Exhibit 1(b)
Sears Xxxxxxx Acceptance Corp.
$ Medium-Term Notes Series __
DISTRIBUTION AGREEMENT
, 199
Sears Xxxxxxx 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. $ (or the
equivalent in foreign currency or currency units), and agrees
with each person serving as an agent pursuant to this Agreement
(individually, an "Agent", and collectively, the "Agents") as
set forth herein. Subject to the terms and conditions stated
herein, the Company hereby (i) appoints each Agent as an agent
of the Company for the purpose of soliciting and receiving
offers to purchase Notes from the Company and (ii) agrees that
whenever it determines to sell Notes directly to any Agent as
principal, it will enter into a separate agreement (each a
"Terms Agreement"), substantially in the form of Annex I hereto,
relating to such sale in accordance with Section 2(b) hereof
(unless the Company and such Agent shall otherwise agree).
The Notes will be issued under an indenture, dated as of
, 199 (the "Indenture"), between the Company and
, 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, Xxxxxxx and Co. ("Sears")
represents and warrants to, and agrees with, each Agent that:
(a) A registration statement on Form S-3 (Registration No. 33-
) in respect of U.S. $ 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..............
1 year to less than 18 months.............
18 months to less than 2 years............
2 years to less than 3 years..............
3 years to less than 4 years..............
4 years to less than 5 years..............
5 years to less than 6 years..............
6 years to less than 7 years..............
7 years to less than 11 years.............
11 years to less than 15 years............
15 years to less than 20 years............
20 years to 30 years......................
Greater than 30 years..................... to be negotiated
Notwithstanding anything herein to the contrary, if, at or prior
to the time of settlement, the Company and an Agent have entered
into, or such Agent has arranged for the Company to enter into,
a contract with respect to the sale of the currency (other than
United States dollars) or currency unit in which a Note has been
denominated and the purchase of which was solicited by such
Agent, the commission in United States dollars payable by the
Company to such Agent shall be based upon the same exchange rate
set forth in such contract.
The authorized denominations of Notes denominated in a currency
or currency unit other than United States dollars shall be
equivalent, as determined by the Market Exchange Rate for such
currency or currency unit on the business day immediately
preceding the date on which the offer for such Notes is
accepted, of U.S. $1,000 (rounded down to an integral multiple
of 10,000 units of such currency or currency unit), and any
larger amount. The authorized denominations of Notes
denominated in United States dollars shall be U.S. $1,000 and
any larger amount in integral multiples of $1,000.
The "Market Exchange Rate" on a given date for a given foreign
currency means the noon buying rate in New York City for cable
transfers in such currency as certified for customs purposes by
the Federal Reserve Bank of New York on such date; provided,
however, that in the case of European Currency Units, Market
Exchange Rate means, unless otherwise agreed by the Company and
the Agents, the rate of exchange determined by the Council of
European Communities (or any successor thereto) as published on
such date or the most recently available date in the Official
Journal of the European Communities (or any successor
publication).
Unless otherwise agreed between the Company and each Agent,
each Agent shall communicate to the Company, orally or in
writing, each offer to purchase Notes received by it as Agent
other than those rejected by such Agent in accordance herewith.
The Company shall have the sole right to accept offers to
purchase Notes and may reject any proposed purchase of Notes.
Each Agent shall have the right, in its discretion reasonably
exercised, to reject any proposed purchase of Notes received by
it, and any such rejection by it shall not be deemed a breach of
its agreements contained herein.
(b) Each sale of Notes to any Agent as principal shall be made
in accordance with the terms of this Agreement and (unless the
Company and such Agent shall otherwise agree) a Terms Agreement
which will provide for the sale of such Notes. Terms
Agreements, each of which shall be substantially in the form of
Annex I hereto, may take the form of an exchange of any standard
form of written telecommunication between any Agent, the Company
and Sears, including by telecopy or telex. The Company, Sears
and any Agent who is a party to a Terms Agreement agree to
exchange executed copies of such Terms Agreement as promptly as
practicable after they have entered into such Terms Agreement
pursuant to the foregoing exchange of written telecommunication.
The Agents may utilize a selling or dealer group in connection
with the reoffering of the Notes purchased as principal.
For each sale of Notes to an Agent as principal that is not
made pursuant to a Terms Agreement, the procedural details
relating to the issue and delivery of such Notes and payment
therefor shall be as set forth in the Procedure. For each such
sale of Notes to an Agent as principal that is not made pursuant
to a Terms Agreement, the Company agrees to pay such Agent a
commission (or grant an equivalent discount) as provided in
Section 3(a) and in accordance with the schedule set forth
therein or established from time to time pursuant thereto,
except as the parties otherwise agree in writing.
Each time and date of delivery of and payment for Notes to be
purchased by an Agent as principal, whether set forth in a Terms
Agreement or in accordance with the Procedure, is referred to
herein as a "Time of Delivery."
(c) Procedural details relating to the issue and delivery of
Notes, the solicitation of offers to purchase Notes, and the
payment in each case therefor, shall be as set forth in the
Procedure. The provisions of the Procedure shall apply to all
transactions contemplated hereunder other than those made
pursuant to a Terms Agreement. Each of the Agents and the
Company agrees to perform the respective duties and obligations
specifically provided to be performed by each of them in the
Procedure. The Company will furnish to the Trustee a copy of
the Procedure as from time to time in effect.
4. The documents required to be delivered pursuant to Section 8
hereof shall be delivered at the offices of the Company, 0000
Xxxxxxx Xxxx, Xxxxxxxxxx, Xxxxxxxx, 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,
Xxxxxxx and Co., and the authorized capital stock of Sears is as
set forth or incorporated by reference in the Registration
Statement;
(iii) SRAC is not an "investment company" within the meaning
of the Investment Company Act of 1940, as amended;
(iv) Each of this Agreement and any applicable Terms
Agreement has been duly authorized, executed and delivered on
the part of the Company, and this Agreement has been duly
authorized, executed and delivered on the part of Sears;
(v) The issue and sale of the Notes and the compliance by the
Company with all of the provisions of the Notes, the Indenture,
this Agreement and any applicable Terms Agreement will not (a)
conflict with or result in any breach which would constitute a
material default under, or result in the creation or imposition
of any lien, charge or encumbrance upon any of the property or
assets of the Company, material to the Company, pursuant to the
terms of, any indenture, loan agreement or other agreement or
instrument for borrowed money known to such counsel to which the
Company is a party or by which the Company may be bound or to
which any of the property or assets of the Company, material to
the Company, is subject, (b) result in any material violation of
the provisions of the Certificate of Incorporation, as amended,
or the By-Laws of the Company or (c) to the best of the
knowledge of such counsel, result in any material violation of
any statute or any order, rule or regulation applicable to the
Company of any court or any Federal, State or other regulatory
authority or other governmental body having jurisdiction over
the Company, other than the Act, the Exchange Act, the Trust
Indenture Act, and the rules and regulations pursuant to each
such act, and other than the securities laws of the various
states or other jurisdictions which are applicable to the issue
and sale of the Notes; and, to the best knowledge of such
counsel, no consent, approval, authorization or other order of,
or filing with, any court or any such regulatory authority or
other governmental body is required for the issue and sale of
the Notes except as may be required under the Act, the Exchange
Act, the Trust Indenture Act and securities laws of the various
states or other jurisdictions which are applicable to the issue
and sale of the Notes;
(vi) The Indenture has been duly authorized, executed and
delivered on the part of the Company and, as to the Company, is
a valid and binding instrument in accordance with its terms
except as the foregoing may be limited by insolvency,
bankruptcy, reorganization or other laws relating to or
affecting the enforcement of creditors' rights or by general
equity principles, and has been qualified under the Trust
Indenture Act; the Notes have been duly authorized and (assuming
due authentication by the Trustee) when duly executed, issued
and delivered pursuant to the Indenture and any Terms Agreement,
will constitute valid and binding obligations of the Company in
accordance with their terms, entitled to the benefits of the
Indenture, except as the foregoing may be limited by insolvency,
bankruptcy, reorganization or other laws relating to or
affecting the enforcement of creditors' rights or by general
equity principles;
(vii) The Fixed Charge Coverage and Ownership Agreement has
been duly authorized, executed and delivered by the parties
thereto and is a valid and binding instrument in accordance with
its terms except as the same may be limited by insolvency,
bankruptcy, reorganization or other laws relating to or
affecting the enforcement of creditors' rights or by general
equity principles;
(viii) Such counsel does not know of any pending legal or
governmental proceedings required to be described in the
Prospectus as amended or supplemented which are not described as
required;
(ix) Except for statements in such documents which do not
constitute part of the Registration Statement or the Prospectus
pursuant to Rule 412 of Regulation C under the Act and after
substituting therefor any statements modifying or superseding
such excluded statements, the documents incorporated by
reference in the Prospectus as amended or supplemented (other
than the financial statements and related schedules, the
analyses of operations and financial condition and other
financial, statistical and accounting data therein, as to which
such counsel need express no opinion), when they became
effective or were filed with the Commission, as the case may be,
complied as to form in all material respects with the
requirements of the Act or the Exchange Act, as applicable, and
the rules and regulations of the Commission thereunder;
(x) Except for statements in such documents which do not
constitute part of the Registration Statement or the Prospectus
pursuant to Rule 412 of Regulation C under the Act and after
substituting therefor any statements modifying or superseding
such excluded statements, the Registration Statement and the
Prospectus as amended or supplemented (excluding the documents
incorporated by reference therein) (other than the financial
statements and related schedules, the analyses of operations and
financial condition and other financial, statistical and
accounting data therein, as to which such counsel need express
no opinion) comply as to form in all material respects with the
requirements of the Act and the rules and regulations
thereunder; the answers in the Registration Statement to Items 9
and 10 (insofar as it relates to such counsel) of Form S-3 are
to the best of such counsel's knowledge accurate statements or
summaries of the matters therein set forth and fairly present
the information called for with respect to those matters by the
Act and the rules and regulations thereunder; and
(xi) Such counsel does not know of any contract or other
document to which the Company or Sears is a party required to be
filed as an exhibit to the Registration Statement or required to
be incorporated by reference into the Prospectus as amended or
supplemented or required to be described in the Prospectus as
amended or supplemented which has not been so filed,
incorporated by reference or described.
In rendering such opinion, such counsel may rely to the extent
such counsel deems appropriate upon certificates of officers or
other executives of the Company, Sears and its business groups
and subsidiaries and of public officials as to factual matters
and upon opinions of other counsel. In rendering the opinion
referred to in subdivision (v) above, such counsel need not
express an opinion as to whether, with respect to any Notes
denominated in a currency other than United States dollars, a
court located in the United States of America would grant a
judgment relating to the Notes in other than United States
dollars, nor an opinion as to the date which any such court
would utilize for determining the rate of conversion into United
States dollars in granting such judgment. Such counsel shall
also state that: (a) nothing has come to such counsel's
attention which has caused such counsel to believe that any of
the documents referred to in subdivision (ix) above (other than
the financial statements, the analyses of operations and
financial condition and other financial, statistical and
accounting data therein, as to which such counsel need express
no belief), in each case after excluding any statement in any
such document which does not constitute part of the Registration
Statement or the Prospectus as amended or supplemented pursuant
to Rule 412 of Regulation C under the Act and after substituting
therefor any statement modifying or superseding such excluded
statement, when such documents became effective or were filed,
as the case may be, contained, in the case of documents which
became effective under the Act, an untrue statement of a
material fact or omitted to state a material fact required to be
stated therein or necessary to make the statements therein not
misleading, and, in the case of documents which were filed under
the Exchange Act with the Commission, an untrue statement of a
material fact or omitted to state a material fact necessary in
order to make the statements therein, in the light of the
circumstances under which they were made, not misleading, and
(b) nothing has come to such counsel's attention which has
caused such counsel to believe that the Registration Statement
or Prospectus as amended or supplemented (other than the
financial statements, the analyses of operations and financial
condition and other financial, statistical and accounting data
therein, as to which such counsel need express no belief)
contains an untrue statement of a material fact or omits to
state a material fact required to be stated therein or necessary
to make the statements therein not misleading;
(d) On the Closing Date, each Time of Delivery and the date of
effectiveness of each amendment or the filing of each supplement
to the Registration Statement or the Prospectus setting forth or
incorporating by reference amended or supplemental financial
information, as the case may be, the independent certified
public accountants who have certified the financial statements
of the Company and Sears and its subsidiaries included or
incorporated by reference in the Registration Statement shall
have furnished to the Agents a letter or letters, dated the
Closing Date or such applicable date, as the case may be, in
form and substance satisfactory to the Agents, to the effect set
forth in Annex III hereto (modified in the case of amended or
supplemented financial information to reflect such amended and
supplemental financial information included or incorporated by
reference in the Registration Statement and the Prospectus as
amended or supplemented to the date of such letter, provided
that if the Registration Statement or the Prospectus is amended
or supplemented solely to include or incorporate by reference
unaudited quarterly financial information, the scope of such
letter, which shall be satisfactory in form and substance to
such Agent, may be limited to relate to such unaudited financial
information unless any other accounting, financial or
statistical information included or incorporated by reference
therein is of a character that, in the reasonable judgment of
such Agent, such letter should address such other information);
(e) (i) The Company and Sears shall not have sustained, after
the date of the latest audited financial statements included or
incorporated by reference in the Prospectus and (A) prior to the
Closing Date, any material loss or interference with its
business from fire, explosion, flood or other calamity, whether
or not covered by insurance, or from any labor dispute or court
or governmental action, order or decree, otherwise than as
contemplated in the Prospectus as amended or supplemented
through the date of this Agreement and (B) prior to each Time of
Delivery, any such loss or interference, otherwise than as set
forth or contemplated in the Prospectus as amended or
supplemented through the date that the Agent agreed to purchase
such Notes as principal; and (ii) since the respective dates as
of which information is given in the Prospectus as amended or
supplemented and (A) prior to the Closing Date, there shall not
have been any material change in the capital stock accounts or
long-term debt of the Company or any material adverse change in
the general affairs, financial position, stockholders' equity or
results of operations of the Company, otherwise than as set
forth or contemplated in the Prospectus as amended or
supplemented through the date of this Agreement and (B) prior to
each Time of Delivery, there shall not have been any such
change, otherwise than as set forth or contemplated in the
Prospectus as amended or supplemented through the date that the
Agent agreed to purchase such Notes as principal, the effect of
which, in any such case described in clause (i) or (ii), in the
judgment of such Agent makes it impracticable or inadvisable to
proceed with the solicitation by such Agent of offers to
purchase Notes from the Company or the purchase by such Agent of
Notes from the Company as principal, as the case may be;
(f) During the period in which the Agents are soliciting
offers to purchase Notes, including the period between the date
that any Agent agreed to purchase such Notes as principal and
the related Time of Delivery, no downgrading shall have occurred
in the rating accorded the Company's or Sears debt securities by
Xxxxx'x 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 0000 Xxxxxxx Xxxx, Xxxxxxxxxx, Xxxxxxxx 00000,
Attention: Xxxxxxx X. Xxxx, Secretary, Facsimile Transmission
No. (000) 000-0000, and if to Sears shall be sufficient in all
respects when delivered or sent by facsimile transmission or
registered mail to Sears at 0000 Xxxxxxx Xxxx, Xxxxxxx Xxxxxxx,
Xxxxxxxx 00000, Attention: Senior Vice President and General
Counsel, Facsimile Transmission No. (000) 000-0000 with a copy
to the Vice President and Treasurer, Facsimile Transmission No.
(000) 000-0000. 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 XXXXXXX ACCEPTANCE CORP.
By: _______________________
SEARS, XXXXXXX AND CO.
By: ________________________
Agents Designated Hereby:
Accepted in New York, New York, as of the date set forth on the
first page of the Distribution Agreement:
Address:
Facsimile Transmission No.:
[Other terms of Agent's appointment, if any, including the
duration of appointment if limited other than pursuant to
Section 12]
Accepted in New York, New York, as of the date [set forth on the
first page of the Distribution Agreement]:
By:_________________________________________
ANNEX I
Sears Xxxxxxx Acceptance Corp.
$ Medium Term Notes Series __
TERMS AGREEMENT
_______________________
_______________________
_______________________
Dear Sirs: ,199
Sears Xxxxxxx 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,
Xxxxxxx 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 XXXXXXX ACCEPTANCE CORP.
By:
SEARS, XXXXXXX AND CO.
By:
Accepted:
[_______________________________________
By: ]
SCHEDULE TO ANNEX I
Title of Purchased Notes:
[Medium-Term Notes, Series I]
[ % Notes due ]
Aggregate Principal Amount:
[$ or units of other Specified Currency]
[Currency Swap or Forward Arrangements:]
[Price to Public:]
Purchase Price by :
% of the principal amount of the Purchased Notes [, plus
accrued interest from to ] [and accrued
amortization, from to ]
Specified Funds for Payment of Purchase Price:
immediately available funds
Indenture:
Indenture, dated as of May 15, 1995, as supplemented to the
date hereof, between the Company and The Chase Manhattan Bank,
N.A., as Trustee
Form of Purchased Notes:
[Certificated form only][Global form only]
Time of Delivery:
Closing Location:
Maturity:
Interest Rate:
[ %] [Specify floating rate provisions, if any]
Interest Payment Dates:
[months and dates]
Documents to be Delivered:
The following documents referred to in the Distribution
Agreement shall be delivered as a condition to the Closing:
[(1) The opinion referred to in Section 8(c).]
[(2) The accountants' letter referred to in Section 8(d).]
[(3) The officers' certificate referred to in Section 8(h).]
Lock-Out Provisions:
[Describe modifications, if any, to the lock-out provisions set
forth in Section 6 of the Distribution Agreement.]
Syndicate Provisions:
[Set forth any provisions relating to underwriters' default and
step-up of amounts to be purchased by underwriters acting with
]
PAGE>
ANNEX II
Sears Xxxxxxx Acceptance Corp.
ADMINISTRATIVE PROCEDURE
Medium-term notes (the "Notes") in the aggregate initial
offering price of up to $ are to offered from time
to time by Sears Xxxxxxx 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 , 199 (the "Distribution Agreement"), between
the Company, Sears, Xxxxxxx 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
, 199 (the "Indenture"), between the Company and
, as Trustee (the "Trustee").
Unless otherwise defined herein, terms defined in the Indenture
or the Notes shall be used herein as therein defined.
In the case of purchases of Notes by any Agent as principal,
the relevant terms and settlement details related thereto,
including the Time of Delivery referred to in the first
paragraph of Section 8, will (unless the Company and such Agent
otherwise agree) be set forth in a Terms Agreement entered into
between such Agent and the Company and Sears pursuant to the
Distribution Agreement.
The procedures to be followed during, and the specific terms
of, the solicitation of offers by the Agents and the sale as a
result thereof by the Company are explained below. The
procedures are subject, and are qualified in their entirety by
reference, to all of the respective provisions of the
Distribution Agreement and the Indenture.
The Company will advise each Agent in writing of those persons
handling administrative responsibilities ("Designated Persons")
with whom such Agent is to communicate regarding offers to
purchase Notes and the details of their delivery.
I. General Procedures
Registration: Notes will be issued only in fully registered
form and will be either (a) Book- Entry Notes represented by
one or more global notes (each a "Global Note") held by the
Trustee, as agent for The Depository Trust Company ("DTC") and
recorded in the book-entry system maintained by DTC or (b)
Certificated Notes delivered in certificated form to the Selling
Agent or Purchasing Agent. All Notes will be issued as
Book-Entry Notes except as otherwise approved in advance by the
Company and except that non-U.S. dollar denominated Notes will
be issued as Certificated Notes only unless otherwise specified
in a Prospectus Supplement or Pricing Supplement.
Maturities: Each Note will mature on a date, selected by the
purchaser and agreed to by the Company, which will be at least
nine months but not more than thirty years from the date of
original issuance by the Company of such Note (the "Settlement
Date").
Price to Public: Each Note will be issued at the percentage of
principal amount specified in the Prospectus (as defined in
Section 1(a) of the Distribution Agreement) relating to the
Notes.
Currencies: Notes will be denominated in U.S. dollars or in
such other currency or currency unit as is specified in the
Prospectus (the "Specified Currency").
Denominations: The denomination of any Book-Entry, Global or
Certificated Note will be a minimum of U.S. $1,000 or any amount
in excess thereof in integral multiples of $1,000 or the
equivalent, as determined pursuant to the provisions of the
Indenture, of U.S. $1,000 (rounded down to an integral multiple
of 1,000 units of such Specified Currency) and any amounts in
excess thereof.
Interest Payments: As specified in the Indenture and the Form of
Note.
Acceptance of
Offers: Each Agent will promptly advise the Company by
telephone or other appropriate means of offers to purchase Notes
received by it other than those rejected by such Agent. Each
Agent may, in its discretion reasonably exercised, reject any
offer received by it. Each Agent also may make offers to the
Company to purchase Notes as a Purchasing Agent in accordance
with Section 2(b) of the Distribution Agreement. The Company
will have the sole right to accept offers to purchase Notes and
may reject any such offer.
If the Company accepts an offer to purchase Notes, it will
confirm such acceptance in writing to the Selling Agent or
Purchasing Agent, as the case may be. If the Company rejects an
offer, it will promptly notify the Agent involved.
Filing and Delivery
of Prospectus: If the Company accepts an offer to purchase a
Note, the Company will prepare a Pricing Supplement reflecting
the terms of such Note and will arrange to have a Pricing
Supplement filed with the Securities and Exchange Commission
(the "Commission") as soon as practicable after the preparation
thereof and will supply at least one such Pricing Supplement to
the Selling Agent or the Purchasing Agent, as the case may be,
not later than 5:00 p.m., New York City time, on the Business
Day following the date of acceptance of such offer.
With respect to each Note sold pursuant to the Distribution
Agreement, the Selling Agent shall send a copy of the Prospectus
as most recently amended or supplemented (together with the
Pricing Supplement relating to such Note) to the purchaser or
its agent prior to or together with the delivery of (a) the
written confirmation of sale (including, in the case of a
book-entry security, the confirmation through DTC's
Institutional Delivery System) or (b) the delivery of such Note,
whichever is earlier.
Confirmation: For each offer accepted by the Company, the
Selling Agent will issue a written confirmation to each
purchaser containing the Sale Information (as defined below),
plus delivery and payment instructions.
Currency Swaps: Unless otherwise requested by the Company, each
time an Agent advises the Company of an offer to purchase Notes
denominated in a currency or currency unit other than U.S.
dollars, such Agent will provide the Company information with
respect to currency swap or forward arrangements that, as of the
time the offer is communicated to the Company, such Agent is
prepared to enter into or arrange with a third party to enter
into in order to exchange amounts to be received from the
purchaser of such Note at the Settlement Date and to exchange
amounts to be paid by the Company on the interest payment dates
and at maturity.
Settlement--
Sales as Principal: In the event of a purchase of Notes by an
Agent or Agents, as principal or underwriter (other than as
Purchasing Agent), appropriate settlement details will be set
forth in the applicable Terms Agreement to be entered into
between such Agent or Agents and the Company pursuant to the
Distribution Agreement.
Settlement--
Sales as Agent: All offers solicited by the Agents and
accepted by the Company will be settled on the third Business
Day (as defined below) after the date of acceptance unless
otherwise agreed by the purchaser and the Company and the
Settlement Date shall be specified upon acceptance of such
offer. The term "Business Day" means a Monday, Tuesday,
Wednesday, Thursday or Friday on which commercial banks in any
of New York City, the City of Chicago or the City of Wilmington
and, (i) if the Note is denominated in a currency other than
U.S. dollars, in the capital of the country of the Specified
Currency, or (ii) if the Note is denominated in European
Currency Units, in Brussels, are not required or authorized to
be closed.
Communication of Sale
Information to the
Company by Selling
Agent: For each offer accepted by the Company, the Selling
Agent or Purchasing Agent, as the case may be, will provide
(unless provided by the purchaser directly to the Company) to a
Designated Person by facsimile transmission or other acceptable
means the following information (the "Sale Information"):
(1) If a Certificated Note, exact name of the registered owner,
(2) If a Certificated Note, exact address of the registered owner,
(3) If a Certificated Note, taxpayer identification number of the
registered owner (if available),
(4) If a Book-Entry Note, the DTC Participant Number of the institution
through which the customer will hold the beneficial interest in the
Global Note,
(5) Principal amount of the Note,
(6) Date of Note,
(7) If a Fixed Rate Note, the interest rate,
(8) Settlement Date,
(9) Maturity date,
(10) Currency or currency unit in which the Note is to be denominated and,
if other than U.S. dollars, the applicable Exchange Rate for such
currency or currency unit,
(11) Indexed Currency, the Base Rate and the Exchange Rate Determination
Date, if applicable,
(12) Issue Price,
(13) Selling Agent's commission or Purchasing Agent's discount, as the case
may be (to be paid upon settlement as a discount from gross proceeds
of sale except as provided below under "Delivery of Notes and Cash
Payment"),
(14) Net proceeds to the Company,
(15) If a redeemable Note with a Redemption Commencement Date, such of
the following as are applicable:
(i) Redemption Commencement Date,
(ii) Initial Redemption Price (% of par), and
(iii)Amount (% of par) that the Redemption Price shall decline
(but not below par) on each anniversary of the Redemption
Commencement Date,
(16) If a redeemable or repayable Note with a Redemption Date or
Redemption Dates, such of the following as are applicable:
(i) the Redemption Date or Redemption Dates,
(ii) whether the Note is redeemable or repayable at the option of
the Company or the Holder or both,
(iii)the Redemption Price (% of par) on each Redemption Date,
(iv) the notice period during which the option to redeem may be
exercised, and
(v) the method by which notice of redemption is to be given,
(17) If a Floating Rate Note, such of the following as are applicable:
(i) Interest Rate Basis,
(ii) Index Maturity,
(iii) Spread,
(iv) Spread Multiplier,
(v) Maximum Rate,
(vi) Minimum Rate,
(vii) Initial Interest Determination Date,
(viii) Interest Reset Dates,
(ix) Calculation Dates,
(x) Interest Determination Dates, and
(xi) Calculation Agent,
(18) Interest Payment Dates,
(19) Regular Record Dates,
(20) Denomination of certificates to be delivered at settlement, and
(21) That the Note is a Certificated Note (if applicable),
(22) To the extent known to the Agent, any information not otherwise
expressly set forth in the Prospectus Supplement which
is required pursuant to Item 501(c)(7) or 508 of Regulation S-K
promulgated by the Commission, including, but not limited to, the
initial public offering price of the Notes, if other than 100%
of the principal amount, and
(23) If an Agent purchases Notes as a principal, the extent, if any, to
which the items specified in Sections 8(c), 8(d) and 8(h) of the
Distribution Agreement are required to be furnished as of the Time
of Delivery.
In addition, the Selling Agent will use its reasonable
efforts to provide in writing the following information to the
Company and the Trustee:
(24) One of the following:
a. In the case of a foreign registered owner (other than a
Financial Institution (as defined below)), an IRS Form W-8 that
has been duly and properly signed by the registered owner.
b. In the case of a registered owner which is a Financial
Institution, a statement from the Financial Institution signed
under penalties of perjury stating that the Financial
Institution has received from the beneficial owner an IRS Form
W-8 that has been duly and properly signed by the registered
owner together with a copy of such Form W-8.
c. In the case of a registered owner who is a United
States person, an IRS Form W-9 that has been duly and properly
signed by the registered owner.
A "Financial Institution" is a securities clearing
organization, a bank, or another financial institution that
holds customers' securities in the ordinary course of its trade
or business which holds a Note for a beneficial owner who is a
foreign person.
After receiving the Sale Information the Company will, after
recording the Sale Information and any necessary calculations,
provide appropriate documentation to the Trustee necessary for
the preparation, authentication and delivery of such Note.
Change in Interest
Rate, Maturity or
Currency Denomination: The Company and the Agents will discuss
from time to time the rates of interest per annum to be borne
by, and the maturity and currency denomination of, Notes that
may be sold as a result of the solicitation of offers by the
Agents.
Suspension of
Solicitation;
Amendment or
Supplement: The Company may instruct the Agents to suspend
solicitation of offers to purchase Notes at any time, whereupon
the Agents will as promptly as possible (but in any event not
later than one business day after receipt of such instruction)
suspend solicitation until such time as the Company has advised
the Agents that solicitation of offers to purchase Notes may be
resumed. If the Company proposes to amend or supplement the
Registration Statement or the Prospectus relating to the Notes
(except in the case of a Pricing Supplement), it will promptly
advise the Agents and will furnish to the Agents such proposed
amendment or supplement and, after the Agents have been afforded
a reasonable opportunity to review such amendment or supplement,
will cause such amendment or supplement to be filed with the
Commission. The Company will promptly provide the Agents with
copies of any such amendment or supplement and confirm to the
Agents that such amendment or supplement has been filed with the
Commission.
In the event that at the time the Agents suspend
solicitation of offers to purchase Notes there shall be any
outstanding offers to purchase Notes that have been accepted by
the Company but for which settlement has not occurred, the
Company, consistent with its obligations under the Distribution
Agreement, promptly will advise the Agents whether such sales
may be settled and whether copies of the Prospectus as
supplemented at the time of the suspension may be delivered in
connection with the settlement of such sales. The Company will
have the sole responsibility for such decision and for any
arrangements which may be made in the event that the Company
determines that such sales may not be settled or that copies of
such Prospectus may not be so delivered.
Authenticity of
Signatures: The Trustee will furnish the Agents from time to
time with the specimen signatures of each of the Trustee's
officers, employees or agents who have been authorized by the
Trustee to authenticate Notes, but the Agents will have no
obligation or liability to the Company or the Trustee in respect
of the authenticity of the signature of any officer, employee or
agent of the Company or the Trustee on any Note.
Advertising Cost: The Company will determine with the Agents the
amount of advertising that may be appropriate in the
solicitation of offers to purchase the Notes. Advertising
expenses will be paid by the Company.
II. Book-Entry Procedures
In connection with the qualification of Book-Entry Notes for
eligibility in the book-entry system maintained by DTC, the
Trustee will perform the custodial, document control and
administrative functions described below, in accordance with its
obligations under a Letter of Representations from the Company
and the Trustee to DTC, dated , 199 , and a
Medium-Term Note Certificate Agreement, dated , 19
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 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 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 on behalf of the Company by the
Selling Agent on behalf of the purchaser the same day as the
Selling Agent's receipt of such Certificated Note in immediately
available funds. If either (i) the Certificated Note is
denominated in U.S. dollars or (ii) the Certificated Note is
denominated in a currency or currency unit other than U.S.
dollars and, at or prior to the Settlement Date, the Company and
the Selling Agent have entered into, or the Selling Agent has
arranged for the Company to enter into, a contract with respect
to the sale of the Specified Currency, the amount payable by the
Selling Agent pursuant to the preceding sentence shall be the
issue price of the Certificated Note (or the U.S. dollar
equivalent pursuant to such contract) less the Selling Agent's
commission determined in accordance with Section 2(a) of the
Distribution Agreement. In all other cases, the Selling Agent's
commission shall not be discounted from the gross proceeds but
shall be paid separately by the Company in U.S. dollars in
immediately available funds on the Settlement Date. The payment
by the Selling Agent shall be made only upon prior receipt by
such Agent of immediately available funds from or on behalf of
the purchaser in the Specified Currency unless such Agent
decides, at its option, to advance its own funds for such
payment against subsequent receipt of funds from the purchaser.
Upon delivery of a Certificated Note to the Selling Agent
and the verification provided in the preceding paragraph, the
Selling Agent shall promptly deliver such Certificated Note to
the purchaser or its agent.
Failures: In the event that a purchaser (other than a
Purchasing Agent) shall fail to accept delivery of and make
payment for any Certificated Note, the Selling Agent will
forthwith notify the Trustee and the Company's
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,
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.
