ACKNOWLEDGEMENT AND EXTENSION AGREEMENT

Exhibit 10(c)

ACKNOWLEDGEMENT AND EXTENSION AGREEMENT

Dated as of August 19, 2003

To the Lenders parties to
The Credit Agreement
Referred to below and
Citibank N.A., as Agent

Ladies and Gentlemen:

     Reference is made to the 364-Day Credit Agreement, dated as of February 24, 2003 (the “Credit Agreement”; capitalized terms not otherwise defined in this Acknowledgement and Extension Agreement have the same meanings as specified in the Credit Agreement), among Sears Xxxxxxx Acceptance Corp. (the “Borrower”), the lenders parties thereto, Bank One, NA, as syndication agent, Barclays Bank PLC and Bank of America, N.A., as documentation agents, Xxxxxxx Xxxxx Barney Inc. and Banc One Capital Markets, Inc., as joint lead arrangers and joint bookrunners, and Citibank, N.A., as administrative agent.

     Sears, Xxxxxxx and Co. has announced that it has contracted to sell its Credit and Financial Products business unit (including the assets associated with such business unit) to Citigroup (or any of its subsidiaries) (the “Sale”). The Borrower has determined that (i) as a result of the Sale, the aggregate Commitments under the Credit Agreement will be more than will be required for the ongoing financing needs of the Borrower and (ii) it is advisable to request that, effective upon consummation of the Sale, the Termination Date be extended to May 24, 2004.

     Subject to the condition that the Required Lenders shall have executed and returned this Acknowledgement and Extension Agreement to the Agent as provided herein (the “Agreement Effectiveness”), the Lenders, Borrower and Citibank N.A., as Agent, hereby agree as follows:

     (1)  Reduction of Commitment. Subject to the Agreement Effectiveness, the Borrower hereby gives irrevocable notice, pursuant to Section 2.04(a) of the Credit Agreement that, effective on the date that is thirty (30) days after the date on which the Sale or substantially all of the Sale is consummated, the respective Commitments of the Lenders shall be permanently reduced ratably in an aggregate amount of $1,000,000,000.

     (2)  Extension of Termination Date. Notwithstanding anything in Section 2.17 of the Credit Agreement to the contrary but subject to the conditions set forth in Section 3.02 of the Credit Agreement (taking into account the Agreement Effectiveness), the Lenders that have duly executed and returned this Acknowledgement and Extension Agreement irrevocably consent to the extension of the Termination Date (as it relates solely to the Commitment (after giving effect to the reduction contemplated above) of each such consenting Lender) to May 24, 2004, such extension being subject to the Sale or substantially all of the Sale being consummated. For the avoidance of doubt, Lenders that have duly executed this Acknowledgement and Extension Agreement shall be deemed to be Consenting Lenders pursuant to Section 2.17 of the Credit Agreement and Lenders that have not executed this Acknowledgement and Extension Agreement shall be deemed to be Non-Consenting Lenders thereunder and the extension of the Termination Date shall not apply with respect to the Commitment of such Lenders. Except as expressly provided in this paragraph (2), the provisions of Section 2.17 shall continue to be, and shall remain, in full force and effect, including without limitation with respect to the extension of any Termination Date occurring after February 23, 2004. Subject to (x) the Agreement Effectiveness and (y) the Sale or substantially all of the Sale being consummated, the Borrower agrees that it will not exercise the Term Loan Election before February 24, 2004.

     (3)  Maturity Date in Case of Term Loan Election. The Borrower hereby acknowledges and agrees that, subject to the Sale or substantially all of the Sale being consummated, if the Term Loan Election is exercised pursuant to Section 2.05 of the Credit Agreement, the Maturity Date shall be November 25, 2004.

     Each party executing this Acknowledgement and Extension Agreement is asked to (i) return two counterparts hereof to Xxxxx X. Xxxxxx, Shearman & Sterling LLP, 000 Xxxxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 and (ii) fax a copy of the executed Acknowledgement to Xxxxx X. Xxxxxx (tel. 000-000-0000; fax 000-000-0000), in each case on or before the Return Date.

     This Acknowledgement and Extension Agreement may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same document. Delivery of an executed counterpart of this Acknowledgement and Extension Agreement by telecopier shall be effective as delivery of a manually executed counterpart hereof.

     This Acknowledgement and Extension Agreement shall be governed by, and construed in accordance with, the laws of the State of New York.

Very truly yours,

SEARS XXXXXXX ACCEPTANCE CORP.				SEARS, XXXXXXX AND CO.
By:		/s/ Xxxxx X. Xxxxx		By:		/s/ Xxxxx X. Xxxxxxx
		Name: Xxxxx X. Xxxxx Title: President				Name: Xxxxx X. Xxxxxxx Title: Senior V.P. and CFO

ACKNOWLEDGED AND AGREED AND COMMITMENT EXTENSION APPROVED:

BANCA NAZIONALE DEL LAVORO S.p.A., NEW YORK BRANCH

By:		/s/ Francesco Di Mario		By:		/s/ Xxxxx Xxxxxx
		Name: Francesco Di Mario Title: Vice President				Name: Xxxxx Xxxxxx Title: Senior Vice President

BANCO POPULAR DE PUERTO RICO, NEW YORK BRANCH
By:	/s/ Xxxxxx X. Xxxxxxxx
	Name:	Xxxxxx X. Xxxxxxxx
	Title:	Vice President
BANK OF AMERICA, N.A.
By:	/s/ Xxxxxxxxx X. Xxxxxxx
	Name:	Xxxxxxxxx X. Xxxxxxx
	Title:	Managing Director
BANK HAPOALIM.B.M.
By:	/s/ Xxxx Xxxx
	Name:	Xxxx Xxxx
	Title:	Vice President
THE BANK OF NEW YORK
By:	/s/ Xxxxxxxx X.X. Xxxxxxx
	Name:	Xxxxxxxx X.X. Xxxxxxx
	Title:	Vice President
THE BANK OF NOVA SCOTIA
By:	/s/ Xxxxxx Xxxx
	Name:	Xxxxxx Xxxx
	Title:	Sr. Manager

BANK ONE N.A.
By:	/s/ Xxxxxxx X. Xxxxxxx
	Name:	Xxxxxxx X. Xxxxxxx
	Title:	Director
BARCLAYS BANK PLC
By:	/s/ Xxxx Xxxxxxxx
	Name:	Xxxx Xxxxxxxx
	Title:	Director
BEAR XXXXXXX CORPORATE LENDING INC.
By:	/s/ Xxxxx X. Xxxxxxx
	Name:	Xxxxx X. Xxxxxxx
	Title:	Executive Vice President
BMO XXXXXXX XXXXX FINANCING, INC.
By:	/s/ Xxxxxx X. Xxxxxx
	Name:	Xxxxxx X. Xxxxxx
	Title:	Vice President

BNP PARIBAS

By:		/s/ Xxxxx Xxxxxx		By:		/s/ Xxxxxxx Xxxxxx
		Name: Xxxxx Xxxxxx Title: Central Region Manager				Name: Xxxxxxx Xxxxxx Title: Director

CIBC
By:		/s/ Xxxxxxx X. Xxxxxxxx Name: Xxxxxxx X. Xxxxxxxx
		Title: Executive Director
		CIBC World Markets Corp., as Agent
CITIBANK, N.A
By:		/s/ Xxxxxx Xxxxx Name: Xxxxxx Xxxxx
		Title: Vice President
DEUTSCHE BANK AG NEW YORK BRANCH
By:		/s/ Xxxxxx X. Xxxxx Name: Xxxxxx X. Xxxxx		By:		/s/ Xxxxxxx Xxxxxxx Name: Xxxxxxx Xxxxxxx
		Title: Director				Title: Director
DRESDNER BANK AG, NEW YORK AND GRAND CAYMAN BRANCHES
By:		/s/ Xxxxxxx Xxxxxxx Name: Xxxxxxx Xxxxxxx		By:		/s/ Xxxxxxx Xxxxxx Name: Xxxxxxx Xxxxxx
		Title: Director				Title: Vice President
FLEET NATIONAL BANK
By:		/s/ Xxxxxxx X. Xxxxxxxx Name: Xxxxxxx X. Xxxxxxxx		By:		/s/ Xxxxxxx X. Xxxxxx Name: Xxxxxxx X. Xxxxxx
		Title: Managing Director				Title: Managing Director

FIFTH THIRD BANK
By:		/s/ Xxxxxxxxxxx X. Xxxxx Name: Xxxxxxxxxxx X. Xxxxx
		Title: Vice President
FIRST HAWAIIAN BANK
By:		/s/ Xxxxxxx X. Xxxxxxx Name: Xxxxxxx X. Xxxxxxx
		Title: Vice President, Manager
HSBC BANK USA
By:		/s/ Xxxxxx Xxxxxx Name: Xxxxxx Xxxxxx
		Title: First Vice President
HSH NORDBANK , NEW YORK BRANCH
By:		/s/ Xxxx xxx Xxxxx Name: Xxxx xxx Xxxxx		By:		/s/ Xxx Xx Name: Xxx Xx
		Title: Senior Vice President				Title: AVP
		Head of Corporate Banking
HUNTINGTON NATIONAL BANK
By:		/s/ Xxxxxx XxXxxx Name: Xxxxxx XxXxxx
		Title: Vice President

KEYBANK NATIONAL ASSOCIATION
By:		/s/ Xxxxx X. Xxxxxxx Name: Xxxxx X. Xxxxxxx
		Title: Vice President
MELLON BANK, N.A
By:		/s/ Xxxx X. Xxxxxxxx Name: Xxxx X. Xxxxxxxx
		Title: Vice President
XXXXXXX XXXXX BANK USA
By:		/s/ Xxxxx Xxxxx Name: Xxxxx Xxxxx Title: Vice President
XXXXXX XXXXXXX BANK
By:		/s/ Jaap L. Tonckens Name: Jaap L. Tonckens
		Title: Vice President
NATIONAL CITY BANK
By:		/s/ Xxxxx X. Xxxxxxxx Name: Xxxxx X. Xxxxxxxx
		Title: Vice President

THE NORTHERN TRUST COMPANY
By:		/s/ Xxxxx Xxxxx Name: Xxxxx Xxxxx
		Title: Vice President
PNC BANK, N.A
By:		/s/ Xxxx X. Xxxxxx Name: Xxxx X. Xxxxxx
		Title: Vice President
ROYAL BANK OF CANADA
By:		/s/ Xxxxx Xxxx Name: Xxxxx Xxxx
		Title: Authorized Signatory
STATE STREET BANK AND TRUST COMPANY
By:		/s/ Xxxx X. Xxxxxx Name: Xxxx X. Xxxxxx
		Title: Assistant Vice President
UBS AG, CAYMAN ISLANDS BRANCH
By:		/s/ Xxxxxxxx X’Xxxxx Name: Xxxxxxxx X’Xxxxx		By:		/s/ Xxxx Xxxxxxxxxxx Name: Xxxx Xxxxxxxxxxx
		Title: Director				Title: Associate Director
						Banking Products Services, US

U.S. BANK NATIONAL ASSOCIATION
By:		/s/ Xxxx Xxxxxxxxxx Name: Xxxx Xxxxxxxxxx
		Title: Vice President
WACHOVIA BANK, NATIONAL ASSOCIATION
By:		/s/ Xxxx Xxx Name: Xxxx Xxx
		Title: Associate
XXXXX FARGO BANK, NATIONAL ASSOCIATION
By:		/s/ Xxxxxxx X. Xxxx Name: Xxxxxxx X. Xxxx		By:		/s/ Xxxxxxx X. Xxxxxxx Name: Xxxxxxx X. Xxxxxxx
		Title: Vice President				Title: Vice President
WESTLB AG (f/k/a/ WESTDEUTSCHE LANDESBANK GIROZENTRALE), NEW YORK BRANCH
By:		/s/ Xxxxxxxxx Xxxxxxxxxx Name: Xxxxxxxxx Xxxxxxxxxx		By:		/s/ Xxxxx Xxxxxx Name: Xxxxx Xxxxxx
		Title: Managing Director				Title: Associate Director
XXXXXXX STREET COMMITMENT CORPORATION
By:		/s/ Xxxxxxxx X. Xxxx Name: Xxxxxxxx X. Xxxx Title: Chief Financial Officer