Exhibit 4(ii)
1
[EXECUTION COPY]
$1,000,000,000
CREDIT AGREEMENT
dated as of November 30, 1998
among
Sears Xxxxxxx Acceptance Corp.,
The Banks Listed Herein,
The Chase Manhattan Bank,
as Administrative Agent,
Citibank, N.A.,
as Syndication Agent
and
Bank of America NT&SA and The First National Bank of Chicago,
as Co-Documentation Agents
TABLE OF CONTENTS
Page
ARTICLE 1Definitions
Section 1.01. Definitions 1
Section 1.02. Accounting Terms and Determinations 14
ARTICLE 2The Credits
Section 2.01. Commitments to Lend 15
Section 2.02. Notice of Committed Borrowing 15
Section 2.03. Money Market Borrowings 16
Section 2.04. Notice to Banks; Funding of Loans 20
Section 2.05. Notes 21
Section 2.06. Mandatory Termination of
Commitments and Repayment of Loans 21
Section 2.07. Interest Rates 22
Section 2.08. Facility Fee 25
Section 2.09. Optional Termination or Reduction
of Commitments 25
Section 2.10. Method of Electing Interest Rates 26
Section 2.11. Optional Prepayments 27
Section 2.12. General Provisions as to Payments 28
Section 2.13. Funding Losses 29
Section 2.14. Computation of Interest and Fees 29
Section 2.15. Taxes 29
Section 2.16. Regulation D Compensation 32
Section 2.17. Optional Increase in Commitments 33
ARTICLE 3Conditions
Section 3.01. Effectiveness of Agreement 34
Section 3.02. Borrowings 35
ARTICLE 4Representations and Warranties
Section 4.01. Corporate Existence and Power 36
Section 4.02. Corporate and Governmental
Authorization; No Contravention 37
Section 4.03. Binding Effect 37
Section 4.04. Financial Information 37
Section 4.05. Litigation 38
Section 4.06. Compliance with ERISA 38
Section 4.07. Environmental Matters 39
Section 4.08. Taxes 39
Section 4.09. Subsidiaries 39
Section 4.10. Full Disclosure 39
ARTICLE 5Covenants
Section 5.01. Information 39
Section 5.02. Maintenance of Property; Insurance 42
Section 5.03. Conduct of Business and Maintenance
of Existence 42
Section 5.04. Compliance with Laws 42
Section 5.05. Letter Agreement 43
Section 5.06. Negative Pledge 43
Section 5.07. Consolidations, Mergers and Sales
of Assets 44
Section 5.08. Use of Proceeds 45
Section 5.09. Subsidiary Debt 45
Section 5.10. Fixed Charge Coverage 45
Section 5.11. Debt 45
ARTICLE 6Defaults
Section 6.01. Events of Default 46
Section 6.02. Notice of Default 48
ARTICLE 7The Administrative Agent
Section 7.01. Appointment and Authorization 48
Section 7.02. Administrative Agent and Affiliates 48
Section 7.03. Action by Administrative Agent 49
Section 7.04. Consultation with Experts 49
Section 7.05. Liability of Administrative Agent 49
Section 7.06. Indemnification 49
Section 7.07. Credit Decision 50
Section 7.08. Successor Administrative Agent 50
Section 7.09. Administrative Agent's Fee 50
Section 7.10. Syndication Agent and Co-
Documentation Agents 50
ARTICLE 8Change in Circumstances
Section 8.01. Basis for Determining Interest Rate
Inadequate or Unfair 51
Section 8.02. Illegality 51
Section 8.03. Increased Cost and Reduced Return 52
Section 8.04. Base Rate Loans Substituted for
Affected Fixed Rate Loans 54
Section 8.05. Substitution of Bank 55
ARTICLE 9Miscellaneous
Section 9.01. Notices 55
Section 9.02. No Waivers 55
Section 9.03. Expenses; Documentary Taxes;
Indemnification 56
Section 9.04. Sharing of Set-offs 56
Section 9.05. Amendments and Waivers 57
Section 9.06. Successors and Assigns 57
Section 9.07. Collateral 59
Section 9.08. Governing Law; Submission to
Jurisdiction 59
Section 9.09. Counterparts; Integration 60
Section 9.10. Restrictions on Transfers 60
Section 9.11. Confidentiality 60
Section 9.12. WAIVER OF JURY TRIAL 61
COMMITMENT SCHEDULE
Exhibit A - Note
Exhibit B - Notice of Committed Borrowing
Exhibit C - Notice of Interest Rate Election
Exhibit D - Money Market Quote Request
Exhibit E - Invitation for Money Market Quotes
Exhibit F - Money Market Quote
Exhibit G - Opinion of Counsel for the Borrower
Exhibit H - Opinion of Special Counsel for the
Administrative Agent
Exhibit I - Assignment and Assumption Agreement
Exhibit J - Terms of Subordination
CREDIT AGREEMENT
CREDIT AGREEMENT dated as of November 30, 1998
among SEARS XXXXXXX ACCEPTANCE CORP., the BANKS listed
on the signature pages hereof, CITIBANK N.A., as
Syndication Agent, BANK OF AMERICA NT&SA and THE FIRST
NATIONAL BANK OF CHICAGO, as Co-Documentation Agents
and THE CHASE MANHATTAN BANK, as Administrative Agent.
ARTICLE 1
Definitions
Section 1.1. Definitions. The following terms,
as used herein, have the following meanings:
"Absolute Rate Auction" means a solicitation of
Money Market Quotes setting forth Money Market Absolute
Rates pursuant to Section 2.03.
"Account" means an open-end charge plan for
specified Persons, maintained by Sears or an Affiliate
of Sears.
"Adjusted CD Rate" has the meaning set forth in
Section 2.07(b).
"Administrative Agent" means The Chase Manhattan
Bank in its capacity as administrative agent for the
Banks hereunder, and its successors in such capacity.
"Administrative Questionnaire" means, with respect
to each Bank, an administrative questionnaire in the
form prepared by the Administrative Agent and submitted
to the Administrative Agent (with a copy to the
Borrower) duly completed by such Bank.
"Affiliate" of a given Person means any other
Person that directly, or indirectly through one or more
intermediaries, controls, or is controlled by, or is
under common control with, such given Person.
"Agreement" means this Credit Agreement as same
may be amended from time to time.
"Applicable Lending Office" means, with respect to
any Bank, (i) in the case of its Domestic Loans, its
Domestic Lending Office, (ii) in the case of its
Euro-Dollar Loans, its Euro-Dollar Lending Office and
(iii) in the case of its Money Market Loans, its Money
Market Lending Office.
"Assessment Rate" has the meaning set forth in
Section 2.07(b).
"Assignee" has the meaning set forth in
Section 9.06(c).
"Bank" means each bank listed on the signature
pages hereof, each Assignee which becomes a Bank
pursuant to Section 9.06(c), and their respective
successors.
"Base Rate" means, for any day, a rate per annum
equal to the higher of (i) the Prime Rate for such day
and (ii) the sum of 1/2 of 1% plus the Federal Funds Rate
for such day.
"Base Rate Loan" means (i) a Committed Loan which
bears interest at the Base Rate pursuant to the
applicable Notice of Committed Borrowing or Notice of
Interest Rate Election or the provisions of Article
VIII or (ii) an overdue amount which was a Base Rate
Loan immediately before it became overdue.
"Benefit Arrangement" means at any time an
employee benefit plan within the meaning of Section
3(3) of ERISA which is not a Plan or a Multiemployer
Plan and which is maintained or otherwise contributed
to by any member of the ERISA Group.
"Borrower" means Sears Xxxxxxx Acceptance Corp., a
Delaware corporation, and its successors.
"Borrower's 1997 Form 10-K" means the Borrower's
annual report on Form 10-K for 1997, as filed with the
Commission pursuant to the Exchange Act (excluding the
exhibits thereto).
"Borrowing" means a borrowing hereunder consisting
of Loans made to the Borrower at the same time by the
Banks pursuant to Article II on a single date and for a
single Interest Period. Borrowings are classified for
purposes of this Agreement either by reference to the
pricing of Loans comprising such Borrowing (e.g., a
"Euro-Dollar Borrowing" is a Borrowing comprised of
Euro-Dollar Loans and a "Fixed Rate Borrowing" is a
Borrowing comprised of Fixed Rate Loans) or by
reference to the provisions of Article II under which
participation therein is determined (i.e., a "Committed
Borrowing" is a Borrowing under Section 2.01 in which
all Banks participate in proportion to their
Commitments, while a "Money Market Borrowing" is a
Borrowing under Section 2.03 in which the Bank
participants are determined on the basis of their bids
in accordance therewith).
"CD Base Rate" has the meaning set forth in
Section 2.07(b).
"CD Loan" means (i) a Committed Loan which bears
interest at a rate determined with reference to the CD
Base Rate pursuant to the applicable Notice of
Committed Borrowing or Notice of Interest Rate Election
or (ii) an overdue amount which was a CD Loan
immediately before it became overdue.
"CD Margin" has the meaning set forth in Section
2.07(b).
"CD Reference Banks" means The Chase Manhattan
Bank, Citibank N.A., Bank of America NT&SA and The
First National Bank of Chicago.
"Co-Documentation Agents" means each of Bank of
America NT&SA and The First National Bank of Chicago,
each in its capacity as a co-documentation agent
hereunder.
"Commission" means the Securities and Exchange
Commission.
"Commitment" means, with respect to each Bank
listed on the Commitment Schedule, the amount set forth
opposite such Bank's name on the Commitment Schedule,
as such amount may be reduced from time to time
pursuant to Section 2.09 or increased from time to time
pursuant to Section 2.17.
"Commitment Schedule" means the Commitment
Schedule attached hereto.
"Committed Loan" means a loan made by a Bank
pursuant to Section 2.01.
"Consolidated Debt" means at any date the Debt of
the Borrower and its Consolidated Subsidiaries,
determined on a consolidated basis as of such date.
"Consolidated Net Income" means, for any period,
the net income of the Borrower and its Consolidated
Subsidiaries for such period.
"Consolidated Stockholder's Equity" means as of
any date the total stockholder's equity of the Borrower
and its Consolidated Subsidiaries, plus the amount of
any SRAC Subordinated Debt, as of such date.
"Consolidated Subsidiary" means at any date any
Subsidiary or other Person the accounts of which are
consolidated with those of the Borrower in its
consolidated financial statements as of such date.
"Consolidated Tangible Net Worth" means at any
date the Consolidated Stockholder's Equity less the
consolidated Intangible Assets of the Borrower and its
Consolidated Subsidiaries, all determined as of such
date. For purposes of this definition "Intangible
Assets" means the amount (to the extent reflected as an
asset on the consolidated statement of financial
position of the Borrower and its Consolidated
Subsidiaries) of (i) all write-ups (other than
write-ups resulting from foreign currency translations
and write-ups of assets of a going concern business
made within twelve months after the acquisition of such
business) subsequent to July 4, 1998 in the book value
of any asset owned by the Borrower or a Consolidated
Subsidiary and (ii) all unamortized debt discount and
expense to the extent reflected as an asset on a
consolidated statement of financial position of
Borrower and its Consolidated Subsidiaries, unamortized
deferred charges, goodwill, patents, trademarks,
service marks, trade names, anticipated future benefit
of tax loss carry-forwards, copyrights, organization or
developmental expenses and other intangible assets.
"Debt" of any Person means, at any date, without
duplication, (i) all obligations of such Person for
borrowed money properly recordable as a liability on
the financial statements of such Person, (ii) all
obligations of such Person, properly recordable as a
liability on the financial statements of such Person,
evidenced by bonds, debentures, notes or other similar
instruments, (iii) all obligations of such Person to
pay the deferred purchase price of property except
trade accounts payable arising in the ordinary course
of business, (iv) the net present value of future
minimum lease payments under capital leases, (v) all
direct recourse payment obligations of such Person in
respect of any accounts receivable sold by such Person,
(vi) all Debt (as defined in clauses (i) through (v)
above) of others secured by a Lien on any asset of such
Person, whether or not such Debt is assumed by such
Person, and (vii) all Debt (as defined in clauses (i)
through (vi) above) of others Guaranteed by such
Person; provided that SRAC Subordinated Debt shall not
be deemed to be Debt for the purpose of determining the
Debt of the Borrower.
"Default" means any condition or event which
constitutes an Event of Default or which with the
giving of notice or lapse of time or both would, unless
cured or waived, become an Event of Default.
"Designated Default" means (x) any Event of
Default, (y) any event or condition which, with the
giving of notice or lapse of time or both, would become
an Event of Default (other than any event or condition
referred to in clause (e) or (f) of Section 6.01) or
(z) any event or condition that entitles the holder of
any Material SRAC Debt or Material Company Material
Debt, or any Person acting on any such holder's behalf,
to accelerate the maturity thereof (but in the case of
any event or condition referred to in clause (e) of
Section 6.01, only after the expiration of the three
Domestic Business Day period referred to in such clause
(e)).
"Domestic Business Day" means any day except a
Saturday, Sunday or other day on which commercial banks
in New York City or Chicago are authorized by law to
close.
"Domestic Lending Office" means, as to each Bank,
its office located at its address set forth in its
Administrative Questionnaire (or identified in its
Administrative Questionnaire as its Domestic Lending
Office) or such other office as such Bank may hereafter
designate as its Domestic Lending Office by notice to
the Borrower and the Administrative Agent; provided
that any Bank may so designate separate Domestic
Lending Offices for its Base Rate Loans, on the one
hand, and its CD Loans, on the other hand, in which
case all references herein to the Domestic Lending
Office of such Bank shall be deemed to refer to either
or both of such offices, as the context may require.
"Domestic Loans" means CD Loans or Base Rate Loans
or both.
"Domestic Reserve Percentage" has the meaning set
forth in Section 2.07(b).
"Effective Date" means the date this Agreement
becomes effective in accordance with Section 3.01.
"Environmental Laws" means any and all federal,
state and local statutes, laws, regulations,
ordinances, rules, judgments, orders, decrees, permits,
licenses, agreements or other governmental restrictions
relating to the protection of the environment or to
emissions, discharges or releases of pollutants,
contaminants, petroleum or petroleum products,
chemicals or industrial, toxic or hazardous substances
or wastes into the environment or otherwise relating to
the generation, processing, use, treatment, storage,
disposal, transport or handling of pollutants,
contaminants, petroleum or petroleum products,
chemicals or industrial, toxic or hazardous substances
or wastes, or the clean-up or other remediation
thereof.
"ERISA" means the Employee Retirement Income
Security Act of 1974, as amended, or any successor
statute.
"ERISA Group" means the Borrower and all members
of a controlled group of corporations and all trades or
businesses (whether or not incorporated) under common
control which, together with the Borrower, are treated
as a single employer under Section 414 of the Internal
Revenue Code.
"Euro-Dollar Business Day" means any Domestic
Business Day on which commercial banks are open for
international business (including dealings in dollar
deposits) in London.
"Euro-Dollar Lending Office" means, as to each
Bank, its office, branch or Affiliate located at its
address set forth in its Administrative Questionnaire
(or identified in its Administrative Questionnaire as
its Euro-Dollar Lending Office) or such other office,
branch or Affiliate of such Bank as it may hereafter
designate as its Euro-Dollar Lending Office by notice
to the Borrower and the Administrative Agent.
"Euro-Dollar Loan" means (i) a Committed Loan
which bears interest at a rate determined with
reference to the London Interbank Offered Rate pursuant
to the applicable Notice of Committed Borrowing or
Notice of Interest Rate Election or (ii) an overdue
amount which was a Euro-Dollar Loan immediately before
it became overdue.
"Euro-Dollar Margin" has the meaning set forth in
Section 2.07(c).
"Euro-Dollar Reference Banks" means the principal
London offices of The Chase Manhattan Bank, Citibank
N.A., Bank of America NT&SA and The First National Bank
of Chicago.
"Euro-Dollar Reserve Percentage" means for any day
that percentage (expressed as a decimal) which is in
effect on such day, as prescribed by the Board of
Governors of the Federal Reserve System (or any
successor) for determining the maximum reserve
requirement for a member bank of the Federal Reserve
System in New York City with deposits exceeding five
billion dollars in respect of "Eurocurrency
liabilities" (or in respect of any other category of
liabilities which includes deposits by reference to
which the interest rate on Euro-Dollar Loans is
determined or any category of extensions of credit or
other assets which includes loans by a non-United
States office of any Bank to United States residents).
"Event of Default" has the meaning set forth in
Section 6.01.
"Exchange Act" means the Securities Exchange Act
of 1934, as amended.
"Federal Funds Rate" means, for any day, the rate
per annum (rounded upward, if necessary, to the nearest
1/100th of 1%) equal to the weighted average of the
rates on overnight Federal funds transactions with
members of the Federal Reserve System arranged by
Federal funds brokers on such day, as published by the
Federal Reserve Bank of New York on the Domestic
Business Day next succeeding such day, provided that
(i) if such day is not a Domestic Business Day, the
Federal Funds Rate for such day shall be such rate on
such transactions on the next preceding Domestic
Business Day as so published on the next succeeding
Domestic Business Day, and (ii) if no such rate is so
published on such next succeeding Domestic Business
Day, the Federal Funds Rate for such day shall be the
average rate quoted to The Chase Manhattan Bank on such
day on such transactions as determined by the
Administrative Agent.
"Fixed Charge Coverage Ratio" means, for any
period, the Borrower's ratio of earnings to fixed
charges, determined for such period in accordance with
Item 503(d) of Regulation S-K promulgated by the
Commission, as in effect on the date hereof.
"Fixed Rate Loans" means CD Loans or Euro-Dollar
Loans or Money Market Loans (excluding Money Market
LIBOR Loans bearing interest at the Base Rate pursuant
to Section 8.01) or any combination of the foregoing.
"Group of Loans" means at any time a group of
Committed Loans consisting of (i) all Loans which are
Base Rate Loans at such time, (ii) all Loans which are
CD Loans having the same Interest Period at such time
or (iii) all Loans which are Euro-Dollar Loans having
the same Interest Period at such time; provided that,
if Loans of any particular Bank are converted to or
made as Base Rate Loans pursuant to Section 8.02 or
8.04, such Loans shall be included in the same Group or
Groups of Loans from time to time as they would have
been in if they had not been so converted or made.
"Guarantee" by any Person means any obligation,
contingent or otherwise, of such Person directly or
indirectly guaranteeing any Debt (as defined in clauses
(i) through (vi) of the definition of Debt) of any
other Person or in any manner providing for the payment
of any such Debt of any other Person or otherwise
protecting the holder of such Debt against loss
(whether by agreement to keep-well, to purchase assets,
goods, securities or services, or to take-or-pay or
otherwise), provided that the term Guarantee shall not
include endorsements for collection or deposit in the
ordinary course of business. The term "Guarantee" used
as a verb has a correlative meaning.
"Interest Period" means: (1) with respect to each
Euro-Dollar Loan, a period commencing on the date of
Borrowing specified in the applicable Notice of
Borrowing or on the date specified in the applicable
Notice of Interest Rate Election and ending one, two,
three or six months thereafter (or such other number of
months thereafter as the Borrower, the Administrative
Agent and all the Banks may agree), as the Borrower may
elect in the applicable Notice; provided that:
(a) any Interest Period which would
otherwise end on a day which is not a
Euro-Dollar Business Day shall, subject to
clause (c) below, be extended to the next
succeeding Euro-Dollar Business Day unless such
Euro-Dollar Business Day falls in another
calendar month, in which case such Interest
Period shall end on the next preceding
Euro-Dollar Business Day;
(b) any Interest Period which begins on
the last Euro-Dollar Business Day of a calendar
month (or on a day for which there is no
numerically corresponding day in the calendar
month at the end of such Interest Period)
shall, subject to clause (c) below, end on the
last Euro-Dollar Business Day of a calendar
month; and
(c) any Interest Period which begins
before and would otherwise end after the
Termination Date shall end on the Termination
Date.
(2) with respect to each CD Loan, a period
commencing on the date of Borrowing specified in the
applicable Notice of Borrowing or on the date specified
in the applicable Notice of Interest Rate Election and
ending 30, 60, 90 or 180 days thereafter (or such other
number of days thereafter as the Borrower, the
Administrative Agent and all the Banks may agree), as
the Borrower may elect in the applicable Notice;
provided that:
(a) any Interest Period which would
otherwise end on a day which is not a
Euro-Dollar Business Day shall, subject to
clause (b) below, be extended to the next
succeeding Euro-Dollar Business Day; and
(b) any Interest Period which begins
before and would otherwise end after the
Termination Date shall end on the Termination
Date.
(3) with respect to each Money Market LIBOR
Borrowing, the period commencing on the date of such
Borrowing and ending such whole number of months
thereafter as the Borrower may elect in accordance with
Section 2.03; provided that:
(a) any Interest Period which would
otherwise end on a day which is not a
Euro-Dollar Business Day shall, subject to
clause (c) below, be extended to the next
succeeding Euro-Dollar Business Day unless such
Euro-Dollar Business Day falls in another
calendar month, in which case such Interest
Period shall end on the next preceding
Euro-Dollar Business Day;
(b) any Interest Period which begins on
the last Euro-Dollar Business Day of a calendar
month (or on a day for which there is no
numerically corresponding day in the calendar
month at the end of such Interest Period)
shall, subject to clause (c) below, end on the
last Euro-Dollar Business Day of a calendar
month; and
(c) any Interest Period which begins
before and would otherwise end after the
Termination Date shall end on the Termination
Date.
(4) with respect to each Money Market Absolute
Rate Borrowing, the period commencing on the date of
such Borrowing and ending such number of days
thereafter (but not less than 30 days) as the Borrower
may elect in accordance with Section 2.03; provided
that:
(a) any Interest Period which would
otherwise end on a day which is not a
Euro-Dollar Business Day shall, subject to
clause (b) below, be extended to the next
succeeding Euro-Dollar Business Day; and
(b) any Interest Period which begins
before and would otherwise end after the
Termination Date shall end on the Termination
Date.
"Internal Revenue Code" means the Internal Revenue
Code of 1986, as amended, or any successor statute.
"Letter Agreement" means the letter agreement
dated September 28, 1984 between the Borrower and
Sears, as amended as of October 17, 1991, and as the
same may further be amended from time to time in
accordance with the terms thereof and of Section 5.05.
"LIBOR Auction" means a solicitation of Money
Market Quotes setting forth Money Market Margins based
on the London Interbank Offered Rate pursuant to
Section 2.03.
"Lien" means (i) any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in
respect of any asset recorded as such on the financial
statements of the Borrower or any Subsidiary or (ii)
the interest of a vendor or lessor under any
conditional sales agreement, capital lease or other
title retention agreement relating to any asset
recorded as such on the financial statements of the
Borrower or any Subsidiary.
"Loan" means a Domestic Loan or a Euro-Dollar Loan
or a Money Market Loan and "Loans" means Domestic Loans
or Euro-Dollar Loans or Money Market Loans or any
combination of the foregoing.
"London Interbank Offered Rate" has the meaning
set forth in Section 2.07(c).
"Margin Stock" has the meaning set forth in
Regulation U.
"Material Company" means any of the Borrower, any
Subsidiary, Sears, any Person of which Sears is a
subsidiary or any Material Sears Subsidiary.
"Material Company Material Debt" means any Debt or
Debts of any Material Company other than the Borrower
or any Subsidiary, arising in one or more related or
unrelated transactions, in an aggregate principal
amount not less than $100,000,000.
"Material Plan" means at any time a Plan or Plans
having aggregate Unfunded Liabilities in excess of
$75,000,000.
"Material Sears Subsidiary" means any Sears
Subsidiary having consolidated total assets in excess
of $6,000,000,000 at the time of any determination of
its status hereunder.
"Material SRAC Debt" means any Debt or Debts or
SRAC Subordinated Debt of the Borrower and/or one or
more Subsidiaries, arising in one or more related or
unrelated transactions, in an aggregate principal
amount not less than $50,000,000 (other than the
Loans).
"Money Market Absolute Rate" has the meaning set
forth in Section 2.03(d).
"Money Market Absolute Rate Loan" means a loan to
be made by a Bank pursuant to an Absolute Rate Auction.
"Money Market Lending Office" means, as to each
Bank, its Domestic Lending Office or such other office,
branch or affiliate of such Bank as it may hereafter
designate as its Money Market Lending Office by notice
to the Borrower and the Administrative Agent; provided
that any Bank may from time to time by notice to the
Borrower and the Administrative Agent designate
separate Money Market Lending Offices for its Money
Market LIBOR Loans, on the one hand, and its Money
Market Absolute Rate Loans, on the other hand, in which
case all references herein to the Money Market Lending
Office of such Bank shall be deemed to refer to either
or both of such offices, as the context may require.
"Money Market LIBOR Loan" means a loan to be made
by a Bank pursuant to a LIBOR Auction (including such a
loan bearing interest at the Base Rate pursuant to
Section 8.01(a)).
"Money Market Loan" means a Money Market LIBOR
Loan or a Money Market Absolute Rate Loan.
"Money Market Margin" has the meaning set forth in
Section 2.03(d).
"Money Market Quote" means an offer by a Bank to
make a Money Market Loan in accordance with Section
2.03.
"Multiemployer Plan" means at any time an employee
pension benefit plan within the meaning of Section
4001(a)(3) of ERISA to which any member of the ERISA
Group is then making or accruing an obligation to make
contributions or has within the preceding five plan
years made contributions, including for these purposes
any Person which ceased to be a member of the ERISA
Group during such five year period.
"Non-U.S. Bank" shall mean any Bank other than a
Bank that is organized under the laws of the United
States or any State thereof or the District of
Columbia.
"Notes" means promissory notes of the Borrower,
substantially in the form of Exhibit A hereto (either
immediately before giving effect to the Agreement or
after giving effect thereto), evidencing the obligation
of the Borrower to repay the Loans, and "Note" means
any one of such promissory notes issued hereunder.
"Notice of Borrowing" means a Notice of Committed
Borrowing (as defined in Section 2.02) or a Notice of
Money Market Borrowing (as defined in Section 2.03(f)).
"Notice of Interest Rate Election" has the meaning
set forth in Section 2.10.
"Obligor" means, with respect to any Account, the
Person or Persons obligated to make payments with
respect to such Account, including any guarantor
thereof.
"Parent" means, with respect to any Bank, any
Person controlling such Bank.
"Participant" has the meaning set forth in
Section 9.06(b).
"PBGC" means the Pension Benefit Guaranty
Corporation or any entity succeeding to any or all of
its functions under ERISA.
"Person" means an individual, a corporation, a
partnership, an association, a trust or any other
entity or organization, including a government or
political subdivision or an agency or instrumentality
thereof.
"Plan" means at any time an employee pension
benefit plan (other than a Multiemployer Plan) which is
covered by Title IV of ERISA or subject to the minimum
funding standards under Section 412 of the Internal
Revenue Code and either (i) is maintained, or
contributed to, by any member of the ERISA Group for
employees of any member of the ERISA Group or (ii) has
at any time within the preceding five years been
maintained, or contributed to, by any Person which was
at such time a member of the ERISA Group for employees
of any Person which was at such time a member of the
ERISA Group.
"Prime Rate" means the rate of interest publicly
announced by The Chase Manhattan Bank in New York City
from time to time as its Prime Rate.
"Receivable" means, at any date, any amounts owing
at such date by the Obligors under an Account,
including, without limitation, amounts owing for the
payment of goods and services, cash advances, if
applicable, finance charges and other charges, if any.
"Reference Banks" means the CD Reference Banks or
the Euro-Dollar Reference Banks, as the context may
require, and "Reference Bank" means any one of such
Reference Banks.
"Regulation U" means Regulation U of the Board of
Governors of the Federal Reserve System, as in effect
from time to time.
"Required Banks" means at any time Banks having at
least 66-2/3% of the aggregate amount of the
Commitments or, if the Commitments shall have been
terminated, holding Notes evidencing at least 66-2/3%
of the aggregate unpaid principal amount of the Loans.
"Revolving Credit Period" means the period from
and including the Effective Date to and including the
Termination Date.
"Sears" means Sears, Xxxxxxx and Co., a New York
corporation, and its successors.
"Sears Subsidiary" means any corporation or other
entity of which securities or other ownership interests
having ordinary voting power to elect a majority of the
Board of Directors or other persons performing similar
functions are at the time directly or indirectly owned
or controlled by Sears or one or more other Sears
Subsidiaries, or by Sears and one or more other Sears
Subsidiaries, provided that any such securities or
other ownership interests held in a fiduciary capacity
for others, or as portfolio investments, by Sears (to
the extent it engages in a financial or insurance
business) or by any Sears Subsidiary engaged in the
insurance business or a financial business shall be
disregarded for purposes of this definition.
"SRAC Preferred Stock" means at any time one or
more series of preferred stock of the Borrower
outstanding at such time; provided that (i) neither the
voluntary or involuntary liquidation preference nor the
redemption price of all such preferred stock
outstanding at any time shall exceed $150,000,000 and
(ii) the terms of such preferred stock shall not grant
voting rights to the holders thereof to elect members
of the board of directors of the Borrower except the
right to elect not more than the lesser of two members
or 25% of the members of such board upon the failure of
the Borrower to pay dividends or similar contingency.
"SRAC Subordinated Debt" means any indebtedness
for borrowed money of the Borrower to any of (w) Sears,
(x) a Wholly-Owned Subsidiary of Sears, (y) a
corporation of which Sears is a Wholly-Owned Subsidiary
or (z) a Wholly-Owned Subsidiary of a corporation
described in clause (y) above, evidenced by notes or
other evidences of indebtedness for borrowed money
which is made subordinate and junior in right of
payment to the Notes and such other indebtedness for
borrowed money of the Borrower as may be specified
(whether expressly or by category) in the instruments
evidencing such indebtedness (the Notes and all other
obligations of the Borrower hereunder and such other
indebtedness of the Borrower to which the SRAC
Subordinated Debt is subordinate and junior being
herein called "Superior Debt") by provisions no less
favorable to the holders of the Superior Debt than
those set forth in Exhibit J.
"Subsidiary" means any corporation or other entity
of which securities or other ownership interests having
ordinary voting power to elect a majority of the board
of directors or other persons performing similar
functions are at the time directly or indirectly owned
by the Borrower.
"Syndication Agent" means Citibank N.A., in its
capacity as syndication agent hereunder.
"Termination Date" means November 29, 1999 or, if
such date is not a Euro-Dollar Business Day, then the
next preceding Euro-Dollar Business Day.
"Unfunded Liabilities" means, with respect to any
Plan at any time, the amount (if any) by which (i) the
present value of all benefits under such Plan exceeds
(ii) the fair market value of all Plan assets allocable
to such benefits (excluding any accrued but unpaid
contributions), all determined as of the then most
recent valuation date for such Plan, but only to the
extent that such excess represents a potential
liability of a member of the ERISA Group to the PBGC or
any other Person under Title IV of ERISA.
"Wholly-Owned Subsidiary" of a given Person means
any Person all of the shares of capital stock or other
ownership interests of which (except directors'
qualifying shares) are at the time directly or
indirectly owned by the given Person or one or more
other Wholly-Owned Subsidiaries or by the given Person
and one or more other Wholly-Owned Subsidiaries.
Section 1.2. Accounting Terms and Determinations.
Unless otherwise specified herein, all accounting terms
used herein shall be interpreted, all accounting
determinations hereunder shall be made, and all
financial statements required to be delivered hereunder
shall be prepared in accordance with U.S. generally
accepted accounting principles as in effect from time
to time, applied on a basis consistent (except for
changes concurred in by the Borrower's independent
public accountants) with the most recent audited
financial statements delivered to the Banks by the
Borrower pursuant to this Agreement; provided that, if
the Borrower notifies the Administrative Agent that the
Borrower wishes to amend any provision hereof to
eliminate the effect of any change after the date
hereof in such generally accepted accounting principles
(which, for purposes of this proviso shall include the
generally accepted application or interpretation
thereof) on the operation of such provision (or if the
Administrative Agent notifies the Borrower that the
Required Banks wish to amend any such provision for
such purpose), then such provision shall be interpreted
and the Borrower's compliance with such provision shall
be determined, and all accounting determinations with
respect thereto shall be made, on the basis of such
generally accepted accounting principles in effect
immediately before the relevant change in such
generally accepted accounting principles became
effective, until either such notice is withdrawn or
such provision is amended in a manner satisfactory to
the Borrower and the Required Banks.
ARTICLE 2
The Credits
Section 2.1. Commitments to Lend. Each Bank
severally agrees, on the terms and conditions set forth
in this Agreement, to make loans to the Borrower
pursuant to this Section from time to time during the
Revolving Credit Period in amounts such that the
aggregate principal amount of Committed Loans by such
Bank at any one time outstanding shall not exceed the
amount of its Commitment. Each Borrowing under this
Section shall be in a minimum amount of $25,000,000 or
any larger multiple of $5,000,000 (except that any such
Borrowing may be in the aggregate amount available in
accordance with Section 3.02(b)) and shall be made from
the several Banks ratably in proportion to their
respective Commitments. Within the foregoing limits,
the Borrower may borrow under this Section, prepay
Loans (to the extent permitted by Section 2.11) and
reborrow at any time during the Revolving Credit Period
under this Section.
Section 2.2. Notice of Committed Borrowing. The
Borrower shall give the Administrative Agent notice,
substantially in the form attached hereto as Exhibit B
(a "Notice of Committed Borrowing"), not later than
11:00 A.M. (New York City time) on (x) the date of each
Base Rate Borrowing, (y) the second Domestic Business
Day before each CD Borrowing and (z) the third
Euro-Dollar Business Day before each Euro-Dollar
Borrowing, specifying:
(i) the date of such Borrowing, which
shall be a Domestic Business Day in the case of
a Domestic Borrowing or a Euro-Dollar Business
Day in the case of a Euro-Dollar Borrowing,
(ii) the aggregate amount of such
Borrowing,
(iii) whether the Loans comprising such
Borrowing are to bear interest initially at the
Base Rate or at a rate based upon the CD Base
Rate or the London Interbank Offered Rate, and
(iv) in the case of a Fixed Rate Borrowing,
the duration of the initial Interest Period
applicable thereto, subject to the provisions
of the definition of Interest Period.
Section 2.3. Money Market Borrowings.
(a) The Money Market Option. In addition to
Committed Borrowings pursuant to Section 2.01, the
Borrower may, as set forth in this Section, request the
Banks during the Revolving Credit Period to make offers
to make Money Market Loans to the Borrower. The Banks
may, but shall have no obligation to, make such offers
and the Borrower may, but shall have no obligation to,
accept any such offers in the manner set forth in this
Section.
(b) Money Market Quote Request. When the
Borrower wishes to request offers to make Money Market
Loans under this Section, it shall transmit to the
Administrative Agent by telex or facsimile transmission
a Money Market Quote Request substantially in the form
of Exhibit D hereto so as to be received no later than
10:00 A.M. (New York City time) on (x) the fifth
Euro-Dollar Business Day prior to the date of Borrowing
proposed therein, in the case of a LIBOR Auction or (y)
the Domestic Business Day next preceding the date of
Borrowing proposed therein, in the case of an Absolute
Rate Auction (or, in either case, such other time or
date as the Borrower and the Administrative Agent shall
have mutually agreed and shall have notified to the
Banks not later than the date of the Money Market Quote
Request for the first LIBOR Auction or Absolute Rate
Auction for which such change is to be effective)
specifying:
(i) the proposed date of Borrowing, which
shall be a Euro-Dollar Business Day in the case
of a LIBOR Auction or a Domestic Business Day
in the case of an Absolute Rate Auction,
(ii) the aggregate amount of such
Borrowing, which shall be $25,000,000 or a
larger multiple of $5,000,000 (or an amount
equal to the aggregate amount available in
accordance with Section 3.02(b), if less than
$25,000,000),
(iii) the duration of the Interest
Period applicable thereto, subject to the
provisions of the definition of Interest
Period, and
(iv) whether the Money Market Quotes
requested are to set forth a Money Market
Margin or a Money Market Absolute Rate.
The Borrower may request offers to make Money Market
Loans for more than one Interest Period in a single
Money Market Quote Request. No Money Market Quote
Request shall be given until the Borrower has notified
the Administrative Agent of its acceptance or non-
acceptance of the Money Market Quotes relating to any
outstanding Money Market Quote Request.
(c) Invitation for Money Market Quotes.
Promptly upon receipt of a Money Market Quote Request,
the Administrative Agent shall send to the Banks by
telex or facsimile transmission an Invitation for Money
Market Quotes substantially in the form of Exhibit E
hereto, which shall constitute an invitation by the
Borrower to each Bank to submit Money Market Quotes
offering to make the Money Market Loans to which such
Money Market Quote Request relates in accordance with
this Section.
(d) Submission and Contents of Money Market
Quotes. (i) Each Bank may submit a Money Market Quote
containing an offer or offers to make Money Market
Loans in response to any Invitation for Money Market
Quotes. Each Money Market Quote must comply with the
requirements of this subsection (d) and must be
submitted to the Administrative Agent by telex or
facsimile transmission at its offices specified in or
pursuant to Section 9.01 not later than (x) 2:00 P.M.
(New York City time) on the fourth Euro-Dollar Business
Day prior to the proposed date of Borrowing, in the
case of a LIBOR Auction or (y) 9:30 A.M. (New York City
time) on the proposed date of Borrowing, in the case of
an Absolute Rate Auction (or, in either case, such
other time or date as the Borrower and the
Administrative Agent shall have mutually agreed and
shall have notified to the Banks not later than the
date of the Money Market Quote Request for the first
LIBOR Auction or Absolute Rate Auction for which such
change is to be effective); provided that Money Market
Quotes submitted by the Administrative Agent (or any
affiliate of the Administrative Agent) in the capacity
of a Bank may be submitted, and may only be submitted,
if the Administrative Agent or such affiliate notifies
the Borrower of the terms of the offer or offers
contained therein not later than (x) one hour prior to
the deadline for the other Banks, in the case of a
LIBOR Auction or (y) 15 minutes prior to the deadline
for the other Banks, in the case of an Absolute Rate
Auction. Subject to Articles III and VI, any Money
Market Quote so made shall be irrevocable except with
the written consent of the Administrative Agent given
on the instructions of the Borrower.
(ii)Each Money Market Quote shall be in
substantially the form of Exhibit F hereto and shall in
any case specify:
(A) the proposed date of Borrowing,
(B) the principal amount of the Money
Market Loan for which each such offer is being
made, which principal amount (w) may be greater
than or less than the Commitment of the quoting
Bank, (x) must be $5,000,000 or a larger
multiple of $1,000,000, (y) may not exceed the
principal amount of Money Market Loans for
which offers were requested and (z) may be
subject to an aggregate limitation as to the
principal amount of Money Market Loans for
which offers being made by such quoting Bank
may be accepted,
(C) in the case of a LIBOR Auction, the
margin above or below the applicable London
Interbank Offered Rate (the "Money Market
Margin") offered for each such Money Market
Loan, expressed as a percentage (specified to
the nearest 1/10,000th of 1%) to be added to or
subtracted from such base rate,
(D) in the case of an Absolute Rate
Auction, the rate of interest per annum
(specified to the nearest 1/10,000th of 1%)
(the "Money Market Absolute Rate") offered for
each such Money Market Loan, and
(E) the identity of the quoting Bank.
A Money Market Quote may set forth up to five separate
offers by the quoting Bank with respect to each
Interest Period specified in the related Invitation for
Money Market Quotes.
(iii) Any Money Market Quote shall be
disregarded if it:
(A) is not substantially in conformity
with Exhibit F hereto or does not specify all
of the information required by subsection
(d)(ii);
(B) contains qualifying, conditional or
similar language;
(C) proposes terms other than or in
addition to those set forth in the applicable
Invitation for Money Market Quotes; or
(D) arrives after the time set forth in
subsection (d)(i).
(e) Notice to Borrower. The Administrative
Agent shall promptly notify the Borrower of the terms
(x) of any Money Market Quote submitted by a Bank that
is in accordance with subsection (d) and (y) of any
Money Market Quote that amends, modifies or is
otherwise inconsistent with a previous Money Market
Quote submitted by such Bank with respect to the same
Money Market Quote Request. Any such subsequent Money
Market Quote shall be disregarded by the Administrative
Agent unless such subsequent Money Market Quote is
submitted solely to correct a manifest error in such
former Money Market Quote. The Administrative Agent's
notice to the Borrower shall specify (A) the aggregate
principal amount of Money Market Loans for which offers
have been received for each Interest Period specified
in the related Money Market Quote Request, (B) the
respective principal amounts and Money Market Margins
or Money Market Absolute Rates, as the case may be, so
offered, and the identity of the respective Banks
submitting such offers, and (C) if applicable,
limitations on the aggregate principal amount of Money
Market Loans for which offers in any single Money
Market Quote may be accepted.
(f) Acceptance and Notice by Borrower. Not
later than 10:30 A.M. (New York City time) on (x) the
third Euro-Dollar Business Day prior to the proposed
date of Borrowing, in the case of a LIBOR Auction or
(y) the proposed date of Borrowing, in the case of an
Absolute Rate Auction (or, in either case, such other
time or date as the Borrower and the Administrative
Agent shall have mutually agreed and shall have
notified to the Banks not later than the date of the
Money Market Quote Request for the first LIBOR Auction
or Absolute Rate Auction for which such change is to be
effective), the Borrower shall notify the
Administrative Agent of its acceptance or
non-acceptance of the offers so notified to it pursuant
to subsection (e). In the case of acceptance, such
notice (a "Notice of Money Market Borrowing") shall
specify the aggregate principal amount of offers for
each Interest Period that are accepted. The Borrower
may accept any Money Market Quote in whole or in part;
provided that:
(i) the aggregate principal amount of each
Money Market Borrowing may not exceed the applicable
amount set forth in the related Money Market Quote
Request,
(ii)the principal amount of each Money Market
Borrowing must be (A) $25,000,000 or a larger multiple
of $5,000,000, (B) an amount equal to the aggregate
amount available in accordance with Section 3.02(b), if
less than $25,000,000 or (C) the aggregate principal
amount of offers, if less than both $25,000,000 and the
amount referred to in clause (B),
(iii) acceptance of offers may only be made
on the basis of ascending Money Market Margins or Money
Market Absolute Rates, as the case may be, and
(iv)the Borrower may not accept any offer that
is described in subsection (d)(iii) or that otherwise
fails to comply with the requirements of this
Agreement.
(g) Allocation by Administrative Agent. If
offers are made by two or more Banks with the same
Money Market Margins or Money Market Absolute Rates, as
the case may be, for a greater aggregate principal
amount than the amount in respect of which such offers
are accepted for the related Interest Period, the
principal amount of Money Market Loans in respect of
which such offers are accepted shall be allocated by
the Administrative Agent among such Banks as nearly as
possible (in multiples of $1,000,000, as the
Administrative Agent may deem appropriate) in
proportion to the aggregate principal amounts of such
offers. Determinations by the Administrative Agent of
the amounts of Money Market Loans shall be conclusive
in the absence of manifest error.
Section 2.4. Notice to Banks; Funding of Loans.
(a) Upon receipt of a Notice of Borrowing, the
Administrative Agent shall promptly notify each Bank of
the contents thereof and of such Bank's share (if any)
of such Borrowing and such Notice of Borrowing shall
not thereafter be revocable by the Borrower.
(b) Not later than (x) 1:00 P.M. (New York City
time) on the date of each Base Rate Borrowing, (y)
12:00 Noon (New York City time) on the date of any
Money Market Absolute Rate Borrowing and (z) 11:00 A.M.
(New York City time) on the date of any other
Borrowing, each Bank shall make available its ratable
share of such Borrowing, in Federal or other funds
immediately available in New York City, to the
Administrative Agent at its address specified in or
pursuant to Section 9.01. Unless the Administrative
Agent determines that any applicable condition
specified in Article III has not been satisfied, the
Administrative Agent will make the funds so received
from the Banks available to the Borrower promptly after
the Administrative Agent's receipt thereof at the
Administrative Agent's aforesaid address.
(c) Unless the Administrative Agent shall have
received notice from a Bank prior to the date of any
Borrowing (or, in the case of any Base Rate Borrowing,
prior to 11:00 A.M. (New York City time) on the date of
such Borrowing) that such Bank will not make available
to the Administrative Agent such Bank's share of such
Borrowing, the Administrative Agent may assume that
such Bank has made such share available to the
Administrative Agent on the date of such Borrowing in
accordance with subsection (b) of this Section 2.04 and
the Administrative Agent may, in reliance upon such
assumption, make available to the Borrower on such date
a corresponding amount. If and to the extent that such
Bank shall not have so made such share available to the
Administrative Agent, the Administrative Agent shall
notify the Borrower thereof as soon as practicable, and
such Bank and the Borrower severally agree to repay to
the Administrative Agent forthwith on demand
(delivered, in the case of the Borrower, in accordance
with the next succeeding sentence) such corresponding
amount together with interest thereon, for each day
from the date such amount is made available to the
Borrower until the date such amount is repaid to the
Administrative Agent, at (i) in the case of the
Borrower, a rate per annum equal to the higher of the
Federal Funds Rate and the interest rate applicable
thereto pursuant to Section 2.07 and (ii) in the case
of such Bank, the Federal Funds Rate. Any such demand
for repayment shall be made first upon such Bank and,
if such Bank shall have failed to repay such amount
within two Euro-Dollar Business Days after such demand,
then upon the Borrower. If such Bank shall repay to the
Administrative Agent such corresponding amount, such
amount so repaid shall constitute such Bank's Loan
included in such Borrowing for purposes of this
Agreement.
Section 2.5. Notes. (a) The Loans of each Bank
shall be evidenced by a single Note payable to the
order of such Bank for the account of its Applicable
Lending Office in an amount equal to the aggregate
unpaid principal amount of such Bank's Loans.
(b) Each Bank may, by notice to the Borrower and
the Administrative Agent, request that its Loans of a
particular type be evidenced by a separate Note in an
amount equal to the aggregate unpaid principal amount
of such Loans. Each such Note shall be in substantially
the form of Exhibit A hereto with appropriate
modifications to reflect the fact that it evidences
solely Loans of the relevant type. Each reference in
this Agreement to the "Note" of such Bank shall be
deemed to refer to and include any or all of such
Notes, as the context may require.
(c) Upon receipt of each Bank's Note pursuant to
Section 3.01(b), the Administrative Agent shall mail
such Note to such Bank. Each Bank shall record the date
and amount of each Loan made by it and the date and
amount of each payment of principal made by the
Borrower with respect thereto, and may, if such Bank so
elects in connection with any transfer or enforcement
of its Note, endorse on the schedule forming a part
thereof appropriate notations to evidence the foregoing
information with respect to each such Loan then
outstanding; provided that the failure of any Bank to
make any such recordation or endorsement shall not
affect the obligations of the Borrower hereunder or
under the Notes. Each Bank is hereby irrevocably
authorized by the Borrower so to endorse its Note and
to attach to and make a part of its Note a continuation
of any such schedule as and when required.
Section 2.6. Mandatory Termination of Commitments
and Repayment of Loans. Each Money Market Loan
included in any Money Market Borrowing shall mature,
and the principal amount thereof (together with accrued
interest thereon) shall be due and payable, on the last
day of the Interest Period applicable to such Money
Market Borrowing. The Commitment for each Bank shall
terminate on the Termination Date, and all Loans
(including without limitation any Money Market Loans)
then outstanding (together with accrued interest
thereon) shall be due and payable on such date.
Section 2.7. Interest Rates. (a) Each Base Rate
Loan shall bear interest on the outstanding principal
amount thereof, for each day from the date such Loan is
made until it becomes due, at a rate per annum equal to
the Base Rate for such day. Such interest shall be
payable monthly in arrears on the date in each calendar
month that numerically corresponds to the date such
Loan is made (or, in the case of any calendar month in
which there is no such date, on the last day of such
month) and on each date a Base Rate Loan is converted
to a Fixed Rate Loan. Any overdue principal of or
interest on any Base Rate Loan shall bear interest,
payable on demand, for each day until paid at a rate
per annum equal to the sum of 2% plus the rate
otherwise applicable to Base Rate Loans for such day.
(b) Each CD Loan shall bear interest on the
outstanding principal amount thereof, for each day
during each Interest Period applicable thereto, at a
rate per annum equal to the sum of the CD Margin plus
the Adjusted CD Rate applicable to such Interest
Period; provided that if any CD Loan or any portion
thereof shall, as a result of clause (2)(b) of the
definition of Interest Period, have an Interest Period
of less than 30 days, such portion shall bear interest
during such Interest Period at the rate applicable to
Base Rate Loans during such period. Such interest
shall be payable for each Interest Period on the last
day thereof and, if such Interest Period is longer than
90 days, at intervals of 90 days after the first day
thereof. Any overdue principal of or interest on any
CD Loan of any Bank shall bear interest, payable on
demand, for each day until paid at a rate per annum
equal to the sum of 2% plus the higher of (i) the sum
of the CD Margin plus the Adjusted CD Rate applicable
to such Loan on the day before such payment was due and
(ii) the rate applicable to Base Rate Loans for such
day.
The "Adjusted CD Rate" applicable to any Interest
Period means a rate per annum determined pursuant to
the following formula:
*
ACDR = Adjusted CD Rate
CDBR = CD Base Rate
DRP = Domestic Reserve Percentage
AR = Assessment Rate
* The amount in brackets being rounded
upward, if necessary, to the next higher
1/100 of 1%.
The "CD Base Rate" applicable to any Interest
Period is the rate of interest determined by the
Administrative Agent to be the average (rounded upward,
if necessary, to the next higher 1/100 of 1%) of the
prevailing rates per annum bid at 10:00 A.M. (New York
City time) (or as soon thereafter as practicable) on
the first day of such Interest Period by two or more
New York certificate of deposit dealers of recognized
standing for the purchase at face value from each CD
Reference Bank of its certificates of deposit in an
amount comparable to the principal amount of the CD
Loan of such CD Reference Bank to which such Interest
Period applies and having a maturity comparable to such
Interest Period.
The "CD Margin" means 0.375%.
"Domestic Reserve Percentage" means for any day
that percentage (expressed as a decimal) which is in
effect on such day, as prescribed by the Board of
Governors of the Federal Reserve System (or any
successor) for determining the maximum reserve
requirement (including without limitation any basic,
supplemental or emergency reserves) for a member bank
of the Federal Reserve System in New York City with
deposits exceeding five billion dollars in respect of
new non-personal time deposits in dollars in New York
City having a maturity comparable to the related
Interest Period and in an amount of $100,000 or more.
The Adjusted CD Rate shall be adjusted automatically on
and as of the effective date of any change in the
Domestic Reserve Percentage.
"Assessment Rate" means for any day the annual
assessment rate in effect on such day which is payable
by a member of the Bank Insurance Fund classified as
adequately capitalized and within supervisory subgroup
"A" (or a comparable successor assessment risk
classification) within the meaning of 12 C.F.R.
327.4(a) (or any successor provision) to the Federal
Deposit Insurance Corporation (or any successor) for
such Corporation's (or such successor's) insuring time
deposits at offices of such institution in the United
States. The Adjusted CD Rate shall be adjusted
automatically on and as of the effective date of any
change in the Assessment Rate.
(c) Each Euro-Dollar Loan of any Bank shall bear
interest on the outstanding principal amount thereof,
for each day during each Interest Period applicable
thereto, at a rate per annum equal to the sum of the
Euro-Dollar Margin plus the London Interbank Offered
Rate applicable to such Interest Period. Such interest
shall be payable for each Interest Period on the last
day thereof and, if such Interest Period is longer than
three months, at intervals of three months after the
first day thereof.
The "London Interbank Offered Rate" applicable to
any Interest Period means the average (rounded upward,
if necessary, to the next higher 1/16 of 1%) of the
respective rates per annum at which deposits in dollars
are offered to each of the Euro-Dollar Reference Banks
in the London interbank market at approximately 11:00
A.M. (London time) two Euro-Dollar Business Days before
the first day of such Interest Period in an amount
approximately equal to the principal amount of the
Euro-Dollar Loan of such Euro-Dollar Reference Bank to
which such Interest Period is to apply and for a period
of time comparable to such Interest Period.
The "Euro-Dollar Margin" means 0.25%.
(d) Any overdue principal of or interest on any
Euro-Dollar Loan of any Bank shall bear interest,
payable on demand, for each day from and including the
date payment thereof was due to but excluding the date
of actual payment, at a rate per annum equal to the sum
of 2% plus the higher of (i) the sum of the Euro-Dollar
Margin plus the London Interbank Offered Rate
applicable to such Loan on the day before such payment
was due and (ii) the Euro-Dollar Margin plus the
quotient obtained (rounded upward, if necessary, to the
next higher 1/100 of 1%) by dividing (x) the average
(rounded upward, if necessary, to the next higher 1/16
of 1%) of the respective rates per annum at which one
day (or, if such amount due remains unpaid more than
three Euro-Dollar Business Days, then for such other
period of time not longer than six months as the
Administrative Agent may select) deposits in dollars in
an amount approximately equal to such overdue payment
due to each of the Euro-Dollar Reference Banks are
offered to such Euro-Dollar Reference Bank in the
London interbank market for the applicable period
determined as provided above by (y) 1.00 minus the
Euro-Dollar Reserve Percentage (or, if the
circumstances described in clause (a) or (b) of Section
8.01 shall exist, at a rate per annum equal to the sum
of 2% plus the rate applicable to Base Rate Loans for
such day).
(e) Subject to Section 8.01(a), each Money Market
LIBOR Loan shall bear interest on the outstanding
principal amount thereof, for the Interest Period
applicable thereto, at a rate per annum equal to the
sum of the London Interbank Offered Rate for such
Interest Period (determined in accordance with Section
2.07(c) as if the related Money Market LIBOR Borrowing
were a Committed Euro-Dollar Borrowing) plus (or minus)
the Money Market Margin quoted by the Bank making such
Loan in accordance with Section 2.03. Each Money Market
Absolute Rate Loan shall bear interest on the
outstanding principal amount thereof, for the Interest
Period applicable thereto, at a rate per annum equal to
the Money Market Absolute Rate quoted by the Bank
making such Loan in accordance with Section 2.03. Such
interest shall be payable for each Interest Period on
the last day thereof and, if such Interest Period is
longer than three months, at intervals of three months
after the first day thereof. Any overdue principal of
or interest on any Money Market Loan shall bear
interest, payable on demand, for each day until paid at
a rate per annum equal to the sum of 2% plus the Base
Rate for such day.
(f) The Administrative Agent shall determine each
interest rate applicable to the Loans hereunder. The
Administrative Agent shall give prompt notice to the
Borrower (by facsimile) and the Banks (by telex or
facsimile) of each rate of interest so determined, and
its determination thereof shall be conclusive in the
absence of manifest error. The Administrative Agent
will, at the request of the Borrower, furnish such
additional information concerning the calculation of
the interest rate on any Fixed Rate Loan as the
Borrower may reasonably request.
(g) Each Reference Bank agrees to use its best
efforts to furnish quotations to the Administrative
Agent as contemplated hereby. If any Reference Bank
does not furnish a timely quotation, the Administrative
Agent shall determine the relevant interest rate on the
basis of the quotation or quotations furnished by the
remaining Reference Bank or Banks or, if none of such
quotations is available on a timely basis, the
provisions of Section 8.01 shall apply.
Section 2.8. Facility Fee. The Borrower shall
pay to the Administrative Agent for the account of each
Bank a facility fee for each day at a rate per annum of
0.07% (x) from and including the Effective Date to but
excluding the Termination Date (or earlier date of
termination of the Commitments in their entirety), on
the daily amount of such Bank's Commitment (whether
used or unused) and (y) from and including the
Termination Date (or such earlier date of termination)
to but excluding the date the Loans shall be repaid in
their entirety, on the daily outstanding principal
amount of the Loans of such Bank. Accrued fees under
this Section shall be payable quarterly on each March
31, June 30, September 30 and December 31 prior to the
Termination Date and upon the date of termination of
the Commitments in their entirety (and, if later, the
date the Loans shall be repaid in their entirety).
Section 2.9. Optional Termination or Reduction of
Commitments . During the Revolving Credit Period, the
Borrower may, upon at least three Domestic Business
Days' notice to the Administrative Agent (and the
Administrative Agent shall promptly notify the Banks of
such notice), (i) terminate the Commitments at any
time, if no Loans are outstanding at such time or (ii)
proportionately reduce from time to time by an
aggregate amount of $25,000,000 or any larger multiple
of $5,000,000, the aggregate amount of the Commitments
in excess of the aggregate outstanding principal amount
of the Loans. If the Commitments are terminated in
their entirety, all accrued fees shall be payable on
the effective date of such termination.
Section 2.10. Method of Electing Interest Rates.
(a) The Loans included in each Committed Borrowing
shall bear interest initially at the type of rate
specified by the Borrower in the applicable Notice of
Committed Borrowing. Thereafter, the Borrower may from
time to time elect to change or continue the type of
interest rate borne by each Group of Committed Loans
(subject in each case to the provisions of Article
VIII), as follows:
(i) if such Loans are Base Rate Loans, the
Borrower may elect to convert such Loans to CD
Loans as of any Domestic Business Day or to
Euro-Dollar Loans as of any Euro-Dollar Business
Day;
(ii) if such Loans are CD Loans, the Borrower
may elect to convert such Loans to Base Rate Loans
or Euro-Dollar Loans or elect to continue such
Loans as CD Loans for an additional Interest
Period, in each case effective on the last day of
the then current Interest Period applicable to
such Loans; or
(iii) if such Loans are Euro-Dollar
Loans, the Borrower may elect to convert such
Loans to Base Rate Loans or CD Loans or elect to
continue such Loans as Euro-Dollar Loans for an
additional Interest Period, in each case effective
on the last day of the then current Interest
Period applicable to such Loans.
Each such election shall be made by delivering a notice
substantially in the form attached hereto as Exhibit C
(a "Notice of Interest Rate Election") to the
Administrative Agent at least three Euro-Dollar
Business Days before the conversion or continuation
selected in such notice is to be effective (unless the
relevant Loans are to be converted from Domestic Loans
to Domestic Loans of the other type or continued as
Domestic Loans of the same type for an additional
Interest Period, in which case such notice shall be
delivered to the Administrative Agent at least three
Domestic Business Days before such conversion or
continuation is to be effective). A Notice of Interest
Rate Election may, if it so specifies, apply to only a
portion of the aggregate principal amount of the
relevant Group of Loans; provided that (i) such portion
is allocated ratably among the Loans comprising such
Group and (ii) the portion to which such Notice
applies, and the remaining portion to which it does not
apply, are each $25,000,000 or any larger multiple of
$5,000,000.
(b) Each Notice of Interest Rate Election shall
specify:
(i) the Group of Committed Loans (or portion
thereof) to which such notice applies;
(ii) the date on which the conversion or
continuation selected in such notice is to be
effective, which shall comply with the applicable
clause of subsection (a) above;
(iii) if the Loans comprising such Group
are to be converted, the new type of Loans and, if
such new Loans are Fixed Rate Loans, the duration
of the initial Interest Period applicable thereto;
and
(iv) if such Loans are to be continued as CD
Loans or Euro-Dollar Loans for an additional
Interest Period, the duration of such additional
Interest Period.
Each Interest Period specified in a Notice of Interest
Rate Election shall comply with the provisions of the
definition of Interest Period.
(c) Upon receipt of a Notice of Interest Rate
Election from the Borrower pursuant to subsection (a)
above, such notice shall not thereafter be revocable by
the Borrower and the Administrative Agent shall
promptly notify each Bank of the contents thereof. If
the Borrower fails to deliver a timely Notice of
Interest Rate Election to the Administrative Agent for
any Group of Fixed Rate Loans, such Loans shall be
converted into Base Rate Loans on the last day of the
then current Interest Period applicable thereto.
(d) An election by the Borrower to change or
continue the rate of interest applicable to any Group
of Loans pursuant to this Section 2.10 shall not
constitute a "Borrowing" subject to the provisions of
Section 3.02.
Section 2.11. Optional Prepayments. (a) The
Borrower may, upon at least one Domestic Business Day's
notice to the Administrative Agent, prepay a Group of
Base Rate Loans (or any Money Market Borrowing bearing
interest at the Base Rate pursuant to Section 8.01(a))
in whole at any time, or from time to time in part in
amounts aggregating $25,000,000 or any larger multiple
of $5,000,000, by paying the principal amount to be
prepaid together with accrued interest thereon to the
date of prepayment. Each such optional prepayment shall
be applied to prepay ratably the Loans of the several
Banks included in such Group.
(b) The Borrower may, upon at least three
Domestic Business Days' notice to the Administrative
Agent, in the case of a Group of CD Loans or upon at
least three Euro-Dollar Business Days' notice to the
Administrative Agent, in the case of a Group of
Euro-Dollar Loans, prepay the Loans comprising such
Group in whole at any time, or from time to time in
part, in amounts aggregating $25,000,000 or any larger
multiple of $5,000,000, by paying the principal amount
to be prepaid together with accrued interest thereon to
the date of prepayment; provided that in the case of
any such prepayment in whole or in part on any day
other than the last day of any Interest Period
applicable to such Group of Loans, the Borrower shall
reimburse each Bank for any loss or expense incurred by
it as a result of any such prepayment in accordance
with Section 2.13. Each such optional prepayment shall
be applied to prepay ratably the Loans of the several
Banks included in such Group. The Borrower may not
prepay all or any portion of the principal amount of
any Money Market Loan (other than any Money Market
Borrowing bearing interest at the Base Rate pursuant to
Section 8.01(a)) prior to the maturity thereof.
(c) Upon receipt of a notice of prepayment
pursuant to this Section, the Administrative Agent
shall promptly notify each Bank of the contents thereof
and of such Bank's ratable share (if any) of such
prepayment and such notice shall not thereafter be
revocable by the Borrower.
Section 2.12. General Provisions as to Payments.
(a) The Borrower shall make each payment of principal
of, and interest on, the Loans and of fees hereunder,
not later than 11:00 A.M. (New York City time) on the
date when due, in Federal or other funds immediately
available in New York City, to the Administrative Agent
at its address referred to in Section 9.01. The
Administrative Agent will promptly distribute to each
Bank its ratable share of each such payment received by
the Administrative Agent for the account of the Banks.
Whenever any payment of principal of, or interest on,
the Domestic Loans or of fees shall be due on a day
which is not a Domestic Business Day, the date for
payment thereof shall be extended to the next
succeeding Domestic Business Day. Whenever any payment
of principal of, or interest on, the Euro-Dollar Loans
shall be due on a day which is not a Euro-Dollar
Business Day, the date for payment thereof shall be
extended to the next succeeding Euro-Dollar Business
Day unless such Euro-Dollar Business Day falls in
another calendar month, in which case the date for
payment thereof shall be the next preceding Euro-Dollar
Business Day. Whenever any payment of principal of, or
interest on, the Money Market Loans shall be due on a
day which is not a Euro-Dollar Business Day, the date
for payment thereof shall be extended to the next
succeeding Euro-Dollar Business Day. If the date for
any payment of principal is extended by operation of
law or otherwise, interest thereon shall be payable for
such extended time.
(b) Unless the Administrative Agent shall have
received notice from the Borrower prior to the date on
which any payment is due to the Banks hereunder that
the Borrower will not make such payment in full, the
Administrative Agent may assume that the Borrower has
made such payment in full to the Administrative Agent
on such date and the Administrative Agent may, in
reliance upon such assumption, cause to be distributed
to each Bank on such due date an amount equal to the
amount then due such Bank. If and to the extent that
the Borrower shall not have so made such payment, each
Bank shall repay to the Administrative Agent forthwith
on demand such amount distributed to such Bank together
with interest thereon, for each day from the date such
amount is distributed to such Bank until the date such
Bank repays such amount to the Administrative Agent, at
the Federal Funds Rate.
Section 2.13. Funding Losses. If the Borrower
makes any payment of principal with respect to any
Fixed Rate Loan or any Fixed Rate Loan is converted to
a Base Rate Loan (pursuant to Article VI or VIII or
otherwise, but excluding any payment pursuant to
Section 2.06) on any day other than the last day of an
Interest Period applicable thereto, or the end of an
applicable period fixed pursuant to Section 2.07(d), or
if the Borrower fails to borrow or prepay any Fixed
Rate Loans after notice has been given to any Bank in
accordance with Section 2.04(a) or 2.11(c), the
Borrower shall reimburse each Bank within 15 days after
demand for any resulting loss or expense incurred by
it, including (without limitation) any loss incurred in
obtaining, liquidating or employing deposits from third
parties, but excluding loss of margin for the period
after any such payment or conversion or failure to
borrow or prepay, provided that such Bank shall have
delivered to the Borrower a certificate as to the
amount of such loss or expense, which certificate shall
be conclusive in the absence of manifest error, and
provided further that such loss shall in no event
exceed the interest which would have been payable for
the balance of such Interest Period or other period,
less the applicable CD Margin or Euro-Dollar Margin, as
the case may be. Such Bank will, at the request of the
Borrower, furnish such additional information
concerning the determination of such loss as the
Borrower may reasonably request.
Section 2.14. Computation of Interest and Fees.
Interest based on the Prime Rate hereunder shall be
computed on the basis of a year of 365 days (or 366
days in a leap year) and paid for the actual number of
days elapsed (including the first day but excluding the
last day). All other interest and fees shall be
computed on the basis of a year of 360 days and paid
for the actual number of days elapsed (including the
first day but excluding the last day).
Section 2.15. Taxes. (a) All payments of
principal, interest and fees to be made by the Borrower
or the Administrative Agent (in respect of such amounts
received by it from the Borrower) pursuant to this
Agreement to any Bank with respect to any Loan or fee
shall be made free and clear of and without reduction
or withholding for or on account of any present or
future income, excise, or other taxes, levies, imposts,
duties, charges, or fees of whatever nature now or
hereafter imposed by any governmental or other taxing
authority, excluding any taxes on or measured by
overall net income (all such non-excluded taxes,
levies, imposts, deductions, charges or withholdings,
"Taxes"), unless the withholding or other payment of
such Taxes is required by applicable law. In the event
that the Borrower or the Administrative Agent is
required by applicable law to make any such withholding
or deduction of Taxes with respect to any Loan or fee,
the Borrower shall pay to the Administrative Agent or
such Bank additional amounts as may be necessary in
order that the net amount received by such
Administrative Agent or Bank after the required
withholding or other payment (including any required
withholding or other payment on such additional
amounts) shall equal the amount the Administrative
Agent or such Bank would have received had no such
withholding or other payment been made; provided,
however, that no such additional amounts shall be paid
by the Borrower (i) except on account of Taxes imposed
by the United States (or any political subdivision,
possession, territory or taxing authority thereof or
therein) and (ii) on account of any federal withholding
tax imposed by the United States of America ("United
States Tax"):
(1) if such Bank or a Participant of such
Bank shall have delivered Internal Revenue Service
Form 4224 ("Form 4224") to the Borrower pursuant
to clause (b) or (c) of this Section 2.15 and such
Bank or Participant shall at any time not be
entitled to complete exemption from United States
Tax for any reason other than a change in United
States federal income tax law, regulation or
official interpretation of such law after the date
hereof (or, in the case of any Assignee or
Participant, the date of the relevant assignment
or participation agreement); or
(2) if such Bank or a Participant of such
Bank shall have delivered Internal Revenue Service
Form 1001 ("Form 1001") to the Borrower pursuant
to clause (b) or (c) of this Section 2.15 and such
Bank or Participant shall at any time not be
entitled to complete exemption from United States
Tax for any reason other than (i) an amendment,
modification or revocation of an applicable income
tax convention or a change in official position
regarding the application or interpretation of
such treaty after the date hereof (or, in the case
of any Assignee or Participant, the date of the
relevant assignment or participation agreement) or
(ii) a change in United States federal income tax
laws, regulation or official interpretation of
such law after the date hereof (or, in the case of
any Assignee or Participant, the date of the
relevant assignment or participation agreement);
or
(3) if such Bank or a Participant of such
Bank shall have failed to comply with its
obligations pursuant to clause (b) or (c) of this
Section 2.15.
(b) Each Bank that is a Non-U.S. Bank hereby
severally covenants and agrees to and for the benefit
of the Borrower and the Administrative Agent that
(1) at, or prior to, the Effective Date,
such Non-U.S. Bank shall have delivered to both
the Borrower and the Administrative Agent either:
(i) two accurate and complete original
signed copies of Form 1001, appropriately
completed and claiming complete exemption
from withholding and deduction of United
States Taxes, with respect to each three-year
calendar period, any portion of which falls
within the Revolving Credit Period, dated as
of the date hereof; or
(ii) two accurate and complete original
signed copies of Form 4224, appropriately
completed and claiming complete exemption
from withholding and deduction of United
States Taxes, with respect to each tax year
of such Bank, any portion of which falls
within the Revolving Credit Period, dated as
of the date hereof; and
(2) in each fiscal year of such Bank after
the Effective Date, at or prior to the first
scheduled payment date in such fiscal year, such
Non-U.S. Bank shall have delivered to both the
Borrower and the Administrative Agent either:
(i) two accurate and complete original
signed copies of Form 1001, appropriately
completed and claiming complete exemption
from withholding and deduction of United
States Taxes, with respect to the three-year
calendar period commencing with the then
current calendar year; or
(ii) two accurate and complete original
signed copies of Form 4224, appropriately
completed and claiming complete exemption
from withholding and deduction of United
States Taxes, with respect to such Bank's
then current tax year.
(c) Each Non-U.S. Bank severally covenants and
agrees to deliver to the Borrower and the
Administrative Agent:
(1) before or promptly after the date on
which any form previously delivered by such Bank
pursuant to Section 2.15(b) may no longer be
relied upon by the Borrower and the Administrative
Agent as a result of an act by such Bank, two
accurate and complete original signed copies of
Form 1001 or Form 4224 (or such additional or
successor forms as shall be adopted from time to
time by the relevant United States taxing
authorities), appropriately completed and claiming
complete exemption from withholding and deduction
of United States Taxes, to replace the like form
previously delivered by such Non-U.S. Bank; and
(2) if any form previously delivered by such
Non-U.S. Bank pursuant to Section 2.15(b) may no
longer be relied upon by the Borrower and the
Administrative Agent for any reason (other than as
a result of an act by the Bank), two accurate and
complete original signed copies of Form 4224 or
Form 1001, as the case may be, (or such additional
or successor forms as shall be adopted from time
to time by the relevant United States taxing
authorities), appropriately completed and claiming
complete exemption from withholding and deduction
of United States Taxes, as the Borrower or the
Administrative Agent may reasonably request.
Notwithstanding the foregoing subsections (b)(2),
(c)(1) and (c)(2) of this Section 2.15, a Non-U.S. Bank
will not be required to provide a form if due to any
change in treaty, law or regulation or official
interpretation that occurred after the date hereof (or,
in the case of any Non-U.S. Bank that is an Assignee or
any Participant complying with subsections (b)(2),
(c)(1) and (c)(2) of this Section 2.15 pursuant to
Section 9.06(b), the date of the relevant assignment or
participation agreement) and prior to the date on which
any such delivery would otherwise be required, all such
forms are inapplicable or such Bank is not entitled to
any exemption from the United States Tax as claimed in
the form previously delivered. In any such case, each
Non-U.S. Bank shall provide such forms as the Borrower
or the Administrative Agent may reasonably request to
establish entitlement, if any, to any reduction in
United States Tax to which such Bank may be entitled
from and after the occurrence of any such change in
treaty, law or regulation.
(d) In the event that the Borrower will be
required to pay an additional amount pursuant to
Section 2.15(a) to any Bank, the Borrower shall have
the rights set forth in Section 8.05. The agreements in
this Section 2.15 shall survive the termination of this
Agreement and the payment of the Notes and all other
amounts payable hereunder.
Section 2.16. Regulation D Compensation. For so
long as any Bank is required to maintain reserves
against "Eurocurrency liabilities" (or any other
category of liabilities which includes deposits by
reference to which the interest rate on Euro-Dollar
Loans is determined or any category of extensions of
credit or other assets which includes loans by a
non-United States office of such Bank to United States
residents), and, as a result, the cost to such Bank (or
its Euro-Dollar Lending Office) of making or
maintaining its Euro-Dollar Loans is increased, then
such Bank may require the Borrower to pay,
contemporaneously with each payment of interest on the
Euro-Dollar Loans, additional interest on the related
Euro-Dollar Loan of such Bank at a rate per annum up to
but not exceeding the excess of (i) (A) the applicable
London Interbank Offered Rate divided by (B) one minus
the Euro-Dollar Reserve Percentage over (ii) the
applicable London Interbank Offered Rate. Any Bank
wishing to require payment of such additional interest
(x) shall so notify the Borrower and the Administrative
Agent, in which case such additional interest on the
Euro-Dollar Loans of such Bank shall be payable to such
Bank at the place indicated in such notice with respect
to each Interest Period commencing at least three
Euro-Dollar Business Days after the giving of such
notice and (y) shall furnish to the Borrower at least
five Euro-Dollar Business Days prior to each date on
which interest is payable on the Euro-Dollar Loans an
officer's certificate setting forth the amount to which
such Bank is then entitled under this Section (which
shall be consistent with such Bank's good faith
estimate of the level at which the related reserves are
maintained by it). Each such certificate shall be
accompanied by such information as the Borrower may
reasonably request as to the computation set forth
therein.
Section 2.17. Optional Increase in Commitments.
At any time, if no Default shall have occurred and be
continuing, the Borrower may, if it so elects, increase
the aggregate amount of the Commitments, either by
designating a bank not theretofore a Bank to become a
Bank (such designation to be effective only with the
prior written consent of the Administrative Agent,
which consent will not be unreasonably withheld) or by
agreeing with an existing Bank that such Bank's
Commitment shall be increased. Upon execution and
delivery by the Borrower and such Bank or other bank of
an instrument in form satisfactory to the
Administrative Agent, such existing Bank shall have a
Commitment as therein set forth or such other bank
shall become a Bank with a Commitment as therein set
forth and all the rights and obligations of a Bank with
such a Commitment hereunder; provided that:
(a) the Borrower shall provide prompt notice
of such increase to the Administrative Agent, who
shall promptly notify the Banks;
(b) no Commitment of any Bank shall exceed,
as a result of such increase, 20% of the aggregate
amount of the Commitments (after giving effect to
such increase); and
(c) the amount of such increase, together
with all other increases in the aggregate amount
of the Commitments pursuant to this Section 2.17
since the date of this Agreement, does not exceed
$250,000,000.
Upon any increase in the aggregate amount of the
Commitments pursuant to this Section 2.17, within five
Domestic Business Days, in the case of any Group of
Base Rate Loans then outstanding, and at the end of the
then current Interest Period, in the case of each Group
of Euro-Dollar Loans and Group of CD Loans then
outstanding, the Borrower shall prepay or repay such
Group in its entirety and, to the extent the Borrower
elects to do so and subject to the conditions specified
in Article III, the Borrower shall reborrow Committed
Loans from the Banks in proportion to their respective
Commitments after giving effect to such increase, until
such time as all outstanding Committed Loans are held
by the Banks in such proportion.
ARTICLE 3
Conditions
Section 3.1. Effectiveness of Agreement. This
Agreement shall become effective on the date that each
of the following conditions shall have been satisfied
(or waived in accordance with Section 9.05):
(a) receipt by the Administrative Agent of
counterparts hereof signed by each of the parties
hereto (or, in the case of any party as to which
an executed counterpart shall not have been
received, receipt by the Administrative Agent in
form satisfactory to it of telegraphic, telex or
other written confirmation from such party of
execution of a counterpart hereof by such party);
(b) receipt by the Administrative Agent for
the account of each Bank of a duly executed Note
dated on or before the Effective Date complying
with the provisions of Section 2.05;
(c) receipt by the Administrative Agent of
an opinion of counsel for the Borrower, who may be
Xxxxxx & Xxxxxxx or Senior Counsel for Sears, or a
combination thereof, substantially in the form of
Exhibit G hereto;
(d) receipt by the Administrative Agent of
an opinion of Xxxxx Xxxx & Xxxxxxxx, special
counsel for the Administrative Agent,
substantially in the form of Exhibit H hereto;
(e) receipt by the Administrative Agent, for
its own account and for the account of the Banks
parties thereto, of all fees payable on or before
the Effective Date; and
(f) receipt by the Administrative Agent of
all documents it may reasonably request
relating to the existence of the Borrower, the
corporate authority for and the validity of this
Agreement and the Notes, and any other matters
relevant hereto, all in form and substance
satisfactory to the Administrative Agent;
provided that the Agreement shall not become effective
or be binding on any party hereto unless all of the
foregoing conditions are satisfied not later than
December 14, 1998. The Administrative Agent shall
promptly notify the Borrower and the Banks of the
Effective Date, and such notice shall be conclusive and
binding on all parties hereto.
Section 3.2. Borrowings. The obligation of any
Bank to make a Loan on the occasion of any Borrowing is
subject to the satisfaction of the following
conditions:
(a) receipt by the Administrative Agent of a
Notice of Borrowing as required by Section 2.02 or
2.03, as the case may be;
(b) the fact that, immediately after such
Borrowing, the aggregate outstanding principal
amount of the Loans will not exceed the aggregate
amount of the Commitments;
(c) the fact that, immediately before and
after such Borrowing, there shall not have
occurred and be continuing any Designated Default;
(d) the fact that the representations and
warranties of the Borrower contained in this
Agreement (other than in Section 4.04(c) hereof)
shall be true on and as of the date of such
Borrowing; and
(e) the fact that there shall have been no
material adverse change in the business,
consolidated financial position or Consolidated
Net Income of the Borrower and its Consolidated
Subsidiaries since July 4, 1998 not disclosed in
writing to the Banks on or prior to the date of
such Borrowing.
Each Borrowing hereunder shall be deemed to be a
representation and warranty by the Borrower on the date
of such Borrowing as to the facts specified in clauses
(b), (c), (d) and (e) of this Section.
For all purposes of this Agreement, (a) no change
in consolidated financial position of the Borrower and
its Consolidated Subsidiaries shall be deemed material
and adverse unless such change is a reduction in
Consolidated Stockholder's Equity of the Borrower and
its Consolidated Subsidiaries of 5% or more as compared
with Consolidated Stockholder's Equity as at the date
of the consolidated balance sheet of the Borrower and
its Consolidated Subsidiaries most recently delivered
under Section 4.04 or 5.01 hereof, (b) no change in
Consolidated Net Income shall be deemed to be material
and adverse unless such change is a reduction therein
for a period of the four most recent full consecutive
fiscal quarters in respect of which results of
operations have been made available to the public
("most recent four quarters") of 25% or more as
compared with Consolidated Net Income for the period of
four consecutive fiscal quarters immediately preceding
the most recent four quarters and (c) no change in
business shall be deemed material and adverse unless it
would be required to be disclosed in an annual report
on Form 10-K (or successor reports) filed with the
Commission on the date as of which the existence of a
material adverse change is being determined. It is
understood that, for all purposes of this Agreement, no
change in business shall be deemed to be required to be
so disclosed if, in the written opinion of counsel for
the Borrower, the laws, rules and regulations then
applicable to required disclosure in Forms 10-K (or
successor reports) do not require such disclosure. Such
an opinion will be deemed sufficient for purposes
hereof if it shall be based on (i) such investigation
of law as such counsel shall have deemed necessary in
the circumstances and (ii) facts as certified in
writing to such counsel by officers of the Borrower or
its Affiliates, it being understood that counsel shall
have no duty to independently verify any such facts. In
case Borrower relies on such an opinion of counsel, it
will promptly distribute a copy thereof to each Bank.
ARTICLE 4
Representations and Warranties
The Borrower represents and warrants that:
Section 4.1. Corporate Existence and Power. The
Borrower has been duly incorporated and is validly
existing as a corporation in good standing under the
laws of the State of Delaware with full corporate power
to conduct its business as presently conducted.
Section 4.2. Corporate and Governmental
Authorization; No Contravention.
(a) The Borrower has full corporate power to
enter into this Agreement and to issue the Notes and to
comply with all of the provisions of this Agreement and
the Notes, and all necessary corporate proceedings of
the Borrower have been duly taken to authorize the
execution, delivery and performance of this Agreement
and the issuance of the Notes by the Borrower.
(b) The issuance by the Borrower of the Notes and
compliance by the Borrower with all of the provisions
of this Agreement will not conflict with or result in a
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 Borrower, material to the Borrower,
pursuant to the terms of, any indenture, loan
agreement, or other agreement or instrument for
borrowed money to which the Borrower is a party or by
which the Borrower may be bound or to which any of the
property or assets of the Borrower, material to the
Borrower, is subject, nor will such action result in
any material violation of the provisions of the
Certificate of Incorporation or the By-Laws of the
Borrower or any statute or any order, rule or
regulation applicable to the Borrower of any court or
any Federal, state or other regulatory authority or
other governmental body having jurisdiction over the
Borrower, 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 issuance by the Borrower of the Notes
and the compliance by the Borrower with all of the
provisions of this Agreement; provided, that the
Borrower makes no representations or warranties with
respect to any usury laws or any securities or blue sky
laws of political subdivisions of the United States or
any laws or treaties of any country (or political
subdivision thereof) other than the United States.
Section 4.3. Binding Effect. This Agreement
constitutes a valid and binding agreement of the
Borrower and the Notes, when executed and delivered in
accordance with this Agreement, will constitute valid
and binding obligations of the Borrower. The Letter
Agreement is in full force and effect and constitutes a
valid and binding agreement of the Borrower and Sears.
Section 4.4. Financial Information.
(a) The statement of financial position of the
Borrower as of January 3, 1998 and the related
statements of income, shareholder's equity and cash
flows for the fiscal year then ended, reported on by
Deloitte & Touche LLP and set forth in the Borrower's
1997 Form 10-K, a copy of which has been delivered to
the Administrative Agent for each of the Banks, present
fairly in all material respects, in conformity with
generally accepted accounting principles, the financial
position of the Borrower as of such date and its
results of operations and cash flows for such fiscal
year.
(b) The unaudited statement of financial
position of the Borrower as of July 4, 1998 and the
related unaudited statements of income and cash flows
for the 26 weeks then ended, set forth in the
Borrower's quarterly report for the 13 week period
ended July 4, 1998 as filed with the Commission on Form
10-Q, a copy of which (excluding the exhibits thereto)
has been delivered to the Administrative Agent for each
of the Banks, present fairly in all material respects,
in conformity with generally accepted accounting
principles applied on a basis consistent with the
financial statements referred to in subsection (a) of
this Section, the financial position of the Borrower as
of such date and its results of operations and cash
flows for such 26 week period (subject to normal
year-end adjustments).
(c) Since July 4, 1998, there has been no
material adverse change in the business, financial
position or results of operations of the Borrower not
disclosed in writing to the Banks prior to the date of
this Agreement.
Section 4.5. Litigation. The Borrower does not
know of any pending legal or governmental proceeding
required to be described in the Annual Report on Form
10-K of the Borrower most recently filed with the
Commission pursuant to the Exchange Act, or in the
Quarterly Reports on Form 10-Q of the Borrower filed
with the Commission pursuant to the Exchange Act
subsequent thereto, which is not described as required,
and the Borrower does not know of any pending legal or
governmental proceedings not so described which would
be required to be described in a subsequent filing with
the Commission and which have not been previously
disclosed in writing to the Banks.
Section 4.6. Compliance with ERISA. Each member
of the ERISA Group has fulfilled its obligations under
the minimum funding standards of ERISA and the Internal
Revenue Code with respect to each Plan and is in
compliance in all material respects with the presently
applicable provisions of ERISA and the Internal Revenue
Code with respect to each Plan. No member of the ERISA
Group has (i) sought a waiver of the minimum funding
standard under Section 412 of the Internal Revenue Code
in respect of any Plan, (ii) failed to make any
contribution or payment to any Plan or Multiemployer
Plan or in respect of any Benefit Arrangement, or made
any amendment to any Plan or Benefit Arrangement, which
has resulted or could result in the imposition of a
Lien or the posting of a bond or other security under
ERISA or the Internal Revenue Code or (iii) incurred
any liability under Title IV of ERISA other than a
liability to the PBGC for premiums under Section 4007
of ERISA.
Section 4.7. Environmental Matters. The Borrower
has reasonably concluded that Environmental Laws are
unlikely to have a material adverse effect on the
business, consolidated financial condition or results
of operations of the Borrower and its Consolidated
Subsidiaries.
Section 4.8. Taxes. All United States Federal
income tax returns and all other material tax returns
which are required to be filed have been filed by or on
behalf of the Borrower and its Subsidiaries and all
taxes due with respect to the Borrower and its
Subsidiaries pursuant to such returns or pursuant to
any assessment received by the Borrower or any
Subsidiary have been paid. The charges, accruals and
reserves on the books of the Borrower and its
Subsidiaries in respect of taxes or other governmental
charges are, in the opinion of the Borrower, adequate.
Section 4.9. Subsidiaries. At the date of this
Agreement, the Borrower has no Subsidiaries. If during
the term of this Agreement, the Borrower shall acquire
or otherwise come to have one or more Subsidiaries,
each of such corporate Subsidiaries shall be a
corporation duly incorporated and validly existing as a
corporation in good standing under the laws of its
jurisdiction of incorporation, and shall have full
corporate powers to conduct its business as conducted.
Section 4.10. Full Disclosure. All written
factual information heretofore furnished by the
Borrower to the Administrative Agent or any Bank for
purposes of or in connection with this Agreement was
true and accurate in all material respects on the date
as of which such information was stated or certified;
provided that the Borrower makes no representations or
warranties with respect to any projections or other non-
factual information contained in any such information.
ARTICLE 5
Covenants
The Borrower agrees that, so long as any Bank has
any Commitment hereunder or any amount payable under
any Note remains unpaid:
Section 5.1. Information. The Borrower will
deliver to each of the Banks:
(a) as soon as available and in any event
within 120 days after the end of each fiscal year
of the Borrower, a statement of financial position
of the Borrower as of the end of such fiscal year
and the related statements of income,
shareholder's equity and cash flows for such
fiscal year, setting forth in each case in
comparative form the figures for the previous
fiscal year, all reported on by Deloitte & Touche
LLP or other independent public accountants of
nationally recognized standing;
(b) as soon as available and in any event
within 60 days after the end of each of the first
three quarters of each fiscal year of the
Borrower, a statement of financial position of the
Borrower as of the end of such quarter and the
related statements of income, shareholder's equity
and cash flows for such quarter and for the
portion of the Borrower's fiscal year ended at the
end of such quarter, setting forth in each case in
comparative form the figures for the corresponding
quarter and the corresponding portion of the
Borrower's previous fiscal year, all certified
(subject to normal year-end adjustments) as to
fairness of presentation, generally accepted
accounting principles and consistency by the chief
financial officer or the chief accounting officer
of the Borrower;
(c) simultaneously with the delivery of
each set of financial statements referred to in
clauses (a) and (b) above, a certificate of the
chief financial officer or the chief accounting
officer of the Borrower (i) setting forth in
reasonable detail the calculations required to
establish whether the Borrower was in compliance
with the requirements of Sections 5.10 and 5.11 on
the date of such financial statements and (ii)
stating whether any Event of Default or any event
or condition which, with the giving of notice or
lapse of time or both, would become an Event of
Default, exists on the date of such certificate
and, if any Event of Default or any such event or
condition then exists, setting forth the details
thereof and the action which the Borrower is
taking or proposes to take with respect thereto;
(d) simultaneously with the delivery of
each set of financial statements referred to in
clause (a) above, a statement of the firm of
independent public accountants which reported on
such statements to the effect that in the course
of their examination of such statements, nothing
came to their attention that caused them to
believe that the Borrower was not in compliance
with any of the terms, covenants, provisions or
conditions of Sections 5.01 to 6.01, inclusive,
insofar as such terms, covenants, provisions or
conditions came within the scope of their
examination;
(e) within five days after any officer of
the Borrower obtains knowledge of any Event of
Default or any event or condition which, with the
giving of notice or lapse of time or both, would
become an Event of Default, if such Event of
Default or event or condition is then continuing,
a certificate of the chief financial officer or
the chief accounting officer of the Borrower
setting forth the details thereof and the action
which the Borrower is taking or proposes to take
with respect thereto;
(f) promptly after the commencement
thereof, notice of all actions, suits or
proceedings of the type described in Section 4.05;
(g) promptly after the filing thereof,
copies (without exhibits thereto) of all
registration statements (other than any
registration statements on Form S-8 or its
equivalent) and reports on Forms 10-K, 10-Q and
8-K (or their equivalents) which the Borrower
shall have filed with the Commission;
(h) if and when any member of the ERISA
Group (i) gives or is required to give notice to
the PBGC of any "reportable event" (as defined in
Section 4043 of ERISA) with respect to any Plan
which might constitute grounds for a termination
of such Plan under Title IV of ERISA, or knows
that the plan administrator of any Plan has given
or is required to give notice of any such
reportable event, a copy of the notice of such
reportable event given or required to be given to
the PBGC; (ii) receives notice of complete or
partial withdrawal liability under Title IV of
ERISA or notice that any Multiemployer Plan is in
reorganization, is insolvent or has been
terminated, a copy of such notice; (iii) receives
notice from the PBGC under Title IV of ERISA of an
intent to terminate, impose liability (other than
for premiums under Section 4007 of ERISA) in
respect of, or appoint a trustee to administer any
Plan, a copy of such notice; (iv) applies for a
waiver of the minimum funding standard under
Section 412 of the Internal Revenue Code, a copy
of such application; (v) gives notice of intent to
terminate any Plan under Section 4041(c) of ERISA,
a copy of such notice and other information filed
with the PBGC; (vi) gives notice of withdrawal
from any Plan pursuant to Section 4063 of ERISA, a
copy of such notice; or (vii) fails to make any
payment or contribution to any Plan or
Multiemployer Plan or in respect of any Benefit
Arrangement or makes any amendment to any Plan or
Benefit Arrangement which has resulted or could
result in the imposition of a Lien or the posting
of a bond or other security, a certificate of the
chief financial officer or the chief accounting
officer of the Borrower setting forth details as
to such occurrence and action, if any, which the
Borrower or applicable member of the ERISA Group
is required or proposes to take; and
(i) from time to time such additional
information regarding the financial position or
business of the Borrower and its Subsidiaries as
the Administrative Agent, at the request of any
Bank, may reasonably request.
If during the term of this Agreement, the Borrower
shall acquire or otherwise come to have one or more
Subsidiaries, the financial statements required to be
delivered pursuant to clauses (a) and (b) above shall
be consolidated financial statements of the Borrower
and its Consolidated Subsidiaries.
Section 5.2. Maintenance of Property; Insurance.
(a) The Borrower will keep, and will cause each
Subsidiary to keep, all property useful and necessary
in its business in good working order and condition,
ordinary wear and tear excepted.
(b) The Borrower will insure or act as
self-insurer, and will cause each Subsidiary to insure
or act as self-insurers, to such extent as the Borrower
may determine to be not unreasonably prejudicial to the
interests of the Banks.
Section 5.3. Conduct of Business and Maintenance
of Existence . Subject to Section 5.07, the Borrower
will, and will cause each Subsidiary to, engage
exclusively in (i) the business now conducted by the
Borrower, including the extension of credit to Sears
pursuant to the Letter Agreement, (ii) the purchase of
Receivables from Sears or its Affiliates on terms and
conditions reasonably determined by the Borrower to be
substantially as favorable to the Borrower or such
Subsidiary as the terms and conditions which would
apply in a similar transaction with a Person that is
not an Affiliate of the Borrower and/or (iii) insurance
or financial activities supporting businesses conducted
by Sears or any of its Affiliates. Subject to Section
5.07, the Borrower will preserve, renew and keep in
full force and effect, and will cause each Subsidiary
to preserve, renew and keep in full force and effect
their respective corporate existence and their
respective rights, privileges and franchises necessary
or desirable in the normal conduct of business;
provided that the Borrower may terminate the corporate
existence of any Subsidiary if such termination could
not reasonably be expected to have a material adverse
effect on the business, consolidated financial position
or consolidated net income of the Borrower and its
Consolidated Subsidiaries taken as a whole, or
otherwise to be materially disadvantageous to the
Banks.
Section 5.4. Compliance with Laws. The Borrower
will make all good faith efforts to comply, and cause
each Subsidiary to make all good faith efforts to
comply, with all material applicable laws, ordinances,
rules, regulations, and requirements of governmental
authorities (including, without limitation,
Environmental Laws and ERISA and the rules and
regulations thereunder) except where the necessity of
compliance therewith is contested in good faith by
appropriate proceedings.
Section 5.5. Letter Agreement. The Borrower will
not, without the prior written consent of the Required
Banks, amend, waive, terminate or otherwise modify any
provision of the Letter Agreement; provided that the
Borrower may amend the Letter Agreement to reduce the
fixed charge coverage ratio set forth in paragraph 3
thereof to no less than 1.15. The Borrower will perform
all its obligations under the Letter Agreement and will
enforce the Letter Agreement and all notes and other
instruments delivered thereunder against Sears in
accordance with their respective terms.
Section 5.6. Negative Pledge. Neither the
Borrower nor any Subsidiary will create, assume or
suffer to exist any Lien securing Debt on any asset now
owned or hereafter acquired by it, except:
(a) any Lien existing on the date of this
Agreement;
(b) any Lien existing on any asset of any
corporation at the time such corporation becomes a
Subsidiary and not created in contemplation of
such event;
(c) any Lien on any asset securing Debt
incurred or assumed for the purpose of financing
all or any part of the cost of acquiring such
asset, provided that such Lien attaches to such
asset concurrently with or within 90 days after
the acquisition thereof;
(d) any Lien on any asset of any
corporation existing at the time such corporation
is merged with or consolidated with or otherwise
acquired by the Borrower or a Subsidiary and not
created in contemplation of such event;
(e) any Lien existing on any asset prior to
the acquisition thereof by the Borrower or a
Subsidiary and not created in contemplation of
such acquisition;
(f) any Lien on assets to secure obligations
incurred in connection with the issuance of
revenue bonds, interest on which is exempt from
Federal income tax pursuant to Section 103(b) of
the Internal Revenue Code;
(g) any Lien arising out of the refinancing,
extension, renewal or refunding of any Debt
secured by any Lien permitted by any of the
foregoing clauses of this Section, provided that
such Debt is not increased and is not secured by
any additional assets;
(h) any Lien arising pursuant to any order
of attachment, distraint or similar legal process
arising in connection with court proceedings so
long as the execution or other enforcement thereof
is effectively stayed and the claims secured
thereby are being contested in good faith by
appropriate proceedings;
(i) any Lien on Margin Stock, but only if
the value of all such Margin Stock of the Borrower
and its Subsidiaries exceeds 25% of the value of
the total assets subject to this Section and then
only to the extent of such excess; and
(j) Liens not otherwise permitted by the
foregoing clauses of this Section securing Debt in
an aggregate principal amount not to exceed 5% of
Consolidated Tangible Net Worth at any time
outstanding.
Section 5.7. Consolidations, Mergers and Sales of
Assets. The Borrower shall not merge or consolidate
with, or sell or transfer all or substantially all of
its property and assets to, any Person, except that
nothing herein shall prevent any consolidation or
merger of the Borrower with or into any other
corporation organized under the laws of the United
States or any state thereof which is (w) Sears, (x) a
Wholly-Owned Subsidiary of Sears, (y) a corporation of
which Sears is a Wholly-Owned Subsidiary or (z) a
Wholly-Owned Subsidiary of a corporation described in
clause (y) above, or any consolidation or merger of any
other such corporation with or into the Borrower, or
any sale or transfer of all or substantially all of the
property and assets of the Borrower to any other such
corporation lawfully entitled to acquire the same;
provided, that (i) immediately after giving effect to
such consolidation, merger, sale or transfer, no
Designated Default shall have occurred and be
continuing; and (ii) the Borrower covenants that any
such consolidation, merger, sale or transfer shall be
upon the conditions that the due and punctual payment
of the principal and accrued interest on the Notes, and
the due and punctual performance and observance of all
the terms, covenants and conditions of this Agreement
to be kept or performed by the Borrower shall, by an
agreement supplemental hereto, be assumed by the
corporation (other than the Borrower) formed by or
resulting from any such consolidation or merger, or
which shall have received the transfer of all or
substantially all of the property and assets of the
Borrower, just as fully and effectually as if such
successor had been the original Borrower; and in the
event of any such sale or transfer the predecessor
Borrower may be dissolved, wound up and liquidated at
any time thereafter.
Section 5.8. Use of Proceeds. The proceeds of
the Loans made under this Agreement will be used by the
Borrower for its general corporate purposes. None of
such proceeds will be used, directly or indirectly, for
the purpose, whether immediate, incidental or ultimate,
of purchasing or carrying any Margin Stock, other than
in the ordinary course of business of Sears or any
Sears Subsidiary and then only in compliance with
Regulation U.
Section 5.9. Subsidiary Debt. The Borrower will
not permit any Subsidiary to issue, assume, incur or
have outstanding any Debt or capital stock having any
preference as to dividends or upon any distribution of
assets except (a) such Debt or stock issued to and held
by Borrower and/or one or more Wholly-Owned
Subsidiaries of the Borrower, (b) such Debt or stock of
a Subsidiary whose business activities are confined
exclusively to raising capital outside the United
States, financing the Borrower and its other
Subsidiaries and other activities incidental thereto,
(c) such Debt or stock of a Person existing at the time
such Person is merged or consolidated with or otherwise
acquired by the Borrower or a Subsidiary and not
created in contemplation thereof and (d) other such
Debt or stock which, in the aggregate, does not exceed
at any time 5% of Consolidated Tangible Net Worth (with
such stock taken at the higher of its voluntary or
involuntary liquidation preference), it being
understood that such Debt and stock referred to in
clauses (b), (c) and (d) shall be permitted under this
Section only if, at the time, the provisions of this
Agreement other than this Section would permit the
Borrower to issue, assume, incur or have outstanding an
equal amount of its own Debt in the same amount
together with all other Debt of the Borrower then
outstanding.
Section 5.10. Fixed Charge Coverage. The Fixed
Charge Coverage Ratio for any fiscal quarter will be
not less than 1.15.
Section 5.11. Debt. Consolidated Debt will at no
time exceed 700% of Consolidated Tangible Net Worth.
For purposes of this Section any preferred stock of a
Consolidated Subsidiary held by a Person other than the
Borrower or a Wholly-Owned Subsidiary of the Borrower
that is a Consolidated Subsidiary shall be included, at
the higher of its voluntary or involuntary liquidation
value, in "Consolidated Debt" and in the "Debt" of such
Consolidated Subsidiary.
ARTICLE 6
Defaults
Section 6.1. Events of Default. If one or more
of the following events ("Events of Default") shall
have occurred and be continuing:
(a) the Borrower shall fail to pay (i) any
principal of any Loan when due or (ii) any interest on
any Loan or any fee or any other amount payable by it
hereunder within ten days after the due date thereof;
(b) the Borrower shall fail to observe or perform
any covenant contained in Sections 5.05 to 5.11,
inclusive, for more than five days;
(c) the Borrower shall fail to observe or perform
any covenant or agreement contained in this Agreement
(other than those covered by clause (a) or (b) above)
for 30 days after written notice thereof has been given
to the Borrower by the Administrative Agent at the
request of any Bank;
(d) any representation, warranty, certification or
statement made by the Borrower in this Agreement or in
any certificate, financial statement or other document
delivered pursuant to this Agreement shall prove to
have been incorrect in any material respect when made
(or deemed made);
(e) (i) the Borrower or any Subsidiary shall fail
to make any payment in respect of any Material SRAC
Debt within three Domestic Business Days after the date
when due (or, if longer, within any applicable grace
period provided in the relevant instrument or agreement
with respect thereto); or (ii) any Material Company
other than the Borrower or any Subsidiary shall fail to
make any payment in respect of any Material Company
Material Debt within three Domestic Business Days after
the date when due (or, if longer, within any applicable
grace period provided in the relevant instrument or
agreement with respect thereto);
(f) any event or condition shall occur which
results in the acceleration of the maturity of (x) any
Material SRAC Debt or (y) any Material Company Material
Debt, in any case by holders thereof exercising their
rights so to accelerate;
(g) any Material Company shall commence a voluntary
case or other proceeding seeking liquidation,
reorganization or other relief with respect to itself
or its debts under any bankruptcy, insolvency or other
similar law now or hereafter in effect or seeking the
appointment of a trustee, receiver, liquidator,
custodian or other similar official of it or any
substantial part of its property, or shall consent to
any such relief or to the appointment of or taking
possession by any such official in an involuntary case
or other proceeding commenced against it, or shall make
a general assignment for the benefit of creditors, or
shall fail generally to pay its debts as they become
due, or shall take any corporate action to authorize
any of the foregoing;
(h) an involuntary case or other proceeding shall
be commenced against any Material Company seeking
liquidation, reorganization or other relief with
respect to it or its debts under any bankruptcy,
insolvency or other similar law now or hereafter in
effect or seeking the appointment of a trustee,
receiver, liquidator, custodian or other similar
official of it or any substantial part of its property,
and such involuntary case or other proceeding shall
remain undismissed and unstayed for a period of 90
days; or an order for relief shall be entered against
any Material Company (in an involuntary case or other
proceeding against such Material Company) under the
federal bankruptcy laws as now or hereafter in effect;
(i) any member of the ERISA Group shall fail to pay
when due an amount or amounts aggregating in excess of
$10,000,000 which it shall have become liable to pay
under Title IV of ERISA; or notice of intent to
terminate a Material Plan shall be filed under Title IV
of ERISA by any member of the ERISA Group, any plan
administrator or any combination of the foregoing; or
the PBGC shall institute proceedings under Title IV of
ERISA to terminate, to impose liability (other than for
premiums under Section 4007 of ERISA) in respect of, or
to cause a trustee to be appointed to administer any
Material Plan; or a condition shall exist by reason of
which the PBGC would be entitled to obtain a decree
adjudicating that any Material Plan must be terminated;
or there shall occur a complete or partial withdrawal
from, or a default, within the meaning of Section
4219(c)(5) of ERISA, with respect to, one or more
Multiemployer Plans which could cause one or more
members of the ERISA Group to incur a current payment
obligation in excess of $50,000,000;
(j) a judgment or order for the payment of money in
excess of $10,000,000 shall be rendered against the
Borrower or any Subsidiary and such judgment or order
shall continue unsatisfied and unstayed (pursuant to
laws, rules or court orders) for a period of 10 days;
(k) other than by reason of a transaction permitted
by Section 5.07 in which Sears is the successor or
transferee, either Sears or a corporation organized
under the laws of the United States or any state
thereof which is (i) a Wholly-Owned Subsidiary of
Sears, (ii) any such corporation of which Sears is a
Wholly-Owned Subsidiary or (iii) a Wholly-Owned
Subsidiary of a corporation described in clause (ii)
above, shall cease to own beneficially and free and
clear of all Liens 100% of the issued and outstanding
capital stock of the Borrower (or any transferee of the
property and assets of the Borrower pursuant to a
transaction permitted by Section 5.07), other than any
SRAC Preferred Stock; or
(l) the Letter Agreement shall for any reason cease
to be in full force and effect;
then, and in every such event, the Administrative Agent
shall (i) if requested by the Required Banks, by notice
to the Borrower terminate the Commitments and they
shall thereupon terminate, and (ii) if requested by the
Required Banks, by notice to the Borrower declare the
Notes (together with accrued interest thereon) to be,
and the Notes shall thereupon become, immediately due
and payable without presentment, demand, protest or
other notice of any kind, all of which are hereby
waived by the Borrower; provided that in the case of
any of the Events of Default specified in clause (g) or
(h) above, without any notice to the Borrower or any
other act by the Administrative Agent or the Banks, the
Commitments shall thereupon terminate and the Notes
(together with accrued interest thereon) shall become
immediately due and payable without presentment,
demand, protest or other notice of any kind, all of
which are hereby waived by the Borrower.
Section 6.2. Notice of Default. The
Administrative Agent shall give notice to the Borrower
under Section 6.01(c) promptly upon being requested to
do so by any Bank and shall thereupon notify all the
Banks thereof.
ARTICLE 7
The Administrative Agent
Section 7.1. Appointment and Authorization. Each
Bank irrevocably appoints and authorizes the
Administrative Agent to take such action as
administrative agent on its behalf and to exercise such
powers under this Agreement and the Notes as are
delegated to the Administrative Agent by the terms
hereof or thereof, together with all such powers as are
reasonably incidental thereto.
Section 7.2. Administrative Agent and Affiliates.
The Chase Manhattan Bank shall have the same rights and
powers under this Agreement as any other Bank and may
exercise or refrain from exercising the same as though
it were not the Administrative Agent, and The Chase
Manhattan Bank and its Affiliates may accept deposits
from, lend money to, and generally engage in any kind
of business with the Borrower or any Subsidiary or
Affiliate of the Borrower as if it were not the
Administrative Agent hereunder.
Section 7.3. Action by Administrative Agent. The
obligations of the Administrative Agent hereunder are
only those expressly set forth herein. Without limiting
the generality of the foregoing, the Administrative
Agent shall not be required to take any action with
respect to any Event of Default or any event or
condition which, with the giving of notice or lapse of
time or both, would become an Event of Default, except
as expressly provided in Article VI.
Section 7.4. Consultation with Experts. The
Administrative Agent may consult with legal counsel
(who may be counsel for the Borrower), independent
public accountants and other experts selected by it and
shall not be liable to any Bank for any action taken or
omitted to be taken by it in good faith in accordance
with the advice of such counsel, accountants or
experts.
Section 7.5. Liability of Administrative Agent.
Neither the Administrative Agent nor any of its
directors, officers, agents, or employees shall be
liable to any Bank for any action taken or not taken by
it in connection herewith (i) with the consent or at
the request of the Required Banks or (ii) in the
absence of its own gross negligence or willful
misconduct. Neither the Administrative Agent nor any of
its directors, officers, agents or employees shall be
responsible for or have any duty to ascertain, inquire
into or verify (i) any statement, warranty or
representation made in connection with this Agreement
or any borrowing hereunder; (ii) the performance or
observance of any of the covenants or agreements of the
Borrower; (iii) the satisfaction of any condition
specified in Article III, except receipt of items
required to be delivered to the Administrative Agent;
or (iv) the validity, effectiveness or genuineness of
this Agreement, the Notes or any other instrument or
writing furnished in connection herewith. The
Administrative Agent shall not incur any liability by
acting in reliance upon any notice, consent,
certificate, statement, or other writing (which may be
a bank wire, telex or similar writing) believed by it
to be genuine or to be signed by the proper party or
parties.
Section 7.6. Indemnification. Each Bank shall,
ratably in accordance with its Commitment, indemnify
the Administrative Agent (to the extent not reimbursed
by the Borrower pursuant to a claim made by the
Administrative Agent pursuant to Section 9.03) against
any cost, expense (including counsel fees and
disbursements), claim, demand, action, loss or
liability (except such as result from the
Administrative Agent's gross negligence or willful
misconduct) that the Administrative Agent may suffer or
incur in connection with this Agreement or any action
taken or omitted by the Administrative Agent hereunder.
Section 7.7. Credit Decision. Each Bank
acknowledges that it has, independently and without
reliance upon the Administrative Agent or any other
Bank, and based on such documents and information as it
has deemed appropriate, made its own credit analysis
and decision to enter into this Agreement. Each Bank
also acknowledges that it will, independently and
without reliance upon the Administrative Agent or any
other Bank, and based on such documents and information
as it shall deem appropriate at the time, continue to
make its own credit decisions in taking or not taking
any action under this Agreement.
Section 7.8. Successor Administrative Agent. The
Administrative Agent may resign at any time by giving
written notice thereof to the Banks and the Borrower.
Upon any such resignation, the Required Banks shall
have the right to appoint a successor Administrative
Agent. If no successor Administrative Agent shall have
been so appointed by the Required Banks, and shall have
accepted such appointment, within 30 days after the
retiring Administrative Agent gives notice of
resignation, then the retiring Administrative Agent
may, on behalf of the Banks, appoint a successor
Administrative Agent, which shall be a commercial bank
organized or licensed under the laws of the United
States of America or of any State thereof and having a
combined capital and surplus of at least $100,000,000.
Upon the acceptance of its appointment as
Administrative Agent hereunder by a successor
Administrative Agent, such successor Administrative
Agent shall thereupon succeed to and become vested with
all the rights and duties of the retiring
Administrative Agent, and the retiring Administrative
Agent shall be discharged from its duties and
obligations hereunder; provided that until such
acceptance, the retiring Administrative Agent shall
continue to perform its obligations as Administrative
Agent hereunder. After any retiring Administrative
Agent's resignation hereunder as Administrative Agent,
the provisions of this Article shall inure to its
benefit as to any actions taken or omitted to be taken
by it while it was Administrative Agent.
Section 7.9. Administrative Agent's Fee. The
Borrower shall pay to the Administrative Agent for its
own account fees in the amounts and at the times
previously agreed upon between the Borrower and the
Administrative Agent.
Section 7.10. Syndication Agent and Co-
Documentation Agents. Neither the Syndication Agent
nor either Co-Documentation Agent shall have any
responsibility or obligation under this Agreement in
its capacity as Syndication Agent or Co-Documentation
Agent, as the case may be.
ARTICLE 8
Change in Circumstances
Section 8.1. Basis for Determining Interest Rate
Inadequate or Unfair . If on or prior to the first day
of any Interest Period for any Fixed Rate Borrowing:
(a) the Administrative Agent is advised by the
Reference Banks that deposits in dollars (in the
applicable amounts) are not being offered to the
Reference Banks in the relevant market for such
Interest Period, or
(b) in the case of a Committed Borrowing, Banks
having 50% or more of the aggregate amount of the
Commitments advise the Administrative Agent that the
Adjusted CD Rate or the London Interbank Offered Rate,
as the case may be, as determined by the Administrative
Agent will not adequately and fairly reflect the cost
to such Banks of funding their CD Loans or Euro-Dollar
Loans, as the case may be, for such Interest Period,
the Administrative Agent shall forthwith give notice
thereof to the Borrower and the Banks, whereupon until
the Administrative Agent notifies the Borrower that the
circumstances giving rise to such suspension no longer
exist, (i) the obligations of the Banks to make CD
Loans or Euro-Dollar Loans, as the case may be, or to
convert outstanding Loans into CD Loans or Euro-Dollar
Loans, as the case may be, shall be suspended and (ii)
each outstanding CD Loan or Euro-Dollar Loan, as the
case may be, shall be converted into a Base Rate Loan
on the last day of the then current Interest Period
applicable thereto. Unless the Borrower notifies the
Administrative Agent at least one Domestic Business Day
before the date of any Fixed Rate Borrowing for which a
Notice of Borrowing has previously been given that it
elects not to borrow on such date, (i) if such Fixed
Rate Borrowing is a Committed Borrowing, such Borrowing
shall instead be made as a Base Rate Borrowing and (ii)
if such Fixed Rate Borrowing is a Money Market LIBOR
Borrowing, the Money Market LIBOR Loans comprising such
Borrowing shall bear interest for each day from and
including the first day to but excluding the last day
of the Interest Period applicable thereto at the Base
Rate for such day.
Section 8.2. Illegality. If, on or after the
date of this Agreement, the adoption of any applicable
law, rule or regulation, or any change therein, or any
change in the interpretation or administration thereof
by any governmental authority, central bank or
comparable agency charged with the interpretation or
administration thereof, or compliance by any Bank (or
its Euro-Dollar Lending Office) with any request or
directive (whether or not having the force of law) of
any such authority, central bank or comparable agency
shall make it unlawful or impossible for any Bank (or
its Euro-Dollar Lending Office) to make, maintain or
fund its Euro-Dollar Loans and such Bank shall so
notify the Administrative Agent, the Administrative
Agent shall forthwith give notice thereof to the other
Banks and the Borrower, whereupon until such Bank
notifies the Borrower and the Administrative Agent that
the circumstances giving rise to such suspension no
longer exist, the obligation of such Bank to make
Euro-Dollar Loans, or to convert outstanding Loans into
Euro-Dollar Loans, shall be suspended. Before giving
any notice to the Administrative Agent pursuant to this
Section, such Bank shall, if practicable, with the
consent of the Borrower (which consent shall not
unreasonably be withheld), designate a different
Euro-Dollar Lending Office if such designation will
avoid the need for giving such notice and will not, in
the judgment of such Bank, be otherwise disadvantageous
to such Bank. If such notice is given, (i) the Borrower
shall be entitled upon its request to a reasonable
explanation of the factors underlying such notice and
(ii) each Euro-Dollar Loan of such Bank then
outstanding shall be converted to a Base Rate Loan
either (a) on the last day of the then current Interest
Period applicable to such Euro-Dollar Loan if such Bank
may lawfully continue to maintain and fund such Loan to
such day or (b) immediately if such Bank shall
determine that it may not lawfully continue to maintain
and fund such Loan to such day.
Section 8.3. Increased Cost and Reduced Return.
(a) In the event that (x) after the Effective Date, in
the case of any Committed Loan or any obligation to
make Committed Loans or (y) on or after the date of the
related Money Market Quote, in the case of any Money
Market Loan, the adoption of any applicable law, rule
or regulation, or any change therein or in the
interpretation or application thereof by any
governmental authority, central bank or comparable
agency charged with the interpretation or
administration thereof or compliance by any Bank with
any request or directive after the Effective Date
(whether or not having the force of law) of any such
authority, central bank or comparable agency:
(i) does or shall subject such Bank to any
additional tax of any kind whatsoever with respect
to this Agreement, any Note or any Fixed Rate Loan
made by it, or change the basis or the applicable
rate of taxation of payments to such Bank of
principal, interest or any other amount payable
hereunder (except for (A) the imposition of or
change in any tax on or measured by the overall
net income of such Bank, (B) the imposition of or
change in any United States Tax described in
Section 2.15(a) in respect of which the Borrower
is not obligated to pay an additional amount by
reason of the proviso to Section 2.15(a) or (C)
the imposition of or change in any income tax
imposed by any governmental or other taxing
authority of or in any jurisdiction other than the
United States);
(ii) does or shall impose, modify or hold
applicable any reserve, special deposit, insurance
assessment, compulsory loan or similar requirement
against assets held by, or deposits or other
liabilities in or for the account of, advances or
loans by, or other credit extended by, or any
other acquisition of funds by, any office of such
Bank which are not otherwise included in the
determination of the rate of interest on Fixed
Rate Loans hereunder; or
(iii) does or shall impose on such Bank any
other condition;
and the result of any of the foregoing is to increase
the cost to such Bank of making or maintaining Fixed
Rate Loans or to reduce any amount receivable hereunder
or under any Note with respect thereto, then, in any
such case, the Borrower shall promptly pay such Bank,
upon its demand, any additional amounts necessary to
compensate such Bank for such increased cost or reduced
amount receivable which such Bank deems to be material
as determined by such Bank with respect to its Fixed
Rate Loans.
(b) If any Bank shall have determined that, after
the Effective Date, the adoption of any applicable law,
rule or regulation regarding capital adequacy, or any
change therein, or any change in the interpretation or
administration thereof by any governmental authority,
central bank or comparable agency charged with the
interpretation or administration thereof, or any
request or directive regarding capital adequacy
(whether or not having the force of law) of any such
authority, central bank or comparable agency, has or
would have the effect of reducing the rate of return on
capital of such Bank (or its Parent) as a consequence
of such Bank's obligations hereunder to a level below
that which such Bank (or its Parent) could have
achieved but for such adoption, change, request or
directive (taking into consideration its policies with
respect to capital adequacy) by an amount deemed by
such Bank to be material, then from time to time,
within 15 days after demand by such Bank (with a copy
to the Administrative Agent), the Borrower shall pay to
such Bank such additional amount or amounts as will
compensate such Bank (or its Parent) for such
reduction.
(c) Each Bank will promptly notify the Borrower and
the Administrative Agent of any event of which it has
knowledge, occurring after the Effective Date, which
will entitle such Bank to compensation pursuant to this
Section and will, if practicable, with the consent of
the Borrower (which consent shall not unreasonably be
withheld), designate a different Applicable Lending
Office if such designation will avoid the need for, or
reduce the amount of, such compensation and will not,
in the judgment of such Bank, be otherwise
disadvantageous to such Bank. A certificate of any Bank
claiming compensation under this Section and setting
forth in reasonable detail its computation of the
additional amount or amounts to be paid to it hereunder
shall be conclusive in the absence of manifest error.
In determining such amount, such Bank may use any
reasonable averaging and attribution methods.
Notwithstanding the foregoing subsections (a) and (b)
of this Section 8.03, the Borrower shall only be
obligated to compensate any Bank for any amount arising
or accruing both:
(i) during (A) any time or period commencing
(x) in the case of subsection (a), not earlier
than the first day of any Interest Period in
effect on the date on which, and (y) in the case
of subsection (b), not earlier than the date on
which, such Bank notifies the Administrative Agent
and the Borrower that it proposes to demand such
compensation and identifies to the Administrative
Agent and the Borrower the statute, regulation or
other basis upon which the claimed compensation is
or will be based and (B) any time or period during
which, because of the retroactive application of
such statute, regulation or other basis, such Bank
did not know that such amount would arise or
accrue; and
(ii) within six months prior to any demand
therefor, accompanied by a certificate of such
Bank claiming compensation and setting forth in
reasonable detail its computation of the
additional amount or amounts to be paid to it
hereunder.
This Section shall survive the termination of this Agreement and
payment of the outstanding Loans.
Section 8.4. Base Rate Loans Substituted for
Affected Fixed Rate Loans. If (i) the obligation of
any Bank to make or maintain Euro-Dollar Loans has been
suspended pursuant to Section 8.02 or (ii) any Bank has
demanded compensation under Section 8.03(a) and the
Borrower shall, by at least five Euro-Dollar Business
Days' prior notice to such Bank through the
Administrative Agent, have elected that the provisions
of this Section shall apply to such Bank, then, unless
and until such Bank notifies the Borrower that the
circumstances giving rise to such suspension or demand
for compensation no longer apply:
(a) all Loans which would otherwise be made by such
Bank as (or continued as or converted into) CD Loans or
Euro-Dollar Loans, as the case may be, shall instead be
Base Rate Loans (on which interest and principal shall
be payable contemporaneously with the related Fixed
Rate Loans of the other Banks), and
(b) after each of its CD Loans or Euro-Dollar
Loans, as the case may be, has been repaid (or
converted to a Base Rate Loan), all payments of
principal which would otherwise be applied to repay
such Fixed Rate Loans shall be applied to repay its
Base Rate Loans instead.
If such Bank notifies the Borrower that the circumstances giving
rise to such notice no longer apply, the principal
amount of each such Base Rate Loan shall be converted
into a CD Loan or Euro-Dollar Loan, as the case may be,
on the first day of the next succeeding Interest Period
applicable to the related CD Loans or Euro-Dollar Loans
of the other Banks.
Section 8.5. Substitution of Bank. If (i) the
obligation of any Bank to make Euro-Dollar Loans has
been suspended pursuant to Section 8.02, (ii) any Bank
has demanded compensation or given notice of its
intention to demand compensation under Section 8.03 or
(iii) the Borrower is required to pay any additional
amount to any Bank pursuant to Section 2.15(a), the
Borrower shall have the right, with the assistance of
the Administrative Agent, to seek a mutually
satisfactory substitute bank or banks (which may be one
or more of the Banks) to replace such Bank under this
Agreement.
ARTICLE 9
Miscellaneous
Section 9.1. Notices. All notices, requests and
other communications to any party hereunder shall be in
writing (including bank wire, facsimile transmission or
similar writing) and shall be given to such party: (w)
in the case of the Borrower, at its address or telecopy
number set forth on the signature pages hereof, (x) in
the case of the Administrative Agent, at its address,
telecopy number or telex number set forth on the
signature pages hereof, (y) in the case of any Bank, at
its address, telecopy number or telex number set forth
in its Administrative Questionnaire or (z) in the case
of any party, such other address, telecopy number or
telex number as such party may hereafter specify for
the purpose by notice to the Administrative Agent and
the Borrower. Each such notice, request or other
communication shall be effective (i) if given by telex,
when such telex is transmitted to the telex number
specified in this Section and the appropriate
answerback is received, (ii) if given by mail, 72 hours
after such communication is deposited in the mails with
first class postage prepaid, addressed as aforesaid or
(iii) if given by telecopy or any other means, when
delivered at the address specified in this Section (and
confirmed by telephone by the sender, in the case of
any telecopy notice to the Borrower); provided that
notices to the Administrative Agent under Article II or
Article VIII shall not be effective until received.
Section 9.2. No Waivers. No failure or delay by
the Administrative Agent or any Bank or the Borrower in
exercising any right, power or privilege hereunder or
under any Note shall operate as a waiver thereof nor
shall any single or partial exercise thereof preclude
any other or further exercise thereof or the exercise
of any other right, power or privilege. The rights and
remedies herein provided shall be cumulative and not
exclusive of any rights or remedies provided by law.
Section 9.3. Expenses; Documentary Taxes;
Indemnification. (a) The Borrower shall pay (i) all
reasonable out-of-pocket expenses of the Administrative
Agent, including fees and disbursements of special
counsel for the Administrative Agent, in connection
with the preparation of this Agreement, any waiver or
consent hereunder or any amendment hereof or any Event
of Default or any event or condition which, with the
giving of notice or lapse of time or both, would become
an Event of Default or any alleged Event of Default or
such event or condition hereunder and (ii) if an Event
of Default occurs, all reasonable out-of-pocket
expenses incurred by the Administrative Agent and each
Bank, including fees and disbursements of counsel, in
connection with such Event of Default and collection,
bankruptcy, insolvency and other enforcement
proceedings resulting therefrom. The Borrower shall
indemnify each Bank against any transfer taxes,
documentary taxes, assessments or similar charges made
by any governmental authority solely by reason of the
execution and delivery of this Agreement or the Notes.
(b) The Borrower agrees to indemnify the
Administrative Agent and each Bank and their respective
affiliates (each an "Indemnitee") and hold each
Indemnitee harmless from and against any and all
liabilities, losses, damages, costs and expenses of any
kind, including, without limitation, the reasonable
fees and disbursements of counsel, which may be
incurred by such Indemnitee in connection with any
investigative, administrative or judicial proceeding
(whether or not such Indemnitee shall be designated a
party thereto) relating to or arising out of this
Agreement or any actual or proposed use of proceeds of
Loans hereunder; provided that no Indemnitee shall have
the right to be indemnified hereunder (i) for its own
gross negligence or willful misconduct as determined by
a court of competent jurisdiction or (ii) in respect of
any litigation instituted by (x) any Participant
against any Bank or the Administrative Agent, (y) any
Bank against any Participant, any Bank or the
Administrative Agent, or (z) any holder of any security
of any Bank (in its capacity as such) against any Bank,
to the extent any such litigation does not arise out of
any misconduct (alleged in good faith by such Bank) by
or on behalf of the Borrower.
Section 9.4. Sharing of Set-offs. Each Bank
agrees that if it shall, by exercising any right of
set-off or counterclaim or otherwise, receive payment
of a proportion of the aggregate amount of principal
and interest then due with respect to any Note held by
it which is greater than the proportion received by any
other Bank in respect of the aggregate amount of
principal and interest then due with respect to any
Note held by such other Bank, the Bank receiving such
proportionately greater payment shall purchase such
participations in the Notes held by the other Banks,
and such other adjustments shall be made, as may be
required so that all such payments of principal and
interest then due with respect to the Notes held by the
Banks shall be shared by the Banks pro rata; provided
that nothing in this Section shall impair the right of
any Bank to exercise any right of set-off or
counterclaim it may have and to apply the amount
subject to such exercise to the payment of indebtedness
of the Borrower other than its indebtedness under the
Notes. The Borrower agrees, to the fullest extent it
may effectively do so under applicable law, that any
holder of a participation in a Note, whether or not
acquired pursuant to the foregoing arrangements, may
exercise rights of set-off or counterclaim and other
rights with respect to such participation as fully as
if such holder of a participation were a direct
creditor of the Borrower in the amount of such
participation.
Section 9.5. Amendments and Waivers. Any
provision of this Agreement or the Notes may be amended
or waived if, but only if, such amendment or waiver is
in writing and is signed by the Borrower and the
Required Banks (and, if the rights or duties of the
Administrative Agent are affected thereby, by the
Administrative Agent); provided that no such amendment
or waiver shall, unless signed by all the Banks, (i)
increase or decrease the Commitment of any Bank (except
for a ratable decrease in the Commitments of all Banks
pursuant to Section 2.09 or an increase of Commitments
in accordance with Section 2.17) or subject any Bank to
any additional obligation, (ii) reduce the principal of
or rate of interest on any Loan or any fees hereunder
(except that, in the case of a reduction in the
principal of or rate of interest on Loans comprising a
single Money Market Borrowing, only the signatures of
the Borrower and the Banks making Loans included in
such Borrowing shall be required), (iii) postpone the
date fixed for any payment of principal of or interest
on any Loan or any fees hereunder or for the
termination of any Commitment or (iv) change the
percentage of the Commitments or of the aggregate
unpaid principal amount of the Notes, or the number of
Banks, which shall be required for the Banks or any of
them to take any action under this Section or any other
provision of this Agreement.
Section 9.6. Successors and Assigns. (a) The
provisions of this Agreement shall be binding upon and
inure to the benefit of the parties hereto and their
respective successors and assigns, except that the
Borrower may not assign or otherwise transfer any of
its rights under this Agreement (other than pursuant to
a transaction permitted by Section 5.07) without the
prior written consent of all Banks.
(b) Any Bank may at any time grant to one or more
banks or other institutions (each a "Participant")
participating interests in its Commitment or any or all
of its Loans. In the event of any such grant by a Bank
of a participating interest to a Participant, such Bank
shall remain responsible for the performance of its
obligations hereunder, and the Borrower and the
Administrative Agent shall continue to deal solely and
directly with such Bank in connection with such Bank's
rights and obligations under this Agreement. Any
agreement pursuant to which any Bank may grant such a
participating interest shall provide that such Bank
shall retain the sole right and responsibility to
enforce the obligations of the Borrower hereunder
including, without limitation, the right to approve any
amendment, modification or waiver of any provision of
this Agreement; provided that such participation
agreement may provide that such Bank will not agree to
any modification, amendment or waiver of this Agreement
described in clause (i), (ii) or (iii) of Section 9.05
without the consent of the Participant. The Borrower
agrees that each Participant shall, to the extent
provided in its participation agreement, be entitled to
the benefits of Article VIII with respect to its
participating interest. If, pursuant to this Section
9.06(b), any interest in this Agreement or any Note is
proposed to be transferred to any Participant that is
not a bank organized under the laws of the United
States or any State thereof or the District of
Columbia, such proposed Participant shall, as a
condition to the effectiveness of such transfer, (i)
deliver Internal Revenue Service forms as provided in
Section 2.15(b) to the transferor Bank with copies to
the Borrower and (ii) make the covenants specified in
subsections (b)(2), (c)(1) and (c)(2) of Section 2.15
for the benefit of the transferor Bank, the Borrower
and the Administrative Agent. All such covenants shall
be made by an instrument in writing in form and
substance satisfactory to the Borrower.
(c) Any Bank may at any time assign to one or more
banks or other institutions (each an "Assignee") all,
or a proportionate part of all (such proportionate part
to comprise a Commitment of not less than $10,000,000),
of its rights and obligations under this Agreement and
the Notes, and such Assignee shall assume such rights
and obligations, pursuant to an Assignment and
Assumption Agreement in substantially the form of
Exhibit I hereto executed by such Assignee and such
transferor Bank, with (and subject to) the subscribed
consent of the Borrower and the Administrative Agent;
provided that if an Assignee is an Affiliate of such
transferor Bank, no such consent shall be required, but
such transferor Bank shall deliver to the Borrower five
Domestic Business Days' prior written notice of any
such assignment and, promptly after the effectiveness
thereof, a copy of the relevant Assignment and
Assumption Agreement; and provided further that such
assignment may, but need not, include rights of the
transferor Bank in respect of outstanding Money Market
Loans. Upon execution and delivery of such instrument
and payment by such Assignee to such transferor Bank of
an amount equal to the purchase price agreed between
such transferor Bank and such Assignee, such Assignee
shall be a Bank party to this Agreement and shall have
all the rights and obligations of a Bank with a
Commitment as set forth in such instrument of
assumption, and the transferor Bank shall be released
from its obligations hereunder to a corresponding
extent, and no further consent or action by any party
shall be required. Upon the consummation of any
assignment pursuant to this subsection (c), the
transferor Bank, the Administrative Agent and the
Borrower shall make appropriate arrangements so that,
if required, a new Note is issued to the Assignee. In
connection with any such assignment, the transferor
Bank shall pay to the Administrative Agent an
administrative fee for processing such assignment in
the amount of $2,000. If the Assignee is not
incorporated under the laws of the United States of
America or a state thereof, it shall, prior to the
first date on which interest or fees are payable
hereunder for its account, deliver to the Borrower and
the Administrative Agent certification as to exemption
from deduction or withholding of any United States
federal income taxes in accordance with Section 2.15.
(d) Any Bank may at any time assign all or any
portion of its rights under this Agreement and its Note
to a Federal Reserve Bank. No such assignment shall
release the transferor Bank from its obligations
hereunder.
(e) No Participant shall be entitled to receive any
greater payment under Section 8.03 than the relevant
transferor Bank would have been entitled to receive
with respect to the rights transferred. No Assignee or
other transferee of any Bank's rights (other than a
Participant, whose rights shall be governed by the
immediately preceding sentence) shall be entitled to
receive any greater payment under Section 8.03 than
such Bank would have been entitled to receive with
respect to the rights transferred, unless such transfer
is made (x) with the Borrower's prior written consent,
(y) by reason of the provisions of Section 8.02 or 8.03
requiring such Bank to designate a different Applicable
Lending Office under certain circumstances or (z) at a
time when the circumstances giving rise to such greater
payment did not exist.
Section 9.7. Collateral. Each of the Banks
represents to the Administrative Agent and each of the
other Banks that it in good faith is not relying upon
any Margin Stock as collateral in the extension or
maintenance of the credit provided for in this
Agreement.
Section 9.8. Governing Law; Submission to
Jurisdiction. This Agreement and each Note shall be
governed by and construed in accordance with the laws
of the State of New York. The Borrower hereby submits
to the nonexclusive jurisdiction of the United States
District Court for the Southern District of New York
and of any New York State court sitting in New York
City for purposes of all legal proceedings arising out
of or relating to this Agreement or the transactions
contemplated hereby. The Borrower irrevocably waives,
to the fullest extent permitted by law, any objection
which it may now or hereafter have to the laying of the
venue of any such proceeding brought in such a court
and any claim that any such proceeding brought in such
a court has been brought in an inconvenient forum.
Section 9.9. Counterparts; Integration. This
Agreement may be signed in any number of counterparts,
each of which shall be an original, with the same
effect as if the signatures thereto and hereto were
upon the same instrument. This Agreement (and, solely
with respect to information delivered by the Borrower
to the Banks prior to the date hereof, the
confidentiality letter executed by each of the Banks
listed on the signature pages hereto) constitutes the
entire agreement and understanding among the parties
hereto and supersedes any and all prior agreements and
understandings, oral or written, relating to the
subject matter hereof.
Section 9.10. Restrictions on Transfers. Each
Bank agrees that it will not, except by operation of
law, transfer or propose to transfer all or any portion
of its rights and obligations under this Agreement and
the Note held by it, or any participation therein to
any Person except (i) banks (including without
limitation Federal Reserve Banks) or trust companies
empowered by law to accept deposits or (ii) their
corporate parents or their Affiliates which are in the
business of lending money and which are either wholly
owned by them or are Wholly-Owned Subsidiaries of a
common corporate parent, unless such Bank shall have
first delivered to the Borrower an opinion of counsel
as to the legality of the transfer (including
compliance of such transfer with applicable federal
securities laws) and such other matters as the Borrower
may reasonably request, which opinion shall be
satisfactory in form and substance to the Borrower.
Each Bank agrees that it will not transfer all or any
portion of any Note held by it, or any participation
therein, in violation of applicable securities laws.
Section 9.11. Confidentiality. The
Administrative Agent and each Bank represent that they
will maintain the confidentiality of any written or
oral information provided under this Agreement by or on
behalf of the Borrower that has been identified by its
source as confidential (hereinafter collectively called
"Confidential Information"), subject to the
Administrative Agent's and each Bank's (a) obligation
to disclose any such Confidential Information pursuant
to a request or order under applicable laws and
regulations or pursuant to a subpoena or other legal
process, (b) right to disclose any such Confidential
Information to its bank examiners, Affiliates,
auditors, counsel and other professional advisors and
to other Banks, (c) right to disclose any such
Confidential Information in connection with any
litigation or dispute involving the Banks and the
Borrower or any of its Subsidiaries and Affiliates and
(d) right to provide such information to Participants
(as defined in subsection 9.06(b)), prospective
Participants to which sales of participating interests
are permitted pursuant to subsection 9.06(b) and
prospective Assignees to which assignments of interests
are permitted pursuant to subsection 9.06(c), but only
if (i) the Borrower has theretofore given its written
consent to the participation to such Participant or
prospective Participant or the assignment to such
prospective Assignee, (ii) such Participant,
prospective Participant or prospective Assignee agrees
in writing to maintain the confidentiality of such
information on terms substantially similar to those of
this Section as if it were a "Bank" party hereto and
(iii) the Borrower receives copies of such written
agreement prior to the release of such information.
Notwithstanding the foregoing, any such information
supplied to a Bank, Participant, prospective
Participant or prospective Assignee under this
Agreement shall cease to be Confidential Information if
it is or becomes known to such Person by other than
unauthorized disclosure, or if it becomes a matter of
public knowledge.
Section 9.12. WAIVER OF JURY TRIAL. EACH OF THE
BORROWER, THE ADMINISTRATIVE AGENT AND THE BANKS HEREBY
IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY
IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO
THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
IN WITNESS WHEREOF, the parties hereto have caused
this Agreement to be duly executed by their respective
authorized officers as of the day and year first above
written.
SEARS XXXXXXX ACCEPTANCE CORP.
By: /s/ Xxxxxx X. Xxxxx
Name: Xxxxxx X. Xxxxx
Title: Vice President,
Finance
0000 Xxxxxxx Xxxx
Xxxxxxxxxx, Xxxxxxxx 00000
Telefax: (000) 000-0000
BANKS
THE CHASE MANHATTAN BANK, as Bank
and Administrative Agent
By: /s/Xxxxx X. Xxxxxxx
Name: Xxxxx X. Xxxxxxx
Title: Vice President
Xxxxxxx:000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxx X. Xxxxxxx
Facsimile number: 000-000-0000
with a copy to:
Chase Securities Inc.
Address: 000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxx Xxxx
Facsimile number: 212-270-1063
CITIBANK, N.A., as Bank and
Syndication Agent
By:/s/Xxxxxx X. Xxxxx
Name: Xxxxxx X. Xxxxx
Title: As attorney in fact
BANK OF AMERICA NT&SA, as Bank
and Co-Documentation Agent
By: /s/ Xxxxxxx Xxxxxxxxx
Name:Xxxxxxx Xxxxxxxxx
Title: Managing Director
THE FIRST NATIONAL BANK OF
CHICAGO, as Bank and
Co-Documentation Agent
By: /s/ Xxxx Xxxxxx
Name: Xxxx Xxxxxx
Title: Managing Director
BANCA DI ROMA S.P.A.
By: /s/ Xxxxx Xxxxxxxxxx
Name: Xxxxx Xxxxxxxxxx
Title: Assistant Vice President
By:/s/Xxxxxxx Xxxxx
Name: Xxxxxxx Xxxxx
Title: Sr. Vice President
& Branch Manager
FIRST UNION NATIONAL BANK
By: /s/ Xxxxxxxx Xxxxxxx
Name: Xxxxxxxx Xxxxxxx
Title: Senior Vice President
MELLON BANK, N.A.
By:/s/Xxxxxxx X. Xxxxxxx
Name: Xxxxxxx X. Xxxxxxx
Title: AVP
PNC BANK, NATIONAL ASSOCIATION
By:/s/Xxxxxx X. Xxxxxxx
Name: Xxxxxx X. Xxxxxxx
Title: SVP
WACHOVIA BANK, N.A.
By:/s/Xxxx X. Eagle
Name: Xxxx X. Eagle
Title: Vice President
XXXXX FARGO BANK, N.A.
By:/s/Xxxxxx X. Xxxxxx
Name: Xxxxxx X. Xxxxxx
Title: Assistant Vice
President
By: /s/Xxxxxx Xxxxxxx
Name:Xxxxxx Xxxxxxx
Title: Vice President
FLEET NATIONAL BANK
By: /s/Xxxxxx X. X. Xxxxxx
Name: Xxxxxx X. X.Xxxxxx
Title: S.V.P.
BANCO POPULAR DE PUERTO RICO
By: /s/Xxxxxx X. Xxxx
Name: Xxxxxx X. Xxxx
Title: Vice President
By:/s/Xxxx Xxxxxxxxx
Name: Xxxx Xxxxxxxxx
Title: Vice President
FIRSTAR BANK MILWAUKEE, N.A.
By:/s/R. Xxxxx Xxxxxxx
Name: R. Xxxxx Xxxxxxx
Title: Assistant Vice President
BANCA NAZIONALE DEL LAVORO
S.P.A. - NEW YORK BRANCH
By:/s/Xxxxxx Xxxxxxx
Name: Xxxxxx Xxxxxxx
Title: Vice President
By:/s/Xxxxxxxx Xxxxxxxxx
Name: Xxxxxxxx Xxxxxxxxx
Title: First Vice President
BANKBOSTON, N.A.
By:/s/Xxxxxxxx Xxxxxx
Name: Xxxxxxxx Xxxxxx
Title: Vice President
BANK OF HAWAII
By:/s/Xxxxx X. Xxxxxx
Name: Xxxxx X. Xxxxxx
Title: Vice President
THE BANK OF NEW YORK
By:/s/Xxxxxxx Xxxxxxxx
Name: Xxxxxxx Xxxxxxxx
Title: Vice President
CREDIT SUISSE FIRST BOSTON
By:/s/Xxxxxxx Xxxxx
Name: Xxxxxxx Xxxxx
Title: Associate
By:/s/Xxxx Xxxxxxxxx
Name: Xxxx Xxxxxxxxx
Title: Managing Director
HIBERNIA NATIONAL BANK
By:/s/Xxxxxx Xxxxxxx
Name: Xxxxxx Xxxxxxx
Title: Portfolio Manager
KEYBANK NATIONAL
ASSOCIATION
By:/s/Xxxxxxxx X. Xxxx
Name: Xxxxxxxx X. Xxxx
Title: Senior Vice President
THE NORTHERN TRUST COMPANY
By:/s/Xxxx Xxxxxx
Name: Xxxx Xxxxxx
Title: 2nd Vice President
SOUTHTRUST BANK, NATIONAL
ASSOCIATION
By:/s/Xxxxx Xxxxx
Name: Xxxxx Xxxxx
Title: Vice President
FIRST TENNESSEE BANK NATIONAL
ASSOCIATION
By:/s/Xxxxx X. Xxxxx, Xx.
Name: Xxxxx X. Xxxxx, Xx.
Title: Vice President
NATIONAL CITY BANK
By:/s/Xxxxxxx X. Xxxxxxxxx
Name: Xxxxxxx X.Xxxxxxxxx
Title:Vice President
Total Commitments
$1,000,000,000
COMMITMENT SCHEDULE
Bank Commitment
The Chase Manhattan Bank $85,000,000
Citibank, N.A. $75,000,000
Bank of America NT&SA $75,000,000
The First National Bank of Chicago $75,000,000
Banca di Roma S.p.A. $65,000,000
First Union National Bank $65,000,000
Mellon Bank, N.A. $50,000,000
PNC Bank, National Association $50,000,000
Wachovia Bank, N.A. $50,000,000
Xxxxx Fargo Bank, N.A. $50,000,000
Fleet National Bank $35,000,000
Banco Popular de Puerto Rico $30,000,000
Firstar Bank Milwaukee, N.A. $30,000,000
Banca Nazionale del Lavoro S.p.A. - New $25,000,000
York Branch
BankBoston, N.A. $25,000,000
Bank of Hawaii $25,000,000
The Bank of New York $25,000,000
Credit Suisse First Boston $25,000,000
Hibernia National Bank $25,000,000
KeyBank National Association $25,000,000
The Northern Trust Company $25,000,000
SouthTrust Bank, National Association $25,000,000
First Tennessee Bank National Association $20,000,000
National City Bank $20,000,000
Total
$1,000,000,
000
EXHIBIT A
NOTE
New York, New York
, ____
For value received, SEARS XXXXXXX ACCEPTANCE CORP., a
Delaware corporation (the "Borrower"), promises to pay to
the order of _________________ (the "Bank"), for the account
of its Applicable Lending Office, the unpaid principal
amount of each Loan made by the Bank to the Borrower
pursuant to the Credit Agreement referred to below on the
dates provided for in the Credit Agreement and, in any
event, on the maturity date provided for therein. The
Borrower promises to pay interest on the unpaid principal
amount of each such Loan on the dates and at the rate or
rates provided for in the Credit Agreement. All such
payments of principal and interest shall be made in lawful
money of the United States in Federal or other immediately
available funds at the office of The Chase Manhattan Bank,
000 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx.
All Loans made by the Bank and all repayments of the
principal thereof shall be recorded by the Bank and, if the
Bank so elects in connection with any transfer or
enforcement hereof, appropriate notations to evidence the
foregoing information with respect to each such Loan then
outstanding may be endorsed by the Bank on the schedule
attached hereto, or on a continuation of such schedule
attached to and made a part hereof; provided that the
failure of the Bank to make any such recordation or
endorsement shall not affect the obligations of the Borrower
hereunder or under the Credit Agreement.
This note is one of the Notes referred to in the Credit
Agreement dated as of November 30, 1998 among the Borrower,
the banks parties thereto, the Syndication Agent and Co-
Documentation Agents referred to therein and The Chase
Manhattan Bank, as Administrative Agent (as the same may be
amended from time to time, the "Credit Agreement"). Terms
defined in the Credit Agreement are used herein with the
same meanings. This Note is subject, and reference is
hereby made, to the terms and provisions of the Credit
Agreement, including the transfer restrictions set forth in
Section 9.10 thereof and the provisions for mandatory and
optional prepayment hereof and the acceleration of the
maturity hereof.
SEARS XXXXXXX ACCEPTANCE CORP.
By
Title:
Note (cont'd)
LOANS AND PAYMENTS OF PRINCIPAL
Date Amount of Loan Amount of Notation
Principal Made By
Repaid
EXHIBIT B
NOTICE OF COMMITTED BORROWING1
Borrowing
Request
No.
_____________
The Chase Manhattan Bank, as Administrative Agent
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: _______________
This notice shall constitute a "Notice of
Committed Borrowing" pursuant to Section 2.02 of the
Credit Agreement dated as of November 30, 1998 among
Sears Xxxxxxx Acceptance Corp. (the "Borrower"), the
Banks parties thereto, the Syndication Agent and Co-
Documentation Agents referred to therein and The Chase
Manhattan Bank, as Administrative Agent (the
"Administrative Agent") (as amended from time to time,
the "Credit Agreement"). Capitalized terms not
otherwise defined herein have the meanings ascribed to
them in the Credit Agreement.
1. The date of the Borrowing will be
_______________, ____.
2. The principal amount of the Borrowing will be
$____________.2
3. The Borrowing will consist of [CD Loans]
[Euro-Dollar Loans] [Base Rate Loans].
[4. The initial Interest Period for such Loans
shall be _____________.]3
[5.] Transfer Instructions:
[insert appropriate delivery instructions, which
shall include bank and account number]
SEARS XXXXXXX ACCEPTANCE CORP.
By:
Title:
Date:
EXHIBIT C
NOTICE OF INTEREST RATE ELECTION
The Chase Manhattan Bank, as Administrative Agent
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: _______________
This notice shall constitute a "Notice of Interest
Rate Election" pursuant to Section 2.10 of the Credit
Agreement dated as of November 30, 1998 among Sears
Xxxxxxx Acceptance Corp. (the "Borrower"), the Banks
parties thereto, the Syndication Agent and Co-
Documentation Agents referred to therein and The Chase
Manhattan Bank, as Administrative Agent (the
"Administrative Agent") (as amended from time to time,
the "Credit Agreement"). Capitalized terms not
otherwise defined herein have the meanings ascribed to
them in the Credit Agreement.
1. The principal amount of the Group of Loans
(or portion thereof) to which this notice applies is
$__________.
2. The date on which the conversion/continuation
selected is to be effective is __________, ____ (the
"Election Date").
3. The Group of Loans (or portion thereof) to
which this notice applies is [all or a portion of all
Base Rate Loans currently outstanding] [all or a
portion of all CD Loans currently outstanding having an
Interest Period of ___ days and ending on the Election
Date] [all or a portion of all Euro-Dollar Loans
currently outstanding having an Interest Period of __
months and ending on the Election Date].1
4a. The Group of Loans (or portion thereof) which
are to be converted will bear interest [at the Base
Rate] [based upon the CD Rate] [based upon the
Euro-Dollar Rate].
4b. The Group of Loans (or portion thereof) which
are to be continued will bear interest [at the Base
Rate] [based upon the CD Rate] [based upon the
Euro-Dollar Rate].
[5. The Interest Period for such Loans shall be
____________.]2
SEARS XXXXXXX ACCEPTANCE CORP.
By:
Title:
Date: __________________, ____
EXHIBIT D
Form of Money Market Quote Request
[Date]
To: The Chase Manhattan Bank (the "Administrative
Agent")
From: Sears Xxxxxxx Acceptance Corp. (the
"Borrower")
Re: Credit Agreement (the "Credit Agreement")
dated as of November 30, 1998 among the
Borrower, the Banks parties thereto, the
Syndication Agent and Co-Documentation Agents
referred to therein and The Chase Manhattan
Bank, as Administrative Agent
We hereby give notice pursuant to Section 2.03 of
the Credit Agreement that we request Money Market
Quotes for the following proposed Money Market
Borrowing(s):
Date of Borrowing: __________________
Principal Amount1 Interest Period2
$
Such Money Market Quotes should offer a Money
Market [Margin] [Absolute Rate]. [The applicable base
rate is the London Interbank Offered Rate.]
Terms used herein have the meanings assigned to
them in the Credit Agreement.
SEARS XXXXXXX ACCEPTANCE CORP.
By
Title:
EXHIBIT E
Form of Invitation for Money Market Quotes
To: [Name of Bank]
Re: Invitation for Money Market Quotes to
Sears Xxxxxxx Acceptance Corp. (the "Borrower")
Pursuant to Section 2.03 of the Credit Agreement
(the "Credit Agreement") dated as of November 30, 1998
among the Borrower, the Banks parties thereto, the
Syndication Agent and Co-Documentation Agents therein
and The Chase Manhattan Bank, as Administrative Agent,
we are pleased on behalf of the Borrower to invite you
to submit Money Market Quotes to the Borrower for the
following proposed Money Market Borrowing(s):
Date of Borrowing: __________________
Principal Amount Interest Period
$
Such Money Market Quotes should offer a Money
Market [Margin] [Absolute Rate]. [The applicable base
rate is the London Interbank Offered Rate.]
Please respond to this invitation by no later than
[2:00 P.M.] [9:30 A.M.] (New York City time) on [date].
The Chase Manhattan Bank, as
Administrative Agent
By:
Authorized Officer
EXHIBIT F
Form of Money Market Quote
To: The Chase Manhattan Bank (the "Administrative
Agent")
Re: Money Market Quote to Sears Xxxxxxx
Acceptance Corp. (the "Borrower")
In response to your invitation on behalf of the
Borrower dated _____________, ____, we hereby make the
following Money Market Quote on the following terms:
1. Quoting Bank: ________________________________
2. Person to contact at Quoting Bank:
______________________________
3. Date of Borrowing: ____________________*
4. We hereby offer to make Money Market Loan(s) in
the following principal amounts, for the following
Interest Periods and at the following rates:
Principal Interest Money Market
Amount** Period*** [Margin****] [Absolute
Rate*****]
$
$
[Provided, that the aggregate principal amount of
Money Market Loans for which the above offers may
be accepted shall not exceed $____________.]**
* As specified in the related Invitation.
** Principal amount bid for each Interest Period may
not exceed principal amount requested. Specify
aggregate limitation if the sum of the individual
offers exceeds the amount the Bank is willing to lend.
Bids must be made for $5,000,000 or a larger multiple
of $1,000,000.
(notes continued on following page)
We understand and agree that the offer(s) set
forth above, subject to the satisfaction of the
applicable conditions set forth in the Credit Agreement
(the "Credit Agreement") dated as of November 30, 1998
among the Borrower, the Banks parties thereto, the
Syndication Agent and Co-Documentation Agents referred
to therein and The Chase Manhattan Bank, as
Administrative Agent, irrevocably obligates us to make
the Money Market Loan(s) for which any offer(s) are
accepted, in whole or in part.
Very truly yours,
[NAME OF BANK]
Dated:_______________ By:__________________________
Authorized Officer
*** Not less than one month or not less than 30 days,
as specified in the related Invitation. No more than
five bids are permitted for each Interest Period.
**** Margin over or under the London Interbank Offered
Rate determined for the applicable Interest Period.
Specify percentage (to the nearest 1/10,000 of 1%) and
specify whether "PLUS" or "MINUS".
***** Specify rate of interest per annum (to the
nearest 1/10,000th of 1%).
EXHIBIT G-1
OPINION OF
COUNSEL FOR THE BORROWER
[Effective Date]
To the Banks and the Administrative Agent
Referred to Below
c/o The Chase Manhattan Bank, as Administrative Agent
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Ladies and Gentlemen:
I am the Assistant General Counsel - Corporate
Securities of Sears, Xxxxxxx and Co. ("Sears"). The
Sears Law Department, under my supervision, has acted
as counsel to Sears Xxxxxxx Acceptance Corp. (the
"Borrower") and Sears in connection with the Credit
Agreement (the "Credit Agreement") dated as of November
30, 1998 among the Borrower, the Banks parties thereto,
the Syndication Agent and Co-Documentation Agents
referred to therein and The Chase Manhattan Bank, as
Administrative Agent. This opinion is rendered to you
at the request of the Borrower pursuant to Section
3.01(c) of the Credit Agreement. Terms defined in the
Credit Agreement are used herein as therein defined.
I have examined originals or copies, certified or
otherwise identified to my satisfaction, of such
documents, corporate records, certificates of public
officials and other instruments and have conducted such
other investigations of fact and law as I have deemed
necessary or advisable for purposes of this opinion. I
have obtained and with your consent, as evidenced by
your signature on the Credit Agreement, to which a form
of this opinion is attached, relied upon, to the extent
I deem appropriate, certificates of officers of the
Borrower and of public officials as to factual matters.
I call to your attention the fact that in rendering my
opinion, I am expressing my views only as to the
federal laws of the United States and the General
Corporation Law of the State of Delaware, and I express
no opinion with respect to the applicability thereto,
or the effect thereon, of the laws of any other
jurisdiction or as to any matters of municipal law or
any local agencies.
My opinion in paragraph 3 below is based upon the
consideration of only those statutes, rules and
regulations which in my experience are normally
applicable to bank credit transactions.
Based on the foregoing, I am of the opinion that
as of the date hereof:
1. The Borrower has been duly incorporated and
is validly existing as a corporation in good standing
under the laws of the State of Delaware with full
corporate power to conduct its business as presently
conducted.
2. The Borrower has full corporate power to
enter into the Credit Agreement and to issue the Notes
and to comply with all of the provisions of the Credit
Agreement and the Notes, and all necessary corporate
proceedings of the Borrower have been duly taken to
authorize the execution, delivery and performance of
the Credit Agreement and the issuance of the Notes by
the Borrower. The Credit Agreement has been duly
executed and delivered by the Borrower, and the Notes
issued by the Borrower on the date hereof have been
duly issued by the Borrower.
3. The execution and delivery by the Borrower of
the Credit Agreement and the issuance by the Borrower
of the Notes and compliance by the Borrower with all of
the provisions of the Credit Agreement and the Notes
will not conflict with or result in a 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
Borrower, material to the Borrower, pursuant to the
terms of any material indenture, loan agreement or
other agreement or instrument for borrowed money to
which the Borrower is a party or by which the Borrower
may be bound or to which any of the property or assets
of the Borrower, material to the Borrower, is subject,
nor will any such action conflict with or result in a
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 Sears, material to Sears and its
subsidiaries, taken as a whole, pursuant to the terms
of any indenture, loan agreement or other agreement or
instrument for borrowed money relating to a principal
amount of outstanding indebtedness not less than
$100,000,000 to which Sears is a party or by which
Sears may be bound or to which any of the property or
assets of Sears, material to Sears and its
subsidiaries, taken as a whole, is subject, nor will
such action result in any material violation of the
provisions of the Certificate of Incorporation or the
By-Laws of the Borrower or, to the best of my
knowledge, any statute or any order, rule or regulation
applicable to the Borrower of any court or any federal,
state or other regulatory authority or other
governmental body having jurisdiction over the
Borrower, and, to the best of my knowledge, 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 execution
and delivery by the Borrower of the Credit Agreement
and the issuance by the Borrower of the Notes and the
compliance by the Borrower with all of the provisions
of the Credit Agreement and the Notes; provided that I
express no opinion with respect to any securities or
blue sky laws of political subdivisions of the United
States or any laws or treaties of any country (or
political subdivision thereof) other than the United
States.
4. To the best of my knowledge, there is no
pending legal or governmental proceeding (i) required
to be described in the Borrower's 1997 Form 10-K or in
the Quarterly Reports on Form 10-Q of the Borrower
filed with the Commission pursuant to the Exchange Act
subsequent thereto, which are not described as required
or (ii) which would be required to be described in a
Quarterly Report on Form 10-Q filed by the Borrower if
such filing were made on the date hereof.
5. The Borrower has no Subsidiaries.
I express no opinion as to the compliance by the
parties to the Credit Agreement (other than the
Borrower) with any state or federal laws or regulations
applicable to the transactions contemplated by the
Credit Agreement because of the nature of their
business.
This opinion is furnished by me as counsel for the
Borrower to you, and is solely for your benefit in
connection with the transactions covered hereby, and is
not to be otherwise used, circulated or relied upon
without my express prior written consent.
Very truly yours,
EXHIBIT G-2
OPINION OF XXXXXX AND XXXXXXX,
SPECIAL COUNSEL TO THE BORROWER
[Effective Date]
To the Banks and the Administrative Agent
Referred to Below
c/o The Chase Manhattan Bank, as Administrative Agent
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: [ ]
Ladies and Gentlemen:
We have acted as counsel to Sears Xxxxxxx
Acceptance Corp. (the "Borrower") in connection with
the Credit Agreement (the "Agreement") dated as of
November 30, 1998 between the Borrower and the Banks
party thereto (the "Banks"). This opinion is rendered
to you pursuant to the terms of the Agreement.
Capitalized terms defined in the Agreement are used
herein as therein defined.
As counsel to the Borrower, we have made such
legal and factual examinations, including an
examination of originals or copies certified or
otherwise identified to our satisfaction of such
documents, corporate records and other instruments, as
we have deemed necessary or appropriate for purposes of
this opinion.
We have obtained and relied upon, to the extent we
deem appropriate, certificates of officers or other
executives of the Borrower and of public officials as
to factual matters. We call to your attention the fact
that, in rendering our opinion, we are expressing our
views only as to the laws of the State of New York, and
we express no opinion with respect to the applicability
thereto or the effect thereon of the laws of any other
jurisdiction or as to any matters of municipal law or
the laws of any local agencies.
On the basis of the foregoing and in reliance
thereon, we are of the opinion that, as of the date
hereof:
The Agreement constitutes a valid and binding
agreement of the Borrower and the Notes constitute
valid and binding obligations of the Borrower, each
enforceable in accordance with its terms, except as the
foregoing may be limited by (i) the effect of
bankruptcy, insolvency, reorganization, moratorium or
other similar laws now or hereafter in effect relating
to creditors' rights; (ii) the effect of general
principles of equity (whether considered in a
proceeding in equity or at law) and by the discretion
of the court before which any proceeding therefor may
be brought; and (iii) the unenforceability of any
provision requiring the payment of attorneys' fees,
except to the extent that a court determines such fees
to be reasonable.
In rendering our opinion, we have assumed that the
Borrower and each Bank is duly incorporated or
organized, validly existing and, to the extent
applicable in the relevant jurisdiction, in good
standing under the laws of its jurisdiction of
incorporation or other organization and has the
requisite corporate power and authority to execute and
deliver the Agreement and to perform its obligations
under the Agreement; that the Agreement has been duly
authorized, executed and delivered by the Borrower and
each Bank and that the Agreement constitutes each
Bank's legal, valid and binding obligation, enforceable
against each Bank in accordance with its terms; and
that the signatures on all documents examined by us are
genuine, and that all documents submitted to us as
originals are authentic and all documents submitted to
us as copies conform to the authentic original
documents, assumptions which we have not independently
verified. We express no opinion as to the compliance
by any Bank with any state or federal laws or
regulations applicable to the transactions contemplated
by the Agreement because of the nature of its business.
This opinion is furnished by us as counsel for the
Borrower to you, and is solely for your benefit in
connection with the transaction covered hereby, and is
not to be otherwise used, quoted, circulated or relied
upon without our express prior written consent.
Very truly yours,
EXHIBIT H
OPINION OF
SPECIAL COUNSEL FOR THE ADMINISTRATIVE AGENT
[Effective Date]
To the Banks and the Administrative Agent
Referred to Below
c/o The Chase Manhattan Bank, as Administrative Agent
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Dear Sirs:
We have participated in the preparation of the
Credit Agreement (the "Credit Agreement") dated as of
November 30, 1998 among Sears Xxxxxxx Acceptance Corp.,
a Delaware corporation (the "Borrower"), the Banks
parties thereto (the "Banks"), the Syndication Agent
and Co-Documentation Agents referred to therein and The
Chase Manhattan Bank, as Administrative Agent (the
"Administrative Agent"), and have acted as special
counsel for the Administrative Agent for the purpose of
rendering this opinion pursuant to Section 3.01(d) of
the Credit Agreement. Terms defined in the Credit
Agreement are used herein as therein defined.
We have examined originals or copies, certified or
otherwise identified to our satisfaction, of such
documents, corporate records, certificates of public
officials and other instruments and have conducted such
other investigations of fact and law as we have deemed
necessary or advisable for purposes of this opinion.
Upon the basis of the foregoing, we are of the
opinion that:
1. The execution, delivery and performance by
the Borrower of the Credit Agreement and the Notes are
within the Borrower's corporate powers and have been
duly authorized by all necessary corporate action.
2. The Credit Agreement constitutes a valid and
binding agreement of the Borrower and the Notes
constitute valid and binding obligations of the
Borrower, in each case enforceable in accordance with
its terms, except as the same may be limited by
bankruptcy, insolvency or similar laws affecting
creditors' rights generally and by general principles
of equity.
We are members of the Bar of the State of New York
and the foregoing opinion is limited to the laws of the
State of New York, the federal laws of the United
States of America and the General Corporation Law of
the State of Delaware. In giving the foregoing opinion,
we express no opinion as to the effect (if any) of any
law of any jurisdiction (except the State of New York)
in which any Bank is located which limits the rate of
interest that such Bank may charge or collect.
This opinion is rendered solely to you in
connection with the above matter. This opinion may not
be relied upon by you for any other purpose or relied
upon by any other person without our prior written
consent.
Very truly yours,
EXHIBIT I
ASSIGNMENT AND ASSUMPTION AGREEMENT
AGREEMENT dated as of _________, ____ among
[ASSIGNOR] (the "Assignor"), [ASSIGNEE] (the
"Assignee"), SEARS XXXXXXX ACCEPTANCE CORP. (the
"Borrower") and THE CHASE MANHATTAN BANK, as
Administrative Agent (the "Administrative Agent").
W I T N E S S E T H
WHEREAS, this Assignment and Assumption Agreement
(the "Agreement") relates to the Credit Agreement dated
as of November 30, 1998 among the Borrower, the
Assignor and the other Banks parties thereto, as Banks,
the Syndication Agent and Co-Documentation Agents
referred to therein and the Administrative Agent (the
"Credit Agreement");
WHEREAS, as provided under the Credit Agreement,
the Assignor has a Commitment to make Loans to the
Borrower in an aggregate principal amount at any time
outstanding not to exceed $__________;
WHEREAS, Committed Loans made to the Borrower by
the Assignor under the Credit Agreement in the
aggregate principal amount of $__________ are
outstanding at the date hereof; and
WHEREAS, the Assignor proposes to assign to the
Assignee all of the rights of the Assignor under the
Credit Agreement in respect of a portion of its
Commitment thereunder in an amount equal to $__________
(the "Assigned Amount"), together with a corresponding
portion of its outstanding Committed Loans, and the
Assignee proposes to accept assignment of such rights
and assume the corresponding obligations from the
Assignor on such terms;
NOW, THEREFORE, in consideration of the foregoing
and the mutual agreements contained herein, the parties
hereto agree as follows:
SECTION 1. Definitions. All capitalized terms not
otherwise defined herein shall have the respective
meanings set forth in the Credit Agreement.
SECTION 2. Assignment. The Assignor hereby
assigns and sells to the Assignee all of the rights of
the Assignor under the Credit Agreement to the extent
of the Assigned Amount, and the Assignee hereby accepts
such assignment from the Assignor and assumes all of
the obligations of the Assignor under the Credit
Agreement to the extent of the Assigned Amount,
including the purchase from the Assignor of the
corresponding portion of the principal amount of the
Committed Loans made by the Assignor outstanding at the
date hereof. Upon the execution and delivery hereof by
the Assignor, the Assignee, the Borrower and the
Administrative Agent and the payment of the amounts
specified in Section 3 required to be paid on the date
hereof (i) the Assignee shall, as of the date hereof,
succeed to the rights and be obligated to perform the
obligations of a Bank under the Credit Agreement with a
Commitment in an amount equal to the Assigned Amount,
and (ii) the Commitment of the Assignor shall, as of
the date hereof, be reduced by a like amount and the
Assignor released from its obligations under the Credit
Agreement to the extent such obligations have been
assumed by the Assignee. The assignment provided for
herein shall be without recourse to the Assignor.
SECTION 3. Payments. As consideration for the
assignment and sale contemplated in Section 2 hereof,
the Assignee shall pay to the Assignor on the date
hereof in Federal funds an amount equal to $_________.1
It is understood that any facility fees accrued to the
date hereof are for the account of the Assignor and
such fees accruing with respect to the Assigned Amount
from and including the date hereof are for the account
of the Assignee. Each of the Assignor and the Assignee
hereby agrees that if it receives any amount under the
Credit Agreement which is for the account of the other
party hereto, it shall receive the same for the account
of such other party to the extent of such other party's
interest therein and shall promptly pay the same to
such other party.
SECTION 4. Taxes. [The Assignee agrees (to the
extent it is permitted to do so under the laws and any
applicable double taxation treaties of the United
States, the jurisdiction of such Assignee's
incorporation, and the jurisdictions in which such
Assignee's Domestic Lending Office and Euro-Dollar
Lending Office are located) to execute and deliver to
the Administrative Agent for delivery to the Borrower
at the times and for the periods required pursuant to
Section 2.15 of the Credit Agreement, two accurate and
complete original signed copies of Form 1001 or Form
4224 (or any successor form), appropriately completed
and claiming complete exemption from withholding and
deduction of United States Taxes. Attached hereto are
two accurate and complete original signed copies of
Form 1001 with respect to each three-year calendar
period, any portion of which falls within the Revolving
Credit Period, dated as of the date hereof, or two
accurate and complete signed copies of Form 4224 with
respect to each tax year of the Assignee, any portion
of which falls within the Revolving Credit Period,
dated as of the date hereof, as applicable. The
Assignee hereby represents and warrants to the Borrower
and the Administrative Agent that on the date hereof it
is permitted to take the actions described in this
Section 4 under the laws and any applicable double
taxation treaties of the jurisdictions specified
above.]2 [The Assignee represents to the Borrower and
the Administrative Agent that it is not a Non-U.S.
Bank.]3
SECTION 5. Consent of the Borrower and the
Administrative Agent. This Agreement is conditioned
upon the consent of the Borrower and the Administrative
Agent pursuant to Section 9.06(c) of the Credit
Agreement. The execution of this Agreement by the
Borrower and the Administrative Agent is evidence of
this consent. Pursuant to Section 9.06(c) the Borrower
agrees to execute and deliver a Note payable to the
order of the Assignee to evidence the assignment and
assumption provided for herein.
SECTION 6. Non-Reliance on Assignor. The Assignor
makes no representation or warranty in connection with,
and shall have no responsibility with respect to, the
solvency, financial condition, or statements of the
Borrower, or the validity and enforceability of the
obligations of the Borrower in respect of the Credit
Agreement or any Note. The Assignee acknowledges that
it has, independently and without reliance on the
Assignor, and based on such documents and information
as it has deemed appropriate, made its own credit
analysis and decision to enter into this Agreement and
will continue to be responsible for making its own
independent appraisal of the business, affairs and
financial condition of the Borrower.
SECTION 7. Governing Law. This Agreement shall be
governed by and construed in accordance with the laws
of the State of New York.
SECTION 8. Counterparts. This Agreement may be
signed in any number of counterparts, each of which
shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same
instrument.
IN WITNESS WHEREOF, the parties have caused this
Agreement to be executed and delivered by their duly
authorized officers as of the date first above written.
[ASSIGNOR]
By:
Title:
[ASSIGNEE]
By:
Title:
SEARS XXXXXXX ACCEPTANCE
CORP.
By:
Title:
THE CHASE MANHATTAN BANK,
as Administrative Agent
By:
Title:
EXHIBIT J
TERMS OF SUBORDINATION1
Section 1. Subordination to Superior Debt. The
Borrower and the lender of the SRAC Subordinated Debt
(the "Lender") agree for the benefit of the holders of
the Superior Debt that the SRAC Subordinated Debt
shall, to the extent hereinafter set forth, be
subordinate and junior in right of payment to all
Superior Debt of the Borrower.
Section 2. Borrower Not to Make Payments
hereunder in Certain Circumstances. (a) Upon the
maturity of all or any part of the Superior Debt by
lapse of time, acceleration or otherwise, such Superior
Debt shall first be paid in full, or such payment shall
be duly provided for in cash or in a manner
satisfactory to the holders of such Superior Debt,
before any payment by the Borrower or any Subsidiary is
made on account of the principal of or premium, if any,
or interest on the notes issued hereunder (the "SRAC
Subordinated Notes") or to acquire any of the SRAC
Subordinated Notes or on account of any sinking fund
for the SRAC Subordinated Notes.
(b) In the event and during the continuation of
any Event of Default or any event or condition that,
with the giving of notice or the lapse of time or both,
would become an Event of Default (as such term is
defined in the Credit Agreement, provided that any such
event or condition that would become an Event of
Default only upon both the giving of notice of such
event or condition by the Administrative Agent to the
Borrower and the lapse of time shall constitute such an
event or condition for purposes of this Agreement only
if the Administrative Agent shall have given such
notice to the Borrower) with respect to any Superior
Debt (each such Event of Default or any such event or
condition that, with the giving of notice or the lapse
of time, or both, being referred to in this Agreement
as a "Superior Debt Default"), (i) no payment shall be
made by the Borrower or any Subsidiary on or with
respect to the principal of, or, premium, if any, or
interest on, the SRAC Subordinated Notes or to acquire
any SRAC Subordinated Notes or on account of any
sinking fund for the SRAC Subordinated Notes unless and
until such Superior Debt Default shall have been
remedied, nor shall any such payment be made if after
giving effect, as if paid, to such payment, any
Superior Debt Default would exist and (ii) no holder of
SRAC Subordinated Notes shall demand, accept or
receive, any direct or indirect payment (in cash or
property or by setoff, exercise of contractual or
statutory rights or otherwise) of or on account of any
SRAC Subordinated Notes, notwithstanding the terms of
the SRAC Subordinated Notes or of any agreement or
instrument which governs the SRAC Subordinated Notes,
and no such payment shall be due.
(c) Unless and until all principal of, premium,
if any, and interest on, and all other obligations of
the Borrower under, the Superior Debt shall have been
paid in full, no holder of SRAC Subordinated Notes will
commence or maintain any action, suit or any other
legal or equitable proceeding against the Borrower, or
join with any creditor in any such proceeding, under
any insolvency, bankruptcy, receivership, liquidation,
reorganization or other similar law, unless the holders
of Superior Debt shall also join in bringing such
proceeding, provided that this Section 2(c) shall not
prohibit a holder of SRAC Subordinated Notes from
filing a proof of claim or otherwise participating in
any such proceeding not commenced by it.
Section 3. SRAC Subordinated Notes Subordinated
to Prior Payment of all Superior Debt on Dissolution,
Liquidation or Reorganization of Borrower. In the event
of any insolvency or bankruptcy proceedings, and any
receivership, liquidation, reorganization or other
similar proceedings in connection therewith, relative
to the Borrower or to its creditors, in their capacity
as creditors of the Borrower, or to substantially all
of its property, and in the event of any proceedings
for voluntary liquidation, dissolution or other winding
up of the Borrower, whether or not involving insolvency
or bankruptcy, then:
(a) the holders of all Superior Debt shall first
be entitled to receive payment in full of the principal
thereof, premium, if any, interest and all other
amounts payable thereon (accruing before and after the
commencement of the proceedings) before the holders of
the SRAC Subordinated Notes are entitled to receive any
payment on account of the principal of, premium, if
any, or interest on the SRAC Subordinated Notes; and
(b) all SRAC Subordinated Notes shall forthwith
(notwithstanding the terms of Section 2) become due and
payable and any payment or distribution of assets of
the Borrower of any kind or character, whether in cash,
property or securities to which the holders of the SRAC
Subordinated Notes would be entitled, but for the
provisions of these Terms of Subordination, shall be
paid or distributed by the liquidating trustee or agent
or other person making such payment or distribution,
whether a trustee in bankruptcy, a receiver or
liquidating trustee or other trustee or agent, directly
to the Administrative Agent or any other representative
on behalf of the holders of Superior Debt, to the
extent necessary to make payment in full of all
principal, premium, if any, interest and all other
amounts payable on all Superior Debt remaining unpaid,
after giving effect to any concurrent payment or
distribution to the holders of the Superior Debt.
Section 4. Rights of Holders of Superior Debt;
Subrogation. (a) Should any payment or distribution or
security or the proceeds of any thereof be collected or
received by any holder of SRAC Subordinated Notes in
respect of the SRAC Subordinated Notes, and such
collection or receipt is prohibited hereunder prior to
the payment in full of the Superior Debt, such holder
will forthwith deliver the same to the Administrative
Agent for the equal and ratable benefit of the holders
of the Superior Debt in precisely the form received
(except for the endorsement or the assignment of or by
such holder where necessary) for application to payment
of all Superior Debt in full, after giving effect to
any concurrent payment or distribution to the holders
of Superior Debt and, until so delivered, the same
shall be held in trust by such holder as the property
of the holders of the Superior Debt.
(b) All payments and distributions received by
the Administrative Agent in respect of the SRAC
Subordinated Notes, to the extent received in or
converted into cash, may be applied by the
Administrative Agent first to the payment of any and
all reasonable out-of-pocket expenses (including
attorney's fees and legal expenses) paid or incurred by
the Administrative Agent or such representative in
enforcing the provisions hereof or in endeavoring to
collect or realize upon the SRAC Subordinated Notes or
any security therefor, and any balance thereof shall,
solely as between any holder of the SRAC Subordinated
Notes, on the one hand, and the holders of the Superior
Debt, on the other hand, be applied by the
Administrative Agent in such order of application as
the Administrative Agent may from time to time select,
toward the payment of the Superior Debt remaining
unpaid.
(c) No holder of SRAC Subordinated Notes shall be
subrogated to the rights of the holders of the Superior
Debt to receive payments or distributions of assets of
the Borrower until all amounts payable with respect to
the Superior Debt shall be paid in full; and, for the
purposes of such subrogation, no payments or
distributions to the holders of the Superior Debt of
any cash, property or securities to which any holder of
SRAC Subordinated Notes would be entitled except for
these provisions shall, as between the Borrower, its
creditors other than the holders of the Superior Debt,
and such holders of SRAC Subordinated Notes, be deemed
to be a payment by the Borrower to or on account of the
Superior Debt. The provisions of this Agreement are and
are intended solely for the purpose of defining the
relative rights of holders of SRAC Subordinated Notes,
on the one hand, and the holders of the Superior Debt,
on the other hand.
(d) Subject to the payment in full of all
Superior Debt, the holders of the SRAC Subordinated
Notes shall be subrogated (equally and ratably with the
holders of all subordinated indebtedness of the
Borrower which, by its terms, is not superior in right
of payment to the SRAC Subordinated Notes, and ranks on
a parity with the SRAC Subordinated Notes) to the
rights of the holders of Superior Debt to receive
payments or distributions of cash, property or
securities of the Borrower applicable to the Superior
Debt until all amounts owing on the SRAC Subordinated
Notes shall be paid in full. For purposes of such
subrogation, no payments or distributions to the
holders of the SRAC Subordinated Notes of cash,
property, securities or other assets by virtue of the
subrogation herein provided which otherwise would have
been made to the holders of the Superior Debt shall, as
between the Borrower, its creditors other than the
holders of Superior Debt and the holders of the SRAC
Subordinated Notes, be deemed to be a payment to or on
account of the SRAC Subordinated Notes. The holders of
SRAC Subordinated Notes agree that, in the event that
all or any part of any payment made on account of the
Superior Debt is recovered from the holders of Superior
Debt as a preference, fraudulent transfer or similar
payment under any bankruptcy, insolvency or similar
law, any payment or distribution received by the
holders of SRAC Subordinated Notes on account of the
SRAC Subordinated Notes at any time after the date of
the payment so recovered, whether pursuant to the right
of subrogation provided for in this Section 4(d) or
otherwise, shall be deemed to have been received by
such holders of SRAC Subordinated Notes in trust as the
property of the holders of the Superior Debt and such
holders shall forthwith deliver the same to the
Administrative Agent for the equal and ratable benefit
of the holders of the Superior Debt for application to
payment of all Superior Debt in full.
Section 5. Renewals, Extensions and Increases of
Superior Debt. Each holder of SRAC Subordinated Notes
by his acceptance thereof thereby waives any and all
notice of renewal, extension, accrual or increase in
the amount of any of the Superior Debt, present or
future, and agrees and consents that without notice to
or assent by any holder or holders of the SRAC
Subordinated Notes:
(i) the obligation and liabilities of the
Borrower or any other party or parties for or upon
the Superior Debt (or any promissory note,
security document or guaranty evidencing or
securing the same) may, from time to time, in
whole or in part, be renewed, extended, increased,
modified, amended, accelerated, compromised,
supplemented, terminated, sold, exchanged, waived
or released;
(ii) the Administrative Agent or any other
representative acting on behalf of the holders of
the Superior Debt and the holders of the Superior
Debt may exercise or refrain from exercising any
right, remedy or power granted by or in connection
with any agreements relating to the Superior Debt;
and
(iii) any balance or balances of funds with
any holders of the Superior Debt at any time
standing to the credit of the Borrower may, from
time to time, in whole or in part, be surrendered
or released;
all as the Administrative Agent or any other
representative or representatives acting on behalf of
the holders of the Superior Debt and the holders of the
Superior Debt may deem advisable and all without
impairing, abridging, diminishing, releasing or
affecting the subordination of the SRAC Subordinated
Notes to the Superior Debt provided for herein.
Section 6. Obligation of Borrower Unconditional.
Nothing contained in these Terms of Subordination or in
the SRAC Subordinated Notes is intended to or shall
impair, as between the Borrower, its creditors other
than the holders of the Superior Debt, and the holders
of the SRAC Subordinated Notes, the obligation of the
Borrower, which is absolute and unconditional, to pay
to the holders of the SRAC Subordinated Notes the
principal of, premium, if any, and interest on the SRAC
Subordinated Notes, as and when the same shall become
due and payable (except as provided in Section 2), by
lapse of time, acceleration or otherwise, in accordance
with their terms, or is intended to or shall affect the
relative rights of the holders of the SRAC Subordinated
Notes and other creditors of the Borrower other than
the holders of the Superior Debt, nor shall anything
herein or therein prevent the trustee or the holder of
any SRAC Subordinated Notes (i) from taking all
appropriate actions to preserve its rights under the
SRAC Subordinated Notes not inconsistent with the
rights of the holders of the Superior Debt under these
Terms of Subordination, or (ii) from exercising all
remedies otherwise permitted by applicable law upon
default under the SRAC Subordinated Notes, subject to
the rights, if any, of the holders of the Superior Debt
under Section 2 of these Terms of Subordination and in
respect of cash, property or securities of the Borrower
otherwise payable or delivered to such holders of SRAC
Subordinated Notes upon the exercise of any such
remedy.
Section 7. Miscellaneous. Each holder of SRAC
Subordinated Notes by its acceptance thereof thereby
acknowledges and agrees that the holders of the
Superior Debt have relied upon and will continue to
rely upon the subordination provided for herein in
entering into the agreements relating to Superior Debt
and in extending credit to the Borrower pursuant
thereto.
(b) No present or future holder of Superior Debt
shall be prejudiced in his right to enforce the
subordination contained herein in accordance with the
terms hereof by any act or failure to act on the part
of the Borrower or any holder of the SRAC Subordinated
Notes. The subordination provisions contained herein
are for the benefit of the holders of the Superior Debt
from time to time and, so long as Superior Debt is
outstanding under any agreement, may not be rescinded,
cancelled or modified in any way without the prior
written consent thereto of all holders of Superior
Debt.
(c) The subordination provisions hereof shall be
binding upon any holder of the SRAC Subordinated Notes
and upon the heirs, legal representatives, successors
and assigns of any holder of the SRAC Subordinated
Notes; and, to the extent that any holder of the SRAC
Subordinated Notes is either a partnership or a
corporation, all references herein to any holder of the
SRAC Subordinated Notes shall be deemed to include any
successor or successors, whether immediate or remote,
to such partnership or corporation.
(d) These Terms of Subordination shall be
construed in accordance with and governed by the laws
of the State of New York.
_______________________________
1PREFERENCE 1
ArticleNumber=1
SectionNumber=1.0
ParagraphNumber=(a)
Sub1=(i)
Sub2=(A)
Sub3=(1)
Sub4=
Sub5=
1 Deliver no later than 11:00 A.M. (New York
City time) on (x) the day of a Base Rate Borrowing, (y)
the second Domestic Business Day before a CD Borrowing
and (z) the third Euro-Dollar Business Day before a
Euro-Dollar Borrowing.
2 Must be aggregate principal amount of
$25,000,000 or any larger multiple of $5,000,000 (or
the aggregate amount available in accordance with
Section 3.02(b) of the Credit Agreement, if less).
3 Applicable only in the case of a Fixed Rate
Borrowing. For CD Rate Loans, insert "30 days," "60
days," "90 days" or "180 days" (subject to the
definition of Interest Period). For Euro-Dollar Loans,
insert "one month," "two months," "three months" or
"six months" (subject to the definition of Interest
Period).
1 May apply to a portion of the aggregate
principal amount of the relevant Group of Loans;
provided that (i) such portion is allocated ratably
among the Loans comprising such Group and (ii) the
portion to which such Notice applies, and the remaining
portion to which it does not apply, are each
$25,000,000 or any larger multiple of $5,000,000.
2 Applicable only in the case of a Fixed Rate
Borrowing. For CD Loans, insert "30 days," "60 days,"
"90 days" or "180 days." For Euro-Dollar Loans, insert
"one month," "two months," "three months" or "six
months." The Interest Period, however, may be changed
by agreement of the parties (see "Interest Period" in
Section 1.01 of the Credit Agreement).
1 Amount must be $25,000,000 or a larger
multiple of $5,000,000 (or an amount equal to the
aggregate amount available in accordance with Section
3.02(b), if less than $25,000,000).
2 Not less than one month (LIBOR Auction) or not
less than 30 days (Absolute Rate Auction), subject to
the provisions of the definition of Interest Period.
1 Amount should combine principal together with
accrued interest and breakage compensation, if any, to
be paid by the Assignee, net of any portion of any up-
front fee to be paid by the Assignor to the Assignee.
It may be preferable in an appropriate case to specify
these amounts generically or by formula rather than as
a fixed sum.
2 Use if such Assignee is a Non-U.S. Bank.
3 Use if such Assignee is not a Non-U.S. Bank.
1 These Terms of Subordination refer to the
Credit Agreement (the "Credit Agreement") dated as of
November 30, 1998 among Sears Xxxxxxx Acceptance Corp.,
the Banks parties thereto, the Syndication Agent and Co-
Documentation Agents referred to therein and The Chase
Manhattan Bank, as Administrative Agent. Capitalized
terms used but not defined herein are used herein as
defined in the Credit Agreement.
