Sears ▇▇▇▇▇▇▇ Acceptance Corp.
$2,000,000,000 Medium-Term Notes Series I
DISTRIBUTION AGREEMENT
June 15, 1995
Sears ▇▇▇▇▇▇▇ Acceptance Corp., a Delaware corporation (the
"Company"), proposes to issue and sell from time to time its medium-term
debt securities (the "Notes") in an aggregate initial offering price up
to U.S. $2,000,000,000 (or the equivalent in foreign currency or
currency units), and agrees with each person serving as an agent
pursuant to this Agreement (individually, an "Agent", and collectively,
the "Agents") as set forth herein. Subject to the terms and conditions
stated herein, the Company hereby (i) appoints each Agent as an agent of
the Company for the purpose of soliciting and receiving offers to
purchase Notes from the Company and (ii) agrees that whenever it
determines to sell Notes directly to any Agent as principal, it will
enter into a separate agreement (each a "Terms Agreement"),
substantially in the form of Annex I hereto, relating to such sale in
accordance with Section 2(b) hereof (unless the Company and such Agent
shall otherwise agree).
The Notes will be issued under an indenture, dated as of May 15,
1995 (the "Indenture"), between the Company and The Chase Manhattan
Bank, N.A., as Trustee (the "Trustee"). The Notes shall have the
currency denomination, maturities, annual interest rates (whether fixed
or floating), redemption provisions and other terms set forth in the
Prospectus referred to below as it may be amended or supplemented from
time to time. The Notes will be issued, and the terms and rights
thereof established, from time to time by the Company in accordance with
the Indenture and the Administrative Procedure attached hereto as Annex
II as it may be amended from time to time by written agreement between
the Agents and the Company (the "Procedure") and, if applicable, will be
specified in a related Terms Agreement.
1.Each of the Company and Sears, ▇▇▇▇▇▇▇ and Co. ("Sears")
represents and warrants to, and agrees with, each Agent that:
(a) A registration statement on Form S-3 (Registration No.
33-58139) in respect of U.S. $3,000,000,000 aggregate principal amount
(or the equivalent in foreign currency or currency units) of debt
securities of the Company, including the Notes, has been filed with the
Securities and Exchange Commission (the "Commission") in the form
heretofore delivered to such Agent, excluding exhibits (whether or not
incorporated by reference) to such registration statement but including
all documents incorporated by reference in the prospectus included
therein, and such registration statement in such form has been declared
effective by the Commission and no stop order suspending the
effectiveness of such registration statement has been issued and no
proceeding for that purpose has been initiated or threatened by the
Commission (any preliminary prospectus included in such registration
statement being hereinafter called a "Preliminary Prospectus;" the
various parts of such registration statement, including all exhibits
thereto but excluding Form T-1, each as amended at the time such part
became effective, being hereinafter collectively called the
"Registration Statement;" the prospectus relating to the Notes, in the
form in which it has most recently been filed with the Commission on or
prior to the date of this Agreement, being hereinafter called the
"Prospectus;" any reference herein to any Preliminary Prospectus or the
Prospectus shall be deemed to refer to and include the documents
incorporated by reference therein pursuant to the applicable form under
the Securities Act of 1933, as amended (the "Act") as of the date of
such Preliminary Prospectus or Prospectus, as the case may be; any
supplement to the Prospectus that sets forth only the terms of a
particular issue of Notes being hereinafter called a "Pricing
Supplement;" any reference to any amendment or supplement to any
Preliminary Prospectus or the Prospectus shall be deemed to refer to and
include any documents filed after the date of such Preliminary
Prospectus or Prospectus, as the case may be, under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and incorporated
therein by reference; and any reference to the Prospectus as amended or
supplemented shall be deemed to refer to the Prospectus as amended or
supplemented with respect to Notes sold pursuant to this Agreement, in
the form in which it is filed with the Commission pursuant to Rule
424(b) of Regulation C under the Act, including any documents
incorporated by reference therein as of the date of such filing);
(b) Except for statements in such documents which do not
constitute part of the Registration Statement or the Prospectus pursuant
to Rule 412 of Regulation C under the Act and after substituting
therefor any statements modifying or superseding such excluded
statements (i) the documents incorporated by reference in the
Prospectus, when they became effective or were filed with the
Commission, as the case may be, conformed in all material respects to
the requirements of the Act or the Exchange Act, as applicable, and the
rules and regulations of the Commission thereunder, and none of such
documents, when they became effective or were so filed, as the case may
be, contained, in the case of documents which became effective under the
Act, an untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary to make the
statements therein not misleading, and, in the case of documents which
were filed under the Exchange Act with the Commission, an untrue
statement of a material fact or omitted to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading, and (ii) any
further documents so filed and incorporated by reference in the
Prospectus, when such documents become effective or are filed with the
Commission, as the case may be, will conform in all material respects to
the requirements of the Act or the Exchange Act, as applicable, and the
rules and regulations of the Commission thereunder and will not contain,
in the case of documents which become effective under the Act, an untrue
statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements therein not
misleading, and in the case of documents which are filed under the
Exchange Act with the Commission, an untrue statement of material fact
or omit to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they
were made, not misleading; provided, however, that this representation
and warranty shall not apply to any statements or omissions made in
reliance upon and in conformity with information furnished in writing to
the Company by any Agent expressly for use in the Prospectus as amended
or supplemented to relate to a particular issuance of Notes; the
Indenture has been duly qualified under, and conforms in all material
respects to the requirements of, the Trust Indenture Act of 1939, as
amended (the "Trust Indenture Act"); and
(c) Except for statements in documents incorporated therein by
reference which do not constitute part of the Registration Statement or
the Prospectus pursuant to Rule 412 of Regulation C under the Act and
after substituting therefor any statements modifying or superseding such
excluded statements, the Registration Statement and the Prospectus
conformed, and any amendments or supplements thereto will, when they
become effective or are filed with the Commission, as the case may be,
conform, in all material respects to the requirements of the Act and the
Trust Indenture Act, and the rules and regulations of the Commission
thereunder and do not and will not, as of the applicable effective date
in the case of the Registration Statement and any amendment thereto and
as of the applicable filing date in the case of the Prospectus and any
supplement thereto, contain an untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary
to make the statements therein not misleading; provided, however, that
this representation and warranty shall not apply to any statements or
omissions made in reliance upon and in conformity with information
furnished in writing to the Company by any Agent expressly for use in
the Prospectus as amended or supplemented to relate to a particular
issuance of Notes.
2.The Company represents and warrants to, and agrees with, each
Agent that:
(a) Upon payment therefor as provided herein and in any
Terms Agreement, the Notes will have been duly and validly authorized,
and (assuming their due authentication by the Trustee) will have been
duly and validly issued and will be valid outstanding obligations of the
Company in accordance with their terms, except as the same may be
limited by insolvency, bankruptcy, reorganization, or other laws
relating to or affecting the enforcement of creditors' rights or by
general equity principles, and will be entitled to the benefits of the
Indenture;
(b) The issue and sale of the Notes and the compliance by
the Company with all of the provisions of the Notes, the Indenture, this
Agreement and any Terms Agreement will not conflict with or result in
any breach which would constitute a material default under, or result in
the creation or imposition of any lien, charge or encumbrance upon any
of the property or assets of the Company material to the Company,
pursuant to the terms of, any indenture, loan agreement or other
agreement or instrument for borrowed money to which the Company is a
party or by which the Company may be bound or to which any of the
property or assets of the Company material to the Company, is subject,
nor will such action result in any material violation of the provisions
of the Certificate of Incorporation, as amended, or the By-Laws of the
Company or, to the best of its knowledge, any statute or any order, rule
or regulation applicable to the Company of any court or any Federal,
State or other regulatory authority or other governmental body having
jurisdiction over the Company, and no consent, approval, authorization
or other order of, or filing with, any court or any such regulatory
authority or other governmental body is required for the solicitation of
offers to purchase Notes and the issue and sale of the Notes, except as
may be required under the Act, the Exchange Act, the Trust Indenture Act
and securities laws of the various states and other jurisdictions in
which the Agents will solicit offers to purchase Notes from the Company
and will purchase Notes as principal, as the case may be; and
(c) Immediately after the settlement of any sale of Notes
by the Company resulting from solicitation by such Agent hereunder and
immediately after any Time of Delivery (as defined below) relating to a
sale to an Agent as principal, the aggregate principal amount of Notes
which shall have been issued and sold by the Company hereunder or under
any Terms Agreement and of any debt securities of the Company (other
than such Notes) that shall have been issued and sold pursuant to the
Registration Statement will not exceed the amount of debt securities
registered under the Registration Statement.
3.(a) On the basis of the representations and warranties
herein contained, and subject to the terms and conditions herein set
forth, each of the Agents hereby severally and not jointly agrees to act
as agent of the Company, to use its reasonable efforts to solicit offers
to purchase the Notes from the Company upon the terms and conditions set
forth in the Prospectus relating to the Notes as amended or supplemented
from time to time and in the Procedure.
Subject to the provisions of this Section 3 and to the Procedure, offers
for the purchase of Notes may be solicited by each Agent as agent for
the Company at such time and in such amounts as such Agent deems
advisable; provided, however, that the Company reserves the right to
sell Notes directly on its own behalf or through other agents, dealers
or underwriters, and to appoint additional persons from time to time to
serve as Agents pursuant to this Agreement.
Each Agent agrees that it will not solicit an offer to purchase
Notes or deliver any of the Notes in any jurisdiction outside the United
States of America except under circumstances that will result in
compliance with the applicable laws thereof. Each Agent understands
that no action has been taken to permit a public offering in any
jurisdiction outside the United States of America where action would be
required for such purpose. The Agents further undertake that in
connection with the distribution of Notes denominated in any foreign
currency or currency unit, they will as agent, directly or indirectly,
not solicit offers to purchase and as principal under any Terms
Agreement or otherwise, directly or indirectly, not offer, sell or
deliver, such Notes in or to residents of the country issuing such
currency, except as permitted by applicable law.
The Company reserves the right, in its sole discretion, to instruct the
Agents to suspend at any time, for any period of time or
permanently, the solicitation of offers to purchase the Notes. Promptly
after receipt of notice from the Company, but in any event not less than
one business day thereafter, the Agents will suspend solicitation of
offers to purchase Notes from the Company until such time as the Company
has advised them that such solicitation may be resumed.
The Company agrees to pay each Agent, at the time of settlement of any
sale of a Note by the Company, the purchase of which is solicited by
such Agent, a commission in United States dollars (which, in the case of
Notes denominated in other than United States dollars, shall be based
upon the Market Exchange Rate (as defined below) for such currency or
currency unit at the time of any acceptance of an offer to purchase a
Note) in an amount equal to the following percentage of the principal
amount of such Note sold (or at such other amount as may from time to
time be negotiated between such Agent and the Company):
Maturity Commission
(percentage
of aggregate
principal amount
of Notes sold)
9 months to less than 1 year.................... .125%
1 year to less than 18 months................... .150%
18 months to less than 2 years.................. .200%
2 years to less than 3 years.................... .250%
3 years to less than 4 years.................... .350%
4 years to less than 5 years.................... .450%
5 years to less than 6 years.................... .500%
6 years to less than 7 years.................... .550%
7 years to less than 11 years................... .600%
11 years to less than 15 years.................. .625%
15 years to less than 20 years.................. .675%
20 years to 30 years............................ .750%
Greater than 30 years........................... to be
negotiated
Notwithstanding anything herein to the contrary, if, at or prior to the
time of settlement, the Company and an Agent have entered into, or such
Agent has arranged for the Company to enter into, a contract with
respect to the sale of the currency (other than United States dollars)
or currency unit in which a Note has been denominated and the purchase
of which was solicited by such Agent, the commission in United States
dollars payable by the Company to such Agent shall be based upon the
same exchange rate set forth in such contract.
The authorized denominations of Notes denominated in a currency or
currency unit other than United States dollars shall be equivalent, as
determined by the Market Exchange Rate for such currency or currency
unit on the business day immediately preceding the date on which the
offer for such Notes is accepted, of U.S. $1,000 (rounded down to an
integral multiple of 10,000 units of such currency or currency unit),
and any larger amount. The authorized denominations of Notes
denominated in United States dollars shall be U.S. $1,000 and any larger
amount in integral multiples of $1,000.
The "Market Exchange Rate" on a given date for a given foreign
currency means the noon buying rate in New York City for cable transfers
in such currency as certified for customs purposes by the Federal
Reserve Bank of New York on such date; provided, however, that in the
case of European Currency Units, Market Exchange Rate means, unless
otherwise agreed by the Company and the Agents, the rate of exchange
determined by the Council of European Communities (or any successor
thereto) as published on such date or the most recently available date
in the Official Journal of the European Communities (or any successor
publication).
Unless otherwise agreed between the Company and each Agent, each
Agent shall communicate to the Company, orally or in writing, each offer
to purchase Notes received by it as Agent other than those rejected by
such Agent in accordance herewith. The Company shall have the sole
right to accept offers to purchase Notes and may reject any proposed
purchase of Notes. Each Agent shall have the right, in its discretion
reasonably exercised, to reject any proposed purchase of Notes received
by it, and any such rejection by it shall not be deemed a breach of its
agreements contained herein.
(b) Each sale of Notes to any Agent as principal
shall be made in accordance with the terms of this Agreement and (unless
the Company and such Agent shall otherwise agree) a Terms Agreement
which will provide for the sale of such Notes. Terms Agreements, each
of which shall be substantially in the form of Annex I hereto, may take
the form of an exchange of any standard form of written
telecommunication between any Agent, the Company and Sears, including by
telecopy or telex. The Company, Sears and any Agent who is a party to a
Terms Agreement agree to exchange executed copies of such Terms
Agreement as promptly as practicable after they have entered into such
Terms
Agreement pursuant to the foregoing exchange of written
telecommunication. The Agents may utilize a selling or dealer group in
connection with the reoffering of the Notes purchased as principal.
For each sale of Notes to an Agent as principal that is not made
pursuant to a Terms Agreement, the procedural details relating to the
issue and delivery of such Notes and payment therefor shall be as set
forth in the Procedure. For each such sale of Notes to an Agent as
principal that is not made pursuant to a Terms Agreement, the Company
agrees to pay such Agent a commission (or grant an equivalent discount)
as provided in Section 3(a) and in accordance with the schedule set
forth therein or established from time to time pursuant thereto, except
as the parties otherwise agree in writing.
Each time and date of delivery of and payment for Notes to be
purchased by an Agent as principal, whether set forth in a Terms
Agreement or in accordance with the Procedure, is referred to herein as
a "Time of Delivery."
(c) Procedural details relating to the issue and
delivery of Notes, the solicitation of offers to purchase Notes, and the
payment in each case therefor, shall be as set forth in the Procedure.
The provisions of the Procedure shall apply to all transactions
contemplated hereunder other than those made pursuant to a Terms
Agreement. Each of the Agents and the Company agrees to perform the
respective duties and obligations specifically provided to be performed
by each of them in the Procedure. The Company will furnish to the
Trustee a copy of the Procedure as from time to time in effect.
4. The documents required to be delivered pursuant to Section 8
hereof shall be delivered at the offices of the Company, ▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, at 11:00 a.m., New York time, on the date of
this Agreement, or at such other date and time as the Agents and the
Company agree (such time and date being referred to herein as the
"Closing Date").
5. Each of the Company and Sears covenants and agrees with each
Agent:
(a) Prior to the termination of the offering of
the Notes, to make no amendment or supplement to the Registration
Statement or the Prospectus (except for a Pricing Supplement or a
supplement relating to an offering of securities other than the Notes)
without first having furnished the Agents with a copy of the proposed
form thereof and given the Agents a reasonable opportunity to review the
same; to advise the Agents promptly of any such amendment or supplement
after such Time of Delivery and furnish the Agents with copies thereof,
to prepare, with respect to any Notes to be sold through or to such
Agent pursuant to this Agreement, a Pricing Supplement with respect to
such Notes in a form previously approved by such Agent and to file such
Pricing
Supplement pursuant to Rule 424(b)(2) under the Act not later than the
close of business of the Commission on the second business day after the
date on which such Pricing Supplement is first used or the date of
determination of the offering price; and to file promptly all reports
and any definitive proxy or information statements required to be filed
by the Company or Sears, respectively, with the Commission pursuant to
Section 13 or 14 of the Exchange Act for so long as the delivery of a
prospectus is required in connection with the offering or sale of the
Notes, and during such same period to advise the Agents, promptly after
the Company or Sears receives notice thereof, of the time when any
amendment to the Registration Statement has been filed or has become
effective or any supplement to the Prospectus or any amended Prospectus
(other than any Pricing Supplement and any supplement relating to any
offering of securities other than the Notes) has been filed with, or
mailed for filing to, the Commission, of the issuance by the Commission
of any stop order or of any order preventing or suspending the use of
any prospectus relating to the Notes, of the suspension of the
qualification of the Notes for offering or sale in any jurisdiction, of
the initiation or threatening of any proceeding for any such purpose, or
of any request by the Commission for the amending or supplementing of
the Registration Statement or Prospectus or for additional information;
and, in the event of the issuance of any such stop order or of any such
order preventing or suspending the use of any such prospectus or
suspending any such qualification, to use promptly its best efforts to
obtain its withdrawal;
(b) Promptly from time to time to take such action
as the Agents reasonably may request to qualify the Notes for offering
and sale under the securities laws of such jurisdictions as the Agents
may request and to comply with such laws so as to permit the continuance
of sales and dealings therein for as long as may be necessary to
complete the distribution or sale of the Notes provided that in
connection therewith neither the Company nor Sears shall be required to
qualify as a foreign corporation or to file a general consent to service
of process in any jurisdiction;
(c) To furnish the Agents with copies of the
Registration Statement and each amendment thereto, and with copies of
the Prospectus as amended or supplemented, other than any Pricing
Supplement (except as provided in the Procedure), in the form in which
it is filed with the Commission pursuant to Rule 424 under the Act or in
the form first used to confirm sales which was not required to be filed
pursuant to Rule 424 under the Act, in such quantities as the Agents may
from time to time reasonably request, and, if the delivery of a
prospectus is required at any time in connection with the offering or
sale of the Notes (including Notes purchased from the Company by such
Agent as principal) and if at such time any event shall have occurred as
a result of which the
Prospectus as then amended or supplemented would include an untrue
statement of a material fact or omit to state any material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made when such Prospectus is
delivered, not misleading, or, if for any other reason it shall be
necessary during such same period to amend or supplement the Prospectus
or to file under the Exchange Act any document incorporated by reference
in the Prospectus in order to comply with the Act, the Exchange Act or
the Trust Indenture Act, to (i) notify the Agents to suspend
solicitation of offers to purchase Notes from the Company (and, if so
notified, the Agents shall promptly cease such solicitations), (ii)
prepare and cause to be filed with the Commission, after having
furnished the Agents with a copy of the proposed form and given the
Agents a reasonable opportunity to review the same, an amendment or
supplement to the Registration Statement or the Prospectus as then
amended or supplemented that will correct such statement or omission or
effect such compliance and (iii) supply such Prospectus as then amended
or supplemented to the Agents in such quantities as the Agents may
reasonably request; if such amendment or supplement, and any documents,
certificates and opinions furnished to the Agents pursuant to Section 8
in connection with the preparation or filing of such amendment or
supplement are reasonably satisfactory in all respects to the Agents,
the Agents will, upon the filing of such amendment or supplement with
the Commission and upon the effectiveness of an amendment to the
Registration Statement if such an amendment is required, resume the
Agents obligation to solicit offers to purchase Notes hereunder; if such
amendment or supplement, or any documents, certificates and opinions
furnished to the Agents pursuant to Section 8 in connection with the
preparation or filing of such amendment or supplement, are not
satisfactory to the Agents, the Agents will as promptly as reasonably
practicable notify the Company and Sears in writing;
(d) To make generally available to its security
holders, in accordance with the provisions of Rule 158 under the Act or
otherwise, as soon as practicable, but in any event not later than
forty-five days after the end of the fourth full fiscal quarter (ninety
days in the case of the last fiscal quarter in any fiscal year)
following the fiscal quarter ending after the latest of (x) the
effective date of the
Registration Statement, (y) the effective date of the post-effective
amendment thereto hereinafter referred to and (z) the date of filing of
the report hereinafter referred to, an earning statement of the Company
and Sears and its consolidated subsidiaries, respectively, (which need
not be audited) complying with Section 11(a) of the Act and covering a
period of at least twelve consecutive months beginning after the latest
of (i) the effective date of such Registration Statement, (ii) the
effective date of the post-effective amendment, if any, to such
Registration Statement (within the meaning of Rule 158) and (iii) the
date of filing of the last report of the Company or Sears incorporated
by reference into the Prospectus (within the meaning of Rule 158); and
(e) That each acceptance by the Company of an
offer to purchase Notes hereunder shall be deemed to be an affirmation
to such Agent that the representations and warranties of the Company and
Sears contained in or made pursuant to this Agreement are true and
correct as of the date of such acceptance as though made at and as of
such date, and an undertaking that, if a settlement occurs with respect
to such acceptance, such representations and warranties will be true and
correct as of such settlement date as though made at and as of such date
(except that such representations and warranties shall be deemed to
relate to the Registration Statement and the Prospectus as amended and
supplemented relating to such Notes).
6. The Company covenants and agrees with each Agent that,
except as may otherwise be specified in any Terms Agreement, during the
period beginning from the date of any Terms Agreement and continuing to
and including the earlier of (i) the termination of the trading
restrictions for the Notes purchased thereunder, of which termination
such Agent or Agents party to the Terms Agreement agree to give the
Company prompt notice confirmed in writing and (ii) the Time of Delivery
for such Notes, not to offer, sell, contract to sell or otherwise
dispose of any debt securities of the Company which (i) mature nine
months or more after such Time of Delivery, (ii) mature within six
months of the maturity of such Notes and (iii) are denominated in the
same currency or currency unit specified in the Terms Agreement, without
the prior written consent of such Agent or Agents, which consent shall
not be unreasonably withheld, except pursuant to arrangements of which
such Agent or Agents have been advised by the Company prior to the time
of execution of such Terms Agreement, which advice is confirmed in
writing (which may be by telecopy or telex, receipt acknowledged) to
such Agent or Agents by the end of the business day following the date
of such Terms Agreement.
7. The Company covenants and agrees with each Agent that the
Company will pay or cause to be paid, whether or not any sale of Notes
is consummated, the following: (i) the fees and expenses of the
Company's counsel and accountants in connection with the registration of
the Notes under the Act and all other expenses in connection with the
preparation, printing and filing of the Registration Statement, any
Preliminary Prospectus, the Prospectus and amendments and supplements
thereto and the mailing and delivering of copies thereof to the Agents;
(ii) the fees and expenses of counsel for the Agents, which counsel has
been approved by the Company, incurred heretofore or hereafter in
connection with the transactions contemplated hereunder; (iii) the cost
of printing or reproducing this Agreement, any Terms Agreement, any
Indenture, any Blue Sky and Legal Investment Memoranda and any other
documents in connection with the offering, purchase, sale and delivery
of the Notes; (iv) all expenses in connection with the qualification of
the Notes for offering and sale under state securities laws as provided
in Section 4(b) hereof, including fees and disbursements of counsel for
the Agents in connection with such qualification and in connection with
the Blue Sky and legal investment surveys; (v) any fees charged by
security rating services for rating the Notes; (vi) any filing fees
incident to any required review by the National Association of
Securities Dealers, Inc. of the terms of the sale of the Notes; (vii)
the cost of preparing the Notes; (viii) the fees and expenses of any
Trustee and any transfer or paying agent of the Company and the fees and
disbursements of counsel for any Trustee or such agent in connection
with any Indenture and the Notes; (ix) on a monthly basis all out-of-
pocket expenses (including without limitation advertising expenses)
incurred by such Agent connected with the solicitation of offers to
purchase and the sale of Notes so long as such expenses have been
approved by the Company; and (x) all other costs and expenses incident
to the performance of the Company's obligations hereunder (other than
costs and expenses incurred by any Agent) which are not otherwise
specifically provided for in this Section 7.
8. The obligation of each Agent, as agent of the Company, at
any time ("Solicitation Time") to solicit offers to purchase the Notes
and the obligation of each Agent to purchase Notes as principal pursuant
to any Terms Agreement or otherwise shall in each case be subject, in
such Agent's discretion, to the condition that all representations and
warranties and other statements of the Company or Sears herein are true
and correct at and as of the Closing Date, as of the date of the
effectiveness of any amendment to the Registration Statement (including
the filing of any document incorporated by reference therein), as of the
date any supplement to the Prospectus is filed with the Commission, as
of any Time of Delivery, as of each acceptance by the Company of an
offer to purchase Notes hereunder and as of each settlement date
relating to such sale, the condition that each of the Company and Sears
shall have performed all of its obligations hereunder theretofore to be
performed, and the following additional conditions:
(a) No stop order suspending the effectiveness of
the Registration Statement shall have been issued and no proceeding for
that purpose shall have been initiated or threatened by the Commission;
and all requests for additional information on the part of the
Commission shall have been complied with to the Agents reasonable
satisfaction;
(b) All corporate proceedings and related matters
in connection with the organization of the Company, the validity of the
Indenture and the registration, authorization, issue, sale and delivery
of the Notes shall have been satisfactory to the Agents' counsel, and
such counsel shall have been furnished with such papers and information
as they may reasonably have requested to enable them to pass upon the
matters referred to in this Section 8(b);
(c) Counsel to the Company and Sears, who may be
an employee of the Company or of Sears, shall have furnished to the
Agents such counsel's written opinion, dated the Closing Date, each Time
of Delivery and the date of effectiveness of each amendment or the
filing of each supplement to the Registration Statement or the
Prospectus (including the filing under the Act or the Exchange Act of
documents incorporated by reference in the Prospectus as amended or
supplemented but excluding amendments or supplements (i) relating to an
offering of securities other than the Notes, (ii) constituting a Pricing
Supplement, (iii) setting forth or incorporating by reference financial
statements or other information as of and for a fiscal quarter or (iv)
relating solely to the incorporation by reference of Sears proxy
statement for its annual meeting of shareholders or of a filing by the
Company or Sears of a Current Report on Form 8-K under the Exchange Act
unless in the case of clauses (iii) or (iv) above, in such Agent's
reasonable judgment, such financial statements or other information
contained in such documents are of such a character that an opinion of
counsel should be furnished), as the case may be, in form and substance
satisfactory to the Agents in the Agents' reasonable judgement to the
effect that:
(i) Each of the Company and Sears has been duly
incorporated and is validly existing as a corporation in good standing
under the laws of its respective state of incorporation;
(ii) The authorized capital stock of the Company
consists of 500,000 shares of common stock, par value $100 per share,
all of the issued and outstanding shares of which are owned by Sears,
▇▇▇▇▇▇▇ and Co., and the authorized capital stock of Sears is as set
forth or incorporated by reference in the Registration Statement;
(iii) SRAC is not an "investment company" within the
meaning of the Investment Company Act of 1940, as amended;
(iv) Each of this Agreement and any applicable
Terms Agreement has been duly authorized, executed and delivered on the
part of the Company, and this Agreement has been duly authorized,
executed and delivered on the part of Sears;
(v) The issue and sale of the Notes and the
compliance by the Company with all of the provisions of the Notes, the
Indenture, this Agreement and any applicable Terms Agreement will not
(a) conflict with or result in any breach which would constitute a
material default under, or result in the creation or imposition of any
lien, charge or
encumbrance upon any of the property or assets of the Company, material
to the Company, pursuant to the terms of, any indenture, loan agreement
or other agreement or instrument for borrowed money known to such
counsel to which the Company is a party or by which the Company may be
bound or to which any of the property or assets of the Company, material
to the Company, is subject, (b) result in any material violation of the
provisions of the Certificate of Incorporation, as amended, or the By-
Laws of the Company or (c) to the best of the knowledge of such counsel,
result in any material violation of any statute or any order, rule or
regulation applicable to the Company of any court or any Federal, State
or other regulatory authority or other governmental body having
jurisdiction over the Company, other than the Act, the Exchange Act, the
Trust Indenture Act, and the rules and regulations pursuant to each such
act, and other than the securities laws of the various states or other
jurisdictions which are applicable to the issue and sale of the Notes;
and, to the best knowledge of such counsel, no consent, approval,
authorization or other order of, or filing with, any court or any such
regulatory authority or other governmental body is required for the
issue and sale of the Notes except as may be required under the Act, the
Exchange Act, the Trust Indenture Act and securities laws of the various
states or other jurisdictions which are applicable to the issue and sale
of the Notes;
(vi) The Indenture has been duly authorized,
executed and delivered on the part of the Company and, as to the
Company, is a valid and binding instrument in accordance with its terms
except as the foregoing may be limited by insolvency, bankruptcy,
reorganization or other laws relating to or affecting the enforcement of
creditors' rights or by general equity principles, and has been
qualified under the Trust Indenture Act; the Notes have been duly
authorized and (assuming due authentication by the Trustee) when duly
executed, issued and delivered pursuant to the Indenture and any Terms
Agreement, will constitute valid and binding obligations of the Company
in accordance with their terms, entitled to the benefits of the
Indenture, except as the foregoing may be limited by insolvency,
bankruptcy, reorganization or other laws relating to or affecting the
enforcement of creditors' rights or by general equity principles;
(vii) The Fixed Charge Coverage and Ownership
Agreement has been duly authorized, executed and delivered by the
parties thereto and is a valid and binding instrument in accordance with
its terms except as the same may be limited by insolvency, bankruptcy,
reorganization or other laws relating to or affecting the enforcement of
creditors' rights or by general equity principles;
(viii) Such counsel does not know of any pending
legal or governmental proceedings required to be described in the
Prospectus as amended or supplemented which are not described as
required;
(ix) Except for statements in such documents which
do not constitute part of the Registration Statement or the Prospectus
pursuant to Rule 412 of Regulation C under the Act and after
substituting
therefor any statements modifying or superseding such excluded
statements, the documents incorporated by reference in the Prospectus as
amended or supplemented (other than the financial statements and related
schedules, the analyses of operations and financial condition and other
financial, statistical and accounting data therein, as to which such
counsel need express no opinion), when they became effective or were
filed with the Commission, as the case may be, complied as to form in
all material respects with the requirements of the Act or the Exchange
Act, as applicable, and the rules and regulations of the Commission
thereunder;
(x) Except for statements in such documents which
do not constitute part of the Registration Statement or the Prospectus
pursuant to Rule 412 of Regulation C under the Act and after
substituting
therefor any statements modifying or superseding such excluded
statements, the Registration Statement and the Prospectus as amended or
supplemented (excluding the documents incorporated by reference therein)
(other than the financial statements and related schedules, the analyses
of operations and financial condition and other financial, statistical
and accounting data therein, as to which such counsel need express no
opinion) comply as to form in all material respects with the
requirements of the Act and the rules and regulations thereunder; the
answers in the Registration Statement to Items 9 and 10 (insofar as it
relates to such counsel) of Form S-3 are to the best of such counsel's
knowledge accurate statements or summaries of the matters therein set
forth and fairly present the information called for with respect to
those matters by the Act and the rules and regulations thereunder; and
(xi) Such counsel does not know of any contract or
other document to which the Company or Sears is a party required to be
filed as an exhibit to the Registration Statement or required to be
incorporated by reference into the Prospectus as amended or supplemented
or required to be described in the Prospectus as amended or supplemented
which has not been so filed, incorporated by reference or described.
In rendering such opinion, such counsel may rely to the extent
such counsel deems appropriate upon certificates of officers or other
executives of the Company, Sears and its business groups and
subsidiaries and of public officials as to factual matters and upon
opinions of other counsel. In rendering the opinion referred to in
subdivision (v) above, such counsel need not express an opinion as to
whether, with respect to any Notes denominated in a currency other than
United States dollars, a court located in the United States of America
would grant a judgment relating to the Notes in other than United States
dollars, nor an opinion as to the date which any such court would
utilize for determining the rate of conversion into United States
dollars in granting such judgment. Such counsel shall also state that:
(a) nothing has come to such counsel's attention which has caused such
counsel to believe that any of the documents referred to in subdivision
(ix) above (other than the financial statements, the analyses of
operations and financial condition and other financial, statistical and
accounting data therein, as to which such counsel need express no
belief), in each case after excluding any statement in any such document
which does not constitute part of the Registration Statement or the
Prospectus as amended or supplemented pursuant to Rule 412 of Regulation
C under the Act and after substituting therefor any statement modifying
or superseding such excluded statement, when such documents became
effective or were filed, as the case may be, contained, in the case of
documents which became effective under the Act, an untrue statement of a
material fact or omitted to state a material fact required to be stated
therein or necessary to make the statements therein not misleading, and,
in the case of documents which were filed under the Exchange Act with
the Commission, an untrue statement of a material fact or omitted to
state a material fact necessary in order to make the statements therein,
in the light of the circumstances under which they were made, not
misleading, and (b) nothing has come to such counsel's attention which
has caused such counsel to believe that the Registration Statement or
Prospectus as amended or supplemented (other than the financial
statements, the analyses of operations and financial condition and other
financial, statistical and accounting data therein, as to which such
counsel need express no belief) contains an untrue statement of a
material fact or omits to state a material fact required to be stated
therein or necessary to make the statements therein not misleading;
(d) On the Closing Date, each Time of Delivery and
the date of effectiveness of each amendment or the filing of each
supplement to the Registration Statement or the Prospectus setting forth
or
incorporating by reference amended or supplemental financial
information, as the case may be, the independent certified public
accountants who have certified the financial statements of the Company
and Sears and its subsidiaries included or incorporated by reference in
the Registration Statement shall have furnished to the Agents a letter
or letters, dated the Closing Date or such applicable date, as the case
may be, in form and substance satisfactory to the Agents, to the effect
set forth in Annex III hereto (modified in the case of amended or
supplemented financial information to reflect such amended and
supplemental financial information included or incorporated by reference
in the Registration Statement and the Prospectus as amended or
supplemented to the date of such letter, provided that if the
Registration Statement or the Prospectus is amended or supplemented
solely to include or incorporate by reference unaudited quarterly
financial information, the scope of such letter, which shall be
satisfactory in form and substance to such Agent, may be limited to
relate to such unaudited financial information unless any other
accounting, financial or statistical information included or
incorporated by reference therein is of a character that, in the
reasonable judgment of such Agent, such letter should address such other
information);
(e) (i) The Company and Sears shall not have
sustained, after the date of the latest audited financial statements
included or incorporated by reference in the Prospectus and (A) prior to
the Closing Date, any material loss or interference with its business
from fire, explosion, flood or other calamity, whether or not covered by
insurance, or from any labor dispute or court or governmental action,
order or decree, otherwise than as contemplated in the Prospectus as
amended or supplemented through the date of this Agreement and (B) prior
to each Time of Delivery, any such loss or interference, otherwise than
as set forth or contemplated in the Prospectus as amended or
supplemented through the date that the Agent agreed to purchase such
Notes as
principal; and (ii) since the respective dates as of which information
is given in the Prospectus as amended or supplemented and (A) prior to
the Closing Date, there shall not have been any material change in the
capital stock accounts or long-term debt of the Company or any material
adverse change in the general affairs, financial position, stockholders'
equity or results of operations of the Company, otherwise than as set
forth or contemplated in the Prospectus as amended or supplemented
through the date of this Agreement and (B) prior to each Time of
Delivery, there shall not have been any such change, otherwise than as
set forth or contemplated in the Prospectus as amended or supplemented
through the date that the Agent agreed to purchase such Notes as
principal, the effect of which, in any such case described in clause (i)
or (ii), in the judgment of such Agent makes it impracticable or
inadvisable to proceed with the solicitation by such Agent of offers to
purchase Notes from the Company or the purchase by such Agent of Notes
from the Company as principal, as the case may be;
(f) During the period in which the Agents are
soliciting offers to purchase Notes, including the period between the
date that any Agent agreed to purchase such Notes as principal and the
related Time of Delivery, no downgrading shall have occurred in the
rating accorded the Company's or Sears debt securities by ▇▇▇▇▇'▇
Investors Service, Inc. or Standard & Poor's Corporation; provided,
however, that this Section 6(f) shall not apply to any such rating
agencies which shall have notified the Company of the downgrading in the
rating of such debt securities and of which the Company shall have given
the Agents written notice prior to the execution of the Terms Agreement;
(g) During the period in which the Agents are
soliciting offers to purchase Notes, including the period between the
date that any Agent agreed to purchase such Notes as principal and the
related Time of Delivery, neither (i) the United States shall have
become engaged in the outbreak or escalation of hostilities involving
the United States or there has been a declaration by the United States
of a national
emergency or a declaration of war, (ii) a banking moratorium shall have
been declared by either Federal or New York State authorities or, in the
case of Notes denominated in other than United States dollars, by the
authorities of the country of the currency in which such Notes are
denominated, (iii) trading in securities generally on the New York Stock
Exchange shall have been suspended nor limited or minimum prices shall
have been established by such Exchange, nor (iv) in the case of Notes
denominated in other than United States dollars, any change involving
such currency exchange rates, exchange controls, taxation or similar
matters, any of which events, in the Agents' judgment, renders it
inadvisable to proceed with the solicitation by the Agents of offers to
purchase Notes from the Company or the purchase by the Agents of Notes
from the Company as principal, as the case may be; and
(h) Each of the Company and Sears shall have
furnished or caused to be furnished to the Agents at the Closing Date,
each Time of Delivery and the date of effectiveness of each amendment or
the filing of each supplement to the Registration Statement or the
Prospectus (including the filing under the Act or the Exchange Act of
documents which are incorporated by reference in the Prospectus as
amended or supplemented but excluding amendments or supplements (i)
relating to an offering of securities other than the Notes, (ii)
constituting a Pricing Supplement, or (iii) relating solely to the
incorporation by reference of Sears proxy statement for its annual
meeting of shareholders or of a filing by the Company or Sears of a
Current Report on Form 8-K under the Exchange Act, unless in the case of
clause (iii) above, in such Agent's reasonable judgment, the information
contained in such documents is of such a character that certificates of
officers referred to below should be furnished, as the case may be)
certificates of officers of the Company and Sears satisfactory to the
Agents, as to the accuracy at and as of the Closing Date or such
applicable date, as the case may be, of the representations, warranties
and agreements of the Company and Sears, respectively, herein and as to
the performance by each of the Company and Sears of all its obligations
hereunder to be performed at or prior to the Closing Date or such
applicable date, as the case may be, and the Company shall have also
furnished the Agents similar certificates satisfactory to the Agents as
to the matters set forth in subdivision (a) of this Section 8.
9. (a) The Company will indemnify and hold harmless
each Agent against any losses, claims, damages or liabilities, joint or
several, to which such Agent may become subject, under the Act or
otherwise, insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based upon any untrue
statement or alleged untrue statement of any material fact contained in
any Preliminary Prospectus, the Registration Statement, the Prospectus
or the Prospectus as amended or supplemented, or any amendment or
supplement thereto furnished by the Company or Sears, or arise out of or
are based upon the omission or alleged omission to state therein a
material fact required to be stated therein or (in the case of the
Registration Statement or the Prospectus as amended or supplemented or
any amendment or supplement thereto) necessary to make the statements
therein not misleading or (in the case of any Preliminary Prospectus)
necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading; and will
reimburse each Agent for any legal or other expenses reasonably incurred
by such Agent in connection with
investigating or defending any such action or claim; provided, however,
that the Company shall not be liable in any such case to the extent that
any such loss, claim, damage or liability arises out of or is based upon
an untrue statement or alleged untrue statement or omission or alleged
omission made in any Preliminary Prospectus, or the Registration
Statement, the Prospectus or the Prospectus as amended or supplemented
or any such amendment or supplement in reliance upon and in conformity
with written information furnished to the Company by the Agents
expressly for use therein; and provided, further, that the Company shall
not be liable to any Agent or any person controlling such Agent under
the indemnity agreement in this subdivision (a) with respect to the
Preliminary Prospectus or the Prospectus or the Prospectus as amended or
supplemented or any amendment or supplement thereto, as the case may be,
to the extent that any such loss, claim, damage or liability of such
Agent or controlling person results solely from the fact that such Agent
sold Notes to a person to whom there was not sent or given, at or prior
to the written confirmation of such sale, a copy of the Prospectus
(excluding documents incorporated by reference) or of the Prospectus as
then amended or supplemented (excluding documents incorporated by
reference), whichever is most recent, if the Company has previously
furnished copies thereof to such Agent.
(b) Each Agent will indemnify and hold harmless
the Company against any losses, claims, damages or liabilities to which
the Company may become subject, under the Act or otherwise, insofar as
such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in any Preliminary
Prospectus, the
Registration Statement, the Prospectus, or the Prospectus as amended or
supplemented, or any amendment or supplement thereto, or arise out of or
are based upon the omission or the alleged omission to state therein a
material fact required to be stated therein or (in the case of the
Registration Statement or the Prospectus or the Prospectus as amended or
supplemented or any amendment or supplement thereto) necessary to make
the statements therein not misleading or (in the case of any Preliminary
Prospectus) necessary to make the statements therein, in the light of
the circumstances under which they were made, not misleading, in each
case to the extent, but only to the extent, that such untrue statement
or alleged untrue statement or omission or alleged omission was made in
any Preliminary Prospectus or the Registration Statement or the
Prospectus or the Prospectus as amended or supplemented or such
amendment or supplement in reliance upon and in conformity with written
information furnished to the Company by such Agent expressly for use
therein; and will reimburse the Company for any legal or other expenses
reasonably incurred by the Company in connection with investigating or
defending any such action or claim.
(c) Within a reasonable period after receipt by an
indemnified party under subdivision (a) or (b) above of notice of the
commencement of any action with respect to which indemnification is
sought under such subdivision or contribution may be sought under
subdivision (d) below, such indemnified party shall notify the
indemnifying party in writing of the commencement thereof. In case any
such action shall be brought against any indemnified party, the
indemnifying party shall be entitled to participate in, and, to the
extent that it shall wish, jointly with any other indemnifying party
similarly notified, to assume the defense thereof, with counsel
satisfactory to such indemnified party, and after notice from the
indemnifying party to such indemnified party of its election so to
assume the defense thereof, the indemnifying party shall not be liable
to such indemnified party for any legal or other expenses subsequently
incurred by such indemnified party in connection with the defense
thereof other than reasonable costs of investigation.
(d) If the indemnification provided for in this
Section 9 is unavailable to an indemnified party under subdivision (a)
or (b) above in respect of any losses, claims, damages or liabilities
(or actions in respect thereof) referred to therein, then each
indemnifying party shall contribute to the amount paid or payable by
such indemnified party as a result of such losses, claims, damages or
liabilities (or actions in respect thereof) in such proportion as is
appropriate to reflect the relative benefits received by the Company on
the one hand and the contributing Agent on the other from the offering
of the Notes and also the relative fault of the Company and Sears on the
one hand and the contributing Agent on the other in connection with the
statements or omissions which resulted in such losses, claims, damages
or liabilities (or actions in respect thereof), as well as any other
relevant equitable considerations. The relative benefits received by
the Company on the one hand and the contributing Agent on the other
shall be deemed to be in the same proportion as the total net proceeds
from the sale of Notes (before deducting expenses) received by the
Company bear to the total commissions or discounts received by the
contributing Agent. The relative fault shall be determined by reference
to, among other things, whether the untrue or alleged untrue statement
of a material fact or the omission or alleged omission to state a
material fact relates to
information supplied by the Company or Sears on the one hand or the
contributing Agent on the other and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent
such statement or omission of the Company or Sears on the one hand and
the contributing Agent on the other hand. With respect to any Agent,
such relative fault shall also be determined by reference to the extent
(if any) to which such losses, claims, damages or liabilities (or
actions in respect thereof) with respect to any Preliminary Prospectus
result from the fact that such Agent sold Notes to a person to whom
there was not sent or given, at or prior to the written confirmation of
such sale, a copy of the Prospectus (excluding documents incorporated by
reference) or of the Prospectus as then amended or supplemented
(excluding documents incorporated by reference) if the Company has
previously furnished copies thereof to such Agent. The Company and the
contributing Agent agree that it would not be just and equitable if
contribution pursuant to this subdivision (d) were determined by per
capita allocation (even if all Agents were treated as one entity for
such purpose) or by any other method of allocation which does not take
account of the equitable considerations referred to above in this
subdivision (d). The amount paid or payable by an indemnified party as
a result of the losses, claims, damages or liabilities (or actions in
respect thereof) referred to above in this subdivision (d) shall be
deemed to include any legal or other expenses reasonably incurred by
such indemnified party in connection with investigating or defending any
such action or claim. Notwithstanding the provisions of this
subdivision (d), no Agent shall be required to contribute any amount in
excess of the amount by which the total price at which the Notes
purchased by or through such Agent were sold exceeds the amount of any
damages which such Agent has otherwise been required to pay by reason of
such untrue or alleged untrue statement or omission or alleged omission.
No person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the Act) shall be entitled to contribution from any
person who was not guilty of such fraudulent misrepresentation. The
obligations of each of the Agents under this subdivision (d) to
contribute are several in proportion to the respective purchases made by
or through it to which such loss, claim, damage or liability (or action
in respect thereof) relates and are not joint.
(e) The obligations of the Company under this
Section 9 shall be in addition to any liability which the Company may
otherwise have and shall extend, upon the same terms and conditions, to
each person, if any, who controls any Agent within the meaning of the
Act; and each Agent's obligations under this Section 9 shall be in
addition to any liability which such Agent may otherwise have and shall
extend, upon the same terms and conditions, to each officer and director
of the Company or Sears and to each person, if any, who controls the
Company within the meaning of the Act.
10. In soliciting offers to purchase Notes from
the Company and in performing the other obligations of such Agent
hereunder (other than in respect of any purchase by an Agent as
principal, pursuant to a Terms Agreement or otherwise), each Agent is
acting solely as agent for the Company and not as principal. Each Agent
will make reasonable efforts to assist the Company in obtaining
performance by each purchaser whose offer to purchase Notes from the
Company was solicited by such Agent and has been accepted by the
Company, but such Agent shall not have any liability to the Company in
the event such purchase is not consummated for any reason. If the
Company shall default on its
obligation to deliver Notes to a purchaser whose offer it has accepted,
the Company shall hold each Agent harmless against any loss, claim or
damage arising from or as a result of such default by the Company.
11. The respective indemnities, agreements,
representations, warranties and other statements by any Agent, the
Company and Sears set forth in or made pursuant to this Agreement shall
remain in full force and effect regardless of any investigation (or any
statement as to the results thereof) made by or on behalf of any Agent,
the Company, Sears, or any officer or director or any controlling person
of the Company, Sears or any Agent, and shall survive each delivery of
and payment for any of the Notes.
12. The provisions of this Agreement relating to
the solicitation of offers to purchase Notes from the Company may be
suspended or this Agreement may be terminated at any time by the Company
as to any or all Agents or by any Agent insofar as this Agreement
relates to such Agent upon the giving of written notice of such
suspension or termination to such Agent or the Company, as the case may
be. Unless otherwise agreed by the respective parties, any such
suspension or termination shall be effective immediately with respect to
the party giving such notice and, in the case of the party receiving
such notice, at the close of business on the first business day
following the receipt of such notice. In the event of such suspension
or termination with respect to any Agent, (x) this Agreement shall
remain in full force and effect with respect to any Agent as to which
such suspension or termination has not occurred, and (y) the Company
shall not have any liability to such Agent and such Agent shall not have
any liability to the Company, except as provided in any Terms Agreements
and in the fifth paragraph of Section 3(a), Section 7, Section 9,
Section 10 and Section 11.
13. Except as otherwise specifically provided
herein or in the Procedure, all statements, requests, notices and
advices hereunder shall be in writing, or by telephone if promptly
confirmed in writing, and if to an Agent shall be sufficient in all
respects when delivered or sent by facsimile transmission or registered
mail to such Agent at the address or facsimile transmission number set
forth in the Appointment and Acceptance of Agent relating to the
appointment of such Agent, and if to the Company shall be sufficient in
all respects when delivered or sent by facsimile transmission or
registered mail to the Company at ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇, Secretary, Facsimile
Transmission No. (▇▇▇) ▇▇▇-▇▇▇▇, and if to Sears shall be sufficient in
all respects when delivered or sent by facsimile transmission or
registered mail to Sears at ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇,
Attention: Senior Vice President, General Counsel and Secretary,
Facsimile Transmission No. (▇▇▇) ▇▇▇-▇▇▇▇ with a copy to the Vice
President and Treasurer, Facsimile Transmission No. (▇▇▇) ▇▇▇-▇▇▇▇.
Upon request of any party hereto, any statements, requests, notices and
advices transmitted by facsimile shall be promptly followed by delivery
of executed documents by registered mail.
14. This Agreement and any Terms Agreement shall
be binding upon, and inure solely to the benefit of, each Agent, the
Company and Sears, and to the extent provided in Section 9, Section 10
and Section 11 hereof, the officers and directors of the Company and
Sears and any person who controls any Agent or the Company, and their
respective heirs, executors, administrators, successors and assigns, and
no other person shall acquire or have any right under or by virtue of
this Agreement or any Terms Agreement. No purchaser of any of the Notes
through or from any Agent hereunder shall be deemed a successor or
assign by reason merely of such purchase.
15. Time shall be of the essence in this Agreement
and any Terms Agreement. As used herein, the term "business day" shall
mean any day when the office of the Commission in Washington, D.C. is
normally open for business or each Monday, Tuesday, Wednesday, Thursday
and Friday which is not a legal holiday for banking institutions in any
of the City of Chicago, The City of New York or the City of Wilmington.
16. This Agreement and any Terms Agreement shall
be governed by, and construed in accordance with, the internal laws of
the State of New York.
17. This Agreement (including such Appointments
and Acceptances of Agent as may be executed and delivered by the Company
and Sears and accepted by one or more Agents from time to time) and any
Terms Agreement may be executed by any one or more of the parties hereto
and thereto in any number of counterparts, each of which shall be an
original, but all of such respective counterparts shall together
constitute one and the same instrument.
APPOINTMENT AND ACCEPTANCE OF
AGENT
Each agent designated below is hereby appointed as an Agent on the
terms and conditions set forth in the Distribution Agreement. Upon
acceptance of such appointment by signing and returning to us three
counterparts hereof, the Distribution Agreement shall constitute a
binding agreement between the Company, Sears and each such Agent in
accordance with its terms.
Very truly yours,
SEARS ▇▇▇▇▇▇▇ ACCEPTANCE CORP.
By:/S/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
SEARS, ▇▇▇▇▇▇▇ AND CO.
By:/S/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Agents Designated Hereby:
Accepted in New York, New York, as of the date set forth on the first
page of the Distribution Agreement:
▇▇▇▇▇▇▇, ▇▇▇▇▇ & CO.
Address: ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attn: Registration
Department
Facsimile Transmission No.: (▇▇▇) ▇▇▇-▇▇▇▇
/S/▇▇▇▇▇▇▇, Sachs & Co.
▇▇▇▇▇▇▇ LYNCH, PIERCE, ▇▇▇▇▇▇ & ▇▇▇▇▇ INCORPORATED
Address: ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ Floor, World Financial Center, ▇▇▇▇▇
▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇,
Attn: MTN Product Management
Facsimile Transmission No.: (▇▇▇) ▇▇▇-▇▇▇▇
By:/S/▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & CO. INCORPORATED
Address: ▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attn:
Managing Director, Short- and
Medium-Term Note Department
Facsimile Transmission No.: (▇▇▇) ▇▇▇-▇▇▇▇
copy to: ▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attn:
Manager, Credit Department
Facsimile Transmission No.: (▇▇▇) ▇▇▇-▇▇▇▇
By:/S/▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇ III
SALOMON BROTHERS INC
Address: Seven ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇,
Attn: Medium-Term Note
Department
Facsimile Transmission No.: (▇▇▇) ▇▇▇-▇▇▇▇
By:/S/▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
ANNEX I
Sears ▇▇▇▇▇▇▇ Acceptance Corp.
$ Medium Term Notes
Series I
TERMS AGREEMENT
_______________________
_______________________
_______________________
Dear Sirs:
,199
Sears ▇▇▇▇▇▇▇ Acceptance Corp. (the "Company") proposes, subject
to the terms and conditions stated herein and in the Distribution
Agreement, dated ___________, 199_ (the "Distribution Agreement"),
between the Company and Sears, ▇▇▇▇▇▇▇ and Co. ("Sears") on the one hand
and the Agents thereunder on the other, to issue and sell to you the
securities specified in the Schedule hereto (the "Purchased Notes").
Each of the provisions of the Distribution Agreement not specifically
related to the solicitation by such firms, as agents of the Company, of
offers to purchase Notes is incorporated herein by reference in its
entirety, and shall be deemed to be part of this Agreement to the same
extent as if such provisions had been set forth in full herein, provided
that for purposes of this Agreement all references in the Distribution
Agreement to the "Agents" shall be deemed to refer to you alone.
Nothing contained herein or in the Distribution Agreement shall make any
party hereto an agent of the Company or make such party subject to the
provisions in the Distribution Agreement relating to the solicitation of
offers to purchase securities from the Company, solely by virtue of its
execution of this Terms Agreement. Each of the representations and
warranties set forth therein shall be deemed to have been made at and as
of the date of this Terms Agreement, except that each representation and
warranty in Sections 1 and 2 of the Distribution Agreement which makes
reference to the Prospectus shall be deemed to be a representation and
warranty as of the date of the Distribution Agreement in relation to the
Prospectus (as therein defined), and also a representation and warranty
as of the date of this Terms Agreement in relation to the Prospectus as
amended and supplemented to relate to the Purchased Notes. Unless
otherwise defined herein, terms defined in the Distribution Agreement
are used herein as therein defined.
An amendment to the Registration Statement, or a supplement to the
Prospectus, as the case may be, relating to the Purchased Notes, in the
form heretofore delivered to you is now proposed to be filed with, or in
the case of a supplement, mailed for filing to, the Commission.
Subject to the terms and conditions set forth herein and in the
Distribution Agreement incorporated herein by reference, the Company
agrees to issue and sell to you and you agree to purchase from the
Company the Purchased Notes, at the time and place, in the principal
amount and at the purchase price set forth in the Schedule hereto.
If the foregoing is in accordance with your understanding, please
sign and return to us two counterparts hereof, and upon acceptance
hereof by you this letter and such acceptance hereof, including those
provisions of the Distribution Agreement incorporated herein by
reference, shall constitute a binding agreement between you, the Company
and Sears.
SEARS ▇▇▇▇▇▇▇ ACCEPTANCE CORP.
By:
SEARS, ▇▇▇▇▇▇▇ AND CO.
By:
Accepted:
[__________________________________________
By: ]
SCHEDULE TO ANNEX I
Title of Purchased Notes:
[Medium-Term Notes, Series I]
[ % Notes due ]
Aggregate Principal Amount:
[$ or units of other Specified Currency]
[Currency Swap or Forward Arrangements:]
[Price to Public:]
Purchase Price by :
% of the principal amount of the Purchased Notes [, plus accrued
interest from to ] [and accrued amortization, from
to ]
Specified Funds for Payment of Purchase Price:
immediately available funds
Indenture:
Indenture, dated as of May 15, 1995, as supplemented to the date
hereof, between the Company and The Chase Manhattan Bank, N.A., as
Trustee
Form of Purchased Notes:
[Certificated form only][Global form only]
Time of Delivery:
Closing Location:
Maturity:
Interest Rate:
[ %] [Specify floating rate provisions, if any]
Interest Payment Dates:
[months and dates]
Documents to be Delivered:
The following documents referred to in the Distribution Agreement
shall be delivered as a condition to the Closing:
[(1) The opinion referred to in Section 8(c).]
[(2) The accountants' letter referred to in Section 8(d).]
[(3) The officers' certificate referred to in Section 8(h).]
Lock-Out Provisions:
[Describe modifications, if any, to the lock-out provisions set
forth in Section 6 of the Distribution Agreement.]
Syndicate Provisions:
[Set forth any provisions relating to underwriters' default and
step-up of amounts to be purchased by underwriters acting with
]
ANNEX II
Sears ▇▇▇▇▇▇▇ Acceptance Corp.
ADMINISTRATIVE PROCEDURE
Medium-term notes (the "Notes") in the aggregate initial offering
price of up to $2,000,000,000 are to be offered from time to time by
Sears ▇▇▇▇▇▇▇ Acceptance Corp. (the "Company") through agents of the
Company (together, in such capacity, the "Agents"). Each Agent has
agreed to use its reasonable efforts to solicit offers to purchase Notes
directly from the Company (an Agent, in relation to a purchase of a
particular Note by a purchaser solicited by such Agent, being herein
referred to as the "Selling Agent") and may also purchase Notes from the
Company as principal (an Agent, in relation to a purchase of a Note by
such Agent as principal other than pursuant to a Terms Agreement being
herein referred to as the "Purchasing Agent"). The Notes are being sold
pursuant to a Distribution Agreement, dated June 15, 1995 (the
"Distribution Agreement"), between the Company, Sears, ▇▇▇▇▇▇▇ and Co.
("Sears") and the Agents, to which this Administrative Procedure is
attached as Annex II.
The Notes will be issued pursuant to an Indenture, dated as of May
15, 1995 (the "Indenture"), between the Company and The Chase Manhattan
Bank, N.A., as Trustee (the "Trustee").
Unless otherwise defined herein, terms defined in the Indenture or
the Notes shall be used herein as therein defined.
In the case of purchases of Notes by any Agent as principal, the
relevant terms and settlement details related thereto, including the
Time of Delivery referred to in the first paragraph of Section 8, will
(unless the Company and such Agent otherwise agree) be set forth in a
Terms Agreement entered into between such Agent and the Company and
Sears pursuant to the Distribution Agreement.
The procedures to be followed during, and the specific terms of,
the solicitation of offers by the Agents and the sale as a result
thereof by the Company are explained below. The procedures are subject,
and are qualified in their entirety by reference, to all of the
respective provisions of the Distribution Agreement and the Indenture.
The Company will advise each Agent in writing of those persons
handling administrative responsibilities ("Designated Persons") with
whom such Agent is to communicate regarding offers to purchase Notes and
the details of their delivery.
I. General Procedures
Registration: Notes will be issued only in fully
registered form and will be either (a) Book-Entry Notes represented by
one or more global notes (each a "Global Note") held by the Trustee, as
agent for The Depository Trust Company ("DTC") and recorded in the book-
entry system maintained by DTC or (b) Certificated Notes delivered in
certificated form to the Selling Agent or Purchasing Agent. All Notes
will be issued as Book-Entry Notes except as otherwise approved in
advance by the Company and except that non-U.S. dollar denominated Notes
will be issued as Certificated Notes only unless otherwise specified in
a Prospectus Supplement or Pricing Supplement.
Maturities: Each Note will mature on a date,
selected by the purchaser and agreed to by the Company, which will be at
least nine months but not more than thirty years from the date of
original issuance by the Company of such Note (the "Settlement Date").
Price to Public: Each Note will be issued at the
percentage of principal amount specified in the Prospectus (as defined
in Section 1(a) of the Distribution Agreement) relating to the Notes.
Currencies: Notes will be denominated in U.S.
dollars or in such other currency or currency unit as is specified in
the Prospectus (the "Specified Currency").
Denominations: The denomination of any Book-Entry,
Global or Certificated Note will be a minimum of U.S. $1,000 or any
amount in excess thereof in integral multiples of $1,000 or the
equivalent, as determined pursuant to the provisions of the Indenture,
of U.S. $1,000 (rounded down to an integral multiple of 1,000 units of
such Specified Currency) and any amounts in excess thereof.
Interest Payments: As specified in the Indenture and
the Form of Note.
Acceptance of
Offers: Each Agent will promptly advise the
Company by telephone or other appropriate means of offers to purchase
Notes
received by it other than those rejected by such Agent. Each Agent may,
in its discretion reasonably exercised, reject any offer received by it.
Each Agent also may make offers to the Company to purchase Notes as a
Purchasing Agent in accordance with Section 2(b) of the Distribution
Agreement. The Company will have the sole right to accept offers to
purchase Notes and may reject any such offer.
If the Company accepts an offer to
purchase Notes, it will confirm such acceptance in writing to the
Selling Agent or Purchasing Agent, as the case may be. If the Company
rejects an offer, it will promptly notify the Agent involved.
Filing and Delivery
of Prospectus: If the Company accepts an offer to
purchase a Note, the Company will prepare a Pricing Supplement
reflecting the terms of such Note and will arrange to have a Pricing
Supplement filed with the Securities and Exchange Commission (the
"Commission") as soon as practicable after the preparation thereof and
will supply at least one such Pricing Supplement to the Selling Agent or
the Purchasing Agent, as the case may be, not later than 5:00 p.m., New
York City time, on the Business Day following the date of acceptance of
such offer.
With respect to each Note sold
pursuant to the Distribution Agreement, the Selling Agent shall send a
copy of the Prospectus as most recently amended or supplemented
(together with the Pricing Supplement relating to such Note) to the
purchaser or its agent prior to or together with the delivery of (a) the
written confirmation of sale (including, in the case of a book-entry
security, the
confirmation through DTC's Institutional Delivery System) or (b) the
delivery of such Note, whichever is earlier.
Confirmation: For each offer accepted by the
Company, the Selling Agent will issue a written confirmation to each
purchaser containing the Sale Information (as defined below), plus
delivery and payment instructions.
Currency Swaps: Unless otherwise requested by the
Company, each time an Agent advises the Company of an offer to purchase
Notes
denominated in a currency or currency unit other than U.S. dollars, such
Agent will provide the Company information with respect to currency swap
or forward arrangements that, as of the time the offer is communicated
to the Company, such Agent is prepared to enter into or arrange with a
third party to enter into in order to exchange amounts to be received
from the purchaser of such Note at the Settlement Date and to exchange
amounts to be paid by the Company on the interest payment dates and at
maturity.
Settlement--
Sales as Principal: In the event of a purchase of
Notes by an Agent or Agents, as principal or underwriter (other than as
Purchasing Agent), appropriate settlement details will be set forth in
the
applicable Terms Agreement to be entered into between such Agent or
Agents and the Company pursuant to the Distribution Agreement.
Settlement--
Sales as Agent: All offers solicited by the Agents
and accepted by the Company will be settled on the third Business Day
(as defined below) after the date of acceptance unless otherwise agreed
by the purchaser and the Company and the Settlement Date shall be
specified upon acceptance of such offer. The term "Business Day" means
a Monday, Tuesday, Wednesday, Thursday or Friday on which commercial
banks in any of New York City, the City of Chicago or the City of
Wilmington and, (i) if the Note is denominated in a currency other than
U.S. dollars, in the capital of the country of the Specified Currency,
or (ii) if the Note is denominated in European Currency Units, in
Brussels, are not required or authorized to be closed.
Communication of Sale
Information to the
Company by Selling
Agent: For each offer accepted by the
Company, the Selling Agent or Purchasing Agent, as the case may be, will
provide (unless provided by the purchaser directly to the Company) to a
Designated Person by facsimile transmission or other acceptable means
the following information (the "Sale Information"):
(1) If a Certificated Note, exact
name of the registered owner,
(2) If a Certificated Note, exact
address of the registered owner,
(3) If a Certificated Note,
taxpayer identification number of the registered owner (if available),
(4) If a Book-Entry Note, the DTC
Participant Number of the institution through which the customer will
hold the beneficial interest in the Global Note,
(5) Principal amount of the Note,
(6) Date of Note,
(7) If a Fixed Rate Note, the
interest rate,
(8) Settlement Date,
(9) Maturity date,
(10) Currency or currency unit in
which the Note is to be denominated and, if other than U.S. dollars, the
applicable Exchange Rate for such currency or currency unit,
(11) Indexed Currency, the Base
Rate and the Exchange Rate Determination Date, if applicable,
(12) Issue Price,
(13) Selling Agent's commission or
Purchasing Agent's discount, as the case may be (to be paid upon
settlement as a discount from gross proceeds of sale except as provided
below under "Delivery of Notes and Cash Payment"),
(14) Net proceeds to the Company,
(15) If a redeemable Note with a
Redemption Commencement Date, such of the following as are applicable:
(i) Redemption
Commencement Date,
(ii) Initial Redemption
Price (% of par), and
(iii) Amount (%
of par) that the Redemption Price shall decline (but not below par) on
each anniversary of the Redemption Commencement Date,
(16) If a redeemable or repayable
Note with a Redemption Date or Redemption Dates, such of the following
as are applicable:
(i) the Redemption Date
or Redemption Dates,
(ii) whether the Note is
redeemable or repayable at the option of the Company or the Holder or
both,
(iii) the
Redemption Price (% of par) on each Redemption Date,
(iv) the notice period
during which the option to redeem may be exercised, and
(v) the method by which
notice of redemption is to be given,
(17) If a Floating Rate Note, such
of the following as are applicable:
(i) Interest Rate Basis,
(ii) Index Maturity,
(iii) Spread,
(iv) Spread Multiplier,
(v) Maximum Rate,
(vi) Minimum Rate,
(vii) Initial
Interest Determination Date,
(viii) Interest
Reset Dates,
(ix) Calculation Dates,
(x) Interest
Determination Dates, and
(xi) Calculation Agent,
(18) Interest Payment Dates,
(19) Regular Record Dates,
(20) Denomination of certificates
to be delivered at settlement, and
(21) That the Note is a
Certificated Note (if applicable),
(22) To the extent known to the
Agent, any information not otherwise expressly set forth in the
Prospectus
Supplement which is required pursuant to Item 501(c)(7) or 508 of
Regulation S-K promulgated by the Commission, including, but not limited
to, the initial public offering price of the Notes, if other than 100%
of the principal amount, and
(23) If an Agent purchases Notes
as a principal, the extent, if any, to which the items specified in
Sections 8(c), 8(d) and 8(h) of the Distribution Agreement are required
to be furnished as of the Time of Delivery.
In addition, the Selling Agent will
use its reasonable efforts to provide in writing the following
information to the Company and the Trustee:
(24) One of the following:
a. In the case of a
foreign registered owner (other than a Financial Institution (as defined
below)), an IRS Form W-8 that has been duly and properly signed by the
registered owner.
b. In the case of a
registered owner which is a Financial Institution, a statement from the
Financial
Institution signed under penalties of perjury stating that the Financial
Institution has received from the beneficial owner an IRS Form W-8 that
has been duly and properly signed by the registered owner together with
a copy of such Form W-8.
c. In the case of a
registered owner who is a United States person, an IRS Form W-9 that has
been duly and properly signed by the registered owner.
A "Financial
Institution" is a securities clearing organization, a bank, or another
financial
institution that holds customers' securities in the ordinary course of
its trade or business which holds a Note for a beneficial owner who is a
foreign person.
After receiving the Sale Information
the Company will, after recording the Sale Information and any necessary
calculations, provide appropriate documentation to the Trustee necessary
for the preparation, authentication and delivery of such Note.
Change in Interest
Rate, Maturity or
Currency Denomination: The Company and the Agents
will discuss from time to time the rates of interest per annum to be
borne by, and the maturity and currency denomination of, Notes that may
be sold as a result of the solicitation of offers by the Agents.
Suspension of
Solicitation;
Amendment or
Supplement: The Company may instruct the Agents to
suspend solicitation of offers to purchase Notes at any time, whereupon
the Agents will as promptly as possible (but in any event not later than
one business day after receipt of such instruction) suspend solicitation
until such time as the Company has advised the Agents that solicitation
of offers to purchase Notes may be resumed. If the Company proposes to
amend or supplement the Registration Statement or the Prospectus
relating to the Notes (except in the case of a Pricing Supplement), it
will promptly advise the Agents and will furnish to the Agents such
proposed amendment or supplement and, after the Agents have been
afforded a reasonable opportunity to review such amendment or
supplement, will cause such amendment or supplement to be filed with the
Commission. The Company will promptly provide the Agents with copies of
any such amendment or supplement and confirm to the Agents that such
amendment or supplement has been filed with the Commission.
In the event that at the time the
Agents suspend solicitation of offers to purchase Notes there shall be
any outstanding offers to purchase Notes that have been accepted by the
Company but for which settlement has not occurred, the Company,
consistent with its obligations under the Distribution Agreement,
promptly will advise the Agents whether such sales may be settled and
whether copies of the Prospectus as supplemented at the time of the
suspension may be
delivered in connection with the settlement of such sales. The Company
will have the sole responsibility for such decision and for any
arrangements which may be made in the event that the Company determines
that such sales may not be settled or that copies of such Prospectus may
not be so delivered.
Authenticity of
Signatures: The Trustee will furnish the Agents
from time to time with the specimen signatures of each of the Trustee's
officers, employees or agents who have been authorized by the Trustee to
authenticate Notes, but the Agents will have no obligation or liability
to the Company or the Trustee in respect of the authenticity of the
signature of any officer, employee or agent of the Company or the
Trustee on any Note.
Advertising Cost: The Company will determine with the
Agents the amount of advertising that may be appropriate in the
solicitation of offers to purchase the Notes. Advertising expenses will
be paid by the Company.
II. Book-Entry Procedures
In connection with the qualification of Book-Entry Notes for
eligibility in the book-entry system maintained by DTC, the Trustee will
perform the custodial, document control and administrative functions
described below, in accordance with its obligations under a Letter of
Representations from the Company and the Trustee to DTC, dated June 15,
1995, and a Medium-Term Note Certificate Agreement, dated March 10, 1989
between the Trustee and DTC (the "Certificate Agreement"), and the
Trustee's obligations as a participant in DTC including DTC's Same-Day
Funds Settlement System ("SDFS").
Issuance: All Fixed Rate Notes which have the
same original issue date, redemption or repayment provisions, Interest
Payment Dates, Regular Record Dates, interest rate, Specified Currency
and maturity date (collectively, the "Fixed Rate Terms") will be
represented
initially by a single Global Note in fully registered form without
coupons.
All Floating Rate Notes which have the
same original issue date, redemption or repayment provisions, Interest
Payment Dates, Regular Record Dates, Interest Rate Basis, Interest
Determination Dates, Interest Reset Dates, Calculation Dates, Index
Maturity, Spread or Spread Multiplier, if any, Minimum Rate, if any,
Maximum Rate, if any, Specified Currency and maturity date
(collectively, the "Floating Rate Terms") will be represented initially
be a single Global Note in fully registered form without coupons.
Identification: The Company has received from the
CUSIP Service Bureau of Standard & Poor's Corporation (the "CUSIP
Service Bureau") a series of approximately 900 CUSIP numbers for future
assignment to Global Notes, and the Company has delivered to the Trustee
and DTC such list of such CUSIP numbers. The Trustee will assign CUSIP
numbers to Global Notes as described below. DTC will notify the CUSIP
Service Bureau periodically of the CUSIP numbers that have been assigned
to Global Notes. The Trustee will notify the Company at any time when
fewer than 100 of the reserved CUSIP numbers remain unassigned to Global
Notes, and, if it deems necessary, the Company will reserve additional
CUSIP numbers for assignment to Global Notes. Upon obtaining such
additional CUSIP numbers, the Company will deliver a list of such
additional numbers to the Trustee and DTC.
Registration: Each Global Note will be registered in
the name of Cede & Co., as nominee for DTC, on the Security Register
maintained under the Indenture. The beneficial owner of a Book-Entry
Note (or one or more indirect participants in DTC designated by such
owner) will designate one or more participants in DTC (the
"Participants") to act as agent or agents for such owner in connection
with the book-entry system maintained by DTC, and DTC will record in
book-entry form, in accordance with instructions provided by such
Participants, a credit balance with respect to such Book-Entry Note in
the account of such Participants. The ownership interest of such
beneficial owner in such Book-Entry Note will be recorded through the
records of such Participants or through the separate records of such
Participants and one or more indirect
participants in DTC.
Transfers: Transfers of a Book-Entry Note will be
accomplished by book entries made by DTC and, in turn, by Participants
(and in certain cases, one or more indirect participants in DTC) acting
on behalf of beneficial transferors and transferees of such Book-Entry
Note.
Exchanges: The Trustee, at the Company's request,
may deliver to DTC and the CUSIP Service Bureau at any time a written
notice of consolidation specifying (a) the CUSIP numbers of two or more
outstanding Global Notes having the same Fixed Rate Terms or Floating
Rate Terms, as the case may be (except that original issue dates need
not be the same), and for which interest has been paid to the same date;
(b) a date, occurring at least 30 days after such written notice is
delivered and at least 30 days before the next Interest Payment Date for
the related Book-Entry Notes, on which such Global Notes shall be
exchanged for a single replacement Global Note; and (c) a new CUSIP
number to be assigned to such replacement Global Note. Upon receipt of
such a notice, DTC will send to its participants (including the Trustee)
a written reorganization notice to the effect that such exchange will
occur on such date.
Prior to the specified exchange date,
the Trustee will deliver to the CUSIP Service Bureau written notice
setting forth such exchange date and the new CUSIP number and stating
that, as of such exchange date, the CUSIP numbers of the Global Notes to
be exchanged will no longer be valid.
On the specified exchange date, the
Trustee will exchange such Global Notes for a single Global Note bearing
the new CUSIP number. The CUSIP numbers of the exchanged Global Notes
will, in accordance with CUSIP Service Bureau procedures, be cancelled
and not immediately reassigned.
Notwithstanding the foregoing, if the
Global Notes to be exchanged exceed $150,000,000 in aggregate principal
amount, one replacement Global Note will be authenticated and issued to
represent each $150,000,000 of principal amount of the exchanged Global
Notes and an additional Global Note will be authenticated and issued to
represent any remaining principal amount of such Global Notes, subject
to the minimum denomination restrictions described in General Procedures
-Denominations (see "Denominations" below).
Denominations: Global Notes representing Book-Entry
Notes will be denominated in principal amounts not in excess of
$150,000,000. If one or more Book-Entry Notes having an aggregate
principal amount in excess of $150,000,000 would, but for the preceding
sentence, be represented by a single Global Note, then one Global Note
will be issued to represent each $150,000,000 principal amount of such
Book-Entry Note or Book-Entry Notes and an additional Global Note will
be issued to represent any remaining principal amount of such Book-Entry
Note or Book-Entry Notes, subject to the minimum denomination
restrictions described in General Procedures - Denominations. In such a
case, each of the Global Notes representing such Book-Entry Note or
Notes shall be assigned the same CUSIP number.
Interest: DTC will arrange for each pending
deposit message described under Settlement Procedure B below to be
transmitted to Standard & Poor's Corporation, which will use the message
to include certain terms of the related Global Note in the appropriate
daily bond report published by Standard & Poor's Corporation.
Payments of Principal,
Premium, if any,
and Interest: Payments of Interest Only. Promptly
after each Regular Record Date (or as soon thereafter as such
information is determined), the Trustee will deliver to the Company and
DTC a written notice specifying by CUSIP number the amount of interest
to be paid on each Global Note on the following Interest Payment Date
(other than an Interest Payment Date coinciding with the Maturity) and
the total of such amounts. DTC will confirm the amount payable on each
Global Note on such Interest Payment Date by reference to the daily bond
reports published by Standard & Poor's Corporation. On such Interest
Payment Date, the Company will pay to the Trustee, and the Trustee in
turn will pay to DTC, such total amount of interest due (other than at
Maturity), at the times and in the manner set forth below under "Manner
of
Payment."
Payments at Maturity. On or about the
first Business Day of each month (or as soon thereafter as such
information is determined), the Trustee will deliver to the Company and
DTC a written list of principal, premium, if any, and interest to be
paid on each Global Note maturing or subject to redemption or repayment
in the following month. The Trustee, the Company and DTC will confirm
the amounts of such principal, premium (if any) and interest payments
with respect to each such Global Note on or about the fifth Business Day
preceding the maturity date of such Global Note. At such maturity date,
the Company will pay to the Trustee, and the Trustee in turn will pay to
DTC, the principal of and premium, if any, on such Global Note, together
with interest due at such maturity date, at the times and in the manner
set forth below under "Manner of Payment." Promptly after payment to
DTC of the principal, premium, if any, and interest due at maturity of
all Book-Entry Notes represented by a particular Global Note, the
Trustee will cancel such Global Note, make appropriate entries in its
records and dispose of such Global Note as provided in the Indenture.
Manner of Payment. The total amount
of any principal, premium and interest due on Global Notes on any
Interest Payment Date or at maturity shall be paid by the Company to the
Trustee in funds immediately available for use by the Trustee as of
noon, New York City time, on such date. The Company will make such
payment on such Global Notes by wire transfer to the Trustee or by
instructing the Trustee to withdraw funds from an account maintained by
the Company at the Trustee. The Company will confirm any such
instructions in writing to the Trustee. For maturity, redemption and
other principal payments, prior to 1:00 p.m., New York City time, on
each such date or as soon as possible thereafter following receipt of
such funds from the Company, the Trustee will pay by separate wire
transfer (using Fedwire message entry instructions in a form previously
specified by DTC) to an account at the Federal Reserve Bank of New York
previously specified by DTC, in funds available for immediate use by
DTC, each payment of interest, principal and premium, if any, due on
Global Notes on such date; and for interest payments, the Trustee will
pay DTC in same day funds on the Interest Payment Date in accordance
with existing arrangements between the Trustee and DTC. Thereafter on
each such date, DTC will pay, in accordance with its SDFS operating
procedures then in effect, such amounts in funds available for immediate
use to the respective
Participants with payments in amounts proportionate to their respective
holdings in principal amount of beneficial interest in such Global Note
as are recorded in the book-entry system maintained by DTC. Once
payment has been made to DTC, neither the Company nor the Trustee shall
have any responsibility or liability for the payment by DTC of the
principal of, or premium, if any, or interest on, the Book-Entry Notes
to such Participants.
Withholding Taxes. The amount of any
taxes required under applicable law to be withheld from any interest
payment on a Book-Entry Note will be determined and withheld by the
Participant, indirect participant in DTC or other Person responsible for
forwarding payments and materials directly to the beneficial owner of
such Book-Entry Note, or as applicable law may otherwise require.
Settlement Procedures: Settlement Procedures with regard
to each Book-Entry Note sold by each Agent will be as follows:
A. Upon receiving the Sale
Information, the Company will, as soon as practicable, advise the
Trustee by facsimile transmission of the Sale Information and the name
of such Agent.
B. The Trustee will assign a
CUSIP number to the Global Note representing such Book-Entry Note and
will communicate to DTC and the Agent through DTC's Participant Terminal
System, a pending deposit message specifying such of the following
Settlement information as applicable:
1. The following
information:
(a) Principal
amount of the purchase.
(b) In the
case of a Fixed Rate Note, the interest rate, or, in the case of a
Floating Rate Note, the initial interest rate, the Interest Reset Dates,
the Interest Payment Dates, the Interest Rate Basis, Index Maturity,
Spread or Spread
Multiplier, if any, and the Minimum Rate and Maximum Rate, if any.
(c) Settlement
date.
(d) Maturity
date.
(e) Price.
(f) DTC
Participant Number of the institution through which the customer will
hold the beneficial interest in the Global Note.
2. The numbers of the
participant accounts maintained by DTC on behalf of the Trustee and the
Agent.
3. Identification as a
Fixed Rate Note or a Floating Rate Note.
4. The initial Interest
Payment Date for such Note, number of days by which such date succeeds
the related DTC record date (which term means the Regular Record Date,
or in the case of Floating Rate Notes which reset weekly, the date five
calendar days immediately preceding the applicable Interest Payment
Date) and, for Fixed Rate Notes, the amount of interest payable on such
Interest Payment Date per $1,000 principal amount of Note.
5. The frequency of
interest payments.
6. The frequency of
interest rate resets.
7. The CUSIP number of
the Global Note representing such Book-Entry Notes.
8. Whether such Global
Note represents any other Book-Entry Notes issued or to be issued.
The Trustee will also orally
notify the Agent of the CUSIP number assigned to the Global Note.
C. The Trustee will prepare a
Global Note representing such Book-Entry Note in a form that has been
approved by the Company.
D. The Trustee will authenticate
the Global Note representing such Book-Entry Note and maintain
possession of such Global Note.
E. DTC will credit such Book-
Entry Note to the participant account of the Trustee maintained by DTC.
F. The Trustee will enter an
SDFS deliver order through DTC's Participant Terminal System instructing
DTC to (i) debit such Book-Entry Note to the Trustee's participant
account and credit such Book-Entry Note to the participant account of
the Agent maintained by DTC and (ii) debit the settlement account of the
Agent and credit the settlement account of the Trustee maintained by
DTC, in an amount equal to the price of such Book-Entry Note less the
Agent's commission. The entry of such a deliver order shall be deemed
to constitute a
representation and warranty by the Trustee to DTC that (a) the Global
Note representing such Book-Entry Note has been issued and authenticated
and (b) the Trustee is holding such Global Note pursuant to the
Certificate Agreement.
G. The Agent will enter an SDFS
deliver order through DTC's Participant Terminal System instructing DTC
to (i) debit such Book-Entry Note to the Agent's participant account and
credit such Book-Entry Note to the participant accounts of the
Participants to whom such Book-Entry Note is to be credited maintained
by DTC and (ii) debit the settlement accounts of such Participants and
credit the settlement account of the Agent maintained by DTC, in an
amount equal to the initial public offering price of the Book-Entry Note
so credited to their accounts.
H. Transfers of funds in
accordance with SDFS deliver orders described in Settlement Procedures F
and G will be settled in accordance with SDFS operating procedures in
effect on the Settlement Date.
I. The Trustee will credit to an
account of the Company maintained at The Chase Manhattan Bank, N.A.
funds available for immediate use in an amount equal to the amount
credited to the Trustee's DTC settlement account in accordance with
Settlement Procedure F.
J. The Agent will confirm the
purchase of each Book-Entry Note to the purchaser thereof either by
transmitting to the Participant to whose account such Note has been
credited a confirmation order through DTC's Participant Terminal System
or by mailing a written confirmation to such purchaser. In all cases
the Prospectus as most recently amended or supplemented (including the
applicable Pricing Supplement) must accompany or precede such
confirmation.
Settlement Procedures
Timetable: For offers accepted by the Company,
Settlement Procedures A through J shall occur no later than the
respective times (New York City time) listed below:
Settlement
Procedure
Time
A 11:00 a.m.
on the second Business Day following the
date of acceptance.
B 2:00 p.m.
on the second Business Day following the
date of acceptance.
C 5:00 p.m.
on the Business Day before the Settlement
Date.
D 9:00 a.m.
on the Settlement Date.
E
10:00 a.m. on the Settlement Date.
F-G 2:00 p.m.
on the Settlement Date.
H 4:45 p.m.
on the Settlement Date.
I-J 5:00 p.m.
on the Settlement Date.
NOTE: If a sale is to be
settled in less than four Business Days after the date of acceptance,
Settlement
Procedures A and B shall be completed as soon as practicable but no
later than 11:00 a.m., and 2:00 p.m., respectively, on the Business Day
before Settlement Date. If the Initial Interest Rate for a Floating
Rate Book-Entry Note has not been determined at the time that Settlement
Procedure A is completed, Settlement Procedures B and C shall be
completed as soon as such rate has been determined.
Settlement Procedure H is subject to
extension in accordance with any extension of Fedwire closing deadlines
and in the other events specified in the SDFS operating procedures in
effect on the Settlement Date.
If Settlement of a Book-Entry Note is
rescheduled or cancelled, the Trustee will deliver to DTC, through DTC's
Participant Terminal System, a cancellation message to such effect by no
later than 2:00 p.m., New York City time, on the Business Day
immediately preceding the scheduled Settlement Date.
Failures: If the Trustee has not entered an
SDFS deliver order with respect to a Book-Entry Note pursuant to
Settlement Procedure F (which may be evidenced by facsimile
transmission), the Trustee, at the Company's direction, shall deliver to
DTC, through DTC's Participant Terminal System, as soon as practicable,
but no later than 2:00 p.m. on any business day, a withdrawal message
instructing DTC to debit such Book-Entry Note to the participant account
of the Trustee maintained at DTC. DTC will process the withdrawal
message, provided that such participant account contains a principal
amount of the Global Note representing such Book-Entry Note that is at
least equal to the
principal amount of such Book-Entry Note to be debited. If withdrawal
messages are processed with respect to all the Book-Entry Notes issued
or to be issued represented by a Global Note, the Trustee will void such
Global Note, make appropriate entries in its records and, unless
otherwise directed by the Company, destroy the Certificate. The CUSIP
number assigned to such Global Note shall, in accordance with CUSIP
Service Bureau procedures, be cancelled and not immediately reassigned.
If withdrawal messages are processed with respect to a portion of the
Book-Entry Notes represented by a Global Note, the Trustee will exchange
such Global Note for two Global Notes, one of which shall represent such
Book-Entry Notes (which shall be cancelled immediately after issuance),
and the other of which shall represent the remaining Book-Entry Notes
previously represented by the surrendered Global Note and shall bear the
CUSIP number of the surrendered Global Note. If the purchase price for
any Book-Entry Note is not timely paid to the Participants with respect
to such Note by the beneficial purchaser (other than a Purchasing Agent)
thereof (or a person, including an indirect participant in DTC, acting
on behalf of such purchaser), such Participants and, in turn, the
related Agent may enter SDFS deliver orders through DTC's Participant
Terminal System debiting such Note free to such Agent's Participant
Account and crediting such Note free to the Participant Account of the
Trustee and shall notify the Trustee and the Company thereof.
Thereafter, the Trustee, (i) will immediately notify the Company, once
the Trustee has confirmed that such Note has been credited to its
Participant Account, and the Company shall transfer by Fedwire
(immediately available funds) to such Agent an amount equal to the price
of such Note which was previously sent by wire transfer to the account
of the Company maintained at The Chase Manhattan Bank, N.A. in
accordance with settlement procedure I, and (ii) the Trustee will
deliver the withdrawal message and take the related actions described in
the preceding sentences of this paragraph. Such debits and credits will
be made on the Settlement Date, if possible, and in any event not later
than 5:00 p.m. on the following Business Day. If such failure shall
have occurred for any reason other than default by the Agent in the
performance of its obligations hereunder or under the Distribution
Agreement, the Company will reimburse the Agent on an equitable basis
for its loss of the use of funds during the period when they were
credited to the account of the Company. In addition, if such failure
shall have occurred by reason of a default by the Company in the
performance of its obligations under the Distribution Agreement, the
Company will pay the Selling Agent any commission to which it would have
been entitled in connection with such sale.
Notwithstanding the foregoing, upon
any failure to settle with respect to a Book-Entry Note, DTC may take
any actions in accordance with its SDFS operating procedures then in
effect. In the event of a failure to settle with respect to a Book-
Entry Note that was to have been represented by a Global Note also
representing other Book-Entry Notes, the Trustee will provide, in
accordance with Settlement Procedures C and D, for the authentication
and issuance of a Global Note representing such other Book-Entry Notes
and will make appropriate entries in its records.
Trustee Not to Risk
Funds: Nothing herein shall be deemed to
require the Trustee to risk or expend its own funds in connection with
any payment to the Company, or the Agents or DTC, it being understood by
all parties that payments made by the Trustee to either the Company, DTC
or the Agents shall be made only to the extent that funds are provided
to the Trustee for such purpose.
III. Certificated Notes procedures
Payment at
Maturity: As specified in the Indenture and the
Form of Note.
Settlement: Prior to 3:00 p.m., New York City
time, on the Business Day prior to the Settlement Date, the Company will
instruct the Trustee or its agent by facsimile transmission or other
acceptable written means to authenticate and deliver the Certificated
Notes no later than 2:15 p.m., New York City time, on the Settlement
Date.
If the Settlement Date is the same day
as the date of acceptance, then prior to 11:00 a.m., New York City time,
on the Settlement Date the Company will instruct the Trustee or its
agent by facsimile transmission or other acceptable written means to
authenticate and deliver the Certificated Notes no later than 2:15 p.m.,
New York time, on the Settlement Date. Certificated Notes denominated
in a currency or currency unit other than U.S. dollars shall have a
Settlement Date not less than two Business Days after the acceptance of
the offer by the Company.
Delivery of
Notes
and Cash
Payment: Upon receipt of appropriate
documentation and instructions, the Company will cause the Trustee to
prepare and
authenticate each Note and appropriate receipts.
Each Certificated Note shall be
authenticated and dated on the Settlement Date therefor. The Trustee
will deliver each authenticated Certificated Note to the Selling Agent
for the benefit of the purchaser in accordance with written instructions
(or oral
instructions confirmed in writing (which may be given by telex or
telecopy) on the next business day) from the Company. Delivery by the
Trustee of each Certificated Note will be made against a receipt
therefor.
Upon verification by the Selling Agent
that a Certificated Note has been prepared and properly authenticated
and delivered by the Trustee and registered in the name of the purchaser
in the proper principal amount and other terms in accordance with the
Sale Information, payment will be made to the Company's account at The
Chase Manhattan Bank, N.A. on behalf of the Company by the Selling Agent
on behalf of the purchaser the same day as the Selling Agent's receipt
of such Certificated Note in immediately available funds. If either (i)
the Certificated Note is denominated in U.S. dollars or (ii) the
Certificated Note is denominated in a currency or currency unit other
than U.S. dollars and, at or prior to the Settlement Date, the Company
and the Selling Agent have entered into, or the Selling Agent has
arranged for the Company to enter into, a contract with respect to the
sale of the Specified Currency, the amount payable by the Selling Agent
pursuant to the preceding sentence shall be the issue price of the
Certificated Note (or the U.S. dollar equivalent pursuant to such
contract) less the Selling Agent's commission determined in accordance
with Section 2(a) of the Distribution Agreement. In all other cases,
the Selling Agent's commission shall not be discounted from the gross
proceeds but shall be paid separately by the Company in U.S. dollars in
immediately available funds on the Settlement Date. The payment by the
Selling Agent shall be made only upon prior receipt by such Agent of
immediately available funds from or on behalf of the purchaser in the
Specified Currency unless such Agent decides, at its option, to advance
its own funds for such payment against subsequent receipt of funds from
the purchaser.
Upon delivery of a Certificated Note
to the Selling Agent and the verification provided in the preceding
paragraph, the Selling Agent shall promptly deliver such Certificated
Note to the purchaser or its agent.
Failures: In the event that a purchaser
(other than a Purchasing Agent) shall fail to accept delivery of and
make payment for any Certificated Note, the Selling Agent will forthwith
notify the Trustee and the Company's Vice President, Finance by
telephone or by facsimile transmission. If the Certificated Note has
been delivered to the Selling Agent on behalf of the purchaser, the
Selling Agent will immediately return the Certificated Note to the
Trustee. If funds have been advanced by the Selling Agent for the
purchase of such Note, The Chase Manhattan Bank, N.A. will, upon
instruction by the Company and upon receipt of the Certificated Note,
debit the account of the Company in an amount equal to the amount
previously credited thereto in respect of the Note and will either
credit the account of or return such funds to the Selling Agent. Such
debits and credits or returns will be made on the Settlement Date if
possible and, in any event, not later than the business day following
the Settlement Date. If such failure shall have occurred for any reason
other than default by the Selling Agent in the performance of its
obligations under the Distribution Agreement, the Company will reimburse
the Selling Agent on an equitable basis for its loss of the use of the
funds during the period when they were credited to the account of the
Company. In addition, if such failure shall have occurred by reason of
a default by the Company in the performance of its obligations under the
Distribution Agreement, the Company will pay the Selling Agent any
commission to which it would have been entitled in connection with such
sale.
Immediately upon receipt of the
certificate representing the Note in respect of which the failure
occurred, the Trustee will void such Certificated Note, make appropriate
entries in its records and, unless otherwise instructed by the Company,
destroy the certificate.
ANNEX III
Pursuant to Section 8(d) of the Distribution Agreement, the
Company's and Sears independent certified public accountants shall
furnish letters to the effect that:
(i) They are independent certified public accountants with
respect to the Company and Sears and its consolidated subsidiaries
within the meaning of the Act and the applicable published rules and
regulations of the Commission thereunder and the answer to Item 10 of
the Registration Statement is correct insofar as it relates to them;
(ii) In their opinion, the financial statements and
schedules and the additional financial information examined by them and
included or incorporated by reference in the Registration Statement or
the Prospectus comply as to form in all material respects with the
applicable accounting requirements of the Act or the Exchange Act, as
applicable, and the published rules and regulations thereunder;
(iii) On the basis of limited procedures, not constituting
an examination in accordance with generally accepted auditing standards,
including a reading of the unaudited financial statements and schedules
and other information referred to below, a reading of the latest
available interim financial statements of the Company and Sears and
certain of its subsidiaries, inspection of the minute books of the
Company and Sears and certain of its subsidiaries since the date of the
latest audited financial statements included or incorporated by
reference in the Prospectus, inquiries of officials of the Company and
Sears and its subsidiaries responsible for financial and accounting
matters and such other inquiries and procedures as may be specified in
such letter, nothing came to their attention that caused them to believe
that:
(A) the unaudited consolidated statements of income,
consolidated statements of financial position and consolidated
statements of changes in financial position of the Company and of Sears
and its consolidated subsidiaries included or incorporated by reference
in the Prospectus do not comply as to form in all material respects with
the applicable accounting requirements of the Exchange Act and the
published rules and regulations thereunder; or
(B) as of a specified date not more than five business days
prior to the date of delivery of such letter, there have been any
changes in the capital stock accounts, long-term debt, short-term debt,
or any decreases in net assets or other items specified by the Agents,
in each case as compared with amounts shown or included in the latest
statement of financial position of the Company included or incorporated
by reference in the Prospectus, except in each case for changes,
increases or decreases which the Prospectus discloses have occurred or
may occur or which are described in such letter; and
(iv) In addition to the examination referred to in their
report(s) included or incorporated by reference in the Prospectus and
the limited procedures, inspection of minute books, inquiries and other
procedures referred to in clause (iii) above, they have carried out
certain specified procedures, not constituting an audit, with respect to
certain amounts, percentages and financial information specified by the
Agents which are derived from the general accounting records of the
Company and Sears and its subsidiaries, which appear in the Prospectus
(excluding documents incorporated by reference), or in Part II of, or in
exhibits and schedules to, the Registration Statement specified by the
Agents or in documents incorporated by reference in the Prospectus
specified by the Agents, and have compared certain of such amounts,
percentages and financial information with the accounting records of the
Company and Sears and its subsidiaries and have found them to be in
agreement.
All references in this Annex III to the Prospectus shall be
deemed to refer to the Prospectus as amended or supplemented (including
the documents incorporated by reference therein) as of the Closing Date
referred to in Section 8(d) thereof and to the Prospectus as amended or
supplemented (including the documents incorporated by reference therein)
as of the date of the amendment, supplement, incorporation or the Time
of Delivery relating to the Terms Agreement requiring the delivery of
such letter under Section 8(d) thereof.