002 Houston, TX 77002
Attention: Steven J. Krakoski,
Vice President
Telephone: (713) 221-2400
Fax: (713) 221-2430
For Administrative Matters
--------------------------
National Westminster Bank, Plc
New York Branch
175 Water Street
New York, NY 10038
Attention: Robert Passarello
Telephone: (212) 602-4149
Telex: 233222 NWBKUR
Fax: (212) 602-4118
NationsBank of Texas, N.A. NationsBank of Texas, N.A. $48,000,000
901 Main Street, 67th Floor 901 Main Street, 67th Floor
Dallas, TX 75202 Dallas, TX 75202
For Business/Credit Matters
---------------------------
Attention: Sharon McCarty
Telephone: (214) 508-0906
Fax: (214) 508-0980
For Administrative Matters
--------------------------
Attention: Karen Puente
Telephone: (214) 508-0519
Fax: (214) 508-0944
NBD Bank, N.A. NBD Bank, N.A. $27,000,000
611 Woodward Avenue 611 Woodward Avenue
</TABLE>
<PAGE>
11
<TABLE>
<CAPTION>
Name of Lender and
- ------------------
Applicable Lending Office Address for Notices Commitment
- ------------------------- ------------------- ----------
<S> <C> <C>
Detroit, MI 48226 Detroit, MI 48226
For Business/Credit Matters
------------------------------
Attention: William J.
McCaffrey,
National Banking Division
Telephone: (313) 225-3444
Telex: 4320060
Fax: (313) 225-2649
For Administrative Matters
------------------------------
Attention: Candace Laitan,
National Banking Division
Telephone: (313) 225-2273
Telex: 4320060
Fax: (313) 225-2649
The Northern Trust Company The Northern Trust Company $27,000,000
50 South LaSalle Street 50 South LaSalle Street
Chicago, IL 60675 Chicago, IL 60675
For Business/Credit Matters
------------------------------
Attention: Martin G. Alston,
Western Division
Telephone: (312) 444-5058
Fax: (312) 630-1566
For Administrative Matters
------------------------------
Attention: Linda Honda,
Western Division
Telephone: (312) 444-5051
Fax: (312) 630-1566
Norwest Bank Norwest Bank $21,000,000
Minnesota, National Minnesota, National
Association Association
6th and Marquette 6th and Marquette
Minneapolis, MN Minneapolis, MN
55479-0085 55479-0085
For Business/Credit Matters
------------------------------
Attention: Perry G. Pelas
Telephone: (612) 667-8609
Fax: (612) 667-4145
</TABLE>
<PAGE>
12
<TABLE>
<CAPTION>
Name of Lender and
- ------------------
Applicable Lending Office Address for Notices Commitment
- ------------------------- ------------------- ----------
<S> <C> <C>
For Administrative Matters
------------------------------
Attention: Margret Hamzavi
Telephone: (612) 667-4747
Fax: (612) 667-4145
PNC Bank, N.A. PNC Bank, N.A. $39,000,000
2525 Lincoln Plaza 2525 Lincoln Plaza
500 North Akard 500 North Akard
Dallas, TX 75201 Dallas, TX 75201
For Business/Credit Matters
------------------------------
Attention: Gregory Gaschler
Telephone: (214) 740-2585
Fax: (214) 740-2588
For Administrative Matters
------------------------------
Attention: Sharon Tackett
Telephone: (214) 740-2525
Fax: (214) 740-2588
For Business/Credit Matters
------------------------------
Royal Bank of Canada 600 Wilshire Blvd. Suite 800 $39,000,000
600 Wilshire Blvd. Los Angeles, CA 90017
Suite 800 Attention: Doug Frost
Los Angeles, CA 90017 Telephone: (213) 955-5310
Fax: (213) 955-5350
For Administrative Matters
------------------------------
Royal Bank of Canada
Pierrepont Plaza
300 Cadman Plaza West
14th Floor
Brooklyn, NY 11201-2701
Attention: Linda Swanston,
Loan Administration
Telephone: (212) 858-7176
Telex: ROYBAN 62519
Fax: (718) 522-6292
The Sanwa Bank Ltd., The Sanwa Bank Ltd., $39,000,000
Dallas Agency Dallas Agency
901 Main Street, 901 Main Street,
Suite 2830, LB 165 Suite 2830, LB 165
Dallas, TX 75202 Dallas, TX 75202
</TABLE>
<PAGE>
13
<TABLE>
<CAPTION>
Name of Lender and
- ------------------
Applicable Lending Office Address for Notices Commitment
- ------------------------- ------------------- ----------
<S> <C> <C>
For Business/Credit Matters
---------------------------
Attention: Robert Smith,
A.V.P.
Telephone: (214) 744-5555
Telex: 735282
Fax: (214) 741-6535
For Administrative Matters
------------------------------
Attention: Gregory Crowe,
A.V.P.
Telephone: (214) 744-5555
Telex: 735282
Fax: (214) 741-6535
Societe Generale Societe Generale $27,000,000
Trammell Crow Center Trammell Crow Center
Suite 4800 Suite 4800
2001 Ross Avenue 2001 Ross Avenue
Dallas, TX 75201 Dallas, TX 75201
For Business/Credit Matters
---------------------------
Attention: Louis P. Laville
III, , V.P.
Telephone: (214) 979-2762
Telex: 170494 SOCGEN UT
Fax: (214) 979-1104
For Administrative Matters
------------------------------
Attention: Angela Aldridge/
Operations
Telephone: (214) 979-2743
Telex: 170494 SOCGEN UT
Fax: (214) 754-0171
The Sumitomo Bank, Ltd. The Sumitomo Bank, Ltd. $39,000,000
NCNB Center NCNB Center
Houston Agency Houston Agency
700 Louisiana, Suite 1750 700 Louisiana, Suite 1750
Houston, TX 77002 Houston, TX 77002
For Business/Credit Matters
---------------------------
Attention: William S. Rogers,
V.P.
Telephone: (713) 238-8214
Telex: 774417
Fax: (713) 759-0020
</TABLE>
<PAGE>
14
<TABLE>
<CAPTION>
Name of Lender and
- ------------------
Applicable Lending Office Address for Notices Commitment
- ------------------------- ------------------- ----------
<S> <C> <C>
For Administrative Matters
------------------------------
Attention: Mr. Goto, Loan
Administration
Telephone: (713) 238-8240
Telex: 774417
Fax: (713) 759-0020
SunBank SunBank $39,000,000
200 South Orange Avenue 200 South Orange Avenue
Orlando, FL 32801 Orlando, FL 32801
For Business/Credit Matters
------------------------------
Attention: Mr. J. Carol Doyle
Telephone: (407) 237-4333
Fax: (407) 237-6894
For Administrative Matters
------------------------------
Attention: Ms. Lois Keezel
Telephone: (407) 237-4855
Fax: (407) 237-6894
Swiss Bank Corporation Swiss Bank Corporation $27,000,000
141 W. Jackson Blvd. 141 W. Jackson Blvd.
Chicago, IL 60604 Chicago, IL 60604
For Business/Credit Matters
------------------------------
Attention: Nancy Russell
Telephone: (312) 554-6436
Fax: (312) 554-6411
For Administrative Matters
------------------------------
Attention: Valerie Williams
Telephone: (212) 574-3146
Fax: (212) 574-4176/3852
Union Bank of Switzerland Union Bank of Switzerland $39,000,000
Houston Agency Houston Agency
1100 Louisiana, Suite 4500 1100 Louisiana, Suite 4500
Houston, TX 77002 Houston, TX 77002
For Business/Credit Matters
---------------------------
Attention: Dan Boyle
Telephone: (713) 655-6500
Fax: (713) 655-6555
For Administrative Matters
------------------------------
</TABLE>
<PAGE>
15
<TABLE>
<CAPTION>
Name of Lender and
- ------------------
Applicable Lending Office Address for Notices Commitment
- ------------------------- ------------------- ----------
<S> <C> <C>
Attention: Robert Mack, Loan
Administration
Telephone: (212) 821-3225
Fax: (212) 821-3259
United Missouri Bank, N.A. United Missouri Bank, N.A. $21,000,000
1010 Grand Avenue 1010 Grand Avenue
Kansas City, MO 64141-6226 Kansas City, MO 64141-6226
For Business/Credit Matters
------------------------------
Attention: Walter Beck,
Commercial Loan Department
Telephone: (816) 860-7109
Telex: 6875032 UMNBK UW
Fax: (816) 860-7143
For Administrative Matters
------------------------------
Attention Billy Ray Smith
Telephone: (816) 860-7019
Telex: 687-5032 UMNBK UW
Fax: (816) 860-7143
United States National United States National $21,000,000
Bank of Oregon Bank of Oregon
111 S.W. Fifth Avenue, 111 S.W. Fifth Avenue,
Suite 2900 Suite 2900
Portland, OR 97204 Portland, OR 97204
For Business/Credit Matters
------------------------------
Attention: Blake R. Howells,
A.V.P.
National Corporate Banking
Division
Telephone: (503) 275-3475
Fax: (503) 275-4346
For Administrative Matters
------------------------------
Attention: Participation
Specialist
Telephone: (503) 275-6561
Fax: (503) 275-4600
Wachovia Bank Wachovia Bank $39,000,000
of Georgia, N.A. of Georgia, N.A.
191 Peachtree Street, NE 191 Peachtree Street, NE
MC GA370 MC GA370
Atlanta, GA 30303 Atlanta, GA 30303
</TABLE>
<PAGE>
16
<TABLE>
<CAPTION>
Name of Lender and
- ------------------
Applicable Lending Office Address for Notices Commitment
- ------------------------- ------------------- ----------
<S> <C> <C>
For Business/Credit Matters
---------------------------
Attention: Paige Daniel
Telephone: (404) 332-1322
Fax: (404) 332-6898
For Administrative Matters
------------------------------
Attention: Huguette Jones,
U.S. Corporate-Dallas
Telephone: (404) 332-4466
Fax: (404) 332-1118
Morgan Guaranty Trust Morgan Guaranty Trust $90,000,000
Company of New York Company of New York
60 Wall Street 60 Wall Street
New York, NY 10260-0060 New York, NY 10260-0060
For Business/Credit Matters
------------------------------
Attention: Stephen B. King
Vice President
Telephone: (212) 648-7415
Telex: 177615 MGT UT
Fax: (212) 648-5336
For Administrative Matters
------------------------------
Attention: John J. O'Dowd
Telephone: (212) 648-6973
Telex: 177615 MGT UT
Fax: (212) 648-5336
J.P. Morgan, Delaware J.P. Morgan, Delaware
500 Stanton Christiana 500 Stanton Christiana
Road Road
P.O. Box 6070 P.O. Box 6070
Newark, DE 19713-2107 Newark, DE 19713-2107
Attention: Kevin M. McCann,
Assistant Treasurer
Telephone: (302) 992-1850
Fax: (302) 992-1852
</TABLE>
<PAGE>
SCHEDULE 3.08
RESTRICTED SUBSIDIARIES
None.
<PAGE>
SCHEDULE 3.09
MATERIAL LITIGATION
None.
<PAGE>
EXHIBIT B
TO THE AMENDMENT AND
RESTATEMENT AGREEMENT
Charles R. Lotter
Senior Vice President
Secretary and General Counsel
December 7, 1994
Each of the lenders named in the
Schedule referred to below
Re: Revolving Credit Agreements of
J. C. Penney Company, Inc. and
J. C. Penney Funding Corporation
--------------------------------
Dear Sirs:
As the General Counsel of J. C. Penney Company, Inc., a Delaware
corporation ("JCPenney"), and of J. C. Penney Funding Corporation, a Delaware
corporation ("Funding"; together with JCPenney, "Borrowers"), I have been asked
to render an opinion pursuant to Section 4.02 of those certain 364-Day and Five-
Year Revolving Credit Agreements dated as of December [ ], 1994 ("Agreements")
among the Borrowers, Morgan Guaranty Trust Company of New York ("Agent"), the
lenders listed in Schedule 2.01 of the Agreements ("Lenders") and Bankers Trust
Company, Chemical Bank and Credit Suisse ("Co-Agents").
In rendering the opinion set forth below, I have examined originals,
photostatic, or certified copies of the Agreements, the respective corporate
records and documents of the Borrowers, copies of public documents, certificates
of the officers or representatives of the Borrowers, and such other instruments
and documents, and have made such inquiries, as I have deemed necessary as a
basis for such opinion. In making such examinations, I have assumed with your
consent the genuineness of all signatures (other than the signatures of the
Borrowers) and the authenticity of all documents submitted to me as originals,
the conformity to original documents of all documents submitted to me as
certified or photostatic copies, and the authenticity of the originals of such
latter documents. As to questions of fact material to such opinion, to the
extent I deemed necessary, I have relied upon the
<PAGE>
Each of the lenders named in the Schedules
December 7, 1994
Page 2
representations and warranties of the Borrowers made in the Agreements and upon
certificates of the officers of the Borrowers. Capitalized terms not otherwise
defined in this opinion letter have the meanings specified in the Agreements.
Based upon the foregoing, I am of the opinion that:
1. Each of the Borrowers has been duly incorporated and is validly
existing and in good standing under the laws of the State of Delaware, and is
duly qualified as a foreign corporation and in good standing under the laws of
each jurisdiction where the failure to so qualify would have a Material Adverse
Effect. Each of the Borrowers has the requisite corporate power and authority
to own, pledge, and operate its properties and assets, to lease the property it
operates under lease, and to conduct its business as now conducted.
2. The execution, delivery, and performance by the Borrowers of the
Agreements and the Borrowings by the Borrowers under the Agreements (i) are
within the corporate power of each of the Borrowers; (ii) have been duly
authorized by each of the Borrowers by all necessary corporate action; (iii) are
not in contravention of JCPenney's Restated Certificate of Incorporation, as
amended, Funding's Certificate of Incorporation, as amended, or either of the
Borrower's by-laws; (iv) to the best of my knowledge do not violate any material
law, statute, rule, or regulation, or any material order of any Governmental
Authority, applicable to either of the Borrowers; (v) do not conflict with or
result in the breach of, or constitute a default under, the material borrowing
indentures, agreements, or other instruments of either of the Borrowers; (vi) do
not result in the creation or imposition of any Lien upon any of the property or
assets of either of the Borrowers other than any Lien created by the Agreements;
and (vii) do not require the consent or approval of, or any filing with, any
Governmental Authority or any other person party to those agreements described
above other than those that have been obtained or made or where the failure to
obtain such consent or approval would not result in a Material Adverse Effect.
3. The Agreements have been duly executed and delivered by each of the
Borrowers and constitute
<PAGE>
Each of the lenders named in the Schedules
December 7, 1994
Page 3
the legal, valid, and binding obligation of such Borrower, enforceable against
such Borrower in accordance with their terms, except as such enforcement may be
limited by bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium, and similar laws of general applicability relating to or affecting
creditors' rights and to general equity principles.
4. Neither Borrower is an "investment company" within the meaning of the
Investment Company Act of 1940, as amended, or a "public-utility company" or a
"holding company" within the meaning of the Public Utility Holding Company Act
of 1935, as amended.
5. To the best of my knowledge after due inquiry, except as set forth in
Schedule 3.09 of the Agreements, no litigation by or before any Governmental
Authority is now pending or threatened against JCPenney or Funding (i) which
involves the Agreements or the Transactions or (ii) as to which there is a
reasonable possibility of an adverse determination and which, if adversely
determined, would, individually or in the aggregate, result in a Material
Adverse Effect.
6. The Support Agreements have been duly executed and delivered by
JCPenney and, where applicable, Funding and, as of the Closing Date, are in full
force and effect in accordance with their terms.
The opinions expressed herein are limited to the laws of the State of
Delaware with respect to the opinions provided in paragraph 1 (except as to due
qualification as a foreign corporation and good standing under the laws of other
jurisdictions) and clauses (i), (ii), and (iii) of paragraph 2. The other
opinions expressed are limited to the laws of the State of New York and the laws
of the United States. I do not express any opinion herein concerning any laws
of any other jurisdictions. This opinion is furnished to you in connection with
the transactions contemplated by the Agreements, and may not be relied upon by
any other person, firm, or corporation for any purpose or by you in any other
context without my prior written consent.
<PAGE>
Each of the lenders named in the Schedules
December 7, 1994
Page 4
Very truly yours,
/s/ Charles R. Lotter
Charles R. Lotter
<PAGE>
CONFORMED COPY
EXHIBIT C
TO THE AMENDMENT AND
RESTATEMENT AGREEMENT
GUARANTY
--------
This Guaranty Agreement is executed as of this 7th day of
December, 1994, by J. C. Penney Company, Inc., a Delaware
corporation ("Guarantor"), in favor of J. C. Penney Funding
Corporation, a Delaware corporation ("Funding"), and the
lenders("") (as defined below).
RECITALS:
--------
WHEREAS, Funding is a wholly-owned subsidiary of Guarantor;
WHEREAS, Funding and Guarantor have entered into those certain 364-Day
and Five-Year Revolving Credit Agreements (collectively, the "Agreements") dated
as of December 16, 1993, as amended and restated with new Lenders as of December
7, 1994 (the "Restated Agreements"), among Guarantor, Funding, Morgan Guaranty
Trust Company of New York, as agent for the Lenders, Bankers Trust Company,
Chemical Bank and Credit Suisse, as co-agents for the Lenders, and certain other
financial institutions named in the Restated Agreements (collectively, the
"Lenders") in amounts not to exceed One Billion Five Hundred Million Dollars
($1,500,000,000) and One Billion Dollars ($1,000,000,000), respectively; and
<PAGE>
2
WHEREAS, Guarantor is willing to guarantee any borrowings of Funding
under the Restated Agreements on the terms set forth herein.
NOW, THEREFORE, in consideration of the premises, Guarantor hereby
agrees as follows:
1. Subject to the terms and conditions of subordination set forth in
this Guaranty, Guarantor hereby unconditionally guarantees in favor of the
Lenders, the prompt payment when due of all interest, principal, and other
amounts owing under the Restated Agreements (collectively, the "Guaranteed
Debt"). This is an unconditional guaranty of payment, and in the event of
default by Funding in the payment of interest, principal, or any other amounts
payable under the Guaranteed Debt, the Lenders may proceed directly against
Guarantor to enforce this Guaranty (including by the institution of legal
proceedings) without first proceeding against Funding.
2. Guarantor acknowledges that it has received and will receive a
direct or indirect benefit from the making of this Guaranty and the creation of
the Guaranteed Debt.
3. (a) The Guaranteed Debt shall be subordinated and subject in right
of payment to the prior payment in full of any and all other indebtedness for
borrowed money
<PAGE>
3
incurred, created, assumed, or otherwise guaranteed by Guarantor (collectively
referred to as the Guarantor's "Senior Debt").
(b) In the event of (i) any dissolution or winding-up or total or
partial liquidation or reorganization of Guarantor, whether voluntary or
involuntary, or any bankruptcy, insolvency, receivership, or similar proceeding
relative to Guarantor, or (ii) any default in the payment of principal
(including any acceleration or required prepayments or amortization) of or
interest on any Senior Debt of Guarantor, then, subject to the provisions of
subsection (d) below, the Lenders shall not be entitled to receive any payment
under this Guaranty on account of the Guaranteed Debt unless and until all
Senior Debt shall have been paid in full or otherwise discharged.
(c) For purposes of determining the priority of payments between the
Senior Debt and the Guaranteed Debt, in the event that the Guaranteed Debt, or
any part thereof, is declared due and payable prior to its stated maturity, all
principal of and interest and any other amounts due on all Senior Debt
outstanding at the time of such declaration as to the Guaranteed Debt shall
first have been paid in full, before any payment is made by Guarantor upon the
Guaranteed Debt.
<PAGE>
4
(d) In no event shall any Lender be required by this subordination to
refund any amounts paid to it pursuant to this Guaranty on account of the
Guaranteed Debt prior to the events specified in subsections (b) and (c) above,
and prior to such events the Lenders shall be entitled to be paid hereunder as
agreed and to collect any sums due such Lenders hereunder by any lawful means.
(e) The provisions of this Section are for the purpose of defining
the relative rights of the holders of any Senior Debt, on the one hand, and the
Lenders, on the other hand, against Guarantor, and nothing herein shall impair,
as between the Guarantor and the Lenders, the obligation of Guarantor, which is
unconditional and absolute, to guarantee the prompt payment when due of the
Guaranteed Debt in accordance with the terms and provisions thereof; nor shall
anything herein prevent the Lenders from exercising all remedies otherwise
permitted by applicable law upon default hereunder, subject to the rights, if
any, under this Section of any Senior Debt holder.
<PAGE>
5
4. The substantive laws of the State of New York shall govern the
validity, construction, enforcement, and interpretation of this Guaranty.
IN WITNESS WHEREOF, Guarantor has executed and delivered this Guaranty
as of the date first written above.
J. C. PENNEY COMPANY, INC.,
a Delaware corporation, as
Guarantor,
by
/s/ Leo A. Gispanski
------------------------
Name: Leo A. Gispanski
Title: Vice President &
Treasurer
<PAGE>
EXHIBIT 4(d)
CONFORMED COPY
AMENDMENT AND RESTATEMENT AGREEMENT dated as of December 7,
1994 (the "Amendment"), relating to the five-year Revolving
Credit Agreement dated as of December 16, 1993 (the "Credit
Agreement"), among J. C. PENNEY COMPANY, INC. ("JCPenney"),
J. C. PENNEY FUNDING CORPORATION ("Funding"), the Lenders party
thereto, MORGAN GUARANTY TRUST COMPANY OF NEW YORK, as Agent for
the Lenders, and BANKERS TRUST COMPANY, CHEMICAL BANK and CREDIT
SUISSE, as Co-Agents for the Lenders.
The Borrowers, the Lenders, the Agent and the Co-Agents desire to (i)
amend the Credit Agreement in order to extend the term thereof, revise certain
pricing terms, modify various covenants, reconstitute the Lenders party thereto,
make certain reallocations of Commitments and effect other changes thereto and
(ii) restate the Credit Agreement, as so amended, in each case on the terms and
subject to the conditions hereinafter set forth. Capitalized terms used but not
defined herein shall have the meanings assigned to them in the Credit Agreement.
Accordingly, the Borrowers, the Lenders, the Agent and the Co-Agents
hereby agree as follows:
SECTION 1. Amendment and Restatement of Credit Agreement. On and as
---------------------------------------------
of the Effective Date (as hereinafter defined), the Credit Agreement, including
the Exhibits and Schedules thereto, shall be amended and restated in the form of
Exhibit A to this Amendment.
SECTION 2. Interest and Fees. Notwithstanding the amendment of the
-----------------
Credit Agreement effected hereby, all interest and Fees accruing under the
Credit Agreement at any time prior to the Effective Date shall accrue and be
payable at the rates (including the Facility Fee Percentage and the Standby
Margin) in effect during the applicable periods under the Credit Agreement prior
to the Effective Date and the amendment of the Credit Agreement hereby, and all
interest and Fees accruing under the Credit Agreement on or after the Effective
Date shall accrue and be payable at the rates (including the Facility Fee
Percentage and the Standby Margin) in effect under the Credit Agreement after
giving effect to this Amendment.
<PAGE>
2
SECTION 3. Actions on Effective Date. (a) On the Effective Date, the
-------------------------
Borrowers will prepay, in accordance with Section 2.12 of the Credit Agreement,
except that the Borrower shall not be required to give notice pursuant to
Section 2.12(a), all Standby Loans which are outstanding as of the opening of
business on the Effective Date. Any Standby Loans made on the Effective Date
shall be made by such institutions as are Lenders after giving effect to this
Amendment and shall be allocated among such Lenders in accordance with their
respective Commitments after giving effect to this Amendment.
(b) On the Effective Date, the Borrowers will make payment in full of
all Fees, indemnities and reimbursements, if any, under the Credit Agreement
(including, without limitation, any amounts owed to any Lender by either
Borrower under Section 2.15) which have accrued to the Effective Date and are
owed to any Lender. The Commitment of any Lender which ceases to be a Lender as
a result of this Amendment shall be deemed to have been terminated in full as of
the Effective Date.
(c) On the Effective Date, the Agent and its Affiliates (as
applicable) shall have received for their own accounts all fees due and payable
to them and in such amounts as have been previously agreed upon in writing
between the Borrowers and the Agent in connection with the Credit Agreement as
amended hereunder.
SECTION 4. Effectiveness. This Amendment shall become effective on
-------------
the first Business Day occurring on or after December 7, 1994 (the "Effective
Date") on which each of the following conditions has been satisfied:
(a) Each Borrower, each Lender under the Credit Agreement (including
Lenders which cease to be such or first become such as a result of this
Amendment), the Agent and each Co-Agent shall have executed counterparts
hereof, and each Borrower, each Lender which is a Lender after the
effectiveness of this Amendment ("Restated Agreement Lenders") and the
Agent shall have executed counterparts of Exhibit A hereto, and, in each
case, such executed counterparts shall have been received by the Agent.
(b) The Borrowers shall have performed their obligations under
Section 3 hereof.
<PAGE>
3
(c) The Agent shall have received a certificate from a Responsible
Officer of each Borrower, dated the Effective Date, and certifying that the
representations and warranties set forth in Article III of the Credit
Agreement, as amended and restated hereby (the "Restated Agreement") shall
be true and correct in all material respects on and as of the Effective
Date with the same effect as though made on and as of such date, except to
the extent such representations and warranties expressly relate to an
earlier date.
(d) The Agent shall have received a certificate from a Responsible
Officer of each Borrower, dated the Effective Date, and certifying that on
the Effective Date, the Borrowers shall be in compliance with all the terms
and provisions set forth herein or in the Restated Agreement on its part to
be observed or performed, and no Event of Default or Default shall have
occurred and be continuing.
(e) The Agent shall have received a favorable written opinion of
Charles R. Lotter, General Counsel for the Borrowers, dated the Effective
Date and addressed to the Restated Agreement Lenders, to the effect set
forth in Exhibit B hereto, and the Borrowers hereby instruct such counsel
to deliver such opinion to the Agent.
(f) The Agent shall have received (i) a copy of the certificate or
articles of incorporation, including all amendments thereto, of each
Borrower, certified as of a recent date by the Secretary of State of the
state of its incorporation, and a certificate as to the good standing of
such Borrower as of a recent date, from such Secretary of State; (ii) a
certificate of the Secretary or Assistant Secretary of each Borrower dated
the Effective Date and certifying (A) that attached thereto is a true and
complete copy of the by-laws of such Borrower as in effect on the Effective
Date and at all times since a date prior to the date of the resolutions
described in clause (B) below, (B) that attached thereto is a true and
complete copy of resolutions duly adopted by the Board of Directors of such
Borrower authorizing the execution, delivery and performance of the
Restated Agreement and the borrowings thereunder, and that such resolutions
have not been modified, rescinded or amended and are in full force and
effect, (C) that the certificate or articles
<PAGE>
4
of incorporation of such Borrower have not been amended since the date of
the last amendment thereto shown on the certificate of good standing
furnished pursuant to clause (i) above, and (D) as to the incumbency and
specimen signature of each officer executing this Amendment or the Restated
Agreement or any other document delivered in connection herewith on behalf
of such Borrower and (iii) a certificate of another officer of each
Borrower as to the incumbency and specimen signature of the Secretary or
Assistant Secretary executing the certificate pursuant to (ii) above.
(g) The Agent shall have received a certificate, dated the Effective
Date and signed by a Responsible Officer of each Borrower, confirming
compliance with the conditions precedent set forth in paragraphs (c) and
(d) of this Section.
(h) The Agent shall have received the fully-executed subordinated
Guaranty of the obligations of Funding by JCPenney, dated the Effective
Date, in favor of the Lenders and attached hereto as Exhibit C.
SECTION 5. APPLICABLE LAW. THIS AMENDMENT SHALL BE CONSTRUED IN
---------------
ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK.
SECTION 6. Counterparts. This Amendment may be executed in two or
-------------
more counterparts, each of which shall constitute an original, but all of which
when taken together shall constitute but one contract.
SECTION 7. Expenses. The Borrowers agree to reimburse the Agent for
---------
its reasonable out-of-pocket expenses in connection with this Amendment,
including the
<PAGE>
5
reasonable fees, charges and disbursements of Cravath, Swaine & Moore, special
counsel for the Agent.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be duly executed by their respective authorized officers as of the day and year
first written above.
J. C. PENNEY COMPANY, INC.,
by
/s/ Leo A. Gispanski
--------------------------
Name: Leo A. Gispanski
Title: Vice President &
Treasurer
J. C. PENNEY FUNDING CORPORATION,
by
/s/ Donald A. McKay
-------------------------
Name: Donald A. McKay
Title: Chairman of the
Board
MORGAN GUARANTY TRUST COMPANY OF NEW YORK,
individually and as Agent,
by
/s/ Stephen B. King
-------------------------
Name: Stephen B. King
Title: Vice President
<PAGE>
BANKERS TRUST COMPANY, individually
and as Co-Agent,
by
/s/ Bruce D. Glasson
------------------------------
Name: Bruce D. Glasson
Title: Managing Director
CHEMICAL BANK, individually and as
Co-Agent,
by
/s/ Meredith L. Vanden Handel
------------------------------
Name: Meredith L. Vanden
Handel
Title: Vice President
CREDIT SUISSE, individually and as
Co-Agent,
by
/s/ Stephen M. Flynn
-----------------------------
Name: Stephen M. Flynn
Title: Member of Senior
Management
by
/s/ Maria N. Gaspara
-----------------------------
Name: Maria N. Gaspara
Title: Associate
ABN AMRO BANK N.V.,
by
/s/ Laurie C. Tuzo
----------------------------
Name: Laurie C. Tuzo
Title: Vice President
by
/s/ Ronald A. Mahle
----------------------------
Name: Ronald A. Mahle
Title: Group Vice President
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION,
by
/s/ Jody B. Schneider
---------------------------
Name: Jody B. Schneider
Title: Vice President
<PAGE>
THE FIRST NATIONAL BANK OF BOSTON,
by
/s/ Bethann R. Halligan
------------------------------
Name: Bethann R. Halligan
Title: Director
BANK OF HAWAII,
by
/s/ Peter S. Ho
------------------------------
Name: Peter S. Ho
Title: Vice President
THE BANK OF NEW YORK,
by
/s/ Gregory L. Batson
------------------------------
Name: Gregory L. Batson
Title: Assistant Vice President
BANK OF TOKYO, LTD., acting by and
through its Dallas Agency, as a
Lender,
by
/s/ John M. Mearns
------------------------------
Name: John M. Mearns
Title: Vice President
BANK ONE, TEXAS, N.A.,
by
/s/ Scott Rhea
------------------------------
Name: Scott Rhea
Title: Banking Officer
BANQUE NATIONALE DE PARIS, Houston
Agency,
by
/s/ Henry F. Setina
------------------------------
Name: Henry F. Setina
Title: Vice President
<PAGE>
CIBC, INC.,
by
/s/ David Balderach
-------------------------------
Name: David Balderach
Title: Vice President
CITIBANK, N.A.,
by
/s/ Arnold J. Ziegel
------------------------------
Name: Arnold J. Ziegel
Title: Authorized Signer
CREDIT LYONNAIS NEW YORK BRANCH,
by
/s/ Robert Ivosevich
------------------------------
Name: Robert Ivosevich
Title: Senior Vice President
THE DAI-ICHI KANGYO BANK, LTD., NEW
YORK BRANCH,
by
/s/ Kiyoshi Miyake
------------------------------
Name: Kiyoshi Miyake
Title: Vice President and
Group Leader
FIRST INTERSTATE BANK OF
CALIFORNIA,
by
/s/ William J. Baird
------------------------------
Name: William J. Baird
Title: Vice President
by
/s/ Wendy V. C. Purcell
------------------------------
Name: Wendy V. C. Purcell
Title: Assistant Vice President
THE FIRST NATIONAL BANK OF CHICAGO,
by
/s/ Ted Wozniak
-------------------------------
Name: Ted Wozniak
Title: Vice President
<PAGE>
FIRST SECURITY BANK OF UTAH, N.A.,
by
/s/ Stephen L. Goalen
------------------------------
Name: Stephen L. Goalen
Title: Senior Vice President
FIRST UNION NATIONAL BANK OF NORTH
CAROLINA,
by
/s/ A. Kimball Collins
------------------------------
Name: A. Kimball Collins
Title: Assistant Vice President
FIRSTAR BANK MILWAUKEE, N.A.,
by
/s/ Timothy W. Somers
------------------------------
Name: Timothy W. Somers
Title: Assistant Vice President
THE FUJI BANK, LIMITED, Houston
Agency,
by
/s/ David Kelley
------------------------------
Name: David Kelley
Title: Vice President and
Senior Manager
INDUSTRIAL BANK OF JAPAN TRUST
COMPANY,
by
/s/ Takeshi Kawano
------------------------------
Name: Takeshi Kawano
Title: Senior Vice President
and Senior Manager
THE LONG-TERM CREDIT BANK OF JAPAN,
LIMITED, New York Branch,
by
/s/ Satoru Otsubo
------------------------------
Name: Satoru Otsubo
Title: Joint General Manager
<PAGE>
MELLON BANK, N.A.,
by
/s/ Lisa M. Pellow
------------------------------
Name: Lisa M. Pellow
Title: Vice President
THE MITSUBISHI BANK, LIMITED,
by
/s/ Shoji Honda
------------------------------
Name: Shoji Honda
Title: General Manager
NATIONAL WESTMINSTER BANK PLC, New
York Branch,
by
/s/ Stephen R. Parker
------------------------------
Name: Stephen R. Parker
Title: Vice President
NATIONAL WESTMINSTER BANK PLC,
Nassau Branch,
by
/s/ Stephen R. Parker
------------------------------
Name: Stephen R. Parker
Title: Vice President
NATIONSBANK OF TEXAS, N.A.,
by
/s/ Sharon L. McCarty
------------------------------
Name: Sharon L. McCarty
Title: Assistant Vice President
NBD BANK, N.A.
by
/s/ D. Andrew Bateman
------------------------------
Name: D. Andrew Bateman
Title: First Vice President
THE NORTHERN TRUST COMPANY,
by
/s/ Sara Clissold
------------------------------
Name: Sara Clissold
Title: Officer
<PAGE>
NORWEST BANK MINNESOTA, N.A.,
by
/s/ Perry G. Pelos
------------------------------
Name: Perry G. Pelos
Title: Vice President
PNC BANK, NATIONAL ASSOCIATION,
by
/s/ Gregory T. Gaschler
------------------------------
Name: Gregory T. Gaschler
Title: Vice President
ROYAL BANK OF CANADA,
by
/s/ Everett M. Harner
------------------------------
Name: Everett M. Harner
Title: Manager
ISTITUTO BANCARIO SAN PAOLO DI
TORINO, SpA,
by
/s/ William J. DeAngelo
------------------------------
Name: William J. DeAngelo
Title: First Vice President
by
/s/ Robert S. Wurster
------------------------------
Name: Robert S. Wurster
Title: First Vice President
THE SANWA BANK LIMITED, Dallas
Agency,
by
/s/ Robert S. Smith
------------------------------
Name: Robert S. Smith
Title: Assistant Vice President
SOCIETE GENERALE, Southwest Agency,
by
/s/ Louis P. Laville, III
------------------------------
Name: Louis P. Laville, III
Title: Vice President
<PAGE>
THE SUMITOMO BANK, LTD., Houston
Agency,
by
/s/ Tatsuo Ueda
------------------------------
Name: Tatsuo Ueda
Title: General Manager
SUNBANK, NATIONAL ASSOCIATION,
by
/s/ J. Carol Doyle
------------------------------
Name: J. Carol Doyle
Title: First Vice President
SWISS BANK CORPORATION, Cayman
Islands Branch,
by
/s/ Nancy A. Russell
------------------------------
Name: Nancy A. Russell
Title: Associate Director
by
/s/ William A. McDonnell
------------------------------
Name: William A. McDonnell
Title: Associate Director
UNION BANK OF SWITZERLAND,
Houston Agency,
by
/s/ Dan O. Boyle
------------------------------
Name: Dan O. Boyle
Title: Vice President
by
/s/ Jean Claude de Roche
------------------------------
Name: Jean Claude de Roche
Title: Assistant Vice President
UNITED MISSOURI BANK, N.A.,
by
/s/ Walter Beck, Jr.
------------------------------
Name: Walter Beck, Jr.
Title: Executive Vice President
<PAGE>
UNITED STATES NATIONAL
BANK OF OREGON,
by
/s/ Blake R. Howells
------------------------------
Name: Blake R. Howells
Title: Assistant Vice President
WACHOVIA BANK OF GEORGIA, N.A.,
by
/s/ Douglas L. Williams
------------------------------
Name: Douglas L. Williams
Title: Senior Vice President
<PAGE>
5
reasonable fees, charges and disbursements of Cravath, Swaine & Moore, special
counsel for the Agent.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be duly executed by their respective authorized officers as of the day and year
first written above.
J. C. PENNEY COMPANY, INC.,
by
/s/ Leo A. Gispanski
--------------------------
Name: Leo A. Gispanski
Title: Vice President &
Treasurer
J. C. PENNEY FUNDING
CORPORATION,
by
/s/ Donald A. McKay
-------------------------
Name: Donald A. McKay
Title: Chairman of the
Board
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK, individually and
as Agent,
by
-------------------------
Name: Stephen B. King
Title: Vice President
<PAGE>
5
reasonable fees, charges and disbursements of Cravath, Swaine & Moore, special
counsel for the Agent.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be duly executed by their respective authorized officers as of the day and year
first written above.
J. C. PENNEY COMPANY, INC.,
by
--------------------------
Name: Leo A. Gispanski
Title: Vice President &
Treasurer
J. C. PENNEY FUNDING CORPORATION,
by
-------------------------
Name: Donald A. McKay
Title: Chairman of the
Board
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK, individually and
as Agent,
by
/s/ Stephen B. King
-------------------------
Name: Stephen B. King
Title: Vice President
<PAGE>
BANKERS TRUST COMPANY, individually
and as Co-Agent,
by
/s/ Bruce D. Glasson
----------------------------------
Name: BRUCE D. GLASSON
Title: MANAGING DIRECTOR
CHEMICAL BANK, individually and as
Co-Agent,
by
----------------------------------
Name: Meredith L. Vanden Handel
Title: Vice President
CREDIT SUISSE, individually and as
Co-Agent,
by
----------------------------------
Name:
Title:
by
----------------------------------
Name:
Title:
ABN AMRO BANK N.V.,
by
----------------------------------
Name:
Title:
by
----------------------------------
Name:
Title:
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION,
by
----------------------------------
Name: Jody B. Schneider
Title: Vice President
<PAGE>
BANKERS TRUST COMPANY, individually
and as Co-Agent,
by
----------------------------------
Name:
Title:
CHEMICAL BANK, individually
and as Co-Agent,
by
/s/ Meredith L. Vanden Handel
----------------------------------
Name: Meredith L. Vanden Handel
Title: Vice President
CREDIT SUISSE, individually and as
Co-Agent,
by
----------------------------------
Name:
Title:
by
----------------------------------
Name:
Title:
ABN AMRO BANK N.V.,
by
----------------------------------
Name:
Title:
by
----------------------------------
Name:
Title:
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION,
by
----------------------------------
Name: Jody B. Schneider
Title: Vice President
<PAGE>
BANKERS TRUST COMPANY, individually
and as Co-Agent,
by
----------------------------------
Name:
Title:
CHEMICAL BANK, individually
and as Co-Agent,
by
----------------------------------
Name: Meredith L. Vanden Handel
Title: Vice President
CREDIT SUISSE, individually and as
Co-Agent,
by
/s/ Stephen M. Flynn
----------------------------------
Name: STEPHEN M. FLYNN
Title: MEMBER OF SENIOR MANGEMENT
by
/s/ Maria N.Gaspara
-----------------------------------
Name: MARIA N. GASPARA
Title: ASSOCIATE
ABN AMRO BANK N.V.,
by
----------------------------------
Name:
Title:
by
----------------------------------
Name:
Title:
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION,
by
----------------------------------
Name: Jody B. Schneider
Title: Vice President
<PAGE>
BANKERS TRUST COMPANY, individually
and as Co-Agent,
by
----------------------------------
Name:
Title:
CHEMICAL BANK, individually
and as Co-Agent,
by
----------------------------------
Name: Meredith L. Vanden Handel
Title: Vice President
CREDIT SUISSE, individually and as
Co-Agent,
by
----------------------------------
Name:
Title:
by
----------------------------------
Name:
Title:
ABN AMRO BANK N.V.,
by
/s/ Laurie C. Tuzo
----------------------------------
Name: Laurie C. Tuzo
Title: Vice President
by
/s/ Ronald A. Mahle
----------------------------------
Name: Ronald A. Mahle
Title: Group Vice President
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION,
by
----------------------------------
Name: Jody B. Schneider
Title: Vice President
<PAGE>
BANKERS TRUST COMPANY, individually
and as Co-Agent,
by
---------------------------------
Name:
Title:
CHEMICAL BANK, individually
and as Co-Agent,
by
---------------------------------
Name: Meredith L. Vanden Handel
Title: Vice President
CREDIT SUISSE, individually and as
Co-Agent,
by
---------------------------------
Name:
Title:
by
----------------------------------
Name:
Title:
ABN AMRO BANK N.V.,
by
----------------------------------
Name:
Title:
by
----------------------------------
Name:
Title:
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION,
by
/s/ Jody B. Schneider
----------------------------------
Name: Jody B. Schneider
Title: Vice President
<PAGE>
THE FIRST NATIONAL BANK OF BOSTON,
by
/s/ Bethann R. Halligan
-----------------------------------
Name: Bethann R. Halligan
Title: Director
BANK OF HAWAII,
by
-----------------------------------
Name:
Title:
THE BANK OF NEW YORK,
by
-----------------------------------
Name:
Title:
BANK OF TOKYO, LTD., acting by and
through its Dallas Agency, as a
Lender,
by
-----------------------------------
Name: John M. Mearns
Title: Vice President
BANK ONE, TEXAS, N.A.,
by
-----------------------------------
Name:
Title:
BANQUE NATIONALE DE PARIS, Houston
Agency,
by
-----------------------------------
Name: Henry F. Setina
Title: Vice President
CIBC, INC.,
by
-----------------------------------
Name: J.D. Westland
Title: Vice President
<PAGE>
THE FIRST NATIONAL BANK OF BOSTON,
by
-----------------------------------
Name:
Title:
BANK OF HAWAII,
by
/s/ Peter S. Ho
-----------------------------------
Name: PETER S. HO
Title: VICE PRESIDENT
THE BANK OF NEW YORK,
by
-----------------------------------
Name:
Title:
BANK OF TOKYO, LTD., acting by and
through its Dallas Agency, as a
Lender,
by
-----------------------------------
Name: John M. Mearns
Title: Vice President
BANK ONE, TEXAS, N.A.,
by
-----------------------------------
Name:
Title:
BANQUE NATIONALE DE PARIS, Houston
Agency,
by
-----------------------------------
Name: Henry F. Setina
Title: Vice President
CIBC, INC.,
by
-----------------------------------
Name: J.D. Westland
Title: Vice President
<PAGE>
THE FIRST NATIONAL BANK OF BOSTON,
by
-----------------------------------
Name:
Title:
BANK OF HAWAII,
by
-----------------------------------
Name:
Title:
THE BANK OF NEW YORK,
by
/s/ GREGORY L. BATSON
-----------------------------------
Name: GREGORY L. BATSON
Title: ASSISTANT VICE PRESIDENT
BANK OF TOKYO, LTD., acting by and
through its Dallas Agency, as a
Lender,
by
-----------------------------------
Name: John M. Mearns
Title: Vice President
BANK ONE, TEXAS, N.A.,
by
-----------------------------------
Name:
Title:
BANQUE NATIONALE DE PARIS, Houston
Agency,
by
-----------------------------------
Name: Henry F. Setina
Title: Vice President
CIBC, INC.,
by
-----------------------------------
Name: J.D. Westland
Title: Vice President
<PAGE>
THE FIRST NATIONAL BANK OF BOSTON,
by
----------------------------------
Name:
Title:
BANK OF HAWAII,
by
----------------------------------
Name:
Title:
THE BANK OF NEW YORK,
by
----------------------------------
Name:
Title:
BANK OF TOKYO, LTD., acting by and
through its Dallas Agency, as a
Lender,
by
/s/ John M. Mearns
----------------------------------
Name: John M. Mearns
Title: Vice President
BANK ONE, TEXAS, N.A.,
by
----------------------------------
Name:
Title:
BANQUE NATIONALE DE PARIS, Houston
Agency,
by
----------------------------------
Name: Henry F. Setina
Title: Vice President
CIBC, INC.,
by
-----------------------------------
Name: J.D. Westland
Title: Vice President
<PAGE>
THE FIRST NATIONAL BANK OF BOSTON,
by
-----------------------------------
Name:
Title:
BANK OF HAWAII,
by
-----------------------------------
Name:
Title:
THE BANK OF NEW YORK,
by
-----------------------------------
Name:
Title:
BANK OF TOKYO, LTD., acting by and
through its Dallas Agency, as a
Lender,
by
-----------------------------------
Name: John M. Mearns
Title: Vice President
BANK ONE, TEXAS, N.A.,
by
/s/ Scott Rhea
-----------------------------------
Name: Scott Rhea
Title: Banking Officer
BANQUE NATIONALE DE PARIS, Houston
Agency,
by
-----------------------------------
Name: Henry F. Setina
Title: Vice President
CIBC, INC.,
by
-----------------------------------
Name: J.D. Westland
Title: Vice President
<PAGE>
THE FIRST NATIONAL BANK OF BOSTON,
by
-----------------------------------
Name:
Title:
BANK OF HAWAII,
by
-----------------------------------
Name:
Title:
THE BANK OF NEW YORK,
by
-----------------------------------
Name:
Title:
BANK OF TOKYO, LTD., acting by and
through its Dallas Agency, as a
Lender,
by
-----------------------------------
Name: John M. Mearns
Title: Vice President
BANK ONE, TEXAS, N.A.,
by
-----------------------------------
Name:
Title:
BANQUE NATIONALE DE PARIS, Houston
Agency,
by
/s/ Henry F. Setina
-----------------------------------
Name: Henry F. Setina
Title: Vice President
CIBC, INC.,
by
-----------------------------------
Name: J.D. Westland
Title: Vice President
<PAGE>
THE FIRST NATIONAL BANK OF BOSTON,
by
-----------------------------------
Name:
Title:
BANK OF HAWAII,
by
-----------------------------------
Name:
Title:
THE BANK OF NEW YORK,
by
-----------------------------------
Name:
Title:
BANK OF TOKYO, LTD., acting by and
through its Dallas Agency, as a
Lender,
by
-----------------------------------
Name: John M. Mearns
Title: Vice President
BANK ONE, TEXAS, N.A.,
by
-----------------------------------
Name:
Title:
BANQUE NATIONALE DE PARIS, Houston
Agency,
by
-----------------------------------
Name: Henry F. Setina
Title: Vice President
CIBC, INC.,
by
/s/ David Baldmach
-----------------------------------
Name: DAVID BALDMACH
Title: Vice President
<PAGE>
CITIBANK, N.A.,
by
/s/ Arnold J. Ziegel
-----------------------------------
Name: ARNOLD J. ZIEGEL
Title: AUTHORIZED SIGNER
CREDIT LYONNAIS NEW YORK BRANCH,
by
-----------------------------------
Name:
Title:
THE DAI-ICHI KANGYO BANK, LTD., NEW
YORK BRANCH,
by
-----------------------------------
Name:
Title:
FIRST INTERSTATE BANK OF
CALIFORNIA,
by
-----------------------------------
Name:
Title:
THE FIRST NATIONAL BANK OF CHICAGO,
by
-----------------------------------
Name: Ted Wozniak
Title: Vice President
FIRST SECURITY BANK OF UTAH, N.A.,
by
-----------------------------------
Name:
Title:
<PAGE>
CITIBANK, N.A.,
by
-----------------------------------
Name:
Title:
CREDIT LYONNAIS NEW YORK BRANCH,
by
/s/ Robert Ivosevich
-----------------------------------
Name: ROBERT IVOSEICH
Title: SENIOR VICE PRESIDENT
THE DAI-ICHI KANGYO BANK, LTD., NEW
YORK BRANCH,
by
-----------------------------------
Name:
Title:
FIRST INTERSTATE BANK OF
CALIFORNIA,
by
-----------------------------------
Name:
Title:
THE FIRST NATIONAL BANK OF CHICAGO,
by
-----------------------------------
Name: Ted Wozniak
Title: Vice President
FIRST SECURITY BANK OF UTAH, N.A.,
by
-----------------------------------
Name:
Title:
<PAGE>
CITIBANK, N.A.,
by
-----------------------------------
Name:
Title:
CREDIT LYONNAIS NEW YORK BRANCH,
by
-----------------------------------
Name:
Title:
THE DAI-ICHI KANGYO BANK, LTD., NEW
YORK BRANCH,
by
/s/ Kiyoshi Miyake
-----------------------------------
Name: KIYOSHI MIYAKE
Title: VP & GROUP LEADERS
FIRST INTERSTATE BANK OF
CALIFORNIA,
by
-----------------------------------
Name:
Title:
THE FIRST NATIONAL BANK OF CHICAGO,
by
-----------------------------------
Name: Ted Wozniak
Title: Vice President
FIRST SECURITY BANK OF UTAH, N.A.,
by
-----------------------------------
Name:
Title:
<PAGE>
CITIBANK, N.A.,
by
-----------------------------------
Name:
Title:
CREDIT LYONNAIS NEW YORK BRANCH,
by
-----------------------------------
Name:
Title:
THE DAI-ICHI KANGYO BANK, LTD., NEW
YORK BRANCH,
by
-----------------------------------
Name:
Title:
FIRST INTERSTATE BANK OF
CALIFORNIA,
by
/s/ W.J. Baird
-----------------------------------
Name: W.J. BAIRD
Title: V.P.
THE FIRST NATIONAL BANK OF CHICAGO,
by
-----------------------------------
Name: Ted Wozniak
Title: Vice President
FIRST SECURITY BANK OF UTAH, N.A.,
by
-----------------------------------
Name:
Title:
<PAGE>
CITIBANK, N.A.,
by
-----------------------------------
Name:
Title:
CREDIT LYONNAIS NEW YORK BRANCH,
by
-----------------------------------
Name:
Title:
THE DAI-ICHI KANGYO BANK, LTD., NEW
YORK BRANCH,
by
-----------------------------------
Name:
Title:
FIRST INTERSTATE BANK OF
CALIFORNIA,
by
-----------------------------------
Name:
Title:
THE FIRST NATIONAL BANK OF CHICAGO,
by
/s/ Ted Wozniak
-----------------------------------
Name: Ted Wozniak
Title: Vice President
FIRST SECURITY BANK OF UTAH, N.A.,
by
-----------------------------------
Name:
Title:
<PAGE>
CITIBANK, N.A.,
by
-----------------------------------
Name:
Title:
CREDIT LYONNAIS NEW YORK BRANCH,
by
-----------------------------------
Name:
Title:
THE DAI-ICHI KANGYO BANK, LTD., NEW
YORK BRANCH,
by
-----------------------------------
Name:
Title:
FIRST INTERSTATE BANK OF
CALIFORNIA,
by
-----------------------------------
Name:
Title:
THE FIRST NATIONAL BANK OF CHICAGO,
by
-----------------------------------
Name: Ted Wozniak
Title: Vice President
FIRST SECURITY BANK OF UTAH, N.A.,
by
/s/ Stephen L. Goalen
-----------------------------------
Name: Stephen L. Goalen
Title: Senior Vice President
<PAGE>
FIRST UNION NATIONAL BANK OF NORTH
CAROLINA,
by
/s/ A. Kimball Collins
-----------------------------------
Name: A. Kimball Collins
Title: Assistant Vice President
FIRSTAR BANK MILWAUKEE, N.A.,
by
-----------------------------------
Name: Timothy W. Somers
Title: Assistant Vice President
THE FUJI BANK, LIMITED, Houston
Agency,
by
-----------------------------------
Name:
Title:
INDUSTRIAL BANK OF JAPAN TRUST
COMPANY,
by
-----------------------------------
Name:
Title:
THE LONG-TERM CREDIT BANK OF JAPAN,
LIMITED, New York Branch,
by
-----------------------------------
Name:
Title:
MELLON BANK, N.A.,
by
-----------------------------------
Name:
Title:
<PAGE>
FIRST UNION NATIONAL BANK OF NORTH
CAROLINA,
by
-----------------------------------
Name:
Title:
by
-----------------------------------
Name:
Title:
FIRSTAR BANK MILWAUKEE, N.A.,
by
/s/ Timothy W. Somers
-----------------------------------
Name: Timothy W. Somers
Title: Assistant Vice President
THE FUJI BANK, LIMITED, Houston
Agency,
by
-----------------------------------
Name:
Title:
INDUSTRIAL BANK OF JAPAN TRUST
COMPANY,
by
-----------------------------------
Name:
Title:
THE LONG-TERM CREDIT BANK OF JAPAN,
LIMITED, New York Branch,
by
-----------------------------------
Name:
Title:
MELLON BANK, N.A.,
by
-----------------------------------
Name:
Title:
<PAGE>
FIRST UNION NATIONAL BANK OF NORTH
CAROLINA,
by
-----------------------------------
Name:
Title:
by
-----------------------------------
Name:
Title:
FIRSTAR BANK MILWAUKEE, N.A.,
by
-----------------------------------
Name: Timothy W. Somers
Title: Assistant Vice President
THE FUJI BANK, LIMITED, Houston
Agency,
by
/s/ David Kelley
-----------------------------------
Name: David Kelley
Title: Vice President & Senior
Manager
INDUSTRIAL BANK OF JAPAN TRUST
COMPANY,
by
-----------------------------------
Name:
Title:
THE LONG-TERM CREDIT BANK OF JAPAN,
LIMITED, New York Branch,
by
-----------------------------------
Name:
Title:
MELLON BANK, N.A.,
by
-----------------------------------
Name:
Title:
<PAGE>
FIRST UNION NATIONAL BANK OF NORTH
CAROLINA,
by
-----------------------------------
Name:
Title:
by
-----------------------------------
Name:
Title:
FIRSTAR BANK MILWAUKEE, N.A.,
by
-----------------------------------
Name: Timothy W. Somers
Title: Assistant Vice President
THE FUJI BANK, LIMITED, Houston
Agency,
by
-----------------------------------
Name:
Title:
INDUSTRIAL BANK OF JAPAN TRUST
COMPANY,
by
/s/ Takeshi Kawano
-----------------------------------
Name: Takeshi Kawano
Title: Senior Vice President &
Senior Manager
THE LONG-TERM CREDIT BANK OF JAPAN,
LIMITED, New York Branch,
by
-----------------------------------
Name:
Title:
MELLON BANK, N.A.,
by
-----------------------------------
Name:
Title:
<PAGE>
FIRST UNION NATIONAL BANK OF NORTH
CAROLINA,
by
-----------------------------------
Name:
Title:
by
-----------------------------------
Name:
Title:
FIRSTAR BANK MILWAUKEE, N.A.,
by
-----------------------------------
Name: Timothy W. Somers
Title: Assistant Vice President
THE FUJI BANK, LIMITED, Houston
Agency,
by
/s/ David Kelley
-----------------------------------
Name:David Kelley
Title:Vice President & Senior
Manager
INDUSTRIAL BANK OF JAPAN TRUST
COMPANY,
by
-----------------------------------
Name:
Title:
THE LONG-TERM CREDIT BANK OF JAPAN,
LIMITED, New York Branch,
by
/s/ Satoru Otsubo
-----------------------------------
Name: Satoru Otsubo
Title: Joint General Manager
MELLON BANK, N.A.,
by
-----------------------------------
Name:
Title:
<PAGE>
FIRST UNION NATIONAL BANK OF NORTH
CAROLINA,
by
-----------------------------------
Name:
Title:
by
-----------------------------------
Name:
Title:
FIRSTAR BANK MILWAUKEE, N.A.,
by
-----------------------------------
Name: Timothy W. Somers
Title: Assistant Vice President
THE FUJI BANK, LIMITED, Houston
Agency,
by
-----------------------------------
Name:
Title:
INDUSTRIAL BANK OF JAPAN TRUST
COMPANY,
by
-----------------------------------
Name:
Title:
THE LONG-TERM CREDIT BANK OF JAPAN,
LIMITED, New York Branch,
by
-----------------------------------
Name:
Title:
MELLON BANK, N.A.,
by
/s/ Lisa M. Pellow
-----------------------------------
Name: Lisa M. pellow
Title: Vice President
<PAGE>
THE MITSUBISHI BANK, LIMITED,
by
/s/ Shoji Honda
-----------------------------------
Name: Shoji Honda
Title: General Manager
NATIONAL WESTMINSTER BANK PLC, New
York Branch,
by
-----------------------------------
Name:
Title:
NATIONAL WESTMINSTER BANK PLC,
Nassau Branch,
by
-----------------------------------
Name:
Title:
NATIONSBANK OF TEXAS, N.A.,
by
-----------------------------------
Name:
Title:
NBD BANK, N.A.
by
-----------------------------------
Name:
Title:
by
-----------------------------------
Name: William J. McCaffrey
Title: Second Vice President
THE NORTHERN TRUST COMPANY,
by
-----------------------------------
Name: Martin G. Alston
Title: Vice President
<PAGE>
THE MITSUBISHI BANK, LIMITED,
by
-----------------------------------
Name:
Title:
NATIONAL WESTMINSTER BANK PLC, New
York Branch,
by
/s/ Stephen R. Parker
-----------------------------------
Name: Stephen R. Parker
Title: Vice President
NATIONAL WESTMINSTER BANK PLC,
Nassau Branch,
by
/s/ Stephen R. Parker
-----------------------------------
Name: Stephen R. Parker
Title: Vice President
NATIONSBANK OF TEXAS, N.A.,
by
-----------------------------------
Name:
Title:
NBD BANK, N.A.
by
-----------------------------------
Name:
Title:
by
-----------------------------------
Name: William J. McCaffrey
Title: Second Vice President
THE NORTHERN TRUST COMPANY,
by
-----------------------------------
Name: Martin G. Alston
Title: Vice President
<PAGE>
THE MITSUBISHI BANK, LIMITED,
by
-----------------------------------
Name:
Title:
NATIONAL WESTMINSTER BANK PLC, New
York Branch,
by
-----------------------------------
Name: David L. Smith
Title: Vice President
NATIONAL WESTMINSTER BANK PLC,
Nassau Branch,
by
-----------------------------------
Name: David L. Smith
Title: Vice President
NATIONSBANK OF TEXAS, N.A.,
by
/s/ Sharon McCarty
-----------------------------------
Name: Sharon McCarty
Title: Assistant Vice President
NBD BANK, N.A.
by
-----------------------------------
Name:
Title:
by
-----------------------------------
Name: William J. McCaffrey
Title: Second Vice President
THE NORTHERN TRUST COMPANY,
by
-----------------------------------
Name: Martin G. Alston
Title: Vice President
<PAGE>
THE MITSUBISHI BANK, LIMITED,
by
-----------------------------------
Name:
Title:
NATIONAL WESTMINSTER BANK PLC, New
York Branch,
by
-----------------------------------
Name: David L. Smith
Title: Vice President
NATIONAL WESTMINSTER BANK PLC,
Nassau Branch,
by
-----------------------------------
Name: David L. Smith
Title: Vice President
NATIONSBANK OF TEXAS, N.A.,
by
-----------------------------------
Name:
Title:
NBD BANK, N.A.
by
/s/ D. Andrew Bateman
-----------------------------------
Name: D. Andrew Bateman
Title: First Vice President
by
-----------------------------------
Name: William J. McCaffrey
Title: Second Vice President
THE NORTHERN TRUST COMPANY,
by
-----------------------------------
Name: Martin G. Alston
Title: Vice President
<PAGE>
THE MITSUBISHI BANK, LIMITED,
by
---------------------------------------
Name:
Title:
NATIONAL WESTMINSTER BANK PLC, New
York Branch,
by
---------------------------------------
Name: David L. Smith
Title: Vice President
NATIONAL WESTMINSTER BANK PLC,
Nassau Branch,
by
---------------------------------------
Name: David L. Smith
Title: Vice President
NATIONSBANK OF TEXAS, N.A.,
by
---------------------------------------
Name:
Title:
NBD BANK, N.A.
by
---------------------------------------
Name:
Title:
by
---------------------------------------
Name: William J. McCaffrey
Title: Second Vice President
THE NORTHERN TRUST COMPANY,
by
/s/ Sara Clissold for Martin G. Alston
---------------------------------------
Name: Martin G. Alston
Title: Vice President
<PAGE>
NORWEST BANK MINNESOTA, N.A.,
by
/s/ Perry G. Pelos
------------------------------
Name: Perry G. Pelos
Title: Vice President
PNC BANK, NATIONAL ASSOCIATION,
by
------------------------------
Name:
Title:
ROYAL BANK OF CANADA,
by
------------------------------
Name:
Title:
ISTITUTO BANCARIO SAN PAOLO DI
TORINO, SpA,
by
------------------------------
Name:
Title:
by
------------------------------
Name: Robert S. Wurster
Title: First Vice President
THE SANWA BANK LIMITED, Dallas
Agency,
by
------------------------------
Name: Robert S. Smith
Title: Assistant Vice President
SOCIETE GENERALE, Southwest Agency,
by
/s/ Louis P. Laville, III
------------------------------
Name: Louis P. Laville, III
Title: Vice President
<PAGE>
NORWEST BANK MINNESOTA, N.A.,
by
------------------------------
Name:
Title:
PNC BANK, NATIONAL ASSOCIATION,
by
/s/ Gregory T. Gaschler
------------------------------
Name: Gregory T. Gaschler
Title: Vice President
ROYAL BANK OF CANADA,
by
------------------------------
Name:
Title:
ISTITUTO BANCARIO SAN PAOLO DI
TORINO, SpA,
by
------------------------------
Name:
Title:
by
------------------------------
Name: Robert S. Wurster
Title: First Vice President
THE SANWA BANK LIMITED, Dallas
Agency,
by
------------------------------
Name: Robert S. Smith
Title: Assistant Vice President
SOCIETE GENERALE, Southwest Agency,
by
------------------------------
Name: Louis P. Laville, III
Title: Vice President
<PAGE>
NORWEST BANK MINNESOTA, N.A.,
by
------------------------------
Name:
Title:
PNC BANK, NATIONAL ASSOCIATION,
by
------------------------------
Name:
Title:
ROYAL BANK OF CANADA,
by
/s/ Everett M. Harner
------------------------------
Name: Everett M. Harner
Title: Manager
ISTITUTO BANCARIO SAN PAOLO DI
TORINO, SpA,
by
------------------------------
Name:
Title:
by
------------------------------
Name: Robert S. Wurster
Title: First Vice President
THE SANWA BANK LIMITED, Dallas
Agency,
by
------------------------------
Name: Robert S. Smith
Title: Vice President
SOCIETE GENERALE, Southwest Agency,
by
------------------------------
Name: Louis P. Laville, III
Title: Vice President
<PAGE>
NORWEST BANK MINNESOTA, N.A.,
by
------------------------------
Name:
Title:
PNC BANK, NATIONAL ASSOCIATION,
by
------------------------------
Name:
Title:
ROYAL BANK OF CANADA,
by
------------------------------
Name:
Title:
ISTITUTO BANCARIO SAN PAOLO DI
TORINO, SpA,
by
/s/ William J. DeAngelo
------------------------------
Name: William J. DeAngelo
Title: First Vice President
by
/s/ Robert S. Wurster
------------------------------
Name: Robert S. Wurster
Title: First Vice President
THE SANWA BANK LIMITED, Dallas
Agency,
by
------------------------------
Name: Robert S. Smith
Title: Assistant Vice President
SOCIETE GENERALE, Southwest Agency,
by
------------------------------
Name: Louis P. Laville, III
Title: Vice President
<PAGE>
NORWEST BANK MINNESOTA, N.A.,
by
------------------------------
Name:
Title:
PNC BANK, NATIONAL ASSOCIATION,
by
------------------------------
Name:
Title:
ROYAL BANK OF CANADA,
by
------------------------------
Name:
Title:
ISTITUTO BANCARIO SAN PAOLO DI
TORINO, SpA,
by
------------------------------
Name:
Title:
by
------------------------------
Name: Robert S. Wurster
Title: First Vice President
THE SANWA BANK LIMITED, Dallas
Agency,
by
/s/ Robert S. Smith
------------------------------
Name: Robert S. Smith
Title: Assistant Vice President
SOCIETE GENERALE, Southwest Agency,
by
------------------------------
Name: Louis P. Laville, III
Title: Vice President
<PAGE>
NORWEST BANK MINNESOTA, N.A.,
by
------------------------------
Name:
Title:
PNC BANK, NATIONAL ASSOCIATION,
by
------------------------------
Name:
Title:
ROYAL BANK OF CANADA,
by
------------------------------
Name:
Title:
ISTITUTO BANCARIO SAN PAOLO DI
TORINO, SpA,
by
------------------------------
Name:
Title:
by
------------------------------
Name: Robert S. Wurster
Title: First Vice President
THE SANWA BANK LIMITED, Dallas
Agency,
by
------------------------------
Name: Robert Smith
Title: Assistant Vice President
SOCIETE GENERALE, Southwest Agency,
by
/s/ Louis P. Laville, III
------------------------------
Name: Louis P. Laville, III
Title: Vice President
<PAGE>
THE SUMITOMO BANK, LTD., Houston
Agency,
by
/s/ Tatsuo Ueda
-----------------------------------
Name: Tatsuo Ueda
Title: General Manager
SUNBANK, NATIONAL ASSOCIATION,
by
-----------------------------------
Name:
Title:
SWISS BANK CORPORATION, Cayman
Islands Branch,
by
-----------------------------------
Name:
Title:
by
-----------------------------------
Name:
Title:
UNION BANK OF SWITZERLAND,
Houston Agency,
by
-----------------------------------
Name:
Title:
by
-----------------------------------
Name:
Title:
UNITED MISSOURI BANK, N.A.,
by
-----------------------------------
Name: Walter Beck, Jr.
Title: Executive Vice President
<PAGE>
THE SUMITOMO BANK, LTD., Houston
Agency,
by
-----------------------------------
Name:
Title:
SUNBANK, NATIONAL ASSOCIATION,
by
/s/ J. Carol Doyle
-----------------------------------
Name: J. Carol Doyle
Title: First Vice President
SWISS BANK CORPORATION, Cayman
Islands Branch,
by
-----------------------------------
Name:
Title:
by
-----------------------------------
Name:
Title:
UNION BANK OF SWITZERLAND,
Houston Agency,
by
-----------------------------------
Name:
Title:
by
-----------------------------------
Name:
Title:
UNITED MISSOURI BANK, N.A.,
by
-----------------------------------
Name: Walter Beck, Jr.
Title: Executive Vice President
<PAGE>
THE SUMITOMO BANK, LTD., Houston
Agency,
by
-----------------------------------
Name:
Title:
SUNBANK, NATIONAL ASSOCIATION,
by
-----------------------------------
Name:
Title:
SWISS BANK CORPORATION, Cayman
Islands Branch,
by
/s/ Nancy A. Russell
-----------------------------------
Name: Nancy A. Russell
Title: Associate Director
Merchant Banking
by
/s/ William A. McDonnell
-----------------------------------
Name: William A. Donnell
Title: Associate Director
Merchant Banking
UNION BANK OF SWITZERLAND,
Houston Agency,
by
-----------------------------------
Name:
Title:
by
-----------------------------------
Name:
Title:
UNITED MISSOURI BANK, N.A.,
by
-----------------------------------
Name: Walter Beck, Jr.
Title: Executive Vice President
<PAGE>
THE SUMITOMO BANK, LTD., Houston
Agency,
by
-----------------------------------
Name:
Title:
SUNBANK, NATIONAL ASSOCIATION,
by
-----------------------------------
Name:
Title:
SWISS BANK CORPORATION, Cayman
Islands Branch,
by
-----------------------------------
Name:
Title:
by
-----------------------------------
Name:
Title:
UNION BANK OF SWITZERLAND,
Houston Agency,
by
/s/ Dan O. Boyle
-----------------------------------
Name: Dan O. Boyle
Title: Vice President
by
/s/ Jean Claude de Roche
-----------------------------------
Name: Jean Claude de Roche
Title: Assistant Vice President
UNITED MISSOURI BANK, N.A.,
by
-----------------------------------
Name: Walter Beck, Jr.
Title: Executive Vice President
<PAGE>
THE SUMITOMO BANK, LTD., Houston
Agency,
by
-----------------------------------
Name:
Title:
SUNBANK, NATIONAL ASSOCIATION,
by
-----------------------------------
Name:
Title:
SWISS BANK CORPORATION, Cayman
Islands Branch,
by
-----------------------------------
Name:
Title:
by
-----------------------------------
Name:
Title:
UNION BANK OF SWITZERLAND,
Houston Agency,
by
-----------------------------------
Name:
Title:
by
-----------------------------------
Name:
Title:
UNITED MISSOURI BANK, N.A.,
by
/s/ Walter Beck, Jr.
-----------------------------------
Name: Walter Beck, Jr.
Title: Executive Vice President
<PAGE>
UNITED STATES NATIONAL
BANK OF OREGON,
by
/s/ Blake R. Howells
-----------------------------------
Name: Blake R. Howells
Title: Assistant Vice President
WACHOVIA BANK OF GEORGIA, N.A.,
by
-----------------------------------
Name:
Title:
<PAGE>
UNITED STATES NATIONAL
BANK OF OREGON,
by
-----------------------------------
Name: Blake R. Howells
Title: Assistant Vice President
WACHOVIA BANK OF GEORGIA, N.A.,
by
/s/ Douglas L. William
-----------------------------------
Name: Douglas L. William
Title: Senior Vice President
<PAGE>
CONFORMED COPY
EXHIBIT A
TO THE AMENDMENT AND
RESTATEMENT AGREEMENT
================================================================================
J. C. PENNEY COMPANY, INC.
J. C. PENNEY FUNDING CORPORATION
_____________________
$1,000,000,000
FIVE-YEAR REVOLVING CREDIT AGREEMENT
Dated as of December 16, 1993,
As Amended and Restated as of December 7, 1994
_____________________
MORGAN GUARANTY TRUST COMPANY OF NEW YORK,
as Agent,
BANKERS TRUST COMPANY, CHEMICAL BANK, and
CREDIT SUISSE,
as Co-Agents,
and
BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION and NATIONSBANK OF TEXAS, N.A.,
as Lead Managers
================================================================================
[CS&M Ref. No. 1385-280]
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
Article Section
- ------- -------
<C> <S> <C>
I. DEFINITIONS
1.01 Defined Terms........................................... 1
1.02 Terms Generally......................................... 21
II. THE CREDITS
2.01 Commitments............................................. 22
2.02 Loans................................................... 23
2.03 Competitive Bid Procedure............................... 25
2.04 Standby Borrowing Procedure............................. 28
2.05 Refinancings............................................ 29
2.06 Fees.................................................... 30
2.07 Repayment of Loans; Evidence of the
Borrowers' Obligations................................ 30
2.08 Interest on Loans....................................... 31
2.09 Default Interest........................................ 32
2.10 Alternate Rate of Interest.............................. 32
2.11 Termination and Reduction
of Commitments........................................ 33
2.12 Prepayment.............................................. 34
2.13 Reserve Requirements;
Change in Circumstances............................... 35
2.14 Change in Legality...................................... 36
2.15 Indemnity............................................... 37
2.16 Pro Rata Treatment...................................... 39
2.17 Sharing of Setoffs...................................... 39
2.18 Payments................................................ 40
2.19 Taxes................................................... 41
2.20 Mitigation; Duties of Lenders
and Agent............................................. 44
III. REPRESENTATIONS AND WARRANTIES
3.01 Organization; Powers.................................... 48
3.02 Authorization........................................... 48
3.03 Enforceability.......................................... 48
3.04 Governmental Approvals.................................. 49
3.05 Financial Statements.................................... 49
3.06 No Material Adverse Change.............................. 49
3.07 Title to Properties; Possession
Under Leases.......................................... 49
3.08 Restricted Subsidiaries................................. 50
</TABLE>
<PAGE>
Contents, p. 2
<TABLE>
<CAPTION>
Page
----
Article Section
- ------- -------
<C> <S> <C>
3.09 Litigation; Compliance with
Laws.................................................. 50
3.10 Agreements.............................................. 50
3.11 Federal Reserve Regulations............................. 51
3.12 Investment Company Act;
Public Utility Holding Company
Act................................................... 51
3.13 Use of Proceeds......................................... 51
3.14 Tax Returns............................................. 51
3.15 No Material Misstatements............................... 52
3.16 Employee Benefit Plans.................................. 52
3.17 Support Agreements...................................... 52
IV. CONDITIONS OF LENDING
4.01 All Borrowings.......................................... 53
4.02 First Borrowing [INTENTIONALLY OMITTED]................. 53
V. AFFIRMATIVE COVENANTS
5.01 Existence; Businesses and Properties.................... 54
5.02 Insurance............................................... 54
5.03 Obligations and Taxes................................... 54
5.04 Financial Statements, Reports, etc...................... 55
5.05 Litigation and Other Notices............................ 56
5.06 ERISA................................................... 57
5.07 Maintaining Records; Access to
Properties and Inspections............................ 57
5.08 Use of Proceeds......................................... 58
5.09 Pari-Passu.............................................. 58
5.10 Support Agreements...................................... 58
VI. NEGATIVE COVENANTS
6.01 Limitation on Liens--JCPenney........................... 59
6.02 Limitations on Senior Funded
Indebtedness.......................................... 62
6.03 Limitations with Respect to
Restricted Subsidiaries............................... 62
6.04 Mergers, Consolidations, Sales of
Assets and Acquisitions............................... 64
6.05 Limitations on Liens--Funding........................... 66
6.06 Conduct of Funding's Business........................... 68
VII. EVENTS OF DEFAULT............................................. 69
VIII. THE AGENT..................................................... 73
</TABLE>
<PAGE>
Contents, p. 3
<TABLE>
<CAPTION>
Page
----
Article Section
- ------- -------
<C> <S> <C>
IX. MISCELLANEOUS
9.01 Notices................................................. 76
9.02 Survival of Agreement................................... 77
9.03 Binding Effect.......................................... 78
9.04 Successors and Assigns.................................. 78
9.05 Expenses; Indemnity..................................... 81
9.06 Right of Setoff......................................... 82
9.07 Applicable Law.......................................... 83
9.08 Waivers; Amendment...................................... 83
9.09 Interest and Charges.................................... 84
9.10 Entire Agreement........................................ 84
9.11 Severability............................................ 85
9.12 Counterparts............................................ 85
9.13 Headings................................................ 85
9.14 Jurisdiction; Consent to Service
of Process............................................ 85
9.15 Confidentiality......................................... 86
9.16 Liability of Borrowers.................................. 87
<S> <C>
Exhibit A-1 Form of Competitive Bid Request
Exhibit A-2 Form of Notice of Competitive Bid Request
Exhibit A-3 Form of Competitive Bid
Exhibit A-4 Form of Standby Borrowing Request
Exhibit B Form of Opinion [INTENTIONALLY OMITTED]
Exhibit C Form of Guaranty
Schedule 2.01 Commitments
Schedule 3.08 Restricted Subsidiaries
Schedule 3.09 Material Litigation
</TABLE>
<PAGE>
CONFORMED COPY
EXHIBIT A
TO THE AMENDMENT AND
RESTATEMENT AGREEMENT
FIVE-YEAR REVOLVING CREDIT AGREEMENT dated as of December
16, 1993, as amended and restated as of December 7, 1994 (the
"Agreement"), among J. C. PENNEY COMPANY, INC. a Delaware
corporation ("JCPenney"), J. C. PENNEY FUNDING CORPORATION, a
Delaware corporation ("Funding"), the lenders listed in Schedule
2.01 (as of any date, together with any permitted assigns
hereunder on such date, the "Lenders"), MORGAN GUARANTY TRUST
COMPANY OF NEW YORK ("Morgan"), as agent for the Lenders (in such
capacity, the "Agent") and BANKERS TRUST COMPANY, CHEMICAL BANK
and CREDIT SUISSE, as co-agents for the Lenders (in such
capacity, the "Co-Agents").
The Borrowers (as herein defined) have requested the Lenders to extend
credit to the Borrowers in order to enable them to borrow on a standby revolving
credit basis on and after the Closing Date (as herein defined) and at any time
and from time to time prior to the Maturity Date (as herein defined) an
aggregate principal amount not in excess of $1,000,000,000 at any time
outstanding. The Borrowers have also requested the Lenders to provide a
procedure pursuant to which the Borrowers may invite the Lenders to bid on an
uncommitted basis on borrowings by the Borrowers scheduled to mature on or prior
to the Maturity Date. The proceeds of such borrowings are to be used for
general corporate purposes, including, without limitation, working capital
requirements, liquidity and the repayment of maturing commercial paper and other
indebtedness of the Borrowers. The Lenders will extend such credit to the
Borrowers on the terms and subject to the conditions herein set forth.
Accordingly, the Borrowers, the Lenders, the Agent and the Co-Agents
agree as follows:
ARTICLE I. DEFINITIONS
SECTION 1.01. Defined Terms. As used in this Agreement, the
--------------
following terms shall have the meanings specified below:
"ABR Borrowing" shall mean a Borrowing comprised of ABR Loans.
-------------
<PAGE>
2
"ABR Loan" shall mean any Standby Loan bearing interest at a rate
--------
determined by reference to the Alternate Base Rate in accordance with the
provisions of Article II.
"Adjusted CD Rate" shall mean, with respect to any CD Borrowing
----------------
requested by any Borrower pursuant to Section 2.03(a) for any Interest Period,
an interest rate per annum (rounded upwards, if necessary, to the next 1/100 of
1%) equal to the sum of (a) a rate per annum equal to the product of (i) the
Fixed CD Rate in effect for such Interest Period and (ii) Statutory Reserves,
plus (b) the Assessment Rate. For purposes hereof, the term "Fixed CD Rate"
shall mean the arithmetic average (rounded upwards, if necessary, to the next
1/100 of 1%) of the prevailing rates per annum bid at or about 10:00 a.m., New
York City time, to the Agent on the first Business Day of the Interest Period
applicable to such CD Borrowing by three New York City negotiable certificate of
deposit dealers of recognized standing selected by the Agent for the purchase at
face value of negotiable certificates of deposit of major United States money
center banks in a principal amount approximately equal to the product of (x) the
aggregate principal amount of such CD Borrowing as specified in the related
Competitive Bid Request and (y) the percentage which the Agent's Commitment
represents of the Total Commitment and with a maturity comparable to such
Interest Period.
"Additional Costs" shall mean, with respect to any Lender, any
----------------
increased costs or reduction in amounts received or receivable or reduction in
return on capital incurred or suffered by such Lender and in respect of which
such Lender is entitled to request compensation in accordance with Section 2.13.
"Administrative Fees" shall have the meaning assigned to such term in
-------------------
Section 2.06(b).
"Affiliate" shall mean, when used 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.
"Alternate Base Rate" shall mean, for any day, a rate per annum
-------------------
(rounded upwards, if necessary, to the next 1/16 of 1%) equal to the greater of
(a) the Prime Rate on such day, and (b) the Federal Funds Effective Rate in
effect on such day plus 0.50%. For purposes hereof, "Federal Funds
<PAGE>
3
Effective Rate" shall mean, for any day, the weighted average of the rates on
overnight Federal funds transactions with members of the Federal Reserve System
arranged by Federal funds brokers, as published on the next succeeding Business
Day by the Federal Reserve Bank of New York, or, if such rate is not so
published for any day which is a Business Day, the average of the rates quoted
to the Agent on such day for such transactions by three Federal funds brokers of
recognized standing selected by it. If for any reason the Agent shall have
determined (which determination shall be conclusive absent manifest error) that
it is unable to ascertain the Federal Funds Effective Rate for any reason,
including the inability or failure of the Agent to obtain sufficient quotations
in accordance with the terms hereof, the Alternate Base Rate shall be determined
without regard to clause (b) of the first sentence of this definition until the
circumstances giving rise to such inability no longer exist. Any change in the
Alternate Base Rate due to a change in the Prime Rate shall be effective on the
date such change is announced publicly.
"Applicable Lending Office" shall mean, for each Lender and for each
-------------------------
Type of Loan, the office or branch of such Lender (or of an Affiliate of such
Lender) designated for such Type of Loan opposite such Lender's name on Schedule
2.01 or such other office or branch of such Lender (or of an Affiliate of such
Lender) as such Lender may from time to time, in accordance with the terms of
this Agreement, specify to the Agent and the Borrowers as the office or branch
by which its Loans of such Type are to be made and maintained.
"Assessment Rate" shall mean for any date the then current net annual
---------------
assessment rate (rounded upwards, if necessary, to the next 1/100 of 1%)
actually employed by the Agent in determining amounts payable by the Agent to
the Federal Deposit Insurance Corporation (or any successor) for insurance by
such Corporation (or such successor) of time deposits made in dollars at the
Agent's domestic offices.
"Board" shall mean the Board of Governors of the Federal Reserve
-----
System of the United States.
"Borrowers" shall mean JCPenney and Funding.
---------
"Borrowing" shall mean a group of Loans of a single Type made by the
---------
Lenders (or, in the case of a Competitive Borrowing, by the Lender or Lenders
whose
<PAGE>
4
Competitive Bids have been accepted pursuant to Section 2.03) to the same
Borrower on a single date and as to which a single Interest Period is in effect.
"Business Day" shall mean any day (other than a day which is a
------------
Saturday, Sunday or legal holiday in the State of New York) on which banks are
open for business in New York City; provided, however, that, when used in
-------- -------
connection with a Eurodollar Loan, the term "Business Day" shall also exclude
any day on which banks are not open for dealings in dollar deposits in the
London interbank market.
"CD Borrowing" shall mean a Competitive Borrowing comprised of CD
------------
Loans.
"CD Loan" shall mean any Competitive Loan bearing interest at a rate
-------
determined by reference to the Adjusted CD Rate in accordance with the
provisions of Article II.
"Closing Date" shall mean December 7, 1994.
------------
"Code" shall mean the Internal Revenue Code of 1986, as the same may
----
be amended from time to time.
"Commitment" shall mean, with respect to each Lender, the commitment
----------
of such Lender hereunder as set forth as of the Closing Date in Schedule 2.01
hereto and, thereafter, in the Register (or as otherwise determined by the
parties hereto in the event of manifest error in the Register), as such Lender's
Commitment may be permanently terminated or reduced from time to time pursuant
to Section 2.11. The Commitment of each Lender shall automatically and
permanently terminate on the Maturity Date if not terminated earlier pursuant to
the terms hereof.
"Commitment Termination Date" shall have the meaning assigned to such
---------------------------
term in Section 2.11(d).
"Competitive Bid" shall mean an offer by a Lender to make a
---------------
Competitive Loan pursuant to Section 2.03.
"Competitive Bid Rate" shall mean, as to any Competitive Bid made by a
--------------------
Lender pursuant to Section 2.03(b), (a) in the case of a Eurodollar Competitive
Loan or a CD Loan, the Competitive Margin, and (b) in the case of a Fixed Rate
Loan, the fixed rate of interest offered by the Lender making such Competitive
Bid.
<PAGE>
5
"Competitive Bid Request" shall mean a request made pursuant to
-----------------------
Section 2.03 in the form of Exhibit A-1.
"Competitive Borrowing" shall mean a Borrowing consisting of a
---------------------
Competitive Loan or concurrent Competitive Loans from the Lender or Lenders
whose Competitive Bids for such Borrowing have been accepted under the bidding
procedure described in Section 2.03 by the Borrower requesting such Borrowing.
"Competitive Loan" shall mean a Loan from a Lender to a Borrower
----------------
pursuant to the bidding procedure described in Section 2.03. Each Competitive
Loan shall be a Eurodollar Competitive Loan, a CD Loan or a Fixed Rate Loan.
"Competitive Margin" shall mean, as to any Eurodollar Competitive Loan
------------------
or CD Loan, the margin (expressed as a percentage rate per annum in the form of
a decimal to no more than four decimal places) to be added to or subtracted from
the LIBO Rate or the Adjusted CD Rate, as applicable, in order to determine the
interest rate applicable to such Eurodollar Competitive Loan or CD Loan, as
specified in the Competitive Bid relating to such Eurodollar Competitive Loan or
CD Loan.
"Control" shall mean the possession, directly or indirectly, of the
-------
power to direct or cause the direction of the management or policies of a
person, whether through the ownership of voting securities, by contract or
otherwise, and "Controlling" and "Controlled" shall have meanings correlative
thereto.
"Default" shall mean any event or condition which upon notice, lapse
-------
of time or both would constitute an Event of Default.
"dollars" or "$" shall mean lawful money of the United States of
--------------
America.
"Eligible Assignee" shall mean (a) a commercial bank organized under
-----------------
the laws of the United States, or any state thereof, and having total assets in
excess of $1,000,000,000; (b) a commercial bank organized under the laws of any
other country which is a member of the Organization for Economic Cooperation and
Development, or a political subdivision of any such country, and having total
assets in excess of $1,000,000,000, provided that such bank is acting through a
branch or agency located in the country
<PAGE>
6
in which it is organized or another country which is described in this clause;
and (c) the central bank of any country which is a member of the Organization
for Economic Cooperation and Development.
"ERISA" shall mean the Employee Retirement Income Security Act of
-----
1974, as the same may be amended from time to time, and the rules and
regulations promulgated thereunder, as from time to time in effect.
"ERISA Affiliate" shall mean any trade or business (whether or not
---------------
incorporated) that is a member of a group of which any Borrower is a member and
which is treated as a single employer under Section 414 of the Code.
"Eurodollar Borrowing" shall mean a Borrowing comprised of Eurodollar
--------------------
Loans.
"Eurodollar Competitive Loan" shall mean any Competitive Loan bearing
---------------------------
interest at a rate determined by reference to the LIBO Rate in accordance with
the provisions of Article II.
"Eurodollar Loan" shall mean any Eurodollar Competitive Loan or
---------------
Eurodollar Standby Loan.
"Eurodollar Standby Loan" shall mean any Standby Loan bearing interest
-----------------------
at a rate determined by reference to the LIBO Rate in accordance with the
provisions of Article II.
"Event of Default" shall have the meaning assigned to such term in
----------------
Article VII.
"Facility Fee" shall have the meaning assigned to such term in Section
------------
2.06(a).
<PAGE>
7
"Facility Fee Percentage" shall mean on any date the applicable
-----------------------
percentage set forth below based upon the ratings by Moody's and S&P,
respectively, applicable on such date to the Index Debt:
<TABLE>
<CAPTION>
Category 1 Percentage
- ---------- ----------
<S> <C>
AA- or better by S&P
AND
Aa3 or better by Moody's 0.0800%
Category 2
- ----------
A+ or better by S&P
OR
A1 or better by Moody's
AND
Category 1 does not apply 0.0900%
Category 3
- ----------
A- or better by S&P
OR
A3 or better by Moody's
AND
neither Category 1 nor
Category 2 applies 0.1000%
Category 4
- ----------
BBB or better by S&P
AND
Baa2 or better by Moody's
AND
neither Category 1,
Category 2 nor Category 3
applies 0.1500%
Category 5
- ----------
Lower than BBB, or
unrated, by S&P
OR
Lower than Baa2, or
unrated, by Moody's
AND
neither Category 1,
Category 2, Category 3 nor
</TABLE>
<PAGE>
8
<TABLE>
<S> <C>
Category 4 applies 0.2250%
</TABLE>
For purposes of the foregoing, (i) if no rating for the Index Debt shall be
available from either rating agency, (other than because (a) such rating agency
shall no longer be in the business of rating corporate debt obligations or (b)
of any other reason outside the control of JCPenney and Funding), such rating
agency shall be deemed to have established a rating in Category 5 and (ii) if
any rating established or deemed to have been established by Moody's or S&P
shall be changed (other than as a result of a change in the rating system of
either Moody's or S&P), such change shall be effective as of the date on which
such change is first publicly announced by the rating agency making such change.
If the rating system of either Moody's or S&P shall change prior to the Maturity
Date, or if either such rating agency shall cease to be in the business of
rating corporate debt obligations or shall no longer have in effect a rating for
any reason outside the control of JCPenney and Funding, the Borrowers and the
Lenders shall negotiate in good faith to amend the references to specific
ratings in this definition to reflect such changed rating system or the absence
of such a rating. Pending agreement on any such amendment, (i) if the rating
system of one such rating agency shall remain unchanged, or if a rating shall be
available from one such rating agency, the Facility Fee Percentage shall be
determined by reference to the rating established by such rating agency, (ii) if
no rating for the Index Debt shall be available from either rating agency then
(A) for 60 days, the Facility Fee Percentage shall be determined by reference to
the rating or ratings most recently available, (B) after 60 days, the Facility
Fee Percentage shall be determined by reference to Category 4 (or Category 5 if
such Percentage shall have been determined by reference to Category 4 under
clause (A) above) and (C) after 180 days, the Facility Fee Percentage shall be
determined by reference to Category 5.
"Fees" shall mean the Facility Fees and the Administrative Fees.
----
"Fixed Rate Borrowing" shall mean a Competitive Borrowing comprised of
--------------------
Fixed Rate Loans.
"Fixed Rate Loan" shall mean any Competitive Loan bearing interest at
---------------
a fixed percentage rate per annum (expressed in the form of a decimal to no more
than four
<PAGE>
9
decimal places) specified by the Lender making such Loan in its related
Competitive Bid.
"Funded Indebtedness" of any corporation shall mean, at any date for
-------------------
the determination thereof, without duplication, the outstanding aggregate
principal amount of (a) all indebtedness created, incurred or assumed by such
corporation (including, in the case of any Borrower, the Loans made to such
Borrower) which by its terms is not payable on demand and which matures by its
terms, or which by its terms such corporation has the right at its option to
renew or extend to a date, more than one year after the date of determination,
whether outstanding on the Closing Date or thereafter created, incurred or
assumed (including the current portion of any indebtedness which shall
constitute Funded Indebtedness at the time of its incurrence), and which is (i)
for money borrowed or (ii) evidenced by a note or similar instrument given in
connection with the acquisition of any business, properties or assets, including
securities, (b) any indebtedness of others of the kinds described in the
preceding clause (a) for the payment of which such corporation is responsible or
liable as guarantor or otherwise and (c) amendments, renewals and refundings of
any such indebtedness; provided, however, that such term shall not include any
-------- -------
obligations under leases or any guarantees of obligations of others under
leases. It is understood that for the purposes of this definition the term
"principal" when used at any date with respect to any indebtedness issued at a
discount shall mean the amount of principal of such indebtedness that could be
declared due and payable on that date upon the occurrence of one or more events
permitting the acceleration of such indebtedness pursuant to the terms of such
indebtedness.
"GAAP" shall mean United States generally accepted accounting
----
principles, applied on a consistent basis.
"Governmental Authority" shall mean any court or governmental agency,
----------------------
authority, instrumentality or regulatory body, in each case whether Federal,
state, local or foreign.
"Indenture" shall mean the Indenture dated as of April 1, 1994,
---------
between JCPenney and Bank of America National Trust and Savings Association, as
trustee.
<PAGE>
10
"Index Debt" shall mean JCPenney's senior unsecured, non credit-
----------
enhanced, publicly held long-term indebtedness.
"Interest Payment Date" shall mean, with respect to any Loan, the last
---------------------
day of the Interest Period applicable thereto and, in the case of a Eurodollar
Loan with an Interest Period of more than three months' duration or a CD Loan or
Fixed Rate Loan with an Interest Period of more than 90 days' duration, each day
that would have been an Interest Payment Date for such Loan had successive
Interest Periods of three months' duration or 90 days' duration, as the case may
be, been applicable to such Loan and, in addition, the date of any refinancing
or conversion of such Loan with or to a Loan of a different Type.
"Interest Period" shall mean (a) as to any Eurodollar Borrowing that
---------------
is a Standby Borrowing, the period commencing on the date of such Borrowing or
on the last day of the immediately preceding Interest Period applicable to such
Borrowing, as the case may be, and ending on the numerically corresponding day
(or, if there is no numerically corresponding day, on the last day) in the
calendar month that is 1, 2, 3, 6 or, subject to availability from each Lender,
12 months thereafter, as the Borrower requesting such Borrowing may elect, (b)
as to any ABR Borrowing, the period commencing on the date of such Borrowing and
ending on the date specified in the related Standby Borrowing Request (which
date shall in no event be later than 5 Business Days after the date of such
Borrowing), (c) as to any Eurodollar Borrowing that is a Competitive Borrowing,
the period commencing on the date of such Borrowing and ending on the date
specified in the Competitive Bids in which the offers to make the Eurodollar
Competitive Loans comprising such Borrowing were extended (which date shall be
(A) the numerically corresponding day (or, if there is no numerically
corresponding day, the last day) in the calendar month that is 1, 2, 3, 6, 9 or
12 months after the date of such Borrowing or (B) such other date as shall be
specified in such Competitive Bids) and (d) as to any CD Borrowing or Fixed Rate
Borrowing, the period specified in the Competitive Bids in which the offers to
make the CD Loans or Fixed Rate Loans comprising such Borrowing were extended,
commencing on the date of such Borrowing (which period shall be a period of 30,
60, 90, 180 or 360 days' duration or such other duration as shall be specified
in such Competitive Bids); provided, however, that (x) if any Interest Period
-------- -------
would end on a day other than a Business Day, such Interest
<PAGE>
11
Period shall be extended to the next succeeding Business Day unless, in the case
of Eurodollar Loans only, such next succeeding Business Day would fall in the
next calendar month, in which case such Interest Period shall end on the next
preceding Business Day, (y) no Interest Period may be selected that ends later
than the Maturity Date then in effect and (z) the Interest Period for any ABR
Loan or CD Loan made in lieu of, or resulting from the conversion of, a
Eurodollar Loan pursuant to Section 2.10 or 2.14 shall be determined in
accordance with the provisions of such Section. Interest shall accrue from and
including the first day of an Interest Period to but excluding the last day of
such Interest Period.
"Investment" means, with respect to each of Funding and its
----------
Subsidiaries only, any acquisition of any of the capital stock of any
corporation, or any acquisition of indebtedness of, or any capital contribution,
loan or advance to, or any guarantee of an obligation of, any person, except (i)
any loan or advance made in connection with the lease, purchase or construction
of office space for Funding or any of its Subsidiaries or the purchase of
materials, supplies, services or equipment for the offices of Funding or any of
its Subsidiaries and (ii) any guarantee or endorsement made in the ordinary
course of business in connection with the deposit of items for collection or any
guarantee of an obligation of an agent or an employee of Funding or any of its
Subsidiaries that is required to meet applicable legal requirements.
"LIBO Rate" shall mean, with respect to any Eurodollar Borrowing for
---------
any Interest Period, an interest rate per annum (rounded upwards, if necessary,
to the next 1/16 of 1%) equal to the average of the rates at which dollar
deposits approximately equal in principal amount to (i) in the case of a Standby
Borrowing, each LIBO Reference Lender's portion of such Eurodollar Borrowing and
(ii) in the case of a Competitive Borrowing, the principal amounts that would
have been each LIBO Reference Lender's portion of such Competitive Borrowing had
such Competitive Borrowing been a Standby Borrowing, and for a maturity
comparable to such Interest Period are offered to the principal London office of
the applicable LIBO Reference Lender in immediately available funds in the
London interbank market at approximately 11:00 a.m., London time, two Business
Days prior to the commencement of such Interest Period.
<PAGE>
12
"LIBO Reference Lenders" shall mean Morgan Guaranty Trust Company of
----------------------
New York, Credit Suisse and NBD Bank, N.A., or such other or additional Lenders
as the Borrowers, the Agent and the Required Lenders shall designate in writing
as "LIBO Reference Lenders".
"Lien" shall mean, with respect to any asset, any mortgage, lien,
----
pledge or security interest in or on such asset.
"Loan" shall mean a Competitive Loan or a Standby Loan, whether made
----
as a Eurodollar Loan, a CD Loan, a Fixed Rate Loan or an ABR Loan, as permitted
hereby.
"Margin Stock" shall have the meaning given such term under Regulation
------------
U.
"Material Adverse Effect" shall mean (a) a materially adverse effect
-----------------------
on the business, assets or financial condition of (i) JCPenney and the
Restricted Subsidiaries, taken as a whole, or (ii) Funding and its Subsidiaries,
taken as a whole, (b) a material impairment of the ability of any Borrower to
perform any of its obligations under this Agreement or (c) a material impairment
of the rights of or benefits available to the Lenders under this Agreement
(other than any such impairment of rights or benefits that is primarily
attributable to (x) action taken by or against one or more Lenders (excluding
any action against one or more Lenders taken by any Borrower or Restricted
Subsidiary) or (y) circumstances that are unrelated to any Borrower).
"Maturity Date" shall mean December 7, 1999.
-------------
"Maximum Amount" shall mean, with respect to any amount owing to any
--------------
Lender under this Agreement or in connection herewith, the maximum amount of
interest that such Lender is permitted to charge under applicable law on such
amount.
"Moody's" shall mean Moody's Investors Service, Inc. and any successor
-------
thereto that is a nationally recognized rating agency.
"Multiemployer Plan" shall mean a multiemployer plan as defined in
------------------
Section 4001(a)(3) of ERISA to which any Borrower or any ERISA Affiliate (other
than one considered an ERISA Affiliate only pursuant to subsection (m) or (o) of
Section 414 of the Code) is making or accruing an obligation
<PAGE>
13
to make contributions, or has within any of the preceding five plan years made
or accrued an obligation to make contributions.
"Net Tangible Assets" means the aggregate amount at which the assets
-------------------
of JCPenney and all Restricted Subsidiaries are reflected, in accordance with
GAAP as in effect on the Closing Date, on the asset side of the consolidated
balance sheet, as at the close of a monthly accounting period (selected by
JCPenney) ending within the 65 days next preceding the date of determination, of
JCPenney and the Restricted Subsidiaries (after deducting all valuation and
qualifying reserves relating to said assets), except any of the following
described items that may be included among said assets:
(a) trademarks, patents, goodwill and similar intangibles;
(b) investments in and advances to Non-Restricted Subsidiaries; and
(c) capital lease property rights,
after deducting from such amount current liabilities (other than deferred tax
effects) as reflected, in accordance with GAAP as in effect on the Closing Date,
on such balance sheet.
"Non-Restricted Subsidiary" shall mean any Subsidiary other than the
-------------------------
Restricted Subsidiaries.
"Officer's Certificate" of any corporation shall mean a certificate
---------------------
signed by a Responsible Officer of such corporation.
"PBGC" shall mean the Pension Benefit Guaranty Corporation referred to
----
and defined in ERISA.
"Penney Supplier" means any person that supplies goods or services to
---------------
JCPenney or any Subsidiary.
"Penney Supplier Receivables" means the obligations of Penney
---------------------------
Suppliers for the payment of money for goods or services sold by JCPenney or any
Subsidiary to Penney Suppliers for use in goods or services to be supplied to
JCPenney or any Subsidiary.
<PAGE>
14
"person" shall mean any individual, corporation, partnership, joint
------
venture, association, joint-stock company, trust, unincorporated organization or
Governmental
Authority.
"Plan" shall mean any pension plan (other than a Multiemployer Plan)
----
subject to the provisions of Title IV of ERISA or Section 412 of the Code that
is maintained for employees of any Borrower or ERISA Affiliate.
"Prime Rate" means the rate of interest publicly announced by Morgan
----------
Guaranty Trust Company of New York in New York City from time to time as its
Prime Rate.
"Principal Property" means all real property and tangible personal
------------------
property owned by JCPenney or a Restricted Subsidiary constituting a part of any
store, warehouse or distribution center located within one of the 50 states of
the United States or the District of Columbia, exclusive of motor vehicles,
mobile materials-handling equipment and other rolling stock, cash registers and
other point of sale recording devices and related equipment, and data processing
and other office equipment; provided, however, that such term shall not include
-------- -------
any such property constituting a part of any such store, warehouse or
distribution center unless the net book value of all real property (including
leasehold improvements) and store fixtures constituting a part of such store,
warehouse or distribution center exceeds .25% of Stockholders' Equity.
"Receivables" means the obligations of customers for the payment of
-----------
money arising under agreements between such customers and JCPenney or any
Subsidiary.
"Register" shall have the meaning assigned to such term in Section
--------
9.04(d).
"Regulation G" shall mean Regulation G of the Board as from time to
------------
time in effect and all official rulings and interpretations thereunder or
thereof.
"Regulation U" shall mean Regulation U of the Board as from time to
------------
time in effect and all official rulings and interpretations thereunder or
thereof.
<PAGE>
15
"Regulation X" shall mean Regulation X of the Board as from time to
------------
time in effect and all official rulings and interpretations thereunder or
thereof.
"Reportable Event" shall mean any reportable event as defined in
----------------
Section 4043(b) of ERISA or the regulations issued thereunder with respect to a
Plan (other than a Plan maintained by an ERISA Affiliate which is considered an
ERISA Affiliate only pursuant to subsection (m) or (o) of Section 414 of the
Code).
"Required Lenders" shall mean, at any time, (a) for the purposes of
----------------
terminating the Commitments pursuant to clause (x) of Article VII, Lenders
having Commitments representing at least 66-2/3% of the Total Commitment, (b)
for purposes of acceleration pursuant to clause (y) of Article VII, Lenders
holding Loans representing at least 66-2/3% of the aggregate principal amount of
the Loans outstanding and (c) for all other purposes, Lenders having Commitments
representing greater than 50% of the Total Commitment or, if the Commitments
shall have been terminated, Lenders holding Loans representing greater than 50%
of the aggregate principal amount of the Loans outstanding.
"Responsible Officer" of any corporation shall mean the chairman, vice
-------------------
chairman, president, chief financial officer, treasurer or controller of such
corporation or any executive or senior vice president of such corporation.
"Restricted Subsidiary" means any Subsidiary of JCPenney (other than
---------------------
Funding) which JCPenney shall, by an Officer's Certificate of JCPenney, have
designated as a Restricted Subsidiary and the designation of which as a
Restricted Subsidiary shall not have been cancelled by an Officer's Certificate
of JCPenney; provided, however, that neither the designation of a Subsidiary as
-------- -------
a Restricted Subsidiary nor the cancellation of such designation shall be
operative if the immediate effect of such designation or cancellation shall be
to make Net Tangible Assets less than 200% of the Senior Funded Indebtedness of
JCPenney and the Restricted Subsidiaries on a pro forma basis (eliminating
intercompany items); and provided, further, that any Officer's Certificate
-------- -------
designating a Subsidiary as a Restricted Subsidiary or cancelling such
designation shall set forth the Net Tangible Assets and Senior Funded
Indebtedness of JCPenney and its Restricted Subsidiaries on a pro forma basis
(eliminating intercompany items) and show compliance
<PAGE>
16
with the first proviso of this paragraph. Any such designation or cancellation
of such designation may be made more than once with respect to any Subsidiary.
"S&P" shall mean Standard & Poor's Ratings Group and any successor
---
thereto that is a nationally recognized rating agency.
"SEC" shall mean the Securities and Exchange commission.
---
"Senior Funded Indebtedness" of JCPenney shall mean any Funded
--------------------------
Indebtedness of JCPenney unless in any instrument or instruments evidencing or
securing such Funded Indebtedness or pursuant to which the same is outstanding,
or in any amendment, renewal, extension or refunding of such Funded
Indebtedness, it is provided that such Funded Indebtedness is subordinate in
right of payment to the Loans (a) in the event of any dissolution or winding-up
or total or partial liquidation or reorganization of JCPenney, whether voluntary
or involuntary, or any bankruptcy, insolvency, receivership or similar
proceedings relative to JCPenney and (b) in the event of any default in the
payment of principal (including any required prepayments or amortization) of or
interest on any Loans of JCPenney. "Senior Funded Indebtedness" of any
Restricted Subsidiary means any Funded Indebtedness of such Restricted
Subsidiary and the aggregate preference on involuntary liquidation of any class
of stock of such Restricted Subsidiary ranking, either as to payment of
dividends or distribution of assets, prior to any other class of stock of such
Restricted Subsidiary.
"Standby Borrowing" shall mean a Borrowing consisting of simultaneous
-----------------
Standby Loans from each of the Lenders.
"Standby Borrowing Request" shall mean a request made pursuant to
-------------------------
Section 2.04 in the form of Exhibit A-4.
"Standby Loans" shall mean the revolving loans made by the Lenders to
-------------
the Borrowers pursuant to Section 2.04. Each Standby Loan shall be a Eurodollar
Standby Loan or an ABR Loan.
"Standby Margin" shall mean on any date, with respect to each Standby
--------------
Loan made as part of any Eurodollar Standby Borrowing or ABR Borrowing, as the
case may be, the applicable percentage, based upon the ratings applicable on
<PAGE>
17
such date to the Index Debt, set forth (a) in Table A below if the aggregate
principal amount of the Loans outstanding on such date does not exceed 50% of
the Total Commitment on such date and (b) in Table B below if the aggregate
principal amount of the Loans outstanding on such date exceeds 50% of the Total
Commitment on such date:
Table A:
-------
<TABLE>
<CAPTION>
Eurodollar ABR
Borrowing Borrowing
--------- ---------
Category 1
- ----------
<S> <C> <C>
AA- or better by S&P
AND
Aa3 or better by Moody's 0.1200% 0%
Category 2
- ----------
A+ or better by S&P
OR
A1 or better by Moody's
AND
Category 1 does not apply 0.1600% 0%
Category 3
- ----------
A- or better by S&P
OR
A3 or better by Moody's
AND
neither Category 1 nor
Category 2 applies 0.2000% 0%
Category 4
- ----------
BBB or better by S&P
AND
Baa2 or better by Moody's
AND
neither Category 1, Category 2
nor Category 3 applies 0.2750% 0%
</TABLE>
<PAGE>
18
<TABLE>
Category 5
- ----------
<S> <C> <C>
Lower than BBB, or unrated,
by S&P
OR
Lower than Baa2, or unrated, by
Moody's
AND
neither Category 1, Category 2
Category 3 nor Category 4
applies 0.3250% 0%
</TABLE>
Table B:
-------
<TABLE>
<CAPTION>
Eurodollar ABR
Borrowing Borrowing
--------- ----------
Category 1
- ----------
<S> <C> <C>
AA- or better by S&P
AND
Aa3 or better by Moody's 0.1700% 0%
Category 2
- ----------
A+ or better by S&P
OR
A1 or better by Moody's
AND
Category 1 does not apply 0.2100% 0%
Category 3
- ----------
A- or better by S&P
OR
A3 or better by Moody's
AND
neither Category 1 nor
Category 2 applies 0.2500% 0%
</TABLE>
<PAGE>
19
<TABLE>
Category 4
- ----------
<S> <C> <C>
BBB or better by S&P
AND
Baa2 or better by Moody's
AND
neither Category 1, Category 2
nor Category 3 applies 0.3250% 0%
Category 5
- ----------
Lower than BBB, or unrated,
by S&P
OR
Lower than Baa2, or unrated, by
Moody's
AND
neither Category 1, Category 2
Category 3 nor Category 4
applies 0.4000% 0%
</TABLE>
For purposes of the foregoing, (i) if no rating for the Index Debt shall be
available from either rating agency, (other than because (a) such rating agency
shall no longer be in the business of rating corporate debt obligations or (b)
of any other reason outside the control of JCPenney and Funding), such rating
agency shall be deemed to have established a rating in Category 5 and (ii) if
any rating established or deemed to have been established by Moody's or S&P
shall be changed (other than as a result of a change in the rating system of
either Moody's or S&P), such change shall be effective as of the date on which
such change is first publicly announced by the rating agency making such change.
If the rating system of either Moody's or S&P shall change prior to the Maturity
Date, or if either such rating agency shall cease to be in the business of
rating corporate debt obligations or shall no longer have in effect a rating for
any reason outside the control of JCPenney and Funding, the Borrowers and the
Lenders shall negotiate in good faith to amend the references to specific
ratings in this definition to reflect such changed rating system or the absence
of such a rating. Pending agreement on any such amendment, (i) if the rating
system of one such rating agency shall remain unchanged, or if a rating shall be
available from one such rating agency, the Standby Margin shall be determined by
reference to the rating established by such rating agency, (ii) if no rating for
the Index Debt
<PAGE>
20
shall be available from either rating agency then (A) for 60 days, the Standby
Margin shall be determined by reference to the rating or ratings most recently
available, (B) after 60 days, the Standby Margin shall be determined by
reference to Category 4 (or Category 5 if such Margin shall have been determined
by reference to Category 4 under clause (A) above) and (C) after 180 days, the
Standby Margin shall be determined by reference to Category 5.
"Statutory Reserves" shall mean a fraction (expressed as a decimal),
------------------
the numerator of which is the number one and the denominator of which is the
number one minus the aggregate of the actual reserve percentages (including any
marginal, special, emergency or supplemental reserves) expressed as a decimal
established by the Board and any other banking authority to which the Agent is
subject for new negotiable nonpersonal time deposits in dollars of over $100,000
with maturities approximately equal to the applicable Interest Period.
Statutory Reserves shall be adjusted automatically on and as of the effective
date of any change in any reserve percentage.
"Stockholders' Equity" means the sum, as at the close of a monthly
--------------------
accounting period (selected by JCPenney) ending within the 65 days next
preceding the date of determination, of (a) the aggregate of capital, capital
stock, capital surplus, capital in excess of par value of stock, reinvested
earnings, earned surplus and net income retained for use in the business
(however the foregoing may be designated), after deducting the cost of shares of
capital stock of JCPenney held in its treasury, of JCPenney and its consolidated
Subsidiaries, determined in accordance with GAAP, plus (b) the amount reflected
in such determination as deferred tax effects.
"Subsidiary" means (a) any corporation of which JCPenney, directly or
----------
indirectly, owns more than 50% of the outstanding stock which at the time shall
have by the terms thereof ordinary voting power to elect directors of such
corporation, irrespective of whether or not at the time stock of any other class
or classes of such corporation shall have or might have voting power by reason
of the happening of any contingency, or (b) any such corporation of which such
percentage of shares of outstanding stock of the character described in the
foregoing clause (a) shall at the time be owned, directly or indirectly, (i) by
JCPenney and one or more Subsidiaries as defined in the foregoing clause (a) or
(ii) by one or more such Subsidiaries.
<PAGE>
21
"Support Agreements" shall mean (a) the Amended and Restated
------------------
Receivables Agreement dated as of January 29, 1980, between JCPenney and Funding
(formerly J. C. Penney Financial Corporation), as amended by Amendment No. 1
thereto dated as of January 25, 1983, (b) the Loan Agreement dated as of January
28, 1986, between JCPenney and Funding, as amended by Amendment No. 1 thereto
dated as of December 26, 1986, in each case as amended or modified from time to
time in compliance with Section 5.10 and (c) the subordinated Guaranty of the
obligations of Funding dated as of December 7, 1994, executed by JCPenney in
favor of the Lenders and attached hereto as Exhibit C.
"Taxes" shall mean, with respect to any Lender or Agent, any and all
-----
U.S. Federal income taxes after application of any relevant treaty or convention
and all interest and penalties with respect thereto, attributable to any payment
made by any Borrower hereunder to such Lender or Agent.
"Total Commitment" shall mean at any time the aggregate amount of the
----------------
Lenders' Commitments, as in effect at such time.
"Tranche B Credit Agreement" shall mean the $1,500,000,000 Revolving
--------------------------
Credit Agreement dated the Closing Date among the Borrowers, the financial
institutions named therein as lenders (which include certain of the Lenders),
Morgan Guaranty Trust Company of New York as Agent for the Lenders, and Bankers
Trust Company, Chemical Bank, and Credit Suisse as Co-Agents for the Lenders, as
such agreement may be amended from time to time.
"Transactions" shall have the meaning assigned to such term in Section
------------
3.02.
"Type", when used in respect of any Loan or Borrowing, shall refer to
----
the Rate by reference to which interest on such Loan or on the Loans comprising
such Borrowing is determined. For purposes hereof, "Rate" shall include the
LIBO Rate, the Adjusted CD Rate, and the Alternate Base Rate and, in the case of
any Fixed Rate Loan, the fixed percentage rate per annum specified by the Lender
making such Loan in its related Competitive Bid.
SECTION 1.02. Terms Generally. The definitions in Section 1.01 shall
----------------
apply equally to both the singular and plural forms of the terms defined.
Whenever the context may
<PAGE>
22
require, any pronoun shall include the corresponding masculine, feminine and
neuter forms. The words "include", "includes" and "including" shall be deemed
to be followed by the phrase "without limitation". All references herein to
Articles, Sections, Exhibits and Schedules shall be deemed references to
Articles and Sections of, and Exhibits and Schedules to, this Agreement unless
the context shall otherwise require. Except as otherwise expressly provided
herein, all terms of an accounting or financial nature shall be construed in
accordance with GAAP, as in effect from time to time; provided, however, that,
-------- -------
for purposes of determining compliance with any covenant set forth in Article
VI, such terms shall be construed in accordance with GAAP as in effect on the
date of this Agreement applied on a basis consistent with the application used
in preparing JCPenney's audited consolidated financial statements referred to in
Section 3.05.
ARTICLE II. THE CREDITS
SECTION 2.01. Commitments. Subject to the terms and conditions and
------------
relying upon the representations and warranties herein set forth, each Lender
agrees, severally and not jointly, to make Standby Loans to the Borrowers at any
time and from time to time on and after the Closing Date and until the earlier
of the Maturity Date and the termination of the Commitment of such Lender, in an
aggregate principal amount at any time outstanding not to exceed such Lender's
Commitment, subject, however, to the conditions that (a) at no time shall the
outstanding aggregate principal amount of all Loans made by all Lenders exceed
the Total Commitment and (b) at all times the outstanding aggregate principal
amount of all Standby Loans made by each Lender to a Borrower shall equal the
product of (i) the percentage which its Commitment represents of the Total
Commitment times (ii) the outstanding aggregate principal amount of all Standby
Loans made to such Borrower pursuant to Section 2.04. Subject to Section
2.03(h), any Lender may at its discretion make Competitive Loans in an aggregate
principal amount up to the amount of the Total Commitment of the Lenders
hereunder. Each Lender's Commitment as of the Closing Date is set forth
opposite its respective name in Schedule 2.01 and, after the Closing Date, each
Lender's Commitment shall be set forth opposite its respective name in the
Register. Such Commitments may be terminated, reduced or extended from time to
time pursuant to Section 2.11.
<PAGE>
23
Within the foregoing limits, the Borrowers may borrow, pay or prepay
and reborrow hereunder, on and after the Closing Date and prior to the Maturity
Date, subject to the terms, conditions and limitations set forth herein.
SECTION 2.02. Loans. (a) Each Standby Loan shall be made as part of
------
a Borrowing consisting of Loans made by the Lenders ratably in accordance with
their Commitments; provided, however, that the failure of any Lender to make any
-------- -------
Standby Loan shall not by itself relieve any other Lender of its obligation to
lend hereunder (it being understood, however, that no Lender shall be
responsible for the failure of any other Lender to make any Loan required to be
made by such other Lender). Each Competitive Loan shall be made in accordance
with the procedures set forth in Section 2.03. The Standby Loans or Competitive
Loans comprising any Borrowing shall be (i) in the case of Competitive Loans, in
an aggregate principal amount which is an integral multiple of $5,000,000 and
not less than $25,000,000 (or, if less, an aggregate principal amount equal to
the Total Commitment on the date of such Borrowing minus the outstanding
aggregate principal amount on such date of all Competitive Loans) and (ii) in
the case of Standby Loans, in an aggregate principal amount which is an integral
multiple of $5,000,000 and not less than $25,000,000 (or an aggregate principal
amount equal to the remaining available balance of the Total Commitment).
(b) Subject to Sections 2.10 and 2.14, each Competitive Borrowing
shall be comprised entirely of Eurodollar Competitive Loans, CD Loans or Fixed
Rate Loans, and each Standby Borrowing shall be comprised entirely of Eurodollar
Standby Loans or ABR Loans, as the Borrower requesting such Competitive
Borrowing or Standby Borrowing may specify pursuant to Section 2.03 or 2.04, as
the case may be.
(c) Subject to Section 2.05, each Lender shall make each Loan to be
made by it hereunder on the proposed date thereof by wire transfer of
immediately available funds to the Agent in New York, New York, not later than
12:00 noon, New York City time (11:00 a.m., New York City time, in the case of a
Eurodollar Loan), and the Agent shall by 2:00 p.m., New York City time, credit
the amounts so received to the general deposit account of the Borrower of such
Loan with the Agent or, if a Borrowing shall not occur on such date because any
condition precedent herein specified shall not have been met, return the amounts
so
<PAGE>
24
received to the respective Lenders. Competitive Loans shall be made by the
Lender or Lenders whose Competitive Bids therefor are accepted pursuant to
Section 2.03 in the amounts so accepted and Standby Loans shall be made by the
Lenders pro rata in accordance with Section 2.16. Unless the Agent shall have
received notice from a Lender prior to the date of any Borrowing that such
Lender will not make available to the Agent such Lender's portion of such
Borrowing, the Agent may assume that such Lender has made such portion available
to it on the date of such Borrowing in accordance with this paragraph (c) and
may, in reliance upon such assumption, make a corresponding amount available on
such date to the Borrower requesting such Borrowing. If and to the extent that
such Lender shall not have made such portion available to the Agent, such Lender
and such Borrower severally agree to pay or repay to the Agent forthwith on
demand such corresponding amount together with interest thereon, for each day
from the date such amount is made available to such Borrower until the date such
amount is repaid to the Agent at (i) in the case of such Borrower, the interest
rate applicable at the time to the Loans comprising such Borrowing and (ii) in
the case of such Lender, the Federal Funds Effective Rate; provided, however,
-------- -------
that such Borrower shall not in any event have any liability in respect of such
repayment under Section 2.15. If such Lender shall pay to the Agent such
corresponding amount, such amount shall constitute such Lender's Loan as part of
such Borrowing for purposes of this Agreement.
(d) Notwithstanding any other provision of this Agreement, no
Borrower shall be entitled to request any Borrowing if the Interest Period
requested with respect thereto would end after the Maturity Date.
(e) The Loans of each Type made by each Lender shall be made through
and maintained at such Lender's Applicable Lending Office for Loans of such
Type. Any Lender may change its Applicable Lending Office for any Type of Loans
without the prior written consent of JCPenney so long as (i) such Lender shall
have no knowledge that such change would cause it to be unlawful for such Lender
to make or maintain any Eurodollar Loan or to give effect to its obligations as
contemplated hereby with respect to any Eurodollar Loan and (ii) such Lender
shall not be entitled to recoupment, reimbursement or indemnification in
accordance with the terms and conditions of Sections 2.13 and 2.15 to the extent
that such Lender shall have had knowledge
<PAGE>
25
at the time of such change in Applicable Lending Office that such entitlement
would arise as a result of such change.
SECTION 2.03. Competitive Bid Procedure. (a) In order to request
--------------------------
Competitive Bids, a Borrower shall hand deliver, telex or telecopy to the Agent
a duly completed Competitive Bid Request in the form of Exhibit A-1 hereto, to
be received by the Agent (i) in the case of a Eurodollar Borrowing or a CD
Borrowing, not later than 11:00 a.m., New York City time, four Business Days
before a proposed Competitive Borrowing and (ii) in the case of a Fixed Rate
Borrowing, not later than 11:00 a.m., New York City time, one Business Day
before a proposed Competitive Borrowing. No ABR Loan shall be requested in, or
made pursuant to, a Competitive Bid Request. A Competitive Bid Request that
does not conform substantially to the format of Exhibit A-1 shall be rejected
and the Agent shall promptly notify the appropriate Borrower of such rejection
by telex or telecopier. Such request shall in each case refer to this Agreement
and specify (x) that the Borrowing then being requested is to be a Eurodollar
Borrowing, a CD Borrowing or a Fixed Rate Borrowing, (y) the date of such
Borrowing (which shall be a Business Day) and the aggregate principal amount
thereof (which shall be, subject to the third sentence of Section 2.02(a), in a
minimum principal amount of $25,000,000 and in an integral multiple of
$5,000,000 and (z) the Interest Period with respect thereto (which may not end
after the Maturity Date). Promptly after its receipt of a Competitive Bid
Request that is not rejected as aforesaid, the Agent shall invite by telex or
telecopier (in the form set forth in Exhibit A-2 hereto) the Lenders to bid, on
the terms and conditions of this Agreement, to make Competitive Loans pursuant
to the Competitive Bid Request.
(b) The Agent may, in its sole discretion, make one or more
Competitive Bids to the appropriate Borrower responsive to such Borrower's
Competitive Bid Request. Each Competitive Bid by the Agent must be submitted to
the Borrower via telex or telecopier, in the form of Exhibit A-3 hereto, (i) in
the case of a Eurodollar Borrowing or CD Borrowing, not later than 8:30 a.m.,
New York City time, three Business Days before a proposed Competitive Borrowing
and (ii) in the case of a Fixed Rate Borrowing, not later than 8:30 a.m., New
York City time, on the day of a proposed Competitive Borrowing. Each Lender
may, in its sole discretion, make one or more Competitive Bids to the
appropriate Borrower responsive to such Borrower's Competitive Bid Request.
Each Competitive Bid by a Lender
<PAGE>
26
must be received by the Agent via telex or telecopier, in the form of Exhibit A-
3 hereto, (i) in the case of a Eurodollar Borrowing or CD Borrowing, not later
than 9:00 a.m., New York City time, three Business Days before a proposed
Competitive Borrowing and (ii) in the case of a Fixed Rate Borrowing, not later
than 9:00 a.m., New York City time, on the day of a proposed Competitive
Borrowing. Multiple bids will be accepted by the Agent. Competitive Bids that
do not conform substantially to the format of Exhibit A-3 may be rejected by the
Agent after conferring with, and upon the instruction of, the Borrower
requesting such Competitive Bids, and the Agent shall notify the Lender making
such nonconforming bid of such rejection as soon as practicable. Each
Competitive Bid shall refer to this Agreement and specify (x) the principal
amount (which shall be in an integral multiple of $5,000,000 (unless such
principal amount shall equal the entire principal amount of the Competitive
Borrowing requested by such Borrower) and which may equal such entire principal
amount) of the Competitive Loan or Loans that the Lender is willing to make to
the Borrower requesting such Competitive Bid, (y) the Competitive Bid Rate or
Rates at which the Lender is prepared to make the Competitive Loan or Loans and
(z) the Interest Period and the last day thereof. If any Lender shall elect not
to make a Competitive Bid, such Lender shall so notify the Agent via telex or
telecopier (A) in the case of a Eurodollar Borrowing or a CD Borrowing, not
later than 9:00 a.m., New York City time, three Business Days before a proposed
Competitive Borrowing and (B) in the case of a Fixed Rate Borrowing, not later
than 9:00 a.m., New York City time, on the day of a proposed Competitive
Borrowing; provided, however, that failure by any Lender to give such notice
-------- -------
shall not cause such Lender to be obligated to make any Competitive Loan as part
of such Competitive Borrowing. A Competitive Bid submitted by a Lender pursuant
to this paragraph (b) shall be irrevocable.
(c) The Agent shall notify the appropriate Borrower by telex or
telecopier not later than (i) in the case of a Eurodollar Borrowing or a CD
Borrowing, 10:00 a.m., New York City time, three Business Days before the
proposed Competitive Borrowing and (ii) in the case of a Fixed Rate Borrowing,
10:00 a.m., New York City time, on the day of the proposed Competitive Borrowing
of all the Competitive Bids made, the Competitive Bid Rate and the principal
amount of each Competitive Loan in respect of which a Competitive Bid was made
and the identity of the Lender that made each bid. The Agent shall send a copy
of
<PAGE>
27
all Competitive Bids to such Borrower for its records as soon as practicable
after completion of the bidding process set forth in this Section 2.03.
(d) The appropriate Borrower may in its sole and absolute discretion,
subject only to the provisions of this paragraph (d) and paragraph (h) below,
accept or reject any Competitive Bid referred to in paragraph (c) above. Such
Borrower shall notify the Agent by telex or telecopier not later than (i) in the
case of a Eurodollar Borrowing or a CD Borrowing, 11:30 a.m., New York City
time, three Business Days before the proposed Competitive Borrowing and (ii) in
the case of a Fixed Rate Borrowing, not later than 11:30 a.m., New York City
time, on the day of the proposed Competitive Borrowing whether and to what
extent it has decided to accept or reject any of or all the bids referred to in
paragraph (c) above; provided, however, that (v) the failure by such Borrower to
-------- -------
give such notice shall be deemed to be a rejection of all the bids referred to
in paragraph (c) above, (w) such Borrower shall not accept a bid made at a
particular Competitive Bid Rate if it has decided to reject a bid made at a
lower Competitive Bid Rate, (x) the aggregate amount of the Competitive Bids
accepted by such Borrower shall not exceed the principal amount specified in the
related Competitive Bid Request, (y) if such Borrower shall accept a bid or bids
made at a particular Competitive Bid Rate but the amount of such bid or bids
shall cause the total amount of bids to be accepted by such Borrower to exceed
the amount specified in the related Competitive Bid Request, then such Borrower
shall accept a portion of such bid or bids in an amount equal to the amount
specified in the related Competitive Bid Request less the amount of all other
Competitive Bids accepted with respect to such Competitive Bid Request, which
acceptance, in the case of multiple bids at such Competitive Bid Rate, shall be
made pro rata in accordance with the amount of each such bid at such Competitive
Bid Rate, and (z) except pursuant to clause (y) above, no bid shall be accepted
for a Competitive Loan unless the principal amount of such Competitive Loan is
in an integral multiple of $5,000,000 or is equal to the entire principal amount
of the Competitive Borrowing being requested by such Borrower; provided further,
-------- -------
however, that if a Competitive Loan must be in an amount less than $5,000,000
- -------
because of the provisions of clause (y) above, such Competitive Loan may be for
a minimum of $1,000,000 or any integral multiple thereof, and in calculating the
pro rata allocation of acceptances of portions of multiple bids at a particular
Competitive Bid
<PAGE>
28
Rate pursuant to clause (y) the amounts shall be rounded to integral multiples
of $1,000,000 in a manner which shall be in the discretion of such Borrower. A
notice given pursuant to this paragraph (d) by the appropriate Borrower shall be
irrevocable.
(e) The Agent shall promptly notify each bidding Lender whether or
not its Competitive Bid has been accepted (and if so, in what amount and at what
Competitive Bid Rate) by telex or telecopier sent by the Agent, and each
successful bidder will thereupon become bound, subject to the other applicable
conditions hereof, to make the Competitive Loan in respect of which its bid has
been accepted.
(f) The Borrowers shall not make more than 10 Competitive Bid
Requests during any 30-day period.
(g) All notices required by this Section 2.03 shall be given in
accordance with Section 9.01.
(h) At no time shall the outstanding aggregate principal amount of
all Competitive Loans made by all Lenders exceed the Total Commitment in effect
at such time.
(i) The Agent shall hold in confidence each Competitive Bid received
by the Agent until such Competitive Bid has been disclosed to the appropriate
Borrower pursuant to paragraph (d) above.
SECTION 2.04. Standby Borrowing Procedure. In order to request a
----------------------------
Standby Borrowing, a Borrower shall hand deliver, telex or telecopy a Standby
Borrowing Request in the form of Exhibit A-4 to the Agent (a) in the case of a
Standby Borrowing that is a Eurodollar Borrowing, not later than 11:00 a.m., New
York City time, three Business Days before a proposed borrowing and (b) in the
case of an ABR Borrowing, not later than 10:00 a.m., New York City time, on the
day of a proposed borrowing. A Borrower shall be deemed to have given a Standby
Borrowing Request if it (i) notifies an officer of the Agent identified in
Section 9.01 by telephone of the content of such Standby Borrowing Request not
later than the relevant time set forth above for delivery thereof and (ii)
delivers such Standby Borrowing Request to Agent as soon as practicable;
provided, however, that a Borrower shall not have any right to receive the
- -------- -------
proceeds of a Standby Borrowing unless the Agent has received the related
written Standby Borrowing Request.
<PAGE>
29
Such notice shall be irrevocable and shall in each case specify (i) whether the
Borrowing then being requested is to be a Eurodollar Borrowing or an ABR
Borrowing; (ii) the date of such Standby Borrowing (which shall be a Business
Day) and the amount thereof; and (iii) the Interest Period with respect thereto.
If no election as to the Type of Standby Borrowing is specified in any such
notice, then the requested Standby Borrowing shall be an ABR Borrowing. If no
Interest Period with respect to any Standby Borrowing is specified in any such
notice, then the Borrower requesting such Borrowing shall be deemed to have
selected an Interest Period of one month's duration, in the case of a Eurodollar
Borrowing, or five days' duration, in the case of an ABR Borrowing. If a
Borrower shall not have given notice in accordance with this Section 2.04 of its
election to refinance a Standby Borrowing of such Borrower prior to the end of
the Interest Period in effect for such Borrowing, then such Borrower shall
(unless such Borrowing is repaid at the end of such Interest Period) be deemed
to have given notice of an election to refinance such Borrowing with an ABR
Borrowing. The Agent shall promptly advise the Lenders of any notice given
pursuant to this Section 2.04 and of each Lender's portion of the requested
Borrowing.
SECTION 2.05. Refinancings. Any Borrower may refinance all or any
-------------
part of any Borrowing of such Borrower with a Borrowing of the same or a
different Type made pursuant to Section 2.03 or Section 2.04, subject to the
conditions and limitations set forth herein and elsewhere in this Agreement,
including refinancings of Competitive Borrowings with Standby Borrowings and
Standby Borrowings with Competitive Borrowings. Any Borrowing or part thereof
so refinanced shall be deemed to be repaid in accordance with Section 2.07 with
the proceeds of a new Borrowing hereunder and the proceeds of the new Borrowing,
to the extent they do not exceed the principal amount of the Borrowing being
refinanced, shall not be paid by the Lenders to the Agent or by the Agent to the
appropriate Borrower pursuant to Section 2.02(c); provided, however, that (i) if
-------- -------
the principal amount extended by a Lender in a refinancing is greater than the
principal amount extended by such Lender in the Borrowing being refinanced, then
such Lender shall pay such difference to the Agent for distribution to the
Lenders described in (ii) below, (ii) if the principal amount extended by a
Lender in the Borrowing being refinanced is greater than the principal amount
being extended by such Lender in the refinancing, the Agent shall return the
difference to such Lender out of amounts received
<PAGE>
30
pursuant to (i) above and (iii) to the extent any Lender fails to pay to the
Agent amounts due from it pursuant to (i) above, any Loan or portion thereof
being refinanced shall not be deemed repaid in accordance with Section 2.07 and
shall be payable by the Borrower to which such Loan was made; provided, however,
-------- -------
that such Borrower shall not have any liability under Section 2.15 in respect of
any of its payment obligations under this clause (iii).
SECTION 2.06. Fees. (a) The Borrowers agree, jointly and severally,
-----
to pay to each Lender, through the Agent, on each March 31, June 30, September
30 and December 31 and on the date on which the Commitment of such Lender shall
be terminated as provided herein, a facility fee (a "Facility Fee") at a rate
per annum equal to the Facility Fee Percentage from time to time in effect on
the amount of the Commitment of such Lender, whether used or unused, from time
to time in effect during the preceding quarter (or shorter period commencing on
the Closing Date and/or ending with the Maturity Date or the Commitment
Termination Date with respect to each Lender or any earlier date on which the
Commitment of such Lender shall be terminated). All Facility Fees shall be
computed in arrears on the basis of the actual number of days elapsed in a year
of 360 days. The Facility Fee due to each Lender shall commence to accrue on
the Closing Date (or, if later, the date on which such Lender became a Lender)
and shall cease to accrue on the earlier of the Maturity Date and the
termination of the Commitment of such Lender as provided herein.
(b) The Borrowers agree, jointly and severally, to pay to the Agent
from time to time, for its own account, agent and administrative fees (the
"Administrative Fees") at such times and in such amounts as have been previously
agreed upon in writing between the Borrowers and the Agent.
(c) All Fees shall be paid on the dates due in immediately available
funds. Once paid, none of the Fees shall be refundable, except in the event of
manifest error.
SECTION 2.07. Repayment of Loans; Evidence of the Borrowers'
----------------------------------------------
Obligations. Subject to Section 4.01, the outstanding principal balance of each
- ------------
Competitive Loan and Standby Loan made by any Lender shall be payable (i) except
in the case of ABR Loans, on the last day of the Interest Period applicable to
such Loan and (ii) on the Commitment Termination Date with respect to such
Lender. Each
<PAGE>
31
Competitive Loan and each Standby Loan shall bear interest from the date thereof
on the outstanding principal balance thereof as set forth in Section 2.08. With
respect to each Lender, the entries made in the accounts maintained by the Agent
and such Lender shall be prima facie evidence of the existence and amounts of
the monetary obligations payable by any Borrower to such Lender in respect of
the Loans made by such Lender to such Borrower; provided that the failure to
--------
maintain any such accounts or any error therein shall not affect the obligations
of the Borrowers hereunder.
SECTION 2.08. Interest on Loans. (a) Subject to the provisions of
------------------
Section 2.09, the Loans comprising each Eurodollar Borrowing shall bear interest
(computed on the basis of the actual number of days elapsed over a year of 360
days) at a rate per annum on any date of determination equal to (i) in the case
of each Eurodollar Standby Loan, the LIBO Rate for the Interest Period in effect
for such Borrowing plus the Standby Margin for such date, and (ii) in the case
of each Eurodollar Competitive Loan, the LIBO Rate for the Interest Period in
effect for such Loan plus the Competitive Margin offered by the Lender making
such Loan and accepted by the Borrower requesting such Loan pursuant to Section
2.03. The LIBO Rate for each Interest Period shall be determined by the Agent
in consultation with the LIBO Reference Lenders, and such determination shall be
conclusive absent manifest error. The Agent shall promptly advise the Borrowers
and each Lender of such determination.
(b) Subject to the provisions of Section 2.09, the Loans comprising
each ABR Borrowing shall bear interest (computed on the basis of the actual
number of days elapsed over a year of 365 or 366 days, as the case may be) at a
rate per annum equal to the Alternate Base Rate. The Alternate Base Rate shall
be determined by the Agent, and such determination shall be conclusive absent
manifest error. The Agent shall promptly advise the Borrowers and each Lender
of such determination.
(c) Subject to the provisions of Section 2.09, the Loans comprising
each CD Borrowing shall bear interest (computed on the basis of the actual
number of days elapsed over a year of 360 days) at a rate per annum equal to the
Adjusted CD Rate for the Interest Period in effect for such Borrowing plus, in
the case of each such Loan, the Competitive Margin offered by the Lender making
such Loan and accepted by the Borrower requesting such Borrowing pursuant to
Section 2.03, provided, however, that any CD Loan made
-------- -------
<PAGE>
32
pursuant to Section 2.10 or 2.14 shall bear interest (computed as described in
this paragraph) at a rate per annum on any date of determination equal to the
Adjusted CD Rate for the Interest Period applicable to such CD Loan plus the
Standby Margin for such date.
(d) Subject to the provisions of Section 2.09, each Fixed Rate Loan
shall bear interest at a rate per annum (computed on the basis of the actual
number of days elapsed over a year of 360 days) equal to the fixed rate of
interest offered by the Lender making such Loan and accepted by the Borrower
requesting the applicable Fixed Rate Borrowing pursuant to Section 2.03.
(e) Interest on each Borrowing shall be payable on each applicable
Interest Payment Date.
SECTION 2.09. Default Interest. If any Borrower shall default in the
-----------------
payment of the principal of or interest on any Loan or any other amount becoming
due hereunder, whether by scheduled maturity, notice of prepayment, acceleration
or otherwise, such Borrower shall on demand from time to time from the Agent pay
interest, to the extent permitted by applicable law, on such defaulted amount
from the date on which the Agent first notifies such Borrower that it will be
required to pay interest pursuant to this Section on such defaulted amount up to
(but not including) the date of actual payment (after as well as before
judgment) at a rate per annum (computed on the basis of the actual number of
days elapsed over a year of 365 or 366 days, as the case may be) equal to the
Alternate Base Rate plus 2%.
SECTION 2.10. Alternate Rate of Interest. In the event, and on each
---------------------------
occasion, that on the day two Business Days prior to the commencement of any
Interest Period for a Eurodollar Borrowing the LIBO Reference Lenders shall have
determined and communicated to the Agent that dollar deposits in the principal
amounts of the Eurodollar Loans comprising such Borrowing are not generally
available in the London interbank market, or that the rates at which such dollar
deposits are being offered will not adequately and fairly reflect the cost to
any Lender of making or maintaining its Eurodollar Loan during such Interest
Period, or that reasonable means do not exist for ascertaining the LIBO Rate,
the Agent shall, as soon as practicable thereafter, give written or telex notice
of such determination to the Borrowers and the Lenders. In the
<PAGE>
33
event of any such determination, until the Agent shall have advised the
Borrowers and the Lenders that the circumstances giving rise to such notice no
longer exist, (i) any request by any Borrower for a Competitive Borrowing
pursuant to Section 2.03 shall be of no force and effect and shall be denied by
the Agent and (ii) any request by any Borrower for a Eurodollar Borrowing
pursuant to Section 2.04 shall be deemed to be a request for (A) an ABR
Borrowing having an Interest Period of five days' duration and (B) a refinancing
of such ABR Borrowing with an ABR Borrowing or a CD Borrowing, as such Borrower
shall elect by notice to the Agent not later than 11:00 a.m., New York City
time, one Business Day before such refinancing, comprised of Loans having an
Interest Period that is, when added to the Interest Period for the ABR Borrowing
being refinanced, equal to (in the case of an ABR Borrowing) or as close as
possible to (in the case of a CD Borrowing) the Interest Period requested by
such Borrower in connection with such Eurodollar Borrowing. The parties hereto
shall have the same rights and obligations in respect of a deemed request for a
CD Borrowing or an ABR Borrowing pursuant to this Section and the CD Loans and
ABR Loans made pursuant thereto, and the Commitments shall be utilized by such
CD Loans and such ABR Loans, as if such Borrowing were a Standby Borrowing
requested, and such Loans were Standby Loans made, pursuant to Section 2.04.
Each determination by the LIBO Reference Lenders hereunder shall be conclusive
absent manifest error.
SECTION 2.11. Termination and Reduction of Commitments. (a) Any
-----------------------------------------
Commitment that has not been terminated prior to the Maturity Date shall be
automatically terminated on the Maturity Date.
(b) Except as provided in Section 2.20 hereof, upon at least 5
Business Days' prior irrevocable written or telex notice to the Agent, JCPenney
may at any time in whole permanently terminate, or from time to time in part
permanently reduce, the Total Commitment; provided, however, that each partial
-------- -------
reduction of the Total Commitment shall be in an integral multiple of $5,000,000
and in a minimum principal amount of $25,000,000 or, if less, the Total
Commitment then in effect.
(c) Except as provided in Section 2.20, each reduction in the Total
Commitment hereunder shall be made ratably among the Lenders in accordance with
their respective Commitments. Subject to Section 9.09, the
<PAGE>
34
Borrowers shall pay to the Agent for the account of the Lenders, on the date of
each termination or reduction, the Facility Fees accrued through the date of
such termination or reduction.
(d) The Commitment of each Lender shall automatically and permanently
terminate on December 7, 1999 (the "Commitment Termination Date"); provided,
--------
however, that the Commitment Termination Date with respect to any Lender shall
- -------
not be extended under any circumstances to a date later than the Maturity Date.
SECTION 2.12. Prepayment. (a) Each Borrower shall have the right at
-----------
any time and from time to time to prepay any Standby Borrowing or any
Competitive Borrowing of such Borrower, in whole or in part, subject to the
requirements of Section 2.15 but otherwise without premium or penalty, upon
giving written or telex notice (or telephone notice promptly confirmed by
written or telex notice) to the Agent before 10:00 a.m., New York City time, one
Business Day prior to such prepayment; provided, however, that each partial
-------- -------
prepayment shall be in an amount which is an integral multiple of $5,000,000 and
not less than $25,000,000.
(b) On the date of any termination or reduction of the Commitments
pursuant to Section 2.11, the Borrowers shall pay or prepay so much of the
Standby Borrowings as shall be necessary in order that the aggregate principal
amount of the Standby Loans outstanding will not exceed the Total Commitment
after giving effect to such termination or reduction.
(c) Each notice of prepayment shall specify the prepayment date and
the principal amount of each Borrowing (or portion thereof) to be prepaid, shall
be irrevocable and shall commit the Borrower giving such notice to prepay such
Borrowing (or portion thereof) by the amount stated therein on the date stated
therein. All prepayments under this Section 2.12 shall be subject to Section
2.15 but otherwise without premium or penalty. All prepayments under this
Section 2.12 shall be accompanied by accrued interest on the principal amount
being prepaid to the date of payment.
<PAGE>
35
SECTION 2.13. Reserve Requirements; Change in Circumstances. Subject
---------------------------------------------
to the procedures and limitations of Section 2.20:
(a) Notwithstanding any other provision herein, if after the date of
this Agreement any change in applicable law or regulation or in the
interpretation or administration thereof by any governmental authority charged
with the interpretation or administration thereof (whether or not having the
force of law) shall change the basis of taxation of payments to any Lender of
the principal of or interest on any Eurodollar Loan, CD Loan or Fixed Rate Loan
made by such Lender or any Fees or other amounts payable hereunder (other than
changes in respect of taxes imposed on such Lender by the jurisdiction in which
such Lender is organized, has its principal office or maintains its Applicable
Lending Office for such Loan or by any political subdivision or taxing authority
in any such jurisdiction), or shall impose, modify or deem applicable any
reserve, special deposit or similar requirement against assets of, deposits with
or for the account of or credit extended by such Lender, or shall impose on such
Lender or the London interbank market any other condition affecting this
Agreement or any Eurodollar Loan, CD Loan or Fixed Rate Loan made by such
Lender, and the result of any of the foregoing shall be to increase the cost to
such Lender of making or maintaining any Eurodollar Loan, CD Loan or Fixed Rate
Loan or to reduce the amount of any sum received or receivable by such Lender
hereunder (whether of principal, interest or otherwise) by an amount deemed by
such Lender in its reasonable judgment to be material, then such additional
amount or amounts as will compensate such Lender for such additional costs
incurred or reduction suffered will be paid to such Lender in accordance with
Section 2.20 (i) if such additional costs or reduction shall relate to a
particular Loan, by the Borrower to which such Loan was made and (ii) otherwise,
by JCPenney. Notwithstanding the foregoing, no Lender shall be entitled to
request compensation under this paragraph with respect to any Loan if it shall
have been aware that the change giving rise to such request had been adopted or
enacted at the earlier of the time at which the Lender became a party to this
Agreement or, with respect to a Competitive Loan, the time of submission of the
Competitive Bid pursuant to which such Competitive Loan shall have been made.
(b) If the adoption after the Closing Date of any law, rule,
regulation or guideline regarding capital adequacy, or any change after the
Closing Date in any of the
<PAGE>
36
foregoing or in the interpretation or administration of any of the foregoing by
any governmental authority, central bank or comparable agency charged with the
interpretation or administration thereof, or compliance by any Lender (or any
Applicable Lending Office of such Lender) with any request or directive
regarding capital adequacy (whether or not having the force of law) made or
issued after the Closing Date by any such authority, central bank or comparable
agency, has or would have the effect of reducing the rate of return on such
Lender's capital as a consequence of this Agreement or the Loans made by such
Lender pursuant hereto to a level below that which such Lender could have
achieved but for such adoption, change or compliance (taking into consideration
such Lender's policies with respect to capital adequacy) by an amount deemed by
such Lender in its reasonable judgment to be material, then subject to Section
2.20 hereof, from time to time such additional amount or amounts as will
compensate such Lender for any such reduction suffered will be paid to such
Lender in accordance with Section 2.20 (i) if such reduction shall relate to a
particular Loan, by the Borrower to which such Loan was made and (ii) otherwise,
by JCPenney.
SECTION 2.14. Change in Legality. (a) Notwithstanding any other
-------------------
provision herein, if any change after the Closing Date in any law or regulation
or in the interpretation thereof by any Governmental Authority charged with the
administration or interpretation thereof shall make it unlawful for any Lender
to make or maintain any Eurodollar Loan or to give effect to its obligations as
contemplated hereby with respect to any Eurodollar Loan, then, by written notice
to the Borrowers and to the Agent, such Lender may:
(i) declare that Eurodollar Loans will not thereafter be made by such
Lender hereunder, whereupon such Lender shall not submit a Competitive Bid
in response to a request for Competitive Loans and any request by any
Borrower for a Standby Borrowing comprised of Eurodollar Loans shall, as to
such Lender only, be deemed a request for an ABR Loan or a CD Loan, as such
Borrower shall elect by notice to the Agent not later than 11:00 a.m., New
York City time, one Business Day before such Borrowing, having an Interest
Period equal to (in the case of an ABR Loan) or as close as possible to (in
the case of a CD Loan) the Interest Period applicable to such Eurodollar
Loans unless such declaration shall be subsequently withdrawn; and
<PAGE>
37
(ii) require that all outstanding Eurodollar Loans made by it be
converted to ABR Loans or to CD Loans, in which event all such Eurodollar
Loans shall be automatically converted to ABR Loans or, if JCPenney shall
so notify the Agent on the date of such conversion and the Agent shall have
determined that the Adjusted CD Rate can be determined for the Interest
Period in question, to CD Loans as of the effective date of such notice as
provided in paragraph (b) below.
In the event any Lender shall exercise its rights under (i) or (ii) above, all
payments and prepayments of principal that would otherwise have been applied to
repay the Eurodollar Loans that would have been made by such Lender or the
converted Eurodollar Loans of such Lender shall instead be applied to repay the
ABR Loans or CD Loans made by such Lender in lieu of, or resulting from the
conversion of, such Eurodollar Loans. The parties hereto shall have the same
rights and obligations in respect of a deemed request for a CD Loan pursuant to
clause (i) above and any CD Loan made pursuant to paragraph (a) above, and the
Commitments shall be utilized by any such CD Loan, as if such CD Loan were a
Standby Loan requested and made pursuant to Section 2.04.
(b) For purposes of this Section 2.14, a notice to the Borrowers by
any Lender shall be effective as to each Eurodollar Loan, if lawful, on the last
day of the Interest Period currently applicable to such Eurodollar Loan; in all
other cases such notice shall be effective on the date of receipt by the
Borrowers (in which case the ABR Loan or CD Loan resulting from the conversion
of such Eurodollar Loan pursuant to clause (ii) of paragraph (a) above shall
have an Interest Period equal to (in the case of an ABR Loan) or as close as
possible to (in the case of a CD Loan) the Interest Period applicable to such
Eurodollar Loan).
SECTION 2.15. Indemnity. Each Borrower agrees to indemnify the Agent
----------
and each Lender against any reasonable out-of-pocket loss or expense which the
Agent and/or such Lender may sustain or incur as a consequence of (a) any
failure by such Borrower to fulfill on the date of any borrowing hereunder the
applicable conditions set forth in Article IV, (b) any failure by such Borrower
to borrow or to refinance or continue any Loan hereunder after irrevocable
notice of such borrowing, refinancing or continuation has been given pursuant to
Section 2.03 or 2.04, (c) any payment, prepayment or conversion of a Eurodollar
Loan, CD Loan or Fixed Rate Loan made to such Borrower that is
<PAGE>
38
required by any other provision of this Agreement or otherwise made or deemed
made on a date other than the last day of the Interest Period applicable thereto
or (d) any default in payment or prepayment of the principal amount of any
Eurodollar Loan, CD Loan or Fixed Rate Loan made to such Borrower or any part
thereof or interest accrued thereon, as and when due and payable (at the due
date thereof, whether by scheduled maturity, acceleration, irrevocable notice of
prepayment or otherwise), after the expiration of the applicable grace period,
including, in each such case, any reasonable out-of-pocket loss or expense
sustained or incurred in liquidating or employing deposits from third parties
acquired to effect or maintain such Loan or any part thereof as a Eurodollar
Loan, CD Loan or Fixed Rate Loan. Such loss or reasonable expense shall include
an amount equal to the excess, if any, as reasonably determined by the Agent
and/or such Lender, of (i) its cost of obtaining the funds for the Loan being
paid, prepaid, converted or not borrowed (based on the LIBO Rate or Adjusted CD
Rate or, in the case of a Fixed Rate Loan, the fixed rate of interest applicable
thereto) for the period from the date of such payment, prepayment or failure to
borrow to the last day of the Interest Period for such Loan (or, in the case of
a failure to borrow, the Interest Period for such Loan which would have
commenced on the date of such failure) over (ii) the amount of interest (as
reasonably determined in good faith by the Agent and/or such Lender) that would
be realized by the Agent and/or such Lender in reemploying the funds so paid,
prepaid or not borrowed for such period or Interest Period, as the case may be;
provided, however, that with respect to any Eurodollar Loan or CD Loan for which
- -------- -------
the corresponding LIBO Rate or Adjusted CD Rate, as the case may be, is
available for the period or Interest Period in question, the amount of interest
realized in reemploying such funds shall be computed at such LIBO Rate or
Adjusted CD Rate, as the case may be, at the time of the applicable payment,
prepayment or failure to borrow. In order to exercise its rights under this
Section, the Agent and/or a Lender shall deliver to the appropriate Borrower a
certificate setting forth any amount or amounts which the Agent and/or such
Lender is entitled to receive pursuant to this Section. Such Borrower shall
have a 30-Business Day period following the receipt of such certificate (if such
Borrower in good faith disagrees with the assertion that any payment under such
section is due or with the amount shown as due on such certificate and so
notifies the Agent and/or such Lender of such disagreement within 10 Business
Days following receipt of such certificate) to negotiate with the
<PAGE>
39
Agent and/or such Lender, which negotiations shall be conducted by the
respective parties in good faith, and to agree upon another amount that will
adequately compensate the Agent and/or such Lender, it being expressly
understood that if such Borrower does not provide the required notice of its
disagreement as provided above, such Borrower shall pay the amount shown as due
on the certificate on the tenth Business Day following receipt thereof and
further if such Borrower does provide such required notice, and negotiations are
entered into but do not result in agreement by such Borrower and the Agent
and/or such Lender within the 30-Business Day period, then such Borrower shall
pay the amount shown as due on the certificate on the last day of such period.
SECTION 2.16. Pro Rata Treatment. Except as required under Sections
-------------------
2.14 and 2.20(b), each Standby Borrowing, each payment or prepayment of
principal of any Standby Borrowing, each payment of interest on the Standby
Loans, each payment of the Facility Fees, each reduction of the Commitments and
each refinancing of any Borrowing with a Standby Borrowing of any Type, shall be
allocated pro rata among the Lenders in accordance with their respective
Commitments (or, if such Commitments shall have expired or been terminated, in
accordance with the respective principal amounts of their outstanding Standby
Loans). Each payment of principal of any Competitive Borrowing shall be
allocated pro rata among the Lenders participating in such Borrowing in
accordance with the respective principal amounts of their outstanding
Competitive Loans comprising such Borrowing. Each payment of interest on any
Competitive Borrowing shall be allocated pro rata among the Lenders
participating in such Borrowing in accordance with the respective amounts of
accrued and unpaid interest on their outstanding Competitive Loans comprising
such Borrowing. For purposes of determining the available Commitments of the
Lenders at any time, each outstanding Competitive Borrowing shall be deemed to
utilize the Commitments of each of the Lenders pro rata in accordance with their
respective Commitments. Each Lender agrees that in computing such Lender's
portion of any Borrowing to be made hereunder, the Agent may, in its discretion,
round each Lender's percentage of such Borrowing to the next higher or lower
whole dollar amount.
SECTION 2.17. Sharing of Setoffs. Each Lender agrees that if it
-------------------
shall, through the exercise of a right of banker's lien, setoff or counterclaim
against any Borrower, or pursuant to a secured claim under Section 506 of Title
11
<PAGE>
40
of the United States Code or other security or interest arising from, or in lieu
of, such secured claim, received by such Lender under any applicable bankruptcy,
insolvency or other similar law or otherwise, or by any other means, obtain
payment (voluntary or involuntary) in respect of any Standby Loan or Loans as a
result of which the unpaid principal portion of its Standby Loans shall be
proportionately less than the unpaid principal portion of the Standby Loans of
any other Lender, it shall be deemed simultaneously to have purchased from such
other Lender at face value, and shall promptly pay to such other Lender the
purchase price for, a participation in the Standby Loans of such other Lender,
so that the aggregate unpaid principal amount of the Standby Loans and
participations in the Standby Loans held by each Lender shall be in the same
proportion to the aggregate unpaid principal amount of all Standby Loans then
outstanding as the principal amount of its Standby Loans prior to such exercise
of banker's lien, setoff or counterclaim or other event was to the principal
amount of all Standby Loans outstanding prior to such exercise of banker's lien,
setoff or counterclaim or other event; provided, however, that, if any such
-------- -------
purchase or purchases or adjustments shall be made pursuant to this Section 2.17
and the payment giving rise thereto shall thereafter be recovered, such purchase
or purchases or adjustments shall be rescinded to the extent of such recovery
and the purchase price or prices or adjustment restored without interest. The
Borrowers expressly consent to the foregoing arrangements and agree that,
subject to Section 9.06, any Lender holding a participation in a Standby Loan
deemed to have been so purchased may exercise any and all rights of banker's
lien, setoff or counterclaim with respect to any and all moneys owing by any
Borrowers to such Lender by reason thereof as fully as if such Lender had made a
Standby Loan directly to the Borrower in the amount of such participation.
SECTION 2.18. Payments. (a) Each Borrower shall make each payment
---------
(including principal of or interest on any Borrowing or any Fees or other
amounts) required to be made by it hereunder not later than 12:00 (noon), New
York City time (11:00 a.m., New York City time, in the case of any payment to be
made to the Agent), on the date when due in dollars to the Agent at account
number 006-035280 (ref: JCPenney) maintained by the Agent with Chemical Bank,
270 Park Avenue, New York, New York 10017, in each case in immediately available
funds.
<PAGE>
41
(b) Whenever any payment (including principal of or interest on any
Borrowing or any Fees or other amounts) hereunder shall become due, or otherwise
would occur, on a day that is not a Business Day, such payment may be made on
the next succeeding Business Day, and such extension of time shall in such case
be included in the computation of interest or Fees, if applicable.
SECTION 2.19. Taxes. (a) If any Borrower shall be required by reason of
-----
any change occurring after the date of this Agreement in applicable law or
regulation or tax treaty or in the interpretation or administration thereof by
any Governmental Authority charged with the interpretation or administration
thereof (whether or not having force of law) (a "Change of Law") to deduct any
Taxes from or in respect of any sum payable by it hereunder to any Lender or to
the Agent, then except as otherwise provided in this Section 2.19 and subject to
Section 2.20, (i) the sum payable shall be increased by the amount necessary so
that after making all required deductions (including deductions applicable to
additional sums payable under this Section 2.19) such Lender or the Agent (as
the case may be) shall receive an amount equal to the sum it would have received
had no such deductions been made, (ii) such Borrower shall make such deductions
and (iii) such Borrower shall pay the full amount deducted to the relevant
taxing authority or other Governmental Authority in accordance with applicable
law.
(b) In addition, the Borrowers agree, jointly and severally, to pay any
present or future stamp or documentary taxes or any other excise or property
taxes, charges or similar levies which arise from any payment made hereunder or
from the execution, delivery or registration of, or otherwise with respect to,
this Agreement (hereinafter referred to as "Other Taxes") other than any Other
Taxes imposed upon any assignment or participation of a Lender's rights,
interests and obligations hereunder; provided, however, that the amount the
-------- -------
Borrowers shall be required to pay to a particular Lender in respect of Other
Taxes shall not exceed 1% of the aggregate amount of the Loans or, if
applicable, the Commitment of such Lender on which such Other Taxes are imposed
and provided further, however, that if a Lender is actually aware of the
---------------- -------
application of any Other Tax to any such payment, execution, delivery or
registration, such Lender shall promptly notify the Borrowers of such Other Tax
and the Borrowers shall thereafter have the benefit of the provisions of Section
2.20(b).
<PAGE>
42
(c) Within 30 days after the date of any payment of Taxes withheld by any
Borrower in respect of any payment to any Lender or the Agent, such Borrower
will furnish to the Agent, at its address referred to in Section 9.01, the
original or a certified copy of a receipt evidencing payment thereof or, if such
a receipt is not available, a certificate of the treasurer or any assistant
treasurer of such Borrower setting forth the amount of such payment and the date
on which such payment was made.
(d) Without prejudice to the survival of any other agreement contained
herein, the agreements and obligations contained in this Section 2.19 shall
survive the payment in full of the principal of and interest on all Loans made
hereunder.
(e) On the Closing Date (or, in the case of an entity that becomes a
Lender after the Closing Date, on the date such entity becomes a Lender) and
thereafter as required by applicable law, each Lender that is organized under
the laws of a jurisdiction outside the United States shall deliver to JCPenney
and the Agent such certificates, documents or other evidence, and any amendments
or supplements to such certificates, documents or other evidence, as required by
the Code or Treasury Regulations issued pursuant thereto, including Internal
Revenue Service Form 1001 or Form 4224 and any other certificate or statement of
exemption required by Treasury Regulation Section 1.1441-1, 1.1441-2, 1.441-4(a)
or 1.1441-6(c) or any similar or successor provision, properly completed and
duly executed by such Lender (or the Agent) establishing that payments made
under this Agreement to such Lender (or to the Agent) are (i) not subject to
withholding under the Code because such payments are effectively connected with
the conduct by such Lender (or the Agent) of a trade or business in the United
States or (ii) totally exempt from United States tax under a provision of an
applicable tax treaty. Unless JCPenney and the Agent have received forms or
other documents satisfactory to them indicating that payments hereunder are not
subject to Taxes or are subject to such Taxes at a rate reduced by an applicable
tax treaty, the appropriate Borrower shall withhold Taxes from such payments at
the applicable statutory rate in the case of payments to or for any Lender (or
to the Agent) organized under the laws of a jurisdiction outside the United
States.
(f) The Borrowers shall not be required to pay any additional amounts to
any Lender (or to the Agent)
<PAGE>
43
pursuant to paragraph (a) above if the obligation to pay such additional amounts
would not have arisen but for a failure by such Lender (or the Agent) to comply
with the provisions of paragraph (e) above unless such failure results from a
change occurring after the date of this Agreement in applicable law or
regulation or tax treaty or in the interpretation or administration thereof by
any Governmental Authority charged with the interpretation or administration
thereof (whether or not having force of law).
(g) The Borrowers shall not be liable under this Section 2.19 to any
Lender or to the Agent that has changed the location of its principal office or
any of its Applicable Lending Offices after the date (the "Relevant Date") on
which it first becomes a party to this Agreement (a "Change in Location") for
any Taxes that would have not been imposed but for a Change of Law enacted,
promulgated or effective before the Relevant Date, but only to the extent such
Taxes exceed the amount the Borrowers were required to pay such Lender or the
Agent pursuant to this Section 2.19 immediately prior to such Change in
Location.
(h) If any Lender or the Agent shall become aware that it is entitled to
receive a refund in respect of Taxes indemnified and paid by the Borrower, such
Lender or the Agent shall promptly notify the Borrowers of the availability of
such refund and shall, within 30 days after receipt of a request by JCPenney,
apply for such refund at JCPenney's expense. If any Lender or the Agent
receives a refund in respect of any Taxes for which such Lender or the Agent has
received payment from any Borrower hereunder, it shall within 30 days after
receipt thereof repay the lesser of such refund and the amount paid by the
Borrowers with respect to such Taxes to the appropriate Borrower, in each case
net of all reasonable out-of-pocket expenses of such Lender or the Agent and
with interest received by such Lender or the Agent from the relevant taxing
authority attributable to such refund; provided, however, that such Borrower,
-------- -------
upon the request of such Lender or the Agent, agrees to return such refund (plus
interest, penalties or other charges) to such Lender or the Agent in the event
such Lender or the Agent is required to repay such refund to any Governmental
Authority.
(i) Each Lender and the Agent severally (but not jointly) represents and
warrants to the Borrowers that, as of the date such person becomes a party to
this Agreement, payments made by the Borrowers to such Lender or to the
<PAGE>
44
Agent in connnection with the Agreement are effectively connected with the
conduct by such Lender or the Agent of a trade of business in the United States.
SECTION 2.20. Mitigation; Duties of Lenders and Agent. (a) If, with
----------------------------------------
respect to any Lender or the Agent, an event or circumstance occurs that would
entitle such Lender or the Agent to exercise any of the rights or benefits
afforded by Section 2.13 or 2.19(a), such Lender or the Agent, promptly upon
becoming aware of the same, shall take all steps as may be reasonably available
(including, as may be applicable, designating a different Applicable Lending
Office, making the affected Type of Loan through an Affiliate, or furnishing the
proper certificates under any applicable tax laws, tax treaties, conventions,
and governmental regulations to the extent that such certificates are legally
available to such Lender or to the Agent) to eliminate or mitigate the effects
of any event resulting in the ability of such Lender or the Agent to exercise
rights under any of such Sections; provided, however, that, no Lender or the
-------- -------
Agent shall be under any obligation to take any step that, in its reasonable
judgment, would (i) result in its incurring Additional Costs or taxes in
performing its obligations hereunder unless the Borrowers have expressly agreed
to reimburse it therefor or (ii) be materially disadvantageous to such Lender or
to the Agent. Within 60 days after the occurrence of any event giving rise to
any rights or benefits provided by Sections 2.13 and 2.19(a) in favor of any
Lender or the Agent, such Lender or the Agent (i) will notify the Borrowers of
such event or circumstance and (ii) provide the Borrowers with a certificate
setting forth in reasonable detail (x) the event or circumstance giving rise to
any benefit under Sections 2.13 and 2.19(a), (y) the effective date of, and the
time period during which, compensation for any Additional Costs or Taxes are
being claimed and (z) the determination of amount or amounts claimed thereby and
detailed calculations with respect thereto; provided, however, that if such
-------- -------
Lender or the Agent does not give the Borrowers such notice and certificate
within the 60-day period set forth in this sentence, the Borrowers shall be
required to indemnify such Lender or the Agent only for such Additional Costs
and Taxes as are attributable to the period from and after the first date as of
which such notice and certificate have been received by the Borrowers. Such
Lender or the Agent shall notify the Borrowers of any change in circumstances
with respect to the event specified in the above-described notice and
certificate as promptly as
<PAGE>
45
practicable after such Lender or the Agent obtains knowledge thereof. Such
certificate shall be conclusive absent manifest error. Notwithstanding the
foregoing, no Lender or Agent shall deliver the notice and certificate described
in this paragraph (a) to the Borrowers in respect of any Additional Costs or
Taxes unless it is then the general policy of such Lender or the Agent to pursue
similar rights and remedies in similar circumstances under comparable provisions
of other credit agreements.
(b) With respect to Sections 2.13 and 2.19, the Borrowers shall have
the right, should any Lender request any compensation or indemnity thereunder,
to (i) unless an Event of Default shall have occurred and be continuing, (A)
promptly terminate such Lender's Commitment by irrevocable written or telex
notice of such termination to such Lender and the Agent without the necessity of
complying with Sections 2.11(b) and (c) hereof, (B) reduce the Total Commitments
by the amount of such Lender's Commitment, and (C) pay or prepay in immediately
available funds all Loans made by such Lender hereunder, together with accrued
and unpaid interest thereon and all other amounts owed to such Lender hereunder,
including under Section 2.15 in connection with any such prepayment or (ii)
require such Lender to assign its Commitment, without recourse to or
representation or warranty by such Lender, to another Lender or assignee
acceptable to the Borrowers and with the consent of the Agent, which consent
shall not be unreasonably withheld; provided, however, that (x) such assignment
-------- -------
shall not conflict with any statute, law, rule, regulation, order or decree of
any Governmental Authority and (y) the assigning Lender shall have received from
the Borrowers and/or such assignee full payment in immediately available funds
of the principal of and interest accrued to the date of such payment on the
Loans made by it hereunder to the extent that such Loans are subject to such
assignment and all other amounts owed to it hereunder. The Borrowers shall have
the right, should the Agent request any compensation or indemnity under such
Sections, to require the Agent to assign its rights and obligations hereunder to
a successor Agent with the consent of the Required Lenders, which consent shall
not be unreasonably withheld.
(c) With respect to Sections 2.13 or 2.19 (i) other than with respect
to Section 2.19(b), no Lender or Agent shall be entitled to exercise any right
or benefit afforded thereby and no Borrower shall be obligated to reimburse any
Lender or the Agent pursuant to such Sections
<PAGE>
46
unless (x) such Lender or the Agent has delivered to the Borrowers in accordance
with Section 9.01 the notice and the certificate described in Section 2.20(a)
hereof and (y) the affected Borrower has had a 30-Business Day period following
the receipt of such notice and certificate (if such Borrower in good faith
disagrees with the assertion that any payment under such Sections is due or with
the amount shown as due on such certificate and so notifies the Lender or the
Agent of such disagreement within 10 Business Days following receipt of the
notice and certificate) to negotiate with the requesting Lender or the Agent,
which negotiations shall be conducted by the respective parties in good faith,
and to agree upon another amount that will adequately compensate such Lender or
the Agent, it being expressly understood that if such Borrower does not provide
the required notice of its disagreement as provided above, such Borrower shall
pay the amount shown as due on the certificate on the tenth Business Day
following receipt thereof and further if such Borrower does provide such
required notice, and negotiations are entered into but do not result in
agreement by such Borrower and such Lender or the Agent within the 30-Business
Day period, then such Borrower shall pay the amount shown as due on the
certificate on the last day of such period, but in either event not earlier than
the date as of which the relevant Additional Costs or Taxes are incurred, (ii)
other than with respect to Other Taxes, unless the appropriate notice and
certificate are delivered to the Borrowers within the 60-day period described in
Section 2.20(a), the Borrowers shall be liable only for Additional Costs, Taxes
or amounts required to be paid which are attributable to the period from and
after the date such notice and certificate have been received by the Borrowers,
(iii) the Borrowers' liability for any amounts incurred as a result of any
change in Applicable Lending Office shall be limited as set forth in Section
2.02(e), (iv) in no event shall the Borrowers be liable for any taxes (other
than Other Taxes) that would not have been imposed but for a connection between
such Lender or the Agent (other than by reason of the activities contemplated by
this Agreement) and the relevant taxing jurisdiction, (v) each Lender or the
Agent shall in good faith allocate all Additional Costs, Taxes, and payments
required to be made fairly among all its commitments and credit extensions
(whether or not it seeks compensation from all affected borrowers), (vi) no
Lender or Agent shall be entitled to exercise any right or benefit afforded
hereby or receive any payment otherwise due under Sections 2.13 or 2.19
(including without limitation, any repayment by a Borrower of any refund of
Taxes pursuant to Section 2.19(h))
<PAGE>
47
which arises from any gross negligence, fraud or wilful misconduct of any Lender
or the Agent, or the failure of such Lender or the Agent to comply with the
terms of this Agreement, (vii) if a Lender or the Agent shall have recouped any
amount or received any offsetting tax benefit (other than a refund of Taxes as
described in Section 2.19(h)) or reserve or capital benefits theretofore paid to
it by such Borrower, such Lender or the Agent shall promptly pay to such
Borrower an amount equal to the amount of the recoupment received by such Lender
or the Agent reduced by any reasonable out-of-pocket expenses of such Lender or
the Agent attributable to such recoupment, as determined in good faith by such
Lender or the Agent, and (viii) the liability of either Borrower to any Lender
or the Agent with respect to any taxes shall be reduced to the extent that such
Lender or the Agent receives an offsetting tax benefit (or could have received
such a benefit by taking reasonable measures to receive it); provided, however,
-------- -------
that there shall not be any reductions pursuant to this clause (viii) with
respect to any tax benefit (x) the existence of which such Lender or the Agent
is unaware, (y) the claiming of which would result in any cost or tax to such
Lender or the Agent (unless such Borrower shall have agreed to pay its
reasonably allocable portion of such cost or tax) and (z) unless such Borrower
shall agree to indemnify the Lender or the Agent to the extent any tax benefit
taken into account under this clause (viii) is thereafter lost or becomes
unavailable.
(d) In addition to their obligations under Section 2.19 hereof, each
of the Lenders and the Agent hereby agree to execute and deliver, and to make
any required filings of, all certificates, agreements, documents, reports,
statements and other instruments as are reasonably necessary to effectuate the
purposes of this Section 2.20 and Sections 2.13 and 2.19. The Borrowers agree,
jointly and severally, to pay all filing fees incurred by any Lender or the
Agent in performing its obligations under this Section 2.20.
<PAGE>
48
ARTICLE III. REPRESENTATIONS AND WARRANTIES
The Borrowers represent and warrant to each of the Lenders that:
SECTION 3.01. Organization; Powers. Each of the Borrowers and the
---------------------
Restricted Subsidiaries (a) is a corporation duly organized, validly existing
and in good standing under the laws of the jurisdiction of its organization, (b)
has all requisite power and authority to own its property and assets and to
carry on its business as now conducted and as proposed to be conducted, (c) is
qualified to do business in every jurisdiction where such qualification is
required, except where the failure so to qualify would not result in a Material
Adverse Effect, and (d) in the case of each Borrower, has the corporate power
and authority to execute, deliver and perform its obligations under this
Agreement and each other agreement or instrument contemplated hereby to which it
is or will be a party and to borrow hereunder.
SECTION 3.02. Authorization. The execution, delivery and performance
--------------
by each Borrower of this Agreement and the borrowings hereunder (collectively,
the "Transactions") (a) have been duly authorized by all requisite corporate
and, if required, stockholder action and (b) will not (i) violate (A) any
applicable provision of law, statute, material rule or material regulation, or
of the certificate or articles of incorporation or other constitutive documents
or by-laws of JCPenney, Funding or any Restricted Subsidiary, (B) any applicable
material order of any Governmental Authority or (C) any provision of any
indenture, agreement or other instrument to which JCPenney, Funding or any
Restricted Subsidiary is a party or by which any of them or any of their
property is or may be bound, (ii) be in conflict with, result in a breach of or
constitute (alone or with notice or lapse of time or both) a default under any
such indenture, agreement or other instrument or (iii) result in the creation or
imposition of any Lien upon or with respect to any property or assets now owned
or hereafter acquired by JCPenney, Funding or any Restricted Subsidiary.
SECTION 3.03. Enforceability. This Agreement has been duly executed
---------------
and delivered by each Borrower and constitutes a legal, valid and binding
obligation of such Borrower enforceable against such Borrower in accordance with
its terms, except as enforceability may be limited by
<PAGE>
49
(a) any applicable bankruptcy, insolvency, reorganization, moratorium,
fraudulent transfer, or similar laws relating to or affecting creditors' rights
generally and (b) general principles of equity.
SECTION 3.04. Governmental Approvals. No action, consent or approval
-----------------------
of, registration or filing with, or any other action by, any Governmental
Authority is or will be required in connection with the Transactions, except (a)
such as have been made or obtained and are in full force and effect or as to
which the failure to be made or obtained and in full force and effect would not
result in a Material Adverse Effect and (b) such periodic and current reports,
if any, as (i) are required to disclose the Transactions and (ii) will be filed
with the SEC on a timely basis.
SECTION 3.05. Financial Statements. Each of JCPenney and Funding has
---------------------
heretofore furnished to the Lenders its consolidated balance sheets and related
consolidated statements of income and cash flows (a) as of and for the fiscal
year ended January 30, 1994, audited by and accompanied by the opinion of KPMG
Peat Marwick, independent public accountants, and (b) as of and for the fiscal
quarter and the portion of the fiscal year ended October 29, 1994, as filed by
JCPenney or Funding, as the case may be, with the SEC on Form 10-Q in respect of
such fiscal quarter. Such financial statements fairly present the financial
position, results of operations and cash flows of JCPenney and its Subsidiaries,
or of Funding and its Subsidiaries, as the case may be, in accordance with GAAP,
subject, in the case of the financial statements referred to in clause (b)
above, to normal year-end audit adjustments.
SECTION 3.06. No Material Adverse Change. Except as previously
---------------------------
disclosed to the Lenders in writing, as of the Closing Date, there has been no
material adverse change in the business, assets, operations or financial
condition of JCPenney, Funding or JCPenney and the Restricted Subsidiaries taken
as a whole since January 30, 1994.
SECTION 3.07. Title to Properties; Possession Under Leases. (a)
------------------------------- -------------
Each of the Borrowers and the Restricted Subsidiaries has good and marketable
title to all its Principal Properties, except for minor defects in title and
other restrictions that do not interfere with its ability to conduct its
business as currently conducted or to utilize such Principal Properties for
their intended purposes. All
<PAGE>
50
the Principal Properties are free and clear of Liens, other than Liens expressly
permitted by Section 6.01.
(b) Each of the Borrowers and the Restricted Subsidiaries has valid
leasehold interests in all the material properties that it purports to hold
under lease, except for restrictions that do not interfere with its ability to
conduct its business as currently conducted or to utilize such properties for
their intended purposes. Each of the Borrowers and the Restricted Subsidiaries
has complied with all material obligations under all material leases to which it
is a party and all such leases are in full force and effect, except in each case
for provisions of such leases that are being contested in good faith in the
ordinary course of the Borrower's business. Each of the Borrowers and the
Restricted Subsidiaries enjoys peaceful and undisturbed possession under all
such material leases.
SECTION 3.08. Restricted Subsidiaries. Schedule 3.08 sets forth as
------------------------
of the Closing Date a list of all the Restricted Subsidiaries and the percentage
ownership interest of JCPenney therein. JCPenney owns, free and clear of all
Liens, all the issued and outstanding shares of the capital stock of Funding,
and all such outstanding shares are validly issued, fully paid and
nonassessable.
SECTION 3.09. Litigation; Compliance with Laws. (a) Except as set
---------------------------------
forth in Schedule 3.09 or as subsequently disclosed in writing to the Lenders,
there are not any actions, suits or proceedings at law or in equity or by or
before any Governmental Authority now pending or, to the knowledge of any
Borrower, threatened against or affecting JCPenney or Funding or any Restricted
Subsidiary or any business, property or rights of any such person (i) which
involve this Agreement or the Transactions or (ii) as to which there is a
reasonable possibility of an adverse determination and which, if adversely
determined, would, individually or in the aggregate, result in a Material
Adverse Effect.
(b) None of the Borrowers or the Restricted Subsidiaries is in
violation of any law, rule or regulation, or in default with respect to any
judgment, writ, injunction or decree of any Governmental Authority, where such
violation or default would result in a Material Adverse Effect.
SECTION 3.10. Agreements. (a) None of the Borrowers or the
-----------
Restricted Subsidiaries is a party to any
<PAGE>
51
agreement or instrument or subject to any corporate restriction that has
resulted or would result in a Material Adverse Effect.
(b) None of the Borrowers or the Restricted Subsidiaries is in
default in any manner under any provision of any indenture or other agreement or
instrument evidencing indebtedness for money borrowed, or any other material
agreement or instrument to which it is a party or by which it or any of its
material properties or material assets are bound, where such default would
result in a Material Adverse Effect.
SECTION 3.11. Federal Reserve Regulations. (a) None of the
----------------------------
Borrowers or the Subsidiaries is engaged principally, or as one of its important
activities, in the business of extending credit for the purpose of purchasing or
carrying Margin Stock.
(b) No part of the proceeds of any Loan will be used, whether
directly or indirectly, and whether immediately, incidentally or ultimately, (i)
to purchase or carry Margin Stock or to extend credit to others for the purpose
of purchasing or carrying Margin Stock or to refund indebtedness originally
incurred for such purpose, or (ii) for any purpose which entails a violation of,
or which is inconsistent with, the provisions of the Regulations of the Board,
including Regulation G, U or X.
SECTION 3.12. Investment Company Act; Public Utility Holding Company
------------------------------ -----------------------
Act. None of the Borrowers is (a) an "investment company" as defined in, or
- ----
subject to regulation under, the Investment Company Act of 1940 or (b) a
"holding company" as defined in, or subject to regulation under, the Public
Utility Holding Company Act of 1935.
SECTION 3.13. Use of Proceeds. The Borrowers will use the proceeds
----------------
of the Loans only for the purposes specified in the preamble to this Agreement.
SECTION 3.14. Tax Returns. Each of the Borrowers and the Restricted
------------
Subsidiaries has filed or caused to be filed all Federal, state and local tax
returns required to have been filed by it and has paid or caused to be paid all
taxes shown to be due and payable on such returns or on any assessments received
by it, except taxes that are being contested in good faith by appropriate
proceedings and for
<PAGE>
52
which the appropriate Borrower or Restricted Subsidiary shall have set aside on
its books adequate reserves.
SECTION 3.15. No Material Misstatements. No information, report,
--------------------------
financial statement, exhibit or schedule furnished by or on behalf of any
Borrower to the Agent or any Lender in connection with the negotiation of this
Agreement or included herein or delivered pursuant hereto contained, contains or
will contain any material misstatement of fact or omitted, omits or will omit to
state any material fact necessary to make the statements therein, in the light
of the circumstances under which they were, are or will be made, not misleading.
SECTION 3.16. Employee Benefit Plans. During the immediately
----------------------
preceding six-year period with respect to the Plans, there were no: (a)
violations known to the Borrowers of ERISA, or (b) Reportable Events (other than
a Reportable Event for which the PBGC has waived the 30-day notice requirement
of Section 4043(a) of ERISA), that would, individually or in the aggregate,
result in a Material Adverse Effect. The present value of all benefit
liabilities under each Plan (based on the assumptions used to fund such Plan)
does not exceed the value of the assets of such Plan. None of the Borrowers or
the ERISA Affiliates has made contributions to any Multiemployer Plan within the
past five years, and such contributions are not now being made or expected to be
required.
SECTION 3.17. Support Agreements. The Support Agreements have been
-------------------
duly executed and delivered by JCPenney and, where applicable, Funding and, as
of the Closing Date, are in full force and effect in accordance with their
terms. A complete and correct copy of each Support Agreement as in effect on
the Closing Date has previously been furnished to each Lender and to the Agent.
<PAGE>
53
ARTICLE IV. CONDITIONS OF LENDING
The obligations of the Lenders to make Loans hereunder are subject to
the satisfaction of the following conditions:
SECTION 4.01. All Borrowings. Subject to the provisions of the last
---------------
sentence of this Section 4.01, on the date of each Borrowing:
(a) The Agent shall have received such notice of such Borrowing as is
required by Section 2.03 or Section 2.04, as applicable.
(b) The representations and warranties set forth in Article III
hereof (except, in the case of all Borrowings hereunder, the representation
set forth in Section 3.06) shall be true and correct in all material
respects on and as of the date of such Borrowing with the same effect as
though made on and as of such date, except to the extent such
representations and warranties expressly relate to an earlier date.
(c) At the time of and immediately after such Borrowing, no Event of
Default or Default shall have occurred and be continuing.
Each Borrowing (other than any new Borrowing described in the last sentence of
this Section 4.01) shall be deemed to constitute a representation and warranty
by the Borrowers on the date of such Borrowing as to the matters specified in
paragraphs (b) and (c) of this Section 4.01. Notwithstanding the other
provisions of this Section 4.01, the refinancing of any Borrowing with a new
Borrowing that does not increase the outstanding aggregate principal amount of
the Loans of any Lender shall not be subject to the satisfaction of any of the
foregoing conditions.
SECTION 4.02. First Borrowing. [INTENTIONALLY OMITTED].
----------------
ARTICLE V. AFFIRMATIVE COVENANTS
The Borrowers covenant and agree with each Lender that, so long as
this Agreement shall remain in effect or the principal of or interest on any
Loan, any Fees or any other expenses or amounts payable under this Agreement
shall
<PAGE>
54
be unpaid, unless the Required Lenders shall otherwise consent in writing, each
of the Borrowers will, and will cause each of the Restricted Subsidiaries to:
SECTION 5.01. Existence; Businesses and Properties. (a) Do or cause
-------------------------------------
to be done all things necessary to preserve, renew and keep in full force and
effect its legal existence, except as would not cause a Default under Section
6.04 or otherwise cause an Event of Default under this Agreement.
(b) Do or cause to be done all things necessary to obtain, preserve,
renew, extend and keep in full force and effect the rights, licenses, permits,
franchises, authorizations, patents, copyrights, trademarks and trade names
material to the conduct of its business; maintain and operate such business in
substantially the manner in which it is presently conducted and operated; comply
in all material respects with all applicable laws, rules, regulations and orders
of any Governmental Authority, whether now in effect or hereafter enacted;
except in each case where the failure to do so would not result in a Material
Adverse Effect; and at all times maintain and preserve all property material to
the conduct of its business and keep such property in good repair, working order
and condition and from time to time make, or cause to be made, all needful and
proper repairs, renewals, additions, improvements and replacements thereto
necessary in order that the business carried on in connection therewith may be
properly conducted at all times; provided, however, that nothing in this
-------- -------
paragraph (b) shall prevent any Borrower or Restricted Subsidiary from
discontinuing the operation and maintenance of any of its properties no longer
deemed useful in the conduct of its business.
SECTION 5.02. Insurance. Maintain insurance and/or self insurance
----------
programs in force that adequately protect the Principal Properties and the
public liability exposures of the Borrowers, as may be required by law, and as
is customary with companies in the same or similar businesses or of the same
general financial net worth.
SECTION 5.03. Obligations and Taxes. Pay and discharge promptly when
----------------------
due all taxes, assessments and governmental charges or levies imposed upon it or
upon its income or profits or in respect of its properties, before the same
shall become delinquent or in default, as well as all lawful claims for labor,
materials and supplies or
<PAGE>
55
otherwise which, if unpaid, might give rise to a Lien upon such properties or
any material part thereof; provided, however, that such payment and discharge
-------- -------
shall not be required with respect to any such tax, assessment, charge, levy or
claim so long as (a) the validity or amount thereof shall be contested in good
faith by appropriate proceedings and (b) the applicable Borrower has made
appropriate reserves therefor as required by GAAP.
SECTION 5.04. Financial Statements, Reports, etc. In the case of the
-----------------------------------
Borrowers, furnish to the Agent for distribution to the Lenders:
(a) as soon as available and in any event within 120 days after the
end of each fiscal year, a copy of the reports filed by each of JCPenney
and Funding with the SEC on Form 10-K in respect of such fiscal year,
accompanied by JCPenney's annual report in respect of such fiscal year or,
if either of JCPenney or Funding is not required to file such a report in
respect of such fiscal year, the consolidated balance sheets and related
consolidated statements of income and cash flows of JCPenney and its
Subsidiaries, or of Funding and its Subsidiaries, as the case may be, as of
the close of such fiscal year, all audited by KPMG Peat Marwick or other
independent public accountants of recognized national standing and
accompanied by an opinion of such accountants (which shall be in scope and
substance reasonably satisfactory to the Required Lenders) to the effect
that such consolidated financial statements fairly present the financial
position, results of operations and cash flows of JCPenney and its
Subsidiaries or of Funding and its Subsidiaries, as the case may be, in
accordance with GAAP;
(b) as soon as available and in any event within 60 days after the end
of each of the first three quarterly periods of each fiscal year, a copy of
the quarterly reports filed by each of JCPenney and Funding with the SEC on
Form 10-Q in respect of such quarterly period, or if either of JCPenney or
Funding is not required to file such a report in respect of such quarterly
period, the consolidated balance sheets and related consolidated statements
of income and cash flows of JCPenney and its Subsidiaries, or of Funding
and its Subsidiaries, as the case may be, as of the close of such fiscal
quarter, certified by its chief financial officer, treasurer or controller
as fairly
<PAGE>
56
presenting the financial position, results of operations and cash flows of
JCPenney and its Subsidiaries or of Funding and its Subsidiaries, as the
case may be, in accordance with GAAP, subject to normal year-end audit
adjustments;
(c) concurrently with any delivery of financial statements by JCPenney
or Funding under (a) above (whether contained in a report filed with the
SEC or otherwise), a certificate of its chief financial officer, president,
treasurer or controller (i) stating that no Event of Default or Default has
occurred or, if such an Event of Default or Default has occurred,
specifying the nature and extent thereof and any corrective action taken or
proposed to be taken with respect thereto and (ii) with respect to
JCPenney, setting forth computations in reasonable detail demonstrating
compliance with the covenant contained in Section 6.02;
(d) promptly after the same become publicly available, copies of all
documents and reports that any Borrower may be required to file with the
SEC pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934,
as amended, or with any Governmental Authority succeeding to any of or all
the functions of the SEC;
(e) promptly after the execution and delivery thereof by the parties
thereto, copies of all agreements and other instruments that have the
effect of amending, modifying or waiving any provision of a Support
Agreement; and
(f) promptly, from time to time, such other documents and information
regarding the operations, business affairs and financial condition of any
Borrower or Restricted Subsidiary, or compliance with the terms of this
Agreement, as the Agent or any Lender may reasonably request.
SECTION 5.05. Litigation and Other Notices. Furnish to the Agent
-----------------------------
prompt written notice of the following promptly after becoming aware thereof:
(a) any Event of Default or Default, specifying the nature and extent
thereof and the corrective action (if any) proposed to be taken with
respect thereto;
<PAGE>
57
(b) the filing or commencement of, or any threat or notice of
intention of any person to file or commence, any action, suit or
proceeding, whether at law or in equity or by or before any Governmental
Authority, against any Borrower or Restricted Subsidiary which, if
adversely determined, would result in a Material Adverse Effect; and
(c) any development that has resulted in, or would result in, a
Material Adverse Effect.
SECTION 5.06. ERISA. (a) Comply in all material respects with the
------
applicable provisions of ERISA and (b) furnish to the Agent and each Lender (i)
as soon as possible, and in any event within 30 days after any Responsible
Officer of any Borrower or ERISA Affiliate either knows or has reason to know
that any Reportable Event has occurred that alone or together with any other
Reportable Events could reasonably be expected to result in liability of the
Borrowers and/or the Restricted Subsidiaries to the PBGC in an aggregate amount
exceeding $200,000,000, a statement of a Responsible Officer of JCPenney setting
forth details as to such Reportable Event and the action proposed to be taken
with respect thereto, together with a copy of the notice, if any, of such
Reportable Event given to the PBGC, (ii) promptly after receipt thereof, a copy
of any notice that any Borrower or ERISA Affiliate receives from the PBGC
relating to the intention of the PBGC to terminate any Plan or Plans (other than
a Plan maintained by an ERISA Affiliate which is considered an ERISA Affiliate
only pursuant to subsection (m) or (o) of Section 414 of the Code) or to appoint
a trustee to administer any Plan or Plans and (iii) within 10 days after the due
date for filing with the PBGC pursuant to Section 412(n) of the Code of a notice
of failure to make a required installment or other payment with respect to a
Plan, a statement of a Responsible Officer of JCPenney setting forth details as
to such failure and the action proposed to be taken with respect thereto,
together with a copy of such notice given to the PBGC. Any failure to comply
with applicable provisions of ERISA shall not be deemed to be material, unless
such failure or failures would result in a Material Adverse Effect.
SECTION 5.07. Maintaining Records; Access to Properties and
------------------------------ --------------
Inspections. Maintain all financial records in accordance with GAAP and permit
- ------------
any representatives designated by any Lender to (a) visit and inspect the
financial records and the Principal Properties of any
<PAGE>
58
Borrower or Restricted Subsidiary during business hours upon reasonable notice,
(b) make extracts from and copies of such financial records, (c) discuss the
affairs, finances and condition of any Borrower or Restricted Subsidiary with
the chief financial officer, treasurer or any assistant treasurer of any
Borrower or Restricted Subsidiary and (d) discuss the affairs, finances and
condition of any Borrower or Restricted Subsidiary with such person's
independent accountants in the presence of any of the chief financial officer,
treasurer or any assistant treasurer of such person. No such inspection,
discussion or other right granted under this Section 5.07 and exercised by any
Lender shall disrupt the normal and ordinary conduct of business of any Borrower
or Restricted Subsidiary, and all costs and expenses incurred in connection
therewith, shall, prior to the occurrence and continuance of an Event of
Default, be borne by the Lender exercising such right.
SECTION 5.08. Use of Proceeds. Use the proceeds of the Loans only
----------------
for the purposes set forth in the preamble to this Agreement.
SECTION 5.09. Pari-Passu. Ensure that (a) the payment obligations of
-----------
any Borrower under this Agreement will at all times rank at least equally and
ratably in all respects with the claims of any other unsecured creditor of such
Borrower and (b) the proceeds of any Loan made to Funding will be used for the
purpose of making either (i) Investments of the type referred to in clause (v)
of Section 6.06(c) or (ii) loans to JCPenney constituting senior unsecured
indebtedness of JCPenney, and not for any other purpose.
SECTION 5.10. Support Agreements. Ensure that (a) each Support
-------------------
Agreement remains in full force and effect in accordance with its terms and (b)
no amendment or modification is made to any Support Agreement or any of the
terms thereof, and no waiver is given or agreed to be given by or on behalf of
Funding with respect to any of its rights under any Support Agreement, which
would have a Material Adverse Effect.
ARTICLE VI. NEGATIVE COVENANTS
Each Borrower covenants and agrees with each Lender and the Agent, so
long as this Agreement shall remain in effect or the principal of or interest on
any Loan, any
<PAGE>
59
Fees or any other expenses or amounts payable under this Agreement shall be
unpaid, unless the Required Lenders shall otherwise consent in writing, as
follows:
SECTION 6.01. Limitation on Liens--JCPenney. JCPenney will not, and
------------------------------
will not permit any Restricted Subsidiary to, issue, assume or guarantee any
notes, bonds, debentures or other similar evidences of indebtedness for money
borrowed (referred to in this Section 6.01 as "indebtedness") secured by any
Lien upon any Principal Property, or shares of capital stock or evidences of
indebtedness for money borrowed issued by any Restricted Subsidiary and owned by
JCPenney or any Restricted Subsidiary, whether owned on the Closing Date or
thereafter acquired, without making effective provision whereby the Loans made
to JCPenney are secured by such Lien equally and ratably with any and all other
indebtedness thereby secured, so long as such indebtedness shall be so secured;
provided, however, that the foregoing restriction shall not apply to
- -------- -------
indebtedness secured by any of the following:
(i) Liens on any property existing at the time of acquisition thereof
by JCPenney or any Restricted Subsidiary;
(ii) Liens on property of a corporation existing at the time such
corporation is merged into or consolidated with JCPenney or any Restricted
Subsidiary or at the time of a sale, lease or other disposition of the
properties of such corporation (or a division thereof) as an entirety or
substantially as an entirety to JCPenney or any Restricted Subsidiary,
provided that such Lien as a result of such merger, consolidation, sale,
--------
lease or other disposition is not extended to property owned by JCPenney or
such Restricted Subsidiary immediately prior thereto;
(iii) Liens on property of a corporation existing at the time such
corporation first becomes a Restricted Subsidiary;
(iv) Liens securing indebtedness of a Restricted Subsidiary to
JCPenney or to another Restricted Subsidiary;
(v) Liens on property to secure all or part of the cost of acquiring,
substantially repairing or altering, constructing, developing or
substantially
<PAGE>
60
improving such property, or to secure indebtedness incurred to provide
funds for any such purpose or for reimbursement of funds previously
expended for any such purpose, provided that the commitment of the creditor
to extend the credit secured by any such Lien shall have been obtained not
later than twelve months after the later of (a) the completion of the
acquisition, substantial repair or alteration, construction, development or
substantial improvement of such property or (b) the placing in operation of
such property or of such property as so substantially repaired or altered,
constructed, developed or substantially improved;
(vi) Liens securing indebtedness payable on demand or not more than
one year after the date as of which the determination is made (excluding
any indebtedness renewable or extendable at the option of the debtor for a
period or periods ending more than one year after the date as of which such
determination is made), which indebtedness in accordance with GAAP would be
included among current liabilities; or
(vii) any extension, renewal or replacement (or successive
extensions, renewals or replacements), in whole or in part, of any Lien
referred to in the foregoing clauses (i) through (vi), inclusive; provided,
--------
however, that the principal amount of indebtedness secured thereby and not
-------
otherwise authorized by said clauses (i) through (vi), inclusive, shall not
exceed the principal amount of indebtedness, plus any premium or fee
payable in connection with any such extension, renewal or replacement, so
secured at the time of such extension, renewal or replacement;
(viii) Liens arising under workmen's compensation laws, unemployment
insurance laws and old age pensions or other social security benefits or
other similar laws;
(ix) Liens securing the performance of bids, tenders, leases,
contracts, statutory obligations, surety and appeal bonds, and other
obligations of like nature, incurred in the ordinary course of business;
(x) Liens imposed by law, such as carriers', warehouseman's,
mechanics', materialmen's and vendors' liens, incurred in good faith in the
ordinary course of business with respect to obligations not then
<PAGE>
61
delinquent, or that are being contested in good faith by appropriate
proceedings for which adequate reserves have been established;
(xi) Liens for taxes to the extent nonpayment thereof shall be
permitted by Section 5.03 hereof;
(xii) Liens incidental to the normal conduct of the business of
JCPenney and its Restricted Subsidiaries or the ownership of their property
and not securing Funded Indebtedness (including zoning restrictions,
easements, licenses, reservations, restrictions on the use of real property
or minor irregularities incident thereto and with respect to leasehold
interests, Liens that are incurred, created, assumed or permitted to exist
and arise by, through or under or are asserted by a landlord or owner of
the leased property, with or without consent of the lessee) which do not in
the aggregate materially impair the value or use of the property used in
the business of JCPenney and its Restricted Subsidiaries taken as a whole,
or the use of such property for the purpose for which such property is
held;
(xiii) Liens arising from capitalized lease obligations, such Liens
not to extend to any other property of JCPenney;
(xiv) Liens in respect of litigation or other similar proceedings in
an amount not to exceed $500,000,000 on an aggregate basis (i) the validity
of which is being currently contested on a timely basis in good faith by
appropriate proceedings (provided that the enforcement of any Liens arising
out of such proceedings shall be stayed during such proceedings) and (ii)
for which adequate reserves shall have been established;
(xv) Liens in respect of leases or subleases granted to other persons
in the ordinary course of business and not materially interfering with the
conduct of business of JCPenney and its Restricted Subsidiaries;
(xvi) Liens arising out of conditional sale, title retention,
consignment or similar arrangements for the sale of goods entered into by
JCPenney or any of its Restricted Subsidiaries in the ordinary course of
<PAGE>
62
business in accordance with the past practices of JCPenney and its
Restricted Subsidiaries; or
(xvii) Liens in favor of customs and revenue authorities arising as a
matter of law securing payment of customs duties in connection with the
importation of goods.
Notwithstanding the provisions of the immediately preceding sentence,
JCPenney or any Restricted Subsidiary may issue, assume or guarantee
indebtedness secured by Liens which would otherwise be subject to the
restrictions of this Section in an aggregate amount which, together with all
attributable debt (as defined in Section 5.09(b) of the Indenture) outstanding
pursuant to Section 5.09(b) of the Indenture, all Senior Funded Indebtedness
outstanding pursuant to the second sentence of Section 6.03(a), the capitalized
amount of all capitalized leases referred to in Section 6.05(j), and all
indebtedness outstanding pursuant to this sentence, does not exceed 5% of
Stockholders' Equity.
SECTION 6.02. Limitations on Senior Funded Indebtedness. JCPenney
------------------------------------------
will not, and will not permit any Restricted Subsidiary to, issue, assume or
guarantee any Senior Funded Indebtedness (otherwise than in connection with any
renewal, extension or refunding of Senior Funded Indebtedness which does not,
except for any premium or fee payable in connection with such renewal, extension
or refunding, increase the unpaid principal amount of Senior Funded Indebtedness
outstanding), or sell, transfer or otherwise dispose of any Senior Funded
Indebtedness of a Restricted Subsidiary, unless, after giving effect thereto and
to the retirement of any Senior Funded Indebtedness to be retired substantially
concurrently therewith, Net Tangible Assets shall be at least 200% of Senior
Funded Indebtedness of JCPenney and the Restricted Subsidiaries (eliminating
intercompany items).
SECTION 6.03. Limitations with Respect to Restricted Subsidiaries.
----------------------------------------------------
(a) JCPenney will not permit any Restricted Subsidiary to issue, assume or
guarantee any Senior Funded Indebtedness; provided, however, that the foregoing
-------- -------
restriction shall not apply to any of the following:
(i) Senior Funded Indebtedness secured by a Lien permitted under the
first sentence of Section 6.01;
<PAGE>
63
(ii) Senior Funded Indebtedness of a corporation existing at the time
such corporation is merged into or consolidated with a Restricted
Subsidiary or at the time of a sale, lease or other disposition of the
properties of such corporation (or a division thereof) as an entirety or
substantially as an entirety to a Restricted Subsidiary;
(iii) Senior Funded Indebtedness of a corporation existing at the
time such corporation first becomes a Restricted Subsidiary:
(iv) Senior Funded Indebtedness of a Restricted Subsidiary to or held
by JCPenney or another Restricted Subsidiary; or
(v) any extension, renewal or replacement (or successive extensions,
renewals or replacements), in whole or in part, of any Senior Funded
Indebtedness referred to in the foregoing clauses (i) through (iv),
inclusive; provided, however, that the principal amount or the aggregate
-------- -------
preference on involuntary liquidation, as the case may be, of Senior Funded
Indebtedness issued pursuant to such extension, renewal or replacement and
not otherwise authorized by said clauses (i) through (iv), inclusive, shall
not exceed the principal amount or the aggregate preference on involuntary
liquidation, as the case may be, of the Senior Funded Indebtedness so
extended, renewed or replaced, plus any premium or fee payable in
connection with any such extension, renewal or replacement.
Notwithstanding the provisions of the immediately preceding sentence,
any Restricted Subsidiary may issue, assume or guarantee Senior Funded
Indebtedness which would otherwise be subject to the restrictions of this
Section 6.03(a) in an aggregate amount which, together with all indebtedness
outstanding pursuant to the second sentence of Section 6.01, all attributable
debt (as defined in Section 5.09(b) of the Indenture) outstanding pursuant to
Section 5.09(b) of the Indenture and all Senior Funded Indebtedness of the
Restricted Subsidiaries outstanding pursuant to this sentence, does not exceed
5% of Stockholders' Equity.
(b) JCPenney will not, and will not permit any Restricted Subsidiary
to, (i) sell or transfer (except to JCPenney or a Restricted Subsidiary) any
Senior Funded
<PAGE>
64
Indebtedness of a Restricted Subsidiary, except Senior Funded Indebtedness
secured by a Lien permitted under the provisions of the first sentence of
Section 6.01 and except to carry out a transaction permitted by Section 6.03(c)
or (ii) sell or transfer (except, in each case, to the extent, if any, required
to qualify directors of a Restricted Subsidiary under applicable law or to
permit any person to maintain his proportionate interest in a Restricted
Subsidiary or except to effect dissolution of any such Restricted Subsidiary or
to carry out a transaction permitted by Section 6.03(c) or except to JCPenney or
a Restricted Subsidiary) any shares of common stock of a Restricted Subsidiary,
unless all the common stock of such Restricted Subsidiary at the time owned by
JCPenney and the Restricted Subsidiaries shall be sold or transferred at the
same time and unless thereafter Net Tangible Assets shall be at least 200% of
Senior Funded Indebtedness of JCPenney and the Restricted Subsidiaries
(eliminating intercompany items).
(c) JCPenney will not permit any Restricted Subsidiary to sell or
otherwise dispose of its assets substantially as an entirety or consolidate with
or merge into any other corporation, unless the corporation to which such assets
shall be sold or otherwise disposed of or which shall be formed by or result
from such consolidation or merger shall be JCPenney or any Restricted Subsidiary
or unless thereafter Net Tangible Assets shall be at least 200% of Senior Funded
Indebtedness of JCPenney and the Restricted Subsidiaries (eliminating
intercompany items).
SECTION 6.04. Mergers, Consolidations, Sales of Assets and
--------------------------------------------
Acquisitions. (a) JCPenney shall not consolidate with or merge into any other
- -------------
corporation or convey or transfer its properties and assets substantially as an
entirety to any person, unless:
(i) the corporation formed by such consolidation or into which
JCPenney is merged or the person which acquires by conveyance or transfer
the properties and assets of JCPenney substantially as an entirety shall be
a corporation organized and existing under the laws of the United States of
America or any State or the District of Columbia, and shall expressly
assume, by an instrument in writing (delivered to the Lenders) the due and
punctual payment of the principal and interest, if any, on all the Loans
and all other amounts payable by JCPenney under this Agreement and all the
rights,
<PAGE>
65
interests and other obligations of JCPenney under this Agreement;
(ii) immediately after giving effect to such transaction, (x) the
representations and warranties set forth in Article III shall be true and
correct in all material respects on the date of such transaction with the
same effect as if made on and as of such date, except to the extent such
representations and warranties expressly relate to an earlier date and (y)
no Event of Default or Default shall have occurred and be continuing; and
(iii) JCPenney shall have delivered an Officer's Certificate stating
that such consolidation, merger, conveyance or transfer and such written
instrument comply with this Section 6.04(a).
(b) Funding shall not consolidate with or merge into any other
corporation or convey or transfer its properties and assets substantially as an
entirety to any person, except that Funding may merge into JCPenney or a direct
or indirect wholly-owned Subsidiary of JCPenney subject to the satisfaction of
the following conditions:
(i) the corporation formed by such consolidation or into which Funding
is merged or the person which acquires by conveyance or transfer the
properties and assets of Funding substantially as an entirety shall
expressly assume, by an instrument in writing (delivered to the Lenders)
the due and punctual payment of the principal and interest, if any, on all
the Loans and all other amounts payable by Funding under this Agreement and
all the rights, interests and other obligations of Funding under this
Agreement;
(ii) immediately after giving effect to such transaction, (x) the
representations and warranties set forth in Article III shall be true and
correct in all material respects on the date of such transaction with the
same effect as if made on and as of such date, except to the extent such
representations and warranties expressly relate to an earlier date and (y)
no Event of Default or Default shall have occurred and be continuing; and
(iii) Funding shall have delivered an Officer's Certificate stating
that such consolidation, merger,
<PAGE>
66
conveyance or transfer and such written instrument comply with this Section
6.04(b).
SECTION 6.05. Limitations on Liens--Funding. Funding will not, and
------------------------------
will not permit any of its Subsidiaries to, create or assume any Lien upon any
of the property of Funding or any such Subsidiary, whether now owned or
hereafter acquired, in connection with the borrowing of money or the acquisition
or construction of property; provided, however, that nothing in this Section
-------- -------
6.05 shall prevent or be deemed to prohibit:
(a) Funding or any of its Subsidiaries from acquiring property subject
to a Lien existing thereon at the time of acquisition, and assuming the
same, or from creating a Lien on property being constructed or acquired to
secure a portion of the cost or purchase price thereof, provided, however,
-------- -------
that (i) any such Lien shall cover solely fixed assets or other physical
properties and (ii) such property is not or shall not thereby become
encumbered in an amount in excess of two-thirds of the lesser of the cost
and fair value thereof (as determined in good faith by the board of
directors of Funding);
(b) any Subsidiary of Funding from creating a Lien upon all or any
part of its property in favor of Funding or a wholly-owned Subsidiary of
Funding to secure indebtedness owed by such Subsidiary to Funding or a
wholly-owned Subsidiary;
(c) Liens existing on all or any part of the assets of a Subsidiary of
Funding at the time it shall become such a Subsidiary;
(d) Funding or any of its Subsidiaries from extending, renewing or
refunding any Lien permitted by the foregoing provisions of this Section
6.05 upon the same property theretofore subject thereto in connection with
the extension, renewal or refunding of the indebtedness secured thereby;
(e) Liens arising under workmen's compensation laws, unemployment
insurance laws and old age pensions or other social security benefits or
other similar laws;
<PAGE>
67
(f) Liens securing the performance of bids, tenders, leases,
contracts, statutory obligations, surety and appeal bonds, and other
obligations of like nature, incurred in the ordinary course of business;
(g) Liens imposed by law, such as carriers', warehouseman's,
mechanics', materialmen's and vendors' liens, incurred in good faith in the
ordinary course of business with respect to obligations not then
delinquent, or that are being contested in good faith by appropriate
proceedings for which adequate reserves have been established;
(h) Liens for taxes to the extent nonpayment thereof shall be
permitted by Section 5.03 hereof;
(i) Liens incidental to the normal conduct of the business of Funding
and its Subsidiaries or the ownership of their property and not securing
Funded Indebtedness (including zoning restrictions, easements, licenses,
reservations, restrictions on the use of real property or minor
irregularities incident thereto and with respect to leasehold interests,
Liens that are incurred, created, assumed or permitted to exist and arise
by, through or under or are asserted by a landlord or owner of the leased
property, with or without consent of the lessee) which do not in the
aggregate materially impair the value or use of the property used in the
business of Funding and its Subsidiaries taken as a whole, or the use of
such property for the purpose for which such property is held;
(j) Liens arising from capitalized lease obligations, such Liens not
to extend to any other property of Funding;
(k) Liens in respect of litigation or other similar proceedings in an
amount not to exceed $500,000,000 on an aggregate basis (i) the validity of
which is being currently contested on a timely basis in good faith by
appropriate proceedings (provided that the enforcement of any Liens arising
out of such proceedings shall be stayed during such proceedings) and (ii)
for which adequate reserves shall have been established;
<PAGE>
68
(l) Liens in respect of leases or subleases granted to other persons
in the ordinary course of business and not materially interfering with the
conduct of business of Funding and its Subsidiaries;
(m) Liens arising out of conditional sale, title retention,
consignment or similar arrangements for the sale of goods entered into by
Funding or any of its Subsidiaries in the ordinary course of business in
accordance with the past practices of Funding and its Subsidiaries; or
(n) Liens in favor of customs and revenue authorities arising as a
matter of law securing payment of customs duties in connection with the
importation of goods.
SECTION 6.06. Conduct of Funding's Business. (a) Funding will not,
------------------------------
and will not permit any Subsidiary of Funding to, engage in any business other
than dealing in Receivables and Penney Supplier Receivables, making Investments
as permitted by paragraph (c) below, financing the acquisition of Receivables
and Penney Supplier Receivables and making of such Investments, and any
activities incidental or related to the foregoing. Receivables at any time
acquired by Funding and its Subsidiaries from JCPenney and its Subsidiaries,
together with Receivables previously acquired from JCPenney and its Subsidiaries
and then owned by Funding and its Subsidiaries, shall be reasonably
representative of the then outstanding Receivables which have arisen in the
business of JCPenney and those Subsidiaries of JCPenney from which such
Receivables have been or are being acquired; provided, however, that Receivables
-------- -------
at any time acquired and owned by Funding and its Subsidiaries may exclude any
type or types of Receivables which are sold or assigned by JCPenney and its
Subsidiaries to one or more third parties if in the opinion of Funding's board
of directors such type or types of Receivables may be serviced more efficiently
or economically by any such third party than by JCPenney, Funding or any such
Subsidiary.
(b) Funding will not, and will not permit any of its subsidiaries to,
make any loan or advance to JCPenney or any Subsidiary of JCPenney (other than
Funding or a Subsidiary of Funding) except on a basis which in the opinion of
Funding's board of directors reasonably reflects sound credit practices at the
time of such loan or advance.
<PAGE>
69
(c) Funding will not, and will not permit any of its subsidiaries to,
make any Investments, directly or indirectly, other than
(i) Investments in Receivables;
(ii) loans and advances to JCPenney and its Subsidiaries;
(iii) Investments in wholly-owned Subsidiaries of Funding or
Investments by any Subsidiary of Funding in Funding;
(iv) Investments in Penney Supplier Receivables; and,
(v) Investments in any direct and indirect obligations of the United
States of America or any agency thereof having a maturity not in excess of
ten years from the date of purchase; obligations having a maturity not in
excess of ten years from the date of purchase of any county, municipality
or state of the United States of America and having any of the three
highest ratings assigned by any nationally recognized organization
regularly engaged in rating the investment quality of such obligations;
open market commercial paper; bankers' acceptances; certificates of
deposit; and other obligations which, in the opinion of Funding's board of
directors, are similar in risk, quality and maturity to any of the
foregoing.
ARTICLE VII. EVENTS OF DEFAULT
In case of the happening of any of the following events ("Events of
Default"):
(a) (i) any representation or warranty made or deemed made pursuant to
this Agreement shall prove to have been false or misleading in any respect,
or (ii) any material representation, warranty, statement or information
contained in any report, certificate, financial statement or other
instrument furnished in connection with or pursuant to this Agreement shall
prove to have been false or misleading in any respect; and only if, in both
---
subsection (i) and subsection (ii), such falsehood or misleading matter
would result
<PAGE>
70
in a Material Adverse Effect when so made, deemed made or furnished;
(b) default shall be made in the payment of any principal of any Loan
when and as the same shall become due and payable, whether at the due date
thereof or at a date fixed for prepayment thereof or by acceleration
thereof or otherwise, and such default shall continue unremedied for one
Business Day;
(c) default shall be made in the payment of any interest on any Loan
or any Fee or any other amount (other than an amount referred to in (b)
above) due under this Agreement, when and as the same shall become due and
payable, and such default shall continue unremedied for a period of five
Business Days;
(d) default shall be made in the due observance or performance by the
Borrowers of any covenant, condition or agreement contained in Section
5.01(a), 5.05 or 5.10 or in Article VI and such default shall continue
unremedied for a period of five Business Days;
(e) default shall be made in the due observance or performance by any
Borrower or Restricted Subsidiary of any covenant, condition or agreement
contained in this Agreement (other than those specified in (b), (c) or (d)
above) and such default shall continue unremedied for a period of 30 days
after notice thereof from the Agent or any Lender to such Borrower or, if
such default is able to be cured and such Borrower is using its best
efforts to cure such default, such longer period as is reasonably required
to cure such default;
(f) any Borrower or Restricted Subsidiary shall (i) fail to pay any
principal or interest, regardless of amount, due in respect of any
indebtedness for borrowed money in a principal amount in excess of
$50,000,000, when and as the same shall become due and payable (after the
expiration of any applicable grace period), and (unless such indebtedness
is already due and payable at the time of such default) such default
results in an acceleration of such indebtedness and in either case is not
cured within five Business Days thereafter or (ii) fail to observe or
perform any other term, covenant, condition or agreement contained in any
agreement or instrument evidencing or governing any such indebtedness if
any failure referred to in this
<PAGE>
71
clause (ii) results in an acceleration of such indebtedness that is not
annulled or rescinded within 15 days after the date of such acceleration;
(g) an involuntary proceeding shall be commenced or an involuntary
petition shall be filed in a court of competent jurisdiction seeking (i)
relief in respect of any Borrower or Restricted Subsidiary, or of a
substantial part of the property or assets of any Borrower or Restricted
Subsidiary, under Title 11 of the United States Code, as now constituted or
hereafter amended, or any other Federal or state bankruptcy, insolvency,
receivership or similar law, (ii) the appointment of a receiver, trustee,
custodian, sequestrator, conservator or similar official for any Borrower
or Restricted Subsidiary or for a substantial part of the property or
assets of any Borrower or Restricted Subsidiary or (iii) the winding-up or
liquidation of any Borrower or Restricted Subsidiary; and such proceeding
or petition shall continue undismissed for 60 days or an order or decree
approving or ordering any of the foregoing shall be entered;
(h) any Borrower or Restricted Subsidiary shall (i) voluntarily
commence any proceeding or file any petition seeking relief under Title 11
of the United States Code, as now constituted or hereafter amended, or any
other Federal or state bankruptcy, insolvency, receivership or similar law,
(ii) consent to the institution of, or fail to contest in a timely and
appropriate manner, any proceeding or the filing of any petition described
in (g) above, (iii) apply for or consent to the appointment of a receiver,
trustee, custodian, sequestrator, conservator or similar official for any
Borrower or Restricted Subsidiary or for a substantial part of the property
or assets of any Borrower or Restricted Subsidiary, (iv) file an answer
admitting the material allegations of a petition filed against it in any
such proceeding, (v) make a general assignment for the benefit of
creditors, (vi) admit in writing its inability or fail generally to pay its
debts as they become due or (vii) take any action for the purpose of
effecting any of the foregoing;
(i) one or more judgments for the payment of money in an aggregate
amount in excess of $100,000,000 shall be rendered against any Borrower,
any Restricted Subsidiary or any combination of Borrowers and
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72
Restricted Subsidiaries and the same shall remain undischarged for a period
of 30 consecutive Business Days during which execution shall not be
effectively stayed, or any action shall be legally taken by a judgment
creditor to levy upon assets or properties of any Borrower or Restricted
Subsidiary to enforce any such judgment;
(j) a Reportable Event or Reportable Events, or a failure to make a
required installment or other payment (within the meaning of Section
412(n)(l) of the Code), shall have occurred with respect to any Plan or
Plans that reasonably could be expected to result in liability of the
Borrowers to the PBGC or to any Plan or Plans in an aggregate amount
exceeding $200,000,000 and, within 30 days after the reporting of any such
Reportable Event to the Agent or after the receipt by the Agent of the
statement required pursuant to Section 5.06, the Agent shall have notified
the Borrowers in writing that (i) the Required Lenders have made a
determination that, on the basis of such Reportable Event or Reportable
Events or the failure to make a required payment, there are reasonable
grounds (A) for the termination of such Plan or Plans by the PBGC, (B) for
the appointment by the appropriate United States District Court of a
trustee to administer such Plan or Plans or (C) for the imposition of a
lien in favor of a Plan and (ii) as a result thereof an Event of Default
exists hereunder; or a trustee shall be appointed by a United States
District Court to administer any such Plan or Plans; or the PBGC shall
institute proceedings to terminate any Plan or Plans;
(k) Funding (or any permitted successor thereto under Section 6.04(b))
shall cease to be a direct or indirect wholly-owned subsidiary of JCPenney
(unless Funding or such permitted successor shall be merged into JCPenney);
or
(l) an Event of Default shall occur under the Tranche A Credit
Agreement.
then, and in every such event (other than an event described in paragraph (g) or
(h) above), and at any time thereafter during the continuance of such event, the
Agent, at the request of the Required Lenders, shall, by notice to the
Borrowers, take either or both of the following actions, at the same or
different times: (x) terminate forthwith the
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73
Commitments and (y) declare the Loans then outstanding to be forthwith due and
payable in whole or in part, whereupon the principal of the Loans so declared to
be due and payable, together with accrued interest thereon and any unpaid
accrued Fees and all other liabilities of the Borrowers accrued hereunder, shall
become forthwith due and payable, without presentment, demand, protest or any
other notice of any kind, all of which are hereby expressly waived by the
Borrowers, anything contained herein to the contrary notwithstanding; and in any
event described in paragraph (g) or (h) above, the Commitments shall
automatically and immediately terminate and the principal of the Loans then
outstanding, together with accrued interest thereon and any unpaid accrued Fees
and all other liabilities of the Borrowers accrued hereunder, shall
automatically and immediately become due and payable, without presentment,
demand, protest or any other notice of any kind, all of which are hereby
expressly waived by the Borrowers, anything contained herein to the contrary
notwithstanding.
ARTICLE VIII. THE AGENT
In order to expedite the transactions contemplated by this Agreement,
each Lender hereby appoints the Agent to act as its agent hereunder. Each of
the Lenders hereby irrevocably authorizes the Agent to take such actions on
behalf of such Lender and to exercise such powers as are specifically delegated
to the Agent by the terms and provisions hereof, together with such actions and
powers as are reasonably incidental thereto. The Agent is hereby expressly
authorized by the Lenders, without hereby limiting any implied authority, (a) to
receive on behalf of the Lenders all payments of principal of and interest on
the Loans and all other amounts due to the Lenders hereunder, and promptly to
distribute to each Lender its proper share of each payment so received; (b) to
give notice on behalf of each of the Lenders to the Borrowers of any Event of
Default specified in this Agreement of which the Agent has actual knowledge
acquired in connection with its agency hereunder; and (c) to distribute to each
Lender copies of all notices, financial statements and other materials delivered
by the Borrowers pursuant to this Agreement as received by the Agent.
The Agent and its directors, officers, employees and agents shall not
be liable as such for any action taken or omitted by any of them, or be
responsible for any
<PAGE>
74
statement, warranty or representation herein or the contents of any document
delivered in connection herewith, except in each case to the extent of its or
his own gross negligence or wilful misconduct in connection therewith, or be
required to ascertain or to make any inquiry concerning the performance or
observance by the Borrowers of any of the terms, conditions, covenants or
agreements contained in this Agreement. The Agent shall not be responsible to
the Lenders for the due execution, genuineness, validity, enforceability or
effectiveness of this Agreement or any other instruments or agreements;
provided, however, that the Agent shall be responsible for its own due execution
- -------- -------
of this Agreement and any other instrument or agreement relating to this
Agreement. The Agent shall in all cases be fully protected in acting, or
refraining from acting, in accordance with written instructions signed by the
Required Lenders and, except as otherwise specifically provided herein, such
instructions and any action or inaction pursuant thereto shall be binding on all
the Lenders. The Agent shall, in the absence of knowledge to the contrary, be
entitled to rely on any instrument or document believed by it in good faith to
be genuine and correct and to have been signed or sent by the proper person or
persons. The Agent and its directors, officers, employees and agents shall not
have any responsibility to any Borrower on account of the failure of or delay in
performance or breach by any Lender of any of its obligations hereunder or to
any Lender on account of the failure of or delay in performance or breach by any
other Lender or any Borrower of any of its respective obligations hereunder or
in connection herewith. The Agent may execute any and all of its duties
hereunder by or through agents of recognized standing or employees and shall be
entitled to rely upon the advice of legal counsel of recognized standing
selected by it with respect to all matters arising hereunder and shall not be
liable for any action taken or suffered in good faith by it in accordance with
the advice of such counsel.
The Lenders hereby acknowledge that the Agent shall be under no duty
to take any discretionary action permitted to be taken by it pursuant to the
provisions of this Agreement unless it shall be requested in writing to do so by
the Required Lenders.
Subject to the appointment and acceptance of a successor Agent as
provided below, the Agent may resign at any time by notifying the Lenders and
the Borrowers. Upon any such resignation, the Required Lenders shall have the
<PAGE>
75
right to appoint a successor; provided, however, that any such appointment shall
-------- -------
be subject to the prior written consent of JCPenney (which consent shall not be
unreasonably withheld so long as such successor shall be (i) a bank with a
rating of Aa2 or better from Moody's or a rating of AA or better from S&P, or an
Affiliate of any such bank, or (ii) any Co-Agent). If no successor shall have
been so appointed by the Required Lenders and shall have accepted such
appointment within 30 days after the retiring Agent gives notice of its
resignation, then the retiring Agent may, on behalf of the Lenders, appoint a
successor Agent; provided, however, that any such appointment shall be subject
-------- -------
to the prior written consent of JCPenney (which consent shall not be
unreasonably withheld so long as such successor shall be (i) a bank with a
rating of Aa2 or better from Moody's or a rating of AA or better from S&P, or an
Affiliate of any such bank, or (ii) any Co-Agent). Upon the acceptance of any
appointment as Agent hereunder by a permitted successor, such successor shall
succeed to and become vested with all the rights, powers, privileges and duties
of the retiring Agent and the retiring Agent shall be discharged from its duties
and obligations as Agent hereunder. After an Agent's resignation hereunder, the
provisions of this Article and Section 9.05 shall continue in effect for its
benefit in respect of any actions taken or omitted to be taken by it while it
was acting as Agent.
The Borrowers shall have the right to replace any Agent requesting
compensation under Section 2.19, but only in accordance with the provisions of
Section 2.20(b).
With respect to the Loans made by it hereunder, the Agent (and any
Lender appointed as a successor Agent) in its individual capacity and not as
Agent shall have the same rights and powers as any other Lender and may exercise
the same as though it were not the Agent (or such successor Agent) and the Agent
and its Affiliates (and any such successor Agent and its Affiliates) may accept
deposits from, lend money to and generally engage in any kind of business with
any Borrower or Subsidiary or any Affiliate of any Borrower as if the Agent (or
such successor Agent) were not an Agent.
Each Lender agrees (i) to reimburse the Agent, on demand, in the
amount of its pro rata share (based on its Commitment hereunder) of any expenses
(other than expenses in connection with the negotiation, preparation and closing
of this Agreement) incurred for the benefit of the Lenders
<PAGE>
76
by the Agent, including counsel fees and compensation of agents and employees
paid for services rendered on behalf of the Lenders, which shall not have been
reimbursed by the Borrowers and (ii) to indemnify and hold harmless the Agent
and any of its directors, officers, employees or agents, on demand, in the
amount of such pro rata share, from and against any and all liabilities, taxes,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind or nature whatsoever which may be imposed
on, incurred by or asserted against it in its capacity as an Agent or any of
them in any way relating to or arising out of this Agreement or any action taken
or omitted by it or any of them under this Agreement, to the extent the same
shall not have been reimbursed by the Borrowers; provided that no Lender shall
--------
be liable to the Agent for any portion of such liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
resulting from the gross negligence or wilful misconduct of the Agent or any of
its directors, officers, employees or agents.
Each Lender acknowledges that it has, independently and without
reliance upon the Agent or any other Lender and based on such documents and
information as it has deemed appropriate, made its own credit analysis and
decision to enter into this Agreement. Each Lender also acknowledges that it
will, independently and without reliance upon the Agent or any other Lender and
based on such documents and information as it shall from time to time deem
appropriate, continue to make its own decisions in taking or not taking action
under or based upon this Agreement, any related agreement or any document
furnished hereunder or thereunder.
ARTICLE IX. MISCELLANEOUS
SECTION 9.01. Notices. Notices and other communications provided for
--------
herein shall be in writing and shall be delivered by hand or overnight courier
service, mailed or
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77
sent by telex, graphic scanning or other telegraphic communications equipment,
as follows:
(a) if to J.C. Penney, to it at J.C. Penney Company, Inc., 6501 Legacy
Drive, Mail Code 1304, Plano, TX 75024-3698, Attention of Treasurer
Telephone: (214) 431-2011
Telecopy: (214) 431-2044
With a copy to: General Counsel - J.C. Penney Company, Inc., at the same
address;
(b) if to Funding, to it at J.C. Penney Funding Corporation, 6501
Legacy Drive, Mail Code 1304, Plano, TX 75024-3698, Attention of President
Telephone: (214) 431-2011
Telecopy: (214) 431-2044 With a copy to: General Counsel - J.C.
Penney Company, Inc., at the same address.
(c) if to the Agent, to it at Morgan Guaranty Trust Company of New
York, 60 Wall Street, 22nd Floor, New York, NY 10260, Attention of Mr.
Stephen B. King
Telephone: (212) 648-7415
Telecopy: (212) 648-5336
(d) if to a Lender, to it at its address (or telecopy number) set
forth in Schedule 2.01.
All notices and other communications given to any party hereto in accordance
with the provisions of this Agreement shall be deemed to have been given on the
date of receipt if delivered by hand or overnight courier service or sent by
telex, telecopy or other telegraphic communications equipment, or on the date
five Business Days after dispatch by certified or registered mail if mailed, in
each case delivered, sent or mailed (properly addressed) to such party as
provided in this Section 9.01 or in accordance with the latest unrevoked
direction from such party given in accordance with this Section 9.01.
SECTION 9.02. Survival of Agreement. All covenants, agreements,
----------------------
representations and warranties made by any Borrower herein and in the
certificates or other instruments prepared or delivered in connection with or
pursuant to this Agreement shall be considered to have been relied upon by the
Lenders and shall survive the making by the Lenders of the Loans, regardless of
any investigation made by the Lenders or on their behalf, and shall continue in
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78
full force and effect as long as the principal of or any accrued interest on any
Loan or any Fee or any other amount payable under this Agreement is outstanding
and unpaid and so long as the Commitments have not been terminated.
SECTION 9.03. Binding Effect. This Agreement shall become effective
---------------
when it shall have been executed by each of the Borrowers and the Agent and when
the Agent shall have received copies hereof which, when taken together, bear the
signatures of each Lender, and thereafter shall be binding upon and inure to the
benefit of the Borrowers, the Agent and each Lender and their respective
successors and permitted assigns in accordance with its terms, except that no
Borrower shall have any right to assign or delegate any of its respective rights
or duties hereunder or any interest herein without the prior consent of all the
Lenders.
SECTION 9.04. Successors and Assigns. (a) Whenever in this
-----------------------
Agreement any of the parties hereto is referred to, such reference shall be
deemed to include the successors and permitted assigns of such party; and all
covenants, promises and agreements by or on behalf of any Borrower, the Agent
or the Lenders that are contained in this Agreement shall bind and inure to the
benefit of their respective successors and permitted assigns.
(b) Each Lender may assign to an Eligible Assignee, at the expense of
the assignor and/or the assignee, all or a portion of its interests, rights and
obligations under this Agreement (including all or a portion of its Commitment
and the Loans at the time owing to it); provided, however, that (i) except in
-------- -------
the case of an assignment by a Lender to an Affiliate of such Lender which is a
bank or bank holding company, the Borrowers and the Agent must give their prior
written consent to such assignment, (ii) the amount of the Commitment of the
assigning Lender subject to such assignment (determined as of the date of such
assignment) shall not be less than $20,000,000 (or the remaining amount of the
Commitment of such Lender), (iii) other than the case of an assignment by a
Lender of the remaining amount of the Commitment of such Lender, no Lender shall
make more than two assignments under this Section 9.04(b) after the Closing Date
and prior to the Maturity Date, (iv) the parties to each such assignment shall
execute and deliver to the Agent an instrument evidencing such assignment (the
"Assignment Instrument") and a processing and recordation fee of $2,500 (which
fee shall not in any event be an obligation of the Borrowers) and
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79
(v) as of the date of such assignment, except with the prior written consent of
JCPenney, (x) the assignee shall not have any right, and shall have no knowledge
that such assignment would result in its having the right, to request
compensation pursuant to Section 2.13 or 2.19 after giving effect to such
assignment in excess of any compensation to which the assigning Lender would
have been entitled under such Sections and (y) the parties to such assignment
shall have no knowledge that such assignment (A) would cause it to be unlawful
for any party thereto to make or maintain any Eurodollar Loan or to give effect
to its obligations as contemplated hereby with respect to any Eurodollar Loan or
(B) would cause any Borrower to incur any liability under Section 2.15. Upon
acceptance and recording pursuant to paragraph (e) of this Section 9.04, from
and after the effective date specified in each Assignment Instrument, which
effective date shall be at least five days after the execution thereof, (A) the
assignee thereunder shall be a party hereto and, to the extent of the interest
assigned by such Assignment Instrument, shall have the rights and obligations
of, and shall for all purposes be, a Lender under this Agreement and (B) the
assigning Lender thereunder shall, to the extent of the interest assigned by
such Assignment Instrument, be released from its obligations under this
Agreement (and, in the case of an Assignment Instrument covering all or the
remaining portion of an assigning Lender's rights and obligations under this
Agreement, such Lender shall cease to be a party hereto (but, subject to Section
2.20, shall continue to be entitled to the benefits of Sections 2.13, 2.15, 2.19
and 9.05, as well as to any Fees accrued for its account hereunder and not yet
paid)). Notwithstanding the foregoing, any Lender assigning any portion of its
rights and obligations under this Agreement may retain any Competitive Loans
made by it outstanding at such time, and in such case shall retain its rights
hereunder in respect of any Loans so retained until such Loans have been repaid
in full in accordance with this Agreement. No assignment may be made by any
Lender except in accordance with the provisions of this Section 9.04(b).
(c) By executing and delivering an Assignment Instrument, the
assignee thereunder shall be deemed to confirm to and agree with the other
parties hereto as follows: (i) such assignee confirms that it has received a
copy of this Agreement, together with copies of the most recent financial
statements delivered pursuant to Section 5.04 and such other documents and
information as it has deemed appropriate to make its own credit analysis and
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80
decision to enter into such Assignment Instrument; (ii) such assignee will
independently and without reliance upon the Agent, the assigning Lender or any
other Lender and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in taking or
not taking action under this Agreement; (iii) such assignee appoints and
authorizes the Agent to take such action as agent on its behalf and to exercise
such powers under this Agreement as are delegated to the Agent by the terms
hereof, together with such powers as are reasonably incidental thereto; and (iv)
such assignee agrees that it will perform in accordance with their terms all the
obligations which by the terms of this Agreement are required to be performed by
it as a Lender.
(d) The Agent shall retain a copy of each Assignment Instrument
delivered to it and a register for the recordation of the name and address of,
and the Commitment of, each Lender from time to time (the "Register"). The
entries in the Register shall be conclusive in the absence of manifest error and
the Borrowers, the Agent and the Lenders may treat each person whose name is
recorded in the Register pursuant to the terms hereof as a Lender hereunder for
all purposes of this Agreement. The Register shall be available for inspection
by any Borrower or any Lender, at any reasonable time and from time to time upon
reasonable prior notice.
(e) Each Lender may without the consent of the Borrowers or the Agent
sell participations to one or more banks or other entities in all or a portion
of its rights and obligations under this Agreement (including all or a portion
of its Commitment and the Loans owing to it); provided, however, that (i) such
-------- -------
Lender's obligations under this Agreement shall remain unchanged, (ii) such
Lender shall remain solely responsible to the other parties hereto for the
performance of such obligations, (iii) the participating banks or other entities
shall not be entitled to the benefit of the provisions contained in Sections
2.13, 2.15, 2.19 and 9.05 and (iv) the Borrowers, the Agent and the other
Lenders shall continue to deal solely and directly with such Lender in
connection with such Lender's rights and obligations under this Agreement, and
such Lender shall retain the sole right to enforce the obligations of the
Borrowers relating to the Loans and to approve any amendment, modification or
waiver of any provision of this Agreement (other than any amendments,
modifications or waivers decreasing any fees payable hereunder or the amount
<PAGE>
81
of principal of or the rate at which interest is payable on the Loans, or
extending any scheduled principal payment date or date fixed for the payment of
interest on the Loans, that would affect the Lender in question and its
participants).
(f) Any Lender or participant may, in connection with any assignment
or participation or proposed assignment or participation pursuant to this
Section 9.04, disclose to the assignee or participant or proposed assignee or
participant any information relating to any Borrower furnished to such Lender by
or on behalf of such Borrower; provided that, prior to any such disclosure of
--------
information designated by such Borrower as confidential, each such assignee or
participant or proposed assignee or participant shall execute an agreement
whereby such assignee or participant shall agree to preserve the confidentiality
of such confidential information in accordance with Section 9.15.
(g) Any Lender may at any time, without the consent of any other
party hereto, assign all or any portion of its rights under this Agreement and
any notes issued to it to a Federal Reserve Bank provided that no such
--------
assignment shall release a Lender from any of its obligations hereunder. In
order to facilitate such an assignment to a Federal Reserve Bank, the Borrower
shall, at the request of the assigning Lender, promptly execute and deliver to
the assigning Lender a note with terms in accordance with this Agreement, in a
form reasonably acceptable to the Agent and the Borrower, evidencing the Loans
made to the Borrower by the assigning Lender hereunder.
SECTION 9.05. Expenses; Indemnity. (a) The Borrowers agree, jointly
--------------------
and severally, to pay all reasonable out-of-pocket expenses incurred by the
Agent in connection with the negotiation, preparation and closing of this
Agreement, including the reasonable fees and disbursements of Cravath, Swaine &
Moore, special counsel for the Agent, and, only with the written consent of the
Borrowers prior to any incurrence, all reasonable out-of-pocket expenses
incurred by the Agent in connection with any amendment, modification or waiver
of this Agreement. The Borrowers agree, jointly and severally, to pay all
reasonable out-of-pocket costs and expenses of the Agent and Lenders, as well as
the allocated costs of in-house counsel, in connection with the collection or
enforcement of this Agreement.
<PAGE>
82
(b) The Borrowers agree, jointly and severally, to indemnify the
Agent, J.P. Morgan Securities Inc., each Lender and each of their respective
directors, officers and employees (each such person being called an
"Indemnitee") against, and to hold each Indemnitee harmless from, any and all
losses, claims, damages, liabilities and related expenses, including reasonable
counsel fees and expenses, incurred by or asserted against any Indemnitee
arising as a result of (i) any breach by any Borrower of any of its obligations
under this Agreement or any agreement or instrument contemplated hereby, (ii)
the use of the proceeds of the Loans or (iii) any claim, litigation,
investigation or proceeding relating to any of the foregoing, if any Indemnitee
is at any time a party thereto; provided that such indemnity shall not, as to
--------
any Indemnitee, be available to the extent that such losses, claims, damages,
liabilities or related expenses (x) arise in connection with any judgment
rendered by a court of competent jurisdiction in favor of any Borrower and
against such Indemnitee, (y) result from the gross negligence or wilful
misconduct of such Indemnitee (or, if such Indemnitee is a Lender or the Agent,
any of its directors, officers or employees) or (z) result from any disputes
among the Lenders and the Agent, or any of them, other than disputes resulting
from the fault of a Borrower.
(c) The provisions of this Section 9.05 shall remain operative and in
full force and effect regardless of the expiration of the term of this
Agreement, the consummation of the transactions contemplated hereby, the
repayment of any of the Loans, the invalidity or unenforceability of any term or
provision of this Agreement, or any investigation made by or on behalf of the
Agent or the Lender. All amounts due under this Section 9.05 shall be payable
on written demand therefor.
SECTION 9.06. Right of Setoff. If an Event of Default shall have
----------------
occurred and be continuing and any three Lenders representing at least
$50,000,000 in aggregate amount of the Commitments have requested the Agent, in
writing, in accordance with the provisions of Article VII, to declare the Loan
to be forthwith due and payable, each Lender is hereby authorized at any time
and from time to time, to the fullest extent permitted by law, to set off and
apply any and all deposits (general or special, time or demand, provisional or
final) at any time held and other indebtedness at any time owing by such Lender
to or for the credit or the account of any Borrower against any of and all
<PAGE>
83
the obligations of such Borrower now or hereafter existing under this Agreement
held by such Lender (other than obligations purchased after such Event of
Default shall have become known to such Lender), irrespective of whether or not
such Lender shall have made any demand under this Agreement and although such
obligations may be unmatured. The rights of each Lender under this Section are
in addition to other rights and remedies (including other rights of setoff)
which such Lender may have. Any Lender exercising its rights under this Section
shall give notice thereof to JCPenney concurrently with or prior to the exercise
of such rights.
SECTION 9.07. APPLICABLE LAW. THIS AGREEMENT SHALL BE CONSTRUED IN
---------------
ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK.
SECTION 9.08. Waivers; Amendment. (a) No failure or delay of the
-------------------
Agent or Lender in exercising any power or right hereunder shall operate as a
waiver thereof, nor shall any single or partial exercise of any such right or
power, or any abandonment or discontinuance of steps to enforce such a right or
power, preclude any other or further exercise thereof or the exercise of any
other right or power. The rights and remedies of the Agent, the Lenders and the
Borrowers hereunder are cumulative and are not exclusive of any rights or
remedies which they would otherwise have. No waiver of any provision of this
Agreement or consent to any departure by any Borrower therefrom shall in any
event be effective unless the same shall be permitted by paragraph (b) below,
and then such waiver or consent shall be effective only in the specific instance
and for the purpose for which given. No notice or demand on any Borrower in any
case shall entitle such Borrower to any other or further notice or demand in
similar or other circumstances.
(b) Neither this Agreement nor any provision hereof may be waived,
amended or modified except pursuant to an agreement or agreements in writing
entered into by the Borrowers and the Required Lenders; provided, however, that
-------- -------
no such agreement shall (i) decrease the principal amount of, or extend the
maturity of or any scheduled principal payment date or date for the payment of
any interest on any Loan, or waive or excuse any such payment or any part
thereof, or decrease the rate of interest on any Loan, without the prior written
consent of each Lender affected thereby, (ii) change the Commitment or decrease
the Facility Fees of any Lender without the prior written consent of such
<PAGE>
84
Lender, or (iii) amend or modify the provisions of Section 2.16 or Section 9.03,
the provisions of this Section or the definition of the "Required Lenders",
without the prior written consent of each Lender; provided further that no such
-------- -------
agreement shall amend, modify or otherwise affect the rights or duties of the
Agent hereunder without the prior written consent of the Agent. Each Lender
shall be bound by any waiver, amendment or modification authorized by this
Section, and any consent by any Lender pursuant to this Section shall bind any
subsequent assignee of such Lender.
SECTION 9.09. Interest and Charges. Notwithstanding any other
---------------------
provision in this Agreement, no Lender shall ever be entitled to receive,
collect or apply, as interest on any amount owing to such Lender under this
Agreement or in connection herewith, any amount in excess of the Maximum Amount.
If any Lender ever receives, collects or applies, as interest, any such excess,
such excess shall be deemed a partial repayment of principal and treated
hereunder as such; and if principal is paid in full, any remaining excess shall
be paid to the appropriate Borrower. In determining whether or not the interest
paid or payable, under any specific contingency, exceeds the Maximum Amount, the
Borrowers and the Lenders shall, to the maximum extent permitted under
applicable law, (i) characterize any nonprincipal payment as an expense, fee or
premium rather than as interest, (ii) exclude voluntary prepayments and the
effect thereof, and (iii) amortize, prorate, allocate and spread in equal parts,
the total amount of interest throughout the entire contemplated term of this
Agreement so that the interest rate is uniform throughout the entire period that
any amount is outstanding under or in connection with this Agreement; provided,
--------
however, that if any obligation owing to a Lender hereunder or in connection
- -------
herewith is paid and performed in full prior to the end of the full contemplated
term thereof, and if the interest received by such Lender on such obligation for
its actual term exceeds the Maximum Amount with respect thereto, such Lender
shall refund to the appropriate Borrower the amount of such excess or credit the
amount of such excess against the total principal amount of all amounts owing to
such Lender hereunder or in connection herewith, and, in such event, such Lender
shall not be subject to any penalties provided by any laws for contracting for,
charging or receiving interest in excess of the Maximum Amount.
SECTION 9.10. Entire Agreement. This written Agreement together with
-----------------
the letter agreement with respect to
<PAGE>
85
payment of fees of even date herewith represent the final agreement among the
parties with respect to the subject matter hereof and may not be contradicted by
evidence of prior, contemporaneous, or subsequent oral agreements of the
parties. There are no unwritten oral agreements among the parties with respect
to the subject matter hereof.
SECTION 9.11. Severability. In the event any one or more of the
-------------
provisions contained in this Agreement should be held invalid, illegal or
unenforceable in any respect, the validity, legality and enforceability of the
remaining provisions contained herein and therein shall not in any way be
affected or impaired thereby. The parties shall endeavor in good-faith
negotiations to replace the invalid, illegal or unenforceable provisions with
valid provisions the economic effect of which comes as close as possible to that
of the invalid, illegal or unenforceable provisions.
SECTION 9.12. Counterparts. This Agreement may be executed in two or
-------------
more counterparts, each of which shall constitute an original but all of which
when taken together shall constitute but one contract, and shall become
effective as provided in Section 9.03.
SECTION 9.13. Headings. Article and Section headings and the Table
---------
of Contents used herein are for convenience of reference only, are not part of
this Agreement and are not to affect the construction of, or to be taken into
consideration in interpreting, this Agreement.
SECTION 9.14. Jurisdiction; Consent to Service of Process. (a) Each
----------------------------------- --------
Borrower hereby irrevocably and unconditionally submits, for itself and its
property, to the nonexclusive jurisdiction of any New York State court or
Federal court of the United States of America sitting in New York City, and any
appellate court from any thereof, in any action or proceeding arising out of or
relating to this Agreement, or for recognition or enforcement of any judgment,
and each of the parties hereto hereby irrevocably and unconditionally agrees
that all claims in respect of any such action or proceeding may be heard and
determined in such New York State or, to the extent permitted by law, in such
Federal court. Each of the parties hereto agrees that a final judgment in any
such action or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by law.
Subject to the foregoing and to paragraph (b) below, nothing in this Agreement
shall affect any right that any party
<PAGE>
86
hereto may otherwise have to bring any action or proceeding relating to this
Agreement against any other party hereto in the courts of any jurisdiction.
(b) Each Borrower hereby irrevocably and unconditionally waives, to
the fullest extent it may legally and effectively do so, any objection which it
may now or hereafter have to the laying of venue of any suit, action or
proceeding arising out of or relating to this Agreement in any New York State or
Federal court. Each of the parties hereto hereby irrevocably waives, to the
fullest extent permitted by law, the defense of an inconvenient forum to the
maintenance of such action or proceeding in any such court.
(c) Each party to this Agreement irrevocably consents to service of
process in the manner provided for notices in Section 9.01. Nothing in this
Agreement will affect the right of any party to this Agreement to serve process
in any other manner permitted by law.
SECTION 9.15. Confidentiality. Notwithstanding anything contained in
----------------
this Agreement to the contrary, the Lenders and the Agent shall hold in
confidence all agreements, statements, reports and information that are not in
the public domain concerning the Borrowers and their Subsidiaries that the Agent
or any Lender receives pursuant to or in connection with this Agreement. The
Agent and each of the Lenders shall not distribute any such confidential
information to other persons except (a) to its counsel, its Affiliates, its
examiners, regulatory authorities and prospective assignees of, or participants
in, its interest herein and their respective counsel (each of which shall be
instructed to hold the same in confidence, and in the case of any prospective
assignee or prospective participant, shall execute an agreement to such effect
pursuant to Section 9.04(f) as a condition to receiving a copy of this Agreement
and becoming an assignee or participant hereunder), (b) pursuant to legal
process, (c) in connection with litigation against or by the Lenders and/or the
Agent arising in connection with this Agreement or (d) with the prior written
consent of the Borrowers. The Agent and each of the Lenders shall give prior or
contemporaneous notice to the Borrowers of any disclosure by it of confidential
information pursuant to clause (b) or (c) above.
<PAGE>
87
SECTION 9.16. Liability of Borrowers. Except as expressly provided
-----------------------
in this Agreement, the obligations of each Borrower hereunder shall be several
obligations with respect to Loans made to it.
IN WITNESS WHEREOF, the Borrowers, the Agent, the Co-Agents and the
Lenders have caused this Agreement to be duly executed by their respective
authorized officers as of the day and year first above written.
J. C. PENNEY COMPANY, INC.,
by
/s/ Leo A. Gispanski
----------------------------
Name: Leo A. Gispanski
Title: Vice President &
Treasurer
J. C. PENNEY FUNDING CORPORATION,
by
/s/ Donald A. McKay
----------------------------
Name: Donald A. McKay
Title: Chairman of the Board
<PAGE>
88
MORGAN GUARANTY TRUST COMPANY OF
NEW YORK, individually and as
Agent,
by
/s/ Stephen B. King
------------------------------
Name: Stephen B. King
Title: Vice President
<PAGE>
89
BANKERS TRUST COMPANY, individually
and as Co-Agent,
by
/s/ Bruce D. Glasson
------------------------------
Name: Bruce D. Glasson
Title: Managing Director
CHEMICAL BANK, individually and as
Co-Agent,
by
/s/ Meredith L. Vanden Handel
------------------------------
Name: Meredith L. Vanden
Handel
Title: Vice President
CREDIT SUISSE, individually and as
Co-Agent,
by
/s/ Stephen M. Flynn
------------------------------
Name: Stephen M. Flynn
Title: Member of Senior
Management
by
/s/ Maria N. Gaspara
------------------------------
Name: Maria N. Gaspara
Title: Associate
ABN AMRO BANK N.V.,
by
/s/ Laurie C. Tuzo
------------------------------
Name: Laurie C. Tuzo
Title: Vice President
by
/s/ Ronald A. Mahle
------------------------------
Name: Ronald A. Mahle
Title: Group Vice President
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION,
by
/s/ Jody B. Schneider
------------------------------
Name: Jody B. Schneider
Title: Vice President
<PAGE>
90
THE FIRST NATIONAL BANK OF BOSTON,
by
/s/ Bethann R. Halligan
------------------------------
Name: Bethann R. Halligan
Title: Director
BANK OF HAWAII,
by
/s/ Peter S. Ho
------------------------------
Name: Peter S. Ho
Title: Vice President
THE BANK OF NEW YORK,
by
/s/ Gregory L. Batson
------------------------------
Name: Gregory L. Batson
Title: Assistant Vice
President
BANK OF TOKYO, LTD., acting by and
through its Dallas Agency, as a
Lender,
by
/s/ John M. Mearns
------------------------------
Name: John M. Mearns
Title: Vice President
BANK ONE, TEXAS, N.A.,
by
/s/ Scott Rhea
------------------------------
Name: Scott Rhea
Title: Banking Officer
BANQUE NATIONALE DE PARIS, Houston
Agency,
by
/s/ Henry F. Setina
------------------------------
Name: Henry F. Setina
Title: Vice President
<PAGE>
91
CITIBANK, N.A.,
by
/s/ Arnold J. Ziegel
------------------------------
Name: Arnold J. Ziegel
Title: Authorized Signer
CREDIT LYONNAIS NEW YORK BRANCH,
by
/s/ Robert Ivosevich
------------------------------
Name: Robert Ivosevich
Title: Senior Vice President
THE DAI-ICHI KANGYO BANK, LTD., NEW
YORK BRANCH,
by
/s/ Kiyoshi Miyake
------------------------------
Name: Kiyoshi Miyake
Title: Vice President and
Group Leader
FIRST INTERSTATE BANK OF CALIFORNIA,
by
/s/ William J. Baird
------------------------------
Name: William J. Baird
Title: Vice President
by
/s/ Wendy V. C. Purcell
------------------------------
Name: Wendy V. C. Purcell
Title: Assistant Vice President
THE FIRST NATIONAL BANK OF CHICAGO,
by
/s/ Ted Wozniak
------------------------------
Name: Ted Wozniak
Title: Vice President
FIRST SECURITY BANK OF UTAH, N.A.,
by
/s/ Stephen L. Goalen
------------------------------
Name: Stephen L. Goalen
Title: Senior Vice President
<PAGE>
92
FIRST UNION NATIONAL BANK OF NORTH
CAROLINA,
by
/s/ A. Kimball Collins
------------------------------
Name: A. Kimball Collins
Title: Assistant Vice President
FIRSTAR BANK MILWAUKEE, N.A.,
by
/s/ Timothy W. Somers
------------------------------
Name: Timothy W. Somers
Title: Assistant Vice President
THE FUJI BANK, LIMITED, Houston
Agency,
by
/s/ David Kelley
------------------------------
Name: David Kelley
Title: Vice President and
Senior Manager
INDUSTRIAL BANK OF JAPAN TRUST COMPANY,
by
/s/ Takeshi Kawano
------------------------------
Name: Takeshi Kawano
Title: Senior Vice President and
Senior Manager
THE LONG-TERM CREDIT BANK OF JAPAN,
LIMITED, New York Branch,
by
/s/ Satoru Otsubo
------------------------------
Name: Satoru Otsubo
Title: Joint General Manager
MELLON BANK, N.A.,
by
/s/ Lisa M. Pellow
------------------------------
Name: Lisa M. Pellow
Title: Vice President
<PAGE>
93
THE MITSUBISHI BANK, LIMITED,
by
/s/ Shoji Honda
------------------------------
Name: Shoji Honda
Title: General Manager
NATIONAL WESTMINSTER BANK PLC, New
York Branch,
by
/s/ Stephen R. Parker
------------------------------
Name: Stephen R. Parker
Title: Vice President
NATIONAL WESTMINSTER BANK PLC,
Nassau Branch,
by
/s/ Stephen R. Parker
------------------------------
Name: Stephen R. Parker
Title: Vice President
NATIONSBANK OF TEXAS, N.A.,
by
/s/ Sharon L. McCarty
------------------------------
Name: Sharon L. McCarty
Title: Assistant Vice President
NBD BANK, N.A.
by
/s/ D. Andrew Bateman
------------------------------
Name: D. Andrew Bateman
Title: First Vice President
THE NORTHERN TRUST COMPANY,
by
/s/ Sara Clissold
------------------------------
Name: Sara Clissold
Title: Officer
NORWEST BANK MINNESOTA, N.A.,
by
/s/ Perry G. Pelos
------------------------------
Name: Perry G. Pelos
Title: Vice President
<PAGE>
94
PNC BANK, NATIONAL ASSOCIATION,
by
/s/ Gregory T. Gaschler
------------------------------
Name: Gregory T. Gaschler
Title: Vice President
ROYAL BANK OF CANADA,
by
/s/ Everett M. Harner
------------------------------
Name: Everett M. Harner
Title: Manager
ISTITUTO BANCARIO SAN PAOLO DI
TORINO, SpA,
by
/s/ William J. DeAngelo
------------------------------
Name: William J. DeAngelo
Title: First Vice President
by
/s/ Robert S. Wurster
------------------------------
Name: Robert S. Wurster
Title: First Vice President
THE SANWA BANK LIMITED, Dallas Agency,
by
/s/ Robert S. Smith
------------------------------
Name: Robert S. Smith
Title: Assistant Vice President
SOCIETE GENERALE, Southwest Agency,
by
/s/ Louis P. Laville, III
------------------------------
Name: Louis P. Laville, III
Title: Vice President
THE SUMITOMO BANK, LTD., Houston Agency,
by
/s/ Tatsuo Ueda
------------------------------
Name: Tatsuo Ueda
Title: General Manager
<PAGE>
95
SUNBANK, NATIONAL ASSOCIATION,
by
/s/ J. Carol Doyle
------------------------------
Name: J. Carol Doyle
Title: First Vice President
SWISS BANK CORPORATION, Cayman
Islands Branch,
by
/s/ Nancy A. Russell
------------------------------
Name: Nancy A. Russell
Title: Associate Director
by
/s/ William A. McDonnell
------------------------------
Name: William A. McDonnell
Title: Associate Director
UNION BANK OF SWITZERLAND, Houston Agency,
by
/s/ Dan O. Boyle
------------------------------
Name: Dan O. Boyle
Title: Vice President
by
/s/ Jean Claude de Roche
------------------------------
Name: Jean Claude de Roche
Title: Assistant Vice President
UNITED MISSOURI BANK, N.A.,
by
/s/ Walter Beck, Jr.
------------------------------
Name: Walter Beck, Jr.
Title: Executive Vice President
UNITED STATES NATIONAL BANK OF OREGON,
by
/s/ Blake R. Howells
------------------------------
Name: Blake R. Howells
Title: Assistant Vice President
<PAGE>
96
WACHOVIA BANK OF GEORGIA, N.A.,
by
/s/ Douglas L. Williams
------------------------------
Name: Douglas L. Williams
Title: Senior Vice President
<PAGE>
87
SECTION 9.16. Liability of Borrowers. Except as expressly provided
-----------------------
in this Agreement, the obligations of each Borrower hereunder shall be several
obligations with respect to Loans made to it.
IN WITNESS WHEREOF, the Borrowers, the Agent, the Co-Agents and the
Lenders have caused this Agreement to be duly executed by their respective
authorized officers as of the day and year first above written.
J. C. PENNEY COMPANY, INC.,
by
/s/ Leo A. Gispanski
----------------------------
Name: Leo A. Gispanski
Title: Vice President &
Treasurer
J. C. PENNEY FUNDING CORPORATION,
by
/s/ Donald A. McKay
----------------------------
Name: Donald A. McKay
Title: Chairman of the Board
<PAGE>
88
MORGAN GUARANTY TRUST COMPANY OF
NEW YORK, individually and as
Agent,
by
/s/ Stephen B. King
------------------------------
Name: Stephen B. King
Title: Vice President
<PAGE>
89
BANKERS TRUST COMPANY, individually
and as Co-Agent,
by
/s/ Bruce D. Classon
------------------------------
Name: Bruce D. Classon
Title: Managing Director
CHEMICAL BANK, individually and as
Co-Agent,
by
------------------------------
Name: Meredith Vanden Handel
Title: Vice President
CREDIT SUISSE, individually and as
Co-Agent,
by
------------------------------
Name:
Title:
by
------------------------------
Name:
Title:
ABN AMRO BANK N.V.,
by
------------------------------
Name:
Title:
by
------------------------------
Name:
Title:
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION,
by
------------------------------
Name: Jody B. Schneider
Title: Vice President
<PAGE>
89
BANKERS TRUST COMPANY, individually
and as Co-Agent,
by
------------------------------
Name:
Title:
CHEMICAL BANK, individually and as
Co-Agent,
by
/s/ Meredith L. Vanden Handel
------------------------------
Name: Meredith L. Vanden Handel
Title: Vice President
CREDIT SUISSE, individually and as
Co-Agent,
by
------------------------------
Name:
Title:
by
------------------------------
Name:
Title:
ABN AMRO BANK N.V.,
by
------------------------------
Name:
Title:
by
------------------------------
Name:
Title:
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION,
by
------------------------------
Name: Jody B. Schneider
Title: Vice President
<PAGE>
89
BANKERS TRUST COMPANY, individually
and as Co-Agent,
by
------------------------------
Name:
Title:
CHEMICAL BANK, individually and as
Co-Agent,
by
------------------------------
Name: Meredith Vanden Handel
Title: Vice President
CREDIT SUISSE, individually and as
Co-Agent,
by
/s/ Stephen M. Flynn
------------------------------
Name: Stephen M. Flynn
Title: Member of Senior Management
by
/s/ Maria N. Gaspara
------------------------------
Name: Maria N. Gaspara
Title: Associate
ABN AMRO BANK N.V.,
by
------------------------------
Name:
Title:
by
------------------------------
Name:
Title:
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION,
by
------------------------------
Name: Jody B. Schneider
Title: Vice President
<PAGE>
89
BANKERS TRUST COMPANY, individually
and as Co-Agent,
by
------------------------------
Name:
Title:
CHEMICAL BANK, individually and as
Co-Agent,
by
------------------------------
Name: Meredith Vanden Handel
Title: Vice President
CREDIT SUISSE, individually and as
Co-Agent,
by
------------------------------
Name:
Title:
by
------------------------------
Name:
Title:
ABN AMRO BANK N.V.,
by
/s/ Laurie C. Tuzo
------------------------------
Name: Laurie C. Tuzo
Title: Vice President
by
/s/ Robert A. Mahle
------------------------------
Name: Ronald A. Mahle
Title: Group Vice President
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION,
by
------------------------------
Name: Jody B. Schneider
Title: Vice President
<PAGE>
89
BANKERS TRUST COMPANY, individually
and as Co-Agent,
by
------------------------------
Name:
Title:
CHEMICAL BANK, individually and as
Co-Agent,
by
------------------------------
Name: Meredith L. Vanden Handel
Title: Vice President
CREDIT SUISSE, individually and as
Co-Agent,
by
------------------------------
Name:
Title:
by
------------------------------
Name:
Title:
ABN AMRO BANK N.V.,
by
------------------------------
Name:
Title:
by
------------------------------
Name:
Title:
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION,
by
/s/ Jody B. Schneider
------------------------------
Name: Jody B. Schneider
Title: Vice President
<PAGE>
90
THE FIRST NATIONAL BANK OF BOSTON,
by
/s/ Bethann R. Halligan
------------------------------
Name: Bethann R. Halligan
Title: Director
BANK OF HAWAII,
by
------------------------------
Name:
Title:
THE BANK OF NEW YORK,
by
------------------------------
Name:
Title:
BANK OF TOKYO, LTD., acting by and
through its Dallas Agency, as a
Lender,
by
------------------------------
Name: John M. Mearns
Title: Vice President
BANK ONE, TEXAS, N.A.,
by
------------------------------
Name:
Title:
BANQUE NATIONALE DE PARIS, Houston
Agency,
by
------------------------------
Name: Henry F. Setina
Title: Vice President
CITIBANK, N.A.,
by
------------------------------
Name:
Title:
<PAGE>
90
THE FIRST NATIONAL BANK OF BOSTON,
by
------------------------------
Name:
Title:
BANK OF HAWAII,
by
/s/ Peter S. Ho
------------------------------
Name: Peter S. Ho
Title: Vice President
THE BANK OF NEW YORK,
by
------------------------------
Name:
Title:
BANK OF TOKYO, LTD., acting by and
through its Dallas Agency, as a
Lender,
by
------------------------------
Name: John M. Mearns
Title: Vice President
BANK ONE, TEXAS, N.A.,
by
------------------------------
Name:
Title:
BANQUE NATIONALE DE PARIS, Houston
Agency,
by
------------------------------
Name: Henry F. Setina
Title: Vice President
CITIBANK, N.A.,
by
------------------------------
Name:
Title:
<PAGE>
90
THE FIRST NATIONAL BANK OF BOSTON,
by
------------------------------
Name:
Title:
BANK OF HAWAII,
by
------------------------------
Name:
Title:
THE BANK OF NEW YORK,
by
/s/ Gregory L. Batson
------------------------------
Name: Gregory L. Batson
Title: Assistant Vice President
BANK OF TOKYO, LTD., acting by and
through its Dallas Agency, as a
Lender,
by
------------------------------
Name: John M. Mearns
Title: Vice President
BANK ONE, TEXAS, N.A.,
by
------------------------------
Name:
Title:
BANQUE NATIONALE DE PARIS, Houston
Agency,
by
------------------------------
Name: Henry F. Setina
Title: Vice President
CITIBANK, N.A.,
by
------------------------------
Name:
Title:
<PAGE>
90
THE FIRST NATIONAL BANK OF BOSTON,
by
------------------------------
Name:
Title:
BANK OF HAWAII,
by
------------------------------
Name:
Title:
THE BANK OF NEW YORK,
by
------------------------------
Name:
Title:
BANK OF TOKYO, LTD., acting by and
through its Dallas Agency, as a
Lender,
by
/s/ John M. Mearns
------------------------------
Name: John M. Mearns
Title: Vice President
BANK ONE, TEXAS, N.A.,
by
------------------------------
Name:
Title:
BANQUE NATIONALE DE PARIS, Houston
Agency,
by
------------------------------
Name: Henry F. Setina
Title: Vice President
CITIBANK, N.A.,
by
------------------------------
Name:
Title:
<PAGE>
90
THE FIRST NATIONAL BANK OF BOSTON,
by
------------------------------
Name:
Title:
BANK OF HAWAII,
by
------------------------------
Name:
Title:
THE BANK OF NEW YORK,
by
------------------------------
Name:
Title:
BANK OF TOKYO, LTD., acting by and
through its Dallas Agency, as a
Lender,
by
------------------------------
Name: John M. Mearns
Title: Vice President
BANK ONE, TEXAS, N.A.,
by
/s/ Scott Rhea
------------------------------
Name: Scott Rhea
Title: Banking Officer
BANQUE NATIONALE DE PARIS, Houston
Agency,
by
------------------------------
Name: Henry F. Setina
Title: Vice President
CITIBANK, N.A.,
by
------------------------------
Name:
Title:
<PAGE>
90
THE FIRST NATIONAL BANK OF BOSTON,
by
------------------------------
Name:
Title:
BANK OF HAWAII,
by
------------------------------
Name:
Title:
THE BANK OF NEW YORK,
by
------------------------------
Name:
Title:
BANK OF TOKYO, LTD., acting by and
through its Dallas Agency, as a
Lender,
by
------------------------------
Name: John M. Mearns
Title: Vice President
BANK ONE, TEXAS, N.A.,
by
------------------------------
Name:
Title:
BANQUE NATIONALE DE PARIS, Houston
Agency,
by
/s/ Henry F. Setina
------------------------------
Name: Henry F. Setina
Title: Vice President
CITIBANK, N.A.,
by
------------------------------
Name:
Title:
<PAGE>
90
THE FIRST NATIONAL BANK OF BOSTON,
by
------------------------------
Name:
Title:
BANK OF HAWAII,
by
------------------------------
Name:
Title:
THE BANK OF NEW YORK,
by
------------------------------
Name:
Title:
BANK OF TOKYO, LTD., acting by and
through its Dallas Agency, as a
Lender,
by
------------------------------
Name: John M. Mearns
Title: Vice President
BANK ONE, TEXAS, N.A.,
by
------------------------------
Name:
Title:
BANQUE NATIONALE DE PARIS, Houston
Agency,
by
------------------------------
Name: Henry F. Setina
Title: Vice President
CITIBANK, N.A.,
by
/s/ Arnold J. Ziegel
------------------------------
Name: Arnold J. Ziegel
Title: Vice President
<PAGE>
91
CREDIT LYONNAIS NEW YORK BRANCH,
by
/s/ Robert Ivoslvich
------------------------------
Name: Robert Ivoslvich
Title: Senior Vice President
THE DAI-ICHI KANGYO BANK, LTD., NEW
YORK BRANCH,
by
------------------------------
Name:
Title:
FIRST INTERSTATE BANK OF CALIFORNIA,
by
------------------------------
Name:
Title:
THE FIRST NATIONAL BANK OF CHICAGO,
by
------------------------------
Name: Ted Wozniak
Title: Vice President
FIRST SECURITY BANK OF UTAH, N.A.,
by
------------------------------
Name:
Title:
FIRST UNION NATIONAL BANK OF NORTH
CAROLINA,
by
-----------------------------
Name:
Title:
by
-----------------------------
Name:
Title:
<PAGE>
91
CREDIT LYONNAIS NEW YORK BRANCH,
by
------------------------------
Name:
Title:
THE DAI-ICHI KANGYO BANK, LTD., NEW
YORK BRANCH,
by
/s/ Kiyoshi Miyake
------------------------------
Name: Kiyoshi Miyake
Title: Vice President and Group Leader
FIRST INTERSTATE BANK OF CALIFORNIA,
by
------------------------------
Name:
Title:
THE FIRST NATIONAL BANK OF CHICAGO,
by
------------------------------
Name: Ted Wozniak
Title: Vice President
FIRST SECURITY BANK OF UTAH, N.A.,
by
------------------------------
Name:
Title:
FIRST UNION NATIONAL BANK OF NORTH
CAROLINA,
by
-----------------------------
Name:
Title:
by
-----------------------------
Name:
Title:
<PAGE>
91
CREDIT LYONNAIS NEW YORK BRANCH,
by
------------------------------
Name:
Title:
THE DAI-ICHI KANGYO BANK, LTD., NEW
YORK BRANCH,
by
------------------------------
Name:
Title:
FIRST INTERSTATE BANK OF CALIFORNIA,
by
/s/ William J. Baird
------------------------------
Name: William J. Baird
Title: Vice President
THE FIRST NATIONAL BANK OF CHICAGO,
by
------------------------------
Name: Ted Wozniak
Title: Vice President
FIRST SECURITY BANK OF UTAH, N.A.,
by
------------------------------
Name:
Title:
FIRST UNION NATIONAL BANK OF NORTH
CAROLINA,
by
-----------------------------
Name:
Title:
by
-----------------------------
Name:
Title:
<PAGE>
91
CREDIT LYONNAIS NEW YORK BRANCH,
by
------------------------------
Name:
Title:
THE DAI-ICHI KANGYO BANK, LTD., NEW
YORK BRANCH,
by
------------------------------
Name:
Title:
FIRST INTERSTATE BANK OF CALIFORNIA,
by
------------------------------
Name:
Title:
THE FIRST NATIONAL BANK OF CHICAGO,
by
/s/ Ted Wozniak
------------------------------
Name: Ted Wozniak
Title: Vice President
FIRST SECURITY BANK OF UTAH, N.A.,
by
------------------------------
Name:
Title:
FIRST UNION NATIONAL BANK OF NORTH
CAROLINA,
by
-----------------------------
Name:
Title:
by
-----------------------------
Name:
Title:
<PAGE>
91
CREDIT LYONNAIS NEW YORK BRANCH,
by
------------------------------
Name:
Title:
THE DAI-ICHI KANGYO BANK, LTD., NEW
YORK BRANCH,
by
------------------------------
Name:
Title:
FIRST INTERSTATE BANK OF CALIFORNIA,
by
------------------------------
Name:
Title:
THE FIRST NATIONAL BANK OF CHICAGO,
by
------------------------------
Name: Ted Wozniak
Title: Vice President
FIRST SECURITY BANK OF UTAH, N.A.,
by
/s/ Stephen L. Goalen
------------------------------
Name: Stephen L. Goalen
Title: Senior Vice President
FIRST UNION NATIONAL BANK OF NORTH
CAROLINA,
by
-----------------------------
Name:
Title:
by
-----------------------------
Name:
Title:
<PAGE>
91
CREDIT LYONNAIS NEW YORK BRANCH,
by
------------------------------
Name:
Title:
THE DAI-ICHI KANGYO BANK, LTD., NEW
YORK BRANCH,
by
------------------------------
Name:
Title:
FIRST INTERSTATE BANK OF CALIFORNIA,
by
------------------------------
Name:
Title:
THE FIRST NATIONAL BANK OF CHICAGO,
by
------------------------------
Name: Ted Wozniak
Title: Vice President
FIRST SECURITY BANK OF UTAH, N.A.,
by
------------------------------
Name:
Title:
FIRST UNION NATIONAL BANK OF NORTH
CAROLINA,
by
/s/ A. Kimball Collins
-----------------------------
Name: A. Kimball Collins
Title: AVP
<PAGE>
92
FIRSTAR BANK MILWAUKEE, N.A.,
by
/s/ Timothy W. Somers
------------------------------
Name: Timothy W. Somers
Title: Assistant Vice President
THE FUJI BANK, LIMITED, Houston
Agency,
by
------------------------------
Name:
Title:
INDUSTRIAL BANK OF JAPAN TRUST COMPANY,
by
------------------------------
Name:
Title:
THE LONG-TERM CREDIT BANK OF JAPAN,
LIMITED, New York Branch,
by
------------------------------
Name:
Title:
MELLON BANK, N.A.,
by
------------------------------
Name:
Title:
THE MITSUBISHI BANK, LIMITED,
by
------------------------------
Name:
Title:
<PAGE>
92
FIRSTAR BANK MILWAUKEE, N.A.,
by
------------------------------
Name: Timothy W. Somers
Title: Assistant Vice President
THE FUJI BANK, LIMITED, Houston
Agency,
by
/s/ David Kelley
------------------------------
Name: David Kelley
Title: Vice President &
Senior Manager
INDUSTRIAL BANK OF JAPAN TRUST COMPANY,
by
------------------------------
Name:
Title:
THE LONG-TERM CREDIT BANK OF JAPAN,
LIMITED, New York Branch,
by
------------------------------
Name:
Title:
MELLON BANK, N.A.,
by
------------------------------
Name:
Title:
THE MITSUBISHI BANK, LIMITED,
by
------------------------------
Name:
Title:
<PAGE>
92
FIRSTAR BANK MILWAUKEE, N.A.,
by
------------------------------
Name: Timothy W. Somers
Title: Assistant Vice President
THE FUJI BANK, LIMITED, Houston
Agency,
by
------------------------------
Name:
Title:
INDUSTRIAL BANK OF JAPAN TRUST COMPANY,
by
/s/ Takeshi Kawano
------------------------------
Name: Takeshi Kawano
Title: Senior Vice President &
Senior Manager
THE LONG-TERM CREDIT BANK OF JAPAN,
LIMITED, New York Branch,
by
------------------------------
Name:
Title:
MELLON BANK, N.A.,
by
------------------------------
Name:
Title:
THE MITSUBISHI BANK, LIMITED,
by
------------------------------
Name:
Title:
<PAGE>
92
FIRSTAR BANK MILWAUKEE, N.A.,
by
------------------------------
Name: Timothy W. Somers
Title: Assistant Vice President
THE FUJI BANK, LIMITED, Houston
Agency,
by
------------------------------
Name:
Title:
INDUSTRIAL BANK OF JAPAN TRUST COMPANY,
by
------------------------------
Name:
Title:
THE LONG-TERM CREDIT BANK OF JAPAN,
LIMITED, New York Branch,
by
/s/ Satoru Otsubo
------------------------------
Name: Satoru Otsubo
Title: Joint General Manager
MELLON BANK, N.A.,
by
------------------------------
Name:
Title:
THE MITSUBISHI BANK, LIMITED,
by
------------------------------
Name:
Title:
<PAGE>
92
FIRSTAR BANK MILWAUKEE, N.A.,
by
------------------------------
Name: Timothy W. Somers
Title: Assistant Vice President
THE FUJI BANK, LIMITED, Houston
Agency,
by
------------------------------
Name:
Title:
INDUSTRIAL BANK OF JAPAN TRUST COMPANY,
by
------------------------------
Name:
Title:
THE LONG-TERM CREDIT BANK OF JAPAN,
LIMITED, New York Branch,
by
------------------------------
Name:
Title:
MELLON BANK, N.A.,
by
/s/ Lisa M. Pellow
------------------------------
Name: Lisa M. Pellow
Title: Vice President
THE MITSUBISHI BANK, LIMITED,
by
------------------------------
Name:
Title:
<PAGE>
92
FIRSTAR BANK MILWAUKEE, N.A.,
by
------------------------------
Name: Timothy W. Somers
Title: Assistant Vice President
THE FUJI BANK, LIMITED, Houston
Agency,
by
------------------------------
Name:
Title:
INDUSTRIAL BANK OF JAPAN TRUST COMPANY,
by
------------------------------
Name:
Title:
THE LONG-TERM CREDIT BANK OF JAPAN,
LIMITED, New York Branch,
by
------------------------------
Name:
Title:
MELLON BANK, N.A.,
by
------------------------------
Name:
Title:
THE MITSUBISHI BANK, LIMITED,
by
/s/ Shoji Honda
------------------------------
Name: Shoji Honda
Title: General Manager
<PAGE>
93
NATIONAL WESTMINSTER BANK PLC, New
York Branch,
by
/s/ Stephen R. Parker
------------------------------
Name: Stephen R. Parker
Title: Vice President
NATIONAL WESTMINSTER BANK PLC,
Nassau Branch,
by
/s/ Stephen R. Parker
------------------------------
Name: Stephen R. Parker
Title: Vice President
NATIONSBANK OF TEXAS, N.A.,
by
------------------------------
Name:
Title:
NBD BANK, N.A.
by
------------------------------
Name:
Title:
by
------------------------------
Name: William J. McCaffrey
Title: Second Vice President
THE NORTHERN TRUST COMPANY,
by
------------------------------
Name: Martin G. Alston
Title: Vice President
NORWEST BANK MINNESOTA, N.A.,
by
------------------------------
Name:
Title:
<PAGE>
93
NATIONAL WESTMINSTER BANK PLC, New
York Branch,
by
------------------------------
Name: David L. Smith
Title: Vice President
NATIONAL WESTMINSTER BANK PLC,
Nassau Branch,
by
------------------------------
Name: David L. Smith
Title: Vice President
NATIONSBANK OF TEXAS, N.A.,
by
/s/ Sharon McCarty
------------------------------
Name: Sharon McCarty
Title: Assistant Vice President
NBD BANK, N.A.
by
------------------------------
Name:
Title:
by
------------------------------
Name: William J. McCaffrey
Title: Second Vice President
THE NORTHERN TRUST COMPANY,
by
------------------------------
Name: Martin G. Alston
Title: Vice President
NORWEST BANK MINNESOTA, N.A.,
by
------------------------------
Name:
Title:
<PAGE>
93
NATIONAL WESTMINSTER BANK PLC, New
York Branch,
by
------------------------------
Name: David L. Smith
Title: Vice President
NATIONAL WESTMINSTER BANK PLC,
Nassau Branch,
by
------------------------------
Name: David L. Smith
Title: Vice President
NATIONSBANK OF TEXAS, N.A.,
by
------------------------------
Name:
Title:
NBD BANK, N.A.
by
/s/ D. ANDREW BATEMAN
------------------------------
Name: D. ANDREW BATEMAN
Title: First Vice President
by
------------------------------
Name: William J. McCaffrey
Title: Second Vice President
THE NORTHERN TRUST COMPANY,
by
------------------------------
Name: Martin G. Alston
Title: Vice President
NORWEST BANK MINNESOTA, N.A.,
by
------------------------------
Name:
Title:
<PAGE>
93
NATIONAL WESTMINSTER BANK PLC, New
York Branch,
by
------------------------------
Name: David L. Smith
Title: Vice President
NATIONAL WESTMINSTER BANK PLC,
Nassau Branch,
by
------------------------------
Name: David L. Smith
Title: Vice President
NATIONSBANK OF TEXAS, N.A.,
by
------------------------------
Name:
Title:
NBD BANK, N.A.
by
------------------------------
Name:
Title:
by
------------------------------
Name: William J. McCaffrey
Title: Second Vice President
THE NORTHERN TRUST COMPANY,
by
/s/ Sara Clesiold for Martin Alston
------------------------------------
Name: Martin G. Alston
Title: Vice President
NORWEST BANK MINNESOTA, N.A.,
by
------------------------------
Name:
Title:
<PAGE>
93
NATIONAL WESTMINSTER BANK PLC, New
York Branch,
by
------------------------------
Name: David L. Smith
Title: Vice President
NATIONAL WESTMINSTER BANK PLC,
Nassau Branch,
by
------------------------------
Name: David L. Smith
Title: Vice President
NATIONSBANK OF TEXAS, N.A.,
by
------------------------------
Name:
Title:
NBD BANK, N.A.
by
------------------------------
Name:
Title:
by
------------------------------
Name: William J. McCaffrey
Title: Second Vice President
THE NORTHERN TRUST COMPANY,
by
------------------------------
Name: Martin G. Alston
Title: Vice President
NORWEST BANK MINNESOTA, N.A.,
by
/s/ Perry G. Pelos
------------------------------
Name: Perry G. Pelos
Title: Vice President
<PAGE>
94
PNC BANK, NATIONAL ASSOCIATION,
by
/s/ Gregory T. Gaschler
------------------------------
Name: Gregory T. Gaschler
Title: Vice President
ROYAL BANK OF CANADA,
by
------------------------------
Name:
Title:
ISTITUTO BANCARIO SAN PAOLO DI
TORINO, SpA,
by
------------------------------
Name:
Title:
by
------------------------------
Name: Robert S. Wurster
Title: First Vice President
THE SANWA BANK LIMITED, Dallas Agency,
by
------------------------------
Name: Robert S. Smith
Title: Assistant Vice President
SOCIETE GENERALE, Southwest Agency,
by
------------------------------
Name: Louis P. Laville, III
Title: Vice President
THE SUMITOMO BANK, LTD., Houston Agency,
by
------------------------------
Name:
Title:
<PAGE>
94
PNC BANK, NATIONAL ASSOCIATION,
by
------------------------------
Name:
Title:
ROYAL BANK OF CANADA,
by
/s/ E. M. Harner
------------------------------
Name: E. M. Harner
Title: Manager
ISTITUTO BANCARIO SAN PAOLO DI
TORINO, SpA,
by
------------------------------
Name:
Title:
by
------------------------------
Name: Robert S. Wurster
Title: First Vice President
THE SANWA BANK LIMITED, Dallas Agency,
by
------------------------------
Name: Robert S. Smith
Title: Assistant Vice President
SOCIETE GENERALE, Southwest Agency,
by
------------------------------
Name: Louis P. Laville, III
Title: Vice President
THE SUMITOMO BANK, LTD., Houston Agency,
by
------------------------------
Name:
Title:
<PAGE>
94
PNC BANK, NATIONAL ASSOCIATION,
by
------------------------------
Name:
Title:
ROYAL BANK OF CANADA,
by
------------------------------
Name:
Title:
ISTITUTO BANCARIO SAN PAOLO DI
TORINO, SpA,
by
/s/ William J. DeAngelo
------------------------------
Name: William J. DeAngelo
Title: First Vice President
by
/s/ Robert S. Wurster
------------------------------
Name: Robert S. Wurster
Title: First Vice President
THE SANWA BANK LIMITED, Dallas Agency,
by
------------------------------
Name: Robert S. Smith
Title: Assistant Vice President
SOCIETE GENERALE, Southwest Agency,
by
------------------------------
Name: Louis P. Laville, III
Title: Vice President
THE SUMITOMO BANK, LTD., Houston Agency,
by
------------------------------
Name:
Title:
<PAGE>
94
PNC BANK, NATIONAL ASSOCIATION,
by
------------------------------
Name:
Title:
ROYAL BANK OF CANADA,
by
------------------------------
Name:
Title:
ISTITUTO BANCARIO SAN PAOLO DI
TORINO, SpA,
by
------------------------------
Name:
Title:
by
------------------------------
Name: Robert S. Wurster
Title: First Vice President
THE SANWA BANK LIMITED, Dallas Agency,
by
/s/ Robert S. Smith
------------------------------
Name: Robert S. Smith
Title: Assistant Vice President
SOCIETE GENERALE, Southwest Agency,
by
------------------------------
Name: Louis P. Laville, III
Title: Vice President
THE SUMITOMO BANK, LTD., Houston Agency,
by
------------------------------
Name:
Title:
<PAGE>
94
PNC BANK, NATIONAL ASSOCIATION,
by
------------------------------
Name:
Title:
ROYAL BANK OF CANADA,
by
------------------------------
Name:
Title:
ISTITUTO BANCARIO SAN PAOLO DI
TORINO, SpA,
by
------------------------------
Name:
Title:
by
------------------------------
Name: Robert S. Wurster
Title: First Vice President
THE SANWA BANK LIMITED, Dallas Agency,
by
------------------------------
Name: Robert S. Smith
Title: Assistant Vice President
SOCIETE GENERALE, Southwest Agency,
by
/s/ Louis P. Laville, III
------------------------------
Name: Louis P. Laville, III
Title: Vice President
THE SUMITOMO BANK, LTD., Houston Agency,
by
------------------------------
Name:
Title:
<PAGE>
94
PNC BANK, NATIONAL ASSOCIATION,
by
------------------------------
Name:
Title:
ROYAL BANK OF CANADA,
by
------------------------------
Name:
Title:
ISTITUTO BANCARIO SAN PAOLO DI
TORINO, SpA,
by
------------------------------
Name:
Title:
by
------------------------------
Name: Robert S. Wurster
Title: First Vice President
THE SANWA BANK LIMITED, Dallas Agency,
by
------------------------------
Name: Robert S. Smith
Title: Assistant Vice President
SOCIETE GENERALE, Southwest Agency,
by
------------------------------
Name: Louis P. Laville, III
Title: Vice President
THE SUMITOMO BANK, LTD., Houston Agency,
by
/s/ Tatsuo Ueda
------------------------------
Name: Tatsuo Ueda
Title: General Manager
<PAGE>
95
SUNBANK, NATIONAL ASSOCIATION,
by
/s/ J. Carol Doyle
------------------------------
Name: J. Carol Doyle
Title: First Vice President
SWISS BANK CORPORATION, Cayman
Islands Branch,
by
------------------------------
Name:
Title:
by
------------------------------
Name:
Title:
UNION BANK OF SWITZERLAND, Houston Agency,
by
------------------------------
Name:
Title:
by
------------------------------
Name:
Title:
UNITED MISSOURI BANK, N.A.,
by
------------------------------
Name: Walter Beck, Jr.
Title: Executive Vice President
UNITED STATES NATIONAL BANK OF OREGON,
by
------------------------------
Name: Blake R. Howells
Title: Assistant Vice President
<PAGE>
95
SUNBANK, NATIONAL ASSOCIATION,
by
------------------------------
Name:
Title:
SWISS BANK CORPORATION
by
/s/ Nancy A. Russell
------------------------------
Name: Nancy A. Russell
Title: Associate Director
Merchant Banking
by
/s/ William A. McDonnell
------------------------------
Name: William A. McDonnell
Title: Associate Director
Merchant Banking
UNION BANK OF SWITZERLAND, Houston Agency,
by
------------------------------
Name:
Title:
by
------------------------------
Name:
Title:
UNITED MISSOURI BANK, N.A.,
by
------------------------------
Name: Walter Beck, Jr.
Title: Executive Vice President
UNITED STATES NATIONAL BANK OF OREGON,
by
------------------------------
Name: Blake R. Howells
Title: Assistant Vice President
<PAGE>
95
SUNBANK, NATIONAL ASSOCIATION,
by
------------------------------
Name:
Title:
SWISS BANK CORPORATION, Cayman
Islands Branch,
by
------------------------------
Name:
Title:
by
------------------------------
Name:
Title:
UNION BANK OF SWITZERLAND, Houston Agency,
by
/s/ Dan O. Boyle
------------------------------
Name: Dan O. Boyle
Title: Vice President
by
/s/ Jean Claude de Roche
------------------------------
Name: Jean Claude de Roche
Title: Assistant Vice President
UNITED MISSOURI BANK, N.A.,
by
------------------------------
Name: Walter Beck, Jr.
Title: Executive Vice President
UNITED STATES NATIONAL BANK OF OREGON,
by
------------------------------
Name: Blake R. Howells
Title: Assistant Vice President
<PAGE>
95
SUNBANK, NATIONAL ASSOCIATION,
by
------------------------------
Name:
Title:
SWISS BANK CORPORATION, Cayman
Islands Branch,
by
------------------------------
Name:
Title:
by
------------------------------
Name:
Title:
UNION BANK OF SWITZERLAND, Houston Agency,
by
------------------------------
Name:
Title:
by
------------------------------
Name:
Title:
UNITED MISSOURI BANK, N.A.,
by
/s/ Walter Beck, Jr.
------------------------------
Name: Walter Beck, Jr.
Title: Executive Vice President
UNITED STATES NATIONAL BANK OF OREGON,
by
------------------------------
Name: Blake R. Howells
Title: Assistant Vice President
<PAGE>
95
SUNBANK, NATIONAL ASSOCIATION,
by
------------------------------
Name:
Title:
SWISS BANK CORPORATION, Cayman
Islands Branch,
by
------------------------------
Name:
Title:
by
------------------------------
Name:
Title:
UNION BANK OF SWITZERLAND, Houston Agency,
by
------------------------------
Name:
Title:
by
------------------------------
Name:
Title:
UNITED MISSOURI BANK, N.A.,
by
------------------------------
Name: Walter Beck, Jr.
Title: Executive Vice President
UNITED STATES NATIONAL BANK OF OREGON,
by
/s/ Blake R. Howells
------------------------------
Name: Blake R. Howells
Title: Assistant Vice President
<PAGE>
96
WACHOVIA BANK OF GEORGIA, N.A.,
by
/s/ Douglas L. Williams
------------------------------
Name: Douglas L. Williams
Title: Senior Vice President
<PAGE>
EXHIBIT A-1
FORM OF COMPETITIVE BID REQUEST
Morgan Guaranty Trust Company of New York
60 Wall Street
New York, New York 10260
[Date]
Attention: [ ]
Dear Sirs:
The undersigned, [ ] (the "Borrower"), refers to the
Revolving Credit Agreement dated as of December 16, 1993 (as it may hereafter be
amended, modified, extended or restated from time to time, the "Credit
Agreement"), to which it is a party. Capitalized terms used but not defined
herein shall have the meanings assigned to such terms in the Credit Agreement.
The Borrower hereby gives you notice pursuant to Section 2.03(a) of the Credit
Agreement that it requests a Competitive Borrowing under the Credit Agreement,
and in that connection sets forth below the terms on which such Competitive
Borrowing is requested to be made:
(A) Date of Competitive Borrowing
(which is a Business Day) ______________
(B) Principal Amount of
Competitive Borrowing/1/ ______________
(C) Interest rate basis/2/ ______________
(D) Interest Period and the last
day thereof/3/ ______________
Upon acceptance of any or all of the Loans offered by the Lenders in
response to this request, the Borrower
- --------------
/1/ Not less than $25,000,000 (and in integral multiples of $5,000,000) or, if
less, an aggregate principal amount equal to the Total Commitment on the
date of such Borrowing minus the outstanding aggregate principal amount on
such date of all Competitive Loans.
/2/ Eurodollar Loan, Fixed Rate Loan or CD Loan.
/3/ Which shall be subject to the definition of "Interest Period" and end not
later than the Maturity Date.
<PAGE>
2
shall be deemed to have represented and warranted, except as otherwise provided
in Section 4.01, that the conditions to lending specified in Section 4.01(b) and
(c) of the Credit Agreement have been satisfied.
Very truly yours,
by
________________________________
Title: [Responsible Officer]/4/
- --------------
/4/ Chairman, vice chairman, president, chief financial officer, treasurer or
controller of such corporation or any executive or senior vice president of such
corporation.
<PAGE>
EXHIBIT A-2
FORM OF NOTICE OF COMPETITIVE BID REQUEST
[Name of Lender]
[Address]
[Date]
Attention: [ ]
Dear Sirs:
Reference is made to the Revolving Credit Agreement dated as of
December 16, 1993 (as it may hereafter be amended, modified, extended or
restated from time to time, the "Credit Agreement"), among J. C. Penney Company,
Inc. ("JCPenney"), J. C. Penney Funding Corporation ("Funding"), the Lenders and
Morgan Guaranty Trust Company of New York, as Agent. Capitalized terms used but
not defined herein shall have the meanings assigned to such terms in the Credit
Agreement. [ ]/1/ made a Competitive Bid Request on [ ],
19[ ], pursuant to Section 2.03(a) of the Credit Agreement, and in that
connection you are invited to submit a Competitive Bid by [time], on [date]./2/
Your Competitive Bid must comply with Section 2.03(b) of the Credit Agreement
and the terms set forth below on which the Competitive Bid Request was made:
(A) Date of Competitive Borrowing _______________
(B) Principal amount of
Competitive Borrowing _______________
(C) Interest rate basis _______________
- --------------
/1/ JCPenney or Funding.
/2/ The Competitive Bid must be received by the Agent: (i) in the case of
Eurodollar Loans or CD Loans, not later than 9:00 a.m., New York City time,
three Business Days before the proposed Competitive Borrowing, and (ii) in the
case of Fixed Rate Loans, not later than 9:00 a.m., New York City time, on the
day of a proposed Competitive Borrowing.
<PAGE>
2
(D) Interest Period and the last
day thereof _______________
Very truly yours,
MORGAN GUARANTY TRUST COMPANY OF NEW YORK, as
Agent,
By
____________________________________
Title:
<PAGE>
EXHIBIT A-3
FORM OF COMPETITIVE BID
Morgan Guaranty Trust Company of New York
60 Wall Street
New York, New York 10260
[Date]
Attention: [ ]
Dear Sirs:
The undersigned, [name of Lender], refers to the Revolving Credit
Agreement dated as of December 16, 1993 (as it may hereafter be amended,
modified, extended or restated from time to time, the "Credit Agreement"), among
J. C. Penney Company, Inc. ("JCPenney"), J. C. Penney Funding Corporation
("Funding"), the Lenders and Morgan Guaranty Trust Company of New York, as
Agent. Capitalized terms used but not defined herein shall have the meanings
assigned to such terms in the Credit Agreement. The undersigned hereby makes a
Competitive Bid pursuant to Section 2.03(b) of the Credit Agreement, in response
to the Competitive Bid Request made by [ ]/1/ on [ ],
19[ ],
- --------------
/1/ JCPenney or Funding.
<PAGE>
2
and in that connection sets forth below the terms on which such Competitive Bid
is made:
(A) Principal Amount/2/ _______________
(B) Competitive Bid Rate[s]/3/ _______________
(C) Interest Period and last
day thereof _______________
The undersigned hereby confirms that it will, subject only to the
conditions set forth in the Credit Agreement, extend credit to the Borrower upon
acceptance by the Borrower of this bid in accordance with Section 2.03(d) of the
Credit Agreement.
Very truly yours,
[NAME OF LENDER],
by
__________________________
Title:
- --------------
/2/ An integral multiple of $5,000,000 (unless equal to the requested
Competitive Borrowing) and not greater than the requested Competitive
Borrowing. Multiple bids will be accepted by the Agent.
/3/ One or more rates; i.e., LIBO Rate + or - ____%, in the case of Eurodollar
Loans, Adjusted CD Rate + or - ____%, in the case of CD Loans, or ____%, in
the case of Fixed Rate Loans.
<PAGE>
EXHIBIT A-4
FORM OF STANDBY BORROWING REQUEST
Morgan Guaranty Trust Company of New York
60 Wall Street
New York, New York 10260
[Date]
Attention: [ ]
Dear Sirs:
The undersigned, [ ] (the "Borrower"), refers to the Revolving
Credit Agreement dated as of December 16, 1993 (as it may hereafter be amended,
modified, extended or restated from time to time, the "Credit Agreement"), to
which it is a party. Capitalized terms used but not defined herein shall have
the meanings assigned to such terms in the Credit Agreement. The Borrower
hereby gives you notice pursuant to Section 2.04 of the Credit Agreement that it
requests a Standby Borrowing under the Credit Agreement, and in that connection
sets forth below the terms on which such Standby Borrowing is requested to be
made:
(A) Date of Standby Borrowing
(which is a Business Day) _______________
(B) Principal Amount of
Standby Borrowing/1/ _______________
- --------------
/1/ Not less than $25,000,000 (and in integral multiples of $5,000,000) or, if
less, an aggregate principal amount equal to the remaining available
balance of the Total Commitment.
<PAGE>
2
(C) Interest rate basis/2/ _______________
(D) Interest Period and the Last
day thereof/3/ _______________
Upon acceptance of any or all of the Loans made by the Lenders in
response to this request, the Borrower shall be deemed to have represented and
warranted, except as otherwise provided in Section 4.01, that the conditions to
lending specified in Section 4.01(b) and (c) of the Credit Agreement have been
satisfied; provided, however, that in the case of a refinancing of a Standby
Borrowing with a new Standby Borrowing that does not increase the outstanding
aggregate principal amount of the Loans of any Lender, the Borrower shall not be
subject to the satisfaction of any of the Section 4.01 conditions.
Very truly yours,
by
________________________________
Title: [Responsible Officer]/4/
- --------------
/2/ Eurodollar Loan or ABR Loan. Notice under Section 2.04 is necessary to
refinance a Standby Borrowing with a Eurodollar Borrowing. In the absence of
such a notice, unless the Borrowing is repaid at the end of the applicable
Interest Period, the Borrower shall be deemed to have given notice of an
election to refinance such Borrowing with an ABR Borrowing of 5 days'
duration.
/3/ Which shall be subject to the definition of "Interest Period" and end not
later than the Maturity Date.
/4/ Chairman, vice chairman, president, chief financial officer, treasurer or
controller of such corporation or any executive or senior vice president of
such corporation.
<PAGE>
EXHIBIT B
[INTENTIONALLY OMITTED]
<PAGE>
EXHIBIT C
FORM OF GUARANTY
GUARANTY
This Guaranty Agreement is executed as of this 7th day of
December, 1994, by J. C. Penney Company, Inc., a Delaware
corporation ("Guarantor"), in favor of J. C. Penney Funding
Corporation, a Delaware corporation ("Funding"), and the
lenders("") (as defined below).
RECITALS:
WHEREAS, Funding is a wholly-owned subsidiary of Guarantor;
WHEREAS, Funding and Guarantor have entered into those certain 364-Day
and Five-Year Revolving Credit Agreements (collectively, the "Agreements") dated
as of December 16, 1993, as amended and restated with new Lenders as of December
7, 1994 (the "Restated Agreements"), among Guarantor, Funding, Morgan Guaranty
Trust Company of New York, as agent for the Lenders, Bankers Trust Company,
Chemical Bank and Credit Suisse, as co-agents for the Lenders, and certain other
financial institutions named in the Restated Agreements (collectively, the
"Lenders") in amounts not to exceed One Billion Five Hundred Million Dollars
($1,500,000,000) and One Billion Dollars ($1,000,000,000), respectively; and
<PAGE>
2
WHEREAS, Guarantor is willing to guarantee any borrowings of Funding
under the Restated Agreements on the terms set forth herein.
NOW, THEREFORE, in consideration of the premises, Guarantor hereby
agrees as follows:
1. Subject to the terms and conditions of subordination set forth in
this Guaranty, Guarantor hereby unconditionally guarantees in favor of the
Lenders, the prompt payment when due of all interest, principal, and other
amounts owing under the Restated Agreements (collectively, the "Guaranteed
Debt"). This is an unconditional guaranty of payment, and in the event of
default by Funding in the payment of interest, principal, or any other amounts
payable under the Guaranteed Debt, the Lenders may proceed directly against
Guarantor to enforce this Guaranty (including by the institution of legal
proceedings) without first proceeding against Funding.
2. Guarantor acknowledges that it has received and will receive a
direct or indirect benefit from the making of this Guaranty and the creation of
the Guaranteed Debt.
3. (a) The Guaranteed Debt shall be subordinated and subject in right
of payment to the prior payment in full of any and all other indebtedness for
borrowed money
<PAGE>
3
incurred, created, assumed, or otherwise guaranteed by Guarantor (collectively
referred to as the Guarantor's "Senior Debt").
(b) In the event of (i) any dissolution or winding-up or total or
partial liquidation or reorganization of Guarantor, whether voluntary or
involuntary, or any bankruptcy, insolvency, receivership, or similar proceeding
relative to Guarantor, or (ii) any default in the payment of principal
(including any acceleration or required prepayments or amortization) of or
interest on any Senior Debt of Guarantor, then, subject to the provisions of
subsection (d) below, the Lenders shall not be entitled to receive any payment
under this Guaranty on account of the Guaranteed Debt unless and until all
Senior Debt shall have been paid in full or otherwise discharged.
(c) For purposes of determining the priority of payments between the
Senior Debt and the Guaranteed Debt, in the event that the Guaranteed Debt, or
any part thereof, is declared due and payable prior to its stated maturity, all
principal of and interest and any other amounts due on all Senior Debt
outstanding at the time of such declaration as to the Guaranteed Debt shall
first have been paid in full, before any payment is made by Guarantor upon the
Guaranteed Debt.
<PAGE>
4
(d) In no event shall any Lender be required by this subordination to
refund any amounts paid to it pursuant to this Guaranty on account of the
Guaranteed Debt prior to the events specified in subsections (b) and (c) above,
and prior to such events the Lenders shall be entitled to be paid hereunder as
agreed and to collect any sums due such Lenders hereunder by any lawful means.
(e) The provisions of this Section are for the purpose of defining
the relative rights of the holders of any Senior Debt, on the one hand, and the
Lenders, on the other hand, against Guarantor, and nothing herein shall impair,
as between the Guarantor and the Lenders, the obligation of Guarantor, which is
unconditional and absolute, to guarantee the prompt payment when due of the
Guaranteed Debt in accordance with the terms and provisions thereof; nor shall
anything herein prevent the Lenders from exercising all remedies otherwise
permitted by applicable law upon default hereunder, subject to the rights, if
any, under this Section of any Senior Debt holder.
<PAGE>
5
4. The substantive laws of the State of New York shall govern the
validity, construction, enforcement, and interpretation of this Guaranty.
IN WITNESS WHEREOF, Guarantor has executed and delivered this Guaranty
as of the date first written above.
J. C. PENNEY COMPANY, INC.,
a Delaware corporation, as Guarantor,
by
------------------------
Name: Leo A. Gispanski
Title: Vice President &
Treasurer
<PAGE>
SCHEDULE 2.01
LENDERS
-------
<TABLE>
<CAPTION>
Name of Lender and
Applicable Lending Office Address for Notices Commitment
- ------------------------- ------------------- ----------
<S> <C> <C>
ABN AMRO Bank N.V. ABN AMRO Bank N.V. $18,000,000
Three Riverway, Three Riverway,
Suite 1600 Suite 1600
Houston, TX 77056 Houston, TX 77056
For Business/Credit Matters
---------------------------
Attention: Laurie Tuzo
Telephone: (713) 964-3360
Fax: (713) 629-7533
For Administrative Matters
---------------------------
Attention: Patricia Baker
or Belinda Rowell
Telephone: (713) 964-3331
Fax: (713) 629-7533
For Business/Credit Matters
---------------------------
Bank of America Bank of America NT & SA $32,000,000
National Trust and Savings 333 Clay Street
Association Suite 4550
2200 Ross Avenue Houston, TX 77002
Suite 3000 Attn: Andrew J. Welch
Dallas, TX 75201-2831 Telephone: (214) 969-2063
(Business)
Telefax: (214) 969-0998
Jody B. Schneider,
Vice President (Credit)
Telephone: (713) 651-4976
(Business)
(713) 651-4865 (Credit)
Telex: 67652 BANKMER SFO
Fax: (713) 651-4841
For Administrative Matters
--------------------------
Bank of America NT&SA
ABA #12100 358
Global Payments Operations
#5693
Concord, CA 94520
Attention: Camille Gibbey
Telephone: (510) 675-7759
Telex: 34346 BANKMER SFO
Fax: (510) 675-7531
</TABLE>
<PAGE>
2
<TABLE>
<CAPTION>
Name of Lender and
Applicable Lending Office Address for Notices Commitment
- ------------------------- ------------------- -----------
<S> <C> <C>
The First National Bank The First National Bank $18,000,000
of Boston of Boston
100 Federal Street 100 Federal Street
Mail Stop 01-21-01 Mail Stop 01-21-01
Boston, MA 02100 Boston, MA 02100
For Business/Credit Matters
---------------------------
Attention: Bethann R.
Halligan
Telephone: (617) 434-0144
Fax: (617) 434-0630/6685
For Administrative Matters
--------------------------
Attention: Michele Taglione
Telephone: (617) 434-4039
Fax: (617) 434-0630/6685
Bank of Hawaii Bank of Hawaii $18,000,000
130 Merchant Street 130 Merchant Street
20th Floor 20th Floor
Honolulu, HI 96813 Honolulu, HI 96813
For Business/Credit Matters
---------------------------
Attention: Peter Ho
Telephone: (808) 537-8439
Fax: (808) 537-8301
The Bank of New York The Bank of New York $18,000,000
One Wall Street One Wall Street
Southern Division Southern Division
22nd Floor 22nd Floor
New York, NY 10024 New York, NY 10024
For Business/Credit Matters
---------------------------
Attention: Steven M. Ross
Telephone: (212) 635-1336
Fax: (212) 635-6434
The Bank of Tokyo, Ltd. The Bank of Tokyo, Ltd. $18,000,000
Dallas Agency Dallas Agency
2001 Ross Avenue, LB 118, 2001 Ross Avenue, lb 118
3150 Trammell Crow Center 3150 Trammell Crow Center
Dallas, TX 75201 Dallas, TX 75201
</TABLE>
<PAGE>
3
<TABLE>
<CAPTION>
Name of Lender and
Applicable Lending Office Address for Notices Commitment
- ------------------------- ------------------- ----------
<S> <C> <C>
For Business/Credit Matters
---------------------------
Attention: J. M. Mearns,
Vice President and Manager
Telephone: (214) 954-1200
Fax: (214) 954-1007
For Administrative Matters
--------------------------
Attention: Brenda Trader
Telephone: (214) 954-1200
Fax: (214) 954-1007
Bank One, Texas, N.A. Bank One, Texas, N.A. $ 8,000,000
1717 Main Street 1717 Main Street
Dallas, TX 75201 Dallas, TX 75201
For Business/Credit Matters
---------------------------
Attention: Scott Rhea
Third Floor
Telephone: (214) 290-2637
Fax: (214) 290-2683
For Administrative Matters
--------------------------
Attention: Lisa Peterson
Telephone: (214) 290-2614
Fax: (214) 290-2683
Bankers Trust Company Bankers Trust Company $40,000,000
130 Liberty Street P.O. Box 318
New York, NY 10008 Church Street Station
New York, NY 10008-0318
For Business/Credit Matters
---------------------------
Attention: Katherine Judge
Corporate Finance Credit
Telephone: (212) 250-4969
Fax: (212) 250-7478
For Administrative Matters
--------------------------
Attention: John Jeffcoat
Telephone: (212) 250-8195
Fax: (212) 250-7351
</TABLE>
<PAGE>
4
<TABLE>
<CAPTION>
Name of Lender and
Applicable Lending Office Address for Notices Commitment
- ------------------------- ------------------- ----------
<S> <C> <C>
Banque Nationale de Paris BNP $18,000,000
Houston Agency 717 North Harwood,
717 N. Harwood St. Suite 2630
Suite 2630 Dallas, TX 75201
Dallas, TX 75201
For Business/Credit Matters
---------------------------
Attention: Henry F. Setina
Telephone: (214) 969-7388
Fax: (214) 969-0060
For Administrative Matters
--------------------------
Attention: Donna Rose
Telephone: (713) 951-1240
Telex: 166085 BNPHTX
Fax: (713) 659-1414
Chemical Bank Chemical Bank $40,000,000
270 Park Avenue, 270 Park Avenue,
10th Floor 10th Floor
New York, NY 10017 New York, NY 10017
For Business/Credit Matters
---------------------------
Attention: Meredith L.
Vanden Handel
Telephone: (212) 270-2999
Fax: (212) 270-9856
For Administrative Matters
--------------------------
Attention: Sheila Hamilton
Telephone: (212) 270-2322
Fax: (212) 682-8937
Citibank, N.A. Citibank, N.A. $26,000,000
399 Park Avenue, 399 Park Avenue,
12th Floor 12th Floor
New York, NY 10043 New York, NY 10043
For Business/Credit Matters
---------------------------
Attention: Arnold Ziegel, MD
Telephone: (212) 599-3763
Fax: (212) 793-7585
Attention: Robert A. Snell
Telephone: (212) 559-3215
Fax: (212) 793-7585/7590
</TABLE>
<PAGE>
5
<TABLE>
<CAPTION>
Name of Lender and
Applicable Lending Office Address for Notices Commitment
- ------------------------- ------------------- ----------
<S> <C> <C>
For Administrative Matters
--------------------------
Attention: Stephance L.
Tackors
Telephone (212) 559-3944
Fax: (212) 793-7585/7590
Credit Lyonnais Dallas Credit Lyonnais Dallas $26,000,000
500 North Akard Suite 3210 500 North Akard, Suite 3210
Dallas, TX 75201 Dallas, TX 75201
For Business/Credit Matters
---------------------------
Attention: Samuel Hill
Telephone: (214) 954-3500
Telex: 682 9274 CRLYDAL
Fax: (214) 954-3312
For Administrative Matters
--------------------------
Attention: Judy Gordon
Telephone: (214) 954-3500
Telex: 682 9274 CRLYDAL
Fax: (214) 954-3312
For Business/Credit Matters
---------------------------
Credit Suisse Credit Suisse $40,000,000
1100 Lousiana, Suite 4750 1100 Louisiana, Suite 4750
Houston, TX 77002 Houston, TX 77002
Attention: James P. Moran
Docs. to: Telephone: (713) 751-0300
Maria Gaspara Fax: (713) 751-0702
633 West Fifth Street
64th Floor
Los Angeles, CA 90071
For Administrative Matters
--------------------------
Attention: Rita Asa
Telephone: (213) 955-8284
Fax: (213) 955-8245
For Business/Credit Matters
---------------------------
DKB DKB $26,000,000
1100 Louisiana 1100 Louisiana
Suite 4940 Suite 4940
Houston, TX 77002 Houston, TX 77002
For Business/Credit Matters
---------------------------
Attention: Kelton G.
Glasscock
Telephone: (713) 654-5055
Fax: (713) 654-1667
</TABLE>
<PAGE>
6
<TABLE>
<CAPTION>
Name of Lender and
Applicable Lending Office Address for Notices Commitment
- ------------------------- ------------------- ----------
<S> <C> <C>
For Business/Credit Matters
---------------------------
First Interstate Bank of First Interstate Bank of $26,000,000
California California
707 Wilshire Blvd., W29-23 U.S. Banking Division
Los Angeles, CA 90017 707 Wilshire Blvd., W16-13
Los Angeles, CA 90017
Attention: William J. Baird
Telephone: (213) 614-5540
Fax: (213) 614-2569
For Administrative Matters
--------------------------
First Interstate Bank of
California
707 Wilshire Blvd., W29-23
Los Angeles, CA 90017
Attention: Carol Collins or
Irene Zao
Telephone: (213) 580-6166/6148
Fax: (213) 488-9909/9959
The First National Bank The First National Bank $26,000,000
of Chicago of Chicago
One First National Plaza One First National Plaza
Suite 0374; 1-10 Suite 0374; 1-10
Chicago, IL 60676 Chicago, IL 60676
For Business/Credit Matters
---------------------------
Attention: Ted Wozniak
Telephone: (312) 732-1032
Telex: 4330253
Fax: (312) 732-3885
For Administrative Matters
--------------------------
Attention: John Loizzo
Telephone: (312) 732-4118
Telex: 4330253
Fax: (312) 732-4840
First Security Bank First Security Bank $ 8,000,000
of Utah, N.A. of Utah, N.A.
Commercial Banking Commercial Banking Division
Division 15 East 100 South,
15 East 100 South, 2nd Floor
2nd Floor Salt Lake City, UT 84111
Salt Lake City, UT 84111
</TABLE>
<PAGE>
7
<TABLE>
<CAPTION>
Name of Lender and
Applicable Lending Office Address for Notices Commitment
- ------------------------- ------------------- ----------
<S> <C> <C>
For Business/Credit Matters
---------------------------
Attention: Judy Callister
Telephone: (801) 246-5561
Fax: (801) 246-5532
For Administrative Matters
--------------------------
Attention: Trish Sanders
Telephone: (801) 246-5575
Fax: (801) 246-5532
First Union National Bank First Union National Bank $26,000,000
of North Carolina of North Carolina
301 South College Street, 301 South College Street,
One First Union Center TW-10 One First Union Center TW-10
Charlotte, NC 28288-0745 Charlotte, NC 28288-0745
For Business/Credit Matters
---------------------------
Attention: E. Mark
Stubblefield
Telephone: (704) 383-7650
Fax: (704) 374-2802
For Administrative Matters
--------------------------
Attention: Perry Brown,
U.S. Banking
Telephone: (704)374-6613
Fax: (704) 374-2802
Firstar Bank Milwaukee, N.A. Firstar Bank Milwaukee, N.A. $14,000,000
777 East Wisconsin Avenue 777 East Wisconsin Avenue
Milwaukee, WI 53202 Milwaukee, WI 53202
U.S. Banking Division
For Business/Credit Matters
---------------------------
Attention: Timothy W. Somers
Telephone: (414) 765-6077
Fax: (414) 765-5062
For Administrative Matters
--------------------------
Attention: Jane Gumina
Telephone: (414) 765-4647
Fax: (414) 765-5062
</TABLE>
<PAGE>
8
<TABLE>
<CAPTION>
Name of Lender and
Applicable Lending Office Address for Notices Commitment
- ------------------------- ------------------- ----------
<S> <C> <C>
The Fuji Bank, Ltd. The Fuji Bank, Ltd. $26,000,000
One Houston Center One Houston Center
Suite 4100, Suite 4100,
1221 Mckinney Street 1221 Mckinney Street
Houston, TX 77010 Houston, TX 77010
For Business/Credit Matters
---------------------------
Attention: Jay Fort
Telephone: (713) 759-1800
Telex: 790026 FUJIBANK HOU
Fax: (713) 759-0048
For Administrative Matters
--------------------------
Attention: Jenny Lin
Telephone: (713) 650-7821
Telex: 790026 FUJIBANK HOU
Fax: (713) 759-0048
The Industrial Bank The Industrial Bank $26,000,000
of Japan of Japan
MCORP Plaza MCORP Plaza
Suite 4850 Suite 4850
Houston, TX 77002 Houston, TX 77002
For Business/Credit Matters
---------------------------
Attention: W. Lynn Williford
Telephone: (713) 651-9444
Fax: (713) 651-9209
The Industrial Bank of Japan
Trust Company
245 Park Avenue
New York, NY 10167
Attention: Linda Muscarella
Telephone: (212) 309-1872
Fax: (212) 856-9450
For Administrative Matters
--------------------------
Attention: Agnes Aberin
Telephone: (212) 309-6793
Telex: 175597 IBJTC
Fax: (212) 557-3581
</TABLE>
<PAGE>
9
<TABLE>
<CAPTION>
Name of Lender and
Applicable Lending Office Address for Notices Commitment
- ------------------------- ------------------- ----------
<S> <C> <C>
Istituto Bancario Istituto Bancario $18,000,000
San Paolo Di Torino San Paolo Di Torino
SpA-New York SpA-New York
245 Park Avenue 245 Park Avenue
35th Floor 35th Floor
New York, NY 10167 New York, NY 10167
For Business/Credit Matters
---------------------------
Attention: Robert S. Wurster
Telephone: (212) 692-3160
Telex: 220045 SPAOL UR
Fax: (212) 599-5303
For Administrative Matters
--------------------------
Attention: Daniele Sarp
Telephone: (212) 692-3195
Telex: 220045 SPAOL UR
Fax: (212) 599-5303
The Long-Term Credit Bank The Long-Term Credit Bank $18,000,000
of Japan, Limited of Japan, Limited
Texas Commerce Tower Texas Commerce Tower
Suite 4700 West Suite 4700 West
2200 Ross Avenue 2200 Ross Avenue
Dallas, TX 75201 Dallas, TX 75201
For Business/Credit Matters
---------------------------
Attention: R. Bruce Frey
Telephone: (214) 969-5352
Fax: (214) 969-5357
For Administrative Matters
--------------------------
Attention: Robert Pacifici
Telephone: (212) 335-4801
Telex: 425722 LTCBNY
Fax: (212) 608-3452
Mellon Bank, N.A. Mellon Bank, N.A.
Room 4438 Room 4438
One Mellon Bank Center One Mellon Bank Center
Pittsburgh, PA 15258-001 Pittsburgh, PA 15258-001
For Business/Credit Matters
---------------------------
Attention: Lisa M. Pellow,
Global Corporate Banking
Telephone: (412) 236-2790
Fax: (412) 236-1914
</TABLE>
<PAGE>
10
<TABLE>
<CAPTION>
Name of Lender and
Applicable Lending Office Address for Notices Commitment
- ------------------------- ------------------- ----------
<S> <C> <C>
For Administrative Matters
--------------------------
Attention: Tracy Stevens,
Loan Administration
Telephone: (412) 234-8285
Fax: (412) 234-5049
The Mitsubishi Bank, Ltd. The Mitsubishi Bank, Ltd. $26,000,000
Houston Agency Houston Agency
1100 Louisiana Street 1100 Louisiana Street
Suite 2800 Suite 2800
Houston, TX 77002-5216 Houston, TX 77002-5216
For Business/Credit Matters
---------------------------
Attention: Michael A. Innes
Telephone: (713) 655-3807
Fax: (713) 658-0116
National Westminster National Westminster $26,000,000
Bank Plc, Bank Plc,
600 Travis Street 600 Travis Street
Texas Commerce Tower Texas Commerce Tower
#6070 #6070
Houston, TX 77002 Houston, TX 77002
Attention: Steven J.
Krakoski,
Vice President
Telephone: (713) 221-2400
Fax: (713) 221-2430
For Administrative Matters
--------------------------
National Westminster Bank Plc
New York Branch
175 Water Street
New York, NY 10038
Attention: Robert Passarello
Telephone: (212) 602-4149
Telex: 233222 NWBKUR
Fax: (212) 602-4118
NationsBank of Texas, N.A. NationsBank of Texas, N.A. $32,000,000
901 Main Street, 67th Floor 901 Main Street, 67th Floor
Dallas, TX 75202 Dallas, TX 75202
For Business/Credit Matters
---------------------------
Attention: Sharon McCarty
Telephone: (214) 508-0906
Fax: (214) 508-0980
</TABLE>
<PAGE>
11
<TABLE>
<CAPTION>
Name of Lender and
Applicable Lending Office Address for Notices Commitment
- ------------------------- ------------------- ----------
<S> <C> <C>
For Administrative Matters
-------------------------- $32,000,000
Attention: Karen Puente
Telephone: (214) 508-0519
Fax: (214) 508-0944
NBD Bank, N.A. NBD Bank, N.A. $18,000,000
611 Woodward Avenue 611 Woodward Avenue
Detroit, MI 48226 Detroit, MI 48226
For Business/Credit Matters
---------------------------
Attention: William J.
McCaffrey,
National Banking Division
Telephone: (313) 225-3444
Telex: 4320060
Fax: (313) 225-2649
For Administrative Matters
--------------------------
Attention: Candace Laitan,
National Banking Division
Telephone: (313) 225-2273
Telex: 4320060
Fax: (313) 225-2649
The Northern Trust Company The Northern Trust Company $18,000,000
50 South LaSalle Street 50 South LaSalle Street
Chicago, IL 60675 Chicago, IL 60675
For Business/Credit Matters
---------------------------
Attention: Martin G. Alston,
Western Division
Telephone: (312) 444-5058
Fax: (312) 630-1566
For Administrative Matters
--------------------------
Attention: Linda Honda,
Western Division
Telephone: (312) 444-5051
Fax: (312) 630-1566
Norwest Bank Norwest Bank $14,000,000
Minnesota, National Minnesota, National
Association Association
6th and Marquette 6th and Marquette
Minneapolis, MN Minneapolis, MN
55479-0085 55479-0085
</TABLE>
<PAGE>
12
<TABLE>
<CAPTION>
Name of Lender and
Applicable Lending Office Address for Notices Commitment
- ------------------------- ------------------- ----------
<S> <C> <C>
For Business/Credit Matters
---------------------------
Attention: Perry G. Pelas
Telephone: (612) 667-8609
Fax: (612) 667-4145
For Administrative Matters
--------------------------
Attention: Margret Hamzavi
Telephone: (612) 667-4747
Fax: (612) 667-4145
PNC Bank, N.A. PNC Bank, N.A. $26,000,000
2525 Lincoln Plaza 2525 Lincoln Plaza
500 North Akard 500 North Akard
Dallas, TX 75201 Dallas, TX 75201
For Business/Credit Matters
---------------------------
Attention: Gregory Gaschler
Telephone: (214) 740-2585
Fax: (214) 740-2588
For Administrative Matters
--------------------------
Attention: Sharon Tackett
Telephone: (214) 740-2525
Fax: (214) 740-2588
For Business/Credit Matters
---------------------------
Royal Bank of Canada 600 Wilshire Blvd. Suite 800 $26,000,000
600 Wilshire Blvd. Los Angeles, CA 90017
Suite 800 Attention: Doug Frost
Los Angeles, CA 90017 Telephone: (213) 955-5310
Fax: (213) 955-5350
For Administrative Matters
--------------------------
Royal Bank of Canada
Pierrepont Plaza
300 Cadman Plaza West
14th Floor
Brooklyn, NY 11201-2701
Attention: Linda Swanston,
Loan Administration
Telephone: (212) 858-7176
Telex: ROYBAN 62519
Fax: (718) 522-6292
</TABLE>
<PAGE>
13
<TABLE>
<CAPTION>
Name of Lender and
Applicable Lending Office Address for Notices Commitment
- ------------------------- ------------------- ----------
<S> <C> <C>
The Sanwa Bank Ltd., The Sanwa Bank Ltd., $26,000,000
Dallas Agency Dallas Agency
901 Main Street, 901 Main Street,
Suite 2830, LB 165 Suite 2830, LB 165
Dallas, TX 75202 Dallas, TX 75202
For Business/Credit Matters
---------------------------
Attention: Robert Smith,
A.V.P.
Telephone: (214) 744-5555
Telex: 735282
Fax: (214) 741-6535
For Administrative Matters
--------------------------
Attention: Gregory Crowe,
A.V.P.
Telephone: (214) 744-5555
Telex: 735282
Fax: (214) 741-6535
Societe Generale Societe Generale $18,000,000
Trammell Crow Center Trammell Crow Center
Suite 4800 Suite 4800
2001 Ross Avenue 2001 Ross Avenue
Dallas, TX 75201 Dallas, TX 75201
For Business/Credit Matters
---------------------------
Attention: Louis P. Laville
III, , V.P.
Telephone: (214) 979-2762
Telex: 170494 SOCGEN UT
Fax: (214) 979-1104
For Administrative Matters
--------------------------
Attention: Angela Aldridge/
Operations
Telephone: (214) 979-2743
Telex: 170494 SOCGEN UT
Fax: (214) 754-0171
The Sumitomo Bank, Ltd. The Sumitomo Bank, Ltd. $26,000,000
NCNB Center NCNB Center
Houston Agency Houston Agency
700 Louisiana, Suite 1750 700 Louisiana, Suite 1750
Houston, TX 77002 Houston, TX 77002
</TABLE>
<PAGE>
14
<TABLE>
<CAPTION>
Name of Lender and
Applicable Lending Office Address for Notices Commitment
- ------------------------- ------------------- ----------
<S> <C> <C>
For Business/Credit Matters
---------------------------
Attention: William S.
Rogers, V.P.
Telephone: (713) 238-8214
Telex: 774417
Fax: (713) 759-0020
For Administrative Matters
--------------------------
Attention: Mr. Goto, Loan
Administration
Telephone: (713) 238-8240
Telex: 774417
Fax: (713) 759-0020
SunBank SunBank $26,000,000
200 South Orange Avenue 200 South Orange Avenue
Orlando, FL 32801 Orlando, FL 32801
For Business/Credit Matters
---------------------------
Attention: Mr. J. Carol Doyle
Telephone: (407) 237-4333
Fax: (407) 237-6894
For Administrative Matters
--------------------------
Attention: Ms. Lois Keezel
Telephone: (407) 237-4855
Fax: (407) 237-6894
Swiss Bank Corporation Swiss Bank Corporation $18,000,000
141 W. Jackson Blvd. 141 W. Jackson Blvd.
Chicago, IL 60604 Chicago, IL 60604
For Business/Credit Matters
---------------------------
Attention: Nancy Russell
Telephone: (312) 554-6436
Fax: (312) 554-6411
For Administrative Matters
--------------------------
Attention: Valerie Williams
Telephone: (212) 574-3146
Fax: (212) 574-4176/3852
Union Bank of Switzerland Union Bank of Switzerland $26,000,000
Houston Agency Houston Agency
1100 Louisiana, Suite 4500 1100 Louisiana, Suite 4500
Houston, TX 77002 Houston, TX 77002
</TABLE>
<PAGE>
15
<TABLE>
<CAPTION>
Name of Lender and
Applicable Lending Office Address for Notices Commitment
- ------------------------- ------------------- ----------
<S> <C> <C>
For Business/Credit Matters
---------------------------
Attention: Dan Boyle
Telephone: (713) 655-6500
Fax: (713) 655-6555
For Administrative Matters
--------------------------
Attention: Robert Mack, Loan
Administration
Telephone: (212) 821-3225
Fax: (212) 821-3259
United Missouri Bank, N.A. United Missouri Bank, N.A. $14,000,000
1010 Grand Avenue 1010 Grand Avenue
Kansas City, MO 64141-6226 Kansas City, MO 64141-6226
For Business/Credit Matters
---------------------------
Attention: Walter Beck,
Commercial Loan Department
Telephone: (816) 860-7109
Telex: 6875032 UMNBK UW
Fax: (816) 860-7143
For Administrative Matters
--------------------------
Attention Billy Ray Smith
Telephone: (816) 860-7019
Telex: 687-5032 UMNBK UW
Fax: (816) 860-7143
United States National United States National $14,000,000
Bank of Oregon Bank of Oregon
111 S.W. Fifth Avenue, 111 S.W. Fifth Avenue,
Suite 2900 Suite 2900
Portland, OR 97204 Portland, OR 97204
For Business/Credit Matters
---------------------------
Attention: Blake R. Howells,
A.V.P.
National Corporate Banking
Division
Telephone: (503) 275-3475
Fax: (503) 275-4346
For Administrative Matters
--------------------------
Attention: Participation
Specialist
Telephone: (503) 275-6561
Fax: (503) 275-4600
</TABLE>
<PAGE>
16
<TABLE>
<CAPTION>
Name of Lender and
Applicable Lending Office Address for Notices Commitment
- ------------------------- ------------------- ----------
<S> <C> <C>
Wachovia Bank Wachovia Bank $26,000,000
of Georgia, N.A. of Georgia, N.A.
191 Peachtree Street, NE 191 Peachtree Street, NE
MC GA370 MC GA370
Atlanta, GA 30303 Atlanta, GA 30303
For Business/Credit Matters
---------------------------
Attention: Paige Daniel
Telephone: (404) 332-1322
Fax: (404) 332-6898
For Administrative Matters
--------------------------
Attention: Huguette Jones
U.S. Corporate-Dallas
Telephone: (404) 332-4466
Fax: (404) 332-1118
Morgan Guaranty Trust Morgan Guaranty Trust $60,000,000
Company of New York Company of New York
60 Wall Street 60 Wall Street
New York, NY 10260-0060 New York, NY 10260-0060
For Business/Credit Matters
---------------------------
Attention: Stephen B. King
Vice President
Telephone: (212) 648-7415
Telex: 177615 MGT UT
Fax: (212) 648-5336
For Administrative Matters
--------------------------
Attention: John J. O'Dowd
Telephone: (212) 648-6973
Telex: 177615 MGT UT
Fax: (212) 648-5336
J.P. Morgan, Delaware J.P. Morgan, Delaware
500 Stanton Christiana 500 Stanton Christiana
Road Road
P.O. Box 6070 P.O. Box 6070
Newark, DE 19713-2107 Newark, DE 19713-2107
Attention: Kevin M. McCann,
Assistant Treasurer
Telephone: (302) 992-1850
Fax: (302) 992-1852
</TABLE>
<PAGE>
SCHEDULE 3.08
RESTRICTED SUBSIDIARIES
None.
<PAGE>
SCHEDULE 3.09
MATERIAL LITIGATION
None.
<PAGE>
EXHIBIT B
TO THE AMENDMENT AND
RESTATEMENT AGREEMENT
Charles R. Lotter
Senior Vice President
Secretary and General Counsel
December 7, 1994
Each of the lenders named in the
Schedules referred to below
Re: Revolving Credit Agreement of
J. C. Penney Company, Inc. and
J. C. Penney Funding Corporation
--------------------------------
Dear Sirs:
As the General Counsel of J. C. Penney Company, Inc., a Delaware corporation
("JCPenney"), and of J. C. Penney Funding Corporation, a Delaware corporation
("Funding"; together with JCPenney, "Borrowers"), I have been asked to render an
opinion pursuant to Section 4(e) of each of those certain Amendment and
Restatement Agreements (the "Amendments") dated as of December 7, 1994 relating
to the 364-day and five-year Revolving Credit Agreements dated as of December
16, 1993, as amended and restated with new Lenders as of December 7, 1994 (the
"Restated Agreements"), among the Borrowers, Morgan Guaranty Trust Company of
New York ("Agent"), the lenders listed in Schedule 2.01 of each of the Restated
Agreements ("Lenders"), and Bankers Trust Company, Chemical Bank, and Credit
Suisse ("Co-Agents").
In rendering the opinion set forth below, I have examined originals,
photostatic, or certified copies of the Amendments and Restated Agreements, the
respective corporate records and documents of the Borrowers, copies of public
documents, certificates of the officers or representatives of the Borrowers, and
such other instruments and documents, and have made such inquiries, as I have
deemed necessary as a basis for such opinion. In making such examinations, I
have assumed with your consent the genuineness of all signatures (other than the
signatures of the Borrowers) and the authenticity of all documents submitted to
me as originals, the conformity to original documents of all documents submitted
to me as certified or photostatic copies, and the authenticity of the originals
of such latter documents. As to questions of fact material to such opinion, to
the extent I deemed necessary, I have relied upon the
<PAGE>
Each of the lenders named in the Schedules
December 7, 1994
Page 2
representations and warranties of the Borrowers made in the Amendments and
Restated Agreements and upon certificates of the officers of the Borrowers.
Capitalized terms not otherwise defined in this opinion letter have the meanings
specified in the Amendments and Restated Agreements.
Based upon the foregoing, I am of the opinion that:
1. Each of the Borrowers has been duly incorporated and is validly existing
and in good standing under the laws of the State of Delaware, and is duly
qualified as a foreign corporation and in good standing under the laws of each
jurisdiction where the failure to so qualify would have a Material Adverse
Effect. Each of the Borrowers has the requisite corporate power and authority to
own, pledge, and operate its properties and assets, to lease the property it
operates under lease, and to conduct its business as now conducted.
2. The execution, delivery, and performance by the Borrowers of the Amendments
and Restated Agreements and the Borrowings by the Borrowers under the Amendments
and Restated Agreements (i) are within the corporate power of each of the
Borrowers; (ii) have been duly authorized by each of the Borrowers by all
necessary corporate action; (iii) are not in contravention of JCPenney's
Restated Certificate of Incorporation, as amended, Funding's Certificate of
Incorporation, as amended, Funding's Certificate of Incorporation, as amended,
or either of the Borrower's by-laws; (iv) to the best of my knowledge do not
violate any material law, statute, rule, or regulation, or any material order of
any Governmental Authority, applicable to either of the Borrowers; (v) do not
conflict with or result in the breach of, or constitute a default under, the
material borrowing indentures, agreements, or other instruments of either of the
Borrowers; (vi) do not result in the creation or imposition of any Lien upon any
of the property or assets of either of the Borrowers other than any Lien created
by the Amendments and Restated Agreements; and (vii) do not require the consent
or approval of, or any filing with, any Governmental Authority or any other
person party to those agreements described above other than those that have been
obtained or made or where the failure to obtain such consent or approval would
not result in a Material Adverse Effect.
3. The Amendments and Restated Agreements have been duly executed and
delivered by each of the Borrowers and constitute
<PAGE>
Each of the lenders named in the Schedules
December 7, 1994
Page 3
the legal, valid, and binding obligation of such Borrower, enforceable against
such Borrower in accordance with their terms, except as such enforcement may be
limited by bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium, and similar laws of general applicability relating to or affecting
creditors' rights and to general equity principles.
4. Neither Borrower is an "investment company" within the meaning of the
Investment Company Act of 1940, as amended, or a "public-utility company" or a
"holding company" within the meaning of the Public Utility Holding Company Act
of 1935, as amended.
5. To the best of my knowledge after due inquiry, except as set forth in
Schedules 3.09 of the Restated Agreements, no litigation by or before any
Governmental Authority is now pending or threatened against JCPenney or Funding
(i) which involves the Amendments, Restated Agreements or the Transactions or
(ii) as to which there is a reasonable possibility of an adverse determination
and which, if adversely determined, would, individually or in the aggregate,
result in a Material Adverse Effect.
6. The Support Agreements have been duly executed and delivered by JCPenney
and, where applicable, Funding and, as of the Closing Date, are in full force
and effect in accordance with their terms.
The opinions expressed herein are limited to the laws of the State of Delaware
with respect to the opinions provided in paragraph 1 (except as to due
qualification as a foreign corporation and good standing under the laws of other
jurisdictions) and clauses (i), (ii), and (iii) of paragraph 2. The other
opinions expressed are limited to the laws of the State of New York and the laws
of the United States. I do not express any opinion herein concerning any laws of
any other jurisdictions. The opinion is furnished to you in connection with the
transactions contemplated by the Amendments and Restated Agreements, and may not
be relied upon by any other person, firm, or corporation for any purpose or by
you in any other context without my prior written consent.
<PAGE>
Each of the lenders named in the Schedules
December 7, 1994
Page 4
Very truly yours,
[SIGNATURE OF CHARLES R. LOTTER APPEARS HERE]
Charles R. Lotter
<PAGE>
CONFORMED COPY
EXHIBIT C
TO THE AMENDMENT AND
RESTATEMENT AGREEMENT
GUARANTY
This Guaranty Agreement is executed as of this 7th day of December, 1994, by J.
C. Penney Company, Inc., a Delaware corporation ("Guarantor"), in favor of J. C.
Penney Funding Corporation, a Delaware corporation ("Funding"), and the lenders
("") (as defined below).
RECITALS:
WHEREAS, Funding is a wholly-owned subsidiary of Guarantor;
WHEREAS, Funding and Guarantor have entered into those certain 364-Day and
Five-Year Revolving Credit Agreements (collectively, the "Agreements") dated as
of December 16, 1993, as amended and restated with new Lenders as of December 7,
1994 (the "Restated Agreements"), among Guarantor, Funding, Morgan Guaranty
Trust Company of New York, as agent for the Lenders, Bankers Trust Company,
Chemical Bank and Credit Suisse, as co-agents for the Lenders, and certain other
financial institutions named in the Restated Agreements (collectively, the
"Lenders") in amounts not to exceed One Billion Five Hundred Million Dollars
($1,500,000,000) and One Billion Dollars ($1,000,000,000), respectively; and
<PAGE>
2
WHEREAS, Guarantor is willing to guarantee any borrowings of Funding under the
Restated Agreements on the terms set forth herein.
NOW, THEREFORE, in consideration of the premises, Guarantor hereby agrees as
follows:
1. Subject to the terms and conditions of subordination set forth in this
Guaranty, Guarantor hereby unconditionally guarantees in favor of the Lenders,
the prompt payment when due of all interest, principal, and other amounts owing
under the Restated Agreements (collectively, the "Guaranteed Debt"). This is an
unconditional guaranty of payment, and in the event of default by Funding in the
payment of interest, principal, or any other amounts payable under the
Guaranteed Debt, the Lenders may proceed directly against Guarantor to enforce
this Guaranty (including by the institution of legal proceedings) without first
proceeding against Funding.
2. Guarantor acknowledges that it has received and will receive a direct or
indirect benefit from the making of this Guaranty and the creation of the
Guaranteed Debt.
3. (a) The Guaranteed Debt shall be subordinated and subject in right of
payment to the prior payment in full of any and all other indebtedness for
borrowed money
<PAGE>
3
incurred, created, assumed, or otherwise guaranteed by Guarantor (collectively
referred to as the Guarantor's "Senior Debt").
(b) In the event of (i) any dissolution or winding-up or total or partial
liquidation or reorganization of Guarantor, whether voluntary or involuntary, or
any bankruptcy, insolvency, receivership, or similar proceeding relative to
Guarantor, or (ii) any default in the payment of principal (including any
acceleration or required prepayments or amortization) of or interest on any
Senior Debt of Guarantor, then, subject to the provisions of subsection (d)
below, the Lenders shall not be entitled to receive any payment under this
Guaranty on account of the Guaranteed Debt unless and until all Senior Debt
shall have been paid in full or otherwise discharged.
(c) For purposes of determining the priority of payments between the Senior
Debt and the Guaranteed Debt, in the event that the Guaranteed Debt, or any part
thereof, is declared due and payable prior to its stated maturity, all principal
of and interest and any other amounts due on all Senior Debt outstanding at the
time of such declaration as to the Guaranteed Debt shall first have been paid in
full, before any payment is made by Guarantor upon the Guaranteed Debt.
<PAGE>
4
(d) In no event shall any Lender be required by this subordination to refund
any amounts paid to it pursuant to this Guaranty on account of the Guaranteed
Debt prior to the events specified in subsections (b) and (c) above, and prior
to such events the Lenders shall be entitled to be paid hereunder as agreed and
to collect any sums due such Lenders hereunder by any lawful means.
(e) The provisions of this Section are for the purpose of defining the
relative rights of the holders of any Senior Debt, on the one hand, and the
Lenders, on the other hand, against Guarantor, and nothing herein shall impair,
as between the Guarantor and the Lenders, the obligation of Guarantor, which is
unconditional and absolute, to guarantee the prompt payment when due of the
Guaranteed Debt in accordance with the terms and provisions thereof; nor shall
anything herein prevent the Lenders from exercising all remedies otherwise
permitted by applicable law upon default hereunder, subject to the rights, if
any, under this Section of any Senior Debt Holder.
<PAGE>
5
4. The substantive laws of the State of New York shall govern the validity,
construction, enforcement, and interpretation of this Guaranty.
IN WITNESS WHEREOF, Guarantor has executed and delivered this Guaranty as of
the date first written above.
J. C. PENNEY COMPANY, INC.,
a Delaware corporation, as
Guarantor
by
/s/ Leo A. Gispanski
-----------------------
Name: Leo A. Gispanski
Title: Vice President &
Treasurer
<PAGE>
Exhibit 4(g)
3(a)(3) COMMERCIAL PAPER DEALER AGREEMENT
This will confirm our arrangement whereby Merrill Lynch Money Markets Inc.
("Merrill Lynch") will act as dealer in sales of commercial paper notes (the
"Notes") of J. C. Penney Funding Corporation (the "Company"). In that
connection, Merrill Lynch may, but shall not be obligated to, purchase such
commercial paper from the Company as principal.
It is understood that the commercial paper will have a maturity at the time
of issuance not to exceed nine months (exclusive of days of grace) and be
denominated in notes not less than $100,000 each. Merrill Lynch understands
that, in connection with any issuance and sale of Notes by the Company, the
Company will obtain the prior advice of its counsel that all action required by
any regulatory body or bodies has been duly taken.
Each acceptance by the Company of an offer to purchase Notes pursuant to
this Letter Agreement shall be deemed to constitute a representation and
warranty to Merrill Lynch that such Notes, when issued, (i) will constitute
valid and legally binding obligations of the Company, enforceable in accordance
with their terms, and subject, as to enforcement, to bankruptcy, insolvency,
reorganization, moratorium, and other laws of general applicability relating to
or affecting creditors' rights generally and to general equity principles, (ii)
will be entitled to the exemption from registration under the Securities Act of
1933, as amended, pursuant to Section 3(a)(3) (or any such successor section
thereto) thereunder, and (iii) the Company is not an "investment company" as
defined in the Investment Company Act of 1940, as amended.
The Company has authorized the use of a Commercial Paper Memorandum
("Memorandum") prepared by CS First Boston Corporation and J. P. Morgan
Securities, Inc. on the basis of information furnished by the Company. Such
Memorandum may be used in connection with the sale of the Company's Notes until
the Company advises Merrill Lynch in writing that an updated or revised
Memorandum in a form approved by the Company should be substituted. The Company
will promptly advise Merrill Lynch of any material change in its ratings, its
financial condition or the results of its operations which may make such
updating or revision advisable.
With respect to the original Memorandum, and each updated or revised
Memorandum approved by the Company, the Company will indemnify Merrill Lynch and
hold Merrill Lynch harmless against any loss, claim, liability or expense
(including reasonable costs of defense) arising out of or based upon any
allegation that such Memorandum includes an untrue statement of a material fact
or omits to state any material fact necessary in order to make the
<PAGE>
statements therein, in light of the circumstances under which they were made,
not misleading, except insofar as such loss, claim, liability or expense arises
out of or is based upon any untrue statement or omission or alleged untrue
statement or omission which has been made therein or omitted therefrom in
reliance upon and in conformity with information furnished to the Company by
Merrill Lynch. The foregoing indemnity agreement shall be in force and effect
for a period of one year after the last issuance by Merrill Lynch of commercial
paper pursuant to this Letter Agreement.
With respect to the original Memorandum, and each updated or revised
Memorandum then currently in use for so long as Merrill Lynch shall act as a
dealer pursuant to this Agreement or any successor agreement hereto, Merrill
Lynch will indemnify the Company and hold the Company harmless against any loss,
claim, liability or expense (including reasonable costs of defense) arising out
of or based upon any allegation that such Memorandum includes an untrue
statement of a material fact or omits to state any material fact necessary in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading, to the extent that such loss, claim, liability
or expense arises out of or is based upon any untrue statement or omission or
alleged untrue statement or omission which has been made therein or omitted
therefrom in reliance upon and in conformity with information furnished to the
Company by Merrill Lynch. The foregoing indemnity agreement shall be in force
and effect for a period of one year after the last issuance by Merrill Lynch of
commercial paper pursuant to this Letter Agreement.
In addition, the Company agrees to furnish promptly to Merrill Lynch
(mailed directly to the attention of the Commercial Paper Product Manager) the
following information:
1. All reports filed by the Company with the Securities and Exchange
Commission (the "SEC") pursuant to Section 13(a) of the Securities
Exchange Act of 1934, as amended (the "1934 Act") (or reasonably
comparable information if the Company is not subject to such filing
requirements), and the Company's Parent's Annual Report and reports on
Forms 8-K, 10-Q and 10-K filed with the SEC pursuant to the 1934 Act;
2. All reports mailed to the Company's Parent's public stockholders; and
3. Copies of reports submitted by the Company to the rating agencies
showing the amounts of commercial paper outstanding and the bank lines
and other liquidity sources supporting such commercial paper.
The Company also agrees to provide such other information as Merrill Lynch
may reasonably request.
<PAGE>
The Company will notify Merrill Lynch promptly, to the attention of the
Commercial Paper Product Manager, of any change (or any advice from a rating
agency of a contemplated change) in any of its debt ratings, any material change
in the aggregate size of its commercial paper program and any other development
in its affairs or in the industry or industries in which it is engaged which has
a material impact on the results of its operations, its financial condition or
the marketability of its commercial paper.
This Agreement may be terminated at any time by either of the parties
hereto upon the giving of at least 15 days' prior written notice to the other
party.
THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
LAWS OF THE STATE OF NEW YORK WITHOUT GIVING EFFECT TO THE CONFLICT OF LAWS
PROVISIONS THEREOF.
J. C. PENNEY FUNDING CORPORATION MERRILL LYNCH MONEY MARKETS INC.
By ___________________________ By ________________________________
Title ________________________ Title _____________________________
Date: May 3, 1994 Date: May 3, 1994
<PAGE>
Exhibit 4(h)
3(a)(3) COMMERCIAL PAPER DEALER AGREEMENT
This will confirm our arrangement whereby Morgan Stanley & Co. Incorporated
("Morgan Stanley") will act as dealer in sales of commercial paper notes (the
"Notes") of J. C. Penney Funding Corporation (the "Company"). In that
connection, Morgan Stanley may, but shall not be obligated to, purchase such
commercial paper from the Company as principal.
It is understood that the commercial paper will have a maturity at the time
of issuance not to exceed nine months (exclusive of days of grace) and be
denominated in notes not less than $100,000 each. Morgan Stanley understands
that, in connection with any issuance and sale of Notes by the Company, the
Company will obtain the prior advice of its counsel that all action required by
any regulatory body or bodies has been duly taken.
Each acceptance by the Company of an offer to purchase Notes pursuant to
this Letter Agreement shall be deemed to constitute a representation and
warranty to Morgan Stanley that such Notes, when issued, (i) will constitute
valid and legally binding obligations of the Company, enforceable in accordance
with their terms, and subject, as to enforcement, to bankruptcy, insolvency,
reorganization, moratorium, and other laws of general applicability relating to
or affecting creditors' rights generally and to general equity principles, (ii)
will be entitled to the exemption from registration under the Securities Act of
1933, as amended, pursuant to Section 3(a)(3) (or any such successor section
thereto) thereunder, and (iii) the Company is not an "investment company" as
defined in the Investment Company Act of 1940, as amended.
The Company has authorized the use of a Commercial Paper Memorandum
("Memorandum") prepared by Morgan Stanley on the basis of information furnished
by the Company. Such Memorandum may be used in connection with the sale of the
Company's Notes until the Company advises Morgan Stanley in writing that an
updated or revised Memorandum in a form approved by the Company should be
substituted. The Company will promptly advise Morgan Stanley of any material
change in its ratings, its financial condition or the results of its operations
which may make such updating or revision advisable.
With respect to the original Memorandum, and each updated or revised
Memorandum approved by the Company, the Company will indemnify Morgan Stanley
and hold Morgan Stanley harmless against any loss, claim, liability or expense
(including reasonable costs of defense) arising out of or based upon any
allegation that such Memorandum includes an untrue statement of a material fact
or omits to state any material fact necessary in order to make the
<PAGE>
statements therein, in light of the circumstances under which they were made,
not misleading, except insofar as such loss, claim, liability or expense arises
out of or is based upon any untrue statement or omission or alleged untrue
statement or omission which has been made therein or omitted therefrom in
reliance upon and in conformity with information furnished to the Company by
Morgan Stanley. The foregoing indemnity agreement shall be in force and effect
for a period of one year after the last issuance by Morgan Stanley of commercial
paper pursuant to this Letter Agreement.
With respect to the original Memorandum, and each updated or revised
Memorandum then currently in use for so long as Morgan Stanley shall act as a
dealer pursuant to this Agreement or any successor agreement hereto, Morgan
Stanley will indemnify the Company and hold the Company harmless against any
loss, claim, liability or expense (including reasonable costs of defense)
arising out of or based upon any allegation that such Memorandum includes an
untrue statement of a material fact or omits to state any material fact
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading, to the extent that such loss, claim,
liability or expense arises out of or is based upon any untrue statement or
omission or alleged untrue statement or omission which has been made therein or
omitted therefrom in reliance upon and in conformity with information furnished
to the Company by Morgan Stanley. The foregoing indemnity agreement shall be in
force and effect for a period of one year after the last issuance by Morgan
Stanley of commercial paper pursuant to this Letter Agreement.
In addition, the Company agrees to furnish promptly to Morgan Stanley
mailed directly to the attention of Manager, Continuously Offered Products,
Morgan Stanley & Co. Incorporated, 1221 Avenue of the Americas, 4th Floor, New
York, NY 10020, Fax: (212) 764-7490 the following information:
1. All reports filed by the Company with the Securities and Exchange
Commission (the "SEC") pursuant to Section 13(a) of the Securities
Exchange Act of 1934, as amended (the "1934 Act") (or reasonably
comparable information if the Company is not subject to such filing
requirements), and the Company's Parent's Annual Report and reports on
Forms 8-K, 10-Q and 10-K filed with the SEC pursuant to the 1934 Act;
2. All reports mailed to the Company's Parent's public stockholders; and
3. Copies of reports submitted by the Company to the rating agencies
showing the amounts of commercial paper outstanding and the bank lines
and other liquidity sources supporting such commercial paper.
The Company also agrees to provide such other information as Morgan Stanley
may reasonably request.
<PAGE>
The Company will notify Morgan Stanley promptly, to the attention of
Manager, Continuously Offered Products, Morgan Stanley & Co. Incorporated, 1221
Avenue of the Americas, 4th Floor, New York, NY 10020, Fax: (212) 764-7490, of
any change (or any advice from a rating agency of a contemplated change) in any
of its debt ratings, any material change in the aggregate size of its commercial
paper program and any other development in its affairs or in the industry or
industries in which it is engaged which has a material impact on the results of
its operations, its financial condition or the marketability of its commercial
paper.
This Agreement may be terminated at any time by either of the parties
hereto upon the giving of at least 15 days' prior written notice to the other
party.
THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
LAWS OF THE STATE OF NEW YORK WITHOUT GIVING EFFECT TO THE CONFLICT OF LAWS
PROVISIONS THEREOF.
J. C. PENNEY FUNDING CORPORATION MORGAN STANLEY & CO. INCORPORATED
By ___________________________ By ________________________________
Title ________________________ Title _____________________________
Date: __________________, 1995 Date: _______________________, 1995
<PAGE>
Exhibit 10(e)
LINE OF CREDIT AGREEMENT
This Line of Credit Agreement (this "Agreement") is made as of the 1st day
of July, 1994 between J. C. Penney Funding Corporation ("J.C. Penney Funding"),
a Delaware corporation with its principal place of business at 6501 Legacy
Drive, Plano, Texas 75024-3698, and J. C. Penney Chile, Inc. (Agencia en Chile)
("Borrower"), with its office at Los Conquistadores 1700, Piso 12, Torre Santa
Maria, Santiago, Chile.
1. Between the date of this Agreement and December 31, 1996 ("Borrowing
Period"), J.C. Penney Funding shall make available the sum of $25,000,000 in
U.S. Dollars ("Borrowing Amount") for borrowing by Borrower.
2. During the Borrowing Period, Borrower may from time to time request one
or more loans from J.C. Penney Funding and J.C. Penney Funding shall lend to
Borrower such sum or sums, each with a maturity of three years, as Borrower
requests ("Loans"), provided that the total of such Loans shall not exceed the
Borrowing Amount.
3. Once each week, by no later than 12 o'clock noon central time on the
Thursday of that week, Borrower may notify J.C. Penney Funding of the amount, if
any, it will borrow or repay for the following week, and J.C. Penney Funding
shall transfer any such amount to be borrowed to Borrower by no later than 3
o'clock p.m. on Tuesday of such following week.
4. Borrower shall pay interest on any sum borrowed pursuant to this
Agreement at a rate taking effect on the first day of each calendar month
equivalent to the one-month London Interbank Offering Rate ("LIBOR") as
published on such date (or, if such date is not a business day in the U.S., on
the first succeeding business day in the U.S.) in the Wall Street Journal plus
one hundred basis points (i.e. LIBOR + 1%).
5. Interest is to be calculated on the weighted daily average of unpaid
balances during the month. Interest shall be payable quarterly in arrears and
at maturity by credit to such account of J. C. Penney Funding as J. C. Penney
Funding shall specify. Payments of interest for each quarter shall be made by
the tenth day of the following quarter. Notwithstanding any other provision
hereof, interest paid or payable shall not exceed the maximum amount permissible
under applicable law and, if such amount is exceeded, the excess amount of
interest shall be refunded to Borrower.
6. Borrower shall have the right to repay Loans in whole or in part (to
the extent Borrower may, in its sole discretion, determine is appropriate)
without penalty at any time prior to maturity with telephone notice to J. C.
Penney Funding by 12 o'clock noon central time by an individual duly authorized
by Borrower; provided that Borrower will obtain prior approval of any prepayment
from the Central Bank of Chile.
<PAGE>
Exhibit 10(e)
7. Borrower's promise to repay indebtedness hereunder will be evidenced by
a promissory note or notes for Loans in the same form as Exhibit "A" signed by
an individual duly authorized by Borrower. Exhibit "A" is attached hereto and
incorporated herein by reference for all purposes.
8. The terms of this Loan may not be waived, altered, notified, amended or
terminated in any manner except by written instrument signed by J. C. Penney
Funding and Borrower.
9. This Agreement shall be construed according to, and governed by, the
laws of the State of Delaware.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized representatives as of the date first set forth
above.
J. C. PENNEY FUNDING CORPORATION
By: ________________________________
Donald A. McKay
Chairman of theBoard
J.C. PENNEY CHILE, INC. (AGENCIA EN CHILE)
By:________________________________
George K. Kapplinger
President
<PAGE>
Exhibit 13
MANAGEMENT'S DISCUSSION AND ANALYSIS OF 1994 ANNUAL REPORT
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
J. C. Penney Funding Corporation ("Funding") is a wholly-owned consolidated
subsidiary of J. C. Penney Company, Inc. ("JCPenney"). The business of Funding
consists of financing a portion of JCPenney's operations through loans to
JCPenney, the purchase of customer receivable balances that arise from the
retail credit sales of JCPenney, or a combination of both. No receivables have
been purchased by Funding since 1985. The loan agreement between Funding and
JCPenney provides for unsecured loans to be made by Funding to JCPenney. Each
loan is evidenced by a revolving promissory note and is payable upon demand in
whole or in part as may be required by Funding. Copies of our loan and
receivables agreements with JCPenney are available upon request.
Funding issues commercial paper through CS First Boston Corporation, J.P. Morgan
Securities Inc., Merrill Lynch Money Markets Inc., and Morgan Stanley & Co.,
Incorporated to corporate and institutional investors in the domestic market.
The commercial paper is guaranteed by JCPenney on a subordinated basis. Funding
has, from time to time, issued long term debt in public and private markets in
the United States and abroad. The commercial paper is rated "A1" by Standard &
Poor's Corporation, "P1" by Moody's Investors Service, Inc., and "F1" by Fitch
Investors Service, Inc.
Income is derived primarily from earnings on loans to JCPenney and is designed
to produce earnings sufficient to cover its interest expense at a coverage ratio
of at least one and one-half times.
In 1994, net income increased to $32 million from $16 million in 1993 and $17
million in 1992. The increase in 1994 is attributed to higher borrowing levels
and higher interest rates, the decrease in 1993 is attributed to lower interest
rates and lower earnings on loans. Interest expense was $94 million in 1994
compared with $47 million in 1993 and $50 million in 1992. Interest earned from
JCPenney was $143 million in 1994 compared to $71 million in 1993 and $75
million in 1992.
Commercial paper borrowings averaged $1,990 million in 1994 compared to $1,347
million in 1993 and $1,146 million in 1992. The average interest rate on
commercial paper was 4.6 per cent in 1994, up from 3.2 per cent in 1993 and
3.7 per cent in 1992.
Total debt averaged $1,990 million in 1994, compared with $1,347 million in 1993
and $1,185 million in 1992. During 1992, JCPenney initiated a program to
restructure its debt portfolio to take advantage of declining interest rates.
Under the debt restructure program, Funding exercised its option to prepay all
of its long term debt, totalling $177 million.
Committed bank credit facilities available to Funding and JCPenney as of January
28, 1995, amounted to $2.5 billion. These facilities include a $1.5 billion,
364-day revolver, and a $1.0 billion, five-year revolver with a group of 42
domestic and international banks. These facilities support commercial paper
borrowing arrangements. Neither of the borrowing facilities was in use as of
January 28, 1995. See page 8 for a complete list of committed bank credit
facilities.
We would like to express our appreciation to the institutional investment
community, as well as to our credit line participants and commercial paper
dealers for their continued support during 1994.
Donald A. McKay
Chairman of the Board
March 27, 1995
1
<PAGE>
STATEMENTS OF INCOME J. C. PENNEY FUNDING CORPORATION
(In millions)
<TABLE>
<CAPTION>
FOR THE YEAR 1994 1993 1992
---- ---- ----
<S> <C> <C> <C>
INTEREST INCOME........................... $143 $ 71 $ 77
EXPENSES
Interest on short term debt............ 94 47 46
Interest on long term debt............. -- -- 4
Other expenses......................... -- -- 1
---- ---- ----
TOTAL EXPENSES......................... 94 47 51
---- ---- ----
INCOME BEFORE INCOME TAXES................ 49 24 26
Income taxes........................... 17 8 9
---- ---- ----
NET INCOME................................ $ 32 $ 16 $ 17
==== ==== ====
</TABLE>
STATEMENTS OF REINVESTED EARNINGS
(In millions)
<TABLE>
<CAPTION>
1994 1993 1992
---- ---- ----
<S> <C> <C> <C>
BALANCE AT BEGINNING OF YEAR.............. $851 $835 $818
NET INCOME................................ 32 16 17
---- ---- ----
BALANCE AT END OF YEAR.................... $883 $851 $835
==== ==== ====
</TABLE>
See Notes to Financial Statements on page 6.
2
<PAGE>
BALANCE SHEETS J. C. PENNEY FUNDING CORPORATION
(In millions except share data)
<TABLE>
<CAPTION>
1994 1993 1992
------ ------ ------
<S> <C> <C> <C>
CURRENT ASSETS
Loans to JCPenney.............................. $3,114 $2,323 $1,912
------ ------ ------
TOTAL CURRENT ASSETS...................... $3,114 $2,323 $1,912
====== ====== ======
LIABILITIES AND EQUITY OF JCPENNEY
CURRENT LIABILITIES
Short term debt................................ $2,074 $1,284 $ 887
Due to JCPenney................................ 12 43 45
------ ------ ------
TOTAL CURRENT LIABILITIES................. 2,086 1,327 932
EQUITY OF JCPENNEY
Common stock (including contributed
capital), par value $100:
Authorized, 750,000 shares -
issued and outstanding, 500,000 shares.... 145 145 145
Reinvested earnings............................ 883 851 835
------ ------ ------
TOTAL EQUITY OF JCPENNEY.................. 1,028 996 980
------ ------ ------
TOTAL LIABILITIES AND EQUITY OF JCPENNEY.. $3,114 $2,323 $1,912
====== ====== ======
</TABLE>
See Notes to Financial Statements on page 6.
3
<PAGE>
STATEMENTS OF CASH FLOWS J. C. PENNEY FUNDING CORPORATION
(In millions)
<TABLE>
<CAPTION>
FOR THE YEAR 1994 1993 1992
---- ---- ----
<S> <C> <C> <C>
OPERATING ACTIVITIES
Net income................................... $ 32 $ 16 $ 17
Increase in loans to JCPenney................ (791) (411) (303)
Decrease in amount due to JCPenney........... (31) (2) (6)
----- ----- -----
(790) (397) (292)
----- ----- -----
FINANCING ACTIVITIES
Increase in short term debt.................. 790 397 416
Payments of long term debt................... -- -- (177)
----- ----- -----
790 397 239
----- ----- -----
DECREASE IN SHORT TERM INVESTMENTS........... -- -- (53)
Short term investments at beginning of year.. -- -- 53
----- ----- -----
Short term investments at end of year........ $ -- $ -- $ --
===== ===== =====
SUPPLEMENTAL CASH FLOW INFORMATION
Interest paid................................ $ 94 $ 47 $ 55
Interest received............................ $ -- $ -- $ 2
Income taxes paid............................ $ 10 $ 4 $ 11
</TABLE>
See Notes to Financial Statements on page 6.
4
<PAGE>
INDEPENDENT AUDITORS' REPORT J. C. PENNEY FUNDING CORPORATION
To the Board of Directors of
J. C. Penney Funding Corporation:
We have audited the accompanying balance sheets of J. C. Penney Funding
Corporation as of January 28, 1995, January 29, 1994, and January 30, 1993, and
the related statements of income, reinvested earnings, and cash flows, appearing
on pages 3 through 5, for the years then ended. These financial statements are
the responsibility of the Corporation's management. Our responsibility is to
express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of J. C. Penney Funding
Corporation as of January 28, 1995, January 29, 1994, and January 30, 1993, and
the results of its operations and its cash flows for the years then ended in
conformity with generally accepted accounting principles.
KPMG Peat Marwick LLP
200 Crescent Court, Dallas, Texas 75201
February 23, 1995
NOTES TO FINANCIAL STATEMENTS
GENERAL
J. C. Penney Funding Corporation ("Funding") is a wholly-owned consolidated
subsidiary of J. C. Penney Company, Inc. ("JCPenney"). The principal business
of Funding consists of financing a portion of JCPenney's operations through
loans to JCPenney. To finance its operations, Funding issues commercial paper,
which is guaranteed by JCPenney on a subordinated basis, to corporate and
institutional investors in the domestic market. Funding has, from time to time,
issued long term debt in public and private markets in the United States and
abroad.
DEFINITION OF FISCAL YEAR
Funding's fiscal year ends on the last Saturday in January. Fiscal year 1994
ended January 28, 1995, Fiscal 1993 ended January 29, 1994, and Fiscal 1992
ended January 30, 1993. Fiscal years 1994 and 1993 each comprised 52 weeks and
fiscal year 1992 comprised 53 weeks.
COMMERCIAL PAPER PLACEMENT
Funding began placing commercial paper solely through dealers, rather than as a
direct issuer, on April 3, 1992. The average interest rate on commercial paper
at year end 1994, 1993, and 1992 was 5.9%, 3.2% and 3.4%, respectively.
SUMMARY OF ACCOUNTING POLICIES
INCOME TAXES
Funding's taxable income is included in the consolidated federal income tax
return of JCPenney. Income taxes in Funding's statement of income are computed
as if Funding filed a separate federal income tax return.
LOANS TO JCPENNEY
Funding and JCPenney are parties to a Loan Agreement which provides for
unsecured loans, payable on demand, to be made from time to time by Funding to
JCPenney for the general business purposes of JCPenney, subject to the terms
and conditions of the Loan Agreement. Under the terms of the Agreement, Funding
and JCPenney agree upon a mutually-acceptable earnings coverage of Funding's
interest and other fixed charges. The earnings to fixed charges ratio has
historically been at least one and one-half times.
COMMITTED BANK CREDIT FACILITIES
In 1994, committed bank credit facilities available to Funding and JCPenney as
of January 28, 1995, amounted to $2.5 billion. These facilities include a $1.5
billion, 364-day revolver, and a $1.0 billion, five-year revolver with a group
of 42 domestic and international banks. These facilities support commercial
paper borrowing arrangements. See page 8 for a complete list of committed bank
credit facilities. In addition a number of minority-owned banks participate in
a $5 million credit line for which First Texas Bank acts as agent. None of the
borrowing facilities were in use as of January 28, 1995.
FAIR VALUE OF FINANCIAL INSTRUMENTS
The fair value of short term debt (commercial paper) at January 28, 1995,
January 29, 1994, and January 30, 1993, approximates the amount as reflected on
the balance sheet due to its short average maturity.
The fair value of loans to JCPenney at January 28, 1995, January 29, 1994, and
January 30, 1993, also approximates the amount reflected on the balance sheet
because the loan is payable on demand and the interest charged on the loan
balance is adjusted to reflect current market interest rates.
5
<PAGE>
FIVE YEAR FINANCIAL SUMMARY J. C. PENNEY FUNDING CORPORATION
(In millions)
<TABLE>
<CAPTION>
AT YEAR END 1994 1993 1992 1991 1990
------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
CAPITALIZATION
Short term debt
Commercial paper................... $2,074 1,284 887 414 842
Master notes....................... -- -- -- 57 62
------ ----- ----- ----- -----
Total short term debt............ 2,074 1,284 887 471 904
------ ----- ----- ----- -----
Current maturities of long term debt.. -- -- -- -- 75
------ ----- ----- ----- -----
Long term debt
7.875% to 9.25% due 1991 to 1998... -- -- -- 177 196
------ ----- ----- ----- -----
Total long term debt............. -- -- -- 177 196
------ ----- ----- ----- -----
Total debt............................ 2,074 1,284 887 648 1,175
------ ----- ----- ----- -----
Equity of JCPenney.................... 1,028 996 980 963 940
------ ----- ----- ----- -----
TOTAL CAPITALIZATION..................... $3,102 2,280 1,867 1,611 2,115
====== ===== ===== ===== =====
COMMITTED BANK CREDIT FACILITIES......... $2,500 1,250 1,250 1,250 2,000
FOR THE YEAR
INCOME................................... $ 143 71 77 101 200
EXPENSES................................. $ 94 47 51 67 132
NET INCOME............................... $ 32 16 17 23 45
FIXED CHARGES - TIMES EARNED............. 1.52 1.52 1.52 1.52 1.52
PEAK SHORT TERM DEBT..................... $2,649 2,327 1,665 1,489 1,665
AVERAGE DEBT
Short term............................ $1,990 1,347 1,146 754 1,277
Long term............................. $ -- -- 39 232 281
------ ----- ----- ----- -----
Total................................. $1,990 1,347 1,185 986 1,558
AVERAGE INTEREST RATES
Short term debt....................... 4.6 % 3.2% 3.7% 5.6% 8.1%
Long term debt........................ -- % --% 8.9% 8.7% 8.6%
Total................................. 4.6 % 3.2% 3.9% 6.3% 8.2%
</TABLE>
6
<PAGE>
QUARTERLY DATA J. C. PENNEY FUNDING CORPORATION
($ in millions) (Unaudited)
<TABLE>
<CAPTION>
FIRST SECOND THIRD FOURTH
---------------- --------------- --------------- ---------------
1994 1993 1992 1994 1993 1992 1994 1993 1992 1994 1993 1992
----- ---- ---- ---- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Income....................... $ 24 13 22 32 15 19 38 22 18 49 21 18
Expenses..................... $ 16 9 15 21 10 12 25 14 12 32 14 12
Income before taxes.......... $ 8 4 7 11 5 7 13 8 6 17 7 6
Net income................... $ 5 3 5 7 3 4 9 5 4 11 5 4
Fixed charges -
times earned............... 1.52 1.52 1.52 1.52 1.52 1.52 1.52 1.52 1.52 1.52 1.52 1.52
</TABLE>
COMMITTED REVOLVING CREDIT FACILITIES
AS OF JANUARY 28, 1995
ABN-AMRO Bank N.V.
Bank of America NT & SA
Bank of Hawaii
Bank of New York
Bank One, Texas, N.A.
Bankers Trust Company
The Bank of Tokyo, Ltd.
Banque Nationale de Paris
Chemical Bank
Citibank, N.A.
Credit Lyonnais
Credit Suisse
Dai-Ichi Kangyo Bank
First Interstate Bank of California
The First National Bank of Boston
The First National Bank of Chicago
First Security Bank of Utah, N.A.
First Union National Bank of
North Carolina
Firstar Bank Milwaukee, N.A.
The Fuji Bank, Limited
The Industrial Bank of Japan
Trust Company
The Long Term Credit Bank of
Japan, Ltd.
Mellon Bank, N.A.
Mitsubishi Bank
Morgan Guaranty Trust Company
of New York
National Westminster Bank PLC
NationsBank of Texas, N.A.
NBD Bank, N.A.
The Northern Trust Company
Norwest Bank Minnesota, N.A.
PNC Bank, N.A.
The Royal Bank of Canada
The Sanwa Bank Limited
San Paolo Bank
Societe Generale
The Sumitomo Bank, Limited
SunBank, N.A.
Swiss Bank Corporation
Union Bank of Switzerland
United Missouri Bank, N.A.
United States National Bank
of Oregon
Wachovia Bank of North Carolina, N.A.
7
<PAGE>
Exhibit 23
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
The Board of Directors of
J. C. Penney Funding Corporation:
We consent to incorporation by reference in: (1) the Registration Statement
(No. 33-28390) on Form S-8; (2) the Registration Statement (No. 33-59666) on
Form S-8; (3) the Registration Statement (No. 33-59668) on Form S-8; (4) the
Registration Statement (No. 33-66070) on Form S-8; (5) the Registration
Statement (No. 33-66072) on Form S-8; (6) the Registration Statement (No. 33-
53275) on Form S-3; (7) the Registration Statement (No. 33-56993) on Form S-8;
and (8) the Registration Statement (No. 33-56995) on Form S-8 of J. C. Penney
Company, Inc. of our report dated February 23, 1995, relating to the balance
sheets of J. C. Penney Funding Corporation as of January 28, 1995, January 29,
1994, and January 30, 1993, and the related statements of income, reinvested
earnings, and cash flows for the years then ended, which report appears in the
1994 Annual Report of J. C. Penney Funding Corporation, which Annual Report is
incorporated by reference in the Annual Report on Form 10-K of J. C. Penney
Funding Corporation for the year ended January 28, 1995.
/s/ KPMG Peat Marwick LLP
KPMG Peat Marwick LLP
Dallas, Texas
April 13, 1995
<PAGE>
Exhibit 24
CONFORMED COPY
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, THAT each of the undersigned directors and
officers of J. C. PENNEY FUNDING CORPORATION, a Delaware corporation, which
is about to file with the Securities and Exchange Commission, Washington,
D.C., under the provisions of the Securities Exchange Act of 1934, its Annual
Report on Form 10-K for the 52 weeks ended January 28, 1995, hereby
constitutes and appoints L. A. Gispanski and D. A. McKay, and each of them,
his or her true and lawful attorneys-in-fact and agents, with full power to
act without the other, for him or her and in his or her name, place, and
stead, in any and all capacities, to sign said Annual Report, which is about
to be filed, and any and all subsequent amendments to said Annual Report, and
to file said Annual Report and each subsequent amendment so signed, with all
exhibits thereto, and any and all documents in connection therewith, and to
appear before the Securities and Exchange Commission in connection with any
matter relating to said Annual Report and any subsequent amendments, hereby
granting unto said attorneys-in-fact and agents, and each of them, full power
and authority to do and perform any and all acts and things requisite and
necessary to be done in and about the premises as fully and to all intents
and purposes as he or she might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents, or any of them, may
lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned have executed this Power of Attorney as
of the 10th day of April, 1995.
/S/ D. A. McKay /S/ L. A. Gispanski
------------------------------ --------------------------------
D. A. McKay L. A. Gispanski
Chairman of the Board Controller
(principal executive officer); (principal accounting officer);
Director Director
/S/ S. F. Walsh /S/ R. E. Northam
------------------------------ --------------------------------
S. F. Walsh R. E. Northam
President Director
(principal financial officer);
Director
/S/ R. B. Cavanaugh
--------------------------------
R. B. Cavanaugh
Director
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEET AND RELATED CONSOLIDATED STATEMENT OF INCOME
OF J. C. PENNEY FUNDING CORPORATION AS OF JANUARY 28, 1995, AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JAN-28-1995
<PERIOD-END> JAN-28-1995
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 3,114
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 3,114
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 3,114
<CURRENT-LIABILITIES> 2,086
<BONDS> 0
<COMMON> 145
0
0
<OTHER-SE> 883
<TOTAL-LIABILITY-AND-EQUITY> 3,114
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (49)
<INCOME-PRETAX> 49
<INCOME-TAX> 17
<INCOME-CONTINUING> 32
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 32
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
<PAGE>
Exhibit 99
- --------------------------------------------------------------------------------
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
- --------------------------------------------------------------------------------
RESULTS OF OPERATIONS
<TABLE>
<CAPTION>
($ in millions except per share data) 1994 1993 1992
- ----------------------------------------------------------------------------
<S> <C> <C> <C>
Retail sales, per cent increase 7.4 5.4 11.2
Comparative store sales,
per cent increase 6.8 5.3 9.7
Gross margin, per cent of retail sales
FIFO 31.5 31.3 31.5
LIFO 31.5 31.5 31.7
Selling, general, and administrative
expenses, per cent of retail sales 23.5 23.7 24.7
Pre-tax income of other businesses $ 165 $ 149 $ 125
Effective income tax rate 37.8 39.3 38.3
Net income $1,057 $ 940 $ 777
Per share $ 4.05 $ 3.53 $ 2.95
- ----------------------------------------------------------------------------
</TABLE>
NET INCOME. The Company recorded its third consecutive year of outstanding
profits in 1994, with net income exceeding $1 billion for the first time in
the Company's history. Net income in 1994 was $1,057 million, an increase of
12.5 per cent from $940 million in 1993. Fully diluted earnings per share
improved 14.7 per cent to $4.05 per share from $3.53 per share in 1993.
Increased sales volume in both stores and catalog was largely responsible for
the improvement in each of the last three years. Contributing to increased
profits were well managed selling, general, and administrative expenses.
These expenses, as a per cent of retail sales, continued to decline in 1994
following significant reductions in 1993 and 1992.
Net income was $940 million in 1993, an increase of 20.9 per cent from
$777 million in 1992. Fully diluted earnings per share improved to $3.53 per
share from $2.95 per share in 1992. Net income was $777 million in 1992, an
increase of 47.2 per cent from $528 million in 1991, excluding the impact in
1991 of nonrecurring items and the cumulative effect of an accounting change.
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------
REVENUE (In millions) 1994 Per cent increase 1993 Per cent increase 1992
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
JCPenney stores $ 15,023 6.9 $ 14,056 4.4 $ 13,460
Catalog 3,817 8.6 3,514 11.0 3,166
Drug stores 1,540 9.0 1,413 2.2 1,383
-------- -------- --------
Total retail sales* 20,380 7.4 18,983 5.4 18,009
-------- -------- --------
JCPenney Insurance 571 20.2 475 22.5 388
JCPenney National Bank 131 9.5 120 2.0 118
-------- -------- --------
Total revenue $ 21,082 7.7 $ 19,578 5.7 $ 18,515
</TABLE>
1994 and 1993 comprised 52 weeks, and 1992 comprised 53 weeks.
*On a comparable 52-week basis, total retail sales increased 6.9 per cent in
1993; JCPenney stores sales increased 5.8 per cent; Catalog sales increased
12.8 per cent; and Drug store sales increased 4.2 per cent.
- --------------------------------------------------------------------------------
The sales gains in JCPenney stores over the last three years were primarily the
result of the Company's strategy of offering fashion and quality merchandise to
its customers at competitive, affordable prices; the aggressive national
advertising campaign which began in 1993; and the emphasis on developing its
private brands. Catalog sales increases have been fueled by the growth in the
number of new customers, gains from specialty catalogs, and improved synergy
with the JCPenney stores' merchandise mix. Drug store sales increases were due
primarily to the growth in store and institutional pharmacy sales.
GROSS MARGIN dollars, on a FIFO basis, increased $461 million or 7.7 per cent in
1994, reflecting the favorable sales performance of both stores and catalog and
improved inventory management. As a per cent of retail sales, gross margin was
31.5 per cent in 1994, compared with 31.3 per cent in 1993 and 31.5 per cent in
1992. The level of the Company's LIFO index in 1994 was about the same as the
level in 1993, resulting in a pre-tax LIFO charge of $1 million. Because of a
decline in retail prices, there was deflation in the Company's index in 1993 and
1992, resulting in a pre-tax LIFO credit of $36 million and $32 million,
respectively.
SG&A EXPENSES, as a per cent of retail sales, declined in 1994 to 23.5 per cent
from 23.7 per cent in 1993 and 24.7 per cent in 1992, as a result of the
Company's continuing efforts to control costs across all operating and support
areas. SG&A expenses increased in 1994 from 1993's level, reflecting planned
increases in store and catalog advertising.
NET INTEREST EXPENSE AND CREDIT OPERATIONS
<TABLE>
<CAPTION>
(In millions) 1994 1993 1992
- ---------------------------------------------------------------------------
<S> <C> <C> <C>
Interest expense, net $ 270 $ 241 $ 258
Finance charge revenue (624) (523) (509)
Credit costs
Bad debt expense 177 95 122
Operating expenses
(including third party
credit costs) 270 260 261
-----------------------------------
Net interest expense
and credit operations $ 93 $ 73 $ 132
- ---------------------------------------------------------------------------
</TABLE>
22
<PAGE>
- --------------------------------------------------------------------------------
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
- --------------------------------------------------------------------------------
NET INTEREST EXPENSE AND CREDIT OPERATIONS increased 27.0 per cent in 1994 to
$93 million. Finance charge revenue rose $101 million in 1994, while bad debt
expense increased $82 million from the low levels last year, due to the
higher level of customer receivables. Interest expense increased $29 million
compared with 1993, primarily due to higher working capital requirements and
the stock purchase programs. Interest expense was also impacted by higher
short term interest rates in 1994, which were offset by lower average
borrowing rates on the Company's long term debt as a result of the debt
restructuring program in 1993 and 1992.
Net interest expense and credit operations declined in 1993, primarily
as a result of lower bad debt and interest expense. Interest expense declined
as a result of the Company's debt restructuring program in 1993 and 1992
initiated to take advantage of declining interest rates.
THE EFFECTIVE INCOME TAX RATE for 1994 was 37.8 per cent as compared with
39.3 per cent in 1993 and 38.3 per cent in 1992. The effective tax rate
declined in 1994 due to greater utilization of the available targeted jobs
tax credit. The 1993 rate included a one-time, non-cash charge of $14 million
for the revaluation of deferred taxes, as required by Statement No. 109,
Accounting for Income Taxes. Excluding the adjustment for deferred taxes, the
1993 effective income tax rate was 38.3 per cent.
PRE-TAX INCOME OF OTHER BUSINESSES
<TABLE>
<CAPTION>
(In millions) 1994 1993 1992
- ---------------------------------------------------------------------------
<S> <C> <C> <C>
JCPenney Insurance $ 138 $ 120 $ 101
JCPenney National Bank 27 29 24
-----------------------------------
Total $ 165 $ 149 $ 125
- ---------------------------------------------------------------------------
</TABLE>
JCPENNEY INSURANCE, which markets life, accident and health, and credit
insurance, continued its growth trend. During the past three years, JCPenney
Insurance has expanded its market share through relationships with credit
card issuers other than the Company, in both the United States and Canada to
solicit their customers. Pre-tax income was $138 million in 1994, an increase
of $18 million or 14.6 per cent over 1993. This growth resulted from
favorable trends in both premiums and lower loss ratios. Premium income for
1994 was $508 million, an increase of $92 million or 22 per cent over 1993.
The growth in premium income resulted from an increase of 1.7 million
policies and certificates, 30 per cent more than in 1993. Renewal premiums
increased as a result of greater sales over the past four years coupled with
favorable policy retention. Pre-tax income was $120 million in 1993, an
increase of 19.3 per cent over 1992, primarily due to increased premiums.
JCPENNEY NATIONAL BANK is a consumer bank, having no commercial lending
activity. The Bank offers Visa and MasterCard credit cards to consumers, and
generates funds primarily through certificates of deposit. At the end of the
year, about 497 thousand credit cards were active. Pre-tax income was $27
million in 1994, down from $29 million in 1993, due to higher average
interest rates on deposits. Pre-tax income improved in both 1993 and 1992, as
a result of lower interest rates and a reduction in bad debt expense.
FINANCIAL CONDITION. The Company's goal is to continue to maintain a strong
balance sheet. Outstanding earnings for the last three years and consistent
cash flows have contributed to our strong financial condition. This provides
the Company flexibility to capitalize on attractive opportunities for growth,
increase its dividends, and to purchase shares of stock - all leading toward
enhanced stockholder value.
Return on stockholders' equity is a key measure for evaluating the
Company's performance. Our return on equity in 1994 was 19.7 per cent compared
to 20.1 per cent in 1993 and 18.6 per cent in 1992. This performance placed the
Company in the top quartile of our key retail competitors and the S&P 500.
The Company's credit ratings on its long term debt and commercial paper are
among the highest in the retail industry. In October 1994, Moody's Investors
Service upgraded the Company's long term debt rating to A1. Currently, the
Company's long term debt is rated A+ by Standard & Poor's Corporation, A1 by
Moody's Investors Service, and A+ by Fitch Investors Service, Inc. Our
commercial paper is rated A1, P1 and F1, by Standard & Poor's, Moody's, and
Fitch, respectively.
CASH FLOW. In 1994, the Company continued to generate sufficient cash flows
internally to meet the major portion of its cash requirements to finance its
operations. Cash flow generated internally in 1994, which consisted of net
income plus depreciation and amortization and deferred taxes, was $1,414
million. At this level, cash flow covered substantially all of the Company's
cash requirements for working capital, capital expenditures, and dividends.
In addition, the Company used debt financing to complete its stock purchase
program of 10 million shares at a total cost of $475 million.
During the next few years, the Company expects to generate internally
sufficient cash flow to meet substantially all of its cash requirements for
operations, capital expenditures, and dividends. Capital expenditures are
expected to be approximately $600 million in each of the next three years.
23
<PAGE>
- --------------------------------------------------------------------------------
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
- --------------------------------------------------------------------------------
DEBT TO CAPITAL. The Company's debt to capital ratio is based on an asset mix
which is significantly influenced by customer receivables from the Company's
proprietary credit card. Debt includes both on and off balance sheet
financing. Over the last several years, the Company's debt capacity has
increased as a result of its strong earnings and cash flows. This has
permitted the Company to enhance stockholder value through a stock purchase
program and dividend increases. At the end of 1994, after the completion of
the first stock purchase program, the debt to capital ratio was 53.1 per
cent. A second purchase program, for the purchase of up to an additional 10
million shares of the Company's common stock, was authorized and begun in
January 1995.
DIVIDENDS. On March 8, 1995, the Board of Directors increased the quarterly
common dividend to 48 cents per share, or an indicated annual rate of $1.92
per share. The regular quarterly dividend on the Company's outstanding common
stock is payable on May 1, 1995, to stockholders of record on April 10, 1995.
The quarterly common dividend was 42 cents per share in 1994, 36 cents per
share in 1993, and 33 cents per share in 1992, or an indicated annual rate of
$1.68 per share in 1994, $1.44 per share in 1993, and $1.32 per share in
1992.
IMPACT OF INFLATION AND CHANGING PRICES. The impact of inflation on the
Company has not been significant in recent years due to the low levels of
inflation. Inflation causes increases in the cost of doing business,
including capital expenditures. By striving to control costs, the Company
attempts to minimize the effects of inflation on its operations.
24
<PAGE>
- --------------------------------------------------------------------------------
INDEPENDENT AUDITORS' REPORT
- --------------------------------------------------------------------------------
To the Stockholders and Board of Directors
of J.C. Penney Company, Inc.:
We have audited the accompanying consolidated balance sheets of J.C. Penney
Company, Inc. and Subsidiaries as of January 28, 1995, January 29, 1994, and
January 30, 1993, and the related consolidated statements of income, reinvested
earnings, and cash flows for the years then ended. These consolidated financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these consolidated financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of J.C. Penney
Company, Inc. and Subsidiaries as of January 28, 1995, January 29, 1994, and
January 30, 1993, and the results of their operations and their cash flows for
the years then ended in conformity with generally accepted accounting
principles.
As discussed on page 39, the Company adopted the provisions of the
Financial Accounting Standards Board's Statement of Financial Accounting
Standards No. 109, Accounting for Income Taxes, in 1993. Also, as discussed on
page 29, the Company adopted the provisions of the Financial Accounting
Standards Board's Statement of Financial Accounting Standards No. 115,
Accounting for Certain Investments in Debt and Equity Securities, in 1994.
/s/ KPMG Peat Marwick LLP
KPMG Peat Marwick LLP
200 Crescent Court, Dallas, Texas 75201
February 23, 1995
- --------------------------------------------------------------------------------
COMPANY STATEMENT ON FINANCIAL
INFORMATION
- --------------------------------------------------------------------------------
The Company is responsible for the information presented in this Annual
Report. The consolidated financial statements have been prepared in accordance
with generally accepted accounting principles and are considered to present
fairly in all material respects the Company's results of operations, financial
position, and cash flows. Certain amounts included in the consolidated financial
statements are estimated based on currently available information and judgment
of the outcome of future conditions and circumstances. Financial information
elsewhere in this Annual Report is consistent with that in the consolidated
financial statements.
The Company's system of internal controls is supported by written policies
and procedures and supplemented by a staff of internal auditors. This system is
designed to provide reasonable assurance, at suitable costs, that assets are
safeguarded and that transactions are executed in accordance with appropriate
authorization and are recorded and reported properly. The system is continually
reviewed, evaluated, and where appropriate, modified to accommodate current
conditions. Emphasis is placed on the careful selection, training, and
development of professional managers.
An organizational alignment that is premised upon appropriate delegation of
authority and division of responsibility is fundamental to this system.
Communication programs are aimed at assuring that established policies and
procedures are disseminated and understood throughout the Company.
The consolidated financial statements have been audited by independent
auditors whose report appears to the left. This audit was conducted in
accordance with generally accepted auditing standards, which includes the
consideration of the Company's internal controls to the extent necessary to form
an independent opinion on the consolidated financial statements prepared by
management.
The Audit Committee of the Board of Directors is composed solely of
directors who are not officers or employees of the Company. The Audit
Committee's responsibilities include recommending to the Board for stockholder
approval the independent auditors for the annual audit of the Company's
consolidated financial statements. The Committee also reviews the independent
auditors' audit strategy and plan, scope, fees, audit results, and non-audit
services and related fees; internal audit reports on the adequacy of internal
controls; the Company's ethics program; status of significant legal matters; the
scope of the internal auditors' plans and budget and results of their audits;
and the effectiveness of the Company's program for correcting audit findings.
The independent auditors and Company personnel, including internal auditors,
meet periodically with the Audit Committee to discuss auditing and financial
reporting matters.
/s/ Robert E. Northam
Robert E. Northam
Executive Vice President and Chief Financial Officer
25
<PAGE>
- --------------------------------------------------------------------------------
CONSOLIDATED STATEMENTS OF INCOME
J.C. PENNEY COMPANY, INC. AND SUBSIDIARIES
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE YEAR (In millions except per share data) 1994 1993 1992
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Revenue
Retail sales $ 20,380 $ 18,983 $ 18,009
Other revenue 702 595 506
----------------------------------
Total revenue 21,082 19,578 18,515
----------------------------------
Costs and expenses
Cost of goods sold, occupancy, buying, and warehousing costs 13,970 12,997 12,297
Selling, general, and administrative expenses 4,783 4,508 4,446
Costs and expenses of other businesses 537 446 381
Net interest expense and credit operations 93 73 132
----------------------------------
Total costs and expenses 19,383 18,024 17,256
----------------------------------
Income before income taxes, extraordinary charge, and
cumulative effect of accounting change 1,699 1,554 1,259
Income taxes 642 610 482
----------------------------------
Income before extraordinary charge and cumulative effect
of accounting change 1,057 944 777
Extraordinary charge on debt redemption,
net of income taxes of $35 -- (55) --
Cumulative effect of accounting change
for income taxes -- 51 --
----------------------------------
Net income $ 1,057 $ 940 $ 777
==================================
Earnings per common share
Primary
Income before extraordinary charge and
cumulative effect of accounting change $ 4.29 $ 3.79 $ 3.15
Extraordinary charge on debt redemption, net -- (.23) --
Cumulative effect of accounting change for income taxes -- .21 --
----------------------------------
Net income $ 4.29 $ 3.77 $ 3.15
==================================
Fully diluted
Income before extraordinary charge and
cumulative effect of accounting change $ 4.05 $ 3.55 $ 2.95
Extraordinary charge on debt redemption, net -- (.21) --
Cumulative effect of accounting change for income taxes -- .19 --
----------------------------------
Net income $ 4.05 $ 3.53 $ 2.95
==================================
</TABLE>
See Summary of Accounting Policies and Notes to Financial Statements on pages
29 through 39.
- --------------------------------------------------------------------------------
26
<PAGE>
- --------------------------------------------------------------------------------
CONSOLIDATED BALANCE SHEETS
- --------------------------------------------------------------------------------
J.C. Penney Company, Inc. and Subsidiaries
<TABLE>
<CAPTION>
ASSETS (In millions) 1994 1993 1992
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Current assets
Cash and short term investments of $207, $156, and $405 $ 261 $ 173 $ 426
Receivables, net 5,159 4,679 3,750
Merchandise inventories 3,876 3,545 3,258
Prepaid expenses 172 168 157
----------------------------------------
Total current assets 9,468 8,565 7,591
Properties, net 3,954 3,818 3,755
Investments, primarily insurance operations 1,359 1,182 991
Deferred insurance policy acquisition costs 482 426 372
Other assets 939 797 758
----------------------------------------
$ 16,202 $ 14,788 $ 13,467
========================================
</TABLE>
<TABLE>
<CAPTION>
LIABILITIES AND STOCKHOLDERS' EQUITY (In millions except share data)
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Current liabilities
Accounts payable and accrued expenses $ 2,274 $ 2,139 $ 2,038
Short term debt 2,092 1,284 907
Current maturities of long term debt -- 348 --
Deferred taxes 115 112 64
----------------------------------------
Total current liabilities 4,481 3,883 3,009
Long term debt 3,335 2,929 3,171
Deferred taxes 1,039 1,013 1,012
Bank deposits 702 581 538
Insurance policy and claims reserves 568 540 462
Other liabilities 462 477 570
Stockholders' equity
Preferred stock, without par value:
Authorized, 25 million shares -- issued, 1 million shares
of Series B LESOP convertible preferred 630 648 666
Guaranteed LESOP obligation (307) (379) (447)
Common stock, par value 50c:
Authorized, 1,250 million shares --
issued, 227, 236, and 235 million shares 1,030 1,003 955
Reinvested earnings 4,262 4,093 3,531
----------------------------------------
Total stockholders' equity 5,615 5,365 4,705
----------------------------------------
$ 16,202 $ 14,788 $ 13,467
========================================
</TABLE>
See Summary of Accounting Policies and Notes to Financial Statements on pages
29 through 39.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
CONSOLIDATED STATEMENTS OF REINVESTED EARNINGS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
(In millions)
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Reinvested earnings at beginning of year $ 4,093 $ 3,531 $ 3,156
Net income 1,057 940 777
Net unrealized change in debt and equity securities (21) 1 (1)
Retirement of common stock (435) -- --
Common stock dividends declared (392) (339) (309)
Preferred stock dividends declared, net of taxes (40) (40) (33)
Two-for-one stock split -- -- (59)
--------------------------------------
Reinvested earnings at end of year $4,262 $ 4,093 $ 3,531
======================================
</TABLE>
See Summary of Accounting Policies and Notes to Financial Statements on pages
29 through 39.
- --------------------------------------------------------------------------------
27
<PAGE>
- --------------------------------------------------------------------------------
CONSOLIDATED STATEMENTS OF CASH FLOWS
- --------------------------------------------------------------------------------
J.C. Penney Company, Inc. and Subsidiaries
<TABLE>
<CAPTION>
FOR THE YEAR (In millions) 1994 1993 1992
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Operating activities
Net income $ 1,057 $ 940 $ 777
Extraordinary charge, net of income taxes -- 55 --
Cumulative effect of accounting change for income taxes -- (51) --
Depreciation and amortization 323 316 310
Amortization of original issue discount 5 48 58
Deferred taxes 29 100 48
Change in cash from:
Customer receivables (326) (352) 411
Securitized customer receivables amortized -- (425) (36)
Inventories, net of trade payables (352) (196) (27)
Other assets and liabilities, net 2 (149) 33
---------------------------------------------
738 286 1,574
---------------------------------------------
Investing activities
Capital expenditures (550) (480) (454)
Purchases of investment securities (476) (351) (325)
Proceeds from sales of investment securities 287 215 195
Investment in asset-backed certificates -- (12) (419)
---------------------------------------------
(739) (628) (1,003)
---------------------------------------------
Financing activities
Increase in short term debt 808 377 436
Issuance of long term debt 500 1,015 280
Payments of long term debt (350) (875) (677)
Premium on debt retirement -- (76) --
Common stock issued, net 45 37 39
Common stock purchased and retired (475) -- --
Preferred stock retired (18) (18) (18)
Dividends paid, preferred and common (421) (371) (342)
---------------------------------------------
89 89 (282)
---------------------------------------------
Net increase (decrease) in cash and short term investments 88 (253) 289
Cash and short term investments at beginning of year 173 426 137
---------------------------------------------
Cash and short term investments at end of year $ 261 $ 173 $ 426
=============================================
Supplemental cash flow information
Interest paid $ 301 $ 253 $ 265
Interest received $ 55 $ 51 $ 71
Income taxes paid $ 509 $ 486 $ 322
</TABLE>
See Summary of Accounting Policies and Notes to Financial Statements on pages
29 through 39.
- --------------------------------------------------------------------------------
28
<PAGE>
- --------------------------------------------------------------------------------
SUMMARY OF ACCOUNTING POLICIES
- --------------------------------------------------------------------------------
BASIS OF CONSOLIDATION. The consolidated financial statements present the
results of J.C. Penney Company, Inc. and all of its wholly-owned and
majority-owned subsidiaries. All significant intercompany transactions and
balances have been eliminated in consolidation.
DEFINITION OF FISCAL YEAR. The Company's fiscal year ends on the last
Saturday in January. Fiscal year 1994 ended January 28, 1995, 1993 ended
January 29, 1994, and 1992 ended January 30, 1993. They comprised 52 weeks,
52 weeks, and 53 weeks, respectively. The accounts of JCPenney Insurance and
JCPenney National Bank are on a calendar year basis.
RETAIL SALES. Retail sales include merchandise and services, net of returns,
and exclude sales taxes.
EARNINGS PER COMMON SHARE. Primary earnings per share are computed by
dividing net income less dividend requirements on the Series B LESOP
convertible preferred stock, net of tax, by the weighted average common stock
and common stock equivalents outstanding. Fully diluted earnings per share
also assume conversion of the Series B LESOP convertible preferred stock into
the Company's common stock. Additionally, it assumes adjustment of net income
for the additional cash requirements, net of tax, needed to fund the LESOP
debt service resulting from the assumed replacement of the preferred
dividends with common stock dividends. The number of shares used in the
computation of fully diluted earnings per share was 258 million in 1994, 261
million in 1993, and 258 million in 1992.
CASH AND SHORT TERM INVESTMENTS. Cash invested in instruments with remaining
maturities of three months or less from time of investment is reflected as
short term investments.
MERCHANDISE INVENTORIES. Substantially all merchandise inventories are valued
at the lower of cost (last-in, first-out) or market, determined by the retail
method.
DEPRECIATION. The cost of buildings and equipment is depreciated on a
straight line basis over the estimated useful lives of the assets. The
principal annual rates of depreciation are 2 per cent for buildings, 5 per
cent for warehouse fixtures and equipment, 10 per cent for selling fixtures
and equipment, and 20 per cent for data center equipment. Improvements to
leased premises are amortized on a straight line basis over the expected term
of the lease or their estimated useful lives, whichever is shorter.
DEFERRED CHARGES. Expenses associated with the opening of new stores are
written off in the year of the store opening, except those of stores opened
in January, which are written off in the following fiscal year. Deferred
policy acquisition costs, principally marketing costs and commissions
incurred by JCPenney Insurance to secure new insurance policies, are
amortized over the expected premium-paying period of the related policies.
INVESTMENTS. Effective January 30, 1994, the Company adopted Statement of
Financial Accounting Standards (SFAS) No. 115, Accounting for Certain
Investments in Debt and Equity Securities. This statement requires that
securities be classified as trading, held-to-maturity, or available-for-sale.
The Company's investments, which consist of fixed income securities
(principally bonds) held by JCPenney Insurance, marketable equity securities,
and JCP Receivables, Inc. asset-backed certificates held by the Company, are
classified as available-for-sale and are carried at fair value. Changes in
unrealized gains and losses are recorded directly to stockholders' equity,
net of applicable income taxes. Adoption of this statement had no material
effect on the Company's investments, deferred taxes, and stockholders'
equity, as reflected on the consolidated balance sheet at January 28, 1995,
and had no impact on net income. In 1993 and 1992, fixed income securities
and asset-backed certificates were carried at amortized cost on the
consolidated balance sheets.
INSURANCE POLICY AND CLAIMS RESERVES. Liabilities established by JCPenney
Insurance for future policy benefits are computed using a net level premium
method including assumptions as to investment yields, mortality, morbidity,
and persistency based on the Company's experience. Liabilities for unpaid
claims are charged to expense in the period that the claims are incurred.
ADVERTISING. Costs for newspaper, television, radio, and other media are
expensed as incurred. Direct response advertising consists primarily of
catalog preparation and printing costs, which are charged to expense over the
period during which the benefits of the catalogs are expected, not to exceed
six months.
DERIVATIVE FINANCIAL INSTRUMENTS. The Company adopted Statement of Financial
Accounting Standards (SFAS) No. 119, Disclosure about Derivative Financial
Instruments and Fair Value of Financial Instruments, in 1994. This statement
requires certain disclosures about derivative financial instruments, which
are defined in the statement as futures, forward, swap, and option contracts,
and other financial instruments with similar characteristics. The Company's
current derivative positions consist of off-balance-sheet interest rate swaps.
The accounting treatment for these interest rate swaps is to record the net
interest received or paid as an adjustment to interest expense on a current
basis. Gains or losses resulting from market movements are not recognized.
29
<PAGE>
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
1. RECEIVABLES
2. MERCHANDISE INVENTORIES
3. PROPERTIES
4. CAPITAL EXPENDITURES
5. INVESTMENTS
6. DERIVATIVE FINANCIAL INSTRUMENTS
7. FAIR VALUE OF FINANCIAL INSTRUMENTS
8. ACCOUNTS PAYABLE AND ACCRUED EXPENSES
9. SHORT TERM DEBT
10. LONG TERM DEBT
11. PREFERRED STOCK
12. COMMON STOCK
13. FINANCE CHARGE REVENUE AND BAD DEBT EXPENSE
14. INTEREST EXPENSE
15. RENT EXPENSE
16. RETIREMENT PLANS
17. TAXES
18. SEGMENT REPORTING
- --------------------------------------------------------------------------------
1. RECEIVABLES
<TABLE>
<CAPTION>
(In millions) 1994 1993 1992
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Customer receivables serviced $ 4,751 $ 4,410 $ 4,068
Customer receivables sold 725 725 1,150
------------------------------------
Customer receivables owned 4,026 3,685 2,918
Less allowance for doubtful accounts 74 59 69
------------------------------------
Customer receivables, net 3,952 3,626 2,849
JCPenney National Bank receivables 729 587 538
Other receivables 478 466 363
------------------------------------
Receivables, net $ 5,159 $ 4,679 $ 3,750
- --------------------------------------------------------------------------------
</TABLE>
The Company's policy is to write off accounts when the scheduled minimum
payment has not been received for six consecutive months, if any portion of the
balance is more than 12 months past due, or if it is otherwise determined that
the customer is unable to pay. Collection efforts continue subsequent to write
off, and recoveries are applied as a reduction of bad debt losses.
During the period 1988 to 1990, the Company transferred portions of its
customer receivables to a trust which, in turn, sold certificates representing
undivided interests in the trust in public offerings. Certificates sold during
this period totaled $1,400 million. No gain or loss was recognized at the date
of sale. $675 million of the certificates sold were amortized in 1993 and 1992.
As of January 28, 1995, $725 million of the certificates were outstanding and
the balance of the receivables in the trust was $1,768 million. The Company owns
the remaining undivided interest in the trust not represented by the
certificates and will continue to service all receivables for the trust.
Cash flows generated from receivables in the trust are dedicated to payment
of interest on the outstanding certificates with stated rates of 8.95% and
9.625%, absorption of defaulted accounts in the trust, and payment of servicing
fees to the Company. Reserve funds (fully funded at $91 million) are available
if cash flows from the receivables become insufficient to make such payments.
None of the reserve funds has been utilized as of January 28, 1995.
Additionally, the Company has made available to the trust irrevocable letters of
credit of $87 million that may be drawn upon should the reserve funds be
exhausted. None of the letters of credit was in use as of January 28, 1995.
2. MERCHANDISE INVENTORIES
<TABLE>
<CAPTION>
(In millions) 1994 1993 1992
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Merchandise inventories, at lower
of cost (FIFO) or market $ 4,123 $ 3,791 $ 3,540
LIFO reserve (247) (246) (282)
---------------------------------
Merchandise inventories, at LIFO cost $ 3,876 $ 3,545 $ 3,258
- --------------------------------------------------------------------------------
</TABLE>
Substantially all of the Company's inventories are measured using the
last-in, first-out (LIFO) method of inventory valuation. The Company applies
internally developed indices to measure increases and decreases in its own
retail prices.
3. PROPERTIES
<TABLE>
<CAPTION>
(In millions) 1994 1993 1992
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Land $ 213 $ 213 $ 212
Buildings
Owned 2,178 2,119 2,016
Capital leases 186 219 237
Fixtures and equipment 2,763 2,693 2,703
Leasehold improvements 611 575 544
--------------------------------
5,951 5,819 5,712
Less accumulated depreciation
and amortization 1,997 2,001 1,957
--------------------------------
Properties, net $ 3,954 $3,818 $3,755
- --------------------------------------------------------------------------------
</TABLE>
At January 28, 1995, the Company owned 251 retail stores, four catalog
distribution centers, one store distribution center, its home office
facility, and the insurance company corporate offices.
4. CAPITAL EXPENDITURES
Capital expenditures, primarily for new and relocated JCPenney stores and for
modernizations and updates of existing stores, were as follows:
<TABLE>
<CAPTION>
(In millions) 1994 1993 1992
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
JCPenney stores:
New and relocated stores $ 197 $ 162 $ 130
Modernizations and updates 136 130 76
Technology and other store
improvements 78 44 32
--------------------------------
411 336 238
Catalog 21 21 11
Drug stores 59 40 27
Other* 53 62 218
--------------------------------
Total capital expenditures $ 544 $ 459 $ 494
- --------------------------------------------------------------------------------
</TABLE>
*1992 includes $173 million for home office construction costs.
30
<PAGE>
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------
5. INVESTMENTS
Investments at year end 1994 were carried at fair value on the consolidated
balance sheet and totaled $1,359 million. In 1993 and 1992, fixed income
securities held by JCPenney Insurance and asset-backed certificates held by the
Company were carried at amortized cost on the consolidated balance sheets. The
amortized cost and fair values of investments were as follows:
<TABLE>
<CAPTION>
1994 1993 1992
------------------------------------------------------------------------------------
Amortized Fair Amortized Fair Amortized Fair
INVESTMENTS (In millions) Cost Value Cost Value Cost Value
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Fixed income securities
JCPenney Insurance
U.S. Government obligations $ 111 $ 107 $ 139 $ 153 $ 138 $ 142
Corporate securities 278 266 280 302 210 224
Mortgage-backed securities 216 199 158 164 148 159
Other investments 100 89 93 91 45 44
----------------------------------------------------------------------------------
705 661 670 710 541 569
JCPenney Company
Asset-backed certificates 431 453 431 510 419 465
Other cash investments 149 148 1 1 2 1
----------------------------------------------------------------------------------
$1,285 $1,262 $1,102 $1,221 $ 962 $1,035
Equity securities
JCPenney Insurance $ 35 $ 37 $ 28 $ 33 $ 22 $ 29
JCPenney Company 58 60 43 47 -- --
----------------------------------------------------------------------------------
$ 93 $ 97 $ 71 $ 80 $ 22 $ 29
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Unrealized capital gains and losses on fixed income and equity securities
included in stockholders' equity at year end 1994 were as follows:
<TABLE>
<CAPTION>
Gross
Cost or Unrealized Net
Amortized Fair -------------------- Unrealized
(In millions) Cost Value Gains (Losses) Gains (Losses)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
JCPenney Insurance fixed income securities $ 705 $ 661 $ 6 $ (50) $ (44)
Asset-backed certificates 431 453 22 0 22
Other cash investments 149 148 0 (1) (1)
Equity securities 93 97 9 (5) 4
------------------------------------------------------------------------
$1,378 $1,359 $ 37 $ (56) $ (19)
Deferred income taxes 7
--------------
Total $ (12)
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
The scheduled maturities for fixed income securities at year end 1994 were as
follows:
<TABLE>
<CAPTION>
Amortized Fair
(In millions) Cost Value
- --------------------------------------------------------------------------------
<S> <C> <C>
Due in one year or less $ 16 $ 16
Due after one year through five years 339 331
Due after five years through ten years 519 539
Due after ten years 176 158
---------------------
1,050 1,044
Mortgage-backed securities 216 199
Other 19 19
---------------------
Total $1,285 $1,262
- --------------------------------------------------------------------------------
</TABLE>
Realized gains and losses on investment transactions are determined on a
first-in, first-out basis and are included in income on the trade date, and
other revenue on the consolidated statements of income. These gains were $7
million in 1994, $14 million in 1993, and $12 million in 1992.
31
<PAGE>
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------
6. DERIVATIVE FINANCIAL INSTRUMENTS
The Company selectively uses off-balance-sheet derivative financial
instruments to manage market and interest rate risk, and reduce costs
associated with financings. The Company uses derivatives for purposes other
than trading activities, and derivatives which are leveraged or speculative
by nature are not used. Current derivative positions consist of
off-balance-sheet interest rate swaps which management believes present no
significant financial risk to the Company.
CURRENT DERIVATIVE POSITIONS. In connection with the sale of $375 million of
asset-backed certificates in 1990, the Company entered into two offsetting
interest rate swaps. The swaps help to protect the investors of the
certificates by reducing the possibility of an early amortization of the
principal. Currently, the Company has no interest rate exposure from these
swaps due to their offsetting nature.
The Company has in place interest rate swap contracts that were entered
into in connection with the issuance of $250 million principal amount of 8.25
per cent sinking fund debentures in August 1992. These are four year agreements
with a notional principal amount totaling $250 million. Under the swap
agreements, the Company converted its fixed rate obligation to a floating rate
obligation based on the six month London Interbank (LIBOR) rate. Since the
inception of these interest rate swaps in 1992, interest expense has been
reduced by approximately $10 million, and the interest cost of the 8.25 per cent
fixed rate coupon has been effectively lowered to 6.25 per cent. The cumulative
benefit of these swaps will be impacted by fluctuations in short term interest
rates over the remaining 18 months of the swap contracts.
The counter parties to these contracts are high credit quality commercial
banks. Consequently, credit risk, which is inherent in all swaps, has been
minimized to a large extent.
The impact of these interest rate swaps on both interest expense and the
Company's average long term borrowing rate for 1994, 1993, and 1992 was
immaterial.
7. FAIR VALUE OF FINANCIAL INSTRUMENTS
Estimates of fair value are made at a specific point in time, based on
relevant market prices and information about the financial instrument. The
estimated fair values of financial instruments presented below are not
necessarily indicative of the amounts the Company might realize in actual
market transactions. The carrying amount and fair value for the financial
assets and liabilities on the consolidated balance sheet at each year end
were:
<TABLE>
<CAPTION>
1994 1993 1992
-----------------------------------------------------------------------------
Carrying Fair Carrying Fair Carrying Fair
(In millions) Amount Value Amount Value Amount Value
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Financial assets
JCPenney Insurance fixed income securities $ 661 $ 661 $ 670 $ 710 $ 541 $ 569
Asset-backed certificates 453 453 431 510 419 465
Other cash investments 148 148 1 1 2 1
Equity securities 97 97 80 80 29 29
Receivables, net 5,159 5,159 4,679 4,679 3,750 3,750
Cash and short term investments 261 261 173 173 426 426
Financial liabilities
Long term debt (excluding capital leases)* $ 3,231 $ 3,124 $ 2,802 $ 3,021 $ 3,030 $ 3,295
Bank deposits 702 698 581 584 538 541
Short term debt 2,092 2,092 1,284 1,284 907 907
Current maturities of long term debt -- -- 348 348 -- --
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
*The fair value of the off-balance-sheet interest rate swaps at the end of 1994,
1993, and 1992 was $(8) million, $13 million, and $4 million, respectively.
32
<PAGE>
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------
Fair values for fixed income securities, asset-backed certificates, and
equity securities are based on quoted market prices. Fixed income securities and
asset-backed certificates were carried at fair value on the consolidated balance
sheet at year end 1994, and were carried at amortized cost in 1993 and 1992. The
Company believes that the carrying value of existing customer and bank
receivables is the best estimate of fair value because of their short average
maturity and bad debt losses can be reasonably estimated and have been reserved.
The carrying amount for the Company's cash and short term investments, short
term debt, and current maturities of long term debt approximates fair value due
to their short maturities. The fair value for long term debt, excluding capital
leases, was determined based on the interest rate environment and the Company's
credit rating. The fair value of bank deposits was based on the discounted value
of contractual cash flows. The fair value of interest rate swaps is estimated
based on quotes from brokers, and reflects the estimated amount that the Company
would receive or pay to terminate the contracts at the reporting date.
CONCENTRATIONS OF CREDIT RISK. Financial instruments that potentially subject
the Company to concentrations of credit risk consist principally of customer
accounts receivable and investments. Concentrations of credit risk for the
Company's customer accounts receivable are limited due to the large number of
customers comprising the Company's credit card base and their dispersion
across the country. With respect to investments held by JCPenney Insurance,
the Company limits the credit risk by diversifying its investments by
industry sector and by investing primarily in high grade fixed income
securities. The result has been a conservative portfolio having an average
rating of AA.
8. ACCOUNTS PAYABLE AND ACCRUED EXPENSES
<TABLE>
<CAPTION>
(In millions) 1994 1993 1992
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Trade payables $ 1,014 $ 1,034 $ 944
Accrued salaries, vacations, profit-sharing, and bonuses 336 311 308
Taxes, including income taxes 358 234 238
Workers' compensation and public liability insurance 123 126 116
Common dividend payable 96 85 77
Other 347 349 355
------------------------------------
Total $ 2,274 $ 2,139 $ 2,038
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
9. SHORT TERM DEBT
<TABLE>
<CAPTION>
(In millions) 1994 1993 1992
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Commercial paper $ 2,074 $ 1,284 $ 887
Other 18 -- 20
----------------------------------
Total $ 2,092 $ 1,284 $ 907
Average interest rate at year end 5.9% 3.2% 3.4%
- --------------------------------------------------------------------------------
</TABLE>
COMMITTED BANK CREDIT FACILITIES available to the Company as of January 28,
1995, amounted to $2.5 billion. In 1994, the Company completed two syndicated
revolving credit facility agreements. These facilities comprise a $1.5
billion, 364-day revolver and a $1.0 billion, five-year revolver with a group
of domestic and international banks. These facilities support the Company's
short term borrowing program and replaced the Company's existing credit
lines. None of the borrowing facilities was in use as of January 28, 1995.
Also, the Company had $880 million of uncommitted credit lines in the form of
letters of credit with seven banks to support its direct import merchandise
program. At January 28, 1995, $370 million of letters of credit issued by the
Company were outstanding.
33
<PAGE>
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------
10. LONG TERM DEBT
<TABLE>
<CAPTION>
(In millions) 1994 1993 1992
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Original issue discount
Zero coupon notes and 6% debentures, due 1994
and 2006, $550 at maturity, yields 14.6% to 14.9%,
effective rates 13% to 13.2% $ 104 $ 101 $ 401
Debentures and notes
5.375% to 7.375%, due 1998 to 2023 1,500 1,000 --
8.25% to 8.375%, due 1996 to 2022 250 250 366
9% to 10%, due 1997 to 2021 1,000 1,000 1,750
Guaranteed LESOP notes, 8.17%, due 1998* 307 379 447
Present value of commitments under capital leases 104 127 141
Other 70 72 66
-------------------------------------
Long term debt $3,335 $2,929 $3,171
Average long term debt outstanding $2,754 $2,471 $2,683
Average interest rates 8.2% 9.9% 10.5%
- -----------------------------------------------------------------------------------------------------------
</TABLE>
*For further discussion, see LESOP on page 37.
<TABLE>
<CAPTION>
CHANGES IN LONG TERM DEBT (In millions) 1994 1993 1992
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Increases
5.375% to 9.75% notes, due 1998 to 2023 $ 500 $ 1,000 $ 250
Amortization of original issue discount 3 48 43
Other -- 16 30
-------------------------------------------
503 1,064 323
-------------------------------------------
Decreases
Transfers to current maturities of long term debt -- 348 --
8.375% to 12.75% debentures, bonds, and notes,
due 1995 to 2021, retired in 1992 and 1993 -- 872 423
Other, including LESOP amortization 97 86 83
-------------------------------------------
97 1,306 506
-------------------------------------------
Net increase (decrease) in long term debt $ 406 $ (242) $ (183)
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
MATURITIES OF LONG TERM DEBT (In millions) Long Term Debt Capital Leases
- --------------------------------------------------------------------------------
<S> <C> <C>
1995 $ 2 $ 17
1996 6 18
1997 256 14
1998 587 14
1999 232 13
2000 to 2004 1,116 38
Thereafter 821 17
-----------------------
Total $3,020 131
======
Less future interest and executory expenses 27
-----
Present value $ 104
=====
- --------------------------------------------------------------------------------
</TABLE>
34
<PAGE>
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------
11. PREFERRED STOCK
In 1988, a leveraged employee stock ownership plan (LESOP) was adopted (see page
37 for further discussion). The LESOP purchased approximately 1.2 million shares
of a new issue of Series B convertible preferred stock from the Company. These
shares are convertible into shares of the Company's common stock at a conversion
rate equivalent to 20 shares of common stock for each share of preferred stock.
The conversion price is $30 per common share. The convertible preferred stock
may be redeemed at the option of the Company or the LESOP, under certain limited
circumstances. The redemption price may be satisfied in cash or common stock or
a combination of both at the Company's sole discretion. The dividends are
cumulative, are payable semi-annually on January 1 and July 1, and yield 7.9 per
cent. The convertible preferred stock issued to the LESOP has been recorded in
the stockholders' equity section of the consolidated balance sheet, and the
"Guaranteed LESOP obligation," representing borrowings by the LESOP, has been
recorded as a reduction of stockholders' equity. As of January 28, 1995,
approximately 710 thousand shares had been allocated to participants' accounts
since 1988, and approximately 467 thousand shares were committed-to-be released
in the next four years.
THE PREFERRED DIVIDEND is payable semi-annually at an annual rate of $2.37
per common equivalent share. Preferred dividends declared were $50 million in
1994, $52 million in 1993, and $53 million in 1992; on an after tax basis,
the dividends amounted to $31 million in 1994, $31 million in 1993, and $33
million in 1992.
In 1990, the Board of Directors declared a dividend distribution of one new
preferred stock purchase right on each outstanding share of common stock and
authorized the redemption of the old preferred stock purchase rights for five
cents per share totaling $12 million. The preferred stock purchase rights, in
accordance with the rights agreement, entitle the purchase, for each right held,
of 1/400 of a share of Series A junior participating preferred stock at a price
of $140. The rights are exercisable upon the occurrence of certain events and
are redeemable by the Company under certain circumstances, all as described in
the rights agreement.
12. COMMON STOCK
The quarterly common dividend was 42 cents per share in 1994, 36 cents per
share in 1993, and 33 cents per share in 1992, or an indicated annual rate of
$1.68 per share in 1994, $1.44 per share in 1993, and $1.32 per share in
1992. Common dividends declared were $392 million in 1994, $339 million in
1993, and $309 million in 1992.
On March 9, 1994, the Board of Directors approved the purchase of up to 10
million shares of the Company's common stock. This purchase program was
completed in January 1995 at a cost of $475 million. All shares were retired and
returned to the status of authorized but unissued shares of common stock. A
second purchase program, for up to an additional 10 million shares of the
Company's common stock, was approved by the Board of Directors on January 23,
1995, and was begun in late January 1995.
On March 10, 1993, the Board of Directors declared a two-for-one stock
split in the form of a stock dividend, which was payable May 1, 1993, to
stockholders of record on April 12, 1993.
At the Company's 1994 Annual Meeting, stockholders approved the increase in
the authorized number of shares of common stock from 500 million to 1.25 billion
shares.
There were approximately 53,000 stockholders of record at year end 1994. In
addition, the Company's savings plans, including the LESOP, had 116,000
participants and held 38.7 million shares of the Company's common stock. The
savings plans also held 1.05 million shares of preferred stock, convertible into
21.0 million shares of common stock. On a combined basis, these plans held
approximately 24 per cent of the Company's common shares after giving effect to
the conversion of the preferred stock at the end of fiscal year 1994.
<TABLE>
<CAPTION>
Shares Paid-in Capital
--------------------------------------------------------------------------
CHANGES IN OUTSTANDING (In thousands) (In millions)
COMMON STOCK 1994 1993 1992 1994 1993 1992
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Balance at beginning of year 236,086 234,778 233,302 $1,003 $ 955 $ 857
Common stock issued 1,455 1,308 1,476 70 48 39
Common stock purchased and retired (10,100) -- -- (43) -- --
Two-for-one stock split -- -- -- -- -- 59
--------------------------------------------------------------------------
Balance at end of year 227,441 236,086 234,778 $1,030 $1,003 $ 955
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
35
<PAGE>
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------
1993 EQUITY COMPENSATION PLAN AND 1993 NON-ASSOCIATE DIRECTORS' EQUITY PLAN.
In May 1993, stockholders approved the 1993 Equity Compensation Plan (1993
Plan), which replaced the expiring 1989 Equity Compensation Plan. Under the
1993 Plan, 11.6 million shares of common stock were reserved for issuance
upon the exercise of options and stock appreciation rights and for the
payment of stock awards over the five-year term of the 1993 Plan. No discount
options nor tax benefit rights may be issued under the 1993 Plan.
Participants in the 1993 Plan are generally to be selected management
associates of the Company and its subsidiaries and affiliates as determined
by the committee administering the 1993 Plan. It is anticipated that
approximately 2,000 associates will be eligible to participate. No awards may
be made under the 1993 Plan after May 31, 1998. In May 1993, stockholders
also approved the 1993 Non-Associate Directors' Equity Plan (Directors'
Plan). Under the Directors' Plan, 90,000 shares of common stock were reserved
for issuance upon the exercise of stock options and the payment of stock
awards over the five-year term of the Directors' Plan. Each director who is
presently not an active employee of the Company will automatically be granted
annually an option to purchase 800 shares, in tandem with an award of 200
restricted shares of common stock. An initial grant/award in this same amount
will also automatically be granted to each new Non-Associate Director upon
his or her first being elected as a director. Such stock options will become
exercisable six months from the date of grant, but shares acquired upon such
exercise will not be transferable until a director terminates service.
<TABLE>
<CAPTION>
1994 1993 1992
----------------------------------------------------------------------------------
Weighted Weighted Weighted
Average Average Average
Shares Option Shares Option Shares Option
STOCK OPTIONS (In thousands) Price (In thousands) Price (In thousands) Price
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Balance at beginning of year 8,235 $ 27.96 8,844 $ 27.42 9,490 $ 26.31
Granted 997 55.31 159 41.24 574 35.10
Exercised (865) 26.51 (752) 24.49 (974) 21.02
Expired and cancelled (20) 32.68 (16) 26.89 (246) 27.66
----- ----- -----
Balance at end of year 8,347 $31.36 8,235 $ 27.96 8,844 $ 27.42
</TABLE>
At year end 1994, options covering 7.3 million shares were exercisable and 10.4
million shares were reserved for future grants.
- --------------------------------------------------------------------------------
13. FINANCE CHARGE REVENUE AND BAD DEBT EXPENSE, on customer accounts
receivable owned by the Company, are included in the "Net interest expense
and credit operations" line of the consolidated statements of income. Finance
charge revenue was $624 million in 1994, $523 million in 1993, and $509
million in 1992. Bad debt expense was $177 million in 1994, $95 million in
1993, and $122 million in 1992.
14. INTEREST EXPENSE
<TABLE>
<CAPTION>
(In millions) 1994 1993 1992
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Short term debt $ 92 $ 43 $ 43
Long term debt 225 246 281
Income on short term investments (16) (14) (48)
Interest capitalized (3) (4) (14)
Other, net* (28) (30) (4)
------------------------------
Interest expense, net $270 $ 241 $ 258
</TABLE>
*Includes $34 million, $34 million and $28 million, respectively, of interest
income from the Company's investment in asset-backed certificates.
- --------------------------------------------------------------------------------
15. RENT EXPENSE
The Company conducts the major part of its operations from leased premises
which include retail stores, distribution centers, warehouses, offices, and
other facilities. Almost all leases will expire during the next 20 years;
however, most leases will be renewed or replaced by leases on other premises.
Rent expense for real property operating leases was:
<TABLE>
<CAPTION>
(In millions) 1994 1993 1992
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Minimum rents $ 235 $ 236 $ 244
Contingent rents based on sales 37 37 35
------------------------------
Total $ 272 $ 273 $ 279
- --------------------------------------------------------------------------------
</TABLE>
The Company also leases data processing equipment and other personal property
under operating leases of primarily three to five years. Rent expense for
personal property leases was $92 million in 1994, $90 million in 1993, and
$107 million in 1992.
36
<PAGE>
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------
Future minimum lease payments for noncancelable real and personal property
operating leases and subleases as of January 28, 1995 were:
<TABLE>
<CAPTION>
(In millions) Operating Leases
- --------------------------------------------------------------------------------
<S> <C>
1995 $ 230
1996 194
1997 160
1998 139
1999 121
Thereafter 597
--------
Total minimum lease payments $1,441
========
Present value $1,000
Weighted average interest rate 10%
- --------------------------------------------------------------------------------
</TABLE>
The minimum lease payments are shown net of estimated executory costs, which
are principally real estate taxes, maintenance, and insurance.
16. RETIREMENT PLANS
<TABLE>
<CAPTION>
(In millions) 1994 1993 1992
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Pension
Service cost $ 57 $ 50 $ 46
Interest cost 134 123 122
Actual (return) loss on assets (22) (236) (90)
Net amortization and deferral (181) 59 (90)
------------------------------
Pension credit (12) (4) (12)
------------------------------
Postretirement health care
Service cost 3 3 6
Interest cost 25 24 27
------------------------------
Total 28 27 33
------------------------------
LESOP expense 53 50 49
------------------------------
Total retirement plans $ 69 $ 73 $ 70
- --------------------------------------------------------------------------------
</TABLE>
PENSION PLAN. JCPenney's principal pension plan, which is noncontributory,
covers substantially all United States employees who have completed 1,000 or
more hours of service within a period of 12 consecutive months and have
attained 21 years of age. In addition, the Company has an unfunded,
noncontributory, supplemental retirement program for certain management
employees. In general, benefits payable under the principal pension plan are
determined by reference to a participant's final average earnings and years
of credited service up to 35 years.
In 1994, the Company increased its discount rate to 8.75 per cent,
reflecting the higher interest rate environment. The impact of this change
reduced the Company's obligation at year end 1994. Pension plan assumptions are
reviewed and modified as necessary on an annual basis. The Company made a $99
million contribution to the plan in 1994 and a $65 million contribution in 1993.
POSTRETIREMENT HEALTH CARE BENEFITS
The Company's retiree health care plan (Retiree Plan) covers medical and
dental services and eligibility for benefits is based on age and years of
service. The Retiree Plan is contributory and the amounts paid by retired
employees have increased in recent years and are expected to continue to do
so. For certain groups of employees, Company contributions toward the cost of
retiree coverage will be based on a fixed dollar amount which will vary with
years of service, age, and dependent coverage. The Retiree Plan is funded on
a pay-as-you-go basis by the Company and retiree contributions.
The Company uses the same discount rate for both its pension plan and
Retiree Plan. The health care trend rate was lowered from 10 per cent to 9.5 per
cent for 1995 with gradual reductions to 6 per cent by 2003 and beyond. The
health care trend rate change represents a modification from previous
assumptions because of favorable experience and a lower inflation environment.
The changes in plan assumptions had no significant impact on the Company's
obligation at year end 1994. A one per cent increase in the health care trend
rate would increase the amount reported for the accumulated obligation by $27
million and would result in $2 million additional expense for 1994.
LESOP. The Company's LESOP, adopted in 1988, is a defined contribution plan
which covers substantially all United States employees who have completed at
least 1,000 hours of service within a period of 12 consecutive months, and if
hired on or after January 1, 1988, have attained 21 years of age.
The LESOP borrowed $700 million at an interest rate of 8.17 per cent
through a 10 year loan guaranteed by the Company. The LESOP used the proceeds of
the loan to purchase a new issue of convertible preferred stock from the
Company. The Company used the proceeds from the issuance of preferred stock to
the LESOP to purchase 28 million common shares of the Company in the open
market.
The Company has reflected the guaranteed LESOP borrowing as long term debt
on the consolidated balance sheet. A like amount of "Guaranteed LESOP
obligation" was recorded as a reduction of stockholders' equity. The convertible
preferred stock issued to the LESOP for cash was recorded in the stockholders'
equity section. As the Company makes contributions to the LESOP, these
contributions, plus the dividends paid on the Company's preferred stock held by
the LESOP, will be used to repay the loan. As the principal amount of the loan
is repaid, the "Guaranteed LESOP obligation" is reduced accordingly.
The amount of LESOP expense recorded by the Company represents its cash
contribution to the LESOP.
37
<PAGE>
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------
The following table sets forth the status of the Company's retirement plans:
<TABLE>
<CAPTION>
December 31
---------------------------------------------
RETIREMENT PLANS (In millions) 1994 1993 1992
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Pension
Present value of accumulated benefits
Vested $ 1,368 $ 1,367 $ 1,227
Non-vested 75 80 73
---------------------------------------------
$ 1,443 $ 1,447 $ 1,300
=============================================
Present value of actuarial benefit obligation $ (1,661) $ (1,781) $ (1,694)
Net assets at fair market value 1,825 1,800 1,585
Unrecognized transition asset, net of unrecognized losses 200 216 259
---------------------------------------------
Net prepaid pension cost $ 364 $ 235 $ 150
=============================================
Postretirement health care benefits
Accumulated benefit obligation
Retirees $ 217 $ 246 $ 205
Fully eligible active participants 43 51 82
Other active participants 40 41 43
---------------------------------------------
300 338 330
Unrecognized net gain (loss) 32 (10) (7)
---------------------------------------------
Net liability $ 332 $ 328 $ 323
=============================================
Key assumptions
Rate of return on pension plan assets 9.5% 9.5% 9.5%
Discount rate 8.75% 7.25% 8.0%
Salary progression rate 4.0% 4.0% 4.0%
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Savings Plans Pension
--------------------------------------------------------------------------
December 31 December 31
TOTAL ASSETS AND EQUITY (In millions) 1994 1993 1992 1994 1993 1992
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
JCPenney preferred and common stock $2,662 $3,030 $2,200 $ -- $ -- $ --
Equity securities 120 117 103 1,288 1,424 1,232
Fixed income investments 1,048 1,091 1,061 473 302 275
LESOP loan obligation, including accrued
interest of $14, $17, and $20 (358) (431) (498) -- -- --
Other assets, net 63 47 37 64 74 78
--------------------------------------------------------------------------
Net assets $3,535 $3,854 $2,903 $1,825 $1,800 $1,585
==========================================================================
<CAPTION>
Savings Plans Pension
--------------------------------------------------------------------------
CHANGES IN FAIR VALUE OF December 31 December 31
NET ASSETS (In millions) 1994 1993 1992 1994 1993 1992
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net assets at beginning of year $3,854 $2,903 $2,173 $1,800 $1,585 $1,561
Company contribution 53 50 49 99 65 --
Participants' contributions 203 184 169 -- -- --
Gains (losses) (280) 984 794 22 236 93
LESOP interest expense (30) (35) (40) -- -- --
Benefits paid (265) (232) (242) (96) (86) (69)
--------------------------------------------------------------------------
Net assets at end of year $3,535 $3,854 $2,903 $1,825 $1,800 $1,585
==========================================================================
</TABLE>
38
<PAGE>
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------
17. TAXES
The Company adopted Financial Accounting Standards Board Statement No. 109,
Accounting for Income Taxes, effective January 31, 1993. This statement
requires an asset and liability approach to accounting for differences
between the tax basis of an asset or liability and its reported amount in the
financial statements (temporary differences). Deferred taxes are determined
by applying the provisions of enacted tax laws, and adjustments are required
for changes in tax laws and rates. Deferred taxes reflected on the balance
sheet were reduced by $51 million, and a cumulative adjustment was recorded
to increase net income by the same amount, using current tax rates in effect
at the beginning of fiscal 1993.
The Omnibus Budget Reconciliation Act of 1993, which was signed into law on
August 10, 1993, included an increase in the statutory Federal income tax
rate from 34 per cent to 35 per cent, retroactive to January 1, 1993. This
change in the tax rate resulted in higher taxes on operating income in 1993
as well as a one-time, non-cash tax expense totaling $14 million for the
revaluation of deferred taxes on the balance sheet as required by Statement
No. 109.
Deferred tax assets and liabilities reflected on the Company's consolidated
balance sheet at January 28, 1995, were measured using enacted tax rates
expected to apply to taxable income in the years in which those temporary
differences are expected to be recovered or settled. The major components of
deferred tax liabilities (assets) at January 28, 1995, were as follows:
<TABLE>
<CAPTION>
Net
TEMPORARY Deferred Deferred (Asset)
DIFFERENCES (In millions) (Asset) Liability Liability
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Retirement plans $(192) $ 204 $ 12
Restructuring reserve (18) -- (18)
Workers' compensation/public liability (100) -- (100)
Leases (31) 369 338
Accounts receivable (29) -- (29)
Inventories (30) 124 94
Depreciation -- 757 757
Deferred policy acquisition costs -- 160 160
Other (200) 140 (60)
---------------------------------------------
Total $(600) $1,754 $1,154
- ------------------------------------------------------------------------------------------------------
</TABLE>
No valuation allowances were considered necessary as of January 31, 1993,
January 29, 1994, or January 28, 1995. The Company believes that the existing
deductible temporary differences will be offset by future reversals of
differences generating taxable income.
Deferred taxes, under APB Opinion No. 11 in 1992, consisted principally of
accumulated depreciation and accounting for leases.
<TABLE>
<CAPTION>
INCOME TAX EXPENSE (In millions) 1994 1993 1992
- ---------------------------------------------------------------------------------------
<S> <C> <C> <C>
Current
Federal $ 521 $ 443 $ 372
State and local 92 67 62
--------------------------------------
613 510 434
--------------------------------------
Deferred
Federal 25 80 29
State and local 4 20 19
--------------------------------------
29 100 48
--------------------------------------
Total $ 642 $ 610 $ 482
Effective tax rate 37.8% 39.3% 38.3%
- ---------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Per cent of
Amounts (In millions) Pre-tax Income
---------------------------------------------------------------
RECONCILIATION OF TAX RATES 1994 1993 1992 1994 1993 1992
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Federal income tax at statutory rate $ 594 $ 544 $ 428 35.0 35.0 34.0
State and local income taxes, less federal income tax benefit 65 58 53 3.8 3.7 4.2
Revaluation of deferred taxes -- 14 -- -- .9 --
Tax effect of dividends on allocated LESOP shares (9) (9) -- (.5) (.5) --
Tax credits and other (8) 3 1 (.5) .2 .1
---------------------------------------------------------------
Total $ 642 $ 610 $ 482 37.8 39.3 38.3
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
18. SEGMENT REPORTING
The Company operates predominantly in one industry segment consisting of
selling merchandise and services to consumers through retail department
stores that include catalog departments. Total assets for that industry
segment at the end of the last three years were $14,103 million, $12,888
million, and $11,820 million, respectively.
39
<PAGE>
- --------------------------------------------------------------------------------
QUARTERLY DATA (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
First Second Third Fourth
----------------------------------------------------------------------------------------------
(In millions except per share data) 1994 1993 1992 1994 1993 1992 1994 1993 1992 1994 1993 1992
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Retail sales $4,350 3,964 3,793 4,242 3,963 3,789 5,149 4,735 4,342 6,639 6,321 6,085
Per cent increase 9.7 4.5 10.5 7.1 4.6 9.6 8.7 9.1 10.3 5.0 3.9 13.2
Total revenue $4,519 4,106 3,918 4,412 4,106 3,912 5,328 4,888 4,472 6,823 6,478 6,213
Per cent increase 10.0 4.8 10.7 7.4 5.0 9.7 9.0 9.3 10.4 5.3 4.3 13.1
LIFO gross margin $1,395 1,280 1,233 1,282 1,191 1,164 1,661 1,530 1,395 2,072 1,985 1,920
LIFO gross margin, per cent of
retail sales 32.1 32.3 32.5 30.2 30.1 30.7 32.2 32.3 32.1 31.2 31.4 31.6
Selling, general, and
administrative expenses, per cent
of retail sales 25.1 25.9 26.7 25.5 25.8 27.1 23.4 24.2 25.0 21.2 20.8 21.7
Income before extraordinary charge
and cumulative effect of
accounting change $ 223 172 136 132 112 80 274 221 186 428 439 375
Net income $ 223 206 136 132 112 80 274 185 186 428 437 375
Income per share before
extraordinary charge and
cumulative effect of accounting
change
Primary $ .88 .68 .54 .52 .43 .31 1.11 .88 .75 1.78 1.80 1.55
Fully diluted $ .84 .65 .52 .51 .42 .31 1.04 .83 .70 1.66 1.65 1.42
Net income per common share
Primary $ .88 .82 .54 .52 .43 .31 1.11 .73 .75 1.78 1.79 1.55
Fully diluted $ .84 .78 .52 .51 .42 .31 1.04 .69 .70 1.66 1.64 1.42
Dividends per common share $ .42 .36 .33 .42 .36 .33 .42 .36 .33 .42 .36 .33
Common stock price range
High $ 59 45 34 54 49 36 54 52 38 52 56 40
Low $ 50 36 27 47 41 32 47 39 33 39 49 36
Close $ 54 43 33 49 45 35 51 52 37 41 52 36
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
40
<PAGE>
- --------------------------------------------------------------------------------
SUPPLEMENTAL INFORMATION (UNAUDITED)
- --------------------------------------------------------------------------------
GENERAL. The following information is provided as a supplement to the
Company's audited financial statements. Its purpose is to facilitate an
understanding of the Company's credit operations, capital structure, and cash
flows.
CREDIT OPERATIONS. The following table presents the results of the Company's
proprietary credit card operation, measuring on an all-inclusive basis the
costs of granting, operating, and financing credit, net of finance charge
revenue. This presentation does not include any profits derived from
merchandise and services purchased by customers. Revenue, costs, and expenses
contained in the table below relate to all customer accounts receivable
generated and serviced by the Company, including those recorded as sold under
asset securitization transactions. This presentation is designed to measure
on an "economic basis" the total pre-tax cost of providing the JCPenney
credit card to customers.
<TABLE>
<CAPTION>
PRE-TAX COST OF JCPENNEY CREDIT CARD (In millions) 1994 1993 1992
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Finance charge revenue
On receivables owned $ (624) $ (523) $ (509)
On receivables sold (105) (129) (166)
-----------------------------------------
Total (729) (652) (675)
Bad debt expense 208 128 171
Operating expenses (including in-store costs) 268 265 270
Cost of capital 403 399 417
-----------------------------------------
Total 879 792 858
-----------------------------------------
Pre-tax cost of JCPenney credit $ 150 $ 140 $ 183
Per cent of JCPenney credit sales 1.6% 1.6% 2.2%
- ------------------------------------------------------------------------------------------------------------
</TABLE>
The cost of capital shown above represents the cost of financing both
Company-owned accounts receivable and securitized accounts receivable. The
cost of the sold receivables is the actual interest paid to certificate
holders. The owned accounts receivables are financed with both debt and
equity capital. The debt component uses the total Company weighted average
interest rate, while the equity component uses the Company's minimum return
on equity objective of 16 per cent. On a combined basis, for both owned and
sold receivables, the debt and equity components of the total capital
requirements were 88 per cent debt and 12 per cent equity, which approximates
the finance industry standard debt to equity ratio.
<TABLE>
<CAPTION>
1994 1993 1992
------------------------------------------------------------------------------
Per cent Per cent Per cent
Amounts of Eligible Amounts of Eligible Amounts of Eligible
CREDIT SALES (JCPenney stores and catalog) (In billions) Sales (In billions) Sales (In billions) Sales
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
JCPenney credit card $ 9.4 49.6 $ 8.7 49.6 $ 8.3 49.8
American Express, Discover, MasterCard, and Visa 3.4 17.9 2.8 16.1 2.3 13.8
------------------------------------------------------------------------------
Total $ 12.8 67.5 $ 11.5 65.7 $10.6 63.6
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
KEY JCPENNEY CREDIT CARD INFORMATION (In millions) 1994 1993 1992
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Number of accounts serviced with balances 17.6 17.2 17.5
Total customer receivables serviced $ 4,751 $ 4,410 $ 4,068
Average customer receivables financed $ 4,197 $ 3,767 $ 3,901
Average account balances (in dollars) $ 269 $ 256 $ 231
Average account maturity (months) 4.2 4.0 4.1
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
Capital structure. The Company's objective is to maintain a capital structure
that will assure continuing access to financial markets so that we can, at
reasonable cost, provide for future needs and capitalize on attractive
opportunities for growth.
41
<PAGE>
- --------------------------------------------------------------------------------
SUPPLEMENTAL INFORMATION (UNAUDITED) (CONTINUED)
- --------------------------------------------------------------------------------
The debt to capital ratio shown in the table below includes both debt recorded
on the Company's consolidated balance sheet as well as off-balance-sheet debt
related to operating leases and the securitization of a portion of the Company's
customer accounts receivable (asset-backed certificates).
<TABLE>
<CAPTION>
DEBT TO CAPITAL (In millions) 1994 1993 1992
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Short term debt,
net of cash investments $ 1,738 $ 1,128 $ 502
Long term debt,
including current maturities 3,335 3,277 3,171
------------------------------------------
5,073 4,405 3,673
Off-balance-sheet debt
Present value of operating leases 1,000 900 950
Securitization of accounts
receivable, net 272 294 731
------------------------------------------
Total debt $ 6,345 $ 5,599 $ 5,354
Consolidated equity $ 5,615 $ 5,365 $ 4,705
Total capital $11,960 $10,964 $10,059
Per cent of total debt to capital 53.1% 51.1% 53.2%
- ---------------------------------------------------------------------------------------------
</TABLE>
The Company builds its capital base according to the different needs and
credit characteristics of its customer receivables and its other core retail
assets. Customer receivables are highly diversified and predictable financial
assets, very different from the core assets of a retailer, which include
fixed assets and inventories for stores and catalog. Accordingly, the Company
finances receivables with more leverage, much like a finance company. The
standards for these assets are a debt ratio of approximately 88 per cent, and
interest coverage of about 1.5 times. Core assets are financed with less
leverage and more comparable to the leverage of non-retail industrial
companies with strong credit ratings. The Company's capital structure at the
end of fiscal year 1994 was:
<TABLE>
<CAPTION>
Customer Core
(In millions) Receivables Assets Combined
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Debt $ 4,092 $2,253 $ 6,345
Equity 585 5,030 5,615
--------------------------------------
Total capital $ 4,677 $7,283 $11,960
Debt to capital per cent 87.5% 30.9% 53.1%
- --------------------------------------------------------------------------------
</TABLE>
The historical debt to capital per cent and fixed charge coverage for the prior
three years, on a separate and combined basis, was:
<TABLE>
<CAPTION>
DEBT TO CAPITAL PER CENT
1994 1993 1992
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Combined 53.1 51.1 53.2
Core assets 30.9 27.1 30.6
Customer receivables 87.5 87.5 87.5
- --------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
FIXED CHARGE COVERAGE
1994 1993 1992
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Combined 4.5 4.3 3.4
Core assets 9.1 8.7 6.4
Customer receivables 1.5 1.5 1.4
- --------------------------------------------------------------------------------
</TABLE>
FINANCING COSTS incurred by the Company to finance its operations, including
those costs related to off-balance-sheet liabilities were as follows:
<TABLE>
<CAPTION>
(In millions) 1994 1993 1992
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Interest expense, net $270 $241 $258
Interest portion of LESOP debt payment 30 35 40
Off-balance-sheet financing costs
Interest imputed on operating leases 95 97 96
Asset-backed certificates interest 67 87 105
----------------------------
Total $462 $460 $499
- --------------------------------------------------------------------------------
</TABLE>
CREDIT RATINGS. Over the years, the Company has maintained one of the highest
credit ratings in the retail industry. The Company's objective is to maintain
a strong investment grade rating on its senior long term debt, and A1/P1/F1
ratings on commercial paper. In October 1994, Moody's Investors Service
upgraded the Company's long term debt rating to A1. Currently, the credit
ratings for the Company are as follows:
<TABLE>
<CAPTION>
Long Term Commercial
Debt Paper
- --------------------------------------------------------------------------------
<S> <C> <C>
Standard & Poor's Corporation A+ A1
Moody's Investors Service A1 P1
Fitch Investors Service, Inc. A+ F1
- --------------------------------------------------------------------------------
</TABLE>
EARNINGS BEFORE INTEREST, TAXES, DEPRECIATION AND AMORTIZATION (EBITDA).
Management believes that a key measure of cash flow generated is earnings before
interest, taxes, depreciation and amortization (EBITDA). EBITDA is not intended
to represent cash flow or any other measure of performance in accordance with
generally accepted accounting principles, but is included as a tool for
analyzing the Company's financial condition. The following schedule shows the
calculation of EBITDA and EBITDA margin as a per cent of total revenue.
<TABLE>
<CAPTION>
(In millions) 1994 1993 1992
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Income before income taxes,
extraordinary charge, and cumulative
effect of accounting change $ 1,699 $ 1,554 $ 1,259
Financing costs 462 460 499
Depreciation and amortization,
including operating leases 449 416 382
----------------------------------------
EBITDA $ 2,610 $ 2,430 $ 2,140
Total revenue $21,082 $19,578 $18,515
EBITDA per cent of total revenue 12.4% 12.4% 11.6%
- ------------------------------------------------------------------------------------------------
</TABLE>
42
<PAGE>
- --------------------------------------------------------------------------------
FIVE YEAR FINANCIAL SUMMARY
- --------------------------------------------------------------------------------
J.C. Penney Company, Inc. and Subsidiaries
<TABLE>
<CAPTION>
(In millions except per share data) 1994 1993/1/ 1992 1991/2/ 1990
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Results for the year
Total revenue $ 21,082 19,578 18,515 16,648 16,736
Retail sales $ 20,380 18,983 18,009 16,201 16,365
Per cent increase (decrease) 7.4 5.4 11.2 (1.0) 1.6
LIFO gross margin, per cent of retail sales 31.5 31.5 31.7 31.5 31.4
FIFO gross margin, per cent of retail sales 31.5 31.3 31.5 30.9 31.7
Selling, general, and administrative
expenses, per cent of retail sales 23.5 23.7 24.7 25.6 26.2
Depreciation and amortization $ 323 316 310 316 299
Income taxes $ 642 610 482 204 255
Income before extraordinary charge
and cumulative effect of accounting changes $ 1,057 944 777 264 577
Net income $ 1,057 940 777 80 577
Earnings per common share
Primary
Before extraordinary charge and cumulative
effect of accounting changes $ 4.29 3.79 3.15 .99 2.30
Net income $ 4.29 3.77 3.15 .20 2.30
Fully diluted
Before extraordinary charge and cumulative
effect of accounting changes $ 4.05 3.55 2.95 .99 2.16
Net income $ 4.05 3.53 2.95 .20 2.16
Per common share
Dividends $ 1.68 1.44 1.32 1.32 1.32
Stockholders' equity $ 23.45 21.53 19.17 17.33 18.38
Return on stockholders' equity 19.7 20.1 18.6 12.0 13.3
Financial position
Receivables, net $ 5,159 4,679 3,750 4,131 4,303
Merchandise inventories $ 3,876 3,545 3,258 2,897 2,657
Properties, net $ 3,954 3,818 3,755 3,633 3,532
Capital expenditures $ 544 459 494 506 601
Total assets $ 16,202 14,788 13,467 12,444 12,256
Total debt $ 5,427 4,561 4,078 4,062 4,114
Stockholders' equity $ 5,615 5,365 4,705 4,188 4,394
Number of common shares
outstanding at year end 227 236 235 233 234
Weighted average common shares
Primary 237 239 236 234 236
Fully diluted 258 261 258 234 260
Number of employees at year end
(In thousands) 202 193 192 185 196
</TABLE>
/1/ Excluding the impact of the tax rate increase on deferred taxes, after tax
income was $958 million, or $3.60 per share, on a fully diluted basis.
/2/ Excluding the effect of nonrecurring items and the cumulative effect of an
accounting change, after tax income was $528 million, or $2.00 per
share, on a fully diluted basis.
- --------------------------------------------------------------------------------
43
<PAGE>
- --------------------------------------------------------------------------------
FIVE YEAR OPERATIONS SUMMARY
- --------------------------------------------------------------------------------
J.C. Penney Company, Inc. and Subsidiaries
<TABLE>
<CAPTION>
1994 1993 1992 1991 1990
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
JCPenney stores
Number of stores
Beginning of year 1,246 1,266 1,283 1,312 1,328
Openings 29 24 33 38 46
Closings (42) (44) (50) (67) (62)
End of year 1,233 1,246 1,266 1,283 1,312
Gross selling space (In million sq. ft.) 113.0 113.9 114.4 114.5 114.4
Sales including catalog desks (In millions) $ 18,048 16,846 15,698 14,277 14,616
Sales per gross square foot/1/ $ 159 146 137 125 127
Catalog
Number of catalog units
JCPenney stores 1,233 1,246 1,266 1,283 1,312
Freestanding sales centers and merchants 552 543 640 697 626
Drug stores 94 101 128 134 136
Other, principally outlet stores 16 14 14 16 16
Total 1,895 1,904 2,048 2,130 2,090
Number of distribution centers 6 6 6 6 6
Distribution space (In million sq. ft.) 11.4 11.4 11.4 11.4 11.4
Sales (In millions) $ 3,817 3,514 3,166 3,002 3,220
Drug stores
Number of stores
Beginning of year 506 548 530 487 471
Openings 46 35 30 46 22
Closings (26) (77) (12) (3) (6)
End of year 526 506 548 530 487
Gross selling space (In million sq. ft.) 4.5 4.6 5.2 5.0 4.8
Sales (In millions) $ 1,540 1,413 1,383 1,192 1,097
Sales per gross square foot/1/ $ 243 235 211 201 198
JCPenney Insurance (In millions)
Revenue $ 571 475 388 328 255
Policies and certificates in force 7.5 5.8 4.6 4.3 4.1
Amount of life insurance in force $ 8,780 7,627 6,552 5,419 5,268
Total assets $ 1,360 1,246 1,033 857 764
</TABLE>
/1/ 1992 is presented on a 52 week basis.
- --------------------------------------------------------------------------------
44
