CONFORMED COPY
Sears Roebuck Acceptance Corp.
$1,500,000,000 Medium-Term Notes Series II
DISTRIBUTION AGREEMENT
March 28, 1996
Sears Roebuck 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. $1,500,000,000 (the equivalent in foreign
currency or currency units), and agrees with each person serving as
an agent pursuant to this Agreement (individually, an "Agent", and
collectively, the "Agents") as set forth herein. Subject to the
terms and conditions stated herein, the Company hereby (i) appoints
each Agent as an agent of the Company for the purpose of soliciting
and receiving offers to purchase Notes from the Company and (ii)
agrees that whenever it determines to sell Notes directly to any
Agent as principal, it will enter into a separate agreement (each a
"Terms Agreement"), substantially in the form of Annex I hereto,
relating to such sale in accordance with Section 2(b) hereof
(unless the Company and such Agent shall otherwise agree).
The Notes will be issued under an indenture, dated as of May
15, 1995 (the "Indenture"), between the Company and The Chase
Manhattan Bank, N.A., as Trustee (the "Trustee"). The Notes shall
have the currency denomination, maturities, annual interest rates
(whether fixed or floating), redemption provisions and other terms
set forth in the Prospectus referred to below as it may be amended
or supplemented from time to time. The Notes will be issued, and
the terms and rights thereof established, from time to time by the
Company in accordance with the Indenture and the Administrative
Procedure attached hereto as Annex II as it may be amended from
time to time by written agreement between the Agents and the
Company (the "Procedure") and, if applicable, will be specified in
a related Terms Agreement.
1. Each of the Company and Sears, Roebuck and Co. ("Sears")
represents and warrants to, and agrees with, each Agent that:
(a) A registration statement on Form S-3 (Registration
No. 33-64215) in respect of U.S. $2,000,000,000 aggregate principal
amount (or the equivalent in foreign currency or currency units) of
debt securities of the Company, including the Notes, has been filed
with the Securities and Exchange Commission (the "Commission") in
the form heretofore delivered to such Agent, excluding exhibits
(whether or not incorporated by reference) to such registration
statement but including all documents incorporated by reference in
the prospectus included therein, and such registration statement in
such form has been declared effective by the Commission and no stop
order suspending the effectiveness of such registration statement
has been issued and no proceeding for that purpose has been
initiated or threatened by the Commission (any preliminary
prospectus included in such registration statement being
hereinafter called a "Preliminary Prospectus;" the various parts of
such registration statement, including all exhibits thereto but
excluding Form T-1, each as amended at the time such part became
effective, being hereinafter collectively called the "Registration
Statement;" the prospectus relating to the Notes, in the form in
which it has most recently been filed with the Commission on or
prior to the date of this Agreement, being hereinafter called the
"Prospectus;" any reference herein to any Preliminary Prospectus or
the Prospectus shall be deemed to refer to and include the
documents incorporated by reference therein pursuant to the
applicable form under the Securities Act of 1933, as amended (the
"Act") as of the date of such Preliminary Prospectus or Prospectus,
as the case may be; any supplement to the Prospectus that sets
forth only the terms of a particular issue of Notes being
hereinafter called a "Pricing Supplement;" any reference to any
amendment or supplement to any Preliminary Prospectus or the
Prospectus shall be deemed to refer to and include any documents
filed after the date of such Preliminary Prospectus or Prospectus,
as the case may be, under the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), and incorporated therein by
reference; and any reference to the Prospectus as amended or
supplemented shall be deemed to refer to the Prospectus as amended
or supplemented with respect to Notes sold pursuant to this
Agreement, in the form in which it is filed with the Commission
pursuant to Rule 424(b) of Regulation C under the Act, including
any documents incorporated by reference therein as of the date of
such filing);
(b) Except for statements in such documents which do not
constitute part of the Registration Statement or the Prospectus
pursuant to Rule 412 of Regulation C under the Act and after
substituting therefor any statements modifying or superseding such
excluded statements (i) the documents incorporated by reference in
the Prospectus, when they became effective or were filed with the
Commission, as the case may be, conformed in all material respects
to the requirements of the Act or the Exchange Act, as applicable,
and the rules and regulations of the Commission thereunder, and
none of such documents, when they became effective or were so
filed, as the case may be, contained, in the case of documents
which became effective under the Act, an untrue statement of a
material fact or omitted to state a material fact required to be
stated therein or necessary to make the statements therein not
misleading, and, in the case of documents which were filed under
the Exchange Act with the Commission, an untrue statement of a
material fact or omitted to state a material fact necessary in
order to make the statements therein, in the light of the
circumstances under which they were made, not misleading, and (ii)
any further documents so filed and incorporated by reference in the
Prospectus, when such documents become effective or are filed with
the Commission, as the case may be, will conform in all material
respects to the requirements of the Act or the Exchange Act, as
applicable, and the rules and regulations of the Commission
thereunder and will not contain, in the case of documents which
become effective under the Act, an untrue statement of a material
fact or omit to state a material fact required to be stated therein
or necessary to make the statements therein not misleading, and in
the case of documents which are filed under the Exchange Act with
the Commission, an untrue statement of material fact or omit to
state a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were
made, not misleading; provided, however, that this representation
and warranty shall not apply to any statements or omissions made in
reliance upon and in conformity with information furnished in
writing to the Company by any Agent expressly for use in the
Prospectus as amended or supplemented to relate to a particular
issuance of Notes; the Indenture has been duly qualified under, and
conforms in all material respects to the requirements of, the Trust
Indenture Act of 1939, as amended (the "Trust Indenture Act"); and
(c) Except for statements in documents incorporated
therein by reference which do not constitute part of the
Registration Statement or the Prospectus pursuant to Rule 412 of
Regulation C under the Act and after substituting therefor any
statements modifying or superseding such excluded statements, the
Registration Statement and the Prospectus conformed, and any
amendments or supplements thereto will, when they become effective
or are filed with the Commission, as the case may be, conform, in
all material respects to the requirements of the Act and the Trust
Indenture Act, and the rules and regulations of the Commission
thereunder and do not and will not, as of the applicable effective
date in the case of the Registration Statement and any amendment
thereto and as of the applicable filing date in the case of the
Prospectus and any supplement thereto, contain an untrue statement
of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein not
misleading; provided, however, that this representation and
warranty shall not apply to any statements or omissions made in
reliance upon and in conformity with information furnished in
writing to the Company by any Agent expressly for use in the
Prospectus as amended or supplemented to relate to a particular
issuance of Notes.
2. The Company represents and warrants to, and agrees with,
each Agent that:
(a) Upon payment therefor as provided herein and in any
Terms Agreement, the Notes will have been duly and validly
authorized, and (assuming their due authentication by the Trustee)
will have been duly and validly issued and will be valid
outstanding obligations of the Company in accordance with their
terms, except as the same may be limited by insolvency, bankruptcy,
reorganization, or other laws relating to or affecting the
enforcement of creditors' rights or by general equity principles,
and will be entitled to the benefits of the Indenture;
(b) The issue and sale of the Notes and the compliance
by the Company with all of the provisions of the Notes, the
Indenture, this Agreement and any Terms Agreement will not conflict
with or result in any breach which would constitute a material
default under, or result in the creation or imposition of any lien,
charge or encumbrance upon any of the property or assets of the
Company material to the Company, pursuant to the terms of, any
indenture, loan agreement or other agreement or instrument for
borrowed money to which the Company is a party or by which the
Company may be bound or to which any of the property or assets of
the Company material to the Company, is subject, nor will such
action result in any material violation of the provisions of the
Certificate of Incorporation, as amended, or the By-Laws of the
Company or, to the best of its knowledge, any statute or any order,
rule or regulation applicable to the Company of any court or any
Federal, State or other regulatory authority or other governmental
body having jurisdiction over the Company, and no consent,
approval, authorization or other order of, or filing with, any
court or any such regulatory authority or other governmental body
is required for the solicitation of offers to purchase Notes and
the issue and sale of the Notes, except as may be required under
the Act, the Exchange Act, the Trust Indenture Act and securities
laws of the various states and other jurisdictions in which the
Agents will solicit offers to purchase Notes from the Company and
will purchase Notes as principal, as the case may be; and
(c) Immediately after the settlement of any sale of
Notes by the Company resulting from solicitation by such Agent
hereunder and immediately after any Time of Delivery (as defined
below) relating to a sale to an Agent as principal, the aggregate
principal amount of Notes which shall have been issued and sold by
the Company hereunder or under any Terms Agreement and of any debt
securities of the Company (other than such Notes) that shall have
been issued and sold pursuant to the Registration Statement will
not exceed the amount of debt securities registered under the
Registration Statement.
3. (a) On the basis of the representations and warranties
herein contained, and subject to the terms and conditions herein
set forth, each of the Agents hereby severally and not jointly
agrees to act as agent of the Company, to use its reasonable
efforts to solicit offers to purchase the Notes from the Company
upon the terms and conditions set forth in the Prospectus relating
to the Notes as amended or supplemented from time to time and in
the Procedure.
Subject to the provisions of this Section 3 and to the
Procedure, offers for the purchase of Notes may be solicited by
each Agent as agent for the Company at such time and in such
amounts as such Agent deems advisable; provided, however, that the
Company reserves the right to sell Notes directly on its own behalf
or through other agents, dealers or underwriters, and to appoint
additional persons from time to time to serve as Agents pursuant to
this Agreement.
Each Agent agrees that it will not solicit an offer to
purchase Notes or deliver any of the Notes in any jurisdiction
outside the United States of America except under circumstances
that will result in compliance with the applicable laws thereof.
Each Agent understands that no action has been taken to permit a
public offering in any jurisdiction outside the United States of
America where action would be required for such purpose. The
Agents further undertake that in connection with the distribution
of Notes denominated in any foreign currency or currency unit, they
will as agent, directly or indirectly, not solicit offers to
purchase and as principal under any Terms Agreement or otherwise,
directly or indirectly, not offer, sell or deliver, such Notes in
or to residents of the country issuing such currency, except as
permitted by applicable law.
The Company reserves the right, in its sole discretion, to
instruct the Agents to suspend at any time, for any period of time
or permanently, the solicitation of offers to purchase the Notes.
Promptly after receipt of notice from the Company, but in any event
not less than one business day thereafter, the Agents will suspend
solicitation of offers to purchase Notes from the Company until
such time as the Company has advised them that such solicitation
may be resumed.
The Company agrees to pay each Agent, at the time of
settlement of any sale of a Note by the Company, the purchase of
which is solicited by such Agent, a commission in United States
dollars (which, in the case of Notes denominated in other than
United States dollars, shall be based upon the Market Exchange Rate
(as defined below) for such currency or currency unit at the time
of any acceptance of an offer to purchase a Note) in an amount
equal to the following percentage of the principal amount of such
Note sold (or at such other amount as may from time to time be
negotiated between such Agent and the Company):
Maturity Commission (percentage
of aggregate principal
amount of Notes sold)
9 months to less than 1 year...................... .125%
1 year to less than 18 months..................... .150%
18 months to less than 2 years.................... .200%
2 years to less than 3 years...................... .250%
3 years to less than 4 years...................... .350%
4 years to less than 5 years...................... .450%
5 years to less than 6 years...................... .500%
6 years to less than 7 years...................... .550%
7 years to less than 11 years..................... .600%
11 years to less than 15 years.................... .625%
15 years to less than 20 years.................... .675%
20 years to 30 years.............................. .750%
Greater than 30 years............................. to be
negotiated
Notwithstanding anything herein to the contrary, if, at or prior to
the time of settlement, the Company and an Agent have entered into,
or such Agent has arranged for the Company to enter into, a
contract with respect to the sale of the currency (other than
United States dollars) or currency unit in which a Note has been
denominated and the purchase of which was solicited by such Agent,
the commission in United States dollars payable by the Company to
such Agent shall be based upon the same exchange rate set forth in
such contract.
The authorized denominations of Notes denominated in a
currency or currency unit other than United States dollars shall be
equivalent, as determined by the Market Exchange Rate for such
currency or currency unit on the business day immediately preceding
the date on which the offer for such Notes is accepted, of U.S.
$1,000 (rounded down to an integral multiple of 1,000 units of such
currency or currency unit), and any larger amount. The authorized
denominations of Notes denominated in United States dollars shall
be U.S. $1,000 and any larger amount in integral multiples of
$1,000.
The "Market Exchange Rate" on a given date for a given foreign
currency means the noon buying rate in New York City for cable
transfers in such currency as certified for customs purposes by the
Federal Reserve Bank of New York on such date; provided, however,
that in the case of European Currency Units, Market Exchange Rate
means, unless otherwise agreed by the Company and the Agents, the
rate of exchange determined by the Council of European Communities
(or any successor thereto) as published on such date or the most
recently available date in the Official Journal of the European
Communities (or any successor publication).
Unless otherwise agreed between the Company and each Agent,
each Agent shall communicate to the Company, orally or in writing,
each offer to purchase Notes received by it as Agent other than
those rejected by such Agent in accordance herewith. The Company
shall have the sole right to accept offers to purchase Notes and
may reject any proposed purchase of Notes. Each Agent shall have
the right, in its discretion reasonably exercised, to reject any
proposed purchase of Notes received by it, and any such rejection
by it shall not be deemed a breach of its agreements contained
herein.
(b) Each sale of Notes to any Agent as principal shall be
made in accordance with the terms of this Agreement and (unless the
Company and such Agent shall otherwise agree) a Terms Agreement
which will provide for the sale of such Notes. Terms Agreements,
each of which shall be substantially in the form of Annex I hereto,
may take the form of an exchange of any standard form of written
telecommunication between any Agent, the Company and Sears,
including by telecopy or telex. The Company, Sears and any Agent
who is a party to a Terms Agreement agree to exchange executed
copies of such Terms Agreement as promptly as practicable after
they have entered into such Terms Agreement pursuant to the
foregoing exchange of written telecommunication. The Agents may
utilize a selling or dealer group in connection with the reoffering
of the Notes purchased as principal.
For each sale of Notes to an Agent as principal that is not
made pursuant to a Terms Agreement, the procedural details relating
to the issue and delivery of such Notes and payment therefor shall
be as set forth in the Procedure. For each such sale of Notes to
an Agent as principal that is not made pursuant to a Terms
Agreement, the Company agrees to pay such Agent a commission (or
grant an equivalent discount) as provided in Section 3(a) and in
accordance with the schedule set forth therein or established from
time to time pursuant thereto, except as the parties otherwise
agree in writing.
Each time and date of delivery of and payment for Notes to be
purchased by an Agent as principal, whether set forth in a Terms
Agreement or in accordance with the Procedure, is referred to
herein as a "Time of Delivery."
(c) Procedural details relating to the issue and delivery of
Notes, the solicitation of offers to purchase Notes, and the
payment in each case therefor, shall be as set forth in the
Procedure. The provisions of the Procedure shall apply to all
transactions contemplated hereunder other than those made pursuant
to a Terms Agreement. Each of the Agents and the Company agrees to
perform the respective duties and obligations specifically provided
to be performed by each of them in the Procedure. The Company will
furnish to the Trustee a copy of the Procedure as from time to time
in effect.
4. The documents required to be delivered pursuant to
Section 8 hereof shall be delivered at the offices of the Company,
3711 Kennett Pike, Greenville, Delaware, at 11:00 a.m., New York
time, on the date of this Agreement, or at such other date and time
as the Agents and the Company agree (such time and date being
referred to herein as the "Closing Date").
5. Each of the Company and Sears covenants and agrees with
each Agent:
(a) Prior to the termination of the offering of the
Notes, to make no amendment or supplement to the Registration
Statement or the Prospectus (except for a Pricing Supplement or a
supplement relating to an offering of securities other than the
Notes) without first having furnished the Agents with a copy of the
proposed form thereof and given the Agents a reasonable opportunity
to review the same; to advise the Agents promptly of any such
amendment or supplement after such Time of Delivery and furnish the
Agents with copies thereof, to prepare, with respect to any Notes
to be sold through or to such Agent pursuant to this Agreement, a
Pricing Supplement with respect to such Notes in a form previously
approved by such Agent and to file such Pricing Supplement pursuant
to Rule 424(b)(2) under the Act not later than the close of
business of the Commission on the second business day after the
date on which such Pricing Supplement is first used or the date of
determination of the offering price; and to file promptly all
reports and any definitive proxy or information statements required
to be filed by the Company or Sears, respectively, with the
Commission pursuant to Section 13 or 14 of the Exchange Act for so
long as the delivery of a prospectus is required in connection with
the offering or sale of the Notes, and during such same period to
advise the Agents, promptly after the Company or Sears receives
notice thereof, of the time when any amendment to the Registration
Statement has been filed or has become effective or any supplement
to the Prospectus or any amended Prospectus (other than any Pricing
Supplement and any supplement relating to any offering of
securities other than the Notes) has been filed with, or mailed for
filing to, the Commission, of the issuance by the Commission of any
stop order or of any order preventing or suspending the use of any
prospectus relating to the Notes, of the suspension of the
qualification of the Notes for offering or sale in any
jurisdiction, of the initiation or threatening of any proceeding
for any such purpose, or of any request by the Commission for the
amending or supplementing of the Registration Statement or
Prospectus or for additional information; and, in the event of the
issuance of any such stop order or of any such order preventing or
suspending the use of any such prospectus or suspending any such
qualification, to use promptly its best efforts to obtain its
withdrawal;
(b) Promptly from time to time to take such action as
the Agents reasonably may request to qualify the Notes for offering
and sale under the securities laws of such jurisdictions as the
Agents may request and to comply with such laws so as to permit the
continuance of sales and dealings therein for as long as may be
necessary to complete the distribution or sale of the Notes
provided that in connection therewith neither the Company nor Sears
shall be required to qualify as a foreign corporation or to file a
general consent to service of process in any jurisdiction;
(c) To furnish the Agents with copies of the
Registration Statement and each amendment thereto, and with copies
of the Prospectus as amended or supplemented, other than any
Pricing Supplement (except as provided in the Procedure), in the
form in which it is filed with the Commission pursuant to Rule 424
under the Act or in the form first used to confirm sales which was
not required to be filed pursuant to Rule 424 under the Act, in
such quantities as the Agents may from time to time reasonably
request, and, if the delivery of a prospectus is required at any
time in connection with the offering or sale of the Notes
(including Notes purchased from the Company by such Agent as
principal) and if at such time any event shall have occurred as a
result of which the Prospectus as then amended or supplemented
would include an untrue statement of a material fact or omit to
state any material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were
made when such Prospectus is delivered, not misleading, or, if for
any other reason it shall be necessary during such same period to
amend or supplement the Prospectus or to file under the Exchange
Act any document incorporated by reference in the Prospectus in
order to comply with the Act, the Exchange Act or the Trust
Indenture Act, to (i) notify the Agents to suspend solicitation of
offers to purchase Notes from the Company (and, if so notified, the
Agents shall promptly cease such solicitations), (ii) prepare and
cause to be filed with the Commission, after having furnished the
Agents with a copy of the proposed form and given the Agents a
reasonable opportunity to review the same, an amendment or
supplement to the Registration Statement or the Prospectus as then
amended or supplemented that will correct such statement or
omission or effect such compliance and (iii) supply such Prospectus
as then amended or supplemented to the Agents in such quantities as
the Agents may reasonably request; if such amendment or supplement,
and any documents, certificates and opinions furnished to the
Agents pursuant to Section 8 in connection with the preparation or
filing of such amendment or supplement are reasonably satisfactory
in all respects to the Agents, the Agents will, upon the filing of
such amendment or supplement with the Commission and upon the
effectiveness of an amendment to the Registration Statement if such
an amendment is required, resume the Agents obligation to solicit
offers to purchase Notes hereunder; if such amendment or
supplement, or any documents, certificates and opinions furnished
to the Agents pursuant to Section 8 in connection with the
preparation or filing of such amendment or supplement, are not
satisfactory to the Agents, the Agents will as promptly as
reasonably practicable notify the Company and Sears in writing;
(d) To make generally available to its security holders,
in accordance with the provisions of Rule 158 under the Act or
otherwise, as soon as practicable, but in any event not later than
forty-five days after the end of the fourth full fiscal quarter
(ninety days in the case of the last fiscal quarter in any fiscal
year) following the fiscal quarter ending after the latest of (x)
the effective date of the Registration Statement, (y) the effective
date of the post-effective amendment thereto hereinafter referred
to and (z) the date of filing of the report hereinafter referred
to, an earning statement of the Company and Sears and its
consolidated subsidiaries, respectively, (which need not be
audited) complying with Section 11(a) of the Act and covering a
period of at least twelve consecutive months beginning after the
latest of (i) the effective date of such Registration Statement,
(ii) the effective date of the post-effective amendment, if any, to
such Registration Statement (within the meaning of Rule 158) and
(iii) the date of filing of the last report of the Company or Sears
incorporated by reference into the Prospectus (within the meaning
of Rule 158); and
(e) That each acceptance by the Company of an offer to
purchase Notes hereunder shall be deemed to be an affirmation to
such Agent that the representations and warranties of the Company
and Sears contained in or made pursuant to this Agreement are true
and correct as of the date of such acceptance as though made at and
as of such date, and an undertaking that, if a settlement occurs
with respect to such acceptance, such representations and
warranties will be true and correct as of such settlement date as
though made at and as of such date (except that such
representations and warranties shall be deemed to relate to the
Registration Statement and the Prospectus as amended and
supplemented relating to such Notes).
6. The Company covenants and agrees with each Agent that,
except as may otherwise be specified in any Terms Agreement, during
the period beginning from the date of any Terms Agreement and
continuing to and including the earlier of (i) the termination of
the trading restrictions for the Notes purchased thereunder, of
which termination such Agent or Agents party to the Terms Agreement
agree to give the Company prompt notice confirmed in writing and
(ii) the Time of Delivery for such Notes, not to offer, sell,
contract to sell or otherwise dispose of any debt securities of the
Company which (i) mature nine months or more after such Time of
Delivery, (ii) mature within six months of the maturity of such
Notes and (iii) are denominated in the same currency or currency
unit specified in the Terms Agreement, without the prior written
consent of such Agent or Agents, which consent shall not be
unreasonably withheld, except pursuant to arrangements of which
such Agent or Agents have been advised by the Company prior to the
time of execution of such Terms Agreement, which advice is
confirmed in writing (which may be by telecopy or telex, receipt
acknowledged) to such Agent or Agents by the end of the business
day following the date of such Terms Agreement.
7. The Company covenants and agrees with each Agent that the
Company will pay or cause to be paid, whether or not any sale of
Notes is consummated, the following: (i) the fees and expenses of
the Company's counsel and accountants in connection with the
registration of the Notes under the Act and all other expenses in
connection with the preparation, printing and filing of the
Registration Statement, any Preliminary Prospectus, the Prospectus
and amendments and supplements thereto and the mailing and
delivering of copies thereof to the Agents; (ii) the fees and
expenses of counsel for the Agents, which counsel has been approved
by the Company, incurred heretofore or hereafter in connection with
the transactions contemplated hereunder; (iii) the cost of printing
or reproducing this Agreement, any Terms Agreement, any Indenture,
any Blue Sky and Legal Investment Memoranda and any other documents
in connection with the offering, purchase, sale and delivery of the
Notes; (iv) all expenses in connection with the qualification of
the Notes for offering and sale under state securities laws as
provided in Section 4(b) hereof, including fees and disbursements
of counsel for the Agents in connection with such qualification and
in connection with the Blue Sky and legal investment surveys; (v)
any fees charged by security rating services for rating the Notes;
(vi) any filing fees incident to any required review by the
National Association of Securities Dealers, Inc. of the terms of
the sale of the Notes; (vii) the cost of preparing the Notes;
(viii) the fees and expenses of any Trustee and any transfer or
paying agent of the Company and the fees and disbursements of
counsel for any Trustee or such agent in connection with any
Indenture and the Notes; (ix) on a monthly basis all out-of-pocket
expenses (including without limitation advertising expenses)
incurred by such Agent connected with the solicitation of offers to
purchase and the sale of Notes so long as such expenses have been
approved by the Company; and (x) all other costs and expenses
incident to the performance of the Company's obligations hereunder
(other than costs and expenses incurred by any Agent) which are not
otherwise specifically provided for in this Section 7.
8. The obligation of each Agent, as agent of the Company, at
any time ("Solicitation Time") to solicit offers to purchase the
Notes and the obligation of each Agent to purchase Notes as
principal pursuant to any Terms Agreement or otherwise shall in
each case be subject, in such Agent's discretion, to the condition
that all representations and warranties and other statements of the
Company or Sears herein are true and correct at and as of the
Closing Date, as of the date of the effectiveness of any amendment
to the Registration Statement (including the filing of any document
incorporated by reference therein), as of the date any supplement
to the Prospectus is filed with the Commission, as of any Time of
Delivery, as of each acceptance by the Company of an offer to
purchase Notes hereunder and as of each settlement date relating to
such sale, the condition that each of the Company and Sears shall
have performed all of its obligations hereunder theretofore to be
performed, and the following additional conditions:
(a) No stop order suspending the effectiveness of the
Registration Statement shall have been issued and no proceeding for
that purpose shall have been initiated or threatened by the
Commission; and all requests for additional information on the part
of the Commission shall have been complied with to the Agents
reasonable satisfaction;
(b) All corporate proceedings and related matters in
connection with the organization of the Company, the validity of
the Indenture and the registration, authorization, issue, sale and
delivery of the Notes shall have been satisfactory to the Agents'
counsel, and such counsel shall have been furnished with such
papers and information as they may reasonably have requested to
enable them to pass upon the matters referred to in this Section
8(b);
(c) Counsel to the Company and Sears, who may be an
employee of the Company or of Sears, shall have furnished to the
Agents such counsel's written opinion, dated the Closing Date, each
Time of Delivery and the date of effectiveness of each amendment or
the filing of each supplement to the Registration Statement or the
Prospectus (including the filing under the Act or the Exchange Act
of documents incorporated by reference in the Prospectus as amended
or supplemented but excluding amendments or supplements (i)
relating to an offering of securities other than the Notes, (ii)
constituting a Pricing Supplement, (iii) setting forth or
incorporating by reference financial statements or other
information as of and for a fiscal quarter or (iv) relating solely
to the incorporation by reference of Sears proxy statement for its
annual meeting of shareholders or of a filing by the Company or
Sears of a Current Report on Form 8-K under the Exchange Act unless
in the case of clauses (iii) or (iv) above, in such Agent's
reasonable judgment, such financial statements or other information
contained in such documents are of such a character that an opinion
of counsel should be furnished), as the case may be, in form and
substance satisfactory to the Agents in the Agents' reasonable
judgement to the effect that:
(i) Each of the Company and Sears has been duly
incorporated and is validly existing as a corporation in good
standing under the laws of its respective state of incorporation;
(ii) The authorized capital stock of the Company
consists of 500,000 shares of common stock, par value $100 per
share, all of the issued and outstanding shares of which are owned
by Sears, Roebuck and Co., and the authorized capital stock of
Sears is as set forth or incorporated by reference in the
Registration Statement;
(iii) SRAC is not an "investment company" within
the meaning of the Investment Company Act of 1940, as amended;
(iv) Each of this Agreement and any applicable Terms
Agreement has been duly authorized, executed and delivered on the
part of the Company, and this Agreement has been duly authorized,
executed and delivered on the part of Sears;
(v) The issue and sale of the Notes and the
compliance by the Company with all of the provisions of the Notes,
the Indenture, this Agreement and any applicable Terms Agreement
will not (a) conflict with or result in any breach which would
constitute a material default under, or result in the creation or
imposition of any lien, charge or encumbrance upon any of the
property or assets of the Company, material to the Company,
pursuant to the terms of, any indenture, loan agreement or other
agreement or instrument for borrowed money known to such counsel to
which the Company is a party or by which the Company may be bound
or to which any of the property or assets of the Company, material
to the Company, is subject, (b) result in any material violation of
the provisions of the Certificate of Incorporation, as amended, or
the By-Laws of the Company or (c) to the best of the knowledge of
such counsel, result in any material violation of any statute or
any order, rule or regulation applicable to the Company of any
court or any Federal, State or other regulatory authority or other
governmental body having jurisdiction over the Company, other than
the Act, the Exchange Act, the Trust Indenture Act, and the rules
and regulations pursuant to each such act, and other than the
securities laws of the various states or other jurisdictions which
are applicable to the issue and sale of the Notes; and, to the best
knowledge of such counsel, no consent, approval, authorization or
other order of, or filing with, any court or any such regulatory
authority or other governmental body is required for the issue and
sale of the Notes except as may be required under the Act, the
Exchange Act, the Trust Indenture Act and securities laws of the
various states or other jurisdictions which are applicable to the
issue and sale of the Notes;
(vi) The Indenture has been duly authorized,
executed and delivered on the part of the Company and, as to the
Company, is a valid and binding instrument in accordance with its
terms except as the foregoing may be limited by insolvency,
bankruptcy, reorganization or other laws relating to or affecting
the enforcement of creditors' rights or by general equity
principles, and has been qualified under the Trust Indenture Act;
the Notes have been duly authorized and (assuming due
authentication by the Trustee) when duly executed, issued and
delivered pursuant to the Indenture and any Terms Agreement, will
constitute valid and binding obligations of the Company in
accordance with their terms, entitled to the benefits of the
Indenture, except as the foregoing may be limited by insolvency,
bankruptcy, reorganization or other laws relating to or affecting
the enforcement of creditors' rights or by general equity
principles;
(vii) The Fixed Charge Coverage and Ownership
Agreement and the Extension Agreement 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 which are not described as
required;
(ix) Except for statements in such documents which
do not constitute part of the Registration Statement or the
Prospectus pursuant to Rule 412 of Regulation C under the Act and
after substituting therefor any statements modifying or superseding
such excluded statements, the documents incorporated by reference
in the Prospectus as amended or supplemented (other than the
financial statements and related schedules, the analyses of
operations and financial condition and other financial, statistical
and accounting data therein, as to which such counsel need express
no opinion), when they became effective or were filed with the
Commission, as the case may be, complied as to form in all material
respects with the requirements of the Act or the Exchange Act, as
applicable, and the rules and regulations of the Commission
thereunder;
(x) Except for statements in such documents which
do not constitute part of the Registration Statement or the
Prospectus pursuant to Rule 412 of Regulation C under the Act and
after substituting therefor any statements modifying or superseding
such excluded statements, the Registration Statement and the
Prospectus as amended or supplemented (excluding the documents
incorporated by reference therein) (other than the financial
statements and related schedules, the analyses of operations and
financial condition and other financial, statistical and accounting
data therein, as to which such counsel need express no opinion)
comply as to form in all material respects with the requirements of
the Act and the rules and regulations thereunder; the answers in
the Registration Statement to Items 9 and 10 (insofar as it relates
to such counsel) of Form S-3 are to the best of such counsel's
knowledge accurate statements or summaries of the matters therein
set forth and fairly present the information called for with
respect to those matters by the Act and the rules and regulations
thereunder; and
(xi) Such counsel does not know of any contract or
other document to which the Company or Sears is a party required to
be filed as an exhibit to the Registration Statement or required to
be incorporated by reference into the Prospectus as amended or
supplemented or required to be described in the Prospectus as
amended or supplemented which has not been so filed, incorporated
by reference or described.
In rendering such opinion, such counsel may rely to the
extent such counsel deems appropriate upon certificates of officers
or other executives of the Company, Sears and its business groups
and subsidiaries and of public officials as to factual matters and
upon opinions of other counsel. In rendering the opinion referred
to in subdivision (v) above, such counsel need not express an
opinion as to whether, with respect to any Notes denominated in a
currency other than United States dollars, a court located in the
United States of America would grant a judgment relating to the
Notes in other than United States dollars, nor an opinion as to the
date which any such court would utilize for determining the rate of
conversion into United States dollars in granting such judgment.
Such counsel shall also state that: (a) nothing has come to such
counsel's attention which has caused such counsel to believe that
any of the documents referred to in subdivision (ix) above (other
than the financial statements, the analyses of operations and
financial condition and other financial, statistical and accounting
data therein, as to which such counsel need express no belief), in
each case after excluding any statement in any such document which
does not constitute part of the Registration Statement or the
Prospectus as amended or supplemented pursuant to Rule 412 of
Regulation C under the Act and after substituting therefor any
statement modifying or superseding such excluded statement, when
such documents became effective or were filed, as the case may be,
contained, in the case of documents which became effective under
the Act, an untrue statement of a material fact or omitted to state
a material fact required to be stated therein or necessary to make
the statements therein not misleading, and, in the case of
documents which were filed under the Exchange Act with the
Commission, an untrue statement of a material fact or omitted to
state a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were
made, not misleading, and (b) nothing has come to such counsel's
attention which has caused such counsel to believe that the
Registration Statement or Prospectus as amended or supplemented
(other than the financial statements, the analyses of operations
and financial condition and other financial, statistical and
accounting data therein, as to which such counsel need express no
belief) contains an untrue statement of a material fact or omits to
state a material fact required to be stated therein or necessary to
make the statements therein not misleading;
(d) On the Closing Date, each Time of Delivery and the
date of effectiveness of each amendment or the filing of each
supplement to the Registration Statement or the Prospectus setting
forth or incorporating by reference amended or supplemental
financial information, as the case may be, the independent
certified public accountants who have certified the financial
statements of the Company and Sears and its subsidiaries included
or incorporated by reference in the Registration Statement shall
have furnished to the Agents a letter or letters, dated the Closing
Date or such applicable date, as the case may be, in form and
substance satisfactory to the Agents, to the effect set forth in
Annex III hereto (modified in the case of amended or supplemented
financial information to reflect such amended and supplemental
financial information included or incorporated by reference in the
Registration Statement and the Prospectus as amended or
supplemented to the date of such letter, provided that if the
Registration Statement or the Prospectus is amended or supplemented
solely to include or incorporate by reference unaudited quarterly
financial information, the scope of such letter, which shall be
satisfactory in form and substance to such Agent, may be limited to
relate to such unaudited financial information unless any other
accounting, financial or statistical information included or
incorporated by reference therein is of a character that, in the
reasonable judgment of such Agent, such letter should address such
other information);
(e) (i) The Company and Sears shall not have sustained,
after the date of the latest audited financial statements included
or incorporated by reference in the Prospectus and (A) prior to the
Closing Date, any material loss or interference with its business
from fire, explosion, flood or other calamity, whether or not
covered by insurance, or from any labor dispute or court or
governmental action, order or decree, otherwise than as
contemplated in the Prospectus as amended or supplemented through
the date of this Agreement and (B) prior to each Time of Delivery,
any such loss or interference, otherwise than as set forth or
contemplated in the Prospectus as amended or supplemented through
the date that the Agent agreed to purchase such Notes as principal;
and (ii) since the respective dates as of which information is
given in the Prospectus as amended or supplemented and (A) prior to
the Closing Date, there shall not have been any material change in
the capital stock accounts or long-term debt of the Company or any
material adverse change in the general affairs, financial position,
stockholders' equity or results of operations of the Company,
otherwise than as set forth or contemplated in the Prospectus as
amended or supplemented through the date of this Agreement and (B)
prior to each Time of Delivery, there shall not have been any such
change, otherwise than as set forth or contemplated in the
Prospectus as amended or supplemented through the date that the
Agent agreed to purchase such Notes as principal, the effect of
which, in any such case described in clause (i) or (ii), in the
judgment of such Agent makes it impracticable or inadvisable to
proceed with the solicitation by such Agent of offers to purchase
Notes from the Company or the purchase by such Agent of Notes from
the Company as principal, as the case may be;
(f) During the period in which the Agents are soliciting
offers to purchase Notes, including the period between the date
that any Agent agreed to purchase such Notes as principal and the
related Time of Delivery, no downgrading shall have occurred in the
rating accorded the Company's or Sears debt securities by Moody's
Investors Service, Inc. or Standard & Poor's Corporation; provided,
however, that this Section 6(f) shall not apply to any such rating
agencies which shall have notified the Company of the downgrading
in the rating of such debt securities and of which the Company
shall have given the Agents written notice prior to the execution
of the Terms Agreement;
(g) During the period in which the Agents are soliciting
offers to purchase Notes, including the period between the date
that any Agent agreed to purchase such Notes as principal and the
related Time of Delivery, neither (i) the United States shall have
become engaged in the outbreak or escalation of hostilities
involving the United States or there has been a declaration by the
United States of a national emergency or a declaration of war, (ii)
a banking moratorium shall have been declared by either Federal or
New York State authorities or, in the case of Notes denominated in
other than United States dollars, by the authorities of the country
of the currency in which such Notes are denominated, (iii) trading
in securities generally on the New York Stock Exchange shall have
been suspended nor limited or minimum prices shall have been
established by such Exchange, nor (iv) in the case of Notes
denominated in other than United States dollars, any change
involving such currency exchange rates, exchange controls, taxation
or similar matters, any of which events, in the Agents' judgment,
renders it inadvisable to proceed with the solicitation by the
Agents of offers to purchase Notes from the Company or the purchase
by the Agents of Notes from the Company as principal, as the case
may be; and
(h) Each of the Company and Sears shall have furnished
or caused to be furnished to the Agents at the Closing Date, each
Time of Delivery and the date of effectiveness of each amendment or
the filing of each supplement to the Registration Statement or the
Prospectus (including the filing under the Act or the Exchange Act
of documents which are incorporated by reference in the Prospectus
as amended or supplemented but excluding amendments or supplements
(i) relating to an offering of securities other than the Notes,
(ii) constituting a Pricing Supplement, or (iii) relating solely to
the incorporation by reference of Sears proxy statement for its
annual meeting of shareholders or of a filing by the Company or
Sears of a Current Report on Form 8-K under the Exchange Act,
unless in the case of clause (iii) above, in such Agent's
reasonable judgment, the information contained in such documents is
of such a character that certificates of officers referred to below
should be furnished, as the case may be) certificates of officers
of the Company and Sears satisfactory to the Agents, as to the
accuracy at and as of the Closing Date or such applicable date, as
the case may be, of the representations, warranties and agreements
of the Company and Sears, respectively, herein and as to the
performance by each of the Company and Sears of all its obligations
hereunder to be performed at or prior to the Closing Date or such
applicable date, as the case may be, and the Company shall have
also furnished the Agents similar certificates satisfactory to the
Agents as to the matters set forth in subdivision (a) of this
Section 8.
9. (a) The Company will indemnify and hold harmless each
Agent against any losses, claims, damages or liabilities, joint or
several, to which such Agent may become subject, under the Act or
otherwise, insofar as such losses, claims, damages or liabilities
(or actions in respect thereof) arise out of or are based upon any
untrue statement or alleged untrue statement of any material fact
contained in any Preliminary Prospectus, the Registration
Statement, the Prospectus or the Prospectus as amended or
supplemented, or any amendment or supplement thereto furnished by
the Company or Sears, or arise out of or are based upon the
omission or alleged omission to state therein a material fact
required to be stated therein or (in the case of the Registration
Statement or the Prospectus as amended or supplemented or any
amendment or supplement thereto) necessary to make the statements
therein not misleading or (in the case of any Preliminary
Prospectus) necessary to make the statements therein, in the light
of the circumstances under which they were made, not misleading;
and will reimburse each Agent for any legal or other expenses
reasonably incurred by such Agent in connection with investigating
or defending any such action or claim; provided, however, that the
Company shall not be liable in any such case to the extent that any
such loss, claim, damage or liability arises out of or is based
upon an untrue statement or alleged untrue statement or omission or
alleged omission made in any Preliminary Prospectus, or the
Registration Statement, the Prospectus or the Prospectus as amended
or supplemented or any such amendment or supplement in reliance
upon and in conformity with written information furnished to the
Company by the Agents expressly for use therein; and provided,
further, that the Company shall not be liable to any Agent or any
person controlling such Agent under the indemnity agreement in this
subdivision (a) with respect to the Preliminary Prospectus or the
Prospectus or the Prospectus as amended or supplemented or any
amendment or supplement thereto, as the case may be, to the extent
that any such loss, claim, damage or liability of such Agent or
controlling person results solely from the fact that such Agent
sold Notes to a person to whom there was not sent or given, at or
prior to the written confirmation of such sale, a copy of the
Prospectus (excluding documents incorporated by reference) or of
the Prospectus as then amended or supplemented (excluding documents
incorporated by reference), whichever is most recent, if the
Company has previously furnished copies thereof to such Agent.
(b) Each Agent will indemnify and hold harmless the Company
against any losses, claims, damages or liabilities to which the
Company may become subject, under the Act or otherwise, insofar as
such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon any untrue statement or
alleged untrue statement of any material fact contained in any
Preliminary Prospectus, the Registration Statement, the Prospectus,
or the Prospectus as amended or supplemented, or any amendment or
supplement thereto, or arise out of or are based upon the omission
or the alleged omission to state therein a material fact required
to be stated therein or (in the case of the Registration Statement
or the Prospectus or the Prospectus as amended or supplemented or
any amendment or supplement thereto) necessary to make the
statements therein not misleading or (in the case of any
Preliminary Prospectus) necessary to make the statements therein,
in the light of the circumstances under which they were made, not
misleading, in each case to the extent, but only to the extent,
that such untrue statement or alleged untrue statement or omission
or alleged omission was made in any Preliminary Prospectus or the
Registration Statement or the Prospectus or the Prospectus as
amended or supplemented or such amendment or supplement in reliance
upon and in conformity with written information furnished to the
Company by such Agent expressly for use therein; and will reimburse
the Company for any legal or other expenses reasonably incurred by
the Company in connection with investigating or defending any such
action or claim.
(c) Within a reasonable period after receipt by an
indemnified party under subdivision (a) or (b) above of notice of
the commencement of any action with respect to which
indemnification is sought under such subdivision or contribution
may be sought under subdivision (d) below, such indemnified party
shall notify the indemnifying party in writing of the commencement
thereof. In case any such action shall be brought against any
indemnified party, the indemnifying party shall be entitled to
participate in, and, to the extent that it shall wish, jointly with
any other indemnifying party similarly notified, to assume the
defense thereof, with counsel satisfactory to such indemnified
party, and after notice from the indemnifying party to such
indemnified party of its election so to assume the defense thereof,
the indemnifying party shall not be liable to such indemnified
party for any legal or other expenses subsequently incurred by such
indemnified party in connection with the defense thereof other than
reasonable costs of investigation.
(d) If the indemnification provided for in this Section 9 is
unavailable to an indemnified party under subdivision (a) or (b)
above in respect of any losses, claims, damages or liabilities (or
actions in respect thereof) referred to therein, then each
indemnifying party shall contribute to the amount paid or payable
by such indemnified party as a result of such losses, claims,
damages or liabilities (or actions in respect thereof) in such
proportion as is appropriate to reflect the relative benefits
received by the Company on the one hand and the contributing Agent
on the other from the offering of the Notes and also the relative
fault of the Company and Sears on the one hand and the contributing
Agent on the other in connection with the statements or omissions
which resulted in such losses, claims, damages or liabilities (or
actions in respect thereof), as well as any other relevant
equitable considerations. The relative benefits received by the
Company on the one hand and the contributing Agent on the other
shall be deemed to be in the same proportion as the total net
proceeds from the sale of Notes (before deducting expenses)
received by the Company bear to the total commissions or discounts
received by the contributing Agent. The relative fault shall be
determined by reference to, among other things, whether the untrue
or alleged untrue statement of a material fact or the omission or
alleged omission to state a material fact relates to information
supplied by the Company or Sears on the one hand or the
contributing Agent on the other and the parties' relative intent,
knowledge, access to information and opportunity to correct or
prevent such statement or omission of the Company or Sears on the
one hand and the contributing Agent on the other hand. With
respect to any Agent, such relative fault shall also be determined
by reference to the extent (if any) to which such losses, claims,
damages or liabilities (or actions in respect thereof) with respect
to any Preliminary Prospectus result from the fact that such Agent
sold Notes to a person to whom there was not sent or given, at or
prior to the written confirmation of such sale, a copy of the
Prospectus (excluding documents incorporated by reference) or of
the Prospectus as then amended or supplemented (excluding documents
incorporated by reference) if the Company has previously furnished
copies thereof to such Agent. The Company and the contributing
Agent agree that it would not be just and equitable if contribution
pursuant to this subdivision (d) were determined by per capita
allocation (even if all Agents were treated as one entity for such
purpose) or by any other method of allocation which does not take
account of the equitable considerations referred to above in this
subdivision (d). The amount paid or payable by an indemnified
party as a result of the losses, claims, damages or liabilities (or
actions in respect thereof) referred to above in this subdivision
(d) shall be deemed to include any legal or other expenses
reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim.
Notwithstanding the provisions of this subdivision (d), no Agent
shall be required to contribute any amount in excess of the amount
by which the total price at which the Notes purchased by or through
such Agent were sold exceeds the amount of any damages which such
Agent has otherwise been required to pay by reason of such untrue
or alleged untrue statement or omission or alleged omission. No
person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Act) shall be entitled to contribution from
any person who was not guilty of such fraudulent misrepresentation.
The obligations of each of the Agents under this subdivision (d) to
contribute are several in proportion to the respective purchases
made by or through it to which such loss, claim, damage or
liability (or action in respect thereof) relates and are not joint.
(e) The obligations of the Company under this Section 9 shall
be in addition to any liability which the Company may otherwise
have and shall extend, upon the same terms and conditions, to each
person, if any, who controls any Agent within the meaning of the
Act; and each Agent's obligations under this Section 9 shall be in
addition to any liability which such Agent may otherwise have and
shall extend, upon the same terms and conditions, to each officer
and director of the Company or Sears and to each person, if any,
who controls the Company within the meaning of the Act.
10. In soliciting offers to purchase Notes from the Company
and in performing the other obligations of such Agent hereunder
(other than in respect of any purchase by an Agent as principal,
pursuant to a Terms Agreement or otherwise), each Agent is acting
solely as agent for the Company and not as principal. Each Agent
will make reasonable efforts to assist the Company in obtaining
performance by each purchaser whose offer to purchase Notes from
the Company was solicited by such Agent and has been accepted by
the Company, but such Agent shall not have any liability to the
Company in the event such purchase is not consummated for any
reason. If the Company shall default on its obligation to deliver
Notes to a purchaser whose offer it has accepted, the Company shall
hold each Agent harmless against any loss, claim or damage arising
from or as a result of such default by the Company.
11. The respective indemnities, agreements, representations,
warranties and other statements by any Agent, the Company and Sears
set forth in or made pursuant to this Agreement shall remain in
full force and effect regardless of any investigation (or any
statement as to the results thereof) made by or on behalf of any
Agent, the Company, Sears, or any officer or director or any
controlling person of the Company, Sears or any Agent, and shall
survive each delivery of and payment for any of the Notes.
12. The provisions of this Agreement relating to the
solicitation of offers to purchase Notes from the Company may be
suspended or this Agreement may be terminated at any time by the
Company as to any or all Agents or by any Agent insofar as this
Agreement relates to such Agent upon the giving of written notice
of such suspension or termination to such Agent or the Company, as
the case may be. Unless otherwise agreed by the respective
parties, any such suspension or termination shall be effective
immediately with respect to the party giving such notice and, in
the case of the party receiving such notice, at the close of
business on the first business day following the receipt of such
notice. In the event of such suspension or termination with
respect to any Agent, (x) this Agreement shall remain in full force
and effect with respect to any Agent as to which such suspension or
termination has not occurred, and (y) the Company shall not have
any liability to such Agent and such Agent shall not have any
liability to the Company, except as provided in any Terms
Agreements and in the fifth paragraph of Section 3(a), Section 7,
Section 9, Section 10 and Section 11.
13. Except as otherwise specifically provided herein or in
the Procedure, all statements, requests, notices and advices
hereunder shall be in writing, or by telephone if promptly
confirmed in writing, and if to an Agent shall be sufficient in all
respects when delivered or sent by facsimile transmission or
registered mail to such Agent at the address or facsimile
transmission number set forth in the Appointment and Acceptance of
Agent relating to the appointment of such Agent, and if to the
Company shall be sufficient in all respects when delivered or sent
by facsimile transmission or registered mail to the Company at 3711
Kennett Pike, Greenville, Delaware 19807, Attention: Richard F.
Kotz, Secretary, Facsimile Transmission No. (302) 888-3150, and if
to Sears shall be sufficient in all respects when delivered or sent
by facsimile transmission or registered mail to Sears at 3333
Beverly Road, Hoffman Estates, Illinois 60179, Attention: Senior
Vice President, General Counsel and Secretary, Facsimile
Transmission No. (847) 286-2471 with a copy to the Vice President
and Treasurer, Facsimile Transmission No. (847) 286-3690. 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 ROEBUCK ACCEPTANCE CORP.
By: /s/ Stephen D. Carp
Vice President, Finance
SEARS, ROEBUCK AND CO.
By: /s/ Alice M. Peterson
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:
GOLDMAN, SACHS & CO.
Address: 85 Broad Steet, New York, New York 10004, Attn:
Registration Department
Facsimile Transmission No.: (212) 902-3000
/s/ Goldman, Sachs & Co.
MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED
Address: 250 Vesey Street, 23rd Floor, World Financial Center,
North Tower, New York, New York 10281, Attn: MTN Product Management
Facsimile Transaction No.: (212) 449-2234
By: /s/ Scott G. Primrose
Authorized Signatory
MORGAN STANLEY & CO. INCORPORATED
Address: 1585 Broadway, New York, New York 10036, Attn: Managing
Director, Short-and Medium-Term Note Department
Facsimile Transmission No.: (212) 761-0780
Copy to: 1585 Broadway, New York, New York 10036, Attn: Medium-
Term Note Department
Facsimile Transmission No.: (212) 761-0780
By: /s/ Harold J. Hendershot, III
SALOMON BROTHERS INC.
Address: Seven World Trade Center, 32st Floor, New York, New York
10048, Attn: Medium-Term Note Department
Facsimile Transmission No.: (212) 783-2274
By: /s/ Anne Clarke Wolff
ANNEX I
Sears Roebuck Acceptance Corp.
$ Medium Term Notes Series __
TERMS AGREEMENT
_______________________
_______________________
_______________________
Dear Sirs: ,199
Sears Roebuck 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, Roebuck 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 ROEBUCK ACCEPTANCE CORP.
By:
SEARS, ROEBUCK AND CO.
By:
Accepted:
[_______________________________________
By: ]
SCHEDULE TO ANNEX I
Title of Purchased Notes:
[Medium-Term Notes, Series II]
[ % Notes due ]
Aggregate Principal Amount:
[$ or units of other Specified Currency]
[Currency Swap or Forward Arrangements:]
[Price to Public:]
Purchase Price by :
% of the principal amount of the Purchased Notes [, plus
accrued interest from to ] [and accrued
amortization, from to ]
Specified Funds for Payment of Purchase Price:
immediately available funds
Indenture:
Indenture, dated as of May 15, 1995, as supplemented to the
date hereof, between the Company and The Chase Manhattan Bank,
N.A., as Trustee
Form of Purchased Notes:
[Certificated form only][Global form only]
Time of Delivery:
Closing Location:
Maturity:
Interest Rate:
[ %] [Specify floating rate provisions, if any]
Interest Payment Dates:
[months and dates]
Documents to be Delivered:
The following documents referred to in the Distribution
Agreement shall be delivered as a condition to the Closing:
[(1) The opinion referred to in Section 8(c).]
[(2) The accountants' letter referred to in Section
8(d).]
[(3) The officers' certificate referred to in Section
8(h).]
Lock-Out Provisions:
[Describe modifications, if any, to the lock-out provisions
set forth in Section 6 of the Distribution Agreement.]
Syndicate Provisions:
[Set forth any provisions relating to underwriters' default
and step-up of amounts to be purchased by underwriters acting with
]
ANNEX II
Sears Roebuck Acceptance Corp.
ADMINISTRATIVE PROCEDURE
Medium-term notes (the "Notes") in the aggregate initial
offering price of up to $1,500,000,000 are to offered from time to
time by Sears Roebuck 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 March 28, 1996 (the
"Distribution Agreement"), between the Company, Sears, Roebuck and
Co. ("Sears") and the Agents, to which this Administrative
Procedure is attached as Annex II.
The Notes will be issued pursuant to an Indenture, dated as of
May 15, 1995 (the "Indenture"), between the Company and The Chase
Manhattan Bank, N.A., as Trustee (the "Trustee").
Unless otherwise defined herein, terms defined in the
Indenture or the Notes shall be used herein as therein defined.
In the case of purchases of Notes by any Agent as principal,
the relevant terms and settlement details related thereto,
including the Time of Delivery referred to in the first paragraph
of Section 8, will (unless the Company and such Agent otherwise
agree) be set forth in a Terms Agreement entered into between such
Agent and the Company and Sears pursuant to the Distribution
Agreement.
The procedures to be followed during, and the specific terms
of, the solicitation of offers by the Agents and the sale as a
result thereof by the Company are explained below. The procedures
are subject, and are qualified in their entirety by reference, to
all of the respective provisions of the Distribution Agreement and
the Indenture.
The Company will advise each Agent in writing of those persons
handling administrative responsibilities ("Designated Persons")
with whom such Agent is to communicate regarding offers to purchase
Notes and the details of their delivery.
I. General Procedures
Registration: Notes will be issued only in fully registered form
and will be either (a) Book-Entry Notes represented by one or more
global notes (each a "Global Note") held by the Trustee, as agent
for The Depository Trust Company ("DTC") and recorded in the book-
entry system maintained by DTC or (b) Certificated Notes delivered
in certificated form to the Selling Agent or Purchasing Agent. All
Notes will be issued as Book-Entry Notes except as otherwise
approved in advance by the Company and except that non-U.S. dollar
denominated Notes will be issued as Certificated Notes only unless
otherwise specified in a Prospectus Supplement or Pricing
Supplement.
Maturities: Each Note will mature on a date, selected by the
purchaser and agreed to by the Company, which will be at least nine
months from the date of original issuance by the Company of such
Note (the "Settlement Date").
Price to Public: Each Note will be issued at the percentage of
principal amount specified in the Prospectus (as defined in Section
1(a) of the Distribution Agreement) relating to the Notes.
Currencies: Notes will be denominated in U.S. dollars or in such
other currency or currency unit as is specified in the Prospectus
(the "Specified Currency").
Denominations: The denomination of any Book-Entry, Global or
Certificated Note will be a minimum of U.S. $1,000 or any amount in
excess thereof in integral multiples of $1,000 or the equivalent,
as determined pursuant to the provisions of the Indenture, of U.S.
$1,000 (rounded down to an integral multiple of 1,000 units of such
Specified Currency) and any amounts in excess thereof.
Interest Payments: As specified in the Indenture and the Form of
Note.
Acceptance of
Offers: Each Agent will promptly advise the Company by
telephone or other appropriate means of offers to purchase Notes
received by it other than those rejected by such Agent. Each Agent
may, in its discretion reasonably exercised, reject any offer
received by it. Each Agent also may make offers to the Company to
purchase Notes as a Purchasing Agent in accordance with Section
2(b) of the Distribution Agreement. The Company will have the sole
right to accept offers to purchase Notes and may reject any such
offer.
If the Company accepts an offer to purchase Notes, it will
confirm such acceptance in writing to the Selling Agent or
Purchasing Agent, as the case may be. If the Company rejects an
offer, it will promptly notify the Agent involved.
Filing and Delivery
of Prospectus: If the Company accepts an offer to purchase a
Note, the Company will prepare a Pricing Supplement reflecting the
terms of such Note and will arrange to have a Pricing Supplement
filed with the Securities and Exchange Commission (the
"Commission") as soon as practicable after the preparation thereof
and will supply at least one such Pricing Supplement to the Selling
Agent or the Purchasing Agent, as the case may be, not later than
5:00 p.m., New York City time, on the Business Day following the
date of acceptance of such offer.
With respect to each Note sold pursuant to the Distribution
Agreement, the Selling Agent shall send a copy of the Prospectus as
most recently amended or supplemented (together with the Pricing
Supplement relating to such Note) to the purchaser or its agent
prior to or together with the delivery of (a) the written
confirmation of sale (including, in the case of a book-entry
security, the confirmation through DTC's Institutional Delivery
System) or (b) the delivery of such Note, whichever is earlier.
Confirmation: For each offer accepted by the Company, the Selling
Agent will issue a written confirmation to each purchaser
containing the Sale Information (as defined below), plus delivery
and payment instructions.
Currency Swaps: Unless otherwise requested by the Company, each
time an Agent advises the Company of an offer to purchase Notes
denominated in a currency or currency unit other than U.S. dollars,
such Agent will provide the Company information with respect to
currency swap or forward arrangements that, as of the time the
offer is communicated to the Company, such Agent is prepared to
enter into or arrange with a third party to enter into in order to
exchange amounts to be received from the purchaser of such Note at
the Settlement Date and to exchange amounts to be paid by the
Company on the interest payment dates and at maturity.
Settlement--
Sales as Principal: In the event of a purchase of Notes by an
Agent or Agents, as principal or underwriter (other than as
Purchasing Agent), appropriate settlement details will be set forth
in the applicable Terms Agreement to be entered into between such
Agent or Agents and the Company pursuant to the Distribution
Agreement.
Settlement--
Sales as Agent: All offers solicited by the Agents and accepted
by the Company will be settled on the third Business Day (as
defined below) after the date of acceptance unless otherwise agreed
by the purchaser and the Company and the Settlement Date shall be
specified upon acceptance of such offer. The term "Business Day"
means a Monday, Tuesday, Wednesday, Thursday or Friday on which
commercial banks in any of New York City, the City of Chicago or
the City of Wilmington and, (i) if the Note is denominated in a
currency other than U.S. dollars, in the capital of the country of
the Specified Currency, or (ii) if the Note is denominated in
European Currency Units, in Brussels, are not required or
authorized to be closed.
Communication of Sale
Information to the
Company by Selling
Agent: For each offer accepted by the Company, the Selling Agent
or Purchasing Agent, as the case may be, will provide (unless
provided by the purchaser directly to the Company) to a Designated
Person by facsimile transmission or other acceptable means the
following information (the "Sale Information"):
(1) If a Certificated Note, exact name of the registered
owner,
(2) If a Certificated Note, exact address of the registered
owner,
(3) If a Certificated Note, taxpayer identification number of
the registered owner (if available),
(4) If a Book-Entry Note, the DTC Participant Number of the
institution through which the customer will hold the
beneficial interest in the Global Note,
(5) Principal amount of the Note,
(6) 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 Redemption Date
or Redemption Dates, such of the following as are applicable:
(i) the Redemption Date or Redemption Dates,
(ii) whether the Note is redeemable or repayable at the
option of the Company or the Holder or both,
(iii) the Redemption Price (% of par) on each
Redemption Date,
(iv) the notice period during which the option to redeem
may be exercised, and
(v) the method by which notice of redemption is to be
given,
(17) If a Floating Rate Note, such of the following as are
applicable:
(i) Interest Rate Basis,
(ii) Index Maturity,
(iii) Spread,
(iv) Spread Multiplier,
(v) Maximum Rate,
(vi) Minimum Rate,
(vii)Initial Interest Determination Date,
(viii)Interest Reset Dates,
(ix) Calculation Dates,
(x) Interest Determination Dates, and
(xi) Calculation Agent,
(18) Interest Payment Dates,
(19) Regular Record Dates,
(20) Denomination of certificates to be delivered at
settlement, and
(21) That the Note is a Certificated Note (if applicable),
(22) To the extent known to the Agent, any information not
otherwise expressly set forth in the Prospectus Supplement which is
required pursuant to Item 501(c)(7) or 508 of Regulation S-K
promulgated by the Commission, including, but not limited to, the
initial public offering price of the Notes, if other than 100% of
the principal amount, and
(23) If an Agent purchases Notes as a principal, the extent,
if any, to which the items specified in Sections 8(c), 8(d) and
8(h) of the Distribution Agreement are required to be furnished as
of the Time of Delivery.
In addition, the Selling Agent will use its reasonable efforts
to provide in writing the following information to the Company and
the Trustee:
(24) One of the following:
a. In the case of a foreign registered owner (other
than a Financial Institution (as defined below)), an IRS Form W-8
that has been duly and properly signed by the registered owner.
b. In the case of a registered owner which is a
Financial Institution, a statement from the Financial Institution
signed under penalties of perjury stating that the Financial
Institution has received from the beneficial owner an IRS Form W-8
that has been duly and properly signed by the registered owner
together with a copy of such Form W-8.
c. In the case of a registered owner who is a United
States person, an IRS Form W-9 that has been duly and properly
signed by the registered owner.
A "Financial Institution" is a securities clearing
organization, a bank, or another financial institution that holds
customers' securities in the ordinary course of its trade or
business which holds a Note for a beneficial owner who is a foreign
person.
After receiving the Sale Information the Company will, after
recording the Sale Information and any necessary calculations,
provide appropriate documentation to the Trustee necessary for the
preparation, authentication and delivery of such Note.
Change in Interest
Rate, Maturity or
Currency Denomination: The Company and the Agents will discuss
from time to time the rates of interest per annum to be borne by,
and the maturity and currency denomination of, Notes that may be
sold as a result of the solicitation of offers by the Agents.
Suspension of
Solicitation;
Amendment or
Supplement: The Company may instruct the Agents to suspend
solicitation of offers to purchase Notes at any time, whereupon the
Agents will as promptly as possible (but in any event not later
than one business day after receipt of such instruction) suspend
solicitation until such time as the Company has advised the Agents
that solicitation of offers to purchase Notes may be resumed. If
the Company proposes to amend or supplement the Registration
Statement or the Prospectus relating to the Notes (except in the
case of a Pricing Supplement), it will promptly advise the Agents
and will furnish to the Agents such proposed amendment or
supplement and, after the Agents have been afforded a reasonable
opportunity to review such amendment or supplement, will cause such
amendment or supplement to be filed with the Commission. The
Company will promptly provide the Agents with copies of any such
amendment or supplement and confirm to the Agents that such
amendment or supplement has been filed with the Commission.
In the event that at the time the Agents suspend solicitation
of offers to purchase Notes there shall be any outstanding offers
to purchase Notes that have been accepted by the Company but for
which settlement has not occurred, the Company, consistent with its
obligations under the Distribution Agreement, promptly will advise
the Agents whether such sales may be settled and whether copies of
the Prospectus as supplemented at the time of the suspension may be
delivered in connection with the settlement of such sales. The
Company will have the sole responsibility for such decision and for
any arrangements which may be made in the event that the Company
determines that such sales may not be settled or that copies of
such Prospectus may not be so delivered.
Authenticity of
Signatures: The Trustee will furnish the Agents from time to
time with the specimen signatures of each of the Trustee's
officers, employees or agents who have been authorized by the
Trustee to authenticate Notes, but the Agents will have no
obligation or liability to the Company or the Trustee in respect of
the authenticity of the signature of any officer, employee or agent
of the Company or the Trustee on any Note.
Advertising Cost: The Company will determine with the Agents the
amount of advertising that may be appropriate in the solicitation
of offers to purchase the Notes. Advertising expenses will be paid
by the Company.
II. Book-Entry Procedures
In connection with the qualification of Book-Entry Notes for
eligibility in the book-entry system maintained by DTC, the Trustee
will perform the custodial, document control and administrative
functions described below, in accordance with its obligations under
a Letter of Representations from the Company and the Trustee to
DTC, dated March 28, 1996, and a Medium-Term Note Certificate
Agreement, dated March 10, 1989 between the Trustee and DTC (the
"Certificate Agreement"), and the Trustee's obligations as a
participant in DTC including DTC's Same-Day Funds Settlement System
("SDFS").
Issuance: All Fixed Rate Notes which have the same original issue
date, redemption or repayment provisions, Interest Payment Dates,
Regular Record Dates, interest rate, Specified Currency and
maturity date (collectively, the "Fixed Rate Terms") will be
represented initially by a single Global Note in fully registered
form without coupons.
All Floating Rate Notes which have the same original issue
date, redemption or repayment provisions, Interest Payment Dates,
Regular Record Dates, Interest Rate Basis, Interest Determination
Dates, Interest Reset Dates, Calculation Dates, Index Maturity,
Spread or Spread Multiplier, if any, Minimum Rate, if any, Maximum
Rate, if any, Specified Currency and maturity date (collectively,
the "Floating Rate Terms") will be represented initially be a
single Global Note in fully registered form without coupons.
Identification: The Company has received from the CUSIP Service
Bureau of Standard & Poor's Corporation (the "CUSIP Service
Bureau") a series of approximately 900 CUSIP numbers for future
assignment to Global Notes, and the Company has delivered to the
Trustee and DTC such list of such CUSIP numbers. The Trustee will
assign CUSIP numbers to Global Notes as described below. DTC will
notify the CUSIP Service Bureau periodically of the CUSIP numbers
that have been assigned to Global Notes. The Trustee will notify
the Company at any time when fewer than 100 of the reserved CUSIP
numbers remain unassigned to Global Notes, and, if it deems
necessary, the Company will reserve additional CUSIP numbers for
assignment to Global Notes. Upon obtaining such additional CUSIP
numbers, the Company will deliver a list of such additional numbers
to the Trustee and DTC.
Registration: Each Global Note will be registered in the name of
Cede & Co., as nominee for DTC, on the Security Register maintained
under the Indenture. The beneficial owner of a Book-Entry Note (or
one or more indirect participants in DTC designated by such owner)
will designate one or more participants in DTC (the "Participants")
to act as agent or agents for such owner in connection with the
book-entry system maintained by DTC, and DTC will record in book-
entry form, in accordance with instructions provided by such
Participants, a credit balance with respect to such Book-Entry Note
in the account of such Participants. The ownership interest of
such beneficial owner in such Book-Entry Note will be recorded
through the records of such Participants or through the separate
records of such Participants and one or more indirect participants
in DTC.
Transfers: Transfers of a Book-Entry Note will be accomplished
by book entries made by DTC and, in turn, by Participants (and in
certain cases, one or more indirect participants in DTC) acting on
behalf of beneficial transferors and transferees of such Book-Entry
Note.
Exchanges: The Trustee, at the Company's request, may deliver
to DTC and the CUSIP Service Bureau at any time a written notice of
consolidation specifying (a) the CUSIP numbers of two or more
outstanding Global Notes having the same Fixed Rate Terms or
Floating Rate Terms, as the case may be (except that original issue
dates need not be the same), and for which interest has been paid
to the same date; (b) a date, occurring at least 30 days after such
written notice is delivered and at least 30 days before the next
Interest Payment Date for the related Book-Entry Notes, on which
such Global Notes shall be exchanged for a single replacement
Global Note; and (c) a new CUSIP number to be assigned to such
replacement Global Note. Upon receipt of such a notice, DTC will
send to its participants (including the Trustee) a written
reorganization notice to the effect that such exchange will occur
on such date.
Prior to the specified exchange date, the Trustee will deliver
to the CUSIP Service Bureau written notice setting forth such
exchange date and the new CUSIP number and stating that, as of such
exchange date, the CUSIP numbers of the Global Notes to be
exchanged will no longer be valid.
On the specified exchange date, the Trustee will exchange such
Global Notes for a single Global Note bearing the new CUSIP number.
The CUSIP numbers of the exchanged Global Notes will, in accordance
with CUSIP Service Bureau procedures, be cancelled and not
immediately reassigned.
Notwithstanding the foregoing, if the Global Notes to be
exchanged exceed $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 Corporation, which will use the message to
include certain terms of the related Global Note in the appropriate
daily bond report published by Standard & Poor's Corporation.
Payments of Principal,
Premium, if any,
and Interest: Payments of Interest Only. Promptly after each
Regular Record Date (or as soon thereafter as such information is
determined), the Trustee will deliver to the Company and DTC a
written notice specifying by CUSIP number the amount of interest to
be paid on each Global Note on the following Interest Payment Date
(other than an Interest Payment Date coinciding with the Maturity)
and the total of such amounts. DTC will confirm the amount payable
on each Global Note on such Interest Payment Date by reference to
the daily bond reports published by Standard & Poor's Corporation.
On such Interest Payment Date, the Company will pay to the Trustee,
and the Trustee in turn will pay to DTC, such total amount of
interest due (other than at Maturity), at the times and in the
manner set forth below under "Manner of Payment."
Payments at Maturity. On or about the first Business Day of
each month (or as soon thereafter as such information is
determined), the Trustee will deliver to the Company and DTC a
written list of principal, premium, if any, and interest to be paid
on each Global Note maturing or subject to redemption or repayment
in the following month. The Trustee, the Company and DTC will
confirm the amounts of such principal, premium (if any) and
interest payments with respect to each such Global Note on or about
the fifth Business Day preceding the maturity date of such Global
Note. At such maturity date, the Company will pay to the Trustee,
and the Trustee in turn will pay to DTC, the principal of and
premium, if any, on such Global Note, together with interest due at
such maturity date, at the times and in the manner set forth below
under "Manner of Payment." Promptly after payment to DTC of the
principal, premium, if any, and interest due at maturity of all
Book-Entry Notes represented by a particular Global Note, the
Trustee will cancel such Global Note, make appropriate entries in
its records and dispose of such Global Note as provided in the
Indenture.
Manner of Payment. The total amount of any principal, premium
and interest due on Global Notes on any Interest Payment Date or at
maturity shall be paid by the Company to the Trustee in funds
immediately available for use by the Trustee as of noon, New York
City time, on such date. The Company will make such payment on
such Global Notes by wire transfer to the Trustee or by instructing
the Trustee to withdraw funds from an account maintained by the
Company at the Trustee. The Company will confirm any such
instructions in writing to the Trustee. For maturity, redemption
and other principal payments, prior to 1:00 p.m., New York City
time, on each such date or as soon as possible thereafter following
receipt of such funds from the Company, the Trustee will pay by
separate wire transfer (using Fedwire message entry instructions in
a form previously specified by DTC) to an account at the Federal
Reserve Bank of New York previously specified by DTC, in funds
available for immediate use by DTC, each payment of interest,
principal and premium, if any, due on Global Notes on such date;
and for interest payments, the Trustee will pay DTC in same day
funds on the Interest Payment Date in accordance with existing
arrangements between the Trustee and DTC. Thereafter on each such
date, DTC will pay, in accordance with its SDFS operating
procedures then in effect, such amounts in funds available for
immediate use to the respective Participants with payments in
amounts proportionate to their respective holdings in principal
amount of beneficial interest in such Global Note as are recorded
in the book-entry system maintained by DTC. Once payment has been
made to DTC, neither the Company nor the Trustee shall have any
responsibility or liability for the payment by DTC of the principal
of, or premium, if any, or interest on, the Book-Entry Notes to
such Participants.
Withholding Taxes. The amount of any taxes required under
applicable law to be withheld from any interest payment on a Book-
Entry Note will be determined and withheld by the Participant,
indirect participant in DTC or other Person responsible for
forwarding payments and materials directly to the beneficial owner
of such Book-Entry Note, or as applicable law may otherwise
require.
Settlement Procedures: Settlement Procedures with regard to each
Book-Entry Note sold by each Agent will be as follows:
A. Upon receiving the Sale Information, the Company will, as
soon as practicable, advise the Trustee by facsimile transmission
of the Sale Information and the name of such Agent.
B. The Trustee will assign a CUSIP number to the Global Note
representing such Book-Entry Note and will communicate to DTC and
the Agent through DTC's Participant Terminal System, a pending
deposit message specifying such of the following Settlement
information as applicable:
1. The following information:
(a) Principal amount of the purchase.
(b) In the case of a Fixed Rate Note, the interest rate,
or, in the case of a Floating Rate Note, the initial interest rate,
the Interest Reset Dates, the Interest Payment Dates, the Interest
Rate Basis, Index Maturity, Spread or Spread Multiplier, if any,
and the Minimum Rate and Maximum Rate, if any.
(c) Settlement date.
(d) Maturity date.
(e) Price.
(f) DTC Participant Number of the institution through
which the customer will hold the beneficial interest in the Global
Note.
2. The numbers of the participant accounts maintained by DTC
on behalf of the Trustee and the Agent.
3. Identification as a Fixed Rate Note or a Floating Rate
Note.
4. The initial Interest Payment Date for such Note, number
of days by which such date succeeds the related DTC record date
(which term means the Regular Record Date, or in the case of
Floating Rate Notes which reset weekly, the date five calendar days
immediately preceding the applicable Interest Payment Date) and,
for Fixed Rate Notes, the amount of interest payable on such
Interest Payment Date per $1,000 principal amount of Note.
5. The frequency of interest payments.
6. The frequency of interest rate resets.
7. The CUSIP number of the Global Note representing such
Book-Entry Notes.
8. Whether such Global Note represents any other Book-Entry
Notes issued or to be issued.
The Trustee will also orally notify the Agent of the CUSIP
number assigned to the Global Note.
C. The Trustee will prepare a Global Note representing such
Book-Entry Note in a form that has been approved by the Company.
D. The Trustee will authenticate the Global Note
representing such Book-Entry Note and maintain possession of such
Global Note.
E. DTC will credit such Book-Entry Note to the participant
account of the Trustee maintained by DTC.
F. The Trustee will enter an SDFS deliver order through
DTC's Participant Terminal System instructing DTC to (i) debit such
Book-Entry Note to the Trustee's participant account and credit
such Book-Entry Note to the participant account of the Agent
maintained by DTC and (ii) debit the settlement account of the
Agent and credit the settlement account of the Trustee maintained
by DTC, in an amount equal to the price of such Book-Entry Note
less the Agent's commission. The entry of such a deliver order
shall be deemed to constitute a representation and warranty by the
Trustee to DTC that (a) the Global Note representing such Book-
Entry Note has been issued and authenticated and (b) the Trustee is
holding such Global Note pursuant to the Certificate Agreement.
G. The Agent will enter an SDFS deliver order through DTC's
Participant Terminal System instructing DTC to (i) debit such Book-
Entry Note to the Agent's participant account and credit such Book-
Entry Note to the participant accounts of the Participants to whom
such Book-Entry Note is to be credited maintained by DTC and (ii)
debit the settlement accounts of such Participants and credit the
settlement account of the Agent maintained by DTC, in an amount
equal to the initial public offering price of the Book-Entry Note
so credited to their accounts.
H. Transfers of funds in accordance with SDFS deliver orders
described in Settlement Procedures F and G will be settled in
accordance with SDFS operating procedures in effect on the
Settlement Date.
I. The Trustee will credit to an account of the Company
maintained at The Chase Manhattan Bank, N.A. funds available for
immediate use in an amount equal to the amount credited to the
Trustee's DTC settlement account in accordance with Settlement
Procedure F.
J. The Agent will confirm the purchase of each Book-Entry
Note to the purchaser thereof either by transmitting to the
Participant to whose account such Note has been credited a
confirmation order through DTC's Participant Terminal System or by
mailing a written confirmation to such purchaser. In all cases the
Prospectus as most recently amended or supplemented (including the
applicable Pricing Supplement) must accompany or precede such
confirmation.
Settlement Procedures
Timetable: For offers accepted by the Company, Settlement
Procedures A through J shall occur no later than the respective
times (New York City time) listed below:
Settlement
Procedure Time
A 11:00 a.m. on the 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-ntry Note pursuant to Settlement Procedure F
(which may be evidenced by facsimile transmission), the Trustee, at
the Company's direction, shall deliver to DTC, through DTC's
Participant Terminal System, as soon as practicable, but no later
than 2:00 p.m. on any business day, a withdrawal message
instructing DTC to debit such Book-Entry Note to the participant
account of the Trustee maintained at DTC. DTC will process the
withdrawal message, provided that such participant account contains
a principal amount of the Global Note representing such Book-Entry
Note that is at least equal to the principal amount of such Book-
Entry Note to be debited. If withdrawal messages are processed
with respect to all the Book-Entry Notes issued or to be issued
represented by a Global Note, the Trustee will void such Global
Note, make appropriate entries in its records and, unless otherwise
directed by the Company, destroy the Certificate. The CUSIP number
assigned to such Global Note shall, in accordance with CUSIP
Service Bureau procedures, be cancelled and not immediately
reassigned. If withdrawal messages are processed with respect to a
portion of the Book-Entry Notes represented by a Global Note, the
Trustee will exchange such Global Note for two Global Notes, one of
which shall represent such Book-Entry Notes (which shall be
cancelled immediately after issuance), and the other of which shall
represent the remaining Book-Entry Notes previously represented by
the surrendered Global Note and shall bear the CUSIP number of the
surrendered Global Note. If the purchase price for any Book-Entry
Note is not timely paid to the Participants with respect to such
Note by the beneficial purchaser (other than a Purchasing Agent)
thereof (or a person, including an indirect participant in DTC,
acting on behalf of such purchaser), such Participants and, in
turn, the related Agent may enter SDFS deliver orders through DTC's
Participant Terminal System debiting such Note free to such Agent's
Participant Account and crediting such Note free to the Participant
Account of the Trustee and shall notify the Trustee and the Company
thereof. Thereafter, the Trustee, (i) will immediately notify the
Company, once the Trustee has confirmed that such Note has been
credited to its Participant Account, and the Company shall transfer
by Fedwire (immediately available funds) to such Agent an amount
equal to the price of such Note which was previously sent by wire
transfer to the account of the Company maintained at The Chase
Manhattan Bank, N.A. in accordance with settlement procedure I, and
(ii) the Trustee will deliver the withdrawal message and take the
related actions described in the preceding sentences of this
paragraph. Such debits and credits will be made on the Settlement
Date, if possible, and in any event not later than 5:00 p.m. on the
following Business Day. If such failure shall have occurred for
any reason other than default by the Agent in the performance of
its obligations hereunder or under the Distribution Agreement, the
Company will reimburse the Agent on an equitable basis for its loss
of the use of funds during the period when they were credited to
the account of the Company. In addition, if such failure shall
have occurred by reason of a default by the Company in the
performance of its obligations under the Distribution Agreement,
the Company will pay the Selling Agent any commission to which it
would have been entitled in connection with such sale.
Notwithstanding the foregoing, upon any failure to settle with
respect to a Book-Entry Note, DTC may take any actions in
accordance with its SDFS operating procedures then in effect. In
the event of a failure to settle with respect to a Book-Entry Note
that was to have been represented by a Global Note also
representing other Book-Entry Notes, the Trustee will provide, in
accordance with Settlement Procedures C and D, for the
authentication and issuance of a Global Note representing such
other Book-Entry Notes and will make appropriate entries in its
records.
Trustee Not to Risk
Funds: Nothing herein shall be deemed to require the Trustee to
risk or expend its own funds in connection with any payment to the
Company, or the Agents or DTC, it being understood by all parties
that payments made by the Trustee to either the Company, DTC or the
Agents shall be made only to the extent that funds are provided to
the Trustee for such purpose.
III. Certificated Notes procedures
Payment at
Maturity: As specified in the Indenture and the Form of Note.
Settlement: Prior to 3:00 p.m., New York City time, on the
Business Day prior to the Settlement Date, the Company will
instruct the Trustee or its agent by facsimile transmission or
other acceptable written means to authenticate and deliver the
Certificated Notes no later than 2:15 p.m., New York City time, on
the Settlement Date.
If the Settlement Date is the same day as the date of
acceptance, then prior to 11:00 a.m., New York City time, on the
Settlement Date the Company will instruct the Trustee or its agent
by facsimile transmission or other acceptable written means to
authenticate and deliver the Certificated Notes no later than 2:15
p.m., New York time, on the Settlement Date. Certificated Notes
denominated in a currency or currency unit other than U.S. dollars
shall have a Settlement Date not less than two Business Days after
the acceptance of the offer by the Company.
Delivery of
Notes
and Cash
Payment: Upon receipt of appropriate documentation and
instructions, the Company will cause the Trustee to prepare and
authenticate each Note and appropriate receipts.
Each Certificated Note shall be authenticated and dated on the
Settlement Date therefor. The Trustee will deliver each
authenticated Certificated Note to the Selling Agent for the
benefit of the purchaser in accordance with written instructions
(or oral instructions confirmed in writing (which may be given by
telex or telecopy) on the next business day) from the Company.
Delivery by the Trustee of each Certificated Note will be made
against a receipt therefor.
Upon verification by the Selling Agent that a Certificated
Note has been prepared and properly authenticated and delivered by
the Trustee and registered in the name of the purchaser in the
proper principal amount and other terms in accordance with the Sale
Information, payment will be made to the Company's account at The
Chase Manhattan Bank, N.A. on behalf of the Company by the Selling
Agent on behalf of the purchaser the same day as the Selling
Agent's receipt of such Certificated Note in immediately available
funds. If either (i) the Certificated Note is denominated in U.S.
dollars or (ii) the Certificated Note is denominated in a currency
or currency unit other than U.S. dollars and, at or prior to the
Settlement Date, the Company and the Selling Agent have entered
into, or the Selling Agent has arranged for the Company to enter
into, a contract with respect to the sale of the Specified
Currency, the amount payable by the Selling Agent pursuant to the
preceding sentence shall be the issue price of the Certificated
Note (or the U.S. dollar equivalent pursuant to such contract) less
the Selling Agent's commission determined in accordance with
Section 2(a) of the Distribution Agreement. In all other cases,
the Selling Agent's commission shall not be discounted from the
gross proceeds but shall be paid separately by the Company in U.S.
dollars in immediately available funds on the Settlement Date. The
payment by the Selling Agent shall be made only upon prior receipt
by such Agent of immediately available funds from or on behalf of
the purchaser in the Specified Currency unless such Agent decides,
at its option, to advance its own funds for such payment against
subsequent receipt of funds from the purchaser.
Upon delivery of a Certificated Note to the Selling Agent and
the verification provided in the preceding paragraph, the Selling
Agent shall promptly deliver such Certificated Note to the
purchaser or its agent.
Failures: In the event that a purchaser (other than a Purchasing
Agent) shall fail to accept delivery of and make payment for any
Certificated Note, the Selling Agent will forthwith notify the
Trustee and the Company by telephone or by facsimile transmission.
If the Certificated Note has been delivered to the Selling Agent on
behalf of the purchaser, the Selling Agent will immediately return
the Certificated Note to the Trustee. If funds have been advanced
by the Selling Agent for the purchase of such Note, The Chase
Manhattan Bank, N.A. will, upon instruction by the Company and upon
receipt of the Certificated Note, debit the account of the Company
in an amount equal to the amount previously credited thereto in
respect of the Note and will either credit the account of or return
such funds to the Selling Agent. Such debits and credits or
returns will be made on the Settlement Date if possible and, in any
event, not later than the business day following the Settlement
Date. If such failure shall have occurred for any reason other
than default by the Selling Agent in the performance of its
obligations under the Distribution Agreement, the Company will
reimburse the Selling Agent on an equitable basis for its loss of
the use of the funds during the period when they were credited to
the account of the Company. In addition, if such failure shall
have occurred by reason of a default by the Company in the
performance of its obligations under the Distribution Agreement,
the Company will pay the Selling Agent any commission to which it
would have been entitled in connection with such sale.
Immediately upon receipt of the certificate representing the
Note in respect of which the failure occurred, the Trustee will
void such Certificated Note, make appropriate entries in its
records and, unless otherwise instructed by the Company, destroy
the certificate.
ANNEX III
Pursuant to Section 8(d) of the Distribution Agreement, the
Company's and Sears independent certified public accountants shall
furnish letters to the effect that:
(i) They are independent certified public accountants with
respect to the Company and Sears and its consolidated subsidiaries
within the meaning of the Act and the applicable published rules
and regulations of the Commission thereunder and the answer to Item
10 of the Registration Statement is correct insofar as it relates
to them;
(ii) In their opinion, the financial statements and schedules
and the additional financial information examined by them and
included or incorporated by reference in the Registration Statement
or the Prospectus comply as to form in all material respects with
the applicable accounting requirements of the Act or the Exchange
Act, as applicable, and the published rules and regulations
thereunder;
(iii) On the basis of limited procedures, not constituting an
examination in accordance with generally accepted auditing
standards, including a reading of the unaudited financial
statements and schedules and other information referred to below, a
reading of the latest available interim financial statements of the
Company and Sears and certain of its subsidiaries, inspection of
the minute books of the Company and Sears and certain of its
subsidiaries since the date of the latest audited financial
statements included or incorporated by reference in the Prospectus,
inquiries of officials of the Company and Sears and its
subsidiaries responsible for financial and accounting matters and
such other inquiries and procedures as may be specified in such
letter, nothing came to their attention that caused them to believe
that:
(A) the unaudited consolidated statements of income,
consolidated statements of financial position and consolidated
statements of changes in financial position of the Company and of
Sears and its consolidated subsidiaries included or incorporated by
reference in the Prospectus do not comply as to form in all
material respects with the applicable accounting requirements of
the Exchange Act and the published rules and regulations
thereunder; or
(B) as of a specified date not more than five business
days prior to the date of delivery of such letter, there have been
any changes in the capital stock accounts, long-term debt, short-
term debt, or any decreases in net assets or other items specified
by the Agents, in each case as compared with amounts shown or
included in the latest statement of financial position of the
Company included or incorporated by reference in the Prospectus,
except in each case for changes, increases or decreases which the
Prospectus discloses have occurred or may occur or which are
described in such letter; and
(iv) In addition to the examination referred to in their
report(s) included or incorporated by reference in the Prospectus
and the limited procedures, inspection of minute books, inquiries
and other procedures referred to in clause (iii) above, they have
carried out certain specified procedures, not constituting an
audit, with respect to certain amounts, percentages and financial
information specified by the Agents which are derived from the
general accounting records of the Company and Sears and its
subsidiaries, which appear in the Prospectus (excluding documents
incorporated by reference), or in Part II of, or in exhibits and
schedules to, the Registration Statement specified by the Agents or
in documents incorporated by reference in the Prospectus specified
by the Agents, and have compared certain of such amounts,
percentages and financial information with the accounting records
of the Company and Sears and its subsidiaries and have found them
to be in agreement.
All references in this Annex III to the Prospectus shall be
deemed to refer to the Prospectus as amended or supplemented
(including the documents incorporated by reference therein) as of
the Closing Date referred to in Section 8(d) thereof and to the
Prospectus as amended or supplemented (including the documents
incorporated by reference therein) as of the date of the amendment,
supplement, incorporation or the Time of Delivery relating to the
Terms Agreement requiring the delivery of such letter under Section
8(d) thereof.