EXHIBIT 10
ECKERD CORPORATION LOAN AGREEMENT
_________________________________
Agreement made as of the 28th day of September, 1998 to be effective
on that date ("Effective Date"), between the lender, ▇. ▇. ▇▇▇▇▇▇ Company,
Inc. ("JCPenney"), a Delaware corporation with its principal place of
business at ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇ and the borrower,
Eckerd Corporation ("Borrower"), a Delaware corporation with its principal
place of business at ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇, ▇▇ ▇▇▇▇▇.
BORROWING AMOUNTS, TERMS AND PROCEDURES
_______________________________________
Between the Effective Date and September 28, 2003 (the "Borrowing
Period"), JCPenney will make available the sum of Three Billion, Five
Hundred Million Dollars ($3,500,000,000) ("Borrowing Amount") for borrowing
by Borrower. The Borrowing Amount includes (1) the $1,595,000,000 open
account indebtedness between JCPenney and Eckerd at the Interest Rate
defined herein, and (2) the $100,000,000 open account indebtedness between
JCPenney and Eckerd at the Short-Term Borrowings Rate shown on the Analysis
of Average Borrowings and Interest Expense as calculated monthly by
JCPenney's Controller's Department. This Agreement formalizes such
previous loans from JCPenney to Eckerd. During the Borrowing Period,
subject to the following terms and conditions, Borrower may borrow, repay,
and borrow again under this Loan Agreement and Borrower agrees to repay
interest and principal as provided herein.
During the Borrowing Period, Borrower may from time to time request
one or more loans (an "Advance" or "Advances") from JCPenney up to the
limit of the Borrowing Amount, and JCPenney will lend to Borrower such sum
or sums, each borrowing with a maturity no later than September 9, 2003, as
Borrower requests, provided that the total of Advances at any one time
outstanding shall not exceed the Borrowing Amount.
By noon Eastern time, Borrower will notify JCPenney of the amount it
intends to borrow or repay the next day. JCPenney will transfer the amount
or credit such amount, as the case may be, of an Advance or repayment to or
from Borrower by no later than 3 o'clock p.m. Eastern time of the next day
for which such amount is due or has been paid.
Except as JCPenney and Borrower otherwise agree in writing, Borrower
agrees to pay as interest an amount on any sum borrowed hereunder computed
at an interest rate, which is a rate equivalent to the average interest
rate on total borrowings as shown on the Analysis of Average Borrowings and
Interest Expense as calculated monthly by JCPenney's Controller's
Department during the time of any Advance hereunder ("Interest Rate").
Interest is to be calculated on the weighted daily average of unpaid
balances during the fiscal month. The interest amount applicable to
outstanding balances of Advances shall be determined
2
each month calculated on the prior month's Interest Rate. The Interest
Rate shall change effective as of the first day of each month of
JCPenney's fiscal year and any such change shall be made without notice.
Interest shall be computed on the basis of the actual number of days
elapsed over the fiscal year of 364 or 371 days, as the case may be.
Interest shall be payable monthly in arrears and at maturity by credit to
such account of JCPenney as JCPenney shall specify. Payments of interest
shall be made by the fiscal month end following the borrowing month.
Interest paid or payable shall not exceed the maximum amount permissible
under applicable law and, if such amount is exceeded, the excessive amount
of interest shall be refunded to Borrower.
JCPenney shall have the right at any time to demand payment of all or
any part of any Advance or Advances outstanding, and interest thereon.
Upon such demand such Advance, Advances or portions thereof and interest
thereon, as the case may be, shall be immediately due and payable.
Advances may be repaid in whole or in part without penalty at any time
prior to maturity by telephone notice to JCPenney by 10 o'clock a.m.
Eastern time by an individual duly authorized by Borrower.
3
Borrower's promise to repay indebtedness hereunder, at JCPenney's
option, may be evidenced by (1) a wire transfer request from Eckerd to
JCPenney's Treasurer's Department, stating the requested loan amount,
effective date, and the name of the bank to which JCPenney should transfer
the funds, (2) Exhibit "A" standing alone, or (3) a promissory note or
notes for Advances in the same form as Exhibit "B". Exhibits "A" and "B"
are attached hereto and incorporated herein by reference for all purposes.
JCPenney's books and records shall be prima facie evidence of all sums due
JCPenney.
REPRESENTATIONS
_______________
A. Good Standing. Borrower is a corporation, duly organized and in good
standing, under the laws of the State of Delaware and has the power to
own its property and to carry on its business in each jurisdiction in
which Borrower operates.
B. Authority and Compliance. Borrower has full power and authority to
enter into this Loan Agreement, to make the borrowings hereunder, to
execute and deliver evidences of Advances and to incur the obligations
provided for herein, all of which has been duly authorized by all
proper and necessary corporate action. No consent or approval of any
public authority is required as a condition to the validity of this
Loan Agreement or the evidences of Advances, and Borrower is in
compliance in all material respects with all applicable laws and
regulatory requirements to which it is subject.
4
C. Binding Agreement. This Loan Agreement constitutes, and the evidences
of Advances when issued and delivered pursuant hereto for value
received will constitute, valid and legally binding obligations of
Borrower in accordance with their terms.
D. Litigation. There are no proceedings pending or, to the knowledge of
Borrower, threatened before any court or administrative agency which
will or may have a material adverse effect on the financial condition
or operations of Borrower or any subsidiary, except as disclosed to
JCPenney.
E. Taxes. All income taxes and other taxes due and payable through the
date of this Loan Agreement have been paid prior to becoming
delinquent or are being contested in good faith.
F. Place of Business. Borrower's principal place of business is in
Largo, Florida.
EVENTS OF DEFAULT
_________________
If one or more of the following events of default shall occur, all
outstanding principal plus unpaid interest on all Advances shall be due and
payable immediately:
5
A. Default shall be made in the payment of any installment of principal
or interest upon an Advance when due and payable, whether at maturity
or otherwise within 5 days; or
B. Default shall be made in the performance of any term, covenant or
agreement contained herein which shall remain uncured for thirty (30)
days after written notice; or
C. Any representation or warranty herein contained or in any financial
statement, certificate, report or opinion submitted to JCPenney in
connection with this Loan Agreement or pursuant to the requirements of
this Loan Agreement shall prove to have been incorrect in any material
respect when made; or
D. Any judgment against Borrower or any attachment or other levy against
the property of Borrower with respect to a claim remains unpaid,
unstayed on appeal, undischarged, not bonded or not dismissed for a
period of sixty (60) days; or
E. Borrower makes an assignment for the benefit of creditors, files a
petition in bankruptcy, is adjudicated insolvent or bankrupt,
petitions or applies to any tribunal for any receiver or any trustee
of Borrower or any substantial part of its property, commences any
action relating to Borrower under any reorganization, arrangement,
readjustment of debt, dissolution or liquidation law or statute of any
jurisdiction,
6
whether now or hereafter in effect, or if there is
commenced against Borrower any such action, or Borrower by an act
indicates its consent to or approval of any trustee for Borrower or
any substantial part of its property, or suffers any such receivership
or trustee to continue undischarged for a period of forty-five (45)
days; then upon the happenings of any of the foregoing events of
default which shall be continuing, the Advances shall become and be
immediately due and payable upon declaration to that effect by
JCPenney.
F. Indebtedness of the Borrower or any subsidiary of the Borrower in an
aggregate principal amount in excess of $25,000,000 shall have become
due (by acceleration, mandatory prepayment or repurchase, or
otherwise) before its otherwise stated maturity after or as a result
of a default in the performance or observance of any obligation or
condition with respect to such Indebtedness or shall fail to have been
paid at its stated maturity or when otherwise due.
MISCELLANEOUS
_____________
A. Amendments. The terms of this Loan Agreement may not be waived,
altered, modified, amended or terminated in any manner except by
written instrument signed by JCPenney and Borrower.
7
B. Cumulative Rights and No Waiver. Each and every right granted to
JCPenney hereunder or under any other document delivered hereunder or
in connection herewith, or allowed it by law or equity shall be
cumulative of and may be exercised in addition to any and all other
rights of JCPenney, and no delay in exercising any right shall operate
as a waiver thereof, nor shall any single or partial exercise by
JCPenney of any right preclude any other or future exercise thereof or
the exercise of any other right. Borrower expressly waives any
presentment, demand, protest or other notice of any kind.
C. Notices. All notices hereunder shall be in writing or by telephone
(with written confirmation) and, if to JCPenney, mailed or delivered
to it at ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, Attention:
Treasurer; or to Borrower, mailed or delivered to it at ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇, ▇▇ ▇▇▇▇▇, Attention: President, with a copy to
Treasurer.
D. Governing Law. THIS LOAN AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
8
IN WITNESS WHEREOF, the parties hereto have caused this Loan Agreement
to be executed on the date first above written.
▇. ▇. PENNEY COMPANY, INC.
By /s/ ▇. ▇. ▇▇▇▇▇▇▇▇▇
________________________________
▇. ▇. ▇▇▇▇▇▇▇▇▇
Vice President and Treasurer
ECKERD CORPORATION
By /s/ ▇. ▇. ▇▇▇▇▇▇
________________________________
▇. ▇. ▇▇▇▇▇▇
President and Chief Executive
Officer
9
EXHIBIT "A"
DATE
▇. ▇. ▇▇▇▇▇▇ COMPANY, INC.
ADDRESS
ADDRESS
CITY, STATE ZIP
ATTN:
WE CONFIRM AND AGREE TO REPAY THE FOLLOWING BORROWING AS INDICATED
BELOW AND AS SET FORTH IN THE LOAN AGREEMENT WITH YOU DATED AS OF
___________ __, 1998:
DATE PRINCIPAL
TRANS. OF AMOUNT OF MATURITY NO. INTEREST INTEREST AMOUNT DUE
NO. LOAN LOAN DATE DAYS RATE RATE INTEREST AT MATURITY
BASIS
TYPE OF BORROWING:
SETTLEMENT INSTRUCTIONS:
CREDIT PROCEEDS IN SAME DAY FUNDS TO:
ACCOUNT NAME:
BANK NAME:
CITY, STATE:
ACCOUNT NUMBER:
MATURITY INSTRUCTIONS:
CHARGE: ACCOUNT NAME:
BANK NAME:
ACCOUNT NUMBER:
OR
WIRE TRANSFER TO: ▇. ▇. PENNEY COMPANY, INC.
CITY, STATE:
ACCOUNT NUMBER:
SINCERELY,
AUTHORIZED SIGNER
EXHIBIT "B"
PROMISSORY NOTE
For value received, on demand, or if prior demand is not made then on
Maturity Date, Eckerd Corporation a Delaware corporation ("Borrower"), with
its principal place of business at ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇▇▇, promises to pay to the order of ▇. ▇. Penney Company, Inc., a
Delaware corporation, ("JCPenney"), the unpaid principal amount of each
borrowing made by the Borrower advanced by JCPenney pursuant to the Eckerd
Corporation Loan Agreement referred to below, together with interest
thereon from the date of such borrowing at the rate or rates specified in
the Eckerd Corporation Loan Agreement, as specified in the Eckerd
Corporation Loan Agreement. All such payments of principal shall be made
in lawful money of the United States in same day funds at JCPenney's
address as set forth below.
Each borrowing made by the Borrower from JCPenney, the maturity thereof,
interest rate basis and rate, and amounts due at maturity, shall be
recorded on Exhibit "A" and, prior to any transfer hereof, endorsed on
such exhibit which may be attached hereto as a part of this Promissory
Note, provided that the failure of JCPenney to make any such recordation or
endorsement shall not affect the obligations of the Borrower hereunder or
under the Eckerd Corporation Loan Agreement. The Borrower shall be
notified of any such transfers or borrowing participations, which shall be
limited only to indebtedness which has been created through actual funding.
The Borrower hereby waives demand, presentment, notice of dishonor,
protest and diligence in collecting sums due hereunder. Borrower will
reimburse JCPenney for its expense, including reasonable attorneys' fees,
in connection with collection of any sums due to JCPenney hereunder.
This Promissory Note is one of the Promissory Notes referred to in the
Eckerd Corporation Loan Agreement dated as of _______ __, 1998 between
Borrower and JCPenney and terms defined in such Agreement are used herein
with the same meanings. Reference is made to the Eckerd Corporation Loan
Agreement for provisions for the prepayment hereof.
THIS PROMISSORY NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE LAWS OF THE STATE OF NEW YORK.
Lender Name: ▇. ▇. ▇▇▇▇▇▇ Company, Inc. Eckerd Corporation
__________________________ __________________________
("Borrower")
Address for Payment:
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ By:
______________________________________ _______________________
(Signature)
▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
_____________________________________
__________________________
(Title)
Date:
_________________________________
