SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
______________________________
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 of the
Securities Exchange Act Of 1934
Date of Report (Date of earliest event reported): April 25, 1995
SEARS, ROEBUCK AND CO.
(Exact name of registrant as specified in its charter)
New York 1-416 36-1750680
(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification
incorporation) No.)
Sears Tower
Chicago, Illinois 60684
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (312) 875-2500
Item 5. Other Events.
On April 25, 1995, Registrant executed a Distribution
Agreement with Dean Witter Reynolds Inc., Goldman, Sachs & Co., Merrill
Lynch, Pierce, Fenner & Smith Incorporated, Salomon Brothers Inc and
Morgan Stanley & Co. Incorporated, as Agents (the "Distribution
Agreement"), relating to $800,000,000 aggregate principal amount of
Medium-Term Notes Series VIII, to be sold from time to time pursuant to
the Distribution Agreement.
Item 7. Financial Statements, Pro Forma Financial Information and
Exhibits.
1 Distribution Agreement, dated April 25, 1995, among
Registrant, Sears, Roebuck and Co., Dean Witter
Reynolds Inc., Goldman, Sachs & Co., Merrill Lynch,
Pierce, Fenner & Smith Incorporated, Salomon Brothers
Inc and Morgan Stanley & Co. Incorporated.
4.1 Form of Fixed Rate Note Medium-Term Note Series VIII.
4.2 Form of Floating Rate Note Series VIII.
5 Opinion of David Shute dated April 25, 1995,
relating to the validity of $800,000,000 aggregate
principal amount of Medium-Term Notes Series VIII.
8 Opinion of Baker & McKenzie, special tax counsel to
Registrant, dated April 25, 1995.
24.1 Consent of David Shute (included in Exhibit 5).
24.2 Consent of Baker & McKenzie (included in Exhibit 8).
28 Letter of Representations, dated as of April 25, 1995,
between the Registrant, Chemical Bank and The
Depository Trust Company.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act
of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned thereunto duly authorized.
SEARS, ROEBUCK AND CO.
/S/ David Shute
DAVID SHUTE
Senior Vice President,
General Counsel and Secretary
April 25, 1995
EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION
1 Distribution Agreement, dated April 25, 1995, among
Registrant, Sears, Roebuck and Co., Dean Witter
Reynolds Inc., Goldman, Sachs & Co., Merrill Lynch,
Pierce, Fenner & Smith Incorporated, Salomon Brothers
Inc and Morgan Stanley & Co. Incorporated.
4.1 Form of Fixed Rate Note Medium-Term Note Series VIII.
4.2 Form of Floating Rate Note Series VIII.
5 Opinion of David Shute dated April 25, 1995,
relating to the validity of $800,000,000 aggregate
principal amount of Medium-Term Notes Series VIII.
8 Opinion of Baker & McKenzie, special tax counsel to
Registrant, dated April 25, 1995.
24.1 Consent of David Shute (included in Exhibit 5).
24.2 Consent of Baker & McKenzie(included in Exhibit 8).
28 Letter of Representations, dated as of April 25, 1995,
between the Registrant, Chemical Bank and The
Depository Trust Company.
Exhibit 1
SEARS, ROEBUCK AND CO.
U.S. $800,000,00 Medium-Term Notes Series VIII
DISTRIBUTION AGREEMENT
DEAN WITTER REYNOLDS INC.
Two World Trade Center
New York, NY 10048
GOLDMAN, SACHS & CO.
85 Broad Street
New York, NY 10004
MERRILL LYNCH & CO.,
MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED
250 Vesey Street
World Financial Center
North Tower
New York, NY 10281
MORGAN STANLEY & CO. INCORPORATED
1221 Avenue of the Americas
New York, NY 10020
SALOMON BROTHERS INC
Seven World Trade Center
New York, NY 10048
April 25, 1995
Dear Sirs:
Sears, Roebuck and Co., a New York corporation (the "Company"),
proposes to issue and sell from time to time its medium-term debt
securities (the "Notes") in an aggregate principal amount up to U.S.
$800,000,000 (or the equivalent in foreign currency or currency units),
and agrees with each of you (individually, an "Agent", and collectively,
the "Agents") as set forth in this Agreement. Subject to the terms and
conditions stated herein, the Company hereby (i) appoints each Agent as
an agent of the Company for the purpose of soliciting and receiving
offers to purchase Notes from the Company and (ii) agrees that whenever
it determines to sell Notes directly to any Agent as principal, it will
enter into a separate agreement (each a "Terms Agreement"),
substantially in the form of Annex I hereto, relating to such sale in
accordance with Section 2(b) hereof (unless the Company and such Agent
shall otherwise agree).
The Notes will be issued under an indenture, dated as of September
15, 1991 (the "Indenture"), between the Company and Chemical Bank
(successor by merger to Manufacturers Hanover Trust Company), as Trustee
(the "Trustee"). The Notes shall have the currency denomination,
maturities, annual interest rates (whether fixed or floating),
redemption provisions and other terms set forth in the Prospectus
referred to below as it may be amended or supplemented from time to
time. The Notes will be issued, and the terms and rights thereof
established, from time to time by the Company in accordance with the
Indenture and the Administrative Procedure attached hereto as Annex II
as it may be amended from time to time by written agreement between the
Agents and the Company (the "Procedure") and, if applicable, will be
specified in a related Terms Agreement.
1. The Company represents and warrants to, and agrees with, each
Agent that:
(a) A registration statement on Form S-3 (Registration No.
33-41485) in respect of U.S. $2,000,000,000 aggregate principal amount
(or the equivalent in foreign currency or currency units) of debt
securities of the Company, including the Notes, has been filed with the
Securities and Exchange Commission (the "Commission") in the form
heretofore delivered to such Agent, excluding exhibits (whether or not
incorporated by reference) to such registration statement but including
all documents incorporated by reference in the prospectus included
therein, and such registration statement in such form has been declared
effective by the Commission and no stop order suspending the
effectiveness of such registration statement has been issued and no
proceeding for that purpose has been initiated or threatened by the
Commission (any preliminary prospectus included in such registration
statement being hereinafter called a "Preliminary Prospectus;" the
various parts of such registration statement, including all exhibits
thereto but excluding Form T-1, each as amended at the time such part
became effective, being hereinafter collectively called the
"Registration Statement;" the prospectus relating to the Notes, in the
form in which it has most recently been filed with the Commission on or
prior to the date of this Agreement, being hereinafter called the
"Prospectus;" any reference herein to any Preliminary Prospectus or the
Prospectus shall be deemed to refer to and include the documents
incorporated by reference therein pursuant to the applicable form under
the Securities Act of 1933, as amended (the "Act") as of the date of
such Preliminary Prospectus or Prospectus, as the case may be; any
supplement to the Prospectus that sets forth only the terms of a
particular issue of Notes being hereinafter called a "Pricing
Supplement;" any reference to any amendment or supplement to any
Preliminary Prospectus or the Prospectus shall be deemed to refer to and
include any documents filed after the date of such Preliminary
Prospectus or Prospectus, as the case may be, under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and incorporated
therein by reference; and any reference to the Prospectus as amended or
supplemented shall be deemed to refer to the Prospectus as amended or
supplemented with respect to Notes sold pursuant to this Agreement, in
the form in which it is filed with the Commission pursuant to Rule
424(b) of Regulation C under the Act, including any documents
incorporated by reference therein as of the date of such filing);
(b) Except for statements in such documents which do not
constitute part of the Registration Statement or the Prospectus pursuant
to Rule 412 of Regulation C under the Act and after substituting
therefor any statements modifying or superseding such excluded
statements (i) the documents incorporated by reference in the
Prospectus, when they became effective or were filed with the
Commission, as the case may be, conformed in all material respects to
the requirements of the Act or the Exchange Act, as applicable, and the
rules and regulations of the Commission thereunder, and none of such
documents, when they became effective or were so filed, as the case may
be, contained, in the case of documents which became effective under the
Act, an untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary to make the
statements therein not misleading, and, in the case of documents which
were filed under the Exchange Act with the Commission, an untrue
statement of a material fact or omitted to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading, and (ii) any
further documents so filed and incorporated by reference in the
Prospectus, when such documents become effective or are filed with the
Commission, as the case may be, will conform in all material respects to
the requirements of the Act or the Exchange Act, as applicable, and the
rules and regulations of the Commission thereunder and will not contain,
in the case of documents which become effective under the Act, an untrue
statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements therein not
misleading, and in the case of documents which are filed under the
Exchange Act with the Commission, an untrue statement of material fact
or omit to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they
were made, not misleading; provided, however, that this representation
and warranty shall not apply to any statements or omissions made in
reliance upon and in conformity with information furnished in writing to
the Company by any Agent expressly for use in the Prospectus as amended
or supplemented to relate to a particular issuance of Notes; the
Indenture has been duly qualified under, and conforms in all material
respects to the requirements of, the Trust Indenture Act of 1939, as
amended (the "Trust Indenture Act");
(c) Except for statements in documents incorporated therein
by reference which do not constitute part of the Registration Statement
or the Prospectus pursuant to Rule 412 of Regulation C under the Act and
after substituting therefor any statements modifying or superseding such
excluded statements, the Registration Statement and the Prospectus
conformed, and any amendments or supplements thereto will, when they
become effective or are filed with the Commission, as the case may be,
conform, in all material respects to the requirements of the Act and the
Trust Indenture Act, and the rules and regulations of the Commission
thereunder and do not and will not, as of the applicable effective date
in the case of the Registration Statement and any amendment thereto and
as of the applicable filing date in the case of the Prospectus and any
supplement thereto, contain an untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary
to make the statements therein not misleading; provided, however, that
this representation and warranty shall not apply to any statements or
omissions made in reliance upon and in conformity with information
furnished in writing to the Company by any Agent expressly for use in
the Prospectus as amended or supplemented to relate to a particular
issuance of Notes;
(d) Upon payment therefor as provided herein and in any
Terms Agreement, the Notes will have been duly and validly authorized,
and (assuming their due authentication by the Trustee) will have been
duly and validly issued and will be valid outstanding obligations of the
Company in accordance with their terms, except as the same may be
limited by insolvency, bankruptcy, reorganization, or other laws
relating to or affecting the enforcement of creditors' rights or by
general equity principles, and will be entitled to the benefits of the
Indenture;
(e) The issue and sale of the Notes and the compliance by
the Company with all of the provisions of the Notes, the Indenture, this
Agreement and any Terms Agreement will not conflict with or result in
any breach which would constitute a material default under, or result in
the creation or imposition of any lien, charge or encumbrance upon any
of the property or assets of the Company or any subsidiary thereof,
material to the Company and its subsidiaries (whether or not
consolidated) considered as a whole, pursuant to the terms of, any
indenture, loan agreement or other agreement or instrument for borrowed
money to which the Company or any of Allstate Holdings, Inc. ("Allstate
Holdings"), The Allstate Corporation ("Allcorp"), Allstate Insurance
Company ("Allstate"), Sears Roebuck Acceptance Corp. ("SRAC"), Sears
Receivables Financing Group, Inc. ("SRFG"), Sears Credit Corp. I
("SCCI"), Sears Credit Corp. II ("SCCII"), Sears Credit Corp. A
("SCCA"), Sears Credit Corp. B ("SCCB"), Sears DC Corp. ("SDCC") or
Sears Overseas Finance N.V. ("SOFNV") (collectively, the "Designated
Subsidiaries") is a party or by which the Company or any Designated
Subsidiary may be bound or to which any of the property or assets of the
Company or any Designated Subsidiary, material to the Company and its
subsidiaries (whether or not consolidated) considered as a whole, is
subject, nor will such action result in any material violation of the
provisions of the Restated Certificate of Incorporation or the By-Laws
of the Company or, to the best of its knowledge, any statute or any
order, rule or regulation applicable to the Company of any court or any
Federal, State or other regulatory authority or other governmental body
having jurisdiction over the Company, and no consent, approval,
authorization or other order of, or filing with, any court or any such
regulatory authority or other governmental body is required for the
solicitation of offers to purchase Notes and the issue and sale of the
Notes, except as may be required under the Act, the Exchange Act, the
Trust Indenture Act and securities laws of the various states and other
jurisdictions in which the Agents will solicit offers to purchase Notes
from the Company and will purchase Notes as principal, as the case may
be; and
(f) Immediately after the settlement of any sale of Notes by
the Company resulting from solicitation by such Agent hereunder and
immediately after any Time of Delivery (as defined below) relating to a
sale to an Agent as principal, the aggregate principal amount of Notes
which shall have been issued and sold by the Company hereunder or under
any Terms Agreement and of any debt securities of the Company (other
than such Notes) that shall have been issued and sold pursuant to the
Registration Statement will not exceed the amount of debt securities
registered under the Registration Statement.
2. (a) On the basis of the representations and warranties
herein contained, and subject to the terms and conditions herein set
forth, each of the Agents hereby severally and not jointly agrees to act
as agent of the Company, to use its reasonable efforts to solicit offers
to purchase the Notes from the Company upon the terms and conditions set
forth in the Prospectus relating to the Notes as amended or supplemented
from time to time and in the Procedure.
Subject to the provisions of this Section 2 and to the Procedure,
offers for the purchase of Notes may be solicited by each Agent as agent
for the Company at such time and in such amounts as such Agent deems
advisable; provided, however, that the Company reserves the right to
sell Notes directly on its own behalf or through other agents, dealers
or underwriters.
Each Agent agrees that it will not solicit an offer to purchase Notes
or deliver any of the Notes in any jurisdiction outside the United
States of America except under circumstances that will result in
compliance with the applicable laws thereof. Each Agent understands
that no action has been taken to permit a public offering in any
jurisdiction outside the United States of America where action would be
required for such purpose. The Agents further undertake that in
connection with the distribution of Notes denominated in any foreign
currency or currency unit, they will as agent, directly or indirectly,
not solicit offers to purchase and as principal under any Terms
Agreement or otherwise, directly or indirectly, not offer, sell or
deliver, such Notes in or to residents of the country issuing such
currency, except as permitted by applicable law.
The Company reserves the right, in its sole discretion, to instruct
the Agents to suspend at any time, for any period of time or
permanently, the solicitation of offers to purchase the Notes. Promptly
after receipt of notice from the Company, but in any event not less than
one business day thereafter, the Agents will suspend solicitation of
offers to purchase Notes from the Company until such time as the Company
has advised them that such solicitation may be resumed.
The Company agrees to pay each Agent, at the time of settlement of
any sale of a Note by the Company, the purchase of which is solicited by
such Agent, a commission in United States dollars (which, in the case of
Notes denominated in other than United States dollars, shall be based
upon the Market Exchange Rate (as defined below) for such currency or
currency unit at the time of any acceptance of an offer to purchase a
Note) in an amount equal to the following percentage of the principal
amount of such Note sold:
Commission
(percentage of
aggregate
principal amount
Maturity of Notes sold)
9 months to less than 1 year....................... .125%
1 year to less than 18 months...................... .150%
18 months to less than 2 years..................... .200%
2 years to less than 3 years....................... .250%
3 years to less than 4 years....................... .350%
4 years to less than 5 years....................... .450%
5 years to less than 6 years....................... .500%
6 years to less than 7 years....................... .550%
7 years to less than 11 years...................... .600%
11 years to less than 15 years..................... .625%
15 years to less than 20 years..................... .675%
20 years to 30 years............................... .750%
Notwithstanding anything herein to the contrary, if, at or prior to the
time of settlement, the Company and an Agent have entered into, or such
Agent has arranged for the Company to enter into, a contract with
respect to the sale of the currency (other than United States dollars)
or currency unit in which a Note has been denominated and the purchase
of which was solicited by such Agent, the commission in United States
dollars payable by the Company to such Agent shall be based upon the
same exchange rate set forth in such contract.
The authorized denominations of Notes denominated in a currency or
currency unit other than United States dollars shall be equivalent, as
determined by the Market Exchange Rate for such currency or currency
unit on the business day immediately preceding the date on which the
offer for such Notes is accepted, of U.S. $100,000 (rounded down to an
integral multiple of 10,000 units of such currency or currency unit),
and any larger amount. The authorized denominations of Notes
denominated in United States dollars shall be U.S. $100,000 and any
larger amount in integral multiples of $1,000.
The "Market Exchange Rate" on a given date for a given foreign
currency means the noon buying rate in New York City for cable transfers
in such currency as certified for customs purposes by the Federal
Reserve Bank of New York on such date; provided, however, that in the
case of European Currency Units, Market Exchange Rate means, unless
otherwise agreed by the Company and the Agents, the rate of exchange
determined by the Council of European Communities (or any successor
thereto) as published on such date or the most recently available date
in the Official Journal of the European Communities (or any successor
publication).
Unless otherwise agreed between the Company and each Agent, each
Agent shall communicate to the Company, orally or in writing, each offer
to purchase Notes received by it as Agent other than those rejected by
such Agent in accordance herewith. The Company shall have the sole
right to accept offers to purchase Notes and may reject any proposed
purchase of Notes. Each Agent shall have the right, in its discretion
reasonably exercised, to reject any proposed purchase of Notes received
by it, and any such rejection by it shall not be deemed a breach of its
agreements contained herein.
(b) Each sale of Notes to any Agent as principal shall be
made in accordance with the terms of this Agreement and (unless the
Company and such Agent shall otherwise agree) a Terms Agreement which
will provide for the sale of such Notes. Terms Agreements, each of
which shall be substantially in the form of Annex I hereto, may take the
form of an exchange of any standard form of written telecommunication
between any of you and the Company, including by telecopy or telex. The
Company and any Agent who is a party to a Terms Agreement agree to
exchange executed copies of such Terms Agreement as promptly as
practicable after they have entered into such Terms Agreement pursuant
to the foregoing exchange of written telecommunication. The Agents may
utilize a selling or dealer group in connection with the reoffering of
the Notes purchased as principal.
For each sale of Notes to an Agent as principal that is not made
pursuant to a Terms Agreement, the procedural details relating to the
issue and delivery of such Notes and payment therefor shall be as set
forth in the Procedure. For each such sale of Notes to an Agent as
principal that is not made pursuant to a Terms Agreement, the Company
agrees to pay such Agent a commission (or grant an equivalent discount)
as provided in Section 2(a) and in accordance with the schedule set
forth therein, except as the parties otherwise agree in writing.
Each time and date of delivery of and payment for Notes to be
purchased by an Agent as principal, whether set forth in a Terms
Agreement or in accordance with the Procedure, is referred to herein as
a "Time of Delivery."
(c) Procedural details relating to the issue and delivery of
Notes, the solicitation of offers to purchase Notes, and the payment in
each case therefor, shall be as set forth in the Procedure. The
provisions of the Procedure shall apply to all transactions contemplated
hereunder other than those made pursuant to a Terms Agreement. Each of
the Agents and the Company agrees to perform the respective duties and
obligations specifically provided to be performed by each of them in the
Procedure. The Company will furnish to the Trustee a copy of the
Procedure as from time to time in effect.
3. The documents required to be delivered pursuant to Section 6
hereof shall be delivered at the offices of the Company, Sears Tower,
Chicago, Illinois, at 10:00 a.m., Chicago time, on the date of this
Agreement, or at such other date and time as you and the Company agree
(such time and date being referred to herein as the "Closing Date").
4. The Company covenants and agrees with each Agent:
(a) Prior to the termination of the offering of the Notes,
to make no amendment or supplement to the Registration Statement or the
Prospectus (except for a Pricing Supplement or a supplement relating to
an offering of securities other than the Notes) without first having
furnished you with a copy of the proposed form thereof and given you a
reasonable opportunity to review the same; to advise you promptly of any
such amendment or supplement after such Time of Delivery and furnish you
with copies thereof, to prepare, with respect to any Notes to be sold
through or to such Agent pursuant to this Agreement, a Pricing
Supplement with respect to such Notes in a form previously approved by
such Agent and to file such Pricing Supplement pursuant to Rule
424(b)(2) under the Act not later than the close of business of the
Commission on the fifth business day after the date on which such
Pricing Supplement is first used; and to file promptly all reports and
any definitive proxy or information statements required to be filed by
the Company with the Commission pursuant to Section 13 or 14 of the
Exchange Act for so long as the delivery of a prospectus is required in
connection with the offering or sale of the Notes, and during such same
period to advise you, promptly after the Company receives notice
thereof, of the time when any amendment to the Registration Statement
has been filed or has become effective or any supplement to the
Prospectus or any amended Prospectus (other than any Pricing Supplement
and any supplement relating to any offering of securities other than the
Notes) has been filed with, or mailed for filing to, the Commission, of
the issuance by the Commission of any stop order or of any order
preventing or suspending the use of any prospectus relating to the
Notes, of the suspension of the qualification of the Notes for offering
or sale in any jurisdiction, of the initiation or threatening of any
proceeding for any such purpose, or of any request by the Commission for
the amending or supplementing of the Registration Statement or
Prospectus or for additional information; and, in the event of the
issuance of any such stop order or of any such order preventing or
suspending the use of any such prospectus or suspending any such
qualification, to use promptly its best efforts to obtain its
withdrawal;
(b) Promptly from time to time to take such action as you
reasonably may request to qualify the Notes for offering and sale under
the securities laws of such jurisdictions as you may request and to
comply with such laws so as to permit the continuance of sales and
dealings therein for as long as may be necessary to complete the
distribution or sale of the Notes provided that in connection therewith
the Company shall not be required to qualify as a foreign corporation or
to file a general consent to service of process in any jurisdiction;
(c) To furnish you with copies of the Registration
Statement and each amendment thereto, and with copies of the Prospectus
as amended or supplemented, other than any Pricing Supplement (except as
provided in the Procedure), in the form in which it is filed with the
Commission pursuant to Rule 424 under the Act, in such quantities as you
may from time to time reasonably request, and, if the delivery of a
prospectus is required at any time in connection with the offering or
sale of the Notes (including Notes purchased from the Company by such
Agent as principal) and if at such time any event shall have occurred as
a result of which the Prospectus as then amended or supplemented would
include an untrue statement of a material fact or omit to state any
material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made when such
Prospectus is delivered, not misleading, or, if for any other reason it
shall be necessary during such same period to amend or supplement the
Prospectus or to file under the Exchange Act any document incorporated
by reference in the Prospectus in order to comply with the Act, the
Exchange Act or the Trust Indenture Act, to (i) notify you to suspend
solicitation of offers to purchase Notes from the Company (and, if so
notified, you shall promptly cease such solicitations), (ii) prepare and
cause to be filed with the Commission, after having furnished you with a
copy of the proposed form and given you a reasonable opportunity to
review the same, an amendment or supplement to the Registration
Statement or the Prospectus as then amended or supplemented that will
correct such statement or omission or effect such compliance and (iii)
supply such Prospectus as then amended or supplemented to you in such
quantities as you may reasonably request; if such amendment or
supplement, and any documents, certificates and opinions furnished to
you pursuant to Section 6 in connection with the preparation or filing
of such amendment or supplement are reasonably satisfactory in all
respects to you, you will, upon the filing of such amendment or
supplement with the Commission and upon the effectiveness of an
amendment to the Registration Statement if such an amendment is
required, resume your obligation to solicit offers to purchase Notes
hereunder; if such amendment or supplement, or any documents,
certificates and opinions furnished to you pursuant to Section 6 in
connection with the preparation or filing of such amendment or
supplement, are not satisfactory to you, you will as promptly as
reasonably practicable notify the Company in writing;
(d) To make generally available to its security holders, in
accordance with the provisions of Rule 158 under the Act or otherwise,
as soon as practicable, but in any event not later than forty-five days
after the end of the fourth full fiscal quarter (ninety days in the case
of the last fiscal quarter in any fiscal year) following the fiscal
quarter ending after the effective date of the Registration Statement
and of the effective date of the post-effective amendment thereto
hereinafter referred to, an earning statement of the Company and its
consolidated subsidiaries (which need not be audited) complying with
Section 11(a) of the Act and covering a period of at least twelve
consecutive months beginning (i) after the effective date of such
Registration Statement and (ii) after the date of the post-effective
amendment, if any, to such Registration Statement (within the meaning of
Rule 158);
(e) Except as may otherwise be specified in any Terms
Agreement, during the period beginning from the date of any Terms
Agreement and continuing to and including the earlier of (i) the
termination of the trading restrictions for the Notes purchased
thereunder, of which termination such Agent or Agents party to the Terms
Agreement agree to give the Company prompt notice confirmed in writing
and (ii) the Time of Delivery for such Notes, not to offer, sell,
contract to sell or otherwise dispose of any debt securities of the
Company which (i) mature nine months or more after such Time of
Delivery, (ii) mature within six months of the maturity of such Notes
and (iii) are denominated in the same currency or currency unit
specified in the Terms Agreement, without the prior written consent of
such Agent or Agents, which consent shall not be unreasonably withheld,
except pursuant to arrangements of which such Agent or Agents have been
advised by the Company prior to the time of execution of such Terms
Agreement, which advice is confirmed in writing (which may be by
telecopy or telex, receipt acknowledged) to such Agent or Agents by the
end of the business day following the date of such Terms Agreement; and
(f) That each acceptance by the Company of an offer to
purchase Notes hereunder shall be deemed to be an affirmation to such
Agent that the representations and warranties of the Company contained
in or made pursuant to this Agreement are true and correct as of the
date of such acceptance as though made at and as of such date, and an
undertaking that, if a settlement occurs with respect to such
acceptance, such representations and warranties will be true and correct
as of such settlement date as though made at and as of such date (except
that such representations and warranties shall be deemed to relate to
the Registration Statement and the Prospectus as amended and
supplemented relating to such Notes).
5. The Company covenants and agrees with each Agent that the
Company will pay or cause to be paid, whether or not any sale of Notes
is consummated, the following: (i) the fees and expenses of the
Company's counsel and accountants in connection with the registration of
the Notes under the Act and all other expenses in connection with the
preparation, printing and filing of the Registration Statement, any
Preliminary Prospectus, the Prospectus and amendments and supplements
thereto and the mailing and delivering of copies thereof to you; (ii)
the fees and expenses of counsel for the Agents incurred heretofore or
hereafter in connection with the transactions contemplated hereunder;
(iii) the cost of printing or reproducing this Agreement, any Terms
Agreement, any Indenture, any Blue Sky and Legal Investment Memoranda
and any other documents in connection with the offering, purchase, sale
and delivery of the Notes; (iv) all expenses in connection with the
qualification of the Notes for offering and sale under state securities
laws as provided in Section 4(b) hereof, including fees and
disbursements of counsel for the Agents in connection with such
qualification and in connection with the Blue Sky and legal investment
surveys; (v) any fees charged by security rating services for rating the
Notes; (vi) any filing fees incident to any required review by the
National Association of Securities Dealers, Inc. of the terms of the
sale of the Notes; (vii) the cost of preparing the Notes; (viii) the
fees and expenses of any Trustee and any transfer or paying agent of the
Company and the fees and disbursements of counsel for any Trustee or
such agent in connection with any Indenture and the Notes; (ix) on a
monthly basis all out-of-pocket expenses (including without limitation
advertising expenses) incurred by such Agent connected with the
solicitation of offers to purchase and the sale of Notes so long as such
expenses have been approved by the Company; and (x) all other costs and
expenses incident to the performance of the Company's obligations
hereunder (other than costs and expenses incurred by any Agent) which
are not otherwise specifically provided for in this Section 5.
6. The obligation of each Agent, as agent of the Company, at any
time ("Solicitation Time") to solicit offers to purchase the Notes and
the obligation of each Agent to purchase Notes as principal pursuant to
any Terms Agreement or otherwise shall in each case be subject, in such
Agent's discretion, to the condition that all representations and
warranties and other statements of the Company herein are true and
correct at and as of the Closing Date, as of the date of the
effectiveness of any amendment to the Registration Statement (including
the filing of any document incorporated by reference therein), as of the
date any supplement to the Prospectus is filed with the Commission, as
of any Time of Delivery, as of each acceptance by the Company of an
offer to purchase Notes hereunder and as of each settlement date
relating to such sale, the condition that the Company shall have
performed all of its obligations hereunder theretofore to be performed,
and the following additional conditions:
(a) No stop order suspending the effectiveness of the
Registration Statement shall have been issued and no proceeding for that
purpose shall have been initiated or threatened by the Commission; and
all requests for additional information on the part of the Commission
shall have been complied with to your reasonable satisfaction;
(b) All corporate proceedings and related matters in
connection with the organization of the Company, the validity of the
Indenture and the registration, authorization, issue, sale and delivery
of the Notes shall have been satisfactory to your counsel, and such
counsel shall have been furnished with such papers and information as
they may reasonably have requested to enable them to pass upon the
matters referred to in this Section 6(b);
(c) Counsel to the Company shall have furnished to you such
counsel's written opinion, dated the Closing Date, each Time of Delivery
and the date of effectiveness of each amendment or the filing of each
supplement to the Registration Statement or the Prospectus (including
the filing under the Act or the Exchange Act of documents incorporated
by reference in the Prospectus as amended or supplemented but excluding
amendments or supplements (i) relating to an offering of securities
other than the Notes, (ii) constituting a Pricing Supplement, (iii)
setting forth or incorporating by reference financial statements or
other information as of and for a fiscal quarter or (iv) relating solely
to the incorporation by reference of the Company's proxy statement for
its annual meeting of shareholders or of a filing by the Company of a
Current Report on Form 8-K under the Exchange Act unless in the case of
clauses (iii) or (iv) above, in such Agent's reasonable judgment, such
financial statements or other information contained in such documents
are of such a character that an opinion of counsel should be furnished),
as the case may be, in form and substance satisfactory to you in your
reasonable judgement to the effect that:
(i) The Company, Allstate Holdings, Allcorp, Allstate, SRAC,
SRFG, SCCI, SCCII, SCCA, SCCB, SDCC, Homart Holding Company of Delaware
("HHC"), and Homart Development Co. ("Homart") have been duly
incorporated and are validly existing as corporations in good standing
under the laws of their respective states of incorporation;
(ii) The Company has authorized capital stock as set forth in
the Registration Statement; all of the outstanding capital stock of
Allstate Holdings, SRAC, SRFG, SCCI, SCCII, SCCA, SCCB, SDCC, and HHC is
owned by the Company; all of the outstanding capital stock of Homart is
owned by HHC; at least 80% of the outstanding shares of common stock,
par value $.01 per share, of Allcorp is owned by Allstate Holdings and
no share of any other class of capital stock of Allcorp is outstanding;
and all of the outstanding capital stock of Allstate is owned by
Allcorp;
(iii) Each of this Agreement and any applicable Terms
Agreement has been duly authorized, executed and delivered on the part
of the Company;
(iv) The issue and sale of the Notes and the compliance by
the Company with all of the provisions of the Notes, the Indenture, this
Agreement and any applicable Terms Agreement will not (a) conflict with
or result in any breach which would constitute a material default under,
or result in the creation or imposition of any lien, charge or
encumbrance upon any of the property or assets of the Company or any
subsidiary thereof, material to the Company and its subsidiaries
(whether or not consolidated) considered as a whole, pursuant to the
terms of, any indenture, loan agreement or other agreement or instrument
for borrowed money known to such counsel to which the Company or any
Designated Subsidiary is a party or by which the Company or any
Designated Subsidiary may be bound or to which any of the property or
assets of the Company or any Designated Subsidiary, material to the
Company and its subsidiaries (whether or not consolidated) considered as
a whole, is subject, (b) result in any material violation of the
provisions of the Restated Certificate of Incorporation or the By-Laws
of the Company or (c) to the best of the knowledge of such counsel,
result in any material violation of any statute or any order, rule or
regulation applicable to the Company of any court or any Federal, State
or other regulatory authority or other governmental body having
jurisdiction over the Company, other than the Act, the Exchange Act, the
Trust Indenture Act, and the rules and regulations under each such act,
and other than the securities laws of the various states or other
jurisdictions which are applicable to the issue and sale of the Notes;
and, to the best knowledge of such counsel, no consent, approval,
authorization or other order of, or filing with, any court or any such
regulatory authority or other governmental body is required for the
issue and sale of the Notes except as may be required under the Act, the
Exchange Act, the Trust Indenture Act and securities laws of the various
states or other jurisdictions which are applicable to the issue and sale
of the Notes;
(v) The Indenture has been duly authorized, executed and
delivered on the part of the Company and, as to the Company, is a valid
and binding instrument in accordance with its terms except as the
foregoing may be limited by insolvency, bankruptcy, reorganization or
other laws relating to or affecting the enforcement of creditors' rights
or by general equity principles, and has been qualified under the Trust
Indenture Act; the Notes have been duly authorized and (assuming due
authentication by the Trustee) when duly executed, issued and delivered
pursuant to the Indenture and any Terms Agreement, will constitute valid
and binding obligations of the Company in accordance with their terms,
entitled to the benefits of the Indenture, except as the foregoing may
be limited by insolvency, bankruptcy, reorganization or other laws
relating to or affecting the enforcement of creditors' rights or by
general equity principles;
(vi) Such counsel does not know of any pending legal or
governmental proceedings required to be described in the Prospectus as
amended or supplemented which are not described as required;
(vii) The documents incorporated by reference in the
Prospectus as amended or supplemented (other than the financial
statements and related schedules, the analyses of operations and
financial condition and other financial, statistical and accounting data
therein, as to which such counsel need express no opinion), when they
became effective or were filed with the Commission, as the case may be,
complied as to form in all material respects with the requirements of
the Act or the Exchange Act, as applicable, and the rules and
regulations of the Commission thereunder;
(viii) The Registration Statement and the Prospectus as
amended or supplemented (excluding the documents incorporated by
reference therein) (other than the financial statements and related
schedules, the analyses of operations and financial condition and other
financial, statistical and accounting data therein, as to which such
counsel need express no opinion) comply as to form in all material
respects with the requirements of the Act and the rules and regulations
thereunder; the answers in the Registration Statement to Items 9 and 10
(insofar as it relates to such counsel) of Form S-3 are to the best of
such counsel's knowledge accurate statements or summaries of the matters
therein set forth and fairly present the information called for with
respect to those matters by the Act and the rules and regulations
thereunder; and
(ix) Such counsel does not know of any contract or other
document to which the Company or any subsidiary thereof is a party
required to be filed as an exhibit to the Registration Statement or
required to be incorporated by reference into the Prospectus as amended
or supplemented or required to be described in the Prospectus as amended
or supplemented which has not been so filed, incorporated by reference
or described.
In rendering such opinion, such counsel may rely to the extent such
counsel deems appropriate upon certificates of officers or other
executives of the Company, its business groups and its subsidiaries and
of public officials as to factual matters and upon opinions of other
counsel. In rendering the opinion referred to in subdivision (v) above,
such counsel need not express an opinion as to whether, with respect to
any Notes denominated in a currency other than United States dollars, a
court located in the United States of America would grant a judgment
relating to the Notes in other than United States dollars, nor an
opinion as to the date which any such court would utilize for
determining the rate of conversion into United States dollars in
granting such judgment. Such counsel shall also state that: (a) nothing
has come to such counsel's attention which has caused such counsel to
believe that any of the documents referred to in subdivision (vii) above
(other than the financial statements, the analyses of operations and
financial condition and other financial, statistical and accounting data
therein, as to which such counsel need express no belief), in each case
after excluding any statement in any such document which does not
constitute part of the Registration Statement or the Prospectus as
amended or supplemented pursuant to Rule 412 of Regulation C under the
Act and after substituting therefor any statement modifying or
superseding such excluded statement, when such documents became
effective or were filed, as the case may be, contained, in the case of
documents which became effective under the Act, an untrue statement of a
material fact or omitted to state a material fact required to be stated
therein or necessary to make the statements therein not misleading, and,
in the case of documents which were filed under the Exchange Act with
the Commission, an untrue statement of a material fact or omitted to
state a material fact necessary in order to make the statements therein,
in the light of the circumstances under which they were made, not
misleading, and (b) nothing has come to such counsel's attention which
has caused such counsel to believe that the Registration Statement or
Prospectus as amended or supplemented (other than the financial
statements, the analyses of operations and financial condition and other
financial, statistical and accounting data therein, as to which such
counsel need express no belief) contains an untrue statement of a
material fact or omits to state a material fact required to be stated
therein or necessary to make the statements therein not misleading;
(d) At 10:00 a.m., Chicago time, on the Closing Date, each
Time of Delivery and the date of effectiveness of each amendment or the
filing of each supplement to the Registration Statement or the
Prospectus setting forth or incorporating by reference amended or
supplemental financial information, as the case may be, the independent
certified public accountants who have certified the financial statements
of the Company and its subsidiaries included or incorporated by
reference in the Registration Statement shall have furnished to you a
letter, dated the Closing Date or such applicable date, as the case may
be, in form and substance satisfactory to you, to the effect set forth
in Annex III hereto (modified in the case of amended or supplemented
financial information to reflect such amended and supplemental financial
information included or incorporated by reference in the Registration
Statement and the Prospectus as amended or supplemented to the date of
such letter, provided that if the Registration Statement or the
Prospectus is amended or supplemented solely to include or incorporate
by reference unaudited quarterly financial information, the scope of
such letter, which shall be satisfactory in form and substance to such
Agent, may be limited to relate to such unaudited financial information
unless any other accounting, financial or statistical information
included or incorporated by reference therein is of a character that, in
the reasonable judgment of such Agent, such letter should address such
other information);
(e) (i) The Company and its subsidiaries (whether or not
consolidated) considered as a whole shall not have sustained, after the
date of the latest audited financial statements included or incorporated
by reference in the Prospectus and (A) prior to the Closing Date, any
material loss or interference with its business from fire, explosion,
flood or other calamity, whether or not covered by insurance, or from
any labor dispute or court or governmental action, order or decree,
otherwise than as contemplated in the Prospectus as amended or
supplemented through the date of this Agreement and (B) prior to each
Time of Delivery, any such loss or interference, otherwise than as set
forth or contemplated in the Prospectus as amended or supplemented
through the date that the Agent agreed to purchase such Notes as
principal; and (ii) since the respective dates as of which information
is given in the Prospectus as amended or supplemented and (A) prior to
the Closing Date, there shall not have been any material change in the
capital stock accounts or long-term debt of the Company or any material
adverse change in the general affairs, financial position, shareholders'
equity or results of operations of the Company and its subsidiaries
(whether or not consolidated) considered as a whole, otherwise than as
set forth or contemplated in the Prospectus as amended or supplemented
through the date of this Agreement and (B) prior to each Time of
Delivery, there shall not have been any such change, otherwise than as
set forth or contemplated in the Prospectus as amended or supplemented
through the date that the Agent agreed to purchase such Notes as
principal, the effect of which, in any such case described in clause (i)
or (ii), in the judgment of such Agent makes it impracticable or
inadvisable to proceed with the solicitation by such Agent of offers to
purchase Notes from the Company or the purchase by such Agent of Notes
from the Company as principal, as the case may be;
(f) During the period in which you are soliciting offers to
purchase Notes, including the period between the date that any Agent
agrees to purchase Notes as principal and the related Time of Delivery,
no downgrading shall have occurred in the rating accorded the Company's
debt securities by Moody's Investors Service, Inc., Standard & Poor's
Corporation or Duff & Phelps, Inc.; provided, however, that this Section
6(f) shall not apply to any such rating agencies which shall have
notified the Company of the downgrading in the rating of such debt
securities and of which the Company shall have given you written notice
prior to the execution of the Terms Agreement;
(g) During the period in which you are soliciting offers to
purchase Notes, including the period between the date that any Agent
agrees to purchase Notes as principal and the related Time of Delivery,
neither (i) the United States shall have become engaged in the outbreak
or escalation of hostilities involving the United States or there has
been a declaration by the United States of a national emergency or a
declaration of war, (ii) a banking moratorium shall have been declared
by either Federal or New York State authorities or, in the case of Notes
denominated in other than United States dollars, by the authorities of
the country of the currency in which such Notes are denominated, (iii)
trading in securities generally on the New York Stock Exchange shall
have been suspended nor limited or minimum prices shall have been
established by such Exchange, nor (iv) in the case of Notes denominated
in other than United States dollars, any change involving such currency
exchange rates, exchange controls, taxation or similar matters, any of
which events, in your judgment, renders it inadvisable to proceed with
the solicitation by you of offers to purchase Notes from the Company or
the purchase by you of Notes from the Company as principal, as the case
may be; and
(h) The Company shall have furnished or caused to be
furnished to you at the Closing Date, each Time of Delivery and the date
of effectiveness of each amendment or the filing of each supplement to
the Registration Statement or the Prospectus (including the filing under
the Act or the Exchange Act of documents which are incorporated by
reference in the Prospectus as amended or supplemented but excluding
amendments or supplements (i) relating to an offering of securities
other than the Notes, (ii) constituting a Pricing Supplement, or (iii)
relating solely to the incorporation by reference of the Company's proxy
statement for its annual meeting of shareholders or of a filing by the
Company of a Current Report on Form 8-K under the Exchange Act, unless
in the case of clause (iii) above, in such Agent's reasonable judgment,
the information contained in such documents are of such a character that
certificates of officers referred to below should be furnished), as the
case may be, certificates of officers of the Company satisfactory to
you, as to the accuracy at and as of the Closing Date or such applicable
date, as the case may be, of the representations, warranties and
agreements of the Company herein and as to the performance by the
Company of all its obligations hereunder to be performed at or prior to
the Closing Date or such applicable date, as the case may be, and the
Company shall have also furnished you similar certificates satisfactory
to you as to the matters set forth in subdivision (a) of this Section 6.
7. (a) The Company will indemnify and hold harmless each Agent
against any losses, claims, damages or liabilities, joint or several, to
which such Agent may become subject, under the Act or otherwise, insofar
as such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in any Preliminary
Prospectus, the Registration Statement, the Prospectus or the Prospectus
as amended or supplemented, or any amendment or supplement thereto
furnished by the Company, or arise out of or are based upon the omission
or alleged omission to state therein a material fact required to be
stated therein or (in the case of the Registration Statement or the
Prospectus as amended or supplemented or any amendment or supplement
thereto) necessary to make the statements therein not misleading or (in
the case of any Preliminary Prospectus) necessary to make the statements
therein, in the light of the circumstances under which they were made,
not misleading; and will reimburse each Agent for any legal or other
expenses reasonably incurred by such Agent in connection with
investigating or defending any such action or claim; provided, however,
that the Company shall not be liable in any such case to the extent that
any such loss, claim, damage or liability arises out of or is based upon
an untrue statement or alleged untrue statement or omission or alleged
omission made in any Preliminary Prospectus, or the Registration
Statement, the Prospectus or the Prospectus as amended or supplemented
or any such amendment or supplement in reliance upon and in conformity
with written information furnished to the Company by you expressly for
use therein; and provided, further, that the Company shall not be liable
to any Agent or any person controlling such Agent under the indemnity
agreement in this subdivision (a) with respect to the Preliminary
Prospectus or the Prospectus or the Prospectus as amended or
supplemented or any amendment or supplement thereto, as the case may be,
to the extent that any such loss, claim, damage or liability of such
Agent or controlling person results solely from the fact that such Agent
sold Notes to a person to whom there was not sent or given, at or prior
to the written confirmation of such sale, a copy of the Prospectus
(excluding documents incorporated by reference) or of the Prospectus as
then amended or supplemented (excluding documents incorporated by
reference), whichever is most recent, if the Company has previously
furnished copies thereof to such Agent.
(b) Each Agent will indemnify and hold harmless the Company
against any losses, claims, damages or liabilities to which the Company
may become subject, under the Act or otherwise, insofar as such losses,
claims, damages or liabilities (or actions in respect thereof) arise out
of or are based upon any untrue statement or alleged untrue statement of
any material fact contained in any Preliminary Prospectus, the
Registration Statement, the Prospectus, or the Prospectus as amended or
supplemented, or any amendment or supplement thereto, or arise out of or
are based upon the omission or the alleged omission to state therein a
material fact required to be stated therein or (in the case of the
Registration Statement or the Prospectus or the Prospectus as amended or
supplemented or any amendment or supplement thereto) necessary to make
the statements therein not misleading or (in the case of any Preliminary
Prospectus) necessary to make the statements therein, in the light of
the circumstances under which they were made, not misleading, in each
case to the extent, but only to the extent, that such untrue statement
or alleged untrue statement or omission or alleged omission was made in
any Preliminary Prospectus or the Registration Statement or the
Prospectus or the Prospectus as amended or supplemented or such
amendment or supplement in reliance upon and in conformity with written
information furnished to the Company by such Agent expressly for use
therein; and will reimburse the Company for any legal or other expenses
reasonably incurred by the Company in connection with investigating or
defending any such action or claim.
(c) Within a reasonable period after receipt by an
indemnified party under subdivision (a) or (b) above of notice of the
commencement of any action with respect to which indemnification is
sought under such subdivision or contribution may be sought under
subdivision (d) below, such indemnified party shall notify the
indemnifying party in writing of the commencement thereof. In case any
such action shall be brought against any indemnified party, the
indemnifying party shall be entitled to participate in, and, to the
extent that it shall wish, jointly with any other indemnifying party
similarly notified, to assume the defense thereof, with counsel
satisfactory to such indemnified party, and after notice from the
indemnifying party to such indemnified party of its election so to
assume the defense thereof, the indemnifying party shall not be liable
to such indemnified party for any legal or other expenses subsequently
incurred by such indemnified party in connection with the defense
thereof other than reasonable costs of investigation.
(d) If the indemnification provided for in this Section 7 is
unavailable to an indemnified party under subdivision (a) or (b) above
in respect of any losses, claims, damages or liabilities (or actions in
respect thereof) referred to therein, then each indemnifying party shall
contribute to the amount paid or payable by such indemnified party as a
result of such losses, claims, damages or liabilities (or actions in
respect thereof) in such proportion as is appropriate to reflect the
relative benefits received by the Company on the one hand and the
contributing Agent on the other from the offering of the Notes and also
the relative fault of the Company on the one hand and the contributing
Agent on the other in connection with the statements or omissions which
resulted in such losses, claims, damages or liabilities (or actions in
respect thereof), as well as any other relevant equitable
considerations. The relative benefits received by the Company on the
one hand and the contributing Agent on the other shall be deemed to be
in the same proportion as the total net proceeds from the sale of Notes
(before deducting expenses) received by the Company bear to the total
commissions or discounts received by the contributing Agent. The
relative fault shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to
information supplied by the Company on the one hand or the contributing
Agent on the other and the parties' relative intent, knowledge, access
to information and opportunity to correct or prevent such statement or
omission of the Company on the one hand and the contributing Agent on
the other hand. With respect to any Agent, such relative fault shall
also be determined by reference to the extent (if any) to which such
losses, claims, damages or liabilities (or actions in respect thereof)
with respect to any Preliminary Prospectus result from the fact that
such Agent sold Notes to a person to whom there was not sent or given,
at or prior to the written confirmation of such sale, a copy of the
Prospectus (excluding documents incorporated by reference) or of the
Prospectus as then amended or supplemented (excluding documents
incorporated by reference) if the Company has previously furnished
copies thereof to such Agent. The Company and the contributing Agent
agree that it would not be just and equitable if contribution pursuant
to this subdivision (d) were determined by per capita allocation (even
if all Agents were treated as one entity for such purpose) or by any
other method of allocation which does not take account of the equitable
considerations referred to above in this subdivision (d). The amount
paid or payable by an indemnified party as a result of the losses,
claims, damages or liabilities (or actions in respect thereof) referred
to above in this subdivision (d) shall be deemed to include any legal or
other expenses reasonably incurred by such indemnified party in
connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this subdivision (d), no Agent shall
be required to contribute any amount in excess of the amount by which
the total price at which the Notes purchased by or through such Agent
were sold exceeds the amount of any damages which such Agent has
otherwise been required to pay by reason of such untrue or alleged
untrue statement or omission or alleged omission. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. The obligations of each of
the Agents under this subdivision (d) to contribute are several in
proportion to the respective purchases made by or through it to which
such loss, claim, damage or liability (or action in respect thereof)
relates and are not joint.
(e) The obligations of the Company under this Section 7
shall be in addition to any liability which the Company may otherwise
have and shall extend, upon the same terms and conditions, to each
person, if any, who controls any Agent within the meaning of the Act;
and each Agent's obligations under this Section 7 shall be in addition
to any liability which such Agent may otherwise have and shall extend,
upon the same terms and conditions, to each officer and director of the
Company and to each person, if any, who controls the Company within the
meaning of the Act.
8. In soliciting offers to purchase Notes from the Company and in
performing the other obligations of such Agent hereunder (other than in
respect of any purchase by an Agent as principal, pursuant to a Terms
Agreement or otherwise), each Agent is acting solely as agent for the
Company and not as principal. Each Agent will make reasonable efforts
to assist the Company in obtaining performance by each purchaser whose
offer to purchase Notes from the Company was solicited by such Agent and
has been accepted by the Company, but such Agent shall not have any
liability to the Company in the event such purchase is not consummated
for any reason. If the Company shall default on its obligation to
deliver Notes to a purchaser whose offer it has accepted, the Company
shall hold each Agent harmless against any loss, claim or damage arising
from or as a result of such default by the Company.
9. The respective indemnities, agreements, representations,
warranties and other statements by any Agent and the Company set forth
in or made pursuant to this Agreement shall remain in full force and
effect regardless of any investigation (or any statement as to the
results thereof) made by or on behalf of any Agent, the Company, or any
officer or director or any controlling person of the Company or any
Agent, and shall survive each delivery of and payment for any of the
Notes.
10. The provisions of this Agreement relating to the
solicitation of offers to purchase Notes from the Company may be
suspended or this Agreement may be terminated at any time by the Company
as to any or all Agents or by any Agent insofar as this Agreement
relates to such Agent upon the giving of written notice of such
suspension or termination to such Agent or the Company, as the case may
be. Unless otherwise agreed by the respective parties, any such
suspension or termination shall be effective immediately with respect to
the party giving such notice and, in the case of the party receiving
such notice, at the close of business on the first business day
following the receipt of such notice. In the event of such suspension
or termination with respect to any Agent, (x) this Agreement shall
remain in full force and effect with respect to any Agent as to which
such suspension or termination has not occurred, and (y) the Company
shall not have any liability to such Agent and such Agent shall not have
any liability to the Company, except as provided in any Terms Agreements
and in the fifth paragraph of Section 2(a), Section 5, Section 7,
Section 8 and Section 9.
11. Except as otherwise specifically provided herein or in
the Procedure, all statements, requests, notices and advices hereunder
shall be in writing, or by telephone if promptly confirmed in writing,
and if to Dean Witter Reynolds Inc. shall be sufficient in all respects
when delivered or sent by facsimile transmission or registered mail to
Two World Trade Center, New York, New York 10048, Facsimile Transmission
No. (212) 912-1232, Attention: Debt Syndicate Department, and if to
Goldman, Sachs & Co. shall be sufficient in all respects when delivered
or sent by facsimile transmission or registered mail to 85 Broad Street,
New York, New York 10004, Facsimile Transmission No. (212) 902-4103,
Attention: Registration Department, and if to Merrill Lynch & Co. or
Merrill Lynch, Pierce, Fenner & Smith Incorporated shall be sufficient
in all respects when delivered or sent by facsimile transmission or
registered mail to 250 Vesey Street, 23rd Floor, World Financial Center,
North Tower, New York, New York 10281, Facsimile Transmission No. (212)
449-2234, Attention: MTN Product Management, and if to Morgan Stanley &
Co. Incorporated shall be sufficient in all respects when delivered or
sent by facsimile transmission or registered mail to 1221 Avenue of the
Americas, New York, New York 10020, Facsimile Transmission No. (212)
764-7490, Attention: Managing Director, Short- and Medium-Term Finance
Department, with a copy to 1251 Avenue of the Americas, New York, New
York 10020, Facsimile Transmission No. (212) 703-4575, Attention:
Manager, Credit Department, and if to Salomon Brothers Inc shall be
sufficient in all respects when delivered or sent by facsimile
transmission or registered mail to Seven World Trade Center, 31st Floor,
New York, New York 10048, Facsimile Transmission No. (212) 783-3350,
Attention: Medium-Term Note Department, and if to the Company shall be
sufficient in all respects when delivered or sent by facsimile
transmission or registered mail to the Company at Sears Tower, Chicago,
Illinois 60684, Attention: Senior Vice President, General Counsel and
Secretary, Facsimile Transmission No. (312) 875-3690. Upon request of
any party hereto, any statements, requests, notices and advices
transmitted by facsimile shall be promptly followed by delivery of
executed documents by registered mail.
12. This Agreement and any Terms Agreement shall be binding
upon, and inure solely to the benefit of, each Agent and the Company,
and to the extent provided in Section 7, Section 8 and Section 9 hereof,
the officers and directors of the Company and any person who controls
any Agent or the Company, and their respective heirs, executors,
administrators, successors and assigns, and no other person shall
acquire or have any right under or by virtue of this Agreement or any
Terms Agreement. No purchaser of any of the Notes through or from any
Agent hereunder shall be deemed a successor or assign by reason merely
of such purchase.
13. Time shall be of the essence in this Agreement and any
Terms Agreement. As used herein, the term "business day" shall mean any
day when the office of the Commission in Washington, D.C. is normally
open for business.
14. This Agreement and any Terms Agreement shall be
governed by, and construed in accordance with, the laws of the State of
New York.
15. This Agreement and any Terms Agreement may be executed
by any one or more of the parties hereto and thereto in any number of
counterparts, each of which shall be an original, but all of such
respective counterparts shall together constitute one and the same
instrument.
If the foregoing is in accordance with your understanding, please
sign and return to us three counterparts hereof, whereupon this letter
and the acceptance by each of you thereof shall constitute a binding
agreement between the Company and each of you in accordance with its
terms.
Very truly yours,
SEARS, ROEBUCK AND CO.
By:/S/ Alice M. Peterson
Vice President and Treasurer
Accepted in New York, New York, as of the date hereof:
DEAN WITTER REYNOLDS INC.
By:/S/Russell K. Mayerfeld
Managing Director
/S/Goldman, Sachs & Co.
(Goldman, Sachs & Co.)
MERRILL LYNCH, PIERCE,
FENNER & SMITH INCORPORATED
By:/S/Scott G. Primrose
Authorized Signatory
MORGAN STANLEY & CO. INCORPORATED
By:/S/ Harold J. Hendershot III
Principal
SALOMON BROTHERS INC
By:/S/Ann Clarke Wolff
Vice President
ANNEX I
Sears, Roebuck and Co.
$ Medium Term Notes Series VIII
TERMS AGREEMENT
[DEAN WITTER REYNOLDS INC.
Two World Trade Center
New York, New York 10048]
[GOLDMAN, SACHS & CO.
85 Broad Street
New York, New York 10004]
[MERRILL LYNCH & CO.,
MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED
250 Vesey Street
World Financial Center
North Tower
New York, NY 10281]
[MORGAN STANLEY & CO. INCORPORATED
1221 Avenue of the Americas
New York, New York 10020]
[SALOMON BROTHERS INC
Seven World Trade Center
New York, NY 10048]
Dear Sirs:
,199
Sears, Roebuck and Co. (the "Company") proposes, subject to the terms
and conditions stated herein and in the Distribution Agreement, dated
, 1995 (the "Distribution Agreement"), between the Company on
the one hand and Dean Witter Reynolds Inc., Goldman, Sachs & Co.,
Merrill Lynch, Pierce, Fenner & Smith Incorporated, Morgan Stanley & Co.
Incorporated and Salomon Brothers Inc on the other, to issue and sell to
you the securities specified in the Schedule hereto (the
"Purchased Notes"). Each of the provisions of the Distribution
Agreement not specifically related to the solicitation by such firms, as
agents of the Company, of offers to purchase Notes is incorporated
herein by reference in its entirety, and shall be deemed to be part of
this Agreement to the same extent as if such provisions had been set
forth in full herein, provided that for purposes of this Agreement all
references in the Distribution Agreement to "you" or "Agents" shall be
deemed to refer to you alone. Nothing contained herein or in the
Distribution Agreement shall make any party hereto an agent of the
Company or make such party subject to the provisions in the Distribution
Agreement relating to the solicitation of offers to purchase securities
from the Company, solely by virtue of its execution of this Terms
Agreement. Each of the representations and warranties set forth therein
shall be deemed to have been made at and as of the date of this Terms
Agreement, except that each representation and warranty in Section 1 of
the Distribution Agreement which makes reference to the Prospectus shall
be deemed to be a representation and warranty as of the date of the
Distribution Agreement in relation to the Prospectus (as therein
defined), and also a representation and warranty as of the date of this
Terms Agreement in relation to the Prospectus as amended and
supplemented to relate to the Purchased Notes. Unless otherwise defined
herein, terms defined in the Distribution Agreement are used herein as
therein defined.
An amendment to the Registration Statement, or a supplement to the
Prospectus, as the case may be, relating to the Purchased Notes, in the
form heretofore delivered to you is now proposed to be filed with, or in
the case of a supplement, mailed for filing to, the Commission.
Subject to the terms and conditions set forth herein and in the
Distribution Agreement incorporated herein by reference, the Company
agrees to issue and sell to you and you agree to purchase from the
Company the Purchased Notes, at the time and place, in the principal
amount and at the purchase price set forth in the Schedule hereto.
If the foregoing is in accordance with your understanding, please
sign and return to us counterparts hereof, and upon acceptance
hereof by you this letter and such acceptance hereof, including those
provisions of the Distribution Agreement incorporated herein by
reference, shall constitute a binding agreement between you and the
Company.
SEARS, ROEBUCK AND CO.
By:
Accepted:
[DEAN WITTER REYNOLDS INC.
By: ]
Managing Director
[ ]
(Goldman, Sachs & Co.)
[MERRILL LYNCH, PIERCE,
FENNER & SMITH INCORPORATED
By: ]
Managing Director
[MORGAN STANLEY & CO. INCORPORATED
By: ]
Principal
[SALOMON BROTHERS INC
By: ]
Vice President
SCHEDULE TO ANNEX I
Title of Purchased Notes:
[Medium-Term Notes]
[ % Notes due ]
Aggregate Principal Amount:
[$ or units of other Specified Currency]
[Currency Swap or Forward Arrangements:]
[Price to Public:]
Purchase Price by :
% of the principal amount of the Purchased Notes [, plus accrued
interest from to ] [and accrued amortization, from
to ]
Specified Funds for Payment of Purchase Price:
same day funds
Indenture:
Indenture, dated as of September 15, 1991, as supplemented to the date
hereof, between the Company and Chemical Bank (successor by merger to
Manufacturers Hanover Trust Company), as Trustee
Form of Purchased Notes:
[Certificated form only] [Global form only]
Time of Delivery:
Closing Location:
Maturity:
Interest Rate:
[ %] [Specify floating rate provisions, if any]
Interest Payment Dates:
[months and dates]
Documents to be Delivered:
The following documents referred to in the Distribution Agreement shall
be delivered as a condition to the Closing:
[(1) The opinion referred to in Section 6(c).]
[(2) The accountants' letter referred to in Section 6(d).]
[(3) The officers' certificate referred to in Section 6(h).]
Lock-Out Provisions:
[Describe modifications, if any, to the lock-out provisions set forth in
Section 4(e) of the Distribution Agreement.]
Syndicate Provisions:
[Set forth any provisions relating to underwriters' default and step-up
of amounts to be purchased by underwriters acting with
]
ANNEX II
Sears, Roebuck and Co.
ADMINISTRATIVE PROCEDURE
Medium-term notes (the "Notes") in the aggregate principal amount of
up to $800,000,000 are to be offered from time to time by Sears, Roebuck
and Co. (the "Company") through Dean Witter Reynolds Inc., Goldman,
Sachs & Co., Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith
Incorporated, Morgan Stanley & Co. Incorporated, and Salomon Brothers
Inc as agents of the Company (together, in such capacity, the "Agents").
Each Agent has agreed to use its reasonable efforts to solicit offers to
purchase Notes directly from the Company (an Agent, in relation to a
purchase of a particular Note by a purchaser solicited by such Agent,
being herein referred to as the "Selling Agent") and may also purchase
Notes from the Company as principal (an Agent, in relation to a purchase
of a Note by such Agent as principal other than pursuant to a Terms
Agreement being herein referred to as the "Purchasing Agent"). The
Notes are being sold pursuant to a Distribution Agreement, dated April
25, 1995 (the "Distribution Agreement"), between the Company and the
Agents, to which this Administrative Procedure is attached as Annex II.
The Notes will be issued pursuant to an Indenture, dated as of
September 15, 1991 (the "Indenture"), between the Company and Chemical
Bank (successor by merger to Manufacturers Hanover Trust Company), as
Trustee (the "Trustee").
Unless otherwise defined herein, terms defined in the Indenture or
the Notes shall be used herein as therein defined.
In the case of purchases of Notes by Dean Witter Reynolds Inc.,
Goldman, Sachs & Co., Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner
& Smith Incorporated, Morgan Stanley & Co. Incorporated or Salomon
Brothers Inc, as principal, the relevant terms and settlement details
related thereto, including the Time of Delivery referred to in the first
paragraph of Section 6, will (unless the Company and such Agent
otherwise agree) be set forth in a Terms Agreement entered into between
Dean Witter Reynolds Inc., Goldman, Sachs & Co., Merrill Lynch, Pierce,
Fenner & Smith Incorporated, Morgan Stanley & Co. Incorporated or
Salomon Brothers Inc and the Company pursuant to the Distribution
Agreement.
The procedures to be followed during, and the specific terms of, the
solicitation of offers by the Agents and the sale as a result thereof by
the Company are explained below. The procedures are subject, and are
qualified in their entirety by reference, to all of the respective
provisions of the Distribution Agreement and the Indenture.
Administrative and record-keeping responsibilities will be handled
for the Company by its Corporate Treasurer's Office (Department 969).
The Company will advise each Agent in writing of those persons handling
administrative responsibilities ("Designated Persons") with whom such
Agent is to communicate regarding offers to purchase Notes and the
details of their delivery.
I. General Procedures
Registration: Notes will be issued only in fully registered form
and will be either (a) Book-Entry Notes represented by one or more
global notes (each a "Global Note") held by the Trustee, as agent for
The Depository Trust Company ("DTC") and recorded in the book-entry
system maintained by DTC or (b) Certificated Notes delivered in
certificated form to the Selling Agent or Purchasing Agent. All Notes
will be issued as Book-Entry Notes except as otherwise approved in
advance by the Company and except that non-U.S. dollar denominated Notes
will be issued as Certificated Notes only unless otherwise specified in
a Prospectus Supplement or Pricing Supplement.
Maturities: Each Note will mature on a date, selected by the
purchaser and agreed to by the Company, which will be at least nine
months but not more than thirty years from the date of original issuance
by the Company of such Note (the "Settlement Date").
Price to Public: Each Note will be issued at the percentage of
principal amount specified in the Prospectus (as defined in Section 1(a)
of the Distribution Agreement) relating to the Notes.
Currencies: Notes will be denominated in U.S. dollars or in
such other currency or
currency unit as is specified in the Prospectus (the "Specified
Currency").
Denominations: The denomination of any Book-Entry, Global or
Certificated Note will be a minimum of U.S. $100,000 or any amount in
excess thereof in integral multiples of $1,000 or the equivalent, as
determined pursuant to the provisions of the Indenture, of U.S. $100,000
(rounded down to an integral multiple of 10,000 units of such Specified
Currency) and any amounts in excess thereof.
Interest Payments: As specified in the Indenture and the Form of
Note.
Acceptance of
Offers: Each Agent will promptly advise the Company by
telephone or other appropriate means of offers to purchase Notes
received by it other than those rejected by such Agent. Each Agent may,
in its discretion reasonably exercised, reject any offer received by it.
Each Agent also may make offers to the Company to purchase Notes as a
Purchasing Agent in accordance with Section 2(b) of the Distribution
Agreement. The Company will have the sole right to accept offers to
purchase Notes and may reject any such offer.
If the Company accepts an offer to purchase Notes,
it will confirm such
acceptance in writing to the Selling Agent or Purchasing Agent, as the
case may be. If the Company rejects an offer, it will promptly notify
the Agent involved.
Filing and Delivery
of Prospectus: If the Company accepts an offer to purchase a
Note, the Company will prepare a Pricing Supplement reflecting the terms
of such Note and will arrange to have such Pricing Supplement filed with
the Securities and Exchange Commission (the "Commission") as soon as
practicable after the preparation thereof and will supply at least one
such Pricing Supplement to the Selling Agent or the Purchasing Agent, as
the case may be, not later than 5:00 p.m., New York City time, on the
Business Day following the date of acceptance of such offer.
With respect to each Note sold pursuant to the
Distribution Agreement, the Selling Agent shall send a copy of the
Prospectus as most recently amended or supplemented (together with the
Pricing Supplement relating to such Note) to the purchaser or its agent
prior to or together with the delivery of (a) the written confirmation
of sale (including, in the case of a book-entry security, the
confirmation through DTC's Institutional Delivery System) or (b) the
delivery of such Note, whichever is earlier.
Confirmation: For each offer accepted by the Company, the
Selling Agent will issue a written confirmation to each purchaser
containing the Sale Information (as defined below), plus delivery and
payment instructions.
Currency Swaps: Unless otherwise requested by the Company, each
time an Agent advises the Company of an offer to purchase Notes
denominated in a currency or currency unit other than U.S. dollars, such
Agent will provide the Company information with respect to currency swap
or forward arrangements that, as of the time the offer is communicated
to the Company, such Agent is prepared to enter into or arrange with a
third party to enter into in order to exchange amounts to be received
from the purchaser of such Note at the Settlement Date and to exchange
amounts to be paid by the Company on the interest payment dates and at
maturity.
Settlement--
Sales as Principal: In the event of a purchase of Notes by an
Agent or Agents, as principal or underwriter (other than as Purchasing
Agent), appropriate settlement details will be set forth in the
applicable Terms Agreement to be entered into between such Agent or
Agents and the Company pursuant to the Distribution Agreement.
Settlement--
Sales as Agent: All offers solicited by the Agents and accepted
by the Company will be settled on the fifth Business Day (as defined
below) after the date of acceptance unless otherwise agreed by the
purchaser and the Company and the Settlement Date shall be specified
upon acceptance of such offer. The term "Business Day" means a Monday,
Tuesday, Wednesday, Thursday or Friday on which commercial banks in New
York City and, (i) if the Note is denominated in a currency other than
U.S. dollars, in the capital of the country of the Specified Currency,
or (ii) if the Note is denominated in European Currency Units, in
Brussels, are not required or authorized to be closed.
Communication of Sale
Information to the
Company by Selling
Agent: For each offer accepted by the Company, the
Selling Agent or Purchasing Agent, as the case may be, will provide
(unless provided by the purchaser directly to the Company) to a
Designated Person by facsimile transmission or other acceptable means
the following information (the "Sale Information"):
(1) If a Certificated Note, exact name of the
registered owner,
(2) If a Certificated Note, exact address of the
registered owner,
(3) If a Certificated Note, taxpayer
identification number of the registered owner (if available),
(4) If a Book-Entry Note, the DTC Participant
Number of the institution through which the customer will hold the
beneficial interest in the Global Note,
(5) Principal amount of the Note,
(6) Date of Note,
(7) If a Fixed Rate Note, the interest rate,
(8) Settlement Date,
(9) Maturity date,
(10) Currency or currency unit in which the Note
is to be denominated and, if other than U.S. dollars, the applicable
Exchange Rate for such currency or currency unit,
(11) Indexed Currency, the Base Rate and the
Exchange Rate Determination Date, if applicable,
(12) Issue Price,
(13) Selling Agent's commission or Purchasing
Agent's discount, as the case may be (to be paid upon settlement as a
discount from gross proceeds of sale except as provided below under
"Delivery of Notes and Cash Payment"),
(14) Net proceeds to the Company,
(15) If a redeemable Note with a Redemption
Commencement Date, such of the following as are applicable:
(i) Redemption Commencement Date,
(ii) Initial Redemption Price (% of par), and
(iii) Amount (% of par) that the Redemption Price shall decline (but not
below par) on each anniversary of the Redemption Commencement Date,
(16) If a redeemable Note with a Redemption Date
or Redemption Dates, such of the following as are applicable:
(i) the Redemption Date or Redemption Dates,
(ii) whether the Note is redeemable at the option of the Company or the
Holder or both,
(iii) the Redemption Price (% of par) on each Redemption Date,
(iv) the notice period during which the option to redeem may be
exercised, and
(v) the method by which notice of redemption is to be given,
(17) If a Floating Rate Note, such of the
following as are applicable:
(i) Interest Rate Basis,
(ii) Index Maturity,
(iii) Spread,
(iv) Spread Multiplier,
(v) Maximum Rate,
(vi) Minimum Rate,
(vii) Initial Interest Determination Date,
(viii) Interest Reset Dates,
(ix) Calculation Dates,
(x) Interest Determination Dates, and
(xi) Calculation Agent,
(18) Interest Payment Dates,
(19) Regular Record Dates,
(20) Denomination of certificates to be delivered
at settlement,
(21) That the Note is a Certificated Note (if
applicable),
(22) To the extent known to the Agent, any
information not otherwise expressly set forth in the Prospectus
Supplement which is required pursuant to Items 501(c)(7) or 508 of
Regulation S-K promulgated by the Commission, in writing expressly for
use in the applicable Pricing Supplement, including without limitation
the initial public offering price of the Notes, if other than 100% of
the principal amount, and
(23) If an Agent purchases Notes as a principal,
the extent, if any, to which the items specified in Sections 6(c), 6(d)
and 6(h) of the Distribution Agreement are required to be furnished as
of the Time of Delivery.
In addition, the Selling Agent will use its reasonable efforts to
provide in writing the following information to the Company and the
Trustee:
(24) One of the following:
a. In the case of a foreign registered owner (other than a Financial
Institution (as defined below)), an IRS Form W-8 that has been duly and
properly signed by the registered owner.
b. In the case of a registered owner which is a Financial Institution, a
statement from the Financial Institution signed under penalties of
perjury stating that the Financial Institution has received from the
beneficial owner an IRS Form W-8 that has been duly and properly signed
by the registered owner together with a copy of such Form W-8.
c. In the case of a registered owner who is a United States person, an
IRS Form W-9 that has been duly and properly signed by the registered
owner.
A "Financial Institution" is a securities clearing organization, a bank,
or another financial institution that holds customers' securities in the
ordinary course of its trade or business which holds a Note for a
beneficial owner who is a foreign person.
After receiving the Sale Information the Company
will, after recording the Sale Information and any necessary
calculations, provide appropriate documentation to the Trustee necessary
for the preparation, authentication and delivery of such Note.
Change in Interest
Rate, Maturity or
Currency Denomination: The Company and the Agents will discuss from
time to time the rates of interest per annum to be borne by, and the
maturity and currency denomination of, Notes that may be sold as a
result of the solicitation of offers by the Agents.
Suspension of
Solicitation;
Amendment or
Supplement: The Company may instruct the Agents to suspend
solicitation of offers to purchase Notes at any time, whereupon the
Agents will as promptly as possible (but in any event not later than one
business day after receipt of such instruction) suspend solicitation
until such time as the Company has advised the Agents that solicitation
of offers to purchase Notes may be resumed. If the Company proposes to
amend or supplement the Registration Statement or the Prospectus
relating to the Notes (except in the case of a Pricing Supplement), it
will promptly advise the Agents and will furnish to the Agents such
proposed amendment or supplement and, after the Agents have been
afforded a reasonable opportunity to review such amendment or
supplement, will cause such amendment or supplement to be filed with the
Commission. The Company will promptly provide the Agents with copies of
any such amendment or supplement and confirm to the Agents that such
amendment or supplement has been filed with the Commission.
In the event that at the time the Agents suspend
solicitation of offers to purchase Notes there shall be any outstanding
offers to purchase Notes that have been accepted by the Company but for
which settlement has not occurred, the Company, consistent with its
obligations under the Distribution Agreement, promptly will advise the
Agents whether such sales may be settled and whether copies of the
Prospectus as supplemented at the time of the suspension may be
delivered in connection with the settlement of such sales. The Company
will have the sole responsibility for such decision and for any
arrangements which may be made in the event that the Company determines
that such sales may not be settled or that copies of such Prospectus may
not be so delivered.
Authenticity of
Signatures: The Trustee will furnish the Agents from time to
time with the specimen signatures of each of the Trustee's officers,
employees or agents who have been authorized by the Trustee to
authenticate Notes, but the Agents will have no obligation or liability
to the Company or the Trustee in respect of the authenticity of the
signature of any officer, employee or agent of the Company or the
Trustee on any Note.
Advertising Cost: The Company will determine with the Agents the
amount of advertising that may be appropriate in the solicitation of
offers to purchase the Notes. Advertising expenses will be paid by the
Company.
II. Book-Entry Procedures
In connection with the qualification of Book-Entry Notes for
eligibility in the book-entry system maintained by DTC, the Trustee will
perform the custodial, document control and administrative functions
described below, in accordance with its obligations under a Letter of
Representations from the Company and the Trustee to DTC, to be dated as
of April 25, 1995 (the "Letter of Representations"), and a Medium-Term
Note Certificate Agreement, dated December 2, 1988 between the Trustee
and DTC (the "Certificate Agreement"), and the Trustee's obligations as
a participant in DTC including DTC's Same-Day Funds Settlement System
("SDFS").
Issuance: All Fixed Rate Notes which have the same original
issue date, redemption or repayment provisions, Interest Payment Dates,
Regular Record Dates, interest rate, Specified Currency and maturity
date (collectively, the "Fixed Rate Terms") will be represented
initially by a single Global Note in fully registered form without
coupons.
All Floating Rate Notes which have the same
original issue date, redemption or repayment provisions, Interest
Payment Dates, Regular Record Dates, Interest Rate Basis, Interest
Determination Dates, Interest Reset Dates, Calculation Dates, Index
Maturity, Spread or Spread Multiplier, if any, Minimum Rate, if any,
Maximum Rate, if any, Specified Currency and maturity date
(collectively, the "Floating Rate Terms") will be represented initially
be a single Global Note in fully registered form without coupons.
Identification: The Company has received from the CUSIP Service
Bureau of Standard & Poor's Corporation (the "CUSIP Service Bureau") a
series of approximately 900 CUSIP numbers for future assignment to
Global Notes, and the Company has delivered to the Trustee and DTC such
list of such CUSIP numbers. The Trustee will assign CUSIP numbers to
Global Notes as described below. DTC will notify the CUSIP Service
Bureau periodically of the CUSIP numbers that have been assigned to
Global Notes. The Trustee will notify the Company at any time when
fewer than 100 of the reserved CUSIP numbers remain unassigned to Global
Notes, and, if it deems necessary, the Company will reserve additional
CUSIP numbers for assignment to Global Notes. Upon obtaining such
additional CUSIP numbers, the Company will deliver a list of such
additional numbers to the Trustee and DTC.
Registration: Each Global Note will be registered in the name of
Cede & Co., as nominee for DTC, on the Security Register maintained
under the Indenture. The beneficial owner of a Book-Entry Note (or one
or more indirect participants in DTC designated by such owner) will
designate one or more participants in DTC (the "Participants") to act as
agent or agents for such owner in connection with the book-entry system
maintained by DTC, and DTC will record in book-entry form, in accordance
with instructions provided by such Participants, a credit balance with
respect to such Book-Entry Note in the account of such Participants.
The ownership interest of such beneficial owner in such Book-Entry Note
will be recorded through the records of such Participants or through the
separate records of such Participants and one or more indirect
participants in DTC.
Transfers: Transfers of a Book-Entry Note will be
accomplished by book
entries made by DTC and, in turn, by Participants (and in certain cases,
one or more indirect participants in DTC) acting on behalf of beneficial
transferors and transferees of such Book-Entry Note.
Exchanges: The Trustee, at the Company's request, may deliver
to DTC and the CUSIP Service Bureau at any time a written notice of
consolidation specifying (a) the CUSIP numbers of two or more
outstanding Global Notes having the same Fixed Rate Terms or Floating
Rate Terms, as the case may be (except that original issue dates need
not be the same), and for which interest has been paid to the same date;
(b) a date, occurring at least 30 days after such written notice is
delivered and at least 30 days before the next Interest Payment Date for
the related Book-Entry Notes, on which such Global Notes shall be
exchanged for a single replacement Global Note; and (c) a new CUSIP
number to be assigned to such replacement Global Note. Upon receipt of
such a notice, DTC will send to its participants (including the Trustee)
a written reorganization notice to the effect that such exchange will
occur on such date.
Prior to the specified exchange date, the Trustee
will deliver to the CUSIP Service Bureau written notice setting forth
such exchange date and the new CUSIP number and stating that, as of such
exchange date, the CUSIP numbers of the Global Notes to be exchanged
will no longer be valid.
On the specified exchange date, the Trustee will
exchange such Global Notes for a single Global Note bearing the new
CUSIP number. The CUSIP numbers of the exchanged Global Notes will, in
accordance with CUSIP Service Bureau procedures, be cancelled and not
immediately reassigned.
Notwithstanding the foregoing, if the Global Notes
to be exchanged exceed $150,000,000 in aggregate principal amount, one
replacement Global Note will be authenticated and issued to represent
each $150,000,000 of principal amount of the exchanged Global Notes and
an additional Global Note will be authenticated and issued to represent
any remaining principal amount of such Global Notes, subject to the
minimum denomination restrictions described in General Procedures -
Denominations (see "Denominations" below).
Denominations: Global Notes representing Book-Entry Notes will be
denominated in principal amounts not in excess of $150,000,000. If one
or more Book-Entry Notes having an aggregate principal amount in excess
of $150,000,000 would, but for the preceding sentence, be represented by
a single Global Note, then one Global Note will be issued to represent
each $150,000,000 principal amount of such Book-Entry Note or Book-Entry
Notes and an additional Global Note will be issued to represent any
remaining principal amount of such Book-Entry Note or Book-Entry Notes,
subject to the minimum denomination restrictions described in General
Procedures - Denominations. In such a case, each of the Global Notes
representing such Book-Entry Note or Notes shall be assigned the same
CUSIP number.
Interest: DTC will arrange for each pending deposit
message described under Settlement Procedure B below to be transmitted
to Standard & Poor's Corporation, which will use the message to include
certain terms of the related Global Note in the appropriate daily bond
report published by Standard & Poor's Corporation.
Payments of Principal,
Premium, if any,
and Interest: Payments of Interest Only. Promptly after each
Regular Record Date (or as soon thereafter as such information is
determined), the Trustee will deliver to the Company and DTC a written
notice specifying by CUSIP number the amount of interest to be paid on
each Global Note on the following Interest Payment Date (other than an
Interest Payment Date coinciding with the Maturity) and the total of
such amounts. DTC will confirm the amount payable on each Global Note
on such Interest Payment Date by reference to the daily bond reports
published by Standard & Poor's Corporation. On such Interest Payment
Date, the Company will pay to the Trustee, and the Trustee in turn will
pay to DTC, such total amount of interest due (other than at Maturity),
at the times and in the manner set forth below under "Manner of
Payment."
Payments at Maturity. On or about the first
Business Day of each month (or as soon thereafter as such information is
determined), the Trustee will deliver to the Company and DTC a written
list of principal, premium, if any, and interest to be paid on each
Global Note maturing or subject to redemption in the following month.
The Trustee, the Company and DTC will confirm the amounts of such
principal, premium (if any) and interest payments with respect to each
such Global Note on or about the fifth Business Day preceding the
maturity date of such Global Note. At such maturity date, the Company
will pay to the Trustee, and the Trustee in turn will pay to DTC, the
principal of and premium, if any, on such Global Note, together with
interest due at such maturity date, at the times and in the manner set
forth below under "Manner of Payment." Promptly after payment to DTC of
the principal, premium, if any, and interest due at maturity of all
Book-Entry Notes represented by a particular Global Note, the Trustee
will cancel such Global Note, make appropriate entries in its records
and dispose of such Global Note as provided in the Indenture.
Manner of Payment. The total amount of any
principal, premium and interest due on Global Notes on any Interest
Payment Date or at maturity shall be paid by the Company to the Trustee
in funds immediately available for use by the Trustee as of noon, New
York City time, on such date. The Company will make such payment on
such Global Notes by wire transfer to the Trustee or by instructing the
Trustee to withdraw funds from an account maintained by the Company at
the Trustee. The Company will confirm any such instructions in writing
to the Trustee. For maturity, redemption and other principal payments,
prior to 1:00 p.m., New York City time, on each such date or as soon as
possible thereafter following receipt of such funds from the Company,
the Trustee will pay by separate wire transfer (using Fedwire message
entry instructions in a form previously specified by DTC) to an account
at the Federal Reserve Bank of New York previously specified by DTC, in
funds available for immediate use by DTC, each payment of interest,
principal and premium, if any, due on Global Notes on such date; and for
interest payments, the Trustee will pay DTC in same day funds on the
Interest Payment Date in accordance with existing arrangements between
the Trustee and DTC. Thereafter on each such date, DTC will pay, in
accordance with its SDFS operating procedures then in effect, such
amounts in funds available for immediate use to the respective
Participants with payments in amounts proportionate to their respective
holdings in principal amount of beneficial interest in such Global Note
as are recorded in the book-entry system maintained by DTC. Once
payment has been made to DTC, neither the Company nor the Trustee shall
have any responsibility or liability for the payment by DTC of the
principal of, or premium, if any, or interest on, the Book-Entry Notes
to such Participants.
Withholding Taxes. The amount of any taxes
required under applicable law to be withheld from any interest payment
on a Book-Entry Note will be determined and withheld by the Participant,
indirect participant in DTC or other Person responsible for forwarding
payments and materials directly to the beneficial owner of such Book-
Entry Note, or as applicable law may otherwise require.
Settlement Procedures: Settlement Procedures with regard to each Book-
Entry Note sold by each Agent will be as follows:
A. Upon receiving the Sale Information, the
Company will, as soon as practicable, advise the Trustee by facsimile
transmission of the Sale Information and the name of such Agent.
B. The Trustee will assign a CUSIP number to the
Global Note representing such Book-Entry Note and will communicate to
DTC and the Agent through DTC's Participant Terminal System, a pending
deposit message specifying such of the following Settlement information
as applicable:
1.The following information:
(a) Principal amount of the purchase.
(b) In the case of a Fixed Rate Note, the
interest rate, or, in the case of a Floating Rate Note, the initial
interest rate, the Interest Reset Dates, the Interest Payment Dates, the
Interest Rate Basis, Index Maturity, Spread or Spread Multiplier, if
any, and the Minimum Rate and Maximum Rate, if any.
(c) Settlement date.
(d) Maturity date.
(e) Price.
(f) DTC Participant Number of the
institution through which the customer will hold the beneficial interest
in the Global Note.
2.The numbers of the participant accounts
maintained by DTC on behalf of the Trustee and the Agent.
3.Identification as a Fixed Rate Note or a
Floating Rate Note.
4.The initial Interest Payment Date for such
Note, number of days by which such date succeeds the related DTC record
date (which term means the Regular Record Date, or in the case of
Floating Rate Notes which reset weekly, the date five calendar days
immediately preceding the applicable Interest Payment Date) and, for
Fixed Rate Notes, the amount of interest payable on such Interest
Payment Date per $1,000 principal amount of Note.
5.The frequency of interest payments.
6.The frequency of interest rate resets.
7.The CUSIP number of the Global Note
representing such Book-Entry Notes.
8.Whether such Global Note represents any
other Book-Entry Notes issued or to be issued.
The Trustee will also orally notify the Agent of
the CUSIP number assigned to the Global Note.
C.The Trustee will prepare a Global Note
representing such Book-Entry Note in a form that has been approved by
the Company.
D.The Trustee will authenticate the Global Note
representing such Book-Entry Note and maintain possession of such Global
Note.
E.DTC will credit such Book-Entry Note to the
participant account of the Trustee maintained by DTC.
F.The Trustee will enter an SDFS deliver order
through DTC's Participant Terminal System instructing DTC to (i) debit
such Book-Entry Note to the Trustee's participant account and credit
such Book-Entry Note to the participant account of the Agent maintained
by DTC and (ii) debit the settlement account of the Agent and credit the
settlement account of the Trustee maintained by DTC, in an amount equal
to the price of such Book-Entry Note less the Agent's commission. The
entry of such a deliver order shall be deemed to constitute a
representation and warranty by the Trustee to DTC that (a) the Global
Note representing such Book-Entry Note has been issued and authenticated
and (b) the Trustee is holding such Global Note pursuant to the
Certificate Agreement.
G.The Agent will enter an SDFS deliver order
through DTC's Participant Terminal System instructing DTC to (i) debit
such Book-Entry Note to the Agent's participant account and credit such
Book-Entry Note to the participant accounts of the Participants to whom
such Book-Entry Note is to be credited maintained by DTC and (ii) debit
the settlement accounts of such Participants and credit the settlement
account of the Agent maintained by DTC, in an amount equal to the
initial public offering price of the Book-Entry Note so credited to
their accounts.
H.Transfers of funds in accordance with SDFS
deliver orders described in Settlement Procedures F and G will be
settled in accordance with SDFS operating procedures in effect on the
Settlement Date.
I.The Trustee will credit to an account of the
Company maintained at Chemical Bank funds available for immediate use in
an amount equal to the amount credited to the Trustee's DTC settlement
account in accordance with Settlement Procedure F.
J.The Agent will confirm the purchase of each Book-
Entry Note to the purchaser thereof either by transmitting to the
Participant to whose account such Note has been credited a confirmation
order through DTC's Participant Terminal System or by mailing a written
confirmation to such purchaser. In all cases the Prospectus as most
recently amended or supplemented (including the applicable Pricing
Supplement) must accompany or precede such confirmation.
Settlement Procedures
Timetable: For offers accepted by the Company, Settlement
Procedures A through J shall occur no later than the respective times
(New York City time) listed below:
Settlement
Procedure Time
A 11:00 a.m. on the second Business Day following
the date of acceptance.
B 2:00 p.m. on the second Business Day following
the date of acceptance.
C 5:00 p.m. on the Business Day before settlement.
D 9:00 a.m. on the Settlement Date.
E 10:00 a.m. on the Settlement Date.
F-G 2:00 p.m. on the Settlement Date.
H 4:45 p.m. on the Settlement Date.
I-J 5:00 p.m. on the Settlement Date.
NOTE: If a sale is to be settled in less than four Business
Days after the date of acceptance, Settlement Procedures A and B shall
be completed as soon as practicable but no later than 11:00 a.m. and
2:00 p.m., respectively, on the Business Day before Settlement Date. If
the Initial Interest Rate for a Floating Rate Book-Entry Note has not
been determined at the time that Settlement Procedure A is completed,
Settlement Procedures B and C shall be completed as soon as such rate
has been determined.
Settlement Procedure H is subject to extension in
accordance with any extension Fedwire closing deadlines and in the other
events specified in the SDFS operating procedures in effect on the
Settlement Date.
If Settlement of a Book-Entry Note is rescheduled
or cancelled, the Trustee will deliver to DTC, through DTC's Participant
Terminal System, a cancellation message to such effect by no later than
2:00 p.m., New York City time, on the Business Day immediately preceding
the scheduled Settlement Date.
Failures: If the Trustee has not entered an SDFS deliver
order with respect to a Book-Entry Note pursuant to Settlement Procedure
F (which may be evidenced by facsimile transmission), the Trustee, at
the Company's direction, shall deliver to DTC, through DTC's Participant
Terminal System, as soon as practicable, but no later than 2:00 p.m. on
any business day, a withdrawal message instructing DTC to debit such
Book-Entry Note to the participant account of the Trustee maintained at
DTC. DTC will process the withdrawal message, provided that such
participant account contains a principal amount of the Global Note
representing such Book-Entry Note that is at least equal to the
principal amount of such Book-Entry Note to be debited. If withdrawal
messages are processed with respect to all the Book-Entry Notes issued
or to be issued represented by a Global Note, the Trustee will void such
Global Note, make appropriate entries in its records and, unless
otherwise directed by the Company, destroy the Certificate. The CUSIP
number assigned to such Global Note shall, in accordance with CUSIP
Service Bureau procedures, be cancelled and not immediately reassigned.
If withdrawal messages are processed with respect to a portion of the
Book-Entry Notes represented by a Global Note, the Trustee will exchange
such Global Note for two Global Notes, one of which shall represent such
Book-Entry Notes (which shall be cancelled immediately after issuance),
and the other of which shall represent the remaining Book-Entry Notes
previously represented by the surrendered Global Note and shall bear the
CUSIP number of the surrendered Global Note. If the purchase price for
any Book-Entry Note is not timely paid to the Participants with respect
to such Note by the beneficial purchaser (other than a Purchasing Agent)
thereof (or a person, including an indirect participant in DTC, acting
on behalf of such purchaser), such Participants and, in turn, the
related Agent may enter SDFS deliver orders through DTC's Participant
Terminal System debiting such Note free to such Agent's Participant
Account and crediting such Note free to the Participant Account of the
Trustee and shall notify the Trustee and the Company thereof.
Thereafter, the Trustee, (i) will immediately notify the Company, once
the Trustee has confirmed that such Note has been credited to its
Participant Account, and the Company shall transfer by Fed wire
(immediately available funds) to such Agent an amount equal to the price
of such Note which was previously sent by wire transfer to the account
of the Company maintained at Chemical Bank in accordance with settlement
procedure I, and (ii) the Trustee will deliver the withdrawal message
and take the related actions described in the preceding sentences of
this paragraph. Such debits and credits will be made on the settlement
date, if possible, and in any event not later than 5:00 p.m. on the
following Business Day. If such failure shall have occurred for any
reason other than default by the Agent in the performance of its
obligations hereunder or under the Distribution Agreement, the Company
will reimburse the Agent on an equitable basis for its loss of the use
of funds during the period when they were credited to the account of the
Company. In addition, if such failure shall have occurred by reason of
a default by the Company in the performance of its obligations under the
Distribution Agreement, the Company will pay the Selling Agent any
commission to which it would have been entitled in connection with such
sale.
Notwithstanding the foregoing, upon any failure to
settle with respect to a
Book-Entry Note, DTC may take any actions in accordance with its SDFS
operating procedures then in effect. In the event of a failure to
settle with respect to a Book-Entry Note that was to have been
represented by a Global Note also representing other Book-Entry Notes,
the Trustee will provide, in accordance with Settlement Procedures C and
D, for the authentication and issuance of a Global Note representing
such other Book-Entry Notes and will make appropriate entries in its
records.
Trustee Not to Risk
Funds: Nothing herein shall be deemed to require the
Trustee to risk or expend its own funds in connection with any payment
to the Company, or the Agents or DTC, it being understood by all parties
that payments made by the Trustee to either the Company, DTC or the
Agents shall be made only to the extent that funds are provided to the
Trustee for such purpose.
Renewable Notes: At the time of issuance of a Renewable Note, the
Trustee will identify the Note as a Renewable Note in the comments field
of the Pending MTN Deposit Message and will list the maturity date as
the latest possible maturity date on the Renewable Note. The Company
will also arrange for a copy of the pricing supplement relating to the
Renewable Note (identified by CUSIP number) to be supplied to
Interactive Data Corporation.
Holders of Book-Entry Renewable Notes may
terminate the automatic extension of maturity during the election period
beginning 30 days prior to and ending 15 days prior to certain Interest
Payment Dates as specified in a Prospectus Supplement or Pricing
Supplement (unless another period is specified in the applicable Pricing
Supplement as the "Special Election Period"). Electing Holders will
exchange the Renewable Notes for Short-Term Notes.
DTC Participants wishing to terminate the automatic
extension of maturity on Renewable Notes that they are holding will be
entitled to utilize DTC's Deliver Order Procedures. After receiving
such Renewable Notes in its account, the Trustee will follow the
procedures outlined in the Letter of Representations.
Termination of the automatic extension of maturity
of all or a portion of a Book-Entry Renewable Note may be revoked
provided that the principal amount of any portion of such Book-Entry
Renewable Note or a Short-Term Note issued in exchange therefor (i) to
which the revocation relates and (ii) to which the revocation does not
relate, each is at least $100,000 or any larger amount that is an
integral multiple of $1,000. Such revocation may be made by following
the procedures described below on any day following delivery to the
Trustee of the election to terminate the automatic extension of maturity
and not less than 60 days prior to the Extended Maturity Date.
Any Participant wishing to revoke the termination
of automatic extension of maturity will be entitled to utilize DTC's
Deliver Order Procedures. After receiving the Short-Term Notes in its
account, the Trustee will follow the procedures outlined in Paragraph __
of the Letter of Representations.
On each exchange date, the Trustee will reduce the
balance of the Renewable Global Note by the total principal amount of
termination instructions received during the prior election period, less
the total principal amount of revocation instructions received relating
to termination instructions with respect to which Short-Term Global
Notes have not theretofore been issued, and increase the balance of the
Renewable Global Note by the total principal amount of revocation
instructions received relating to Short-Term Global Notes theretofore
issued with respect to such Renewable Global Note. The Trustee will
also (i) authenticate a new Global Note for the Short-Term Note,
identified by the separate CUSIP number assigned prior to the beginning
of the election period and with a principal amount equal to the total
amount of termination instructions received during the prior election
period, less the total principal amount of revocation instructions
received with respect thereto, and (ii) reduce the balance of Short-Term
Notes theretofore issued by the total principal balance of revocation
instructions received with respect thereto.
III. Certificated Notes procedures
Payment at
Maturity: As specified in the Indenture and the Form of Note.
Settlement: Prior to 3:00 p.m., New York City time, on the
Business Day prior to the Settlement Date, the Company will instruct the
Trustee or its agent by facsimile transmission or other acceptable
written means to authenticate and deliver the Certificated Notes no
later than 2:15 p.m., New York City time, on the Settlement Date.
If the Settlement Date is the same day as the date
of acceptance, then prior to 11:00 a.m., New York City time, on the
Settlement Date the Company will instruct the Trustee or its agent by
facsimile transmission or other acceptable written means to authenticate
and deliver the Certificated Notes no later than 2:15 p.m., New York
time, on the Settlement Date. Certificated Notes denominated in a
currency or currency unit other than U.S. dollars shall have a
Settlement Date not less than two Business Days after the acceptance of
the offer by the Company.
Delivery of
Notes
and Cash
Payment: Upon receipt of appropriate documentation and
instructions, the Company will cause the Trustee to prepare and
authenticate each Note and appropriate receipts.
Each Certificated Note shall be authenticated and
dated on the Settlement Date therefor. The Trustee will deliver each
authenticated Certificated Note to the Selling Agent for the benefit of
the purchaser in accordance with written instructions (or oral
instructions confirmed in writing (which may be given by telex or
telecopy) on the next business day) from the Company. Delivery by the
Trustee of each Certificated Note will be made against a receipt
therefor.
Upon verification by the Selling Agent that a
Certificated Note has been prepared and properly authenticated and
delivered by the Trustee and registered in the name of the purchaser in
the proper principal amount and other terms in accordance with the Sale
Information, payment will be made to the Company's account at Chemical
Bank on behalf of the Company by the Selling Agent on behalf of the
purchaser the same day as the Selling Agent's receipt of such
Certificated Note in immediately available funds. If either (i) the
Certificated Note is denominated in U.S. dollars or (ii) the
Certificated Note is denominated in a currency or currency unit other
than U.S. dollars and, at or prior to the Settlement Date, the Company
and the Selling Agent have entered into, or the Selling Agent has
arranged for the Company to enter into, a contract with respect to the
sale of the Specified Currency, the amount payable by the Selling Agent
pursuant to the preceding sentence shall be the issue price of the
Certificated Note (or the U.S. dollar equivalent pursuant to such
contract) less the Selling Agent's commission determined in accordance
with Section 2(a) of the Distribution Agreement. In all other cases,
the Selling Agent's commission shall not be discounted from the gross
proceeds but shall be paid separately by the Company in U.S. dollars in
immediately available funds on the Settlement Date. The payment by the
Selling Agent shall be made only upon prior receipt by such Agent of
immediately available funds from or on behalf of the purchaser in the
Specified Currency unless such Agent decides, at its option, to advance
its own funds for such payment against subsequent receipt of funds from
the purchaser.
Upon delivery of a Certificated Note to the
Selling Agent and the verification provided in the preceding paragraph,
the Selling Agent shall promptly deliver such Certificated Note to the
purchaser or its agent.
Failures: In the event that a purchaser (other than a
Purchasing Agent) shall fail to accept delivery of and make payment for
any Certificated Note, the Selling Agent will forthwith notify the
Trustee and the Company's Corporate Treasurer's Office (Department 969)
by telephone or by facsimile transmission. If the Certificated Note has
been delivered to the Selling Agent on behalf of the purchaser, the
Selling Agent will immediately return the Certificated Note to the
Trustee. If funds have been advanced by the Selling Agent for the
purchase of such Note, the banking department of Chemical Bank will,
upon instruction by the Company and upon receipt of the Certificated
Note, debit the account of the Company in an amount equal to the amount
previously credited thereto in respect of the Note and will either
credit the account of or return such funds to the Selling Agent. Such
debits and credits or returns will be made on the Settlement Date if
possible and, in any event, not later than the business day following
the Settlement Date. If such failure shall have occurred for any reason
other than default by the Selling Agent in the performance of its
obligations under the Distribution Agreement, the Company will reimburse
the Selling Agent on an equitable basis for its loss of the use of the
funds during the period when they were credited to the account of the
Company. In addition, if such failure shall have occurred by reason of
a default by the Company in the performance of its obligations under the
Distribution Agreement, the Company will pay the Selling Agent any
commission to which it would have been entitled in connection with such
sale.
Immediately upon receipt of the certificate
representing the Note in respect of which the failure occurred, the
Trustee will void such Certificated Note, make appropriate entries in
its records and, unless otherwise instructed by the Company, destroy the
certificate.
ANNEX III
Pursuant to Section 6(d) of the Distribution Agreement, the
Company's independent certified public accountants shall furnish letters
to the effect that:
(i) They are independent certified public accountants with respect to
the Company and its consolidated subsidiaries within the meaning of the
Act and the applicable published rules and regulations of the Commission
thereunder and the answer to Item 10 of the Registration Statement is
correct insofar as it relates to them;
(ii) In their opinion, the financial statements and schedules and
the additional financial information examined by them and included or
incorporated by reference in the Registration Statement or the
Prospectus comply as to form in all material respects with the
applicable accounting requirements of the Act or the Exchange Act, as
applicable, and the published rules and regulations thereunder;
(iii) On the basis of limited procedures, not constituting an
examination in accordance with generally accepted auditing standards,
including a reading of the unaudited financial statements and schedules
and other information referred to below, a reading of the latest
available interim financial statements of the Company and certain of its
subsidiaries, inspection of the minute books of the Company and certain
of its subsidiaries since the date of the latest audited financial
statements included or incorporated by reference in the Prospectus,
inquiries of officials of the Company and its subsidiaries responsible
for financial and accounting matters and such other inquiries and
procedures as may be specified in such letter, nothing came to their
attention that caused them to believe that:
(A) the unaudited consolidated statements of income, consolidated
statements of financial position and consolidated statements of changes
in financial position included or incorporated by reference in the
Company's Quarterly Reports on Form 10-Q incorporated by reference in
the Prospectus do not comply as to form in all material respects with
the applicable accounting requirements of the Exchange Act and the
published rules and regulations thereunder or are not stated on a basis
substantially consistent with that of the audited consolidated
statements of income, consolidated statements of financial position and
consolidated statements of changes in financial position included or
incorporated by reference in the Company's Annual Report on Form 10-K
for the most recent fiscal year; or
(B) as of a specified date not more than five business days prior
to the date of delivery of such letter, there have been any changes in
the capital stock accounts, long-term debt, short-term debt, domestic
retail customer accounts receivable (owned) of the Sears Merchandise
Group, inventories of the Merchandising operations, or reserves of the
Allstate Insurance Group for insurance claims and policy benefits, or
any decreases in consolidated net assets or other items specified by the
Agents, in each case as compared with amounts shown or included in the
latest consolidated statement of financial position included or
incorporated by reference in the Prospectus, except in each case for
changes, increases or decreases which the Prospectus discloses have
occurred or may occur or which are described in such letter; or
(C) for the period from the date of the latest financial statements
included or incorporated by reference in the Prospectus to the specified
date referred to in sub-clause (B) there were any decreases in operating
revenues-Sears Merchandise Group operations; operating revenues-Allstate
Insurance Group; total operating revenues; operating income; income
before income taxes; group income-Sears Merchandise Group; group income-
Allstate Insurance Group; net income or net income per share or other
items specified by the Agents, or any increases in any items specified
by the Agents, in each case as compared with the comparable period of
the preceding year and with any other period of corresponding length
specified by the Agents, except in each case for increases or decreases
which the Prospectus discloses have occurred or may occur or which are
described in such letter; and
(iv) In addition to the examination referred to in their report(s)
included or incorporated by reference in the Prospectus and the limited
procedures, inspection of minute books, inquiries and other procedures
referred to in clause (iii) above, they have carried out certain
specified procedures, not constituting an audit, with respect to certain
amounts, percentages and financial information specified by the Agents
which are derived from the general accounting records of the Company and
its subsidiaries, which appear in the Prospectus (excluding documents
incorporated by reference), or in Part II of, or in exhibits and
schedules to, the Registration Statement specified by the Agents or in
documents incorporated by reference in the Prospectus specified by the
Agents, and have compared certain of such amounts, percentages and
financial information with the accounting records of the Company and its
subsidiaries and have found them to be in agreement.
All references in this Annex III to the Prospectus shall be deemed to
refer to the Prospectus as amended or supplemented (including the
documents incorporated by reference therein) as of the Closing Date
referred to in Section 6(d) thereof and to the Prospectus as amended or
supplemented (including the documents incorporated by reference therein)
as of the date of the amendment, supplement, incorporation or the Time
of Delivery relating to the Terms Agreement requiring the delivery of
such letter under Section 6(d) thereof.
REGISTERED SEARS, ROEBUCK AND CO. REGISTERED
FXR-MEDIUM-TERM NOTE SERIES VIII
[(Insert if this is a global note CUSIP
(FIXED RATE)
Except as otherwise provided in Section 2.10 of the
Indenture, this Note may be transferred, in whole but not in
part, only to another nominee of the Depository or to a
successor Depository or to a nominee of such successor
Depository.
Unless this Note is presented by an authorized
representative of The Depository Trust Company (55 Water
Street, New York, New York) to the Company or its agent for
registration of transfer, exchange or payment, and any Note
issued upon registration of transfer of, or in exchange for,
or in lieu of, this Note is registered in the name of Cede &
Co. or such other name as requested by an authorized
representative of The Depository Trust Company and any
payment hereon is made to Cede & Co., ANY TRANSFER, PLEDGE
OR OTHER USE HEREOF FOR VALUE OF OTHERWISE BY OR TO ANY
PERSON IS WRONGFUL since the registered owner hereof, Cede &
Co., has an interest herein.]
ORIGINAL ISSUE DATE: REDEMPTION COMMENCEMENT DATE:
INTEREST RATE: REDEMPTION PRICE: IF A
REDEMPTION COMMENCEMENT DATE IS SPECIFIED ABOVE, THE
REDEMPTION PRICE SHALL BE % OF THE
PRINCIPAL AMOUNT OF THIS NOTE TO BE REDEEMED AND THE
REDEMPTION PRICE SHALL DECLINE AT EACH ANNIVERSARY OF THE
REDEMPTION COMMENCEMENT DATE BY % OF THE PRINCIPAL
AMOUNT OF THIS NOTE TO BE REDEEMED UNTIL THE REDEMPTION
PRICE IS 100% OF SUCH PRINCIPAL AMOUNT.
MATURITY DATE:
INTEREST PAYMENT DATES:
OTHER PROVISIONS:
Sears, Roebuck and Co., a corporation duly organized
and existing under the laws of the State of New York (herein
referred to as the "Company", which term includes any
successor corporation under the Indenture hereinafter
referred to), for value received, hereby promises to pay to
or registered assigns, upon presentation and surrender of
this Note, on the Maturity Date shown above (except to the
extent redeemed prior to the Maturity Date) at the office or
agency of the Company in the Borough of Manhattan of The
City of New York, or, at the option of the Holder, such
office or agency, if any, maintained by the Company in the
City of Chicago, the city in which the principal executive
offices of the Company are located or the city in which the
principal corporate trust office of the Trustee is located,
the principal sum of
______________________________________________________
Principal Amount
Specified Currency
and to pay interest thereon at the rate per annum shown
above.
This Note will bear interest from the Original Issue
Date specified above or from the most recent Interest
Payment Date to which interest on this Note has been paid or
duly provided for. Unless otherwise specified above,
interest will be computed on the basis of a 360-day year of
twelve 30-day months.
Interest on this Note shall be payable on the Interest
Payment Dates and on the Maturity Date indicated above (or
the date of redemption), except that if this Note was
originally issued between a Regular Record Date and an
Interest Payment Date, the first payment of interest will be
made on the Interest Payment Date following the next
succeeding Regular Record Date to the registered Holder on
such next succeeding Regular Record Date. If any Interest
Payment Date falls on a day that is not a Business Day, the
interest payment shall be postponed to the next succeeding
Business Day, and no interest on such payment shall accrue
for the period from and after the Interest Payment Date. If
the Maturity Date of this Note falls on a day that is not a
Business Day, the payment of interest and principal may be
made on the next succeeding Business Day with the same force
and effect as if made at maturity, and no interest on such
payment shall accrue for the period from and after the
Maturity Date.
The Regular Record Date shall be the March 15 and
September 15 next preceding any April 1 or October 1
Interest Payment Date and the date 15 calendar days prior to
any other Interest Payment Date, whether or not such date
shall be a Business Day.
"Business Day" as used herein means each Monday,
Tuesday, Wednesday, Thursday, and Friday which is not a
legal holiday for banking institutions in either the City of
Chicago, The City of New York or the city in which the
principal corporate trust office of the Trustee is located
and, if this
Note is denominated in a currency other than Dollars, in
___________________________________________________.
Principal Financial Center of Country Issuing Currency
Payments of interest with respect to any Interest
Payment Date or Maturity Date (or date of redemption) will
include interest accrued to, but excluding, such Interest
Payment Date or Maturity Date (or date of redemption).
The principal of (and premium, if any), and interest
on, this Note is payable by the Company in the Specified
Currency. Interest payable on any Interest Payment Date
(other than Defaulted Interest) shall be payable to the
person who is the registered Holder at the close of business
on the immediately preceding Regular Record Date. Interest
payable upon redemption or at maturity (other than a
redemption or maturity occurring on an Interest Payment
Date) will be paid to the same person to whom the principal
amount of this Note is payable.
Payment of principal of (and premium, if any), and
interest on, this Note on any day (if the Holder of this
Note is a Depository as defined in the Indenture referred to
on the reverse hereof or a nominee of such a Depository)
will be made in accordance with any applicable provisions of
such written agreement between the Company, the Trustee and
such Depository (or its nominee) as may be in effect from
time to time or (if the Holder of this Note holds an
aggregate principal amount of $10,000,000 or more of Notes
with respect to which such payment of principal (and
premium, if any) or interest, as applicable, is to be made
on such day) will be made by wire transfer if the Holder
shall have designated in writing to the Trustee an account
with a bank located in the country issuing the Specified
Currency or such other country as shall be satisfactory to
the Company and the Trustee. If payment of interest is to
be made by wire transfer, such information must be received
by the Trustee at its corporate trust office in the Borough
of Manhattan of The City of New York on or prior to the
Regular Record Date for an Interest Payment Date. The
Trustee will, subject to applicable laws and regulations and
until it receives notice to the contrary, make such payment
to such Holder by wire transfer to the designated account.
If a payment of interest is not made in accordance with such
a written agreement or by wire transfer, payment will be
made by check. Checks for payment of interest on an
Interest Payment Date will be mailed to the Holder at the
address of such Holder appearing on the Security Register on
the applicable Regular Record Date.
To receive payment of a U.S. dollar denominated Note
upon redemption or at maturity, a Holder must make
presentation and surrender of such Note on or before the
Redemption Date or Maturity Date, as applicable. Payment
(other than payment in accordance with a written agreement
between the Company, the Trustee and a Depository (or its
nominee) as set forth above) will be made by check unless
proper wire instructions are on file with the Trustee or are
received at presentment. To receive payment of a Note
denominated in a Foreign Currency upon redemption or at
maturity, a Holder must make presentation and surrender not
less than two Business Days prior to the Redemption Date or
Maturity Date, as applicable. Upon presentation and
surrender of a Note denominated in a Foreign Currency at any
time after the date two Business Days prior to the
Redemption Date or Maturity Date, as applicable, the Company
will pay the principal amount (and premium, if any) of such
Note, and any interest due upon redemption or at maturity
(unless the Redemption Date or Maturity Date is an Interest
Payment Date), two Business Days after such presentation and
surrender.
The Company will pay any administrative costs imposed
by banks in connection with sending payments by wire
transfer, but any tax, assessment or governmental charge
imposed upon payments will be borne by the Holders of the
Notes in respect of which payments are made.
Reference is hereby made to the further provisions of
this Note set forth on the reverse hereof, and such further
provisions shall for all purposes have the same effect as
though fully set forth at this place.
This Note shall not be entitled to any benefit under
the Indenture referred to on the reverse hereof, or become
valid or obligatory for any purpose, until the certificate
of authentication hereon shall have been signed by or on
behalf of the Trustee under such Indenture.
IN WITNESS WHEREOF, the Company has caused this
Instrument to be duly executed under its corporate seal.
Dated: SEARS, ROEBUCK AND CO.
By
CERTIFICATE OF AUTHENTICATION Chairman of the Board of
This is one of the Notes Directors, President and
designated and referred to in the Chief Executive Officer
within-mentioned Indenture.
CHEMICAL BANK,
as Trustee
By
By
Authorized Officer Vice Chairman and Chief
Financial Officer
<PAGE>
SEARS, ROEBUCK AND CO.
Medium-Term Note Series VIII
This Note is one of a duly authorized issue of
debentures, notes, bonds or other evidences of indebtedness
of the Company (hereinafter called the "Securities") of the
series hereinafter specified, unlimited in aggregate
principal amount, all issued or to be issued under or
pursuant to an indenture dated as of September 15, 1991,
executed between the Company and CHEMICAL BANK (successor by
merger to MANUFACTURERS HANOVER TRUST COMPANY), as Trustee;
to which indenture and all indentures supplemental thereto
(herein collectively called the "Indenture") reference is
hereby made for a specification of the rights and limitation
of rights thereunder of the Holders of the Securities, the
rights and obligations thereunder of the Company and the
rights, duties and immunities thereunder of the Trustee.
The Securities may be issued in one or more series, which
different series may be issued in various aggregate
principal amounts, may mature at different times, may bear
interest (if any) at different rates, may be subject to
different redemption provisions (if any), may be subject to
different covenants and defaults and may otherwise vary as
in the Indenture provided. This Note is one of a series
designated as the "Medium-Term Notes Series VIII"
(hereinafter referred to as the "Notes") of the Company,
unlimited in aggregate principal amount. All terms used in
this Note which are defined in the Indenture and which are
not otherwise defined in this Note shall have the meanings
assigned to them in the Indenture.
The Notes are issuable only in registered form without
coupons and will be either (a) Book-Entry Notes represented
by one or more global notes (each a "Global Note") recorded
in the book-entry system maintained by the Depository or (b)
certificated notes issued to, and registered in the names
of, the beneficial owners or their nominees ("Certificated
Notes"). Notes are issuable in minimum denominations of (i)
in the case of Notes denominated in Dollars, U.S. $100,000
and in any larger amount in integral multiples of $1,000
(provided that, if Certificated Notes are issued in exchange
for Book-Entry Notes in accordance with the provisions set
forth in the Indenture and the principal amount of any such
Book-Entry Note is less than $100,000, the minimum
authorized denomination of Certificated Notes issued in
exchange for such Book-Entry Note (and issued upon any
subsequent transfer or exchange of such Certificated Notes)
shall be $1,000 or any integral multiple thereof), and (ii)
in the case of Notes denominated in any Foreign Currency,
the equivalent in such Foreign Currency determined in
accordance with the Market Exchange Rate for such Foreign
Currency on the Business Day immediately preceding the date
on which the Company accepts an offer to purchase a Note, of
U.S. $100,000 (rounded down to an integral multiple of
10,000 units of the Foreign Currency), and in any larger
amount. In the manner and subject to the limitations
provided in the Indenture, the Global Notes or Certificated
Notes are exchangeable, without charge except for any tax or
other governmental charge imposed in relation thereto, for
other Notes of authorized denominations for a like aggregate
principal amount, at the office or agency of the Company in
the Borough of Manhattan of The City of New York, or, at the
option of the Holders thereof, such office or agency, if
any, maintained by the Company in the City of Chicago, the
city in which the principal executive offices of the Company
are located or the city in which the principal corporate
trust office of the Trustee is located.
Unless this Note is denominated in Dollars, in the
event that the currency in which this Note is denominated is
not available for payment at a time at which any payment is
required hereunder due to the imposition of exchange
controls or other circumstances beyond its control, the
Company may, in full satisfaction of its obligation to make
such payment, make instead a payment in an equivalent amount
of Dollars, determined in accordance with the Market
Exchange Rate for such currency on the latest date for which
such rate was established on or before the date on which
payment is due, and such substituted payment of Dollars
shall not constitute a default under this Note or the
Indenture.
If a Redemption Commencement Date is specified above,
this Note may be redeemed, whether or not any other Note is
concurrently redeemed, at the option of the Company, as a
whole, or from time to time in part, on any Business Day on
or after the Redemption Commencement Date and prior to the
Maturity Date, upon mailing by first-class mail, postage
prepaid, a notice of such redemption not less than 30 nor
more than 60 days prior to the Redemption Date, to the
Holder of this Note at his address appearing in the Security
Register, as provided in the Indenture (provided that, if
the Holder of this Note is a Depository or a nominee of a
Depository, notice of such redemption shall be given in
accordance with any applicable provisions of such written
agreement between the Company, the Trustee and such
Depository (or its nominee) as may be in effect from time to
time), at the Redemption Price specified on the face of this
Note (expressed in percentages of the principal amount
hereof to be redeemed) together in each case with interest
accrued to the Redemption Date (subject to the right of the
Holder of record on a Regular Record Date to receive
interest due on an Interest Payment Date). In the event of
redemption of this Note in part only, a new Note or Notes of
this series, and of like tenor, for the unredeemed portion
hereof will be issued in the name of the Holder hereof upon
the cancellation hereof.
Section 4.8 of the Indenture will not apply to any Note
having a Stated Maturity at the time of issue of seven years
or less.
In case a default, as defined in the Indenture, shall
occur and be continuing with respect to the Notes, the
principal amount of all Notes then outstanding under the
Indenture may be declared or may become due and payable upon
the conditions and in the manner and with the effect
provided in the Indenture. The Indenture provides that such
declaration may in certain events be annulled by the Holders
of a majority in principal amount of the Notes outstanding.
To the extent permitted by, and as provided in, the
Indenture, modifications or alterations of the Indenture, or
of any indenture supplemental thereto, and of the rights and
obligations of the Company and the Holders of the Notes, may
be made with the consent of the Company by the affirmative
vote or consent of the Holders of not less than 66-2/3% in
principal amount of the Securities then outstanding (as
defined in the Indenture) of each series to be affected,
evidenced as in the Indenture provided; provided, however,
that no such modification or alteration shall (i) change the
stated maturity of the principal of (and premium, if any),
or interest on, any Security, or reduce the principal amount
of (and premium, if any), or the rate of interest on, any
Security, or change the Currency in which the principal of
(and premium, if any), or interest on, such Security is
denominated or payable, or reduce the amount of the
principal of an Original Issue Discount Security that would
be payable upon a declaration of acceleration of the
Maturity thereof pursuant to Section 6.1 of the Indenture
without the consent of the Holder of each outstanding
Security so affected, or (ii) reduce the percentage of
Securities, the vote or consent of the Holders of which is
required for such modifications and alterations, without the
consent of the Holders of all Securities affected. The
Indenture also provides that the Holders of a majority in
principal amount of the Securities of any series then
outstanding may waive any past default with respect to
Securities of such series under the Indenture and its
consequences, except a default in the payment of the
principal of (or premium, if any), or interest on, any of
the Securities.
This Note is transferable by the registered Holder
hereof or by his attorney duly authorized in writing at the
office or agency of the Company in the Borough of Manhattan
of The City of New York or, at the option of the Holder
hereof, such office or agency, if any, maintained by the
Company in the City of Chicago, the city in which the
principal executive offices of the Company are located or
the city in which the principal corporate trust office of
the Trustee is located, without charge except for any tax,
assessment or other governmental charge imposed in relation
thereto, but only in the manner and subject to the
limitations provided in the Indenture and upon surrender of
this Note. Upon any such transfer a Note or Notes of
authorized denominations for a like aggregate principal
amount and bearing a number not contemporaneously
outstanding will be issued in exchange herefor.
The provisions of Section 3.2 of the Indenture
requiring the Company to maintain an office or agency in the
City of Chicago shall not apply to the Notes. The Company
may maintain an office or agency for the purposes specified
in Section 3.2 of the Indenture in the City of Chicago, the
city in which the principal executive offices of the Company
are located or the city in which the principal corporate
trust office of the Trustee is located, as designated by the
Company from time to time by written notice to the Trustee.
The Company, the Trustee, any Authenticating Agent,
any paying agent and any Security registrar may deem and
treat the registered Holder hereof as the absolute owner
hereof (whether or not this Note shall be overdue and
notwithstanding any notation of ownership or other writing
hereon by anyone other than the Company or any Security
registrar) for the purpose of receiving payment of or on
account of the principal hereof (and premium, if any), and
interest hereon, and for all other purposes, and neither the
Company, the Trustee, an Authenticating Agent, a paying
agent nor the Security registrar shall be affected by any
notice to the contrary. All such payments shall be valid
and effectual to satisfy and discharge the liability upon
this Note to the extent of the sum or sums so paid.
No recourse shall be had for the payment of the
principal of (or premium, if any), or interest on, this Note
or for any claim based hereon or otherwise in any manner in
respect hereof, or in respect of the Indenture, against any
incorporator, shareholder, officer or director, past,
present or future, of the Company or of any predecessor or
successor corporation, whether by virtue of any
constitutional provision or statute or rule of law, or by
the enforcement of any assessment or penalty or in any other
manner, all such liability being expressly waived and
released by the acceptance hereof and as part of the
consideration for the issue hereof. In the event of any
sale or transfer of all or substantially all of the assets
to a successor corporation, the predecessor corporation may
be dissolved and liquidated as more fully set forth in the
Indenture.
All Dollar amounts used in or resulting from
calculations referred to in this Note shall be rounded to
the nearest cent (with one half cent being rounded upwards).
This Note shall be governed by, and construed in
accordance with, the internal laws of the State of Illinois.
<PAGE>
ASSIGNMENT FORM
To assign this Note, fill in the form below:
I or we assign and transfer this Note to:
______________________________
(Insert assignee's soc. sec. or tax I.D. no.)
____________________________________________________________
____________________________________________________________
(Print or type assignee's name, address and zip code)
____________________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
and irrevocably appoint
____________________________________________________________
__________________________________________agent
to transfer this Note on the books of the Company. The
agent may substitute another to act for him.
Date _______________________________________________
Your signature
___________________________________________________________
_________________________________________________________
(Sign exactly as your name appears on the other side of this
Note. The signature to this assignment must be guaranteed
by a commercial bank or trust company having its principal
office or a correspondent in The City of New York or by a
member of The New York Stock Exchange.
REGISTERED SEARS, ROEBUCK AND CO. REGISTERED
No. FLR- MEDIUM-TERM NOTE SERIES VIII
[(Insert if this is to be a Global Note) CUSIP]
(FLOATING RATE)
[(Insert if this is to be a Global Note) Except as otherwise
provided in Section 2.10 of the Indenture, this Note may be
transferred, in whole but not in part, only to another
nominee of the Depository or to a successor Depository or
to a nominee of such successor Depository.
Unless this Note is presented by an authorized
representative of The Depository Trust Company (55 Water
Street, New York, New York) to the Company or its agent for
registration of transfer, exchange or payment, and any Note
issued upon registration of transfer of, or in exchange for,
or in lieu of, this Note is registered in the Name of Cede &
Co. or such other name as requested by an authorized
representative of The Depository Trust Company and any
payment hereon is made to Cede & Co. ANY TRANSFER, PLEDGE OR
OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON
IS WRONGFUL since the registered owner herof, Cede & Co.,
has an interest herein.]
ORIGINAL ISSUE DATE: MATURITY DATE:
INITIAL INTEREST RATE: MAXIMUM RATE:
INDEX MATURITY: MINIMUM RATE:
SPREAD (plus or minus): CALCULATION AGENT:
SPREAD MULTIPLIER: REDEMPTION COMMENCEMENT DATE:
INTEREST RATE BASIS: INTEREST PAYMENT DATES:
INTEREST RESET DATES:
REDEMPTION PRICE: IF A REDEMPTION COMMENCEMENT DATE IS
SPECIFIED ABOVE, THE REDEMPTION PRICE SHALL BE % OF THE
PRINCIPAL AMOUNT OF THIS NOTE TO BE REDEEMED AND THE
REDEMPTION PRICE SHALL DECLINE AT EACH ANNIVERSARY OF THE
REDEMPTION COMMENCEMENT DATE BY % OF THE PRINCIPAL
AMOUNT OF THIS NOTE TO BE REDEEMED UNTIL THE REDEMPTION
PRICE IS % OF SUCH PRINCIPAL AMOUNT.
OTHER PROVISIONS:
Sears, Roebuck and Co., a corporation duly organized
and existing under the laws of the State of New York (herein
referred to as the "Company", which term includes any
successor corporation under the indenture hereinafter
referred to), for value received, hereby promises to pay to
or registered assigns, upon presentation and surrender of
this Note on the Maturity Date shown above (except to the
extent redeemed prior to the Maturity Date) at the office or
agency of the Company in the Borough of Manhattan of The
City of New York, or, at the option of the Holder, such
office or agency, if any, maintained by the Company in the
City of Chicago, the city in which the principal executive
offices of the Company are located or the city in which the
principal corporate trust office of the Trustee is located,
the principal sum of
____________________________________________________________
Principal Amount
______________________________________________________
Specified Currency
and to pay interest thereon at the rate per annum equal to
the Initial Interest Rate shown above until the first
Interest Reset Date shown above and thereafter at the rate
determined in accordance with the provisions on the reverse
hereof depending on the Interest Rate Basis shown above.
This Note will bear interest from the Original Issue
Date specified above or from the most recent Interest
Payment Date to which interest on this Note has been paid or
duly provided for.
Interest on this Note shall be payable on the Interest
Payment Dates and on the Maturity Date indicated above (or
the date of redemption), except that if this Note was
originally issued between a Regular Record Date and an
Interest Payment Date, the first payment of interest will be
made on the Interest Payment Date following the next
succeeding Regular Record Date to the registered Holder on
such next succeeding Regular Record Date. If any Interest
Payment Date or the Maturity Date would fall on a day that
is not a Business Day, such Interest Payment Date or
Maturity Date shall be the next succeeding Business Day (or,
if the Interest Rate Basis on this Note is LIBOR, if such
day falls in the next calendar month, the next preceding
Business Day).
The Regular Record Date shall be the date 15 calendar
days prior to each Interest Payment Date, whether or not
such date shall be a Business Day.
"Business Day" as used herein means each Monday,
Tuesday, Wednesday, Thursday, and Friday which is (a) not a
legal holiday for banking institutions in either the City of
Chicago, The City of New York or the city in which the
principal corporate trust office of the Trustee is located,
and (b) if this Note is denominated in a currency other than
Dollars, any such day that is not a legal holiday for
banking institutions in
,
Principal Financial Center of Country Issuing Currency
and (c) if the Interest Rate Basis with respect to this Note
is LIBOR, any such day specified in (a) on which dealings in
deposits in U.S. dollars are transacted in the London
interbank market.
The principal of (and premium, if any), and interest
on, this Note is payable by the Company in the Specified
Currency. Interest payable on any Interest Payment Date
(other than Defaulted Interest) shall be payable to the
person who is the registered Holder at the close of business
on the immediately preceding Regular Record Date. Interest
payable upon redemption or at maturity (other than a
redemption or maturity occurring on an Interest Payment
Date) will be paid to the same person to whom the principal
amount of this Note is payable.
Payment of principal of (and premium, if any), and
interest on, this Note (if the Holder of this Note is a
Depository as defined in the Indenture referred to on the
reverse hereof or a nominee of such a Depository) will be
made in accordance with any applicable provisions of such
written agreement between the Company, the Trustee and such
Depository (or its nominee) as may be in effect from time to
time or (if the Holder of this Note holds an aggregate
principal amount of $10,000,000 or more of Notes with
respect to which such payment of principal (and premium, if
any) or interest, as applicable, is to be made on such day)
will be made by wire transfer if the Holder shall have
designated in writing to the Trustee an account with a bank
located in the country issuing the Specified Currency or
such other country as shall be satisfactory to the Company
and the Trustee. If payment of interest is to be made by
wire transfer, such information must be received by the
Trustee at its corporate trust office in the Borough of
Manhattan of The City of New York on or prior to the Regular
Record Date for an Interest Payment Date. The Trustee will,
subject to applicable laws and regulations and until it
receives notice to the contrary, make such payment to such
Holder by wire transfer to the designated account. If a
payment of interest is not made in accordance with such a
written agreement or by wire transfer, payment will be made
by check. Checks for payment of interest on an Interest
Payment Date will be mailed to the Holder at the address of
such Holder appearing on the Security Register on the
applicable Regular Record Date.
To receive payment of a U.S. dollar denominated Note
upon redemption or at maturity, a Holder must make
presentation and surrender of such Note on or before the
Redemption Date or Maturity Date, as applicable. Payment
(other than payment in accordance with a written agreement
between the Company, the Trustee and a Depository (or its
nominee) as set forth above) will be made by check unless
proper wire instructions are on file with the Trustee or are
received at presentment. To receive payment of a Note
denominated in a Foreign Currency upon redemption or at
maturity, a Holder must make presentation and surrender not
less than two Business Days prior to the Redemption Date or
Maturity Date, as applicable. Upon presentation and
surrender of a Note denominated in a Foreign Currency at any
time after the date two Business Days prior to the
Redemption Date or Maturity Date, as applicable, the Company
will pay the principal amount (and premium, if any) of such
Note, and any interest due upon redemption or at maturity
(unless the Redemption Date or Maturity Date is an Interest
Payment Date), two Business Days after such presentation and
surrender.
The Company will pay any administrative costs imposed
by banks in connection with sending payments by wire
transfer, but any tax, assessment or governmental charge
imposed upon payments will be borne by the Holders of the
Notes in respect of which payments are made.
Reference is hereby made to the further provisions of
this Note set forth on the reverse hereof, and such further
provisions shall for all proposes have the same effect as
though fully set forth at this place.
This Note shall not be entitled to any benefit under
the Indenture referred to on the reverse hereof, or become
valid or obligatory for any purpose, until the certificate
of authentication hereon shall have been signed by or on
behalf of the Trustee under such Indenture.
IN WITNESS WHEREOF, the Company has caused this
instrument to be duly executed under its corporate seal.
Dated: SEARS, ROEBUCK AND CO.
By
CERTIFICATE OF AUTHENTICATION
This is one of the Notes Chairman of the Board of
designated and referred to in Directors, President and
the within-mentioned Indenture. Chief Executive Officer
CHEMICAL BANK, as Trustee
By
By
Authorized Officer Vice Chairman and Chief
Financial Officer
<PAGE>
SEARS, ROEBUCK AND CO.
Medium-Term Note Series VIII
This Note is one of a duly authorized issue of
debentures, notes, bonds or other evidences of indebtedness
of the Company (hereinafter called the "Securities") of the
series hereinafter specified, unlimited in aggregate
principal amount, all issued or to be issued under or
pursuant to an indenture dated as of September 15, 1991,
executed between the Company and CHEMICAL BANK (successor by
merger to MANUFACTURERS HANOVER TRUST COMPANY), as Trustee;
to which indenture and all indentures supplemental thereto
(herein collectively called the "Indenture") reference is
hereby made for a specification of the rights and limitation
of rights thereunder of the Holders of the Securities, the
rights and obligations thereunder of the Company and the
rights, duties and immunities thereunder of the Trustee.
The Securities may be issued in one or more series, which
different series may be issued in various aggregate
principal amounts, may mature at different times, may bear
interest (if any) at different rates, may be subject to
different redemption provisions (if any), may be subject to
different covenants and defaults and may otherwise vary as
in the Indenture provided. This Note is one of a series
designated as the "Medium-Term Notes Series VIII"
(hereinafter referred to as the "Notes") of the Company,
unlimited in aggregate principal amount. All terms used in
this Note which are defined in the Indenture and which are
not otherwise defined in this Note shall have the meanings
assigned to them in the Indenture.
This Note will bear interest at a rate per annum equal
to the Initial Interest Rate shown on the face hereof until
the first Interest Reset Date shown on the face hereof and
thereafter at the rate determined in accordance with the
applicable provisions below by reference to the Interest
Rate Basis shown on the face hereof based on the Index
Maturity, if any, shown on the face hereof (i) plus or minus
the Spread, if any, specified on the face hereof, or (ii)
multiplied by the Spread Multiplier, if any, specified on
the face hereof. The rate of interest on this Note shall be
reset on each Interest Reset Date; provided, however, that
(a) the Initial Interest Rate shall be in effect from the
Original Issue Date to the first Interest Reset Date, and
(b) the interest rate in effect for the ten days immediately
prior to the Maturity Date or Redemption Date shall be that
in effect on the tenth day preceding such Maturity Date or
Redemption Date. If any Interest Reset Date would be a day
that is not a Market Day, the Interest Reset Date shall be
postponed to the next day that is a Market Day, except that
if the Interest Rate Basis on this Note is LIBOR and if such
Market Day is in the next succeeding calendar month, such
Interest Reset Date shall be the immediately preceding
Market Day. The term "Market Day" means any day that is not
a legal holiday for banking institutions in The City of New
York, except that if the Interest Rate Basis on this Note is
LIBOR, "Market Day" shall mean any such day on which
dealings in deposits in U.S. dollars are transacted in the
London interbank market.
The "Interest Determination Date" pertaining to an
Interest Reset Date, if the Interest Rate Basis for this
Note is the Commercial Paper Rate, Prime Rate, LIBOR, CD
Rate or Federal Funds Rate, shall be the second Market Day
preceding such Interest Reset Date. The "Interest
Determination Date" pertaining to an Interest Reset Date, if
the Interest Rate Basis for this Note is the Treasury Rate,
shall be the day of the week in which such Interest Reset
Date falls on which Treasury bills would normally be
auctioned. Treasury bills are usually sold at auction on
the Monday of each week, unless that day is a legal holiday,
in which case the auction is usually held on the following
Tuesday, except that such auction may be held on the
preceding Friday. If the Interest Rate Basis on this Note
is the Treasury Rate and, as the result of a legal holiday,
an auction is so held on the preceding Friday, such Friday
shall be the Interest Determination Date pertaining to the
Interest Reset Date occurring in the next succeeding week.
If an auction date shall fall on any Interest Reset Date,
then, if the Interest Rate Basis on this Note is the
Treasury Rate, such Interest Reset Date shall instead be the
first Market Day immediately following such auction date.
The "Calculation Date" pertaining to an Interest
Determination Date shall be the tenth day after each
Interest Determination Date or, if such day is not a
Business Day, the next succeeding Business Day.
Determination of Commercial Paper Rate. If the
Interest Rate Basis on this Note is the Commercial Paper
Rate, the Commercial Paper Rate with respect to this Note
for each Interest Reset Date shall equal the Money Market
Yield (calculated as described below) of the per annum rate
(quoted on a bank discount basis) for the relevant Interest
Determination Date for commercial paper having the Index
Maturity specified on the face hereof as such rate is
published by the Board of Governors of the Federal Reserve
System in "Statistical Release H.15(519) Selected Interest
Rates" or any successor publication of the Board of
Governors of the Federal Reserve System ("H.15(519)") under
the heading "Commercial Paper". In the event that such rate
is not published prior to 9:00 A.M., New York City time, on
the relevant Calculation Date, then the Commercial Paper
Rate with respect to such Interest Reset Date shall be the
Money Market Yield of such rate on such Interest
Determination Date for commercial paper having the Index
Maturity specified on the face hereof as published by the
Federal Reserve Bank of New York in its daily statistical
release, "Composite 3:30 P.M. Quotations for U.S. Government
Securities" or any successor publication published by the
Federal Reserve Bank of New York ("Composite Quotations")
under the heading "Commercial Paper". If by 3:00 P.M., New
York City time, on such Calculation Date such rate is not
yet published in either H.15(519) or Composite Quotations,
the Commercial Paper Rate with respect to such Interest
Reset Date shall be calculated by the Calculation Agent and
shall be the Money Market Yield of the arithmetic mean of
the offered per annum rates (quoted on a bank discount
basis), as of 11:00 A.M., New York City time, on such
Interest Determination Date, of three leading dealers of
commercial paper in The City of New York selected by the
Calculation Agent for commercial paper of the Index Maturity
specified on the face hereof placed for an industrial issuer
whose bond rating is "AA", or the equivalent, from a
nationally recognized rating agency; provided, however, that
if fewer than three dealers selected as aforesaid by the
Calculation Agent are quoting as mentioned in this sentence,
the Commercial Paper Rate with respect to such Interest
Reset Date shall be the Commercial Paper Rate in effect on
such Interest Determination Date.
"Money Market Yield" means the rate for which is quoted
on a bank discount basis, a yield (expressed as a
percentage) calculated in accordance with the following
formula:
Money Market Yield = D X 360 X 100
360 - (D X M)
where "D" refers to the per annum rate for a security,
quoted on a bank discount basis and expressed as a decimal;
and "M" refers to, if the term of the applicable Index
Maturity approximately corresponds to the number of days
from, and including, the applicable Interest Reset Date to,
but excluding, the next succeeding Interest Reset Date (a
"Calculation Period"), then the actual number of days in
that Calculation Period and, otherwise, the actual number of
days in the period from, and including, the applicable
Interest Reset Date to, but excluding, the day that
numerically corresponds to that Interest Reset Date (or, if
there is not any such numerically corresponding day, the
last day) in the calendar month that is the number of months
corresponding to the Index Maturity after the month in which
that Interest Reset Date occurred.
Determination of Prime Rate. If the Interest Rate
Basis on this Note is the Prime Rate, the Prime Rate with
respect to this Note for each Interest Reset Date shall
equal the rate set forth for the relevant Interest
Determination Date in H.15(519) under the heading "Bank
Prime Loan". In the event that such rate is not published
prior to 9:00 A.M., New York City time, on the relevant
Calculation Date, then the Prime Rate with respect to such
Interest Reset Date shall be the arithmetic mean of the
rates of interest publicly announced by each bank that
appears on the display designated as page "NYMF" on the
Reuter Monitor Money Rates Service (or such other page as
may replace the NYMF page on that service for the purpose of
displaying prime rates or base lending rates of major United
States banks) ("Reuters Screen NYMF Page") as such bank's
prime rate or base lending rate as in effect for such
Interest Determination Date as quoted on the Reuters Screen
NYMF Page on such Interest Determination Date. If fewer
than four such rates appear on the Reuters Screen NYMF Page
on such Interest Determination Date, the Prime Rate with
respect to such Interest Reset Date shall be the arithmetic
mean of the prime rates or base lending rates (quoted on the
basis of the actual number of days in the year divided by a
360-day year) as of the close of business on such Interest
Determination Date by three major banks in The City of New
York selected by the Calculation Agent; provided, however,
that if fewer than three banks selected as aforesaid by the
Calculation Agent are quoting as mentioned in this sentence,
the Prime Rate with respect to such Interest Reset Date will
be the Prime Rate in effect on such Interest Determination
Date.
Determination of LIBOR. If the Interest Rate Basis on
this Note is LIBOR, LIBOR with respect to this Note for each
Interest Reset Date shall be determined in accordance with
the following provisions:
(i) On the relevant Interest Determination Date,
LIBOR will be the rate for deposits in U.S. dollars
having the Index Maturity specified on the face hereof,
commencing on the second Market Day immediately
following such Interest Determination Date that appears
on the display designated as page "3750" on the Dow
Jones Telerate Service (or such other page as may
replace page 3750 on that service for the purposes of
displaying London interbank offered rates of major
banks) ("Telerate Page 3750") as of 11:00 A.M., London
time, on such Interest Determination Date. If such
rate does not appear on Telerate Page 3750, LIBOR with
respect to such Interest Reset Date shall be determined
as described in (ii) below.
(ii) With respect to an Interest Determination
Date on which no such rate appears on Telerate Page
3750 as described in (i) above, LIBOR shall be
determined on the basis of the rates at approximately
11:00 A.M., London time, on such Interest Determination
Date at which deposits in U.S. dollars having the Index
Maturity specified on the face hereof are offered to
prime banks in the London interbank market by four
major banks in the London interbank market selected by
the Calculation Agent commencing on the second Market
Day immediately following such Interest Determination
Date and in a principal amount equal to an amount of
not less than U.S. $1,000,000 that in the Calculation
Agent's judgment is representative for a single
transaction in such market at such time (a
"Representative Amount"). The Calculation Agent shall
request the principal London office of each of such
banks to provide a quotation of its rate. If at least
two such quotations are provided, LIBOR with respect to
such Interest Reset Date shall be the arithmetic mean
of such quotations. If fewer than two quotations are
provided, LIBOR with respect to such Interest Reset
Date shall be the arithmetic mean of the rates quoted
at approximately 11:00 A.M., New York City time, on
such Interest Determination Date by three major banks
in The City of New York, selected by the Calculation
Agent, for loans in U.S. dollars to leading European
banks having the Index Maturity specified on the face
hereof commencing on the Interest Reset Date and in a
Representative Amount; provided, however, that if fewer
than three banks selected as aforesaid by the
Calculation Agent are quoting as mentioned in this
sentence, LIBOR with respect to such Interest Reset
Date shall be the LIBOR in effect on such Interest
Determination Date.
Determination of Treasury Rate. If the Interest Rate
Basis on this Note is the Treasury Rate, the Treasury Rate
with respect to this Note for each Interest Reset Date shall
equal the rate for the auction on the relevant Interest
Determination Date of direct obligations of the United
States ("Treasury bills") having the Index Maturity
specified on the face hereof as published in H.15(519) under
the heading "U.S. Government Securities/Treasury
Bills/Auction Average (Investment)" or, if not so published
by 9:00 A.M., New York City time, on the relevant
Calculation Date, the auction average rate (expressed as a
bond equivalent, on the basis of a year of 365 or 366 days,
as applicable, and applied on a daily basis) for such
auction as otherwise announced by the United States
Department of the Treasury. In the event that the results
of such auction of Treasury bills having the Index Maturity
specified on the face hereof are not published or reported
as provided above by 3:00 P.M., New York City time, on such
Calculation Date, or if no such auction is held during such
week, then the Treasury Rate shall be the rate set forth in
H.15(519) for the relevant Interest Determination Date for
the Index Maturity specified on the face hereof under the
heading "U.S. Government Securities/Treasury Bills/Secondary
Market". In the event such rate is not so published by 3:00
P.M., New York City time, on the relevant Calculation Date,
the Treasury Rate with respect to such Interest Reset Date
shall be calculated by the Calculation Agent and shall be a
yield to maturity (expressed as a bond equivalent, on the
basis of a year of 365 or 366 days, as applicable, and
applied on a daily basis) of the arithmetic mean of the
secondary market bid rates as of approximately 3:30 P.M.,
New York City time, on such Interest Determination Date, of
three primary United States government securities dealers in
The City of New York selected by the Calculation Agent for
the issue of Treasury bills with a remaining maturity
closest to the Index Maturity specified on the face hereof;
provided, however, that if fewer than three dealers selected
as aforesaid by the Calculation Agent are quoting as
mentioned in this sentence, the Treasury Rate with respect
to such Interest Reset Date shall be the Treasury Rate in
effect on such Interest Determination Date.
Determination of CD Rate. If the Interest Rate Basis
on this Note is the CD Rate, the CD Rate with respect to
this Note for each Interest Reset Date shall equal the rate
for the relevant Interest Determination Date for negotiable
certificates of deposit having the Index Maturity specified
on the face hereof as published in H.15(519) under the
heading "CDs (Secondary Market)". In the event that such
rate is not published prior to 9:00 A.M., New York City
time, on the relevant Calculation Date, then the CD Rate
with respect to such Interest Reset Date shall be the rate
on such Interest Determination Date for negotiable
certificates of deposit having the Index Maturity specified
on the face hereof as published in Composite Quotations
under the heading "Certificates of Deposit". If by 3:00
P.M., New York City time, on such Calculation Date such rate
is not published in either H.15(519) or Composite
Quotations, the CD Rate with respect to such Interest Reset
Date shall be calculated by the Calculation Agent and shall
be the arithmetic mean of the secondary market offered
rates, as of 10:00 A.M., New York City time, on such
Interest Determination Date, of three leading nonbank
dealers of negotiable U.S. dollar certificates of deposit in
The City of New York selected by the Calculation Agent for
negotiable certificates of deposit of major United States
money market banks with a remaining maturity closest to the
Index Maturity specified on the face hereof in a
denomination of U.S. $5,000,000; provided, however, that if
fewer than three dealers selected as aforesaid by the
Calculation Agent are quoting as mentioned in this sentence,
the CD Rate with respect to such Interest Reset Date shall
be the CD Rate in effect on such Interest Determination
Date.
Determination of Federal Funds Rate. If the Interest
Rate Basis on this Note is the Federal Funds Rate, the
Federal Funds Rate with respect to this Note for each
Interest Reset Date shall equal the rate on the relevant
Interest Determination Date for Federal Funds as published
in H.15(519) under the heading "Federal Funds (Effective)".
In the event that such rate is not published prior to 9:00
A.M., New York City time, on the relevant Calculation Date,
then the Federal Funds Rate with respect to such Interest
Reset Date will be the rate on such Interest Determination
Date as published in Composite Quotations under the heading
"Federal Funds/Effective Rate". If by 3:00 P.M., New York
City time, on such Calculation Date such rate is not
published in either H.15(519) or Composite Quotations, the
Federal Funds Rate with respect to such Interest Reset Date
shall be calculated by the Calculation Agent and shall be
the arithmetic mean of the rates, as of 9:00 A.M., New York
City time, on such Interest Determination Date, for the last
transaction in overnight Federal Funds arranged by three
leading brokers of Federal Funds transactions in The City of
New York selected by the Calculation Agent; provided,
however, that if fewer than three brokers selected as
aforesaid by the Calculation Agent are quoting as mentioned
in this sentence, the Federal Funds Rate with respect to
such Interest Reset Date shall be the Federal Funds Rate in
effect on such Interest Determination Date.
Notwithstanding the foregoing, the interest rate on
this Note shall not be greater than the Maximum Interest
Rate, if any, or less than the Minimum Interest Rate, if
any, shown on the face hereof.
At the request of the Holder hereof, the Calculation
Agent will provide to the Holder hereof the interest rate
then in effect and, if determined, the interest rate which
will become effective as of the next Interest Reset Date.
The Calculation Agent shall calculate the interest rate
hereon in accordance with the provisions hereof on or before
each Calculation Date. The Calculation Agent's
determination of any interest rate will be final and binding
in the absence of manifest error.
Unless otherwise specified on the face of this Note,
accrued interest on this Note from the date of issue or from
the last date to which interest has been paid shall be
calculated by multiplying the face amount hereof by an
accrued interest factor. Unless otherwise specified on the
face of this Note, such accrued interest factor is computed
by adding the interest factor calculated for each day from
the date of issue, or from the last date to which interest
has been paid, to but excluding the date for which accrued
interest is being calculated. Unless otherwise specified on
the face of this Note, the interest factor (expressed as a
decimal, rounded if necessary to the next higher one hundred
thousandth of a percentage point for each such day) shall be
computed by dividing the interest rate (expressed as a
decimal) applicable to such date by 360 if the Interest Rate
Basis with respect to this Note is the Commercial Paper
Rate, Prime Rate, LIBOR, CD Rate or Federal Funds Rate, or
by the actual number of days in the year, if the Interest
Rate Basis with respect to this Note is the Treasury Rate.
The applicable interest rate on any Interest Reset Date will
be the interest rate as reset on such date. The applicable
interest rate on any other day will be the interest rate
from the immediately preceding Interest Reset Date (or, if
none, the Initial Interest Rate).
Payments of interest on this Note with respect to any
Interest Payment Date or Maturity Date (or date of
redemption) will include interest accrued to but excluding
such Interest Payment Date or Maturity Date (or date of
redemption); provided, however, that if the Interest Reset
Dates with respect hereto are weekly, interest payable
hereon on any Interest Payment Date, other than interest
payable on the date on which principal hereon is payable,
will include interest accrued to but excluding the day
following the next preceding Regular Record Date.
The Notes are issuable only in registered form without
coupons and will be either (a) Book-Entry Notes represented
by one or more global notes (each a "Global Note") recorded
in the book-entry system maintained by the Depository or (b)
certificated notes issued to, and registered in the names
of, the beneficial owners or their nominees ("Certificated
Notes"). Notes are issuable in minimum denominations of (i)
in the case of Notes denominated in Dollars, U.S. $100,000
and in any larger amount in integral multiples of $1,000
(provided that, if Certificated Notes are issued in exchange
for Book-Entry Notes in accordance with the provisions set
forth in the Indenture and the principal amount of any such
Book-Entry Note is less than $100,000, the minimum
authorized denomination of Certificated Notes issued in
exchange for such Book-Entry Note (and issued upon any
subsequent transfer or exchange of such Certificated Notes)
shall be $1,000 or any integral multiple thereof), and (ii)
in the case of Notes denominated in any Foreign Currency,
the equivalent in such Foreign Currency determined in
accordance with the Market Exchange Rate for such Foreign
Currency on the Business Day immediately preceding the date
on which the Company accepts an offer to purchase a Note, of
U.S. $100,000 (rounded down to an integral multiple of
10,000 units of the Foreign Currency), and in any larger
amount. In the manner and subject to the limitations
provided in the Indenture, the Global Notes or Certificated
Notes are exchangeable, without charge except for any tax or
other governmental charge imposed in relation thereto, for
other Notes of authorized denominations for a like aggregate
principal amount, at the office or agency of the Company in
the Borough of Manhattan of The City of New York, or, at the
option of the Holders thereof, such office or agency, if
any, maintained by the Company in the City of Chicago, the
city in which the principal executive offices of the Company
are located or the city in which the principal corporate
trust office of the Trustee is located.
Unless this Note is denominated in Dollars, in the
event that the currency in which this Note is denominated is
not available for payment at a time at which any payment is
required hereunder due to the imposition of exchange
controls or other circumstances beyond its control, the
Company may, in full satisfaction of its obligation to make
such payment, make instead a payment in an equivalent amount
of Dollars, determined in accordance with the Market
Exchange Rate for such currency on the latest date for which
such rate was established on or before the date on which
payment is due, and such substituted payment of Dollars
shall not constitute a default under this Note or the
Indenture.
If a Redemption Commencement Date is specified above,
this Note may be redeemed, whether or not any other Note is
concurrently redeemed, at the option of the Company, as a
whole, or from time to time in part, on any Business Day on
or after the Redemption Commencement Date and prior to the
Maturity Date, upon mailing by first-class mail, postage
prepaid, a notice of such redemption not less than 30 nor
more than 60 days prior to the Redemption Date, to the
Holder of this Note at his address appearing in the Security
Register, as provided in the Indenture (provided that, if
the Holder of this Note is a Depository or a nominee of a
Depository, notice of such redemption shall be given in
accordance with any applicable provisions of such written
agreement between the Company, the Trustee and such
Depository (or its nominee) as may be in effect from time to
time), at the Redemption Price specified on the face of this
Note (expressed in percentages of the principal amount
hereof to be redeemed) together in each case with interest
accrued to the Redemption Date (subject to the right of the
Holder of record on a Regular Record Date to receive
interest due on an Interest Payment Date). In the event of
redemption of this Note in part only, a new Note or Notes of
this series, and of like tenor, for the unredeemed portion
hereof will be issued in the name of the Holder hereof upon
the cancellation hereof.
Section 4.8 of the Indenture will not apply to any Note
having a Stated Maturity at the time of issue of seven years
or less.
In case a default, as defined in the Indenture, shall
occur and be continuing with respect to the Notes, the
principal amount of all Notes then outstanding under the
Indenture may be declared or may become due and payable upon
the conditions and in the manner and with the effect
provided in the Indenture. The Indenture provides that such
declaration may in certain events be annulled by the Holders
of a majority in principal amount of the Notes outstanding.
To the extent permitted by, and as provided in, the
Indenture, modifications or alterations of the Indenture, or
of any indenture supplemental thereto, and of the rights and
obligations of the Company and the Holders of the Notes, may
be made with the consent of the Company by the affirmative
vote or consent of the Holders of not less than 66 2/3% in
principal amount of the Securities then outstanding (as
defined in the Indenture) of each series to be affected,
evidenced as in the Indenture provided; provided, however,
that no such modification or alteration shall (i) change the
stated maturity of the principal of (and premium, if any),
or the interest on, any Security, or reduce the principal
amount of (and premium, if any), or the rate of interest on,
any Security, or change the Currency in which the principal
of (and premium, if any), or interest on, such Security is
denominated or payable, or reduce the amount of the
principal of an Original Issue Discount Security that would
be payable upon a declaration of acceleration of the
Maturity thereof pursuant to Section 6.1 of the Indenture
without the consent of the Holder of each outstanding
Security so affected, or (ii) reduce the percentage of
Securities, the vote or consent of the Holders of which is
required for such modifications and alterations, without the
consent of the Holders of all Securities affected. The
Indenture also provides that the Holders of a majority in
principal amount of the Securities of any series then
outstanding may waive any past default with respect to
Securities of such series under the Indenture and its
consequences, except a default in the payment of the
principal of (or premium, if any), or interest on, any of
the Securities.
This Note is transferable by the registered Holder
hereof or by his attorney duly authorized in writing at the
office or agency of the Company in the Borough of Manhattan
of The City of New York, or, at the option of the Holder
hereof, such office or agency, if any, maintained by the
Company in the City of Chicago, the city in which the
principal executive offices of the Company are located or
the city in which the principal corporate trust office of
the Trustee is located, without charge except for any tax,
assessment or other governmental charge imposed in relation
thereto, but only in the manner and subject to the
limitations provided in the Indenture and upon surrender of
this Note. Upon any such transfer a Note or Notes of
authorized denominations for a like aggregate principal
amount and bearing a number not contemporaneously
outstanding will be issued in exchange herefor.
The provisions of Section 3.2 of the Indenture
requiring the Company to maintain an office or agency in the
City of Chicago shall not apply to the Notes. The Company
may maintain an office or agency for the purposes specified
in Section 3.2 of the Indenture in the City of Chicago, the
city in which the principal executive offices of the Company
are located or the city in which the principal corporate
trust office of the Trustee is located, as designated by the
Company from time to time by written notice to the Trustee.
The Company, the Trustee, any Authenticating Agent, any
paying agent and any Security registrar may deem and treat
the registered Holder hereof as the absolute owner hereof
(whether or not this Note shall be overdue and
notwithstanding any notation of ownership or other writing
hereon by anyone other than the Company or any Security
registrar) for the purpose of receiving payment of or on
account of the principal hereof (and premium, if any), and
interest hereon, and for all other purposes, and neither the
Company, the Trustee, an Authenticating Agent, a paying
agent nor the Security registrar shall be affected by any
notice to the contrary. All such payments shall be valid
and effectual to satisfy and discharge the liability upon
this Note to the extent of the sum or sums so paid.
No recourse shall be had for the payment of the
principal of (or premium, if any), or interest on, this Note
or for any claim based hereon or otherwise in any manner in
respect hereof, or in respect of the Indenture, against any
incorporator, shareholder, officer or director, past,
present or future, of the Company or of any predecessor or
successor corporation, whether by virtue of any
constitutional provision or statute or rule of law, or by
the enforcement of any assessment or penalty or in any other
manner, all such liability being expressly waived and
released by the acceptance hereof and as part of the
consideration for the issue hereof. In the event of any
sale or transfer of all or substantially all of the assets
to a successor corporation, the predecessor corporation may
be dissolved and liquidated as more fully set forth in the
Indenture.
All Dollar amounts used in or resulting from
calculations referred to in this Note shall be rounded to
the nearest cent (with one half cent being rounded upwards).
This Note shall be governed by, and construed in
accordance with, the internal laws of the State of Illinois.
ASSIGNMENT FORM
To assign this Note, fill in the form below:
I or we assign and transfer this Note to
__________________________________
(Insert assignee's soc. sec. or tax I.D. no.)
___________________________________________________________
(Print or type assignee's name, address and zip code)
___________________________________________________________
___________________________________________________________
__________________________________________________
and irrevocably appoint
________________________________________________ agent
to transfer this Note on the books of the Company. The
agent may substitute another to act for him.
___________________________________________________________
Date __________________________
Your signature
________________________________________________________
(Sign exactly as your name appears on the other side of
this Note. The signature to this assignment must be
guaranteed by a commercial bank or trust company having its
principal office or a correspondent in The City of New York
or by a member of The New York Stock Exchange.)
Exhibit 5
April 25, 1995
Sears, Roebuck and Co.
Sears Tower
Chicago, Illinois 60684
Ladies and Gentlemen:
I am Senior Vice President, General Counsel and Secretary of
Sears, Roebuck and Co. (the "Company"), and, in such capacity, am the
head of the Company's Corporate Law Department. The Corporate Law
Department has examined (i) Registration Statement No. 33-41485, as
filed with the Securities and Exchange Commission (the "Commission"), in
connection with the registration under the Securities Act of 1933, as
amended (the "Act"), of $800,000,000 principal amount of debt securities
of Sears, Roebuck and Co., for an offering to be made on a continuous or
delayed basis pursuant to the provisions of Rule 415 under the Act, (ii)
the final prospectus, dated April 25, 1995, relating to the offering and
sale of $800,000,000 of the aforesaid debt securities, which is part of
the Registration Statement referred to in (i) above (the "Prospectus"),
and the Prospectus Supplement, dated April 25, 1995, (the "Prospectus
Supplement") relating to the initial offering and sale of up to
$800,000,000 aggregate principal amount (or its equivalent in foreign
currencies) of Medium-Term Notes Series VIII of the Company (the
"Notes"), (iii) the Indenture dated as of September 15, 1991, between
the Company and Chemical Bank (successor by merger to Manufacturers
Hanover Trust Company), as Trustee, relating to the aforesaid debt
securities, (iv) the Distribution Agreement, dated April 25, 1995,
between the Company and Dean Witter Reynolds Inc., Goldman, Sachs & Co.,
Merrill Lynch, Pierce, Fenner and Smith Incorporated, Morgan Stanley &
Co. Incorporated and Salomon Brothers Inc, and (v) the forms of the
Notes. The Corporate Law Department is familiar with the proceedings
heretofore taken, and the additional proceedings proposed to be taken
relating to the determination of certain terms not set forth in the
forms of Notes, by the Company in connection with the authorization,
issuance and sale of the Notes.
Subject to the completion of the additional proceedings
referred to above, I am of the opinion that the Notes will, upon the
issuance and sale thereof in the manner referred to in the Prospectus
and Prospectus Supplement, be legally issued and binding obligations of
Sears, Roebuck and Co. in accordance with their terms, subject to
insolvency, bankruptcy, reorganization, moratorium or other laws
relating to or affecting creditors' rights or by general equity
principles (whether considered in a proceeding at law or equity) and the
discretion of the court before which any proceeding therefor may be
brought.
I express no opinion as to whether, with respect to any
Notes denominated in a currency other than United States dollars, a
court located in the United States of America would grant a judgment
relating to the Notes in other than United States dollars nor an opinion
as to the date which any such court would utilize for determining the
rate of conversion into United States dollars in granting such judgment.
I consent to the incorporation by reference of this opinion
into the Registration Statement and to the references to me in the
Prospectus.
Very truly yours,
[Letterhead of Baker & McKenzie]
April 26, 1995
Sears, Roebuck and Co.
Sears Tower, BSC 41-16
Chicago, Illinois 60684
Gentlemen:
Sears, Roebuck and Co. ("Sears") may issue up to U.S. $800,000,000
of Medium-Term Notes Series VIII (the "Notes") due from 9 months to 30
years from date of issue as described in the Prospectus Supplement dated
April 25, 1995 (the "Prospectus Supplement") to the Prospectus dated
April 25, 1995 relating to the initial offering and sale of the Notes
(the "Prospectus").
This opinion is rendered to you in support of an opinion of David
Shute, Senior Vice President, General Counsel and Secretary of Sears of
even date herewith rendered pursuant to Section 6(c) of the Distribution
Agreement dated April 25, 1995 among Sears, Dean Witter Reynolds Inc.,
Goldman, Sachs & Co., Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner
& Smith Incorporated, Morgan Stanley & Co. Incorporated and Salomon
Brothers Inc (the "Distribution Agreement").
As special tax counsel to Sears, we have examined such records and
documents of Sears as we deemed necessary and relevant for purposes of
rendering our opinion as to the principal United States federal income
and estate tax consequences to persons holding Notes, including (i) the
Prospectus, (ii) the Prospectus Supplement, (iii) the Indenture dated as
of September 15, 1991 between Chemical Bank (successor by merger to
Manufacturers Hanover Trust Company), and Sears, (iv) the form of Notes
to be issued under the Indenture, and (v) the Distribution Agreement.
Unless otherwise defined herein, all capitalized terms shall have the
meanings assigned to them in the Prospectus and the Prospectus Supple-
ment.
We have been advised and for purposes of our opinion assume that
Sears will characterize all Notes issued under the Indenture as
indebtedness of Sears for all United States federal income tax purposes.
This opinion does not address:
(1) Special tax situations, such as dealers in securities or
currencies, Holders whose functional currency is not the United States
dollar, or persons holding Notes as a hedge against currency risk or as
part of a larger integrated financial transaction;
(2) Notes issued under the Indenture with a term of 12 months or
less at issue prices of less than their stated redemption price at
maturity, giving rise to original issue discount for federal income tax
purposes;
(3) Notes issued under the Indenture providing for payments of
principal in amounts to be determined by reference to an index;
(4) Notes with original issue discount which are denominated in
more than one currency; and
(5) Notes with original issue discount with a term of more than
five years from the date of issue and having a fixed yield to maturity
that equals or exceeds the sum of the applicable federal rate for the
calendar month in which the obligation is issued plus five percentage
points, including Notes with maturities of more than five years that
could have yields in excess of the applicable federal rate plus five
percentage points because they provide for contingent or variable
payments or because they are subject to redemption before maturity.
On the basis of the foregoing, we are of the opinion that under
present United States federal income and estate tax laws the principal
United States federal income and estate tax consequences to persons
holding Notes are as follows:
In the opinion of Baker & McKenzie, all Notes issued under the
Indenture will be properly characterized as indebtedness of Sears, and
Sears will so characterize all such Notes for all United States federal
income tax purposes. This characterization by Sears will be binding on
every Holder of a Note, unless the Holder discloses its inconsistent
characterization on such Holder's federal income tax return. The
Internal Revenue Service will not be bound by the characterization of
the Notes by Sears and the Holders.
United States Holders
As used herein, "United States Holder" means a Holder of a Note
who is, or which is, a United States Person. A "United States Person"
is (i) a citizen or resident of the United States of America (including
the States and the District of Columbia), its territories, possessions
and other areas subject to its jurisdiction, including the Commonwealth
of Puerto Rico (the "United States"), (ii) a corporation or partnership
created or organized in the United States or under the laws of the
United States or of any State and (iii) an estate or trust the income of
which is subject to United States federal income taxation regardless of
its source.
Payments of Interest and Original Issue Discount. Stated interest
on a Note (whether in a foreign currency or U.S. dollars) will be
taxable to a United States Holder as ordinary interest income at the
time it accrues or is paid in accordance with the United States Holder's
method of accounting for tax purposes, subject to the discussion in the
succeeding paragraphs.
If Notes are issued at a discount from their stated redemption
price at maturity equal to or more than one-fourth of one percent of the
stated redemption price at maturity multiplied by the number of full
years to maturity, such Notes will be original issue discount
obligations ("Original Issue Discount Notes"). The difference between
the issue price and the stated redemption price at maturity of each such
Original Issue Discount Note will constitute original issue discount
("Original Issue Discount"). The stated redemption price at maturity
will include all payments other than interest based on a fixed rate (or
a floating rate, unless a Pricing Supplement states otherwise) and
payable unconditionally at fixed periodic intervals of one year or less
during the entire term of the Original Issue Discount Notes ("Stated
Interest").
Each initial Holder of an Original Issue Discount Note will be
required to include in gross income, in each taxable year during which
the Original Issue Discount Note is held, a portion of the Original
Issue Discount calculated on a yield to maturity basis in addition to
Stated Interest, if any, paid on such Note, regardless of the United
States Holder's method of accounting for tax purposes. A United States
Holder should be aware that, because of the above original issue
discount rules, such Holder will be required to include increasingly
greater amounts of Original Issue Discount in gross income in each
successive accrual period in advance of the receipt of the cash
attributable to such Original Issue Discount income.
A United States Holder of an Original Issue Discount Note must
include in gross income the sum of the daily portions of Original Issue
Discount with respect to an Original Issue Discount Note for each day
during the taxable year such Holder holds such Note. The daily portion
is determined by allocating to each day of the accrual period a ratable
portion of an amount equal to the excess of (i) the Adjusted Issue Price
(as defined below) of the Original Issue Discount Note at the beginning
of the accrual period multiplied by the yield to maturity of such Note
(determined by compounding at the close of each accrual period and
adjusted for the length of the accrual period) over (ii) the amount
payable as Stated Interest, if any, on such Note during such accrual
period. United States Holders may accrue Original Issue Discount using
accrual periods of any length, and such accrual periods may vary in
length over the term of the Original Issue Discount Note, provided that
each accrual period must be no longer than one year and each scheduled
payment of principal or interest must occur either on the final day of
an accrual period or on the first day of an accrual period.
The Adjusted Issue Price of an Original Issue Discount Note
at the start of any accrual period is the issue price of the Original
Issue Discount Note increased by the amount of Original Issue Discount
accrued during all prior accrual periods. A United States Holder of an
Original Issue Discount Note must include in income accrued Original
Issue Discount regardless of whether such Holder uses a cash receipts
and disbursements method of tax accounting or an accrual basis of tax
accounting.
The United States tax treatment of any Indexed Notes will be
described in the applicable Pricing Supplement.
<PAGE>
The face of each Original Issue Discount Note will set forth the
issue date, issue price, yield to maturity, amount of Original Issue
Discount, and any other information required by Treasury regulations.
Sears will furnish to the Internal Revenue Service the amount of
Original Issue Discount, the issue date and any additional information
required by Treasury regulations. Holders, including subsequent
Holders, will be required to determine for themselves the reportable
amount of Original Issue Discount income for a year.
For a Holder who uses a cash receipts and disbursements basis of
tax accounting, if a receipt of payment of stated interest is
denominated in a foreign currency, the amount of interest income will be
the U.S. dollar value of the foreign currency payment amount translated
at the spot rate on the payment date, regardless of whether the payment
is in fact converted to U.S. dollars. For a Holder who uses an accrual
basis of tax accounting, if an accrual of interest is denominated in a
foreign currency, the amount of interest income will be the U.S. dollar
value of the amount of interest accrued in foreign currency translated
at the appropriate accrual translation rate. The "appropriate accrual
translation rate" is the average spot rate in effect during such accrual
period or, at the Holder's election, the spot rate on the last day of
such accrual period (or on the day of receipt of such interest if such
day is within five days of the end of the applicable accrual period).
If the latter translation convention is elected, such convention will
apply with respect to all other debt instruments held by the Holder
during or after the taxable year for which the election is made. Upon
receipt of the interest payment in foreign currency or upon disposition
of the Note, a Holder will recognize currency gain or loss with respect
to the accrued interest equal to the difference between the Holder's
accrued foreign currency interest income translated at the appropriate
accrual translation rate and the U.S. dollar value of the foreign
currency payment translated at the spot rate on the payment date,
regardless of whether the payment is in fact converted to U.S. dollars.
In the case of Original Issue Discount Notes, Treasury regulations
provide similar rules for both cash basis and accrual basis United
States Holders for calculating currency gain or loss with respect to
accrued Original Issue Discount. Original Issue Discount will accrue in
the currency in which the Note is denominated and will be translated
into U.S. dollars at the appropriate accrual translation rate. Upon
receipt of the accrued Original Issue Discount or the disposition of the
Note, such a Holder will recognize currency gain or loss with respect to
the accrued Original Issue Discount equal to the difference between the
Holder's accrued Original Issue Discount income translated at the
appropriate accrual translation rate and the U.S. dollar value of the
foreign currency payment translated at the spot rate on the payment date
or the date of disposition.
Currency gain or loss recognized by a Holder upon receipt of a
foreign currency payment will be treated as ordinary income or loss. In
accordance with current Treasury regulations, currency gain or loss will
not be treated as interest income or expense.
If a United States Holder acquires a Note (including an Original
Issue Discount Note) other than upon original issue for an amount less
than the principal amount or, in the case of an Original Issue Discount
Note, less than the Revised Issue Price (defined as the sum of the issue
price of the Note and the aggregate amount of Original Issue Discount
includible in gross income for all periods prior to the acquisition
without regard to acquisition premium) of such Original Issue Discount
Note on the date of acquisition, the Note may be considered to be a
"market discount bond". As a result, a portion of the gain on the sale
or redemption of the Note (see "United States Tax Considerations--United
States Holders--Purchase, Sale and Redemption of Notes") equal to the
amount of market discount accrued with respect to the Note while it was
held by the United States Holder will be treated as interest income. In
addition, interest on indebtedness incurred or continued to purchase or
carry a Note that is a market discount bond, to the extent that it
exceeds in any year the interest (including Original Issue Discount) on
the Note includible in the United States Holder's income for that year,
may not be fully deductible in that year. The foregoing market discount
rules will not apply if the United States Holder elects to include in
income in each taxable year the portion of the market discount
attributable to that year (accrued on either a straight line or constant
interest rate basis) with respect to all market discount bonds acquired
during or after the taxable year in which such election is made. In the
case of a Note denominated in a foreign currency, the amount of market
discount will be determined in units of foreign currency in which the
Note is denominated. Unless the Holder elects to include in income in
each taxable year such market discount, the resultant market discount is
required to be translated at the spot rate on the date of sale or
redemption of the Note. No part of such market discount is treated as
currency gain or loss. If the Holder elects to include in income in each
taxable year such market discount, the accrued market discount currently
includible in income will be translated at the average spot rate for the
accrual period. Currency gain or loss with respect to accrued market
discount currently includible in income will be determined in a manner
similar to that for accrued Original Issue Discount as discussed above.
If a United States Holder acquires a Note other than upon original
issue for an amount more than the redemption price, a Holder may elect
to amortize such bond premium on a yield to maturity basis. In the case
of a Note denominated in a foreign currency, the amount of bond premium
will be determined in units of the foreign currency in which the Note is
denominated. If a Holder elects to amortize such bond premium, the
amount of accrued bond premium in units of foreign currency in each
taxable year will reduce interest income in units of foreign currency
for such taxable year. Currency gain or loss will be taken into account
with respect to accrued bond premium in each taxable year by treating
the portion of premium amortized with respect to any period as a return
of principal (see "United States Tax Considerations--United States
Holders--Purchase, Sale and Redemption of Notes").
If a United States Holder acquires an Original Issue Discount Note
other than upon original issue for an amount more than the Revised Issue
Price of such Note on the date of acquisition, but less than the
redemption price of such Note, such a Holder will be required to reduce
each daily portion of accrued Original Issue Discount by an allocable
portion of such acquisition premium. The allocable portion of such
acquisition premium will be equal to the daily portion of accrued
Original Issue Discount multiplied by a fraction (i) the numerator of
which is the excess of the cost of the Original Issue Discount Note
incurred by such Holder over the Revised Issue Price of such Note on the
date of acquisition and (ii) the denominator of which is the excess of
the stated redemption price of the Original Issue Discount Note at
maturity over the Revised Issue Price of such Note on the date of
acquisition. In the case of an Original Issue Discount Note denominated
in a foreign currency, the amount of acquisition premium will be
determined in units of foreign currency in which the Note is
denominated. The amount of the allocable portion of acquisition premium
in units of foreign currency in each taxable year will reduce accrued
Original Issue Discount in units of foreign currency for such taxable
year. Currency gain or loss will be taken into account with respect to
accrued acquisition premium in each taxable year by treating the portion
of acquisition premium amortized with respect to any period as a return
of principal (see "United States Tax Considerations--United States
Holders--Purchase, Sale and Redemption of Notes").
A Holder may elect to include in gross income its entire return on
a Note (i.e., the excess of all remaining payments to be received on the
Note over the amount paid for such Note by the Holder) based on the
compounding of interest at a constant rate. This election for a Note
with amortizable bond premium or market discount results in a deemed
election to apply the same accrual principles to all of the Holder's
debt instruments with amortizable bond premium or market discount. This
election may be revoked only with the consent of the IRS.
Purchase, Sale and Redemption of Notes. A United States Holder's
tax basis in a Note will be its U.S. dollar cost. Such Holder's
original tax basis in a Note will be increased by (i) the net amount of
accrued Original Issue Discount included in income and (ii) the amount
of accrued market discount included in income. Such Holder's tax basis
in a Note will be decreased by (i) the amount of accrued bond premium
and (ii) payments other than Stated Interest received by the Holder with
respect to a Note. Although the issue has not yet been directly
addressed by Treasury regulations, in the case of a Note denominated in
a foreign currency, such Holder's original tax basis likely will be
increased by (i) the net amount of accrued Original Issue Discount
income in units of foreign currency translated at the appropriate
accrual translation rate in effect during such accrual period and
(ii) the amount of accrued market discount included in income in units
of foreign currency translated at the average spot rate in effect during
such accrual period. Such Holder's tax basis likely will be decreased
by (i) payments treated as receipts of accrued bond premium in units of
foreign currency translated at the spot rate on the date of acquisition;
(ii) payments treated as receipts of accrued Original Issue Discount
translated at the appropriate accrual translation rates, or accrued
market discount translated at the average spot rate, for the relevant
accrual period; and (iii) payments treated as receipts of principal
translated at the spot rate on the date of acquisition. In accordance
with current Treasury regulations, payments in units of foreign currency
received on a Note by such a Holder will be treated first as a receipt
of Stated Interest, second as a receipt of Original Issue Discount to
the extent accrued, and finally as a receipt of principal.
Subject to the discussion below and the discussion of Notes which
are market discount bonds (see "United States Tax Considerations--United
States Holders--Payments of Interest and Original Issue Discount"), upon
the sale or redemption of a Note, a United States Holder will recognize
capital gain or loss equal to the difference between the amount realized
on the sale or redemption of the Note and the tax basis of the Note.
The amount realized on a sale or redemption of a Note denominated in a
foreign currency will be equal to the sale proceeds or redemption price
in units of foreign currency translated at the spot rate on the date of
sale or redemption. Except to the extent described in the next
paragraph or described in "United States Tax Considerations--United
States Holders--Payments of Interest and Original Issue Discount", gain
or loss will be long-term capital gain or loss if at the time of the
sale or redemption the Note has been held for more than one year.
Except to the extent described in the discussion of market
discount bonds (see "United States Tax Considerations--United States
Holders--Payments of Interest and Original Issue Discount"), the portion
of the gain or loss recognized by a United States Holder on the sale or
redemption of a Note that is attributable to changes in exchange rates
will be treated as ordinary income or loss. If a United States Holder
acquires a Note denominated in a foreign currency on or after the date
of original issue, such Holder's currency gain or loss with respect to
principal will be calculated by multiplying the principal amount in
units of foreign currency by the change in spot rates between the date
such Holder acquired the Note and the date it was sold or redeemed. For
purposes of computing currency gain or loss, the principal amount of a
Note will be a Holder's purchase price for the Note in units of foreign
currency. The sum of any currency gain or loss with respect to the
principal of and accrued but unpaid interest (including accrued but
unpaid Original Issue Discount, if any) on a Note will be realized only
to the extent of the total gain or loss realized on the sale or
redemption.
Exchange of Foreign Currency. Foreign currency received as
interest on a Note or on the sale or redemption of a Note will have a
tax basis equal to its U.S. dollar value (translated at the spot rate)
at the time such interest is received or at the time of sale or
redemption of the Note. Foreign currency purchased will generally have
a tax basis equal to the U.S. dollar cost of acquisition. Any gain or
loss recognized on a sale or other disposition of the foreign currency
(including its use to purchase Notes or its exchange for U.S. dollars)
will be ordinary income or loss.
Foreign Holders
U.S. Withholding Tax. Under United States federal income tax laws
now in effect, and subject to the discussion of backup withholding which
follows, payments by Sears or any paying agent thereof (in its capacity
as such) of principal of and interest (including payments of Original
Issue Discount, if any) on (and premium, if any, on) a Note to a Holder
who is not a United States Person will not be subject to United States
federal withholding tax, provided in the case of interest (including
payments of Original Issue Discount, if any) that (i) such Holder does
not actually or constructively own 10 percent or more of the total
combined voting power of all classes of stock of Sears entitled to vote;
(ii) such Holder is not a controlled foreign corporation for United
States tax purposes with respect to which Sears is a "related person" as
defined in the Code; and (iii) (A) the beneficial owner of the Note
provides a signed written statement to Sears or its agent, under penal-
ties of perjury, that certifies that it is not a United States Person
and provides its name and address, (B) a securities clearing
organization, bank or other financial institution that holds customers'
securities in the ordinary course of its trade or business (a "Financial
Institution") and holds the Note on behalf of the beneficial owner
provides an intermediary certificate to Sears or its agent under
penalties of perjury that such a statement has been received from the
beneficial owner by it or by a Financial Institution between it and the
beneficial owner and furnishes the payor with a copy thereof, or (C) a
securities clearing organization that is the last intermediary in the
chain before Sears or its agent (a "qualified clearing organization")
electronically provides an intermediary certificate to Sears or its
agent under penalties of perjury that such a statement has been received
from the beneficial owner by it or by an intermediary that is a member
of the qualified clearing organization and agrees to furnish (or to
cause the relevant member intermediary to furnish) promptly upon the
request of Sears or the Internal Revenue Service such statement. A
statement described in this paragraph is effective only with respect to
interest payments made to the certifying Holder after the issuance of
the statement in the calendar year of its issuance and the two
immediately succeeding calendar years.
U.S. Income Tax. Except for the possible imposition of United
States withholding tax (see "United States Tax Considerations--Foreign
Holders--U.S. Withholding Tax") and backup withholding tax (see "United
States Tax Considerations--Backup Withholding"), payments of principal
of and interest (including accrued Original Issue Discount, if any) on
(and premium, if any, on) a Note to a Holder who is not a United States
Person will not be subject to United States federal income tax, and
gains from the sale, redemption or other disposition of a Note will not
be subject to United States federal income tax, provided that:
(a) The Holder (or the fiduciary, settlor, or beneficiary of, or a
person holding a power over, such Holder, if such Holder is an estate or
trust; or a partner of such Holder, if such Holder is a partnership)
shall not be or have been engaged in a trade or business, or be or have
been present in, or have or have had a permanent establishment in the
United States;
(b) There shall not have been a present or former connection
between such Holder (or between the fiduciary, settlor, or beneficiary
of, or a person holding a power over, such Holder, if such Holder is an
estate or trust; or a partner of such Holder, if such Holder is a
partnership) and the United States, including, without limitation, such
Holder's status as a citizen or former citizen thereof or resident or
former resident thereof; and
(c) The Holder (or the fiduciary, settlor, or beneficiary of, or
a person holding a power over, such Holder, if such Holder is an estate
or trust; or a partner of such Holder, if such Holder is a partnership)
is not and has not been, for United States tax purposes, (i) a personal
holding company, (ii) a corporation that accumulates earnings to avoid
United States federal income tax, or (iii) a person treated as making an
election the effect of which is to make payments of principal of and
interest (including accrued Original Issue Discount, if any) on (and
premium, if any, on) Notes subject to United States federal income tax.
If a Holder who is not a United States Person is engaged in a
trade or business in the United States and interest (including accrued
Original Issue Discount, if any), gain or income in respect of a Note of
such Holder is effectively connected with the conduct of such trade or
business, the Holder, although exempt from the withholding tax discussed
in the preceding paragraphs, may be subject to United States income tax
on such interest (including accrued Original Issue Discount, if any),
gain or income at the statutory rates provided for United States Persons
after deduction of deductible expenses allocable to such effectively
connected interest, gain or income. In addition, if such a Holder is a
foreign corporation, it may be subject to a branch profits tax equal to
30% of its effectively connected earnings and profits for the taxable
year, as adjusted for certain items, unless a lower rate applies under a
United States income tax treaty with the Holder's country of residence.
For this purpose, interest (including accrued Original Issue Discount,
if any), gain or income in respect of a Note will be included in
earnings and profits subject to the branch tax if the interest
(including accrued Original Issue Discount, if any), gain or income is
effectively connected with the conduct of the United States trade or
business of the Holder.
U.S. Estate Tax. A Note held by an individual who at the time of
death is not a citizen or resident of the United States will generally
not be subject to United States federal estate tax if the individual
does not actually or constructively own 10% or more of the total
combined voting power of all classes of stock of Sears and interest
(including accrued Original Issue Discount, if any) on the Note is not
effectively connected with a United States trade or business of the
individual.
Backup Withholding
A 31% "backup" withholding tax and information reporting
requirements apply to certain payments of principal of and interest
(including payments of Original Issue Discount, if any) on (and premium,
if any, on) an obligation, and to proceeds of the sale of an obligation
before maturity, to certain noncorporate United States Holders, if such
Holders fail to provide correct taxpayer identification numbers and
other information or fail to comply with certain other requirements.
Sears, its paying agent, or a broker, as the case may be, will be
required to withhold from any payment that is subject to backup
withholding, a tax equal to 31% of such payment unless the Holder
furnishes its taxpayer identification number in the manner prescribed in
applicable Treasury regulations and certain other conditions are met.
In the case of payments of principal of and interest (including
payments of Original Issue Discount, if any) on (and premium, if any,
on) Notes by Sears or paying agents of Sears to Holders who are not
United States Persons, temporary Treasury regulations provide that
backup withholding and information reporting will not apply if the
Holder has provided the required certification of its non-United States
status under penalties of perjury or has otherwise established an
exemption (provided that neither Sears nor its paying agent has actual
knowledge that the Holder is a United States Person or the conditions of
any other exemption are not in fact satisfied). In addition, if payment
is collected by a foreign office of a custodian, nominee or other agent
acting on behalf of an owner of a Note, such custodian, nominee or other
agent will not be required to apply backup withholding to its payments
to such owner. However, in such case if the custodian, nominee or other
agent is a United States Person, a controlled foreign corporation for
United States federal income tax purposes, or a foreign person 50% or
more of whose gross income is from a United States trade or business for
a specified three-year period, such custodian, nominee or other agent
will be subject to certain information reporting requirements with
respect to such payment unless such custodian, nominee or other agent
has evidence in its records that the Holder is not a United States
Person and no actual knowledge that such evidence is false or the Holder
otherwise establishes an exemption or is an exempt recipient. An exempt
recipient includes a bank, corporation or Financial Institution.
Under current regulations, payments of the proceeds of the sale of
a Note by a Holder who is not a United States Person to or through a
foreign office of a broker will not be subject to backup withholding.
Payments by foreign offices of a broker that is a United States Person,
a controlled foreign corporation for United States federal income tax
purposes or a foreign person 50% or more of whose gross income is from a
United States trade or business for a specified three-year period are
currently subject to certain information reporting requirements, unless
the payee is an exempt recipient or the broker has evidence in its
records that the payee is not a United States Person and no actual
knowledge that such evidence is false. Payments of the proceeds of a
sale to or through the United States office of a broker will be subject
to information reporting and backup withholding unless the payee
certifies under penalty of perjury that he is not a United States Person
and provides his name and address or the payee otherwise establishes an
exemption.
Any amounts withheld under the backup withholding rules from a
payment to a Holder will be allowed as a refund or a credit against such
Holder's United States federal income tax, provided that the required
information is furnished to the United States Internal Revenue Service.
The foregoing is based on the Internal Revenue Code of 1986, as
amended, regulations, rulings, administrative pronouncements and
judicial decisions as of the date hereof. Subsequent developments in
these areas could have a material effect on this opinion.
We hereby confirm that, as of the date hereof, the statements as
to United States law in the Prospectus Supplement contained under the
caption "United States Tax Considerations" are correct. We hereby
consent to the use of our opinion as set forth in the Prospectus
Supplement and the reference to our firm in said Supplement.
The Chase Manhattan Bank, N.A., as Trustee, may rely on this
opinion as if it were addressed to them.
Very truly yours,
BAKER & MCKENZIE
RHD/LGH/JOD
BOOK-ENTRY-ONLY CORPORATE MEDIUM-TERM NOTE
(GLOBAL CERTIFICATE) PROGRAM
Letter of Representations
(To be Completed by Issuer, Issuing Agent, and Paying Agent)
Sears, Roebuck and Co.
(Name of Issuer)
Chemical Bank 2505
(Name and DTC Participant Number of Issuing Agent)
Same
(Name and DTC Participant Number of Paying Agent)
April 25, 1995
(Date)
Attention: General Counsel's Office
The Depository Trust Company
55 Water Street; 49th Floor
New York, NY 10041-0099
Re: Sears, Roebuck and Co.
Medium-Term Notes Series VIII
(Description of Program, including series designator and rank of
indebtedness.)
Ladies and Gentlemen:
This letter sets forth our understanding with respect to certain
matters relating to the issuance by Issuer from time to time of notes
under its medium-term note program described above (the "Notes").
Issuing Agent will act as issuing agent with respect to the Notes.
Paying Agent will act as paying agent with respect to the Notes. The
Notes will be issued pursuant to a prospectus supplement, private
placement memorandum, or other such document authorizing the issuance of
the Notes dated as of April 25, 1995.
Paying Agent has entered into a Medium-Term Note Certificate
Agreement with The Depository Trust Company ("DTC") dated as of December
2, 1988, pursuant to which Paying Agent will act as custodian of Global
Certificates evidencing the Notes, when issued. Paying Agent will amend
Exhibit A to such Medium-Term Note Certificate Agreement to include the
program described above prior to issuance of the Notes.
To induce DTC to accept the Notes as eligible for deposit at DTC
and to act in accordance with its Rules with respect to the Notes,
Issuer, Issuing Agent, and Paying Agent make the following
representations to DTC:
1. Each issue of the Notes shall be evidenced by one Global
Certificate in registered form registered in the name of DTC's nominee,
Cede & Co., and such Certificate shall represent 100% of the principal
amount of such issue of the Notes. If, however, the principal amount of
the issue exceeds $150,000,000, one Certificate shall be issued with
respect to each $150,000,000 of principal amount and an additional
Certificate shall be issued with respect to any remaining principal
amount.
2. Issuer or Issuing Agent has obtained from the CUSIP Service
Bureau a written list of approximately 900 nine-character numbers (the
basic first six characters of which are the same and uniquely identify
Issuer and the Notes to be issued under its medium-term note program
described above), and Issuing Agent has delivered a copy of such list to
DTC's Underwriting Department. The CUSIP numbers on such list have been
reserved for future assignment to issues of the Notes. At any time when
fewer than 100 of the CUSIP numbers on such list remain unassigned,
Issuer or Issuing Agent shall promptly obtain from the CUSIP Service
Bureau an additional written list of approximately 900 such numbers, and
Issuing Agent shall promptly deliver a copy of such list to DTC's
Underwriting Department.
3. When Notes are to be issued through DTC, Issuing Agent shall
give notice to Paying Agent and issuance instructions to DTC in
accordance with DTC's Procedures, including DTC's Issuing/Paying Agent
Procedures (the "Procedures"), a copy of which previously has been
furnished to Issuing Agent and Paying Agent. The giving of such
issuance instructions, which include delivery instructions, to DTC shall
constitute:
(a) a representation that the Notes are delivered, in connection
with their issuance, upon payment or the promise to pay by the receivers
of such deliveries; and
(b) a confirmation that a Certificate (or Certificates)
evidencing such Notes, in the form described in Paragraph 1, has been
issued and authenticated.
4. If issuance of Notes through DTC is scheduled to take place
one or more days after Issuing Agent has given issuance instructions to
DTC, Issuing Agent may cancel such issuance by giving a cancellation
instruction to DTC in accordance with the Procedures.
5. At any time that Paying Agent has Notes in its DTC account,
it may request withdrawal of such Notes from DTC by giving a withdrawal
instruction to DTC in accordance with the Procedures. Upon DTC's
acceptance of such withdrawal instruction, Paying Agent shall reduce the
principal amount of the Certificate evidencing the Notes accordingly.
6. In the event of any solicitation of consents from or voting
by holders of the Notes, Issuer, Issuing Agent, or Paying Agent shall
establish a record date for such purposes (with no provision for
revocation of consents or votes by subsequent holders) and shall, to the
extent possible, send notice of such record date to DTC not less than 15
calendar days in advance of such record date.
7. In the event of a full or partial redemption of an issue of
outstanding Notes, Issuer or Paying Agent shall send a notice to DTC
specifying: (a) the amount of the redemption; and (b) the date such
notice is to be mailed to beneficial owners or published (the
"Publication Date"). such notice shall be sent to DTC by a secure means
(e.g., legible telecopy, registered or certified mail, overnight
delivery) in a timely manner designed to assure that such notice is in
DTC's possession no later than two business days before the Publication
Date. Issuer or Paying Agent shall forward such notice either in a
separate secure transmission for each CUSIP number or in a secure
transmission for multiple CUSIP numbers (if applicable) which includes a
manifest or list of each CUSIP submitted in that transmission. (The
party sending such notice shall have a method to verify subsequently the
use of such means and the timeliness of such notice.) The Publication
Date shall be not less than 30 days nor more than 60 days prior to the
redemption date. It is understood that DTC's current practice is to
perform its call lottery in $1,000 principal amount increments.
8. (a) After the first interest payment has been made on
individual issues of the Notes (having different original issue dates
but otherwise the same terms, including interest rate, interest payment
dates, rank, stated maturity, repayment options, redemption provisions,
and currency in which the issue is denominated), to consolidate such
issues Issuing Agent shall deliver to DTC and Paying Agent (as well as
to the CUSIP Service Bureau and Interactive Data Corporation) at least
30 days before the day on which the consolidation is to be effective, as
determined by Issuing Agent (the "Exchange Date"), a written notice of
consolidation specifying the CUSIP numbers of the individual issues to
be consolidated and the new CUSIP number of the consolidated issue. The
Exchange Date shall be at least 30 days prior to an interest payment
date for such issues.
(b) On the Exchange Date, Paying Agent shall arrange for the
exchange of the Certificates evidencing the issues to be consolidated
for a single Certificate bearing a new CUSIP number (the "replacement
Certificate"). The replacement Certificate shall bear the original
issue dates, together with the respective principal amounts to which
they relate, for all exchanged Certificates. Notwithstanding the
foregoing, if the Certificates to be exchanged exceed $150,000,000 in
aggregate principal amount, one replacement Certificate shall be issued
with respect to each $150,000,000 of the aggregate principal amount and
an additional replacement Certificate shall be issued with respect to
any remaining aggregate principal amount.
9. (a) With respect to an issue of Notes that are repayable at
the option of the holder, Paying Agent shall send on the day which is
the earlier of 60 days prior to the purchase date or 5 days prior to the
start of the tender exercise period a notice to DTC listing the CUSIP
number of such issue, the start date and end date of the tender exercise
period, the repayment price, and the purchase date. Paying Agent shall
send such notice with respect to an issue of Notes with a "one time
only" repayment option when such option arises; in the case of an issue
of Notes that are repayable on a regular quarterly, semi-annual, annual,
or less frequent cycle, Paying Agent shall send such notice with respect
to each repayment option as it arises, or shall send such notice with
respect to all repayment options when the first such option arises; and,
for an issue of Notes that are repayable on a regular monthly cycle,
Paying Agent shall send such notice with respect to the first repayment
option and annually thereafter; provided, however, Paying Agent shall in
all cases promptly send notice of any change in the issue's operational
terms affecting the repayment options (e.g., an upcoming mandatory
tender), when known.
(b) Paying Agent recognizes that DTC will use its Repayment
Option Procedures, a copy of which previously has been furnished to
Paying Agent, to process tenders of the Notes. It is understood that
under the Repayment Option Procedures DTC will receive daily
instructions from its Participants to tender Notes for purchase. On the
purchase date, if - after paying DTC for tendered Notes - Paying Agent
wishes to retire the tendered Notes, it shall notify DTC to reduce the
principal amount of the issue of the Notes by the aggregate principal
amount of the tendered Notes and shall reduce the principal amount of
the Certificate evidencing the tendered Notes accordingly.
10. (a) Issuer and Paying Agent shall take all steps necessary
in order for any interest payment date on any issue of the Notes
together with the amount of interest payable, as well as changes in the
interest rates on variable rate Notes as they occur from time to time,
to be listed in the appropriate daily bond report published by Standard
& Poor's Corporation.
(b) With regard to variable rate Notes on which the interest
rate is reset daily or weekly, Paying Agent shall, in accordance with
the Procedures, deliver to DTC's Dividend Department, Standard & Poor's
Corporation and Interactive Data Corporation on each day on which the
amount of interest to be paid on the following payment date (including
the issue's first interest payment date) is determined a listing of the
CUSIP number assigned to each such issue along with corresponding
specifications of the record date, payment date, and dollar amount of
interest per $1,000 principal amount of the Notes to be paid on such
payment date. For variable rate Notes on which the interest rate is
reset monthly, quarterly, semiannually, or annually, Paying Agent shall
deliver a similar listing to Standard & Poor's Corporation and
Interactive Data Corporation on the day interest payment amounts are
determined.
(c) With regard to each issue of fixed rate Notes, promptly
after each record date Paying Agent shall deliver to DTC a written
notice specifying by CUSIP number the amount of interest to be paid on
each such issue on the following interest payment date, other than at
maturity, and the total of such amounts.
11. Paying Agent shall deliver to DTC on or about the first
business day of each month a written list of principal and interest to
be paid on each issue of the Notes maturing in the following month.
Paying Agent and DTC shall confirm the amounts of principal and interest
to be paid on each such issue on or about the fifth business day
preceding its maturity.
12. All notices and payment advices sent to DTC shall contain
the CUSIP number of the issue of the Notes.
13. Notices to DTC pursuant to Paragraph 6 by telecopy shall be
sent to DTC's Reorganization Department at (212) 709-6896 or (212) 709-
6897, and receipt of such notices shall be confirmed by telephoning
(212) 709-6870. Notices to DTC pursuant to Paragraph 6 by mail or any
other means shall be sent to:
Reorganization Manager
The Depository Trust Company
7 Hanover Square; 23rd Floor
New York, NY 10004-2695
14. Notices to DTC pursuant to Paragraph 7 by telecopy shall be
sent to DTC's Call Notification Department at (516) 227-4164 or (516)
227-4190. If the party sending the notice does not receive a telecopy
receipt from DTC confirming that the notice has been received, such
party shall telephone (516) 227-4070. Notices to DTC pursuant to
Paragraph 7 by mail or by any other means shall be sent to:
Call Notification Department
The Depository Trust Company
711 Stewart Street
Garden City, NY 11530-4719
15. Notices to DTC pursuant to Paragraphs 8 and 11 and notices
of other corporate actions (including mandatory tenders, exchanges, and
capital changes) by telecopy shall be sent to DTC's Reorganization
Department at (212) 709-1093 or (212) 709-1094, and receipt of such
notices shall be confirmed by telephoning (212) 709-6884. Notices to
DTC pursuant to Paragraphs 8 and 11 and notices of other corporate
actions by mail or by any other means shall be sent to the address
indicated in Paragraph 13.
16. Notices to DTC pursuant to Paragraph 9 by telecopy shall be
sent to DTC's Reorganization Department at (212) 709-1093 or (212) 709-
1094, and receipt of such notices shall be confirmed by telephoning
(212) 709-1470. Notices to DTC pursuant to Paragraph 9 by mail or by
any other means shall be sent to the address indicated in Paragraph 13.
17. Notices to DTC pursuant to Paragraphs 10 (b) and 10 (c) by
telecopy shall be sent to DTC's Dividend Department at (212) 709-1723 or
(212) 709-1686, and receipt of such notices shall be confirmed by
telephoning (212) 709-1270. Notices to DTC pursuant to Paragraphs 10(b)
and 10(c) by mail or by any other means shall be sent to:
Manager; Announcements
Dividend Department
The Depository Trust Company
7 Hanover Square; 22nd Floor
New York, NY 10004-2695
18. Transactions in the Notes shall be eligible for same-day
funds settlement in DTC's SDFS system.
A. Interest payments shall be received by Cede & Co., as
nominee of DTC, or its registered assigns in same-day
funds on each payment date (or the equivalent in
accordance with existing arrangements between Issuer
or Paying Agent and DTC). Such payments shall be made
payable to the order of Cede & Co.
B. Principal payments shall be made in same-day funds on
each payment date by Paying Agent in the manner set
forth in the SDFS Paying Agent Operating Procedures, a
copy of which previously has been furnished to Paying
Agent.
19. DTC may direct Issuer, Issuing Agent, or Paying Agent to use
any other telephone number or address as the number or address to which
notices or payments of interest or principal may be sent.
20. Issuer: (a) understands that DTC has no obligation to, and
will not, communicate to its Participants or to any person having an
interest in the Securities any information contained in the Security
certificate(s); and (b) acknowledges that neither DTC's Participants nor
any person having an interest in the Securities shall be deemed to have
notice of the provisions of the Security certificates by virtue of
submission of such certificate(s) to DTC.
21. In the event Issuer determines that beneficial owners of
Notes shall be able to obtain certificated Notes, Issuer or Paying Agent
shall notify DTC of the availability of Note certificates, and shall
issue, transfer, and exchange Note certificates in appropriate amounts,
as required by DTC and others.
22. DTC may discontinue providing its services as securities
depository with respect to the Notes at any time by giving reasonable
notice to Issuer or Paying Agent (at which time DTC will confirm with
Issuer or Paying Agent the aggregate amount of Notes outstanding by
CUSIP number). Under such circumstances, at DTC's request Issuer and
Paying Agent shall cooperate fully with DTC by taking appropriate action
to make available one or more separate certificates evidencing Notes to
any DTC Participant having Notes credited to its DTC accounts.
23. Nothing herein shall be deemed to require Issuing Agent or
Paying Agent to advance funds on behalf of Issuer.
Notes:
A. Current addresses for delivering notices to the CUSIP Service
Bureau, Interactive Data Corporation, and Standard & Poor's Corporation
are listed in DTC's Medium-Term Note Issuing/Paying Agent Procedures, a
copy of which can be obtained from DTC's Underwriting Department.
B. Schedule A contains statements that DTC believes accurately describe
DTC, the method of effecting book-entry transfers of securities
distributed through DTC, and certain related matters.
Very truly yours,
Sears, Roebuck and Co.
(Issuer)
By:/S/ Alice M. Peterson
(Authorized Officer's Signature)
Chemical Bank
(Issuing Agent)
By:/S/Yvonne D. Benn
(Authorized Officer's Signature)
Chemical Bank
(Paying Agent)
By:/S/Yvonne D. Benn
(Authorized Officer's Signature)
Received and Accepted:
THE DEPOSITORY TRUST COMPANY
By: /S/James McGreeney
(Authorized Officer)
cc: Sales Agent
Sales Agent's Counsel
SCHEDULE A
SAMPLE OFFERING DOCUMENT LANGUAGE
DESCRIBING BOOK-ENTRY-ONLY ISSUANCE
(Prepared by DTC-bracketed material may be applicable only to certain
issues)
1. The Depository Trust Company ("DTC"), New York, NY, will act as
securities depository for the securities (the "Securities"). The
Securities will be issued as fully-registered securities registered in
the name of Cede & Co. (DTC's partnership nominee). One fully-registered
Security certificate will be issued for [each issue of] the Securities,
[each] in the aggregate principal amount of such issue, and will be
deposited with DTC. [If, however, the aggregate principal amount of
[any] issue exceeds $150 million, one certificate will be issued with
respect to each $150 million of principal amount and an additional
certificate will be issued with respect to any remaining principal
amount of such issue.]
2. DTC is a limited-purpose trust company organized under the New
York Banking Law, a "banking organization" within the meaning of the New
York Banking Law, a member of the Federal Reserve System, a "clearing
corporation" within the meaning of the New York Uniform Commercial Code,
and a "clearing agency" registered pursuant to the provisions of Section
17A of the Securities Exchange Act of 1934. DTC holds securities that
its participants ("Participants") deposit with DTC. DTC also
facilitates the settlement among Participants of securities
transactions, such as transfers and pledges, in deposited securities
through electronic computerized book-entry changes in Participants'
accounts, thereby eliminating the need for physical movement of
securities certificates. Direct Participants include securities brokers
and dealers, banks, trust companies, clearing corporations, and certain
other organizations. DTC is owned by a number of its Direct
Participants and by the New York Stock Exchange, Inc., the American
Stock Exchange, Inc., and the National Association of Securities
Dealers, Inc. Access to the DTC system is also available to others such
as securities brokers and dealers, banks, and trust companies that clear
through or maintain a custodial relationship with a Direct Participant,
either directly or indirectly ("Indirect Participants"). The Rules
applicable to DTC and its Participants are on file with the Securities
and Exchange Commission.
3. Purchases of Securities under the DTC system must be made by or
through Direct Participants, which will receive a credit for the
Securities on DTC's records. The ownership interest of each actual
purchaser of each Security ("Beneficial Owner") is in turn to be
recorded on the Direct and Indirect Participants' records. Beneficial
Owners will not receive written confirmation from DTC of their purchase,
but Beneficial Owners are expected to receive written confirmations
providing details of the transaction, as well as periodic statements of
their holdings, from the Direct or Indirect Participant through which
the Beneficial Owner entered into the transaction. Transfers of
ownership interests in the Securities are to be accomplished by entries
made on the books of Participants acting on behalf of Beneficial Owners.
Beneficial Owners will not receive certificates representing their
ownership interests in Securities, except in the event that use of the
book-entry system for the Securities is discontinued.
4. To facilitate subsequent transfers, all Securities deposited by
Participants with DTC are registered in the name of DTC's partnership
nominee, Cede & Co. The deposit of Securities with DTC and their
registration in the name of Cede & Co. effect no change in beneficial
ownership. DTC has no knowledge of the actual Beneficial Owners of the
Securities; DTC's records reflect only the identity of the Direct
Participants to whose accounts such Securities are credited, which may
or may not be the Beneficial Owners. The Participants will remain
responsible for keeping account of their holdings on behalf of their
customers.
5. Conveyance of notices and other communications by DTC to Direct
Participants, by Direct Participants to Indirect Participants, and by
Direct Participants and Indirect Participants to Beneficial Owners will
be governed by arrangements among them, subject to any statutory or
regulatory requirements as may be in effect from time to time.
[6. Redemption notices will be sent to Cede & Co. If less than all
of the Securities within an issue are being redeemed, DTC's practice is
to determine by lot the amount of the interest of each Direct
Participant in such issue to be redeemed.]
7. Neither DTC nor Cede & Co. will consent or vote with respect to
Securities. Under its usual procedures, DTC mails an Omnibus Proxy to
the Issuer as soon as possible after the record date. The Omnibus Proxy
assigns Cede & Co.'s consenting or voting rights to those Direct
Participants to whose accounts the Securities are credited on the record
date (identified in a listing attached to the Omnibus Proxy).
8. Principal an interest payments on the Securities will be made to
DTC. DTC's practice is to credit Direct Participants' accounts on
payable date in accordance with their respective holdings shown on DTC's
records unless DTC has reason to believe that it will not receive
payment on payable date. Payments by Participants to Beneficial Owners
will be governed by standing instructions and customary practices, as is
the case with securities held for the accounts of customers in bearer
form or registered in "street name," and will be the responsibility of
such Participant and not of DTC, the Agent, or the Issuer, subject to
any statutory or regulatory requirements as may be in effect from time
to time. Payment of principal and interest to DTC is the responsibility
of the Issuer or the Agent, disbursement of such payments to Direct
Participants shall be the responsibility of the Issuer or the Agent,
disbursement of such payments to Direct Participants shall be the
responsibility of DTC, and disbursement of such payments to the
Beneficial Owners shall be the responsibility of Direct and Indirect
Participants.
[9. A Beneficial Owner shall give notice to elect to have its
Securities purchased or tendered, through its Participant, to the
[Tender/Remarketing] Agent, and shall effect delivery of such Securities
by causing the Direct Participant to transfer the Participant's interest
in the Securities, on DTC's records, to the [Tender/Remarketing] Agent.
The requirement for physical delivery of Securities in connection with a
demand for purchase or a mandatory purchase will be deemed satisfied
when the ownership rights in the Securities are transferred by Direct
Participants on DTC's records.]
10. DTC may discontinue providing its services as securities
depository with respect to the Securities at any time by giving
reasonable notice to the Issuer or Agent. Under such circumstances, in
the event that a successor securities depository is not obtained,
Security certificates are required to be printed and delivered.
11. The Issuer may decide to discontinue use of the system of book-
entry transfers through DTC (or a successor securities depository). In
that event, Security certificates will be printed and delivered.
12. The information in this section concerning DTC and DTC's book-
entry system has been obtained from sources that the Issuer believes to
be reliable, but the Issuer takes no responsibility for the accuracy
thereof.
EXTENSIONS OF MATURITY AND RESETTING OF INTEREST RATES RIDER
TO MEDIUM-TERM NOTE
A. In the event of an extension of maturity of a Note, the Paying
Agent will, at least 35 days prior to the original maturity date,
deliver a notice to DTC specifying the CUSIP number of the Notes, the
new maturity date of the Note and if the rate is being changed, the new
interest rate for the Note and the day such rate takes effect. It is
understood that in such event the holder of the Note will have the
option to elect repayment of such Note on the original maturity date.
Therefore such notice to DTC shall also list the start date and end date
of the upcoming exercise period, the repayment price and the purchase
date (original maturity date). The Paying Agent will also notify
Standard & Poor's Corporation and Interactive Data Corporation of any
maturity extensions. Such notice shall include the CUSIP number of the
Note, the new maturity date of the Note, and if the rate is being
changed, the new interest rate for the Note and the day such rate takes
effect. It is understood that if the Note is a floating rate Note the
Paying Agent will continue to notify Standard & Poor's Interactive Data
Corporation of the rate change information.
B. In the event that the Issuer elects to change the rate on a
fixed rate Note, the Paying Agent will, at least 35 days prior to the
date the new rate is to take effect, deliver a notice to DTC specifying
the CUSIP number of the Note, the new interest rate on the Note and the
date such rate change takes effect. It is understood that in such event
the holder of the Note will have the option to elect repayment of such
Note on the next interest payment date. Therefore such notice to DTC
shall also list the start date and end date of the upcoming exercise
period, the repayment price and the purchase date. The Paying Agent
will also notify Standard & Poor's Corporation and Interactive Data
Corporation of rate changes on fixed rate Notes. Such notice shall
include the CUSIP number of the Note, the new interest rate on the Note
and the date such rate change is to take effect. It is understood that
all resets of rates on fixed rate Notes will be communicated to Standard
& Poor's Interactive Data Corporation.
C. In the event that after the end of the exercise periods
referred to in paragraphs A and B the Issuer decides to increase the
interest rate on the Notes and allow holders to withdraw their repayment
instructions, the Paying Agent will, at least 15 days prior to the
purchase date, deliver a notice to DTC specifying the CUSIP number of
the Note, the new interest rate for the Note, the date such rate change
takes effect and the final date for the submission of withdrawal of
repayment options instructions. The Paying Agent will also notify
Standard & Poor's Corporation and Interactive Data Corporation of any
such increase in interest rates.
All notices to DTC concerning the events contemplated by this
paragraph and paragraphs A and B shall be delivered to the address
listed on Paragraph 14.
Renewable Notes
It is understood that Renewable Notes provide for an automatic
extension of maturity unless the holder thereof elects to terminate the
automatic extension for any portion of the principal amount of the
Renewable Notes. In the event such extension is terminated, such
portion will become due and payable on the Interest Payment Date falling
six months (unless another period is specified) after the election date
prior to which the holder made such election. The Paying Agent will use
DTC's free Deliver Order (DO) procedures to surrender to the IPA's DTC
account any Notes representing the portion of the principal amount of
Notes for which a holder has elected to terminate such extension.
The IPA will withdraw the Notes and issue short-term notes in
accordance with the Procedures. The IPA's Issuance Instructions include
a free DO to deliver the short-term notes to the Participant's account
and thus complete the exchange.
