Exhibit 1.3
Sears ▇▇▇▇▇▇▇ Acceptance Corp.
$1,750,000,000 Medium-Term Notes Series IV
DISTRIBUTION AGREEMENT
June 13, 1997
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. $1,750,000,000 (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, 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. 333-9817) in respect of U.S. $4,000,000,000 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.
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; provided,
however, that The Company makes no representation as to whether,
with respect to any Notes denominated in a currency other than
United States dollars, a court located in the United States would
grant a judgment relating to the Notes in other than United
States dollars, nor as to the date which any such court would
utilize for determining the rate of convesion into United States
dollars in
granting such judgment;
(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 Notes in 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 1,000
units of such currency or currency unit), and any larger amount
in an
integral multiple of 1,000 units of such currency or currency
unit. 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 ▇▇▇▇▇▇ &
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, 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 giving 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 in all material respects 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 (i) the
condition that all representations and warranties and other
statements of the Company or Sears herein are true and correct in
all material respects 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, (ii) the
condition that each of the Company and Sears shall have performed
all of its obligations hereunder theretofore to be performed, and
(iii) 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,
and, if so specified in any Terms Agreement, the applicable 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
judgment 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) All of the outstanding shares of capital
stock of SRAC have been duly and validly issued and are fully
paid and non-assessable. 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 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
securities laws of the various states or other jurisdictions
which are applicable to the issue and sale of the Notes, as to
which such counsel need express no opinion; 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 has been obtained or effected under the Act, the
Exchange Act and the Trust Indenture Act or as may be required by
the 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, binding and enforceable 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, binding and enforceable 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 dated May 15, 1995 and the Extension Agreement dated
August 22, 1996, each between the Company and Sears, have been
duly authorized, executed and delivered by the parties thereto
and are valid and binding instrument 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;
(viii) Such counsel does not know of any
pending legal or governmental proceedings required to be
described in the Prospectus as amended or supplemented (including
documents
incorporated by reference therein) 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 were filed with the
Commission, complied as to form in all material respects with the
requirements of the
Exchange Act 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 were so filed. contained 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, and, if so specified in any
Terms Agreement, the applicable 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; provided,
however, that this Section 8(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, none of (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 or limited or
minimum prices shall have been
established by such Exchange, or (iv) in the case of Notes
denominated in other than United States dollars, any change shall
have occured involving such 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, and,
if so specified in any Terms Agreement, the applicable 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/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
President
SEARS, ▇▇▇▇▇▇▇ AND CO.
By: /S/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Vice President and Treasurer
Agents Designated Hereby:
Accepted in New York, New York, as of the date set forth on the
first page of the Distribution Agreement:
▇▇▇▇▇▇▇, SACHS & CO.
Address: ▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attn:
Registration Department
Facsimile Transmission No.: (▇▇▇) ▇▇▇-▇▇▇▇
/S/ ▇▇▇▇▇▇▇, ▇▇▇▇▇ & CO.
▇▇▇▇▇▇▇ LYNCH, PIERCE, ▇▇▇▇▇▇ & ▇▇▇▇▇ INCORPORATED
Address: ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ Floor, World Financial Center,
▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇,
Attn: MTN Product Management
Facsimile Transaction No.: (▇▇▇) ▇▇▇-▇▇▇▇
By: /S/ ▇▇▇▇▇ PROMROSE
Authorized Signatory
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & CO. INCORPORATED
Address: ▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attn: Managing
Director, Short and Medium-Term Note Department
Facsimile Transmission No.: (▇▇▇) ▇▇▇-▇▇▇▇
Copy to: ▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attn:
Investment Banking Information Center
Facsimile Transmission No.: (▇▇▇) ▇▇▇-▇▇▇▇
By: /S/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
SALOMON BROTHERS INC
Address: Seven ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇
▇▇▇▇ ▇▇▇▇▇, Attn: Medium-Term Note Department
Facsimile Transmission No.: (▇▇▇) ▇▇▇-▇▇▇▇
By: /S/ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
ANNEX I
Sears ▇▇▇▇▇▇▇ Acceptance Corp.
$ Medium-Term Notes Series __
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 IV]
[ % 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, 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 $1,750,000,000 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 13, 1997 (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, 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 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 in integral mutliples of 1,000 units.
Interest Payments: As specified in the Indenture and the
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 which is not a legal holiday for
banking institutions in any of the City of New York, New York,
the City of Chicago, Illinois or the City of Wilmington,
Delaware or the city in which the principal corporate trust
office of the Trustee is located or (i) if the Note is
denominated in a currency other than U.S. dollars, in the
principal financial center of the country of the Specified
Currency, or (ii) if the Note is denominated in European Currency
Units, in Brussels.
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) Trade 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 Stated
Redemption Date or Stated Redemption Dates, such of the following
as are applicable:
(i) the Stated Redemption Date or Stated
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
Stated 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 13, 1997, 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 (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 $200,000,000 in aggregate principal
amount, one replacement Global Note will be authenticated and
issued to
represent each $200,000,000 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
$200,000,000. If one or more Book-Entry Notes having an
aggregate principal
amount in excess of $200,000,000 would, but for the preceding
sentence, be represented by a single Global Note, then one Global
Note will be issued to represent each $200,000,000 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, 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.
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. 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
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 Business Day
following the date of acceptance.
B 2:00 p.m. on the 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.
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 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 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 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 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.