SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
________________
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) June 29, 1995
SEARS ROEBUCK ACCEPTANCE CORP.
(Exact name of registrant as specified in charter)
Delaware 1-4040 51-0080535
(State or Other (Commission (IRS Employer
Jurisdiction of File Number) Identification No.)
Incorporation)
3711 Kennett Pike, Greenville Delaware 19807
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (302) 888-3116
<PAGE>
Item 5. Other Events.
On June 29, 1995, the Registrant entered into the credit
agreements attached hereto as Exhibits 4(a) and 4(b).
Item 7. Financial Statements, Pro Forma Financial Information and
Exhibits.
The exhibits are incorporated by reference to the exhibit
list attached hereto.
-2-
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 ACCEPTANCE CORP.
Date: , 1995 By:
STEPHEN D. CARP
Vice President, Finance
and Assistant Secretary
(principal financial and
accounting officer
and authorized officer of
Registrant)
-3-
EXHIBIT LIST
4(a) $4,680,000,000 Amended and Restated Credit Agreement dated
as of June 29, 1995 among Sears Roebuck Acceptance Corp.,
the banks listed on the signature pages thereof, the
Managing Agent, Co-Arrangers, Co-Agents and Lead Managers
referred to therein and Morgan Guaranty Trust Company of
New York, as Agent.
4(b) $1,000,000,000 Credit Agreement dated as of June 29, 1995
among Sears Roebuck Acceptance Corp., the banks listed on
the signature pages thereof, the Managing Agent, Co-
Arrangers, Co-Agents and Lead Managers referred to therein
and Morgan Guaranty Trust Company of New York, as Agent.
E1
EXECUTION COPY
$4,680,000,000
AMENDED AND RESTATED
CREDIT AGREEMENT
dated as of June 29, 1995
among
Sears Roebuck Acceptance Corp.,
The Banks Listed Herein,
The Managing Agent Referred to Herein,
The Co-Arrangers, Co-Agents and Lead Managers
Referred to Herein
and
Morgan Guaranty Trust Company of New York,
as Agent
TABLE OF CONTENTS
_________
1 The Table of Contents is not a part of this Agreement.
Page
ARTICLE I
DEFINITIONS
SECTION 1.01 Definitions........................................ 1
1.02 Accounting Terms and Determinations..................... 15
ARTICLE II
THE CREDITS
SECTION 2.01 Commitments to Lend................................ 16
2.02 Notice of Committed Borrowing........................... 16
2.03 Money Market Borrowings................................. 17
2.04 Notice to Banks; Funding of Loans....................... 21
2.05 Notes................................................... 22
2.06 Mandatory Termination of
Commitments and Repayment of Loans...................... 23
2.07 Interest Rates.......................................... 23
2.08 Facility Fee............................................ 27
2.09 Optional Termination or
Reduction of Commitments................................ 28
2.10 Method of Electing Interest Rates....................... 28
2.11 Optional Prepayments.................................... 30
2.12 General Provisions as to Payments....................... 30
2.13 Funding Losses.......................................... 31
2.14 Computation of Interest and Fees........................ 32
2.15 Taxes................................................... 32
2.16 Regulation D Compensation............................... 35
ARTICLE III
CONDITIONS
SECTION 3.01 Effectiveness of Amendment. . ..................... 36
3.02 Borrowings.............................................. 37
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
SECTION 4.01 Corporate Existence and Power...................... 39
4.02 Corporate and Governmental
Authorization; No Contravention......................... 39
4.03 Binding Effect.......................................... 40
4.04 Financial Information................................... 40
4.05 Litigation.............................................. 41
4.06 Compliance with ERISA................................... 41
4.07 Environmental Matters................................... 41
4.08 Taxes................................................... 41
4.09 Subsidiaries............................................ 42
4.10 Full Disclosure......................................... 42
ARTICLE V
COVENANTS
SECTION 5.01 Information........................................ 42
5.02 Maintenance of Property; Insurance...................... 45
5.03 Conduct of Business and
Maintenance of Existence................................ 45
5.04 Compliance with Laws.................................... 46
5.05 Letter Agreement........................................ 46
5.06 Negative Pledge......................................... 46
5.07 Consolidations, Mergers and Sales
of Assets............................................... 47
5.08 Use of Proceeds......................................... 48
5.09 Subsidiary Debt......................................... 48
5.10 Fixed Charge Coverage................................... 49
5.11 Debt.................................................... 49
ARTICLE VI
DEFAULTS
SECTION 6.01 Events of Default.................................. 49
6.02 Notice of Default....................................... 52
ARTICLE VII
THE AGENT
SECTION 7.01 Appointment and Authorization...................... 52
7.02 Agent and Affiliates.................................... 52
7.03 Action by Agent......................................... 52
7.04 Consultation with Experts............................... 53
7.05 Liability of Agent...................................... 53
7.06 Indemnification......................................... 53
7.07 Credit Decision......................................... 53
7.08 Successor Agent......................................... 54
7.09 Agent's Fee............................................. 54
7.10 Managing Agent, Co-Arrangers, Co-Agents
and Lead Managers....................................... 54
ARTICLE VIII
CHANGE IN CIRCUMSTANCES
SECTION 8.01 Basis for Determining Interest
Rate Inadequate or Unfair............................... 54
8.02 Illegality............................................. 55
8.03 Increased Cost and Reduced Return...................... 56
8.04 Base Rate Loans Substituted for
Affected Fixed Rate Loans............................... 58
8.05 Substitution of Bank.................................... 59
ARTICLE IX
MISCELLANEOUS
SECTION 9.01 Notices............................................ 59
9.02 No Waivers.............................................. 60
9.03 Expenses; Documentary Taxes;
Indemnification......................................... 60
9.04 Sharing of Set-Offs..................................... 61
9.05 Amendments and Waivers.................................. 62
9.06 Successors and Assigns.................................. 62
9.07 Collateral.............................................. 64
9.08 Governing Law; Submission to Juris-
diction................................................ 64
9.09 Counterparts; Integration............................... 65
9.10 Restrictions on Transfers............................... 65
9.11 Confidentiality......................................... 65
9.12 WAIVER OF JURY TRIAL.................................... 66
Exhibit A - Note
Exhibit B - Notice of Committed Borrowing
Exhibit C - Notice of Interest Rate Election
Exhibit D - Money Market Quote Request
Exhibit E - Invitation for Money Market Quotes
Exhibit F - Money Market Quote
Exhibit G - Opinion of Counsel for the Borrower
Exhibit H - Opinion of Special Counsel for the
Agent
Exhibit I - Assignment and Assumption Agreement
Exhibit J - Terms of Subordination
CREDIT AGREEMENT
AMENDED AND RESTATED AGREEMENT dated as of June
29, 1995 among SEARS ROEBUCK ACCEPTANCE CORP., the BANKS
listed on the signature pages hereof, the MANAGING AGENT,
CO-ARRANGERS, CO-AGENTS and LEAD MANAGERS referred to herein
and MORGAN GUARANTY TRUST COMPANY OF NEW YORK, as Agent.
WHEREAS the parties hereto have entered into a
Credit Agreement dated as of June 7, 1994, and wish, upon
satisfaction of the conditions set forth in Section 3.01
hereof and effective upon the Amendment Effective Date
referred to below, to amend and restate such Credit
Agreement as set forth herein (such amendment and
restatement, the "Amendment"; and such Credit Agreement, as
in effect from time to time prior to the Amendment Effective
Date, as amended and restated by the Amendment as of the
Amendment Effective Date and as further amended from time to
time thereafter, this "Agreement");
THEREFORE the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. Definitions. The following terms,
as used herein, have the following meanings:
"Absolute Rate Auction" means a solicitation of
Money Market Quotes setting forth Money Market Absolute
Rates pursuant to Section 2.03.
"Account" means an open-end charge plan for
specified Persons, maintained by Sears or an Affiliate of
Sears.
"Adjusted CD Rate" has the meaning set forth in
Section 2.07(b).
"Administrative Questionnaire" means, with respect
to each Bank, an administrative questionnaire in the form
prepared by the Agent and submitted to the Agent (with a
copy to the Borrower) duly completed by such Bank.
"Affiliate" of a given Person means any other
Person that directly, or indirectly through one or more
intermediaries, controls, or is controlled by, or is under
common control with, such given Person.
"Agent" means Morgan Guaranty Trust Company of New
York in its capacity as agent for the Banks hereunder, and
its successors in such capacity.
"Agreement" has the meaning set forth in the
WHEREAS clause hereof.
"Amendment" has the meaning set forth in the
WHEREAS clause hereof.
"Amendment Effective Date" means the date the
Amendment becomes effective in accordance with Section 3.01.
"Applicable Lending Office" means, with respect to
any Bank, (i) in the case of its Domestic Loans, its
Domestic Lending Office, (ii) in the case of its Euro-Dollar
Loans, its Euro-Dollar Lending Office and (iii) in the case
of its Money Market Loans, its Money Market Lending Office.
"Assessment Rate" has the meaning set forth in
Section 2.07(b).
"Assignee" has the meaning set forth in
Section 9.06(c).
"Bank" means each bank listed on the signature
pages hereof, each Assignee which becomes a Bank pursuant to
Section 9.06(c), and their respective successors.
"Base Rate" means, for any day, a rate per annum
equal to the higher of (i) the Prime Rate for such day and
(ii) the sum of 1/2 of 1% plus the Federal Funds Rate for
such day.
"Base Rate Loan" means (i) a Committed Loan which
bears interest at the Base Rate pursuant to the applicable
Notice of Committed Borrowing or Notice of Interest Rate
Election or the provisions of Article VIII or (ii) an
overdue amount which was a Base Rate Loan immediately before
it became overdue.
"Benefit Arrangement" means at any time an
employee benefit plan within the meaning of Section 3(3) of
ERISA which is not a Plan or a Multiemployer Plan and which
is maintained or otherwise contributed to by any member of
the ERISA Group.
"Borrower" means Sears Roebuck Acceptance Corp., a
Delaware corporation, and its successors.
"Borrower's 1994 Form 10-K" means the Borrower's
annual report on Form 10-K for 1994, as filed with the
Commission pursuant to the Exchange Act (excluding the
exhibits thereto).
"Borrowing" means a borrowing hereunder consisting
of Loans made to the Borrower at the same time by the Banks
pursuant to Article II on a single date and for a single
Interest Period. Borrowings are classified for purposes of
this Agreement either by reference to the pricing of Loans
comprising such Borrowing (e.g., a "Euro-Dollar Borrowing"
is a Borrowing comprised of Euro-Dollar Loans and a "Fixed
Rate Borrowing" is a Borrowing comprised of Fixed Rate
Loans) or by reference to the provisions of Article II under
which participation therein is determined (i.e., a
"Committed Borrowing" is a Borrowing under Section 2.01 in
which all Banks participate in proportion to their
Commitments, while a "Money Market Borrowing" is a Borrowing
under Section 2.03 in which the Bank participants are
determined on the basis of their bids in accordance
therewith).
"CD Base Rate" has the meaning set forth in
Section 2.07(b).
"CD Loan" means (i) a Committed Loan which bears
interest at a rate determined with reference to the CD Base
Rate pursuant to the applicable Notice of Committed
Borrowing or Notice of Interest Rate Election or (ii) an
overdue amount which was a CD Loan immediately before it
became overdue.
"CD Margin" has the meaning set forth in
Section 2.07(h).
"CD Reference Banks" means Morgan Guaranty Trust
Company of New York, Chemical Bank and Union Bank of
Switzerland.
"Co-Agents" means each Bank listed on the
signature pages hereof as a Co-Agent, each in its capacity
as co-agent hereunder.
"Co-Arrangers" means each Bank listed on the
signature pages hereof as a Co-Arranger, each in its
capacity as co-arranger hereunder.
"Commission" means the Securities and Exchange
Commission.
"Commitment" means, with respect to each Bank, the
amount set forth opposite the name of such Bank on the
signature pages hereof, as such amount may be reduced from
time to time pursuant to Section 2.09.
"Committed Loan" means a loan made by a Bank
pursuant to Section 2.01.
"Consolidated Debt" means at any date the Debt of
the Borrower and its Consolidated Subsidiaries, determined
on a consolidated basis as of such date.
"Consolidated Net Income" means, for any period,
the net income of the Borrower and its Consolidated
Subsidiaries for such period.
"Consolidated Stockholder's Equity" means as of
any date the total stockholder's equity of the Borrower and
its Consolidated Subsidiaries, plus the amount of any SRAC
Subordinated Debt, as of such date.
"Consolidated Subsidiary" means at any date any
Subsidiary or other Person the accounts of which are
consolidated with those of the Borrower in its consolidated
financial statements as of such date.
"Consolidated Tangible Net Worth" means at any
date the Consolidated Stockholder's Equity less the
consolidated Intangible Assets of the Borrower and its
Consolidated Subsidiaries, all determined as of such date.
For purposes of this definition "Intangible Assets" means
the amount (to the extent reflected as an asset on the
consolidated statement of financial position of the Borrower
and its Consolidated Subsidiaries) of (i) all write-ups
(other than write-ups resulting from foreign currency
translations and write-ups of assets of a going concern
business made within twelve months after the acquisition of
such business) subsequent to March 31, 1995 in the book
value of any asset owned by the Borrower or a Consolidated
Subsidiary and (ii) all unamortized debt discount and
expense to the extent reflected as an asset on a
consolidated statement of financial position of Borrower and
its Consolidated Subsidiaries, unamortized deferred charges,
goodwill, patents, trademarks, service marks, trade names,
anticipated future benefit of tax loss carry-forwards,
copyrights, organization or developmental expenses and other
intangible assets.
"Debt" of any Person means, at any date, without
duplication, (i) all obligations of such Person for borrowed
money properly recordable as a liability on the financial
statements of such Person, (ii) all obligations of such
Person, properly recordable as a liability on the financial
statements of such Person, evidenced by bonds, debentures,
notes or other similar instruments, (iii) all obligations of
such Person to pay the deferred purchase price of property
except trade accounts payable arising in the ordinary course
of business, (iv) the net present value of future minimum
lease payments under capital leases, (v) all direct recourse
payment obligations of such Person in respect of any
accounts receivable sold by such Person, (vi) all Debt (as
defined in clauses (i) through (v) above) of others secured
by a Lien on any asset of such Person, whether or not such
Debt is assumed by such Person, and (vii) all Debt (as
defined in clauses (i) through (vi) above) of others
Guaranteed by such Person; provided that SRAC Subordinated
Debt shall not be deemed to be Debt for the purpose of
determining the Debt of the Borrower.
"Domestic Business Day" means any day except a
Saturday, Sunday or other day on which commercial banks in
New York City or Chicago are authorized by law to close.
"Domestic Lending Office" means, as to each Bank,
its office located at its address set forth in its
Administrative Questionnaire (or identified in its
Administrative Questionnaire as its Domestic Lending Office)
or such other office as such Bank may hereafter designate as
its Domestic Lending Office by notice to the Borrower and
the Agent; provided that any Bank may so designate separate
Domestic Lending Offices for its Base Rate Loans, on the one
hand, and its CD Loans, on the other hand, in which case all
references herein to the Domestic Lending Office of such
Bank shall be deemed to refer to either or both of such
offices, as the context may require.
"Domestic Loans" means CD Loans or Base Rate Loans
or both.
"Domestic Reserve Percentage" has the meaning set
forth in Section 2.07(b).
"Effective Date" means June 7, 1994.
"Environmental Laws" means any and all federal,
state and local statutes, laws, regulations, ordinances,
rules, judgments, orders, decrees, permits, licenses,
agreements or other governmental restrictions relating to
the protection of the environment or to emissions,
discharges or releases of pollutants, contaminants,
petroleum or petroleum products, chemicals or industrial,
toxic or hazardous substances or wastes into the environment
or otherwise relating to the generation, processing, use,
treatment, storage, disposal, transport or handling of
pollutants, contaminants, petroleum or petroleum products,
chemicals or industrial, toxic or hazardous substances or
wastes, or the clean-up or other remediation thereof.
"ERISA" means the Employee Retirement Income
Security Act of 1974, as amended, or any successor statute.
"ERISA Group" means the Borrower and all members
of a controlled group of corporations and all trades or
businesses (whether or not incorporated) under common
control which, together with the Borrower, are treated as a
single employer under Section 414 of the Internal Revenue
Code.
"Euro-Dollar Business Day" means any Domestic
Business Day on which commercial banks are open for
international business (including dealings in dollar
deposits) in London.
"Euro-Dollar Lending Office" means, as to each
Bank, its office, branch or Affiliate located at its address
set forth in its Administrative Questionnaire (or identified
in its Administrative Questionnaire as its Euro-Dollar
Lending Office) or such other office, branch or Affiliate of
such Bank as it may hereafter designate as its Euro-Dollar
Lending Office by notice to the Borrower and the Agent.
"Euro-Dollar Loan" means (i) a Committed Loan
which bears interest at a rate determined with reference to
the London Interbank Offered Rate pursuant to the applicable
Notice of Committed Borrowing or Notice of Interest Rate
Election or (ii) an overdue amount which was a Euro-Dollar
Loan immediately before it became overdue.
"Euro-Dollar Margin" has the meaning set forth in
Section 2.07(h).
"Euro-Dollar Reference Banks" means the principal
London offices of Morgan Guaranty Trust Company of New York,
Chemical Bank and Union Bank of Switzerland.
"Euro-Dollar Reserve Percentage" means for any day
that percentage (expressed as a decimal) which is in effect
on such day, as prescribed by the Board of Governors of the
Federal Reserve System (or any successor) for determining
the maximum reserve requirement for a member bank of the
Federal Reserve System in New York City with deposits
exceeding five billion dollars in respect of "Eurocurrency
liabilities" (or in respect of any other category of
liabilities which includes deposits by reference to which
the interest rate on Euro-Dollar Loans is determined or any
category of extensions of credit or other assets which
includes loans by a non-United States office of any Bank to
United States residents).
"Event of Default" has the meaning set forth in
Section 6.01.
"Exchange Act" means the Securities Exchange Act
of 1934, as amended.
"Facility Fee Rate" has the meaning set forth in
Section 2.07(h).
"Federal Funds Rate" means, for any day, the rate
per annum (rounded upward, if necessary, to the nearest
1/100th of 1%) equal to the weighted average of the rates on
overnight Federal funds transactions with members of the
Federal Reserve System arranged by Federal funds brokers on
such day, as published by the Federal Reserve Bank of New
York on the Domestic Business Day next succeeding such day,
provided that (i) if such day is not a Domestic Business
Day, the Federal Funds Rate for such day shall be such rate
on such transactions on the next preceding Domestic Business
Day as so published on the next succeeding Domestic Business
Day, and (ii) if no such rate is so published on such next
succeeding Domestic Business Day, the Federal Funds Rate for
such day shall be the average rate quoted to Morgan Guaranty
Trust Company of New York on such day on such transactions
as determined by the Agent.
"Fixed Charge Coverage Ratio" means, for any
period, the Borrower's ratio of earnings to fixed charges,
determined for such period in accordance with Item 503(d) of
Regulation S-K promulgated by the Commission, as in effect
on the date hereof.
"Fixed Rate Loans" means CD Loans or Euro-Dollar
Loans or Money Market Loans (excluding Money Market LIBOR
Loans bearing interest at the Base Rate pursuant to Section
8.01(a)) or any combination of the foregoing.
"Group of Loans" means at any time a group of
Committed Loans consisting of (i) all Loans which are Base
Rate Loans at such time, (ii) all Loans which are CD Loans
having the same Interest Period at such time or (iii) all
Loans which are Euro-Dollar Loans having the same Interest
Period at such time; provided that, if Loans of any
particular Bank are converted to or made as Base Rate Loans
pursuant to Section 8.02 or 8.04, such Loans shall be
included in the same Group or Groups of Loans from time to
time as they would have been in if they had not been so
converted or made.
"Guarantee" by any Person means any obligation,
contingent or otherwise, of such Person directly or
indirectly guaranteeing any Debt (as defined in clauses (i)
through (vi) of the definition of Debt) of any other Person
or in any manner providing for the payment of any such Debt
of any other Person or otherwise protecting the holder of
such Debt against loss (whether by agreement to keep-well,
to purchase assets, goods, securities or services, or to
take-or-pay or otherwise), provided that the term Guarantee
shall not include endorsements for collection or deposit in
the ordinary course of business. The term "Guarantee" used
as a verb has a correlative meaning.
"Interest Period" means: (1) with respect to each
Euro-Dollar Loan, a period commencing on the date of
Borrowing specified in the applicable Notice of Borrowing or
on the date specified in the applicable Notice of Interest
Rate Election and ending one, two, three or six months
thereafter (or such other number of months thereafter as the
Borrower, the Agent and all the Banks may agree), as the
Borrower may elect in the applicable Notice; provided that:
(a) any Interest Period which would
otherwise end on a day which is not a Euro-Dollar
Business Day shall, subject to clause (c) below,
be extended to the next succeeding Euro-Dollar
Business Day unless such Euro-Dollar Business Day
falls in another calendar month, in which case
such Interest Period shall end on the next
preceding Euro-Dollar Business Day;
(b) any Interest Period which begins on the last
Euro-Dollar Business Day of a calendar month (or on a
day for which there is no numerically corresponding day
in the calendar month at the end of such Interest
Period) shall, subject to clause (c) below, end on the
last Euro-Dollar Business Day of a calendar month; and
(c) any Interest Period which would otherwise end
after the Termination Date shall end on the Termination
Date.
(2) with respect to each CD Loan, a period
commencing on the date of Borrowing specified in the
applicable Notice of Borrowing or on the date specified in
the applicable Notice of Interest Rate Election and ending
30, 60, 90 or 180 days thereafter (or such other number of
days thereafter as the Borrower, the Agent and all the Banks
may agree), as the Borrower may elect in the applicable
Notice; provided that:
(a) any Interest Period which would otherwise end
on a day which is not a Euro-Dollar Business Day shall,
subject to clause (b) below, be extended to the next
succeeding Euro-Dollar Business Day; and
(b) any Interest Period which would otherwise end
after the Termination Date shall end on the Termination
Date.
(3) with respect to each Money Market LIBOR
Borrowing, the period commencing on the date of such
Borrowing and ending such whole number of months thereafter
as the Borrower may elect in accordance with Section 2.03;
provided that:
(a) any Interest Period which would otherwise end
on a day which is not a Euro-Dollar Business Day shall,
subject to clause (c) below, be extended to the next
succeeding Euro-Dollar Business Day unless such
Euro-Dollar Business Day falls in another calendar
month, in which case such Interest Period shall end on
the next preceding Euro-Dollar Business Day;
(b) any Interest Period which begins on the last
Euro-Dollar Business Day of a calendar month (or on a
day for which there is no numerically corresponding day
in the calendar month at the end of such Interest
Period) shall, subject to clause (c) below, end on the
last Euro-Dollar Business Day of a calendar month; and
(c) any Interest Period which would otherwise end
after the Termination Date shall end on the Termination
Date.
(4) with respect to each Money Market Absolute
Rate Borrowing, the period commencing on the date of such
Borrowing and ending such number of days thereafter (but not
less than 30 days) as the Borrower may elect in accordance
with Section 2.03; provided that:
(a) any Interest Period which would otherwise end
on a day which is not a Euro-Dollar Business Day shall,
subject to clause (b) below, be extended to the next
succeeding Euro-Dollar Business Day; and
(b) any Interest Period which would otherwise end
after the Termination Date shall end on the Termination
Date.
"Internal Revenue Code" means the Internal Revenue
Code of 1986, as amended, or any successor statute.
"Lead Managers" means each Bank listed on the
signature pages hereof as a Lead Manager, each in its
capacity as lead manager hereunder.
"Letter Agreement" means the letter agreement
dated September 28, 1984 between the Borrower and Sears, as
amended as of October 17, 1991, and as the same may further
be amended from time to time in accordance with the terms
thereof and of Section 5.05.
"Level I Status" exists at any date if, at such
date, Sears Long-Term Securities are rated A+ or higher by
S&P or A1 or higher by Moody's.
"Level II Status" exists at any date if, at such
date, (i) Level I Status does not exist and (ii) Sears
Long-Term Securities are rated A- or higher by S&P or A3 or
higher by Moody's.
"Level III Status" exists at any date if, at such
date, (i) neither Level I Status nor Level II Status exists
and (ii) Sears Long-Term Securities are rated BBB+ or higher
by S&P or Baa1 or higher by Moody's.
"Level IV Status" exists at any date if, at such
date, (i) none of Level I, Level II and Level III Status
exists and (ii) Sears Long-Term Securities are rated BBB or
higher by S&P or Baa2 or higher by Moody's.
"Level V Status" exists at any date if none of
Level I, Level II, Level III and Level IV Status exists at
such date.
"LIBOR Auction" means a solicitation of Money
Market Quotes setting forth Money Market Margins based on
the London Interbank Offered Rate pursuant to Section 2.03.
"Lien" means (i) any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in
respect of any asset recorded as such on the financial
statements of the Borrower or any Subsidiary or (ii) the
interest of a vendor or lessor under any conditional sales
agreement, capital lease or other title retention agreement
relating to any asset recorded as such on the financial
statements of the Borrower or any Subsidiary.
"Loan" means a Domestic Loan or a Euro-Dollar Loan
or a Money Market Loan and "Loans" means Domestic Loans or
Euro-Dollar Loans or Money Market Loans or any combination
of the foregoing.
"London Interbank Offered Rate" has the meaning
set forth in Section 2.07(c).
"Managing Agent" means Chemical Bank in its
capacity as managing agent hereunder.
"Material Company" means any of the Borrower, any
Subsidiary, Sears, any Person of which Sears is a subsidiary
or any Material Sears Subsidiary.
"Material Plan" means at any time a Plan or Plans
having aggregate Unfunded Liabilities in excess of
$75,000,000.
"Material Sears Subsidiary" means any Sears
Subsidiary having consolidated total assets in excess of
$6,000,000,000 at the time of any determination of its
status hereunder.
"Moody's" means Moody's Investors Service, Inc.
"Money Market Absolute Rate" has the meaning set
forth in Section 2.03(d).
"Money Market Absolute Rate Loan" means a loan to
be made by a Bank pursuant to an Absolute Rate Auction.
"Money Market Lending Office" means, as to each
Bank, its Domestic Lending Office or such other office,
branch or affiliate of such Bank as it may hereafter
designate as its Money Market Lending Office by notice to
the Borrower and the Agent; provided that any Bank may from
time to time by notice to the Borrower and the Agent
designate separate Money Market Lending Offices for its
Money Market LIBOR Loans, on the one hand, and its Money
Market Absolute Rate Loans, on the other hand, in which case
all references herein to the Money Market Lending Office of
such Bank shall be deemed to refer to either or both of such
offices, as the context may require.
"Money Market LIBOR Loan" means a loan to be made
by a Bank pursuant to a LIBOR Auction (including such a loan
bearing interest at the Base Rate pursuant to Section
8.01(a)).
"Money Market Loan" means a Money Market LIBOR
Loan or a Money Market Absolute Rate Loan.
"Money Market Margin" has the meaning set forth in
Section 2.03(d).
"Money Market Quote" means an offer by a Bank to
make a Money Market Loan in accordance with Section 2.03.
"Multiemployer Plan" means at any time an employee
pension benefit plan within the meaning of Section
4001(a)(3) of ERISA to which any member of the ERISA Group
is then making or accruing an obligation to make
contributions or has within the preceding five plan years
made contributions, including for these purposes any Person
which ceased to be a member of the ERISA Group during such
five year period.
"Non-U.S. Bank" shall mean any Bank other than a
Bank that is organized under the laws of the United States
or any State thereof or the District of Columbia.
"Notes" means promissory notes of the Borrower,
substantially in the form of Exhibit A hereto, evidencing
the obligation of the Borrower to repay the Loans, and
"Note" means any one of such promissory notes issued
hereunder.
"Notice of Borrowing" means a Notice of Committed
Borrowing (as defined in Section 2.02) or a Notice of Money
Market Borrowing (as defined in Section 2.03(f)).
"Notice of Interest Rate Election" has the meaning
set forth in Section 2.10.
"Obligor" means, with respect to any Account, the
Person or Persons obligated to make payments with respect to
such Account, including any guarantor thereof.
"Parent" means, with respect to any Bank, any
Person controlling such Bank.
"Participant" has the meaning set forth in
Section 9.06(b).
"PBGC" means the Pension Benefit Guaranty
Corporation or any entity succeeding to any or all of its
functions under ERISA.
"Person" means an individual, a corporation, a
partnership, an association, a trust or any other entity or
organization, including a government or political
subdivision or an agency or instrumentality thereof.
"Plan" means at any time an employee pension
benefit plan (other than a Multiemployer Plan) which is
covered by Title IV of ERISA or subject to the minimum
funding standards under Section 412 of the Internal Revenue
Code and either (i) is maintained, or contributed to, by any
member of the ERISA Group for employees of any member of the
ERISA Group or (ii) has at any time within the preceding
five years been maintained, or contributed to, by any Person
which was at such time a member of the ERISA Group for
employees of any Person which was at such time a member of
the ERISA Group.
"Prime Rate" means the rate of interest publicly
announced by Morgan Guaranty Trust Company of New York in
New York City from time to time as its Prime Rate.
"Receivable" means, at any date, any amounts owing
at such date by the Obligors under an Account, including,
without limitation, amounts owing for the payment of goods
and services, cash advances, if applicable, finance charges
and other charges, if any.
"Reference Banks" means the CD Reference Banks or
the Euro-Dollar Reference Banks, as the context may require,
and "Reference Bank" means any one of such Reference Banks.
"Regulation U" means Regulation U of the Board of
Governors of the Federal Reserve System, as in effect from
time to time.
"Required Banks" means at any time Banks having at
least 66-2/3% of the aggregate amount of the Commitments or,
if the Commitments shall have been terminated, holding Notes
evidencing at least 66-2/3% of the aggregate unpaid
principal amount of the Loans.
"Revolving Credit Period" means the period from
and including the Effective Date to and including the
Termination Date.
"S&P" means Standard & Poor's Corporation.
"Sears" means Sears, Roebuck and Co., a New York
corporation, and its successors.
"Sears Long-Term Securities" means senior
unsecured long-term debt securities of Sears, without any
direct third-party credit enhancement with respect thereto.
"Sears Subsidiary" means any corporation or other
entity of which securities or other ownership interests
having ordinary voting power to elect a majority of the
Board of Directors or other persons performing similar
functions are at the time directly or indirectly owned or
controlled by Sears or one or more other Sears Subsidiaries,
or by Sears and one or more other Sears Subsidiaries,
provided that any such securities or other ownership
interests held in a fiduciary capacity for others, or as
portfolio investments, by Sears (to the extent it engages in
a financial or insurance business) or by any Sears
Subsidiary engaged in the insurance business or a financial
business shall be disregarded for purposes of this
definition.
"SRAC Preferred Stock" means at any time one or
more series of preferred stock of the Borrower outstanding
at such time; provided that (i) neither the voluntary or
involuntary liquidation preference nor the redemption price
of all such preferred stock outstanding at any time shall
exceed $150,000,000 and (ii) the terms of such preferred
stock shall not grant voting rights to the holders thereof
to elect members of the board of directors of the Borrower
except the right to elect not more than the lesser of two
members or 25% of the members of such board upon the failure
of the Borrower to pay dividends or similar contingency.
"SRAC Subordinated Debt" means any indebtedness
for borrowed money of the Borrower to any of (w) Sears,
(x) a Wholly-Owned Subsidiary of Sears, (y) a corporation of
which Sears is a Wholly-Owned Subsidiary or (z) a
Wholly-Owned Subsidiary of a corporation described in clause
(y) above, evidenced by notes or other evidences of
indebtedness for borrowed money which is made subordinate
and junior in right of payment to the Notes and such other
indebtedness for borrowed money of the Borrower as may be
specified (whether expressly or by category) in the
instruments evidencing such indebtedness (the Notes and all
other obligations of the Borrower hereunder and such other
indebtedness of the Borrower to which the SRAC Subordinated
Debt is subordinate and junior being herein called "Superior
Debt") by provisions no less favorable to the holders of the
Superior Debt than those set forth in Exhibit J.
"Status" refers to the determination of which of
Level I Status, Level II Status, Level III Status, Level IV
Status or Level V Status exists at any date.
"Subsidiary" means any corporation or other entity
of which securities or other ownership interests having
ordinary voting power to elect a majority of the board of
directors or other persons performing similar functions are
at the time directly or indirectly owned by the Borrower.
"Termination Date" means June 29, 2000 or, if such
day is not a Euro-Dollar Business Day, the next succeeding
Euro-Dollar Business Day unless such Euro-Dollar Business
Day falls in another calendar month, in which case the
Termination Date shall be the next preceding Euro-Dollar
Business Day.
"Unfunded Liabilities" means, with respect to any
Plan at any time, the amount (if any) by which (i) the
present value of all benefits under such Plan exceeds (ii)
the fair market value of all Plan assets allocable to such
benefits (excluding any accrued but unpaid contributions),
all determined as of the then most recent valuation date for
such Plan, but only to the extent that such excess
represents a potential liability of a member of the ERISA
Group to the PBGC or any other Person under Title IV of
ERISA.
"Wholly-Owned Subsidiary" of a given Person means
any Person all of the shares of capital stock or other
ownership interests of which (except directors' qualifying
shares) are at the time directly or indirectly owned by the
given Person or one or more other Wholly-Owned Subsidiaries
or by the given Person and one or more other Wholly-Owned
Subsidiaries.
SECTION 1.02. Accounting Terms and
Determinations. Unless otherwise specified herein, all
accounting terms used herein shall be interpreted, all
accounting determinations hereunder shall be made, and all
financial statements required to be delivered hereunder
shall be prepared in accordance with U.S. generally accepted
accounting principles as in effect from time to time,
applied on a basis consistent (except for changes concurred
in by the Borrower's independent public accountants) with
the most recent audited financial statements delivered to
the Banks by the Borrower pursuant to this Agreement;
provided that, if the Borrower notifies the Agent that the
Borrower wishes to amend any provision hereof to eliminate
the effect of any change after the date hereof in such
generally accepted accounting principles (which, for
purposes of this proviso shall include the generally
accepted application or interpretation thereof) on the
operation of such provision (or if the Agent notifies the
Borrower that the Required Banks wish to amend any such
provision for such purpose), then such provision shall be
interpreted and the Borrower's compliance with such
provision shall be determined, and all accounting
determinations with respect thereto shall be made, on the
basis of such generally accepted accounting principles in
effect immediately before the relevant change in such
generally accepted accounting principles became effective,
until either such notice is withdrawn or such provision is
amended in a manner satisfactory to the Borrower and the
Required Banks.
ARTICLE II
THE CREDITS
SECTION 2.01. Commitments to Lend. During the
Revolving Credit Period each Bank severally agrees, on the
terms and conditions set forth in this Agreement, to make
loans to the Borrower pursuant to this Section from time to
time in amounts such that the aggregate principal amount of
Committed Loans by such Bank at any one time outstanding
shall not exceed the amount of its Commitment. Each
Borrowing under this Section shall be in an aggregate
principal amount of $75,000,000 or any larger multiple of
$5,000,000 (except that any such Borrowing may be in the
aggregate amount available in accordance with Section
3.02(b)) and shall be made from the several Banks ratably in
proportion to their respective Commitments. Within the
foregoing limits, the Borrower may borrow under this
Section, prepay Loans (to the extent permitted by Section
2.11) and reborrow at any time during the Revolving Credit
Period under this Section.
SECTION 2.02. Notice of Committed Borrowing. The
Borrower shall give the Agent notice, substantially in the
form attached hereto as Exhibit B (a "Notice of Committed
Borrowing"), not later than 11:00 A.M. (New York City time)
on (x) the date of each Base Rate Borrowing, (y) the second
Domestic Business Day before each CD Borrowing and (z) the
third Euro-Dollar Business Day before each Euro-Dollar
Borrowing, specifying:
(i) the date of such Borrowing, which shall be a
Domestic Business Day in the case of a Domestic
Borrowing or a Euro-Dollar Business Day in the case of
a Euro-Dollar Borrowing,
(ii) the aggregate amount of such Borrowing,
(iii) whether the Loans comprising such Borrowing
are to bear interest initially at the Base Rate or at a
rate based upon the CD Base Rate or the London
Interbank Offered Rate, and
(iv) in the case of a Fixed Rate Borrowing, the
duration of the initial Interest Period applicable
thereto, subject to the provisions of the definition of
Interest Period.
SECTION 2.03. Money Market Borrowings.
(a) The Money Market Option. In addition to
Committed Borrowings pursuant to Section 2.01, the Borrower
may, as set forth in this Section, request the Banks during
the Revolving Credit Period to make offers to make Money
Market Loans to the Borrower. The Banks may, but shall have
no obligation to, make such offers and the Borrower may, but
shall have no obligation to, accept any such offers in the
manner set forth in this Section.
(b) Money Market Quote Request. When the
Borrower wishes to request offers to make Money Market Loans
under this Section, it shall transmit to the Agent by telex
or facsimile transmission a Money Market Quote Request
substantially in the form of Exhibit D hereto so as to be
received no later than 10:00 A.M. (New York City time) on
(x) the fifth Euro-Dollar Business Day prior to the date of
Borrowing proposed therein, in the case of a LIBOR Auction
or (y) the Domestic Business Day next preceding the date of
Borrowing proposed therein, in the case of an Absolute Rate
Auction (or, in either case, such other time or date as the
Borrower and the Agent shall have mutually agreed and shall
have notified to the Banks not later than the date of the
Money Market Quote Request for the first LIBOR Auction or
Absolute Rate Auction for which such change is to be
effective) specifying:
(i) the proposed date of Borrowing, which shall
be a Euro-Dollar Business Day in the case of a LIBOR
Auction or a Domestic Business Day in the case of an
Absolute Rate Auction,
(ii) the aggregate amount of such Borrowing, which
shall be $75,000,000 or a larger multiple of $5,000,000
(or an amount equal to the aggregate amount available
in accordance with Section 3.02(b), if less than
$75,000,000),
(iii) the duration of the Interest Period
applicable thereto, subject to the provisions of the
definition of Interest Period, and
(iv) whether the Money Market Quotes requested are
to set forth a Money Market Margin or a Money Market
Absolute Rate.
The Borrower may request offers to make Money Market Loans
for more than one Interest Period in a single Money Market
Quote Request. No Money Market Quote Request shall be given
until the Borrower has notified the Agent of its acceptance
or non-acceptance of the Money Market Quotes relating to any
outstanding Money Market Quote Request.
(c) Invitation for Money Market Quotes. Promptly
upon receipt of a Money Market Quote Request, the Agent
shall send to the Banks by telex or facsimile transmission
an Invitation for Money Market Quotes substantially in the
form of Exhibit E hereto, which shall constitute an
invitation by the Borrower to each Bank to submit Money
Market Quotes offering to make the Money Market Loans to
which such Money Market Quote Request relates in accordance
with this Section.
(d) Submission and Contents of Money Market
Quotes. (i) Each Bank may submit a Money Market Quote
containing an offer or offers to make Money Market Loans in
response to any Invitation for Money Market Quotes. Each
Money Market Quote must comply with the requirements of this
subsection (d) and must be submitted to the Agent by telex
or facsimile transmission at its offices specified in or
pursuant to Section 9.01 not later than (x) 2:00 P.M. (New
York City time) on the fourth Euro-Dollar Business Day prior
to the proposed date of Borrowing, in the case of a LIBOR
Auction or (y) 9:30 A.M. (New York City time) on the
proposed date of Borrowing, in the case of an Absolute Rate
Auction (or, in either case, such other time or date as the
Borrower and the Agent shall have mutually agreed and shall
have notified to the Banks not later than the date of the
Money Market Quote Request for the first LIBOR Auction or
Absolute Rate Auction for which such change is to be
effective); provided that Money Market Quotes submitted by
the Agent (or any affiliate of the Agent) in the capacity of
a Bank may be submitted, and may only be submitted, if the
Agent or such affiliate notifies the Borrower of the terms
of the offer or offers contained therein not later than (x)
one hour prior to the deadline for the other Banks, in the
case of a LIBOR Auction or (y) 15 minutes prior to the
deadline for the other Banks, in the case of an Absolute
Rate Auction. Subject to Articles III and VI, any Money
Market Quote so made shall be irrevocable except with the
written consent of the Agent given on the instructions of
the Borrower.
(ii) Each Money Market Quote shall be in
substantially the form of Exhibit F hereto and shall in any
case specify:
(A) the proposed date of Borrowing,
(B) the principal amount of the Money Market Loan
for which each such offer is being made, which
principal amount (w) may be greater than or less than
the Commitment of the quoting Bank, (x) must be
$5,000,000 or a larger multiple of $1,000,000, (y) may
not exceed the principal amount of Money Market Loans
for which offers were requested and (z) may be subject
to an aggregate limitation as to the principal amount
of Money Market Loans for which offers being made by
such quoting Bank may be accepted,
(C) in the case of a LIBOR Auction, the margin
above or below the applicable London Interbank Offered
Rate (the "Money Market Margin") offered for each such
Money Market Loan, expressed as a percentage (specified
to the nearest 1/10,000th of 1%) to be added to or
subtracted from such base rate,
(D) in the case of an Absolute Rate Auction, the
rate of interest per annum (specified to the nearest
1/10,000th of 1%) (the "Money Market Absolute Rate")
offered for each such Money Market Loan, and
(E) the identity of the quoting Bank.
A Money Market Quote may set forth up to five separate
offers by the quoting Bank with respect to each Interest
Period specified in the related Invitation for Money Market
Quotes.
(iii) Any Money Market Quote shall be disregarded
if it:
(A) is not substantially in conformity with
Exhibit F hereto or does not specify all of the
information required by subsection (d)(ii);
(B) contains qualifying, conditional or similar
language;
(C) proposes terms other than or in addition to
those set forth in the applicable Invitation for Money
Market Quotes; or
(D) arrives after the time set forth in
subsection (d)(i).
(e) Notice to Borrower. The Agent shall promptly
notify the Borrower of the terms (x) of any Money Market
Quote submitted by a Bank that is in accordance with
subsection (d) and (y) of any Money Market Quote that
amends, modifies or is otherwise inconsistent with a
previous Money Market Quote submitted by such Bank with
respect to the same Money Market Quote Request. Any such
subsequent Money Market Quote shall be disregarded by the
Agent unless such subsequent Money Market Quote is submitted
solely to correct a manifest error in such former Money
Market Quote. The Agent's notice to the Borrower shall
specify (A) the aggregate principal amount of Money Market
Loans for which offers have been received for each Interest
Period specified in the related Money Market Quote Request,
(B) the respective principal amounts and Money Market
Margins or Money Market Absolute Rates, as the case may be,
so offered, and the identity of the respective Banks
submitting such offers, and (C) if applicable, limitations
on the aggregate principal amount of Money Market Loans for
which offers in any single Money Market Quote may be
accepted.
(f) Acceptance and Notice by Borrower. Not later
than 10:30 A.M. (New York City time) on (x) the third
Euro-Dollar Business Day prior to the proposed date of
Borrowing, in the case of a LIBOR Auction or (y) the
proposed date of Borrowing, in the case of an Absolute Rate
Auction (or, in either case, such other time or date as the
Borrower and the Agent shall have mutually agreed and shall
have notified to the Banks not later than the date of the
Money Market Quote Request for the first LIBOR Auction or
Absolute Rate Auction for which such change is to be
effective), the Borrower shall notify the Agent of its
acceptance or non-acceptance of the offers so notified to it
pursuant to subsection (e). In the case of acceptance, such
notice (a "Notice of Money Market Borrowing") shall specify
the aggregate principal amount of offers for each Interest
Period that are accepted. The Borrower may accept any Money
Market Quote in whole or in part; provided that:
(i) the aggregate principal amount of each Money
Market Borrowing may not exceed the applicable amount
set forth in the related Money Market Quote Request,
(ii) the principal amount of each Money Market
Borrowing must be (A) $75,000,000 or a larger multiple
of $5,000,000, (B) an amount equal to the aggregate
amount available in accordance with Section 3.02(b), if
less than $75,000,000 or (C) the aggregate principal
amount of offers, if less than both $75,000,000 and the
amount referred to in clause (B),
(iii) acceptance of offers may only be made on the
basis of ascending Money Market Margins or Money Market
Absolute Rates, as the case may be, and
(iv) the Borrower may not accept any offer that is
described in subsection (d)(iii) or that otherwise
fails to comply with the requirements of this
Agreement.
(g) Allocation by Agent. If offers are made by
two or more Banks with the same Money Market Margins or
Money Market Absolute Rates, as the case may be, for a
greater aggregate principal amount than the amount in
respect of which such offers are accepted for the related
Interest Period, the principal amount of Money Market Loans
in respect of which such offers are accepted shall be
allocated by the Agent among such Banks as nearly as
possible (in multiples of $1,000,000, as the Agent may deem
appropriate) in proportion to the aggregate principal
amounts of such offers. Determinations by the Agent of the
amounts of Money Market Loans shall be conclusive in the
absence of manifest error.
SECTION 2.04. Notice to Banks; Funding of Loans.
(a) Upon receipt of a Notice of Borrowing, the
Agent shall promptly notify each Bank of the contents
thereof and of such Bank's share (if any) of such Borrowing
and such Notice of Borrowing shall not thereafter be
revocable by the Borrower.
(b) Not later than (x) 1:00 P.M. (New York City
time) on the date of each Base Rate Borrowing, (y) 12:00
Noon (New York City time) on the date of any Money Market
Absolute Rate Borrowing and (z) 11:00 A.M. (New York City
time) on the date of any other Borrowing, each Bank shall
make available its ratable share of such Borrowing, in
Federal or other funds immediately available in New York
City, to the Agent at its address specified in or pursuant
to Section 9.01. Unless the Agent determines that any
applicable condition specified in Article III has not been
satisfied, the Agent will make the funds so received from
the Banks available to the Borrower promptly after the
Agent's receipt thereof at the Agent's aforesaid address.
(c) Unless the Agent shall have received notice
from a Bank prior to the date of any Borrowing (or, in the
case of any Base Rate Borrowing, prior to 11:00 A.M. (New
York City time) on the date of such Borrowing) that such
Bank will not make available to the Agent such Bank's share
of such Borrowing, the Agent may assume that such Bank has
made such share available to the Agent on the date of such
Borrowing in accordance with subsection (b) of this Section
2.04 and the Agent may, in reliance upon such assumption,
make available to the Borrower on such date a corresponding
amount. If and to the extent that such Bank shall not have
so made such share available to the Agent, the Agent shall
notify the Borrower thereof as soon as practicable, and such
Bank and the Borrower severally agree to repay to the Agent
forthwith on demand (delivered, in the case of the Borrower,
in accordance with the next succeeding sentence) such
corresponding amount together with interest thereon, for
each day from the date such amount is made available to the
Borrower until the date such amount is repaid to the Agent,
at (i) in the case of the Borrower, a rate per annum equal
to the higher of the Federal Funds Rate and the interest
rate applicable thereto pursuant to Section 2.07 and (ii) in
the case of such Bank, the Federal Funds Rate. Any such
demand for repayment shall be made first upon such Bank and,
if such Bank shall have failed to repay such amount within
two Euro-Dollar Business Days after such demand, then upon
the Borrower. If such Bank shall repay to the Agent such
corresponding amount, such amount so repaid shall constitute
such Bank's Loan included in such Borrowing for purposes of
this Agreement.
SECTION 2.05. Notes. (a) The Loans of each Bank
shall be evidenced by a single Note payable to the order of
such Bank for the account of its Applicable Lending Office
in an amount equal to the aggregate unpaid principal amount
of such Bank's Loans.
(b) Each Bank may, by notice to the Borrower and
the Agent, request that its Loans of a particular type be
evidenced by a separate Note in an amount equal to the
aggregate unpaid principal amount of such Loans. Each such
Note shall be in substantially the form of Exhibit A hereto
with appropriate modifications to reflect the fact that it
evidences solely Loans of the relevant type. Each reference
in this Agreement to the "Note" of such Bank shall be deemed
to refer to and include any or all of such Notes, as the
context may require.
(c) Upon receipt of each Bank's Note pursuant to
Section 3.01(b), the Agent shall mail such Note to such
Bank. Each Bank shall record the date and amount of each
Loan made by it and the date and amount of each payment of
principal made by the Borrower with respect thereto, and
may, if such Bank so elects in connection with any transfer
or enforcement of its Note, endorse on the schedule forming
a part thereof appropriate notations to evidence the
foregoing information with respect to each such Loan then
outstanding; provided that the failure of any Bank to make
any such recordation or endorsement shall not affect the
obligations of the Borrower hereunder or under the Notes.
Each Bank is hereby irrevocably authorized by the Borrower
so to endorse its Note and to attach to and make a part of
its Note a continuation of any such schedule as and when
required.
SECTION 2.06. Mandatory Termination of
Commitments and Repayment of Loans. Each Money Market Loan
included in any Money Market Borrowing shall mature, and the
principal amount thereof (together with accrued interest
thereon) shall be due and payable, on the last day of the
Interest Period applicable to such Money Market Borrowing.
The Commitments shall terminate on the Termination Date, and
any Loans (including without limitation any Money Market
Loans) then outstanding (together with accrued interest
thereon) shall be due and payable on such date.
SECTION 2.07. Interest Rates. (a) Each Base
Rate Loan shall bear interest on the outstanding principal
amount thereof, for each day from the date such Loan is made
until it becomes due, at a rate per annum equal to the Base
Rate for such day. Such interest shall be payable monthly
in arrears on the date in each calendar month that
numerically corresponds to the date such Loan is made (or,
in the case of any calendar month in which there is no such
date, on the last day of such month) and on each date a Base
Rate Loan is converted to a Fixed Rate Loan. Any overdue
principal of or interest on any Base Rate Loan shall bear
interest, payable on demand, for each day until paid at a
rate per annum equal to the sum of 2% plus the rate
otherwise applicable to Base Rate Loans for such day.
(b) Each CD Loan shall bear interest on the
outstanding principal amount thereof, for each day during
each Interest Period applicable thereto, at a rate per annum
equal to the sum of the CD Margin for such day plus the
Adjusted CD Rate applicable to such Interest Period;
provided that if any CD Loan or any portion thereof shall,
as a result of clause (2)(b) of the definition of Interest
Period, have an Interest Period of less than 30 days, such
portion shall bear interest during such Interest Period at
the rate applicable to Base Rate Loans during such period.
Such interest shall be payable for each Interest Period on
the last day thereof and, if such Interest Period is longer
than 90 days, at intervals of 90 days after the first day
thereof. Any overdue principal of or interest on any CD
Loan shall bear interest, payable on demand, for each day
until paid at a rate per annum equal to the sum of 2% plus
the higher of (i) the sum of the CD Margin plus the Adjusted
CD Rate applicable to such Loan and (ii) the rate applicable
to Base Rate Loans for such day.
The "Adjusted CD Rate" applicable to any Interest
Period means a rate per annum determined pursuant to the
following formula:
[ CDBR ]*
ACDR = [ ---------- ] + AR
[ 1.00 - DRP ]
ACDR = Adjusted CD Rate
CDBR = CD Base Rate
DRP = Domestic Reserve Percentage
AR = Assessment Rate
__________
* The amount in brackets being rounded upward, if
necessary, to the next higher 1/100 of 1%
The "CD Base Rate" applicable to any Interest
Period is the rate of interest determined by the Agent to be
the average (rounded upward, if necessary, to the next
higher 1/100 of 1%) of the prevailing rates per annum bid at
10:00 A.M. (New York City time) (or as soon thereafter as
practicable) on the first day of such Interest Period by two
or more New York certificate of deposit dealers of
recognized standing for the purchase at face value from each
CD Reference Bank of its certificates of deposit in an
amount comparable to the principal amount of the CD Loan of
such CD Reference Bank to which such Interest Period applies
and having a maturity comparable to such Interest Period.
"Domestic Reserve Percentage" means for any day
that percentage (expressed as a decimal) which is in effect
on such day, as prescribed by the Board of Governors of the
Federal Reserve System (or any successor) for determining
the maximum reserve requirement (including without
limitation any basic, supplemental or emergency reserves)
for a member bank of the Federal Reserve System in New York
City with deposits exceeding five billion dollars in respect
of new non-personal time deposits in dollars in New York
City having a maturity comparable to the related Interest
Period and in an amount of $100,000 or more. The Adjusted
CD Rate shall be adjusted automatically on and as of the
effective date of any change in the Domestic Reserve
Percentage.
"Assessment Rate" means for any day the annual
assessment rate in effect on such day which is payable by a
member of the Bank Insurance Fund classified as adequately
capitalized and within supervisory subgroup "A" (or a
comparable successor assessment risk classification) within
the meaning of 12 C.F.R. Section 327.3(d) (or any successor
provision) to the Federal Deposit Insurance Corporation (or
any successor) for such Corporation's (or such successor's)
insuring time deposits at offices of such institution in the
United States. The Adjusted CD Rate shall be adjusted
automatically on and as of the effective date of any change
in the Assessment Rate.
(c) Each Euro-Dollar Loan shall bear interest on
the outstanding principal amount thereof, for each day
during each Interest Period applicable thereto, at a rate
per annum equal to the sum of the Euro-Dollar Margin for
such day plus the London Interbank Offered Rate applicable
to such Interest Period. Such interest shall be payable for
each Interest Period on the last day thereof and, if such
Interest Period is longer than three months, at intervals of
three months after the first day thereof.
The "London Interbank Offered Rate" applicable to
any Interest Period means the average (rounded upward, if
necessary, to the next higher 1/16 of 1%) of the respective
rates per annum at which deposits in dollars are offered to
each of the Euro-Dollar Reference Banks in the London
interbank market at approximately 11:00 A.M. (London time)
two Euro-Dollar Business Days before the first day of such
Interest Period in an amount approximately equal to the
principal amount of the Euro-Dollar Loan of such Euro-Dollar
Reference Bank to which such Interest Period is to apply and
for a period of time comparable to such Interest Period.
(d) Any overdue principal of or interest on any
Euro-Dollar Loan shall bear interest, payable on demand, for
each day from and including the date payment thereof was due
to but excluding the date of actual payment, at a rate per
annum equal to the sum of 2% plus the higher of (i) the sum
of the Euro-Dollar Margin plus the London Interbank Offered
Rate applicable to such Loan and (ii) the Euro-Dollar Margin
plus the quotient obtained (rounded upward, if necessary, to
the next higher 1/100 of 1%) by dividing (x) the average
(rounded upward, if necessary, to the next higher 1/16 of
1%) of the respective rates per annum at which one day (or,
if such amount due remains unpaid more than three
Euro-Dollar Business Days, then for such other period of
time not longer than six months as the Agent may select)
deposits in dollars in an amount approximately equal to such
overdue payment due to each of the Euro-Dollar Reference
Banks are offered to such Euro-Dollar Reference Bank in the
London interbank market for the applicable period determined
as provided above by (y) 1.00 minus the Euro-Dollar Reserve
Percentage (or, if the circumstances described in clause (a)
or (b) of Section 8.01 shall exist, at a rate per annum
equal to the sum of 2% plus the rate applicable to Base Rate
Loans for such day).
(e) Subject to Section 8.01(a), each Money Market
LIBOR Loan shall bear interest on the outstanding principal
amount thereof, for the Interest Period applicable thereto,
at a rate per annum equal to the sum of the London Interbank
Offered Rate for such Interest Period (determined in
accordance with Section 2.07(c) as if the related Money
Market LIBOR Borrowing were a Committed Euro-Dollar
Borrowing) plus (or minus) the Money Market Margin quoted by
the Bank making such Loan in accordance with Section 2.03.
Each Money Market Absolute Rate Loan shall bear interest on
the outstanding principal amount thereof, for the Interest
Period applicable thereto, at a rate per annum equal to the
Money Market Absolute Rate quoted by the Bank making such
Loan in accordance with Section 2.03. Such interest shall
be payable for each Interest Period on the last day thereof
and, if such Interest Period is longer than three months, at
intervals of three months after the first day thereof. Any
overdue principal of or interest on any Money Market Loan
shall bear interest, payable on demand, for each day until
paid at a rate per annum equal to the sum of 2% plus the
Base Rate for such day.
(f) The Agent shall determine each interest rate
applicable to the Loans hereunder. The Agent shall give
prompt notice to the Borrower (by facsimile) and the Banks
(by telex or cable) of each rate of interest so determined,
and its determination thereof shall be conclusive in the
absence of manifest error. The Agent will, at the request
of the Borrower, furnish such additional information
concerning the calculation of the interest rate on any Fixed
Rate Loan as the Borrower may reasonably request.
(g) Each Reference Bank agrees to use its best
efforts to furnish quotations to the Agent as contemplated
hereby. If any Reference Bank does not furnish a timely
quotation, the Agent shall determine the relevant interest
rate on the basis of the quotation or quotations furnished
by the remaining Reference Bank or Banks or, if none of such
quotations is available on a timely basis, the provisions of
Section 8.01 shall apply.
(h) Each of "CD Margin", "Euro-Dollar Margin" and
"Facility Fee Rate" means, for any day, the amount set forth
below in the row opposite such term for such day and in the
column corresponding to the Status that exists on such day:
Level I Level II Level III Level IV Level V
CD Margin
0.295%
0.310%
0.390%
0.400%
0.425%
Euro-Dollar
Margin 0.170%
0.185% 0.265% 0.275% 0.300%
Facility Fee
Rate 0.080% 0.090% 0.110% 0.150% 0.200%
SECTION 2.08. Facility Fee. The Borrower shall
pay to the Agent for the account of the Banks ratably in
proportion to their Commitments a facility fee for each day
at the Facility Fee Rate for such day. Such facility fee
shall accrue (x) from and including the Effective Date to
but excluding the Termination Date (or earlier date of
termination of the Commitments in their entirety), on the
daily aggregate amount of the Commitments (whether used or
unused) and (y) from and including the Termination Date (or
such earlier date of termination) to but excluding the date
the Loans shall be repaid in their entirety, on the daily
average aggregate outstanding principal amount of the Loans.
Accrued fees under this Section shall be payable quarterly
on each March 31, June 30, September 30 and December 31
during the Revolving Credit Period and upon the date of
termination of the Commitments in their entirety (and, if
later, the date the Loans shall be repaid in their
entirety).
SECTION 2.09. Optional Termination or Reduction
of Commitments. During the Revolving Credit Period, the
Borrower may, upon at least three Domestic Business Days'
notice to the Agent, (i) terminate the Commitments at any
time, if no Loans are outstanding at such time or (ii)
proportionately reduce from time to time by an aggregate
amount of $75,000,000 or any larger multiple of $5,000,000,
the aggregate amount of the Commitments in excess of the
aggregate outstanding principal amount of the Loans. If the
Commitments are terminated in their entirety, all accrued
fees shall be payable on the effective date of such
termination.
SECTION 2.10. Method of Electing Interest Rates.
(a) The Loans included in each Committed Borrowing shall
bear interest initially at the type of rate specified by the
Borrower in the applicable Notice of Committed Borrowing.
Thereafter, the Borrower may from time to time elect to
change or continue the type of interest rate borne by each
Group of Committed Loans (subject in each case to the
provisions of Article VIII), as follows:
(i) if such Loans are Base Rate Loans, the
Borrower may elect to convert such Loans to CD Loans as
of any Domestic Business Day or to Euro-Dollar Loans as
of any Euro-Dollar Business Day;
(ii) if such Loans are CD Loans, the Borrower may
elect to convert such Loans to Base Rate Loans or
Euro-Dollar Loans or elect to continue such Loans as CD
Loans for an additional Interest Period, in each case
effective on the last day of the then current Interest
Period applicable to such Loans; or
(iii) if such Loans are Euro-Dollar Loans, the
Borrower may elect to convert such Loans to Base Rate
Loans or CD Loans or elect to continue such Loans as
Euro-Dollar Loans for an additional Interest Period, in
each case effective on the last day of the then current
Interest Period applicable to such Loans.
Each such election shall be made by delivering a notice
substantially in the form attached hereto as Exhibit C (a
"Notice of Interest Rate Election") to the Agent at least
three Euro-Dollar Business Days before the conversion or
continuation selected in such notice is to be effective
(unless the relevant Loans are to be converted from Domestic
Loans to Domestic Loans of the other type or continued as
Domestic Loans of the same type for an additional Interest
Period, in which case such notice shall be delivered to the
Agent at least three Domestic Business Days before such
conversion or continuation is to be effective). A Notice of
Interest Rate Election may, if it so specifies, apply to
only a portion of the aggregate principal amount of the
relevant Group of Loans; provided that (i) such portion is
allocated ratably among the Loans comprising such Group and
(ii) the portion to which such Notice applies, and the
remaining portion to which it does not apply, are each
$75,000,000 or any larger multiple of $5,000,000.
(b) Each Notice of Interest Rate Election shall
specify:
(i) the Group of Committed Loans (or portion
thereof) to which such notice applies;
(ii) the date on which the conversion or
continuation selected in such notice is to be
effective, which shall comply with the applicable
clause of subsection (a) above;
(iii) if the Loans comprising such Group are to be
converted, the new type of Loans and, if such new Loans
are Fixed Rate Loans, the duration of the initial
Interest Period applicable thereto; and
(iv) if such Loans are to be continued as CD Loans
or Euro-Dollar Loans for an additional Interest Period,
the duration of such additional Interest Period.
Each Interest Period specified in a Notice of Interest Rate
Election shall comply with the provisions of the definition
of Interest Period.
(c) Upon receipt of a Notice of Interest Rate
Election from the Borrower pursuant to subsection (a) above,
such notice shall not thereafter be revocable by the
Borrower and the Agent shall promptly notify each Bank of
the contents thereof. If the Borrower fails to deliver a
timely Notice of Interest Rate Election to the Agent for any
Group of Fixed Rate Loans, such Loans shall be converted
into Base Rate Loans on the last day of the then current
Interest Period applicable thereto.
(d) An election by the Borrower to change or
continue the rate of interest applicable to any Group of
Loans pursuant to this Section 2.10 shall not constitute a
"Borrowing" subject to the provisions of Section 3.02.
SECTION 2.11. Optional Prepayments. (a) The
Borrower may, upon at least one Domestic Business Day's
notice to the Agent, prepay a Group of Base Rate Loans (or
any Money Market Borrowing bearing interest at the Base Rate
pursuant to Section 8.01(a)) in whole at any time, or from
time to time in part in amounts aggregating $75,000,000 or
any larger multiple of $5,000,000, by paying the principal
amount to be prepaid together with accrued interest thereon
to the date of prepayment. Each such optional prepayment
shall be applied to prepay ratably the Loans of the several
Banks included in such Group.
(b) The Borrower may, upon at least three
Domestic Business Days' notice to the Agent, in the case of
a Group of CD Loans or upon at least three Euro-Dollar
Business Days' notice to the Agent, in the case of a Group
of Euro-Dollar Loans, prepay the Loans comprising such Group
in whole at any time, or from time to time in part, in
amounts aggregating $75,000,000 or any larger multiple of
$5,000,000, by paying the principal amount to be prepaid
together with accrued interest thereon to the date of
prepayment; provided that in the case of any such prepayment
in whole or in part on any day other than the last day of
any Interest Period applicable to such Group of Loans, the
Borrower shall reimburse each Bank for any loss or expense
incurred by it as a result of any such prepayment in
accordance with Section 2.13. Each such optional prepayment
shall be applied to prepay ratably the Loans of the several
Banks included in such Group. The Borrower may not prepay
all or any portion of the principal amount of any Money
Market Loan (other than any Money Market Borrowing bearing
interest at the Base Rate pursuant to Section 8.01(a)) prior
to the maturity thereof.
(c) Upon receipt of a notice of prepayment
pursuant to this Section, the Agent shall promptly notify
each Bank of the contents thereof and of such Bank's ratable
share (if any) of such prepayment and such notice shall not
thereafter be revocable by the Borrower.
SECTION 2.12. General Provisions as to Payments.
(a) The Borrower shall make each payment of principal of,
and interest on, the Loans and of fees hereunder, not later
than 11:00 A.M. (New York City time) on the date when due,
in Federal or other funds immediately available in New York
City, to the Agent at its address referred to in Section
9.01. The Agent will promptly distribute to each Bank its
ratable share of each such payment received by the Agent for
the account of the Banks. Whenever any payment of principal
of, or interest on, the Domestic Loans or of fees shall be
due on a day which is not a Domestic Business Day, the date
for payment thereof shall be extended to the next succeeding
Domestic Business Day. Whenever any payment of principal
of, or interest on, the Euro-Dollar Loans shall be due on a
day which is not a Euro-Dollar Business Day, the date for
payment thereof shall be extended to the next succeeding
Euro-Dollar Business Day unless such Euro-Dollar Business
Day falls in another calendar month, in which case the date
for payment thereof shall be the next preceding Euro-Dollar
Business Day. Whenever any payment of principal of, or
interest on, the Money Market Loans shall be due on a day
which is not a Euro-Dollar Business Day, the date for
payment thereof shall be extended to the next succeeding
Euro-Dollar Business Day. If the date for any payment of
principal is extended by operation of law or otherwise,
interest thereon shall be payable for such extended time.
(b) Unless the Agent shall have received notice
from the Borrower prior to the date on which any payment is
due to the Banks hereunder that the Borrower will not make
such payment in full, the Agent may assume that the Borrower
has made such payment in full to the Agent on such date and
the Agent may, in reliance upon such assumption, cause to be
distributed to each Bank on such due date an amount equal to
the amount then due such Bank. If and to the extent that
the Borrower shall not have so made such payment, each Bank
shall repay to the Agent forthwith on demand such amount
distributed to such Bank together with interest thereon, for
each day from the date such amount is distributed to such
Bank until the date such Bank repays such amount to the
Agent, at the Federal Funds Rate.
SECTION 2.13. Funding Losses. If the Borrower
makes any payment of principal with respect to any Fixed
Rate Loan or any Fixed Rate Loan is converted to a Base Rate
Loan (pursuant to Article VI or VIII or otherwise) on any
day other than the last day of an Interest Period applicable
thereto, or the end of an applicable period fixed pursuant
to Section 2.07(d), or if the Borrower fails to borrow or
prepay any Fixed Rate Loans after notice has been given to
any Bank in accordance with Section 2.04(a) or 2.11(c), the
Borrower shall reimburse each Bank within 15 days after
demand for any resulting loss or expense incurred by it,
including (without limitation) any loss incurred in
obtaining, liquidating or employing deposits from third
parties, but excluding loss of margin for the period after
any such payment or conversion or failure to borrow or
prepay, provided that such Bank shall have delivered to the
Borrower a certificate as to the amount of such loss or
expense, which certificate shall be conclusive in the
absence of manifest error, and provided further that such
loss shall in no event exceed the interest which would have
been payable for the balance of such Interest Period or
other period, less the applicable CD Margin or Euro-Dollar
Margin, as the case may be. Such Bank will, at the request
of the Borrower, furnish such additional information
concerning the determination of such loss as the Borrower
may reasonably request.
SECTION 2.14. Computation of Interest and Fees.
Interest based on the Prime Rate hereunder shall be computed
on the basis of a year of 365 days (or 366 days in a leap
year) and paid for the actual number of days elapsed
(including the first day but excluding the last day). All
other interest and fees shall be computed on the basis of a
year of 360 days and paid for the actual number of days
elapsed (including the first day but excluding the last
day).
SECTION 2.15. Taxes. (a) All payments of
principal, interest and fees to be made by the Borrower or
the Agent (in respect of such amounts received by it from
the Borrower) pursuant to this Agreement to any Bank with
respect to any Loan or fee shall be made free and clear of
and without reduction or withholding for or on account of
any present or future income, excise, or other taxes,
levies, imposts, duties, charges, or fees of whatever nature
now or hereafter imposed by any governmental or other taxing
authority, excluding any taxes on or measured by overall net
income (all such non-excluded taxes, levies, imposts,
deductions, charges or withholdings, "Taxes"), unless the
withholding or other payment of such Taxes is required by
applicable law. In the event that the Borrower or the Agent
is required by applicable law to make any such withholding
or deduction of Taxes with respect to any Loan or fee, the
Borrower shall pay to such Agent or Bank additional amounts
as may be necessary in order that the net amount received by
such Agent or Bank after the required withholding or other
payment (including any required withholding or other payment
on such additional amounts) shall equal the amount such
Agent or Bank would have received had no such withholding or
other payment been made; provided, however, that no such
additional amounts shall be paid by the Borrower (i) except
on account of Taxes imposed by the United States (or any
political subdivision, possession, territory or taxing
authority thereof or therein) and (ii) on account of any
federal withholding tax imposed by the United States of
America ("United States Tax"):
(1) if such Bank or a Participant of such Bank
shall have delivered Internal Revenue Service Form 4224
("Form 4224") to the Borrower pursuant to clause (b) or
(c) of this Section 2.15 and such Bank or Participant
shall at any time not be entitled to complete exemption
from United States Tax for any reason other than a
change in United States federal income tax law,
regulation or official interpretation of such law after
the date hereof (or, in the case of any Assignee or
Participant, the date of the relevant assignment or
participation agreement); or
(2) if such Bank or a Participant of such Bank
shall have delivered Internal Revenue Service Form 1001
("Form 1001") to the Borrower pursuant to clause (b) or
(c) of this Section 2.15 and such Bank or Participant
shall at any time not be entitled to complete exemption
from United States Tax for any reason other than (i) an
amendment, modification or revocation of an applicable
income tax convention or a change in official position
regarding the application or interpretation of such
treaty after the date hereof (or, in the case of any
Assignee or Participant, the date of the relevant
assignment or participation agreement) or (ii) a change
in United States federal income tax laws, regulation or
official interpretation of such law after the date
hereof (or, in the case of any Assignee or Participant,
the date of the relevant assignment or participation
agreement); or
(3) if such Bank or a Participant of such Bank
shall have failed to comply with its obligations
pursuant to clause (b) or (c) of this Section 2.15.
(b) Each Bank that is a Non-U.S. Bank hereby
severally covenants and agrees to and for the benefit of the
Borrower and the Agent that
(1) at, or prior to, the Effective Date,
such Non-U.S. Bank shall have delivered to both
the Borrower and the Agent either:
(i) two accurate and complete original
signed copies of Form 1001, appropriately
completed and claiming complete exemption
from withholding and deduction of United
States Taxes, with respect to each three-year
calendar period, any portion of which falls
within the Revolving Credit Period, dated as
of the date hereof; or
(ii) two accurate and complete original
signed copies of Form 4224, appropriately
completed and claiming complete exemption
from withholding and deduction of United
States Taxes, with respect to each tax year
of such Bank, any portion of which falls
within the Revolving Credit Period, dated as
of the date hereof; and
(2) in each fiscal year of such Bank after
the Effective Date, at or prior to the first
scheduled payment date in such fiscal year, such
Non-U.S. Bank shall have delivered to both the
Borrower and the Agent either:
(i) two accurate and complete original
signed copies of Form 1001, appropriately
completed and claiming complete exemption
from withholding and deduction of United
States Taxes, with respect to the three-year
calendar period commencing with the then
current calendar year; or
(ii) two accurate and complete original
signed copies of Form 4224, appropriately
completed and claiming complete exemption
from withholding and deduction of United
States Taxes, with respect to such Bank's
then current tax year.
(c) Each Non-U.S. Bank severally covenants and
agrees to deliver to the Borrower and the Agent:
(1) before or promptly after the date on
which any form previously delivered by such Bank
pursuant to Section 2.15(b) may no longer be
relied upon by the Borrower and the Agent as a
result of an act by such Bank, two accurate and
complete original signed copies of Form 1001 or
Form 4224 (or such additional or successor Forms
as shall be adopted from time to time by the
relevant United States taxing authorities),
appropriately completed and claiming complete
exemption from withholding and deduction of United
States Taxes, to replace the like Form previously
delivered by such Non-U.S. Bank; and
(2) if any form previously delivered by such
Non-U.S. Bank pursuant to Section 2.15(b) may no
longer be relied upon by the Borrower and the
Agent for any reasons (other than as a result of
an act by the Bank), two accurate and complete
original signed copies of Form 4224 or Form 1001,
as the case may be, (or such additional or
successor Forms as shall be adopted from time to
time by the relevant United States taxing
authorities), appropriately completed and claiming
complete exemption from withholding and deduction
of United States Taxes, as the Borrower or the
Agent may reasonably request.
Notwithstanding the foregoing subsections (b)(2), (c)(1) and
(c)(2) of this Section 2.15, a Non-U.S. Bank will not be
required to provide a form if due to any change in treaty,
law or regulation or official interpretation that occurred
after the date hereof (or, in the case of any Non-U.S. Bank
that is an Assignee or any Participant complying with
subsections (b)(2), (c)(1) and (c)(2) of this Section 2.15
pursuant to Section 9.06(b), the date of the relevant
assignment or participation agreement) and prior to the date
on which any such delivery would otherwise be required, all
such forms are inapplicable or such Bank is not entitled to
any exemption from the United States Tax as claimed in the
form previously delivered. In any such case, each Non-U.S.
Bank shall provide such forms as the Borrower or the Agent
may reasonably request to establish entitlement, if any, to
any reduction in United States Tax to which such Bank may be
entitled from and after the occurrence of any such change in
treaty, law or regulation.
(d) In the event that the Borrower will be
required to pay an additional amount pursuant to
Section 2.15(a) to any Bank, the Borrower shall have the
rights set forth in Section 8.05. The agreements in this
Section 2.15 shall survive the termination of this Agreement
and the payment of the Notes and all other amounts payable
hereunder.
SECTION 2.16. Regulation D Compensation. For so
long as any Bank is required to maintain reserves against
"Eurocurrency liabilities" (or any other category of
liabilities which includes deposits by reference to which
the interest rate on Euro-Dollar Loans is determined or any
category of extensions of credit or other assets which
includes loans by a non-United States office of such Bank to
United States residents), and, as a result, the cost to such
Bank (or its Euro-Dollar Lending Office) of making or
maintaining its Euro-Dollar Loans is increased, then such
Bank may require the Borrower to pay, contemporaneously with
each payment of interest on the Euro-Dollar Loans,
additional interest on the related Euro-Dollar Loan of such
Bank at a rate per annum up to but not exceeding the excess
of (i) (A) the applicable London Interbank Offered Rate
divided by (B) one minus the Euro-Dollar Reserve Percentage
over (ii) the applicable London Interbank Offered Rate. Any
Bank wishing to require payment of such additional interest
(x) shall so notify the Borrower and the Agent, in which
case such additional interest on the Euro-Dollar Loans of
such Bank shall be payable to such Bank at the place
indicated in such notice with respect to each Interest
Period commencing at least three Euro-Dollar Business Days
after the giving of such notice and (y) shall furnish to the
Borrower at least five Euro-Dollar Business Days prior to
each date on which interest is payable on the Euro-Dollar
Loans an officer's certificate setting forth the amount to
which such Bank is then entitled under this Section (which
shall be consistent with such Bank's good faith estimate of
the level at which the related reserves are maintained by
it). Each such certificate shall be accompanied by such
information as the Borrower may reasonably request as to the
computation set forth therein.
ARTICLE III
CONDITIONS
SECTION 3.01. Effectiveness of Amendment. The
Amendment shall become effective on the date that each of
the following conditions shall have been satisfied (or
waived in accordance with Section 9.05):
(a) receipt by the Agent of counterparts
hereof signed by each of the parties hereto (or,
in the case of any party as to which an executed
counterpart shall not have been received, receipt
by the Agent in form satisfactory to it of
telegraphic, telex or other written confirmation
from such party of execution of a counterpart
hereof by such party);
(b) in the case of any Bank that shall not
have received a Note prior to the Amendment
Effective Date, receipt by the Agent for the
account of such Bank of a duly executed Note dated
the Amendment Effective Date complying with the
provisions of Section 2.05;
(c) receipt by the Agent of an opinion of
counsel for the Borrower, who may be Latham &
Watkins or Senior Counsel for Sears, substantially
in the form of Exhibit G hereto;
(d) receipt by the Agent of an opinion of
Davis Polk & Wardwell, special counsel for the
Agent, substantially in the form of Exhibit H
hereto;
(e) receipt by the Agent, for its own
account and for the account of the Banks, of all
accrued but unpaid fees under Section 2.08 of the
Agreement as in effect immediately prior to the
Amendment Effective Date (including without
limitation all commitment and facility fees
payable pursuant to Section 2.08 as so in effect),
for the period up to but excluding the Amendment
Effective Date; and
(f) receipt by the Agent of all documents it
may reasonably request relating to the existence
of the Borrower, the corporate authority for and
the validity of the Amendment, this Agreement and
the Notes, and any other matters relevant hereto,
all in form and substance satisfactory to the
Agent;
provided that the Amendment shall not become effective or be
binding on any party hereto unless all of the foregoing
conditions are satisfied not later than July 20, 1995. The
Agent shall promptly notify the Borrower and the Banks of
the Amendment Effective Date, and such notice shall be
conclusive and binding on all parties hereto.
SECTION 3.02. Borrowings. The obligation of any
Bank to make a Loan on the occasion of any Borrowing is
subject to the satisfaction of the following conditions:
(a) receipt by the Agent of a Notice of
Borrowing as required by Section 2.02 or 2.03, as
the case may be;
(b) the fact that, immediately after such
Borrowing, the aggregate outstanding principal amount
of the Loans will not exceed the aggregate amount of
the Commitments;
(c) the fact that, immediately before and
after such Borrowing, no Event of Default and no
event or condition which, with the giving of
notice or lapse of time or both, would become an
Event of Default, shall have occurred and be
continuing;
(d) the fact that the representations and
warranties of the Borrower contained in this
Agreement (other than in Section 4.04(c) hereof)
shall be true on and as of the date of such
Borrowing; and
(e) the fact that there shall have been no
material adverse change in the business,
consolidated financial position or Consolidated
Net Income of the Borrower and its Consolidated
Subsidiaries since March 31, 1995 not disclosed in
writing to the Banks on or prior to the date of
such Borrowing.
Each Borrowing hereunder shall be deemed to be a
representation and warranty by the Borrower on the date of
such Borrowing as to the facts specified in clauses (b),
(c), (d) and (e) of this Section.
For all purposes of this Agreement, (a) no change
in consolidated financial position of the Borrower and its
Consolidated Subsidiaries shall be deemed material and
adverse unless such change is a reduction in Consolidated
Stockholder's Equity of the Borrower and its Consolidated
Subsidiaries of 5% or more as compared with Consolidated
Stockholder's Equity as at the date of the consolidated
balance sheet of the Borrower and its Consolidated
Subsidiaries most recently delivered under Section 4.04 or
5.01 hereof, (b) no change in Consolidated Net Income shall
be deemed to be material and adverse unless such change is a
reduction therein for a period of the four most recent full
consecutive fiscal quarters in respect of which results of
operations have been made available to the public ("most
recent four quarters") of 25% or more as compared with
Consolidated Net Income for the period of four consecutive
fiscal quarters immediately preceding the most recent four
quarters and (c) no change in business shall be deemed
material and adverse unless it would be required to be
disclosed in an annual report on Form 10-K (or successor
reports) filed with the Commission on the date as of which
the existence of a material adverse change is being
determined. It is understood that, for all purposes of this
Agreement, no change in business shall be deemed to be
required to be so disclosed if, in the written opinion of
counsel for the Borrower, the laws, rules and regulations
then applicable to required disclosure in Forms 10-K (or
successor reports) do not require such disclosure. Such an
opinion will be deemed sufficient for purposes hereof if it
shall be based on (i) such investigation of law as such
counsel shall have deemed necessary in the circumstances and
(ii) facts as certified in writing to such counsel by
officers of the Borrower or its Affiliates, it being
understood that counsel shall have no duty to independently
verify any such facts. In case Borrower relies on such an
opinion of counsel, it will promptly distribute a copy
thereof to each Bank.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
The Borrower represents and warrants that:
SECTION 4.01. Corporate Existence and Power. The
Borrower has been duly incorporated and is validly existing
as a corporation in good standing under the laws of the
State of Delaware with full corporate power to conduct its
business as presently conducted.
SECTION 4.02. Corporate and Governmental
Authorization; No Contravention.
(a) The Borrower has full corporate power to
enter into this Agreement and to issue the Notes and to
comply with all of the provisions of this Agreement and the
Notes, and all necessary corporate proceedings of the
Borrower have been duly taken to authorize the execution,
delivery and performance of this Agreement and the issuance
of the Notes by the Borrower.
(b) The issuance by the Borrower of the Notes and
compliance by the Borrower with all of the provisions of
this Agreement will not conflict with or result in a breach
which would constitute a material default under, or result
in the creation or imposition of any Lien, charge or
encumbrance upon any of the property or assets of the
Borrower, material to the Borrower, pursuant to the terms
of, any indenture, loan agreement, or other agreement or
instrument for borrowed money to which the Borrower is a
party or by which the Borrower may be bound or to which any
of the property or assets of the Borrower, material to the
Borrower, is subject, nor will such action result in any
material violation of the provisions of the Certificate of
Incorporation or the By-Laws of the Borrower or any statute
or any order, rule or regulation applicable to the Borrower
of any court or any Federal, state or other regulatory
authority or other governmental body having jurisdiction
over the Borrower, and no consent, approval, authorization
or other order of, or filing with, any court or any such
regulatory authority or other governmental body is required
for the issuance by the Borrower of the Notes and the
compliance by the Borrower with all of the provisions of
this Agreement; provided, that the Borrower makes no
representations or warranties with respect to any usury laws
or any securities or blue sky laws of political subdivisions
of the United States or any laws or treaties of any country
(or political subdivision thereof) other than the United
States.
SECTION 4.03. Binding Effect. This Agreement
constitutes a valid and binding agreement of the Borrower
and the Notes, when executed and delivered in accordance
with this Agreement, will constitute valid and binding
obligations of the Borrower. The Letter Agreement is in
full force and effect and constitutes a valid and binding
agreement of the Borrower and Sears.
SECTION 4.04. Financial Information.
(a) The statement of financial position of the
Borrower as of December 31, 1994 and the related statements
of income, shareholder's equity and cash flows for the
fiscal year then ended, reported on by Deloitte & Touche LLP
and set forth in the Borrower's 1994 Form 10-K, a copy of
which has been delivered to each of the Banks, present
fairly in all material respects, in conformity with
generally accepted accounting principles, the financial
position of the Borrower as of such date and its results of
operations and cash flows for such fiscal year.
(b) The unaudited statement of financial
position of the Borrower as of March 31, 1995 and the
related unaudited statements of income, shareholder's equity
and cash flows for the three months then ended, set forth in
the Borrower's quarterly report for the fiscal quarter ended
March 31, 1995 as filed with the Commission on Form 10-Q, a
copy of which (excluding the exhibits thereto) has been
delivered to each of the Banks, present fairly in all
material respects, in conformity with generally accepted
accounting principles applied on a basis consistent with the
financial statements referred to in subsection (a) of this
Section, the financial position of the Borrower as of such
date and its results of operations and cash flows for such
three month period (subject to normal year-end adjustments).
(c) Since March 31, 1995, there has been no
material adverse change in the business, financial position
or results of operations of the Borrower not disclosed in
writing to the Banks prior to the date of this Agreement.
SECTION 4.05. Litigation. The Borrower does not
know of any pending legal or governmental proceeding
required to be described in the Annual Report on Form 10-K
of the Borrower most recently filed with the Commission
pursuant to the Exchange Act, or in the Quarterly Reports on
Form 10-Q of the Borrower filed with the Commission pursuant
to the Exchange Act subsequent thereto, which are not
described as required, and the Borrower does not know of any
pending legal or governmental proceedings not so described
which would be required to be described in a subsequent
filing with the Commission and which have not been
previously disclosed in writing to the Banks.
SECTION 4.06. Compliance with ERISA. Each member
of the ERISA Group has fulfilled its obligations under the
minimum funding standards of ERISA and the Internal Revenue
Code with respect to each Plan and is in compliance in all
material respects with the presently applicable provisions
of ERISA and the Internal Revenue Code with respect to each
Plan. No member of the ERISA Group has (i) sought a waiver
of the minimum funding standard under Section 412 of the
Internal Revenue Code in respect of any Plan, (ii) failed to
make any contribution or payment to any Plan or
Multiemployer Plan or in respect of any Benefit Arrangement,
or made any amendment to any Plan or Benefit Arrangement,
which has resulted or could result in the imposition of a
Lien or the posting of a bond or other security under ERISA
or the Internal Revenue Code or (iii) incurred any liability
under Title IV of ERISA other than a liability to the PBGC
for premiums under Section 4007 of ERISA.
SECTION 4.07. Environmental Matters. The
Borrower has reasonably concluded that Environmental Laws
are unlikely to have a material adverse effect on the
business, consolidated financial condition or results of
operations of the Borrower and its Consolidated
Subsidiaries.
SECTION 4.08. Taxes. United States Federal
income tax returns of the Borrower and its Subsidiaries have
been closed through the fiscal year ended December 31, 1982.
All United States Federal income tax returns and all other
material tax returns which are required to be filed have
been filed by or on behalf of the Borrower and its
Subsidiaries and all taxes due with respect to the Borrower
and its Subsidiaries pursuant to such returns or pursuant to
any assessment received by the Borrower or any Subsidiary
have been paid. The charges, accruals and reserves on the
books of the Borrower and its Subsidiaries in respect of
taxes or other governmental charges are, in the opinion of
the Borrower, adequate.
SECTION 4.09. Subsidiaries. At the date of this
Agreement, the Borrower has no Subsidiaries. If during the
term of this Agreement, the Borrower shall acquire or
otherwise come to have one or more Subsidiaries, each of
such corporate Subsidiaries shall be a corporation duly
incorporated and validly existing as a corporation in good
standing under the laws of its jurisdiction of
incorporation, and shall have full corporate powers to
conduct its business as conducted.
SECTION 4.10. Full Disclosure. All written
factual information heretofore furnished by the Borrower to
the Agent or any Bank for purposes of or in connection with
this Agreement was true and accurate in all material
respects on the date as of which such information was stated
or certified; provided that the Borrower makes no
representations or warranties with respect to any
projections or other non-factual information contained in
any such information.
ARTICLE V
COVENANTS
The Borrower agrees that, so long as any Bank has
any Commitment hereunder or any amount payable under any
Note remains unpaid:
SECTION 5.01. Information. The Borrower will
deliver to each of the Banks:
(a) as soon as available and in any event within
120 days after the end of each fiscal year of the
Borrower, a statement of financial position of the
Borrower as of the end of such fiscal year and the
related statements of income, shareholder's equity and
cash flows for such fiscal year, setting forth in each
case in comparative form the figures for the previous
fiscal year, all reported on by Deloitte & Touche LLP
or other independent public accountants of nationally
recognized standing;
(b) as soon as available and in any event within
60 days after the end of each of the first three
quarters of each fiscal year of the Borrower, a
statement of financial position of the Borrower as of
the end of such quarter and the related statements of
income, shareholder's equity and cash flows for such
quarter and for the portion of the Borrower's fiscal
year ended at the end of such quarter, setting forth in
each case in comparative form the figures for the
corresponding quarter and the corresponding portion of
the Borrower's previous fiscal year, all certified
(subject to normal year-end adjustments) as to fairness
of presentation, generally accepted accounting
principles and consistency by the chief financial
officer or the chief accounting officer of the
Borrower;
(c) simultaneously with the delivery of each set
of financial statements referred to in clauses (a) and
(b) above, a certificate of the chief financial officer
or the chief accounting officer of the Borrower (i)
setting forth in reasonable detail the calculations
required to establish whether the Borrower was in
compliance with the requirements of Sections 5.10 and
5.11 on the date of such financial statements and (ii)
stating whether any Event of Default or any event or
condition which, with the giving of notice or lapse of
time or both, would become an Event of Default, exists
on the date of such certificate and, if any Event of
Default or any such event or condition then exists,
setting forth the details thereof and the action which
the Borrower is taking or proposes to take with respect
thereto;
(d) simultaneously with the delivery of each set
of financial statements referred to in clause (a)
above, a statement of the firm of independent public
accountants which reported on such statements to the
effect that in the course of their examination of such
statements, nothing came to their attention that caused
them to believe that the Borrower was not in compliance
with any of the terms, covenants, provisions or
conditions of Sections 5.01 to 6.01, inclusive, insofar
as such terms, covenants, provisions or conditions came
within the scope of their examination;
(e) within five days after any officer of the
Borrower obtains knowledge of any Event of Default or
any event or condition which, with the giving of notice
or lapse of time or both, would become an Event of
Default, if such Event of Default or event or condition
is then continuing, a certificate of the chief
financial officer or the chief accounting officer of
the Borrower setting forth the details thereof and the
action which the Borrower is taking or proposes to take
with respect thereto;
(f) promptly after the commencement thereof,
notice of all actions, suits or proceedings of the type
described in Section 4.05;
(g) promptly after the filing thereof, copies
(without exhibits thereto) of all registration
statements (other than any registration statements on
Form S-8 or its equivalent) and reports on Forms 10-K,
10-Q and 8-K (or their equivalents) which the Borrower
shall have filed with the Commission;
(h) if and when any member of the ERISA Group (i)
gives or is required to give notice to the PBGC of any
"reportable event" (as defined in Section 4043 of
ERISA) with respect to any Plan which might constitute
grounds for a termination of such Plan under Title IV
of ERISA, or knows that the plan administrator of any
Plan has given or is required to give notice of any
such reportable event, a copy of the notice of such
reportable event given or required to be given to the
PBGC; (ii) receives notice of complete or partial
withdrawal liability under Title IV of ERISA or notice
that any Multiemployer Plan is in reorganization, is
insolvent or has been terminated, a copy of such
notice; (iii) receives notice from the PBGC under Title
IV of ERISA of an intent to terminate, impose liability
(other than for premiums under Section 4007 of ERISA)
in respect of, or appoint a trustee to administer any
Plan, a copy of such notice; (iv) applies for a waiver
of the minimum funding standard under Section 412 of
the Internal Revenue Code, a copy of such application;
(v) gives notice of intent to terminate any Plan under
Section 4041(c) of ERISA, a copy of such notice and
other information filed with the PBGC; (vi) gives
notice of withdrawal from any Plan pursuant to Section
4063 of ERISA, a copy of such notice; or (vii) fails to
make any payment or contribution to any Plan or
Multiemployer Plan or in respect of any Benefit
Arrangement or makes any amendment to any Plan or
Benefit Arrangement which has resulted or could result
in the imposition of a Lien or the posting of a bond or
other security, a certificate of the chief financial
officer or the chief accounting officer of the Borrower
setting forth details as to such occurrence and action,
if any, which the Borrower or applicable member of the
ERISA Group is required or proposes to take; and
(i) from time to time such additional information
regarding the financial position or business of the
Borrower and its Subsidiaries as the Agent, at the
request of any Bank, may reasonably request.
If during the term of this Agreement, the Borrower shall
acquire or otherwise come to have one or more Subsidiaries,
the financial statements required to be delivered pursuant
to clauses (a) and (b) above shall be consolidated financial
statements of the Borrower and its Consolidated
Subsidiaries.
SECTION 5.02. Maintenance of Property; Insurance.
(a) The Borrower will keep, and will cause each Subsidiary
to keep, all property useful and necessary in its business
in good working order and condition, ordinary wear and tear
excepted.
(b) The Borrower will insure or act as
self-insurer, and will cause each Subsidiary to insure or
act as self-insurers, to such extent as the Borrower may
determine to be not unreasonably prejudicial to the
interests of the Banks.
SECTION 5.03. Conduct of Business and Maintenance
of Existence. Subject to Section 5.07, the Borrower will,
and will cause each Subsidiary to, engage exclusively in
(i) the business now conducted by the Borrower, including
the extension of credit to Sears pursuant to the Letter
Agreement, (ii) the purchase of Receivables from Sears or
its Affiliates on terms and conditions reasonably determined
by the Borrower to be substantially as favorable to the
Borrower or such Subsidiary as the terms and conditions
which would apply in a similar transaction with a Person
that is not an Affiliate of the Borrower and/or
(iii) insurance or financial activities supporting
businesses conducted by Sears or any of its Affiliates.
Subject to Section 5.07, the Borrower will preserve, renew
and keep in full force and effect, and will cause each
Subsidiary to preserve, renew and keep in full force and
effect their respective corporate existence and their
respective rights, privileges and franchises necessary or
desirable in the normal conduct of business; provided that
the Borrower may terminate the corporate existence of any
Subsidiary if such termination could not reasonably be
expected to have a material adverse effect on the business,
consolidated financial position or consolidated net income
of the Borrower and its Consolidated Subsidiaries taken as a
whole, or otherwise to be materially disadvantageous to the
Banks.
SECTION 5.04. Compliance with Laws. The Borrower
will make all good faith efforts to comply, and cause each
Subsidiary to make all good faith efforts to comply, with
all material applicable laws, ordinances, rules,
regulations, and requirements of governmental authorities
(including, without limitation, Environmental Laws and ERISA
and the rules and regulations thereunder) except where the
necessity of compliance therewith is contested in good faith
by appropriate proceedings.
SECTION 5.05. Letter Agreement. The Borrower
will not, without the prior written consent of the Required
Banks, amend, waive, terminate or otherwise modify any
provision of the Letter Agreement; provided that the
Borrower may amend the Letter Agreement to reduce the fixed
charge coverage ratio set forth in paragraph 3 thereof to no
less than 1.15. The Borrower will perform all its
obligations under the Letter Agreement and will enforce the
Letter Agreement and all notes and other instruments
delivered thereunder against Sears in accordance with their
respective terms.
SECTION 5.06. Negative Pledge. Neither the
Borrower nor any Subsidiary will create, assume or suffer to
exist any Lien securing Debt on any asset now owned or
hereafter acquired by it, except:
(a) any Lien existing on the date of this
Agreement;
(b) any Lien existing on any asset of any
corporation at the time such corporation becomes a
Subsidiary and not created in contemplation of such
event;
(c) any Lien on any asset securing Debt incurred
or assumed for the purpose of financing all or any part
of the cost of acquiring such asset, provided that such
Lien attaches to such asset concurrently with or within
90 days after the acquisition thereof;
(d) any Lien on any asset of any corporation
existing at the time such corporation is merged with or
consolidated with or otherwise acquired by the Borrower
or a Subsidiary and not created in contemplation of
such event;
(e) any Lien existing on any asset prior to the
acquisition thereof by the Borrower or a Subsidiary and
not created in contemplation of such acquisition;
(f) any Lien on assets to secure obligations
incurred in connection with the issuance of revenue
bonds, interest on which is exempt from Federal income
tax pursuant to Section 103(b) of the Internal Revenue
Code;
(g) any Lien arising out of the refinancing,
extension, renewal or refunding of any Debt secured by
any Lien permitted by any of the foregoing clauses of
this Section, provided that such Debt is not increased
and is not secured by any additional assets;
(h) any Lien arising pursuant to any order of
attachment, distraint or similar legal process arising
in connection with court proceedings so long as the
execution or other enforcement thereof is effectively
stayed and the claims secured thereby are being
contested in good faith by appropriate proceedings; and
(i) Liens not otherwise permitted by the
foregoing clauses of this Section securing Debt in an
aggregate principal amount not to exceed 5% of
Consolidated Tangible Net Worth at any time
outstanding.
SECTION 5.07. Consolidations, Mergers and Sales
of Assets. The Borrower shall not merge or consolidate
with, or sell or transfer all or substantially all of its
property and assets to, any Person, except that nothing
herein shall prevent any consolidation or merger of the
Borrower with or into any other corporation organized under
the laws of the United States or any state thereof which is
(w) Sears, (x) a Wholly-Owned Subsidiary of Sears, (y) a
corporation of which Sears is a Wholly-Owned Subsidiary or
(z) a Wholly-Owned Subsidiary of a corporation described in
clause (y) above, or any consolidation or merger of any
other such corporation with or into the Borrower, or any
sale or transfer of all or substantially all of the property
and assets of the Borrower to any other such corporation
lawfully entitled to acquire the same; provided, that
(i) immediately after giving effect to such consolidation,
merger, sale or transfer, no Event of Default or any event
or condition that, with the giving of notice or the lapse of
time or both, would become an Event of Default, shall have
occurred and be continuing; and (ii) the Borrower covenants
that any such consolidation, merger, sale or transfer shall
be upon the conditions that the due and punctual payment of
the principal and accrued interest on the Notes, and the due
and punctual performance and observance of all the terms,
covenants and conditions of this Agreement to be kept or
performed by the Borrower shall, by an agreement
supplemental hereto, be assumed by the corporation (other
than the Borrower) formed by or resulting from any such
consolidation or merger, or which shall have received the
transfer of all or substantially all of the property and
assets of the Borrower, just as fully and effectually as if
such successor had been the original Borrower; and in the
event of any such sale or transfer the predecessor Borrower
may be dissolved, wound up and liquidated at any time
thereafter.
SECTION 5.08. Use of Proceeds. The proceeds of
the Loans made under this Agreement will be used by the
Borrower for its general corporate purposes. None of such
proceeds will be used, directly or indirectly, for the
purpose, whether immediate, incidental or ultimate, of
purchasing or carrying any "margin stock", within the
meaning of Regulation U, other than in the ordinary course
of business of Sears or any Sears Subsidiary.
SECTION 5.09. Subsidiary Debt. The Borrower will
not permit any Subsidiary to issue, assume, incur or have
outstanding any Debt or capital stock having any preference
as to dividends or upon any distribution of assets except
(a) such Debt or stock issued to and held by Borrower and/or
one or more Wholly-Owned Subsidiaries of the Borrower,
(b) such Debt or stock of a Subsidiary whose business
activities are confined exclusively to raising capital
outside the United States, financing the Borrower and its
other Subsidiaries and other activities incidental thereto,
(c) such Debt or stock of a Person existing at the time such
Person is merged or consolidated with or otherwise acquired
by the Borrower or a Subsidiary and not created in
contemplation thereof and (d) other such Debt or stock
which, in the aggregate, does not exceed at any time 5% of
Consolidated Tangible Net Worth (with such stock taken at
the higher of its voluntary or involuntary liquidation
preference), it being understood that such Debt and stock
referred to in clauses (b), (c) and (d) shall be permitted
under this Section only if, at the time, the provisions of
this Agreement other than this Section would permit the
Borrower to issue, assume, incur or have outstanding an
equal amount of its own Debt in the same amount together
with all other Debt of the Borrower then outstanding.
SECTION 5.10. Fixed Charge Coverage. The Fixed
Charge Coverage Ratio for any fiscal quarter will be not
less than 1.15.
SECTION 5.11. Debt. Consolidated Debt will at no
time exceed 700% of Consolidated Tangible Net Worth. For
purposes of this Section any preferred stock of a
Consolidated Subsidiary held by a Person other than the
Borrower or a Wholly-Owned Subsidiary of the Borrower that
is a Consolidated Subsidiary shall be included, at the
higher of its voluntary or involuntary liquidation value, in
"Consolidated Debt" and in the "Debt" of such Consolidated
Subsidiary.
ARTICLE VI
DEFAULTS
SECTION 6.01. Events of Default. If one or more
of the following events ("Events of Default") shall have
occurred and be continuing:
(a) the Borrower shall fail to pay (i) any
principal of any Loan when due or (ii) any interest on
any Loan or any fee or any other amount payable by it
hereunder within ten days after the due date thereof;
(b) the Borrower shall fail to observe or perform
any covenant contained in Sections 5.05 to 5.11,
inclusive, for more than five days;
(c) the Borrower shall fail to observe or perform
any covenant or agreement contained in this Agreement
(other than those covered by clause (a) or (b) above)
for 30 days after written notice thereof has been given
to the Borrower by the Agent at the request of any
Bank;
(d) any representation, warranty, certification
or statement made by the Borrower in this Agreement or
in any certificate, financial statement or other
document delivered pursuant to this Agreement shall
prove to have been incorrect in any material respect
when made (or deemed made);
(e) the Borrower or any Subsidiary shall fail to
make any payment, when due or within any applicable
grace period, in respect of any Debt or Debts or SRAC
Subordinated Debt of the Borrower and/or one or more
Subsidiaries, arising in one or more related or
unrelated transactions, in an aggregate principal
amount not less than $50,000,000 (other than the
Notes);
(f) any event or condition shall occur which (i)
results in the acceleration of the maturity of (x) any
Debt or Debts or SRAC Subordinated Debt of the Borrower
or any Subsidiary in an aggregate principal amount not
less than $50,000,000 (other than the Notes) or (y) any
Debt or Debts of any Material Company other than the
Borrower or any Subsidiary in an aggregate principal
amount not less than $100,000,000, in any case by
holders thereof exercising their rights so to
accelerate, or (ii) entitles the holder of any such
Debt (or SRAC Subordinated Debt) or any Person acting
on such holder's behalf to accelerate the maturity
thereof;
(g) any Material Company shall commence a
voluntary case or other proceeding seeking liquidation,
reorganization or other relief with respect to itself
or its debts under any bankruptcy, insolvency or other
similar law now or hereafter in effect or seeking the
appointment of a trustee, receiver, liquidator,
custodian or other similar official of it or any
substantial part of its property, or shall consent to
any such relief or to the appointment of or taking
possession by any such official in an involuntary case
or other proceeding commenced against it, or shall make
a general assignment for the benefit of creditors, or
shall fail generally to pay its debts as they become
due, or shall take any corporate action to authorize
any of the foregoing;
(h) an involuntary case or other proceeding shall
be commenced against any Material Company seeking
liquidation, reorganization or other relief with
respect to it or its debts under any bankruptcy,
insolvency or other similar law now or hereafter in
effect or seeking the appointment of a trustee,
receiver, liquidator, custodian or other similar
official of it or any substantial part of its property,
and such involuntary case or other proceeding shall
remain undismissed and unstayed for a period of 90
days; or an order for relief shall be entered against
any Material Company (in an involuntary case or other
proceeding against such Material Company) under the
federal bankruptcy laws as now or hereafter in effect;
(i) any member of the ERISA Group shall fail to
pay when due an amount or amounts aggregating in excess
of $10,000,000 which it shall have become liable to pay
under Title IV of ERISA; or notice of intent to
terminate a Material Plan shall be filed under Title IV
of ERISA by any member of the ERISA Group, any plan
administrator or any combination of the foregoing; or
the PBGC shall institute proceedings under Title IV of
ERISA to terminate, to impose liability (other than for
premiums under Section 4007 of ERISA) in respect of, or
to cause a trustee to be appointed to administer any
Material Plan; or a condition shall exist by reason of
which the PBGC would be entitled to obtain a decree
adjudicating that any Material Plan must be terminated;
or there shall occur a complete or partial withdrawal
from, or a default, within the meaning of Section
4219(c)(5) of ERISA, with respect to, one or more
Multiemployer Plans which could cause one or more
members of the ERISA Group to incur a current payment
obligation in excess of $50,000,000;
(j) a judgment or order for the payment of money
in excess of $10,000,000 shall be rendered against the
Borrower or any Subsidiary and such judgment or order
shall continue unsatisfied and unstayed (pursuant to
laws, rules or court orders) for a period of 10 days;
(k) other than by reason of a transaction
permitted by Section 5.07 in which Sears is the
successor or transferee, either Sears or a corporation
organized under the laws of the United States or any
state thereof which is (i) a Wholly-Owned Subsidiary of
Sears, (ii) any such corporation of which Sears is a
Wholly-Owned Subsidiary or (iii) a Wholly-Owned
Subsidiary of a corporation described in clause (ii)
above, shall cease to own beneficially and free and
clear of all Liens 100% of the issued and outstanding
capital stock of the Borrower (or any transferee of the
property and assets of the Borrower pursuant to a
transaction permitted by Section 5.07), other than any
SRAC Preferred Stock; or
(l) the Letter Agreement shall for any reason
cease to be in full force and effect;
then, and in every such event, the Agent shall (i) if
requested by the Required Banks, by notice to the Borrower
terminate the Commitments and they shall thereupon
terminate, and (ii) if requested by the Required Banks, by
notice to the Borrower declare the Notes (together with
accrued interest thereon) to be, and the Notes shall
thereupon become, immediately due and payable without
presentment, demand, protest or other notice of any kind,
all of which are hereby waived by the Borrower; provided
that in the case of any of the Events of Default specified
in clause (g) or (h) above, without any notice to the
Borrower or any other act by the Agent or the Banks, the
Commitments shall thereupon terminate and the Notes
(together with accrued interest thereon) shall become
immediately due and payable without presentment, demand,
protest or other notice of any kind, all of which are hereby
waived by the Borrower.
SECTION 6.02. Notice of Default. The Agent shall
give notice to the Borrower under Section 6.01(c) promptly
upon being requested to do so by any Bank and shall
thereupon notify all the Banks thereof.
ARTICLE VII
THE AGENT
SECTION 7.01. Appointment and Authorization.
Each Bank irrevocably appoints and authorizes the Agent to
take such action as agent on its behalf and to exercise such
powers under this Agreement and the Notes as are delegated
to the Agent by the terms hereof or thereof, together with
all such powers as are reasonably incidental thereto.
SECTION 7.02. Agent and Affiliates. Morgan
Guaranty Trust Company of New York shall have the same
rights and powers under this Agreement as any other Bank and
may exercise or refrain from exercising the same as though
it were not the Agent, and Morgan Guaranty Trust Company of
New York and its Affiliates may accept deposits from, lend
money to, and generally engage in any kind of business with
the Borrower or any Subsidiary or Affiliate of the Borrower
as if it were not the Agent hereunder.
SECTION 7.03. Action by Agent. The obligations
of the Agent hereunder are only those expressly set forth
herein. Without limiting the generality of the foregoing,
the Agent shall not be required to take any action with
respect to any Event of Default or any event or condition
which, with the giving of notice or lapse of time or both,
would become an Event of Default, except as expressly
provided in Article VI.
SECTION 7.04. Consultation with Experts. The
Agent may consult with legal counsel (who may be counsel for
the Borrower), independent public accountants and other
experts selected by it and shall not be liable to any Bank
for any action taken or omitted to be taken by it in good
faith in accordance with the advice of such counsel,
accountants or experts.
SECTION 7.05. Liability of Agent. Neither the
Agent nor any of its directors, officers, agents, or
employees shall be liable to any Bank for any action taken
or not taken by it in connection herewith (i) with the
consent or at the request of the Required Banks or (ii) in
the absence of its own gross negligence or willful
misconduct. Neither the Agent nor any of its directors,
officers, agents or employees shall be responsible for or
have any duty to ascertain, inquire into or verify (i) any
statement, warranty or representation made in connection
with this Agreement or any borrowing hereunder; (ii) the
performance or observance of any of the covenants or
agreements of the Borrower; (iii) the satisfaction of any
condition specified in Article III, except receipt of items
required to be delivered to the Agent; or (iv) the validity,
effectiveness or genuineness of this Agreement, the Notes or
any other instrument or writing furnished in connection
herewith. The Agent shall not incur any liability by acting
in reliance upon any notice, consent, certificate,
statement, or other writing (which may be a bank wire, telex
or similar writing) believed by it to be genuine or to be
signed by the proper party or parties.
SECTION 7.06. Indemnification. Each Bank shall,
ratably in accordance with its Commitment, indemnify the
Agent (to the extent not reimbursed by the Borrower pursuant
to a claim made by the Agent pursuant to Section 9.03)
against any cost, expense (including counsel fees and
disbursements), claim, demand, action, loss or liability
(except such as result from the Agent's gross negligence or
willful misconduct) that the Agent may suffer or incur in
connection with this Agreement or any action taken or
omitted by the Agent hereunder.
SECTION 7.07. Credit Decision. Each Bank
acknowledges that it has, independently and without reliance
upon the Agent or any other Bank, and based on such
documents and information as it has deemed appropriate, made
its own credit analysis and decision to enter into this
Agreement. Each Bank also acknowledges that it will,
independently and without reliance upon the Agent or any
other Bank, and based on such documents and information as
it shall deem appropriate at the time, continue to make its
own credit decisions in taking or not taking any action
under this Agreement.
SECTION 7.08. Successor Agent. The Agent may
resign at any time by giving written notice thereof to the
Banks and the Borrower. Upon any such resignation, the
Required Banks shall have the right to appoint a successor
Agent. If no successor Agent shall have been so appointed
by the Required Banks, and shall have accepted such
appointment, within 30 days after the retiring Agent gives
notice of resignation, then the retiring Agent may, on
behalf of the Banks, appoint a successor Agent, which shall
be a commercial bank organized or licensed under the laws of
the United States of America or of any State thereof and
having a combined capital and surplus of at least
$100,000,000. Upon the acceptance of its appointment as
Agent hereunder by a successor Agent, such successor Agent
shall thereupon succeed to and become vested with all the
rights and duties of the retiring Agent, and the retiring
Agent shall be discharged from its duties and obligations
hereunder; provided that until such acceptance, the retiring
Agent shall continue to perform its obligations as Agent
hereunder. After any retiring Agent's resignation hereunder
as Agent, the provisions of this Article shall inure to its
benefit as to any actions taken or omitted to be taken by it
while it was Agent.
SECTION 7.09. Agent's Fee. The Borrower shall
pay to the Agent for its own account fees in the amounts and
at the times previously agreed upon between the Borrower and
the Agent.
SECTION 7.10. Managing Agent, Co-Arrangers,
Co-Agents and Lead Managers. None of the Managing Agent,
any Co-Arranger, Co-Agent or Lead Manager shall have any
responsibility or obligation under this Agreement in its
capacity as Managing Agent, Co-Arranger, Co-Agent or Lead
Manager, as the case may be.
ARTICLE VIII
CHANGE IN CIRCUMSTANCES
SECTION 8.01. Basis for Determining Interest Rate
Inadequate or Unfair. If on or prior to the first day of
any Interest Period for any Fixed Rate Borrowing:
(a) the Agent is advised by the Reference Banks
that deposits in dollars (in the applicable amounts)
are not being offered to the Reference Banks in the
relevant market for such Interest Period, or
(b) in the case of a Committed Borrowing, Banks
having 50% or more of the aggregate amount of the
Commitments advise the Agent that the Adjusted CD Rate
or the London Interbank Offered Rate, as the case may
be, as determined by the Agent will not adequately and
fairly reflect the cost to such Banks of funding their
CD Loans or Euro-Dollar Loans, as the case may be, for
such Interest Period,
the Agent shall forthwith give notice thereof to the
Borrower and the Banks, whereupon until the Agent notifies
the Borrower that the circumstances giving rise to such
suspension no longer exist, (i) the obligations of the Banks
to make CD Loans or Euro-Dollar Loans, as the case may be,
or to convert outstanding Loans into CD Loans or Euro-Dollar
Loans, as the case may be, shall be suspended and (ii) each
outstanding CD Loan or Euro-Dollar Loan, as the case may be,
shall be converted into a Base Rate Loan on the last day of
the then current Interest Period applicable thereto. Unless
the Borrower notifies the Agent at least one Domestic
Business Day before the date of any Fixed Rate Borrowing for
which a Notice of Borrowing has previously been given that
it elects not to borrow on such date, (i) if such Fixed Rate
Borrowing is a Committed Borrowing, such Borrowing shall
instead be made as a Base Rate Borrowing and (ii) if such
Fixed Rate Borrowing is a Money Market LIBOR Borrowing, the
Money Market LIBOR Loans comprising such Borrowing shall
bear interest for each day from and including the first day
to but excluding the last day of the Interest Period
applicable thereto at the Base Rate for such day.
SECTION 8.02. Illegality. If, on or after the
date of this Agreement, the adoption of any applicable law,
rule or regulation, or any change therein, or any change in
the interpretation or administration thereof by any
governmental authority, central bank or comparable agency
charged with the interpretation or administration thereof,
or compliance by any Bank (or its Euro-Dollar Lending
Office) with any request or directive (whether or not having
the force of law) of any such authority, central bank or
comparable agency shall make it unlawful or impossible for
any Bank (or its Euro-Dollar Lending Office) to make,
maintain or fund its Euro-Dollar Loans and such Bank shall
so notify the Agent, the Agent shall forthwith give notice
thereof to the other Banks and the Borrower, whereupon until
such Bank notifies the Borrower and the Agent that the
circumstances giving rise to such suspension no longer
exist, the obligation of such Bank to make Euro-Dollar
Loans, or to convert outstanding Loans into Euro-Dollar
Loans, shall be suspended. Before giving any notice to the
Agent pursuant to this Section, such Bank shall, if
practicable, with the consent of the Borrower (which consent
shall not unreasonably be withheld), designate a different
Euro-Dollar Lending Office if such designation will avoid
the need for giving such notice and will not, in the
judgment of such Bank, be otherwise disadvantageous to such
Bank. If such notice is given, (i) the Borrower shall be
entitled upon its request to a reasonable explanation of the
factors underlying such notice and (ii) each Euro-Dollar
Loan of such Bank then outstanding shall be converted to a
Base Rate Loan either (a) on the last day of the then
current Interest Period applicable to such Euro-Dollar Loan
if such Bank may lawfully continue to maintain and fund such
Loan to such day or (b) immediately if such Bank shall
determine that it may not lawfully continue to maintain and
fund such Loan to such day.
SECTION 8.03. Increased Cost and Reduced Return.
(a) In the event that (x) after June 29, 1995, in the case
of any Committed Loan or any obligation to make Committed
Loans or (y) on or after the date of the related Money
Market Quote, in the case of any Money Market Loan, the
adoption of any applicable law, rule or regulation, or any
change therein or in the interpretation or application
thereof by any governmental authority, central bank or
comparable agency charged with the interpretation or
administration thereof or compliance by any Bank with any
request or directive after June 29, 1995 (whether or not
having the force of law) of any such authority, central bank
or comparable agency:
(i) does or shall subject such Bank to any
additional tax of any kind whatsoever with respect
to this Agreement, any Note or any Fixed Rate Loan
made by it, or change the basis or the applicable
rate of taxation of payments to such Bank of
principal, interest or any other amount payable
hereunder (except for (A) the imposition of or
change in any tax on or measured by the overall
net income of such Bank, (B) the imposition of or
change in any United States Tax described in
Section 2.15(a) in respect of which the Borrower
is not obligated to pay an additional amount by
reason of the proviso to Section 2.15(a) or (C)
the imposition of or change in any income tax
imposed by any governmental or other taxing
authority of or in any jurisdiction other than the
United States);
(ii) does or shall impose, modify or hold
applicable any reserve, special deposit, insurance
assessment, compulsory loan or similar requirement
against assets held by, or deposits or other
liabilities in or for the account of, advances or
loans by, or other credit extended by, or any
other acquisition of funds by, any office of such
Bank which are not otherwise included in the
determination of the rate of interest on Fixed
Rate Loans hereunder; or
(iii) does or shall impose on such Bank any
other condition;
and the result of any of the foregoing is to increase the
cost to such Bank of making or maintaining Fixed Rate Loans
or to reduce any amount receivable hereunder or under any
Note with respect thereto, then, in any such case, the
Borrower shall promptly pay such Bank, upon its demand, any
additional amounts necessary to compensate such Bank for
such increased cost or reduced amount receivable which such
Bank deems to be material as determined by such Bank with
respect to its Fixed Rate Loans.
(b) If any Bank shall have determined that, after
June 29, 1995, the adoption of any applicable law, rule or
regulation regarding capital adequacy, or any change
therein, or any change in the interpretation or
administration thereof by any governmental authority,
central bank or comparable agency charged with the
interpretation or administration thereof, or any request or
directive regarding capital adequacy (whether or not having
the force of law) of any such authority, central bank or
comparable agency, has or would have the effect of reducing
the rate of return on capital of such Bank (or its Parent)
as a consequence of such Bank's obligations hereunder to a
level below that which such Bank (or its Parent) could have
achieved but for such adoption, change, request or directive
(taking into consideration its policies with respect to
capital adequacy) by an amount deemed by such Bank to be
material, then from time to time, within 15 days after
demand by such Bank (with a copy to the Agent), the Borrower
shall pay to such Bank such additional amount or amounts as
will compensate such Bank (or its Parent) for such
reduction.
(c) Each Bank will promptly notify the Borrower
and the Agent of any event of which it has knowledge,
occurring after June 29, 1995, which will entitle such Bank
to compensation pursuant to this Section and will, if
practicable, with the consent of the Borrower (which consent
shall not unreasonably be withheld), designate a different
Applicable Lending Office if such designation will avoid the
need for, or reduce the amount of, such compensation and
will not, in the judgment of such Bank, be otherwise
disadvantageous to such Bank. A certificate of any Bank
claiming compensation under this Section and setting forth
in reasonable detail its computation of the additional
amount or amounts to be paid to it hereunder shall be
conclusive in the absence of manifest error. In determining
such amount, such Bank may use any reasonable averaging and
attribution methods. Notwithstanding the foregoing
subsections (a) and (b) of this Section 8.03, the Borrower
shall only be obligated to compensate any Bank for any
amount arising or accruing both:
(i) during (A) any time or period commencing
(x) in the case of subsection (a), not earlier
than the first day of any Interest Period in
effect on the date which, and (y) in the case of
subsection (b), not earlier than the date on
which, such Bank notifies the Agent and the
Borrower that it proposes to demand such
compensation and identifies to the Agent and the
Borrower the statute, regulation or other basis
upon which the claimed compensation is or will be
based and (B) any time or period during which,
because of the retroactive application of such
statute, regulation or other basis, such Bank did
not know that such amount would arise or accrue;
and
(ii) within six months prior to any demand
therefor, accompanied by a certificate of such Bank
claiming compensation and setting forth in reasonable
detail its computation of the additional amount or
amounts to be paid to it hereunder.
This Section shall survive the termination of this Agreement
and payment of the outstanding Notes.
SECTION 8.04. Base Rate Loans Substituted for
Affected Fixed Rate Loans. If (i) the obligation of any
Bank to make or maintain Euro-Dollar Loans has been
suspended pursuant to Section 8.02 or (ii) any Bank has
demanded compensation under Section 8.03(a) and the Borrower
shall, by at least five Euro-Dollar Business Days' prior
notice to such Bank through the Agent, have elected that the
provisions of this Section shall apply to such Bank, then,
unless and until such Bank notifies the Borrower that the
circumstances giving rise to such suspension or demand for
compensation no longer apply:
(a) all Loans which would otherwise be made
by such Bank as (or continued as or converted
into) CD Loans or Euro-Dollar Loans, as the case
may be, shall instead be Base Rate Loans (on which
interest and principal shall be payable
contemporaneously with the related Fixed Rate
Loans of the other Banks), and
(b) after each of its CD Loans or
Euro-Dollar Loans, as the case may be, has been
repaid (or converted to a Base Rate Loan), all
payments of principal which would otherwise be
applied to repay such Fixed Rate Loans shall be
applied to repay its Base Rate Loans instead.
If such Bank notifies the Borrower that the circumstances
giving rise to such notice no longer apply, the principal
amount of each such Base Rate Loan shall be converted into a
CD Loan or Euro-Dollar Loan, as the case may be, on the
first day of the next succeeding Interest Period applicable
to the related CD Loans or Euro-Dollar Loans of the other
Banks.
SECTION 8.05. Substitution of Bank. If (i) the
obligation of any Bank to make Euro-Dollar Loans has been
suspended pursuant to Section 8.02, (ii) any Bank has
demanded compensation or given notice of its intention to
demand compensation under Section 8.03 or (iii) the Borrower
is required to pay any additional amount to any Bank
pursuant to Section 2.15(a), the Borrower shall have the
right, with the assistance of the Agent, to seek a mutually
satisfactory substitute bank or banks (which may be one or
more of the Banks) to replace such Bank under this
Agreement.
ARTICLE IX
MISCELLANEOUS
SECTION 9.01. Notices. All notices, requests and
other communications to any party hereunder shall be in
writing (including bank wire, facsimile transmission or
similar writing) and shall be given to such party: (w) in
the case of the Borrower, at its address or telecopy number
set forth on the signature pages hereof, (x) in the case of
the Agent, at its address, telecopy number or telex number
set forth on the signature pages hereof, (y) in the case of
any Bank, at its address, telecopy number or telex number
set forth in its Administrative Questionnaire or (z) in the
case of any party, such other address, telecopy number or
telex number as such party may hereafter specify for the
purpose by notice to the Agent and the Borrower. Each such
notice, request or other communication shall be effective
(i) if given by telex, when such telex is transmitted to the
telex number specified in this Section and the appropriate
answerback is received, (ii) if given by mail, 72 hours
after such communication is deposited in the mails with
first class postage prepaid, addressed as aforesaid or
(iii) if given by telecopy or any other means, when
delivered at the address specified in this Section (and
confirmed by telephone by the sender, in the case of any
telecopy notice to the Borrower); provided that notices to
the Agent under Article II or Article VIII shall not be
effective until received.
SECTION 9.02. No Waivers. No failure or delay by
the Agent or any Bank or the Borrower in exercising any
right, power or privilege hereunder or under any Note shall
operate as a waiver thereof nor shall any single or partial
exercise thereof preclude any other or further exercise
thereof or the exercise of any other right, power or
privilege. The rights and remedies herein provided shall be
cumulative and not exclusive of any rights or remedies
provided by law.
SECTION 9.03. Expenses; Documentary Taxes;
Indemnification. (a) The Borrower shall pay (i) all
reasonable out-of-pocket expenses of the Agent, including
fees and disbursements of special counsel for the Agent, in
connection with the preparation of this Agreement, any
waiver or consent hereunder or any amendment hereof or any
Event of Default or any event or condition which, with the
giving of notice or lapse of time or both, would become an
Event of Default or any alleged Event of Default or such
event or condition hereunder and (ii) if an Event of Default
occurs, all reasonable out-of-pocket expenses incurred by
the Agent and each Bank, including fees and disbursements of
counsel, in connection with such Event of Default and
collection, bankruptcy, insolvency and other enforcement
proceedings resulting therefrom. The Borrower shall
indemnify each Bank against any transfer taxes, documentary
taxes, assessments or similar charges made by any
governmental authority solely by reason of the execution and
delivery of this Agreement or the Notes.
(b) The Borrower agrees to indemnify the Agent
and each Bank and their respective affiliates (each an
"Indemnitee") and hold each Indemnitee harmless from and
against any and all liabilities, losses, damages, costs and
expenses of any kind, including, without limitation, the
reasonable fees and disbursements of counsel, which may be
incurred by such Indemnitee in connection with any
investigative, administrative or judicial proceeding
(whether or not such Indemnitee shall be designated a party
thereto) relating to or arising out of this Agreement or any
actual or proposed use of proceeds of Loans hereunder;
porvided that no Indemnitee shall have the right to be
indemnified hereunder (i) for its own gross negligence or
willful misconduct as determined by a court of competent
jurisdiction or (ii) in respect of any litigation instituted
by (x) any Participant against any Bank or the Agent, (y)
any Bank against any Participant, any Bank or the Agent, or
(z) any holder of any security of any Bank (in its capacity
as such) against any Bank, to the extent any such litigation
does not arise out of any misconduct (alleged in good faith
by such Bank) by or on behalf of the Borrower.
SECTION 9.04. Sharing of Set-Offs. Each Bank
agrees that if it shall, by exercising any right of set-off
or counterclaim or otherwise, receive payment of a
proportion of the aggregate amount of principal and interest
due with respect to any Note held by it which is greater
than the proportion received by any other Bank in respect of
the aggregate amount of principal and interest due with
respect to any Note held by such other Bank, the Bank
receiving such proportionately greater payment shall
purchase such participations in the Notes held by the other
Banks, and such other adjustments shall be made, as may be
required so that all such payments of principal and interest
with respect to the Notes held by the Banks shall be shared
by the Banks pro rata; provided that nothing in this Section
shall impair the right of any Bank to exercise any right of
set-off or counterclaim it may have and to apply the amount
subject to such exercise to the payment of indebtedness of
the Borrower other than its indebtedness under the Notes.
The Borrower agrees, to the fullest extent it may
effectively do so under applicable law, that any holder of a
participation in a Note, whether or not acquired pursuant to
the foregoing arrangements, may exercise rights of set-off
or counterclaim and other rights with respect to such
participation as fully as if such holder of a participation
were a direct creditor of the Borrower in the amount of such
participation.
SECTION 9.05. Amendments and Waivers. Any
provision of this Agreement or the Notes may be amended or
waived if, but only if, such amendment or waiver is in
writing and is signed by the Borrower and the Required Banks
(and, if the rights or duties of the Agent are affected
thereby, by the Agent); provided that no such amendment or
waiver shall, unless signed by all the Banks, (i) increase
or decrease the Commitment of any Bank (except for a ratable
decrease in the Commitments of all Banks) or subject any
Bank to any additional obligation, (ii) reduce the principal
of or rate of interest on any Loan or any fees hereunder
(except that, in the case of a reduction in the principal of
or rate of interest on Loans comprising a single Money
Market Borrowing, only the signatures of the Borrower and
the Banks making Loans included in such Borrowing shall be
required), (iii) postpone the date fixed for any payment of
principal of or interest on any Loan or any fees hereunder
or for the termination of any Commitment or (iv) change the
percentage of the Commitments or of the aggregate unpaid
principal amount of the Notes, or the number of Banks, which
shall be required for the Banks or any of them to take any
action under this Section or any other provision of this
Agreement.
SECTION 9.06. Successors and Assigns. (a) The
provisions of this Agreement shall be binding upon and inure
to the benefit of the parties hereto and their respective
successors and assigns, except that the Borrower may not
assign or otherwise transfer any of its rights under this
Agreement (other than pursuant to a transaction permitted by
Section 5.07) without the prior written consent of all
Banks.
(b) Any Bank may at any time grant to one or more
banks or other institutions (each a "Participant")
participating interests in its Commitment or any or all of
its Loans. In the event of any such grant by a Bank of a
participating interest to a Participant, such Bank shall
remain responsible for the performance of its obligations
hereunder, and the Borrower and the Agent shall continue to
deal solely and directly with such Bank in connection with
such Bank's rights and obligations under this Agreement.
Any agreement pursuant to which any Bank may grant such a
participating interest shall provide that such Bank shall
retain the sole right and responsibility to enforce the
obligations of the Borrower hereunder including, without
limitation, the right to approve any amendment, modification
or waiver of any provision of this Agreement; provided that
such participation agreement may provide that such Bank will
not agree to any modification, amendment or waiver of this
Agreement described in clause (i), (ii) or (iii) of Section
9.05 without the consent of the Participant. The Borrower
agrees that each Participant shall, to the extent provided
in its participation agreement, be entitled to the benefits
of Article VIII with respect to its participating interest.
If, pursuant to this Section 9.06(b), any interest in this
Agreement or any Note is proposed to be transferred to any
Participant that is not a bank organized under the laws of
the United States or any State thereof or the District of
Columbia, such proposed Participant shall, as a condition to
the effectiveness of such transfer, (i) deliver Internal
Revenue Service forms as provided in Section 2.15(b) to the
transferor Bank with copies to the Borrower and (ii) make
the covenants specified in subsections (b)(2), (c)(1) and
(c)(2) of Section 2.15 for the benefit of the transferor
Bank, the Borrower and the Agent. All such covenants shall
be made by an instrument in writing in form and substance
satisfactory to the Borrower.
(c) Any Bank may at any time assign to one or
more banks or other institutions (each an "Assignee") all,
or a proportionate part of all (such proportionate part to
comprise a Commitment of not less than $25,000,000), of its
rights and obligations under this Agreement and the Notes,
and such Assignee shall assume such rights and obligations,
pursuant to an Assignment and Assumption Agreement in
substantially the form of Exhibit I hereto executed by such
Assignee and such transferor Bank, with (and subject to) the
subscribed consent of the Borrower and the Agent; provided
that if an Assignee is an Affiliate of such transferor Bank,
no such consent shall be required, but such transferor Bank
shall deliver to the Borrower five Domestic Business Days'
prior written notice of any such assignment and, promptly
after the effectiveness thereof, a copy of the relevant
Assignment and Assumption Agreement; and provided further
that such assignment may, but need not, include rights of
the transferor Bank in respect of outstanding Money Market
Loans. Upon execution and delivery of such instrument and
payment by such Assignee to such transferor Bank of an
amount equal to the purchase price agreed between such
transferor Bank and such Assignee, such Assignee shall be a
Bank party to this Agreement and shall have all the rights
and obligations of a Bank with a Commitment as set forth in
such instrument of assumption, and the transferor Bank shall
be released from its obligations hereunder to a
corresponding extent, and no further consent or action by
any party shall be required. Upon the consummation of any
assignment pursuant to this subsection (c), the transferor
Bank, the Agent and the Borrower shall make appropriate
arrangements so that, if required, a new Note is issued to
the Assignee. In connection with any such assignment, the
transferor Bank shall pay to the Agent an administrative fee
for processing such assignment in the amount of $2,000. If
the Assignee is not incorporated under the laws of the
United States of America or a state thereof, it shall, prior
to the first date on which interest or fees are payable
hereunder for its account, deliver to the Borrower and the
Agent certification as to exemption from deduction or
withholding of any United States federal income taxes in
accordance with Section 2.15.
(d) Any Bank may at any time assign all or any
portion of its rights under this Agreement and its Note to a
Federal Reserve Bank. No such assignment shall release the
transferor Bank from its obligations hereunder.
(e) No Participant shall be entitled to receive
any greater payment under Section 8.03 than the relevant
transferor Bank would have been entitled to receive with
respect to the rights transferred. No Assignee or other
transferee of any Bank's rights (other than a Participant,
whose rights shall be governed by the immediately preceding
sentence) shall be entitled to receive any greater payment
under Section 8.03 than such Bank would have been entitled
to receive with respect to the rights transferred, unless
such transfer is made (x) with the Borrower's prior written
consent, (y) by reason of the provisions of Section 8.02 or
8.03 requiring such Bank to designate a different Applicable
Lending Office under certain circumstances or (z) at a time
when the circumstances giving rise to such greater payment
did not exist.
SECTION 9.07. Collateral. Each of the Banks
represents to the Agent and each of the other Banks that it
in good faith is not relying upon any "margin stock" (as
defined in Regulation U) as collateral in the extension or
maintenance of the credit provided for in this Agreement.
SECTION 9.08. Governing Law; Submission to
Jurisdiction. This Agreement and each Note shall be
governed by and construed in accordance with the laws of the
State of New York. The Borrower hereby submits to the
nonexclusive jurisdiction of the United States District
Court for the Southern District of New York and of any New
York State court sitting in New York City for purposes of
all legal proceedings arising out of or relating to this
Agreement or the transactions contemplated hereby. The
Borrower irrevocably waives, to the fullest extent permitted
by law, any objection which it may now or hereafter have to
the laying of the venue of any such proceeding brought in
such a court and any claim that any such proceeding brought
in such a court has been brought in an inconvenient forum.
SECTION 9.09. Counterparts; Integration. This
Agreement may be signed in any number of counterparts, each
of which shall be an original, with the same effect as if
the signatures thereto and hereto were upon the same
instrument. This Agreement (and, solely with respect to
information delivered by the Borrower to the Banks prior to
the date hereof, the confidentiality letter executed by each
of the Banks listed on the signature pages hereto)
constitutes the entire agreement and understanding among the
parties hereto and supersedes any and all prior agreements
and understandings, oral or written, relating to the subject
matter hereof.
SECTION 9.10. Restrictions on Transfers. Each
Bank agrees that it will not, except by operation of law,
transfer or propose to transfer all or any portion of its
rights and obligations under this Agreement and the Note
held by it, or any participation therein to any Person
except (i) banks (including without limitation Federal
Reserve Banks) or trust companies empowered by law to accept
deposits or (ii) their corporate parents or their Affiliates
which are in the business of lending money and which are
either wholly owned by them or are Wholly-Owned Subsidiaries
of a common corporate parent, unless such Bank shall have
first delivered to the Borrower an opinion of counsel as to
the legality of the transfer (including compliance of such
transfer with applicable federal securities laws) and such
other matters as the Borrower may reasonably request, which
opinion shall be satisfactory in form and substance to the
Borrower. Each Bank agrees that it will not transfer all or
any portion of any Note held by it, or any participation
therein, in violation of applicable securities laws.
SECTION 9.11. Confidentiality. The Agent and
each Bank represent that they will maintain the
confidentiality of any written or oral information provided
under this Agreement by or on behalf of the Borrower that
has been identified by its source as confidential
(hereinafter collectively called "Confidential
Information"), subject to the Agent's and each Bank's
(a) obligation to disclose any such Confidential Information
pursuant to a request or order under applicable laws and
regulations or pursuant to a subpoena or other legal
process, (b) right to disclose any such Confidential
Information to its bank examiners, Affiliates, auditors,
counsel and other professional advisors and to other Banks,
(c) right to disclose any such Confidential Information in
connection with any litigation or dispute involving the
Banks and the Borrower or any of its Subsidiaries and
Affiliates and (d) right to provide such information to
Participants (as defined in subsection 9.06(b)), prospective
Participants to which sales of participating interests are
permitted pursuant to subsection 9.06(b) and prospective
Assignees to which assignments of interests are permitted
pursuant to subsection 9.06(c), but only if (i) the Borrower
has theretofore given its written consent to the
participation to such Participant or prospective Participant
or the assignment to such prospective Assignee, (ii) such
Participant, prospective Participant or prospective Assignee
agrees in writing to maintain the confidentiality of such
information on terms substantially similar to those of this
Section as if it were a "Bank" party hereto and (iii) the
Borrower receives copies of such written agreement prior to
the release of such information. Notwithstanding the
foregoing, any such information supplied to a Bank,
Participant, prospective Participant or prospective Assignee
under this Agreement shall cease to be Confidential
Information if it is or becomes known to such Person by
other than unauthorized disclosure, or if it becomes a
matter of public knowledge.
SECTION 9.12. WAIVER OF JURY TRIAL. EACH OF THE
BORROWER, THE AGENT AND THE BANKS HEREBY IRREVOCABLY WAIVES
ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING
ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY.
IN WITNESS WHEREOF, the parties hereto have caused
this Amended and Restated Agreement to be duly executed by
their respective authorized officers as of the day and year
first above written.
SEARS ROEBUCK ACCEPTANCE CORP.
By
Title:
3711 Kennett Pike
Greenville, Delaware 19807
Telefax: (302) 888-3156
$150,000,000 MORGAN GUARANTY TRUST COMPANY
OF NEW YORK
By
Title:
BANK AND MANAGING AGENT
$145,000,000 CHEMICAL BANK
By
Title:
BANKS AND CO-ARRANGERS
$140,000,000 BANK OF AMERICA ILLINOIS
By
Title:
$135,000,000 BANK OF MONTREAL,
CHICAGO BRANCH
By
Title:
$135,000,000 THE BANK OF NEW YORK
By
Title:
$135,000,000 THE CHASE MANHATTAN BANK N.A.
By
Title:
$135,000,000 CIBC, INC.
By
Title:
$135,000,000 CITIBANK N.A.
By
Title:
$135,000,000 CREDIT SUISSE
By
Title:
By
Title:
$135,000,000 THE FIRST NATIONAL BANK OF
CHICAGO
By
Title:
$135,000,000 NATIONSBANK OF NORTH CAROLINA,
N.A.
By
Title:
$135,000,000 ROYAL BANK OF CANADA
By
Title:
$135,000,000 SUMITOMO BANK, LTD.
By
Title:
$135,000,000 UNION BANK OF SWITZERLAND
By
Title:
By
Title:
BANKS AND CO-AGENTS
$105,000,000 DAI-ICHI KANGYO BANK, LTD.
By
Title:
$105,000,000 FIRST INTERSTATE BANK OF
CALIFORNIA
By
Title:
By
Title:
$105,000,000 THE INDUSTRIAL BANK OF JAPAN,
LIMITED
By
Title:
$105,000,000 NATIONAL WESTMINSTER BANK PLC
By
Title:
NATIONAL WESTMINSTER BANK PLC,
NASSAU BRANCH
By
Title:
$105,000,000 SWISS BANK CORPORATION
NEW YORK BRANCH
By
Title:
By
Title:
$105,000,000 WACHOVIA BANK OF GEORGIA, N.A.
By
Title:
BANKS AND LEAD MANAGERS
$ 85,000,000 THE FIRST NATIONAL BANK OF BOSTON
By
Title:
$ 85,000,000 MELLON BANK, N.A.
By
Title:
$ 85,000,000 PNC BANK, NATIONAL ASSOCIATION
By
Title:
$ 85,000,000 TORONTO DOMINION (TEXAS), INC.
By
Title:
$ 70,000,000 ABN AMRO BANK N.V.
By
Title:
By
Title:
$ 70,000,000 THE BANK OF TOKYO, LTD.,
CHICAGO BRANCH
By
Title:
$ 70,000,000 BARCLAYS BANK PLC
By
Title:
$ 70,000,000 DEUTSCHE BANK AG, CHICAGO
AND/OR CAYMAN ISLANDS BRANCHES
By
Title:
By
Title:
$ 70,000,000 THE FUJI BANK, LIMITED
By
Title:
$ 70,000,000 THE MITSUBISHI BANK, LIMITED
By
Title:
$ 70,000,000 THE SANWA BANK, LIMITED,
CHICAGO BRANCH
By
Title:
$ 70,000,000 SHAWMUT BANK, N.A.
By
Title:
$ 70,000,000 UNION BANK
By
Title:
OTHER BANKS
$ 55,000,000 FIRST UNION NATIONAL BANK
OF NORTH CAROLINA
By
Title:
$ 55,000,000 THE SAKURA BANK, LIMITED
CHICAGO BRANCH
By
Title:
$ 50,000,000 BANCA COMMERCIALE ITALIANA
By
Title:
By
Title:
$ 50,000,000 BANCA DI ROMA
By
Title:
By
Title:
$ 50,000,000 BANK OF HAWAII
By
Title:
$ 50,000,000 BARNETT BANK OF JACKSONVILLE,
N.A.
By
Title:
$ 50,000,000 THE BOATMEN'S NATIONAL BANK
ST. LOUIS
By
Title:
$ 50,000,000 CAISSE NATIONALE DE CREDIT
AGRICOLE
By
Title:
$ 50,000,000 COMERICA BANK
By
Title:
$ 50,000,000 CORESTATES BANK, N.A.
By
Title:
$ 50,000,000 CREDIT LYONNAIS, CHICAGO BRANCH
By
Title:
CREDIT LYONNAIS, CAYMAN ISLAND
BRANCH
By
Title:
$ 50,000,000 FIRST FIDELITY BANK, NATIONAL
ASSOCIATION
By
Title:
$ 50,000,000 FIRST HAWAIIAN BANK
By
Title:
$ 50,000,000 THE LONG-TERM CREDIT BANK OF
JAPAN, LTD.
By
Title:
$ 50,000,000 NBD BANK, N.A.
By
Title:
$ 50,000,000 NATIONAL CITY BANK, COLUMBUS
By
Title:
$ 50,000,000 THE NORTHERN TRUST COMPANY
By
Title:
$ 50,000,000 NORWEST BANK MINNESOTA, N.A.
By
Title:
$ 50,000,000 SOCIETE GENERALE
By
Title:
By
Title:
$ 50,000,000 THE SUMITOMO TRUST & BANKING CO.,
LTD.
By
Title:
$ 50,000,000 THE TOKAI BANK, LIMITED
CHICAGO BRANCH
By
Title:
$ 50,000,000 TRUST COMPANY BANK
By
Title:
By
Title:
$ 50,000,000 WESTDEUTSCHE LANDESBANK
GIROZENTRALE, NEW YORK AND
CAYMAN ISLANDS BRANCHES
By
Title:
By
Title:
_________________
Total Commitments
$4,680,000,000
===============
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK, as Agent
By
Title:
60 Wall Street
New York, New York 10260
Attention: Charles H. King,
Vice President
Telex number: 177615
EXHIBIT A
NOTE
New York, New York
, 19
For value received, SEARS ROEBUCK ACCEPTANCE CORP., a
Delaware corporation (the "Borrower"), promises to pay to the
order of
(the "Bank"), for the account of its Applicable Lending Office,
the unpaid principal amount of each Loan made by the Bank to the
Borrower pursuant to the Credit Agreement referred to below on
the dates provided for in the Credit Agreement and, in any event,
on the maturity date provided for therein. The Borrower promises
to pay interest on the unpaid principal amount of each such Loan
on the dates and at the rate or rates provided for in the Credit
Agreement. All such payments of principal and interest shall be
made in lawful money of the United States in Federal or other
immediately available funds at the office of Morgan Guaranty
Trust Company of New York, 60 Wall Street, New York, New York.
All Loans made by the Bank and all repayments of the
principal thereof shall be recorded by the Bank and, if the Bank
so elects in connection with any transfer or enforcement hereof,
appropriate notations to evidence the foregoing information with
respect to each such Loan then outstanding may be endorsed by the
Bank on the schedule attached hereto, or on a continuation of
such schedule attached to and made a part hereof; provided that
the failure of the Bank to make any such recordation or
endorsement shall not affect the obligations of the Borrower
hereunder or under the Credit Agreement.
This note is one of the Notes referred to in the
[Credit Agreement dated as of June 7, 1994] [Amended and Restated
Credit Agreement dated as of June 29, 1995]
_________
1 The description in the first set of brackets is included in
each Note delivered prior to the Amendment Effective Date; the
description in the second set is included in each Note delivered on
or after the Amendment Effective Date.
among the Borrower,
the banks listed on the signature pages thereof, the Managing
Agent, Co-Arrangers, Co-Agents and Lead Managers referred to
therein and Morgan Guaranty Trust Company of New York, as Agent
(as the same may be amended from time to time, the "Credit
Agreement"). Terms defined in the Credit Agreement are used
herein with the same meanings. This Note is subject, and
reference is hereby made, to the terms and provisions of the
Credit Agreement, including the transfer restrictions set forth
in Section 9.10 thereof, the provisions for mandatory and
optional prepayment hereof and the acceleration of the maturity
hereof.
SEARS ROEBUCK ACCEPTANCE CORP.
By________________________
Title:
Note (cont'd)
LOANS AND PAYMENTS OF PRINCIPAL
_________________________________________________________________
Amount of
Amount of Principal Notation
Date Loan Repaid Made By
_________________________________________________________________
_________________________________________________________________
_________________________________________________________________
_________________________________________________________________
_________________________________________________________________
_________________________________________________________________
_________________________________________________________________
_________________________________________________________________
_________________________________________________________________
_________________________________________________________________
_________________________________________________________________
_________________________________________________________________
_________________________________________________________________
_________________________________________________________________
_________________________________________________________________
_________________________________________________________________
EXHIBIT B
NOTICE OF COMMITTED BORROWING
_________
1 Deliver no later than 11:00 A.M. (New York City time) on (x)
the day of a Base Rate Borrowing, (y) the second Domestic Business
Day before a CD Borrowing and (z) the third Euro-Dollar Business
Day before a Euro-Dollar Borrowing.
Borrowing Request
No. _____________
Morgan Guaranty Trust Company
of New York, as Agent
60 Wall Street
New York, New York 10260
Attention: _______________
This notice shall constitute a "Notice of Committed
Borrowing" pursuant to Section 2.02 of the Amended and Restated
Credit Agreement dated as of June 29, 1995 among Sears Roebuck
Acceptance Corp. (the "Borrower"), the banks listed on the
signature pages thereof, the Managing Agent, Co-Arrangers, Co-
Agents and Lead Managers referred to therein and Morgan Guaranty
Trust Company of New York, as Agent (the "Agent") (as amended
from time to time, the "Credit Agreement"). Capitalized terms
not otherwise defined herein have the meanings ascribed to them
in the Credit Agreement.
1. The date of the Borrowing will be
_______________, 199_.
2. The principal amount of the Borrowing will
be $____________.
_________
2 Must be aggregate principal amount of $75,000,000 or any
larger multiple of $5,000,000 (or the aggregate amount available in
accordance with Section 3.02(b) of the Credit Agreement, if less).
3. The Borrowing will consist of [CD Loans]
[Euro-Dollar Loans] [Base Rate Loans].
[4. The initial Interest Period for such Loans
shall be _____________.]
_________
3 Applicable only in the case of a Fixed Rate Borrowing. For
CD Rate Loans, insert "30 days," "60 days," "90 days" or "180 days"
(subject to the definition of Interest Period). For Euro-Dollar
Loans, insert "one month," "two months," "three months" or "six
months" (subject to the definition of Interest Period).
[5.] Transfer Instructions:
[insert appropriate delivery instructions, which
shall include bank and account number]
SEARS ROEBUCK ACCEPTANCE CORP.
By____________________________
Title:
Date: __________________, 199_
EXHIBIT C
NOTICE OF INTEREST RATE ELECTION
Morgan Guaranty Trust Company
of New York, as Agent
60 Wall Street
New York, New York 10260
Attention: _______________
This notice shall constitute a "Notice of Interest
Rate Election" pursuant to Section 2.10 of the Amended and
Restated Credit Agreement dated as of June 29, 1995 among Sears
Roebuck Acceptance Corp. (the "Borrower"), the banks listed on
the signature pages thereof, the Managing Agent, Co-Arrangers,
Co-Agents and Lead Managers referred to therein and Morgan
Guaranty Trust Company of New York, as Agent (the "Agent") (as
amended from time to time, the "Credit Agreement"). Capitalized
terms not otherwise defined herein have the meanings ascribed to
them in the Credit Agreement.
1. The principal amount of the Group of Loans
(or portion thereof) to which this notice applies is
$__________.
2. The date on which the conversion/continuation
selected is to be effective is __________, 199_ (the
"Election Date").
3. The Group of Loans (or portion thereof) to
which this notice applies is [all or a portion of all
Base Rate Loans currently outstanding] [all or a
portion of all CD Loans currently outstanding having an
Interest Period of ___ days and ending on the Election
Date] [all or a portion of all Euro-Dollar Loans
currently outstanding having an Interest Period of __
months and ending on the Election Date].
_________
1 May apply to a portion of the aggregate principal amount of
the relevant Group of Loans; provided that (i) such portion is
allocated ratably among the Loans comprising such Group and (ii)
the portion to which such Notice applies, and the remaining portion
to which it does not apply, are each $75,000,000 or any larger
multiple of $5,000,000.
4a. The Group of Loans (or portion thereof) which
are to be converted will bear interest [at the Base
Rate] [based upon the CD Rate] [based upon the
Euro-Dollar Rate].
4b. The Group of Loans (or portion thereof) which
are to be continued will bear interest [at the Base
Rate] [based upon the CD Rate] [based upon the
Euro-Dollar Rate].
[5. The Interest Period for such Loans shall be
____________.]
_________
2 Applicable only in the case of a Fixed Rate Borrowing. For
CD Loans, insert "30 days," "60 days," "90 days" or "180 days."
For Euro-Dollar Loans, insert "one month," "two months," "three
months" or "six months." The Interest Period, however, may be
changed by agreement of the parties (see "Interest Period" in
Section 1.01 of the Credit Agreement).
SEARS ROEBUCK ACCEPTANCE CORP.
By:
Title:
Date: __________________, 199_
EXHIBIT D
Form of Money Market Quote Request
[Date]
To: Morgan Guaranty Trust Company
of New York (the "Agent")
From: Sears Roebuck Acceptance Corp. (the "Borrower")
Re: Amended and Restated Credit Agreement (the "Credit
Agreement") dated as of June 29, 1995 among the
Borrower, the banks listed on the signature pages
thereof, the Managing Agent, Co-Arrangers, Co-
Agents and Lead Managers referred to therein and
Morgan Guaranty Trust Company of New York, as Agent
We hereby give notice pursuant to Section 2.03 of the
Credit Agreement that we request Money Market Quotes for the
following proposed Money Market Borrowing(s):
Date of Borrowing: __________________
Principal Amount
_________
1 Amount must be $75,000,000 or a larger multiple of $5,000,000
(or an amount equal to the aggregate amount available in accordance
with Section 3.02(b), if less than $75,000,000).
Interest Period
_________
2 Not less than one month (LIBOR Auction) or not less than 30
days (Absolute Rate Auction), subject to the provisions of the
definition of Interest Period.
$
Such Money Market Quotes should offer a Money Market
[Margin] [Absolute Rate]. [The applicable base rate is the London
Interbank Offered Rate.]
Terms used herein have the meanings assigned to them
in the Credit Agreement.
SEARS ROEBUCK ACCEPTANCE CORP.
By_________________________
Title:
EXHIBIT E
Form of Invitation for Money Market Quotes
To: [Name of Bank]
Re: Invitation for Money Market Quotes to
Sears Roebuck Acceptance Corp. (the "Borrower")
Pursuant to Section 2.03 of the Amended and Restated
Credit Agreement (the "Credit Agreement") dated as of June 29,
1995 among the Borrower, the banks listed on the signature pages
thereof, the Managing Agent, Co-Arrangers, Co-Agents and Lead
Managers referred to therein and Morgan Guaranty Trust Company of
New York, as Agent, we are pleased on behalf of the Borrower to
invite you to submit Money Market Quotes to the Borrower for the
following proposed Money Market Borrowing(s):
Date of Borrowing: __________________
Principal Amount Interest Period
$
Such Money Market Quotes should offer a Money Market
[Margin] [Absolute Rate]. [The applicable base rate is the
London Interbank Offered Rate.]
Please respond to this invitation by no later than
[2:00 P.M.] [9:30 A.M.] (New York City time) on [date].
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK
By___________________________
Authorized Officer
EXHIBIT F
Form of Money Market Quote
To: Morgan Guaranty Trust Company
of New York (the "Agent")
Re: Money Market Quote to Sears Roebuck
Acceptance Corp. (the "Borrower")
In response to your invitation on behalf of the
Borrower dated _____________, 19__, we hereby make the following
Money Market Quote on the following terms:
1. Quoting Bank: ________________________________
2. Person to contact at Quoting Bank:
______________________________
3. Date of Borrowing: ____________________*
4. We hereby offer to make Money Market Loan(s) in the
following principal amounts, for the following Interest
Periods and at the following rates:
Principal Interest Money Market
Amount** Period*** [Margin****] [Absolute Rate*****]
$
$
[Provided, that the aggregate principal amount of Money
Market Loans for which the above offers may be accepted
shall not exceed $____________.]**
__________
* As specified in the related Invitation.
** Principal amount bid for each Interest Period may not exceed
principal amount requested. Specify aggregate limitation if the
sum of the individual offers exceeds the amount the Bank is
willing to lend. Bids must be made for $5,000,000 or a larger
multiple of $1,000,000.
(notes continued on following page)
We understand and agree that the offer(s) set forth
above, subject to the satisfaction of the applicable conditions
set forth in the Amended and Restated Credit Agreement (the
"Credit Agreement") dated as of June 29, 1995 among the Borrower,
the banks listed on the signature pages thereof, the Managing
Agent, Co-Arrangers, Co-Agents and Lead Managers referred to
therein and Morgan Guaranty Trust Company of New York, as Agent,
irrevocably obligates us to make the Money Market Loan(s) for
which any offer(s) are accepted, in whole or in part.
Very truly yours,
[NAME OF BANK]
Dated:_______________ By:__________________________
Authorized Officer
__________
*** Not less than one month or not less than 30 days, as
specified in the related Invitation. No more than five bids are
permitted for each Interest Period.
**** Margin over or under the London Interbank Offered Rate
determined for the applicable Interest Period. Specify
percentage (to the nearest 1/10,000 of 1%) and specify whether
"PLUS" or "MINUS".
***** Specify rate of interest per annum (to the nearest
1/10,000th of 1%).
EXHIBIT G
OPINION OF
COUNSEL FOR THE BORROWER
[Amendment Effective Date]
To the Banks and the Agent
Referred to Below
c/o Morgan Guaranty Trust Company
of New York, as Agent
60 Wall Street
New York, New York 10260
Dear Sirs:
I am [title of counsel] and have acted as counsel
for Sears Roebuck Acceptance Corp. (the "Borrower") in
connection with the Amended and Restated Credit Agreement
(the "Credit Agreement") dated as of June 29, 1995 among the
Borrower, the banks listed on the signature pages thereof,
the Managing Agent, Co-Arrangers, Co-Agents and Lead
Managers referred to therein and Morgan Guaranty Trust
Company of New York, as Agent. This opinion is rendered to
you at the request of the Borrower pursuant to Section
3.01(c) of the Credit Agreement. Terms defined in the
Credit Agreement are used herein as therein defined.
I have examined originals or copies, certified or
otherwise identified to my satisfaction, of such documents,
corporate records, certificates of public officials and
other instruments and have conducted such other
investigations of fact and law as I have deemed necessary or
advisable for purposes of this opinion. I have obtained and
relied upon, to the extent I deem appropriate, certificates
of officers of the Borrower and of public officials as to
factual matters. I call to your attention the fact that in
rendering my opinion, I am expressing my views only as to
the internal laws of the State of New York, in which I am
admitted to practice law, the Federal laws of the United
States and the General Corporation Law of the State of
Delaware.
Upon the basis of the foregoing, I am of the
opinion that:
1. The Borrower has been duly incorporated and is
validly existing as a corporation in good standing under the
laws of the State of Delaware with full corporate power to
conduct its business as presently conducted.
2. The Borrower has full corporate power to enter
into the Credit Agreement and to issue the Notes and to
comply with all of the provisions of the Credit Agreement
and the Notes, and all necessary corporate proceedings of
the Borrower have been duly taken to authorize the
execution, delivery and performance of the Credit Agreement
and the issuance of the Notes by the Borrower.
3. The issuance by the Borrower of the Notes and
compliance by the Borrower with all of the provisions of the
Credit Agreement will not conflict with or result in a
breach which would constitute a material default under, or
result in the creation or imposition of any Lien, charge or
encumbrance upon any of the property or assets of the
Borrower, material to the Borrower, pursuant to the terms
of, any material indenture, loan agreement, or other
agreement or instrument for borrowed money to which the
Borrower is a party or by which the Borrower may be bound or
to which any of the property or assets of the Borrower,
material to the Borrower, is subject, nor will any such
action conflict with or result in a breach which would
constitute a material default under, or result in the
creation or imposition of any Lien, charge or encumbrance
upon any of the property or assets of Sears, material to
Sears and its subsidiaries, taken as a whole, pursuant to
the terms of, any indenture, loan agreement or other
agreement or instrument for borrowed money relating to a
principal amount of outstanding indebtedness not less than
$100,000,000 to which Sears is a party or by which Sears may
be bound or to which any of the property or assets of Sears,
material to Sears and its subsidiaries, taken as a whole, is
subject, nor will such action result in any material
violation of the provisions of the Certificate of
Incorporation or the By-Laws of the Borrower or, to the best
of my knowledge, any statute or any order, rule or
regulation applicable to the Borrower of any court or any
Federal, state or other regulatory authority or other
governmental body having jurisdiction over the Borrower,
and, to the best of my knowledge, no consent, approval,
authorization or other order of, or filing with, any court
or any such regulatory authority or other governmental body
is required for the issuance by the Borrower of the Notes
and the compliance by the Borrower with all of the
provisions of the Credit Agreement and the Notes; provided
that I express no opinion with respect to any securities or
blue sky laws of political subdivisions of the United States
or any laws or treaties of any country (or political
subdivision thereof) other than the United States.
4. The Credit Agreement constitutes a valid and
binding agreement of the Borrower and the Notes constitute
valid and binding obligations of the Borrower, each
enforceable in accordance with their terms except as the
foregoing may be limited by: (a) the effect of bankruptcy,
insolvency, reorganization, moratorium or other similar laws
now or hereafter in effect relating to or affecting the
rights or remedies of creditors generally; (b) the effect of
general principles of equity, whether enforcement is
considered in a proceeding in equity or at law, and the
discretion of the court before which any proceeding therefor
may be brought; and (c) the unenforceability under certain
circumstances under law or court decisions of provisions
providing for the indemnification of or contribution to a
party with respect to a liability where such indemnification
or contribution is contrary to public policy.
5. I do not know of any pending legal or
governmental proceeding (i) required to be described in the
Borrower's 1994 Form 10-K or in the Quarterly Reports on
Form 10-Q of the Borrower filed with the Commission pursuant
to the Exchange Act subsequent thereto, which are not
described as required or (ii) which would be required to be
described in a Quarterly Report on Form 10-Q filed by the
Borrower if such filing were made on the date hereof.
6. The Borrower has no Subsidiaries.
In rendering my opinion, I have assumed that each
party to the Credit Agreement (other than the Borrower) has
the requisite corporate power and authority to execute and
deliver the Credit Agreement and to perform its obligations
under the Credit Agreement; that the Credit Agreement has
been duly authorized, executed and delivered by the parties
thereto other than the Borrower and constitutes their
legally valid and binding obligation, enforceable against
them in accordance with its terms; and that the signatures
(other than those on behalf of the Borrower) on all
documents examined by me are genuine, assumptions which I
have not independently verified. I express no opinion as to
the compliance by the parties to the Credit Agreement (other
than the Borrower) with any state or Federal laws or
regulations applicable to the transactions contemplated by
the Credit Agreement because of the nature of their
business.
This opinion is furnished by me as counsel for the
Borrower to you, and is solely for your benefit, and is not
to be otherwise used, circulated or relied upon without my
express written consent.
Very truly yours,
EXHIBIT H
OPINION OF
DAVIS POLK & WARDWELL, SPECIAL COUNSEL
FOR THE AGENT
[Amendment Effective Date]
To the Banks and the Agent
Referred to Below
c/o Morgan Guaranty Trust Company
of New York, as Agent
60 Wall Street
New York, New York 10260
Dear Sirs:
We have participated in the preparation of the
Amended and Restated Credit Agreement (the "Credit
Agreement") dated as of June 29, 1995 among Sears Roebuck
Acceptance Corp., a Delaware corporation (the "Borrower"),
the banks listed on the signature pages thereof (the
"Banks"), the Managing Agent, Co-Arrangers, Co-Agents and
Lead Managers referred to therein and Morgan Guaranty Trust
Company of New York, as Agent (the "Agent"), and have acted
as special counsel for the Agent for the purpose of
rendering this opinion pursuant to Section 3.01(d) of the
Credit Agreement. Terms defined in the Credit Agreement are
used herein as therein defined.
We have examined originals or copies, certified or
otherwise identified to our satisfaction, of such documents,
corporate records, certificates of public officials and
other instruments and have conducted such other
investigations of fact and law as we have deemed necessary
or advisable for purposes of this opinion.
Upon the basis of the foregoing, we are of the
opinion that:
1. The execution, delivery and performance by the
Borrower of the Credit Agreement and the Notes are within
the Borrower's corporate powers and have been duly
authorized by all necessary corporate action.
2. The Credit Agreement constitutes a valid and
binding agreement of the Borrower and the Notes constitute
valid and binding obligations of the Borrower, in each case
enforceable in accordance with its terms, except as the same
may be limited by bankruptcy, insolvency or similar laws
affecting creditors' rights generally and by general
principles of equity.
We are members of the Bar of the State of New York
and the foregoing opinion is limited to the laws of the
State of New York, the federal laws of the United States of
America and the General Corporation Law of the State of
Delaware. In giving the foregoing opinion, we express no
opinion as to the effect (if any) of any law of any
jurisdiction (except the State of New York) in which any
Bank is located which limits the rate of interest that such
Bank may charge or collect.
This opinion is rendered solely to you in
connection with the above matter. This opinion may not be
relied upon by you for any other purpose or relied upon by
any other person without our prior written consent.
Very truly yours,
EXHIBIT I
ASSIGNMENT AND ASSUMPTION AGREEMENT
AGREEMENT dated as of _________, 19__ among
[ASSIGNOR] (the "Assignor"), [ASSIGNEE] (the "Assignee"),
SEARS ROEBUCK ACCEPTANCE CORP. (the "Borrower") and MORGAN
GUARANTY TRUST COMPANY OF NEW YORK, as Agent (the "Agent").
W I T N E S S E T H
WHEREAS, this Assignment and Assumption Agreement
(the "Agreement") relates to the Amended and Restated Credit
Agreement dated as of June 29, 1995 among the Borrower, the
Assignor and the other Banks party thereto, as Banks, the
Managing Agent, Co-Arrangers, Co-Agents and Lead Managers
referred to therein and the Agent (the "Credit Agreement");
WHEREAS, as provided under the Credit Agreement,
the Assignor has a Commitment to make Loans to the Borrower
in an aggregate principal amount at any time outstanding not
to exceed $__________;
WHEREAS, Committed Loans made to the Borrower by
the Assignor under the Credit Agreement in the aggregate
principal amount of $__________ are outstanding at the date
hereof; and
WHEREAS, the Assignor proposes to assign to the
Assignee all of the rights of the Assignor under the Credit
Agreement in respect of a portion of its Commitment
thereunder in an amount equal to $__________ (the "Assigned
Amount"), together with a corresponding portion of its
outstanding Committed Loans, and the Assignee proposes to
accept assignment of such rights and assume the
corresponding obligations from the Assignor on such terms;
NOW, THEREFORE, in consideration of the foregoing
and the mutual agreements contained herein, the parties
hereto agree as follows:
SECTION 1. Definitions. All capitalized terms not
otherwise defined herein shall have the respective meanings
set forth in the Credit Agreement.
SECTION 2. Assignment. The Assignor hereby
assigns and sells to the Assignee all of the rights of the
Assignor under the Credit Agreement to the extent of the
Assigned Amount, and the Assignee hereby accepts such
assignment from the Assignor and assumes all of the
obligations of the Assignor under the Credit Agreement to
the extent of the Assigned Amount, including the purchase
from the Assignor of the corresponding portion of the
principal amount of the Committed Loans made by the Assignor
outstanding at the date hereof. Upon the execution and
delivery hereof by the Assignor, the Assignee, the Borrower
and the Agent and the payment of the amounts specified in
Section 3 required to be paid on the date hereof (i) the
Assignee shall, as of the date hereof, succeed to the rights
and be obligated to perform the obligations of a Bank under
the Credit Agreement with a Commitment in an amount equal to
the Assigned Amount, and (ii) the Commitment of the Assignor
shall, as of the date hereof, be reduced by a like amount
and the Assignor released from its obligations under the
Credit Agreement to the extent such obligations have been
assumed by the Assignee. The assignment provided for herein
shall be without recourse to the Assignor.
SECTION 3. Payments. As consideration for the
assignment and sale contemplated in Section 2 hereof, the
Assignee shall pay to the Assignor on the date hereof in
Federal funds an amount equal to $_________.
_________
1 Amount should combine principal together with accrued
interest and breakage compensation, if any, to be paid by the
Assignee, net of any portion of any upfront fee to be paid by the
Assignor to the Assignee. It may be preferable in an appropriate
case to specify these amounts generically or by formula rather than
as a fixed sum.
It is understood that any commitment fees and facility fees
accrued to the date hereof are for the account of the
Assignor and such fees accruing from and including the date
hereof are for the account of the Assignee. Each of the
Assignor and the Assignee hereby agrees that if it receives
any amount under the Credit Agreement which is for the
account of the other party hereto, it shall receive the same
for the account of such other party to the extent of such
other party's interest therein and shall promptly pay the
same to such other party.
SECTION 4. Taxes. [The Assignee agrees (to the
extent it is permitted to do so under the laws and any
applicable double taxation treaties of the United States,
the jurisdiction of such Assignee's incorporation, and the
jurisdictions in which such Assignee's Domestic Lending
Office and Euro-Dollar Lending Office are located) to
execute and deliver to the Agent for delivery to the
Borrower at the times and for the periods required pursuant
to Section 2.15 of the Credit Agreement, two accurate and
complete original signed copies of Form 1001 or Form 4224
(or any successor form), appropriately completed and
claiming complete exemption from withholding and deduction
of United States Taxes. Attached hereto are two accurate
and complete original signed copies of Form 1001 with
respect to each three-year calendar period, any portion of
which falls within the Revolving Credit Period, dated as of
the date hereof, or two accurate and complete signed copies
of Form 4224 with respect to each tax year of the Assignee,
any portion of which falls within the Revolving Credit
Period, dated as of the date hereof, as applicable. The
Assignee hereby represents and warrants to the Borrower and
the Agent that on the date hereof it is permitted to take
the actions described in this Section 4 under the laws and
any applicable double taxation treaties of the jurisdictions
specified above.]
_________
2 Use if such Assignee is a Non-U.S. Bank.
[The Assignee represents to the Borrower
and the Agent that it is not a Non-U.S. Bank.]
_________
3 Use if such Assignee is not a Non-U.S. Bank.
SECTION 5. Consent of the Borrower and the Agent.
This Agreement is conditioned upon the consent of the
Borrower and the Agent pursuant to Section 9.06(c) of the
Credit Agreement. The execution of this Agreement by the
Borrower and the Agent is evidence of this consent.
Pursuant to Section 9.06(c) the Borrower agrees to execute
and deliver a Note payable to the order of the Assignee to
evidence the assignment and assumption provided for herein.
SECTION 6. Non-Reliance on Assignor. The
Assignor makes no representation or warranty in connection
with, and shall have no responsibility with respect to, the
solvency, financial condition, or statements of the
Borrower, or the validity and enforceability of the
obligations of the Borrower in respect of the Credit
Agreement or any Note. The Assignee acknowledges that it
has, independently and without reliance on the Assignor, and
based on such documents and information as it has deemed
appropriate, made its own credit analysis and decision to
enter into this Agreement and will continue to be
responsible for making its own independent appraisal of the
business, affairs and financial condition of the Borrower.
SECTION 7. Governing Law. This Agreement shall
be governed by and construed in accordance with the laws of
the State of New York.
SECTION 8. Counterparts. This Agreement may be
signed in any number of counterparts, each of which shall be
an original, with the same effect as if the signatures
thereto and hereto were upon the same instrument.
IN WITNESS WHEREOF, the parties have caused this
Agreement to be executed and delivered by their duly
authorized officers as of the date first above written.
[ASSIGNOR]
By_________________________
Title:
[ASSIGNEE]
By__________________________
Title:
SEARS ROEBUCK ACCEPTANCE CORP.
By__________________________
Title:
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK, as Agent
By__________________________
Title:
EXHIBIT J
TERMS OF SUBORDINATION
_________
1 These Terms of Subordination refer to the Amended and
Restated Credit Agreement (the "Credit Agreement") dated as of June
29, 1995 among Sears Roebuck Acceptance Corp., the banks listed on
the signature pages thereof, the Managing Agent, Co-Arrangers, Co-
Agents and Lead Managers referred to therein and Morgan Guaranty
Trust Company of New York, as Agent. Capitalized terms used but
not defined herein are used herein as defined in the Credit
Agreement.
Section 1. Subordination to Superior Debt. The
Borrower and the lender of the SRAC Subordinated Debt (the
"Lender") agree for the benefit of the holders of the
Superior Debt that the SRAC Subordinated Debt shall, to the
extent hereinafter set forth, be subordinate and junior in
right of payment to all Superior Debt of the Borrower.
Section 2. Borrower Not to Make Payments
hereunder in Certain Circumstances. (a) Upon the maturity
of all or any part of the Superior Debt by lapse of time,
acceleration or otherwise, such Superior Debt shall first be
paid in full, or such payment shall be duly provided for in
cash or in a manner satisfactory to the holders of such
Superior Debt, before any payment by the Borrower or any
Subsidiary is made on account of the principal of or
premium, if any, or interest on the notes issued hereunder
(the "SRAC Subordinated Notes") or to acquire any of the
SRAC Subordinated Notes or on account of any sinking fund
for the SRAC Subordinated Notes.
(b) In the event and during the continuation of
any Event of Default or any event or condition that, with
the giving of notice or the lapse of time or both, would
become an Event of Default (as such term is defined in the
Credit Agreement, provided that any such event or condition
that would become an Event of Default only upon both the
giving of notice of such event or condition by the Agent to
the Borrower and the lapse of time shall constitute such an
event or condition for purposes of this Agreement only if
the Agent shall have given such notice to the Borrower) with
respect to any Superior Debt (each such Event of Default or
any such event or condition that, with the giving of notice
or the lapse of time, or both, being referred to in this
Agreement as a "Superior Debt Default"), (i) no payment
shall be made by the Borrower or any Subsidiary on or with
respect to the principal of, or, premium, if any, or
interest on, the SRAC Subordinated Notes or to acquire any
SRAC Subordinated Notes or on account of any sinking fund
for the SRAC Subordinated Notes unless and until such
Superior Debt Default shall have been remedied, nor shall
any such payment be made if after giving effect, as if paid,
to such payment, any Superior Debt Default would exist and
(ii) no holder of SRAC Subordinated Notes shall demand,
accept or receive, any direct or indirect payment (in cash
or property or by setoff, exercise of contractual or
statutory rights or otherwise) of or on account of any SRAC
Subordinated Notes, notwithstanding the terms of the SRAC
Subordinated Notes or of any agreement or instrument which
governs the SRAC Subordinated Notes, and no such payment
shall be due.
(c) Unless and until all principal of, premium,
if any, and interest on, and all other obligations of the
Borrower under, the Superior Debt shall have been paid in
full, no holder of SRAC Subordinated Notes will commence or
maintain any action, suit or any other legal or equitable
proceeding against the Borrower, or join with any creditor
in any such proceeding, under any insolvency, bankruptcy,
receivership, liquidation, reorganization or other similar
law, unless the holders of Superior Debt shall also join in
bringing such proceeding, provided that this Section 2(c)
shall not prohibit a holder of SRAC Subordinated Notes from
filing a proof of claim or otherwise participating in any
such proceeding not commenced by it.
Section 3. SRAC Subordinated Notes Subordinated
to Prior Payment of all Superior Debt on Dissolution,
Liquidation or Reorganization of Borrower. In the event of
any insolvency or bankruptcy proceedings, and any
receivership, liquidation, reorganization or other similar
proceedings in connection therewith, relative to the
Borrower or to its creditors, in their capacity as creditors
of the Borrower, or to substantially all of its property,
and in the event of any proceedings for voluntary
liquidation, dissolution or other winding up of the
Borrower, whether or not involving insolvency or bankruptcy,
then:
(a) the holders of all Superior Debt shall first be
entitled to receive payment in full of the principal
thereof, premium, if any, interest and all other amounts
payable thereon (accruing before and after the
commencement of the proceedings) before the holders of
the SRAC Subordinated Notes are entitled to receive any
payment on account of the principal of, premium, if any,
or interest on the SRAC Subordinated Notes; and
(b) all SRAC Subordinated Notes shall forthwith
(notwithstanding the terms of Section 2) become due and
payable and any payment or distribution of assets of the
Borrower of any kind or character, whether in cash,
property or securities to which the holders of the SRAC
Subordinated Notes would be entitled, but for the
provisions of these Terms of Subordination, shall be paid
or distributed by the liquidating trustee or agent or
other person making such payment or distribution, whether
a trustee in bankruptcy, a receiver or liquidating
trustee or other trustee or agent, directly to the Agent
or any other representative on behalf of the holders of
Superior Debt, to the extent necessary to make payment in
full of all principal, premium, if any, interest and all
other amounts payable on all Superior Debt remaining
unpaid, after giving effect to any concurrent payment or
distribution to the holders of the Superior Debt.
Section 4. Rights of Holders of Superior Debt;
Subrogation. (a) Should any payment or distribution or
security or the proceeds of any thereof be collected or
received by any holder of SRAC Subordinated Notes in respect
of the SRAC Subordinated Notes, and such collection or
receipt is prohibited hereunder prior to the payment in full
of the Superior Debt, such holder will forthwith deliver the
same to the Agent for the equal and ratable benefit of the
holders of the Superior Debt in precisely the form received
(except for the endorsement or the assignment of or by such
holder where necessary) for application to payment of all
Superior Debt in full, after giving effect to any concurrent
payment or distribution to the holders of Superior Debt and,
until so delivered, the same shall be held in trust by such
holder as the property of the holders of the Superior Debt.
(b) All payments and distributions received by the
Agent in respect of the SRAC Subordinated Notes, to the
extent received in or converted into cash, may be applied by
the Agent first to the payment of any and all reasonable
out-of-pocket expenses (including attorney's fees and legal
expenses) paid or incurred by the Agent or such
representative in enforcing the provisions hereof or in
endeavoring to collect or realize upon the SRAC Subordinated
Notes or any security therefor, and any balance thereof
shall, solely as between any holder of the SRAC Subordinated
Notes, on the one hand, and the holders of the Superior
Debt, on the other hand, be applied by the Agent in such
order of application as the Agent may from time to time
select, toward the payment of the Superior Debt remaining
unpaid.
(c) No holder of SRAC Subordinated Notes shall be
subrogated to the rights of the holders of the Superior Debt
to receive payments or distributions of assets of the
Borrower until all amounts payable with respect to the
Superior Debt shall be paid in full; and, for the purposes
of such subrogation, no payments or distributions to the
holders of the Superior Debt of any cash, property or
securities to which any holder of SRAC Subordinated Notes
would be entitled except for these provisions shall, as
between the Borrower, its creditors other than the holders
of the Superior Debt, and such holders of SRAC Subordinated
Notes, be deemed to be a payment by the Borrower to or on
account of the Superior Debt. The provisions of this
Agreement are and are intended solely for the purpose of
defining the relative rights of holders of SRAC Subordinated
Notes, on the one hand, and the holders of the Superior
Debt, on the other hand.
(d) Subject to the payment in full of all
Superior Debt, the holders of the SRAC Subordinated Notes
shall be subrogated (equally and ratably with the holders of
all subordinated indebtedness of the Borrower which, by its
terms, is not superior in right of payment to the SRAC
Subordinated Notes, and ranks on a parity with the SRAC
Subordinated Notes) to the rights of the holders of Superior
Debt to receive payments or distributions of cash, property
or securities of the Borrower applicable to the Superior
Debt until all amounts owing on the SRAC Subordinated Notes
shall be paid in full. For purposes of such subrogation, no
payments or distributions to the holders of the SRAC
Subordinated Notes of cash, property, securities or other
assets by virtue of the subrogation herein provided which
otherwise would have been made to the holders of the
Superior Debt shall, as between the Borrower, its creditors
other than the holders of Superior Debt and the holders of
the SRAC Subordinated Notes, be deemed to be a payment to or
on account of the SRAC Subordinated Notes. The holders of
SRAC Subordinated Notes agree that, in the event that all or
any part of any payment made on account of the Superior Debt
is recovered from the holders of Superior Debt as a
preference, fraudulent transfer or similar payment under any
bankruptcy, insolvency or similar law, any payment or
distribution received by the holders of SRAC Subordinated
Notes on account of the SRAC Subordinated Notes at any time
after the date of the payment so recovered, whether pursuant
to the right of subrogation provided for in this Section
4(d) or otherwise, shall be deemed to have been received by
such holders of SRAC Subordinated Notes in trust as the
property of the holders of the Superior Debt and such
holders shall forthwith deliver the same to the Agent for
the equal and ratable benefit of the holders of the Superior
Debt for application to payment of all Superior Debt in
full.
Section 5. Renewals, Extensions and Increases of
Superior Debt. Each holder of SRAC Subordinated Notes by
his acceptance thereof thereby waives any and all notice of
renewal, extension, accrual or increase in the amount of any
of the Superior Debt, present or future, and agrees and
consents that without notice to or assent by any holder or
holders of the SRAC Subordinated Notes:
(i) the obligation and liabilities of the Borrower
or any other party or parties for or upon the Superior
Debt (or any promissory note, security document or
guaranty evidencing or securing the same) may, from time
to time, in whole or in part, be renewed, extended,
increased, modified, amended, accelerated, compromised,
supplemented, terminated, sold, exchanged, waived or
released;
(ii) the Agent or any other representative acting
on behalf of the holders of the Superior Debt and the
holders of the Superior Debt may exercise or refrain from
exercising any right, remedy or power granted by or in
connection with any agreements relating to the Superior
Debt; and
(iii) any balance or balances of funds with any
holders of the Superior Debt at any time standing to the
credit of the Borrower may, from time to time, in whole
or in part, be surrendered or released;
all as the Agent or any other representative or
representatives acting on behalf of the holders of the
Superior Debt and the holders of the Superior Debt may deem
advisable and all without impairing, abridging, diminishing,
releasing or affecting the subordination of the SRAC
Subordinated Notes to the Superior Debt provided for herein.
Section 6. Obligation of Borrower Unconditional.
Nothing contained in these Terms of Subordination or in the
SRAC Subordinated Notes is intended to or shall impair, as
between the Borrower, its creditors other than the holders
of the Superior Debt, and the holders of the SRAC
Subordinated Notes, the obligation of the Borrower, which is
absolute and unconditional, to pay to the holders of the
SRAC Subordinated Notes the principal of, premium, if any,
and interest on the SRAC Subordinated Notes, as and when the
same shall become due and payable (except as provided in
Section 2), by lapse of time, acceleration or otherwise, in
accordance with their terms, or is intended to or shall
affect the relative rights of the holders of the SRAC
Subordinated Notes and other creditors of the Borrower other
than the holders of the Superior Debt, nor shall anything
herein or therein prevent the Trustee or the holder of any
SRAC Subordinated Notes (i) from taking all appropriate
actions to preserve its rights under the SRAC Subordinated
Notes not inconsistent with the rights of the holders of the
Superior Debt under these Terms of Subordination, or (ii)
from exercising all remedies otherwise permitted by
applicable law upon default under the SRAC Subordinated
Notes, subject to the rights, if any, of the holders of the
Superior Debt under Section 2 of these Terms of
Subordination and in respect of cash, property or securities
of the Borrower otherwise payable or delivered to such
holders of SRAC Subordinated Notes upon the exercise of any
such remedy.
Section 7. Miscellaneous. Each holder of SRAC
Subordinated Notes by its acceptance thereof thereby
acknowledges and agrees that the holders of the Superior
Debt have relied upon and will continue to rely upon the
subordination provided for herein in entering into the
agreements relating to Superior Debt and in extending credit
to the Borrower pursuant thereto.
(b) No present or future holder of Superior Debt
shall be prejudiced in his right to enforce the
subordination contained herein in accordance with the terms
hereof by any act or failure to act on the part of the
Borrower or any holder of the SRAC Subordinated Notes. The
subordination provisions contained herein are for the
benefit of the holders of the Superior Debt from time to
time and, so long as Superior Debt is outstanding under any
agreement, may not be rescinded, cancelled or modified in
any way without the prior written consent thereto of all
holders of Superior Debt.
(c) The subordination provisions hereof shall be
binding upon any holder of the SRAC Subordinated Notes and
upon the heirs, legal representatives, successors and
assigns of any holder of the SRAC Subordinated Notes; and,
to the extent that any holder of the SRAC Subordinated Notes
is either a partnership or a corporation, all references
herein to any holder of the SRAC Subordinated Notes shall be
deemed to include any successor or successors, whether
immediate or remote, to such partnership or corporation.
(d) These Terms of Subordination shall be
construed in accordance with and governed by the laws of the
State of New York.
EXECUTION COPY
$1,000,000,000
CREDIT AGREEMENT
dated as of
June 29, 1995
among
Sears Roebuck Acceptance Corp.,
The Banks Listed Herein,
The Managing Agent Referred to Herein,
The Co-Arrangers, Co-Agents and Lead Managers
Referred to Herein
and
Morgan Guaranty Trust Company of New York,
as Agent
TABLE OF CONTENTS
_________
1 The Table of Contents is not a part of this Agreement.
Page
ARTICLE I
DEFINITIONS
SECTION 1.01 Definitions........................................ 1
1.02 Accounting Terms and Determinations..................... 14
ARTICLE II
THE CREDITS
SECTION 2.01 Commitments to Lend................................ 15
2.02 Notice of Committed Borrowing........................... 15
2.03 Money Market Borrowings................................. 16
2.04 Notice to Banks; Funding of Loans....................... 20
2.05 Notes................................................... 21
2.06 Mandatory Termination of
Commitments and Repayment of Loans...................... 22
2.07 Interest Rates.......................................... 22
2.08 Facility Fees........................................... 26
2.09 Optional Termination or
Reduction of Commitments................................ 27
2.10 Method of Electing Interest Rates....................... 27
2.11 Optional Prepayments.................................... 29
2.12 General Provisions as to Payments....................... 29
2.13 Funding Losses.......................................... 30
2.14 Computation of Interest and Fees........................ 31
2.15 Taxes................................................... 31
2.16 Regulation D Compensation............................... 34
ARTICLE III
CONDITIONS
SECTION 3.01 Effectiveness. . .................................. 35
3.02 Borrowings.............................................. 36
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
SECTION 4.01 Corporate Existence and Power...................... 38
4.02 Corporate and Governmental
Authorization; No Contravention......................... 38
4.03 Binding Effect.......................................... 39
4.04 Financial Information................................... 39
4.05 Litigation.............................................. 39
4.06 Compliance with ERISA................................... 40
4.07 Environmental Matters................................... 40
4.08 Taxes................................................... 40
4.09 Subsidiaries............................................ 40
4.10 Full Disclosure......................................... 41
ARTICLE V
COVENANTS
SECTION 5.01 Information........................................ 41
5.02 Maintenance of Property; Insurance...................... 44
5.03 Conduct of Business and
Maintenance of Existence................................ 44
5.04 Compliance with Laws.................................... 44
5.05 Letter Agreement........................................ 45
5.06 Negative Pledge......................................... 45
5.07 Consolidations, Mergers and Sales
of Assets............................................... 46
5.08 Use of Proceeds......................................... 47
5.09 Subsidiary Debt......................................... 47
5.10 Fixed Charge Coverage................................... 47
5.11 Debt.................................................... 47
ARTICLE VI
DEFAULTS
SECTION 6.01 Events of Default.................................. 48
6.02 Notice of Default....................................... 51
ARTICLE VII
THE AGENT
SECTION 7.01 Appointment and Authorization...................... 51
7.02 Agent and Affiliates.................................... 51
7.03 Action by Agent......................................... 51
7.04 Consultation with Experts............................... 51
7.05 Liability of Agent...................................... 51
7.06 Indemnification......................................... 52
7.07 Credit Decision......................................... 52
7.08 Successor Agent......................................... 52
7.09 Agent's Fee............................................. 53
7.10 Managing Agent, Co-Arrangers, Co-Agents
and Lead Managers....................................... 53
ARTICLE VIII
CHANGE IN CIRCUMSTANCES
SECTION 8.01 Basis for Determining Interest
Rate Inadequate or Unfair............................... 53
8.02 Illegality............................................. 54
8.03 Increased Cost and Reduced Return...................... 55
8.04 Base Rate Loans Substituted for
Affected Fixed Rate Loans............................... 57
8.05 Substitution of Bank.................................... 58
ARTICLE IX
MISCELLANEOUS
SECTION 9.01 Notices............................................ 58
9.02 No Waivers.............................................. 59
9.03 Expenses; Documentary Taxes;
Indemnification......................................... 59
9.04 Sharing of Set-Offs..................................... 60
9.05 Amendments and Waivers.................................. 60
9.06 Successors and Assigns.................................. 61
9.07 Collateral.............................................. 63
9.08 Governing Law; Submission to Juris-
diction................................................ 63
9.09 Counterparts; Integration............................... 63
9.10 Restrictions on Transfers............................... 64
9.11 Confidentiality......................................... 64
9.12 WAIVER OF JURY TRIAL.................................... 65
Exhibit A - Note
Exhibit B - Notice of Committed Borrowing
Exhibit C - Notice of Interest Rate Election
Exhibit D - Money Market Quote Request
Exhibit E - Invitation for Money Market Quotes
Exhibit F - Money Market Quote
Exhibit G - Opinion of Counsel for the Borrower
Exhibit H - Opinion of Special Counsel for the
Agent
Exhibit I - Assignment and Assumption Agreement
Exhibit J - Terms of Subordination
CREDIT AGREEMENT
AGREEMENT dated as of June 29, 1995 among SEARS
ROEBUCK ACCEPTANCE CORP., the BANKS listed on the signature
pages hereof, the MANAGING AGENT, CO-ARRANGERS, CO-AGENTS
and LEAD MANAGERS referred to herein and MORGAN GUARANTY
TRUST COMPANY OF NEW YORK, as Agent.
The parties hereto agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. Definitions. The following terms,
as used herein, have the following meanings:
"Absolute Rate Auction" means a solicitation of
Money Market Quotes setting forth Money Market Absolute
Rates pursuant to Section 2.03.
"Account" means an open-end charge plan for
specified Persons, maintained by Sears or an Affiliate of
Sears.
"Adjusted CD Rate" has the meaning set forth in
Section 2.07(b).
"Administrative Questionnaire" means, with respect
to each Bank, an administrative questionnaire in the form
prepared by the Agent and submitted to the Agent (with a
copy to the Borrower) duly completed by such Bank.
"Affiliate" of a given Person means any other
Person that directly, or indirectly through one or more
intermediaries, controls, or is controlled by, or is under
common control with, such given Person.
"Agent" means Morgan Guaranty Trust Company of New
York in its capacity as agent for the Banks hereunder, and
its successors in such capacity.
"Applicable Lending Office" means, with respect to
any Bank, (i) in the case of its Domestic Loans, its
Domestic Lending Office, (ii) in the case of its Euro-Dollar
Loans, its Euro-Dollar Lending Office and (iii) in the case
of its Money Market Loans, its Money Market Lending Office.
"Assessment Rate" has the meaning set forth in
Section 2.07(b).
"Assignee" has the meaning set forth in
Section 9.06(c).
"Bank" means each bank listed on the signature
pages hereof, each Assignee which becomes a Bank pursuant to
Section 9.06(c), and their respective successors.
"Base Rate" means, for any day, a rate per annum
equal to the higher of (i) the Prime Rate for such day and
(ii) the sum of 1/2 of 1% plus the Federal Funds Rate for
such day.
"Base Rate Loan" means (i) a Committed Loan which
bears interest at the Base Rate pursuant to the applicable
Notice of Committed Borrowing or Notice of Interest Rate
Election or the provisions of Article VIII or (ii) an
overdue amount which was a Base Rate Loan immediately before
it became overdue.
"Benefit Arrangement" means at any time an
employee benefit plan within the meaning of Section 3(3) of
ERISA which is not a Plan or a Multiemployer Plan and which
is maintained or otherwise contributed to by any member of
the ERISA Group.
"Borrower" means Sears Roebuck Acceptance Corp., a
Delaware corporation, and its successors.
"Borrower's 1994 Form 10-K" means the Borrower's
annual report on Form 10-K for 1994, as filed with the
Commission pursuant to the Exchange Act (excluding the
exhibits thereto).
"Borrowing" means a borrowing hereunder consisting
of Loans made to the Borrower at the same time by the Banks
pursuant to Article II on a single date and for a single
Interest Period. Borrowings are classified for purposes of
this Agreement either by reference to the pricing of Loans
comprising such Borrowing (e.g., a "Euro-Dollar Borrowing"
is a Borrowing comprised of Euro-Dollar Loans and a "Fixed
Rate Borrowing" is a Borrowing comprised of Fixed Rate
Loans) or by reference to the provisions of Article II under
which participation therein is determined (i.e., a
"Committed Borrowing" is a Borrowing under Section 2.01 in
which all Banks participate in proportion to their
Commitments, while a "Money Market Borrowing" is a Borrowing
under Section 2.03 in which the Bank participants are
determined on the basis of their bids in accordance
therewith).
"CD Base Rate" has the meaning set forth in
Section 2.07(b).
"CD Loan" means (i) a Committed Loan which bears
interest at a rate determined with reference to the CD Base
Rate pursuant to the applicable Notice of Committed
Borrowing or Notice of Interest Rate Election or (ii) an
overdue amount which was a CD Loan immediately before it
became overdue.
"CD Margin" has the meaning set forth in
Section 2.07(b).
"CD Reference Banks" means Morgan Guaranty Trust
Company of New York, Chemical Bank and Union Bank of
Switzerland.
"Co-Agents" means each Bank listed on the
signature pages hereof as a Co-Agent, each in its capacity
as co-agent hereunder.
"Co-Arrangers" means each Bank listed on the
signature pages hereof as a Co-Arranger, each in its
capacity as co-arranger hereunder.
"Commission" means the Securities and Exchange
Commission.
"Commitment" means, with respect to each Bank, the
amount set forth opposite the name of such Bank on the
signature pages hereof, as such amount may be reduced from
time to time pursuant to Section 2.09.
"Committed Loan" means a loan made by a Bank
pursuant to Section 2.01.
"Consolidated Debt" means at any date the Debt of
the Borrower and its Consolidated Subsidiaries, determined
on a consolidated basis as of such date.
"Consolidated Net Income" means, for any period,
the net income of the Borrower and its Consolidated
Subsidiaries for such period.
"Consolidated Stockholder's Equity" means as of
any date the total stockholder's equity of the Borrower and
its Consolidated Subsidiaries, plus the amount of any SRAC
Subordinated Debt, as of such date.
"Consolidated Subsidiary" means at any date any
Subsidiary or other Person the accounts of which are
consolidated with those of the Borrower in its consolidated
financial statements as of such date.
"Consolidated Tangible Net Worth" means at any
date the Consolidated Stockholder's Equity less the
consolidated Intangible Assets of the Borrower and its
Consolidated Subsidiaries, all determined as of such date.
For purposes of this definition "Intangible Assets" means
the amount (to the extent reflected as an asset on the
consolidated statement of financial position of the Borrower
and its Consolidated Subsidiaries) of (i) all write-ups
(other than write-ups resulting from foreign currency
translations and write-ups of assets of a going concern
business made within twelve months after the acquisition of
such business) subsequent to March 31, 1995 in the book
value of any asset owned by the Borrower or a Consolidated
Subsidiary and (ii) all unamortized debt discount and
expense to the extent reflected as an asset on a
consolidated statement of financial position of Borrower and
its Consolidated Subsidiaries, unamortized deferred charges,
goodwill, patents, trademarks, service marks, trade names,
anticipated future benefit of tax loss carry-forwards,
copyrights, organization or developmental expenses and other
intangible assets.
"Debt" of any Person means, at any date, without
duplication, (i) all obligations of such Person for borrowed
money properly recordable as a liability on the financial
statements of such Person, (ii) all obligations of such
Person, properly recordable as a liability on the financial
statements of such Person, evidenced by bonds, debentures,
notes or other similar instruments, (iii) all obligations of
such Person to pay the deferred purchase price of property
except trade accounts payable arising in the ordinary course
of business, (iv) the net present value of future minimum
lease payments under capital leases, (v) all direct recourse
payment obligations of such Person in respect of any
accounts receivable sold by such Person, (vi) all Debt (as
defined in clauses (i) through (v) above) of others secured
by a Lien on any asset of such Person, whether or not such
Debt is assumed by such Person, and (vii) all Debt (as
defined in clauses (i) through (vi) above) of others
Guaranteed by such Person; provided that SRAC Subordinated
Debt shall not be deemed to be Debt for the purpose of
determining the Debt of the Borrower.
"Domestic Business Day" means any day except a
Saturday, Sunday or other day on which commercial banks in
New York City or Chicago are authorized by law to close.
"Domestic Lending Office" means, as to each Bank,
its office located at its address set forth in its
Administrative Questionnaire (or identified in its
Administrative Questionnaire as its Domestic Lending Office)
or such other office as such Bank may hereafter designate as
its Domestic Lending Office by notice to the Borrower and
the Agent; provided that any Bank may so designate separate
Domestic Lending Offices for its Base Rate Loans, on the one
hand, and its CD Loans, on the other hand, in which case all
references herein to the Domestic Lending Office of such
Bank shall be deemed to refer to either or both of such
offices, as the context may require.
"Domestic Loans" means CD Loans or Base Rate Loans
or both.
"Domestic Reserve Percentage" has the meaning set
forth in Section 2.07(b).
"Effective Date" means the date this Agreement
becomes effective in accordance with Section 3.01.
"Environmental Laws" means any and all federal,
state and local statutes, laws, regulations, ordinances,
rules, judgments, orders, decrees, permits, licenses,
agreements or other governmental restrictions relating to
the protection of the environment or to emissions,
discharges or releases of pollutants, contaminants,
petroleum or petroleum products, chemicals or industrial,
toxic or hazardous substances or wastes into the environment
or otherwise relating to the generation, processing, use,
treatment, storage, disposal, transport or handling of
pollutants, contaminants, petroleum or petroleum products,
chemicals or industrial, toxic or hazardous substances or
wastes, or the clean-up or other remediation thereof.
"ERISA" means the Employee Retirement Income
Security Act of 1974, as amended, or any successor statute.
"ERISA Group" means the Borrower and all members
of a controlled group of corporations and all trades or
businesses (whether or not incorporated) under common
control which, together with the Borrower, are treated as a
single employer under Section 414 of the Internal Revenue
Code.
"Euro-Dollar Business Day" means any Domestic
Business Day on which commercial banks are open for
international business (including dealings in dollar
deposits) in London.
"Euro-Dollar Lending Office" means, as to each
Bank, its office, branch or Affiliate located at its address
set forth in its Administrative Questionnaire (or identified
in its Administrative Questionnaire as its Euro-Dollar
Lending Office) or such other office, branch or Affiliate of
such Bank as it may hereafter designate as its Euro-Dollar
Lending Office by notice to the Borrower and the Agent.
"Euro-Dollar Loan" means (i) a Committed Loan
which bears interest at a rate determined with reference to
the London Interbank Offered Rate pursuant to the applicable
Notice of Committed Borrowing or Notice of Interest Rate
Election or (ii) an overdue amount which was a Euro-Dollar
Loan immediately before it became overdue.
"Euro-Dollar Margin" has the meaning set forth in
Section 2.07(c).
"Euro-Dollar Reference Banks" means the principal
London offices of Morgan Guaranty Trust Company of New York,
Chemical Bank and Union Bank of Switzerland.
"Euro-Dollar Reserve Percentage" means for any day
that percentage (expressed as a decimal) which is in effect
on such day, as prescribed by the Board of Governors of the
Federal Reserve System (or any successor) for determining
the maximum reserve requirement for a member bank of the
Federal Reserve System in New York City with deposits
exceeding five billion dollars in respect of "Eurocurrency
liabilities" (or in respect of any other category of
liabilities which includes deposits by reference to which
the interest rate on Euro-Dollar Loans is determined or any
category of extensions of credit or other assets which
includes loans by a non-United States office of any Bank to
United States residents).
"Event of Default" has the meaning set forth in
Section 6.01.
"Exchange Act" means the Securities Exchange Act
of 1934, as amended.
"Federal Funds Rate" means, for any day, the rate
per annum (rounded upward, if necessary, to the nearest
1/100th of 1%) equal to the weighted average of the rates on
overnight Federal funds transactions with members of the
Federal Reserve System arranged by Federal funds brokers on
such day, as published by the Federal Reserve Bank of New
York on the Domestic Business Day next succeeding such day,
provided that (i) if such day is not a Domestic Business
Day, the Federal Funds Rate for such day shall be such rate
on such transactions on the next preceding Domestic Business
Day as so published on the next succeeding Domestic Business
Day, and (ii) if no such rate is so published on such next
succeeding Domestic Business Day, the Federal Funds Rate for
such day shall be the average rate quoted to Morgan Guaranty
Trust Company of New York on such day on such transactions
as determined by the Agent.
"Fixed Charge Coverage Ratio" means, for any
period, the Borrower's ratio of earnings to fixed charges,
determined for such period in accordance with Item 503(d) of
Regulation S-K promulgated by the Commission, as in effect
on the date hereof.
"Fixed Rate Loans" means CD Loans or Euro-Dollar
Loans or Money Market Loans (excluding Money Market LIBOR
Loans bearing interest at the Base Rate pursuant to Section
8.01(a)) or any combination of the foregoing.
"Group of Loans" means at any time a group of
Committed Loans consisting of (i) all Loans which are Base
Rate Loans at such time, (ii) all Loans which are CD Loans
having the same Interest Period at such time or (iii) all
Loans which are Euro-Dollar Loans having the same Interest
Period at such time; provided that, if Loans of any
particular Bank are converted to or made as Base Rate Loans
pursuant to Section 8.02 or 8.04, such Loans shall be
included in the same Group or Groups of Loans from time to
time as they would have been in if they had not been so
converted or made.
"Guarantee" by any Person means any obligation,
contingent or otherwise, of such Person directly or
indirectly guaranteeing any Debt (as defined in clauses (i)
through (vi) of the definition of Debt) of any other Person
or in any manner providing for the payment of any such Debt
of any other Person or otherwise protecting the holder of
such Debt against loss (whether by agreement to keep-well,
to purchase assets, goods, securities or services, or to
take-or-pay or otherwise), provided that the term Guarantee
shall not include endorsements for collection or deposit in
the ordinary course of business. The term "Guarantee" used
as a verb has a correlative meaning.
"Interest Period" means: (1) with respect to each
Euro-Dollar Loan, a period commencing on the date of
Borrowing specified in the applicable Notice of Borrowing or
on the date specified in the applicable Notice of Interest
Rate Election and ending one, two, three or six months
thereafter (or such other number of months thereafter as the
Borrower, the Agent and all the Banks may agree), as the
Borrower may elect in the applicable Notice; provided that:
(a) any Interest Period which would
otherwise end on a day which is not a Euro-Dollar
Business Day shall, subject to clause (c) below,
be extended to the next succeeding Euro-Dollar
Business Day unless such Euro-Dollar Business Day
falls in another calendar month, in which case
such Interest Period shall end on the next
preceding Euro-Dollar Business Day;
(b) any Interest Period which begins on the last
Euro-Dollar Business Day of a calendar month (or on a
day for which there is no numerically corresponding day
in the calendar month at the end of such Interest
Period) shall, subject to clause (c) below, end on the
last Euro-Dollar Business Day of a calendar month; and
(c) any Interest Period which would otherwise end
after the Maturity Date with respect to such Loan shall
end on such Maturity Date.
(2) with respect to each CD Loan, a period
commencing on the date of Borrowing specified in the
applicable Notice of Borrowing or on the date specified in
the applicable Notice of Interest Rate Election and ending
30, 60, 90 or 180 days thereafter (or such other number of
days thereafter as the Borrower, the Agent and all the Banks
may agree), as the Borrower may elect in the applicable
Notice; provided that:
(a) any Interest Period which would otherwise end
on a day which is not a Euro-Dollar Business Day shall,
subject to clause (b) below, be extended to the next
succeeding Euro-Dollar Business Day; and
(b) any Interest Period which would otherwise end
after the Maturity Date with respect to such Loan shall
end on such Maturity Date.
(3) with respect to each Money Market LIBOR
Borrowing, the period commencing on the date of such
Borrowing and ending such whole number of months thereafter
as the Borrower may elect in accordance with Section 2.03;
provided that:
(a) any Interest Period which would otherwise end
on a day which is not a Euro-Dollar Business Day shall,
subject to clause (c) below, be extended to the next
succeeding Euro-Dollar Business Day unless such
Euro-Dollar Business Day falls in another calendar
month, in which case such Interest Period shall end on
the next preceding Euro-Dollar Business Day;
(b) any Interest Period which begins on the last
Euro-Dollar Business Day of a calendar month (or on a
day for which there is no numerically corresponding day
in the calendar month at the end of such Interest
Period) shall, subject to clause (c) below, end on the
last Euro-Dollar Business Day of a calendar month; and
(c) any Interest Period which would otherwise end
after the Termination Date shall end on the Termination
Date.
(4) with respect to each Money Market Absolute
Rate Borrowing, the period commencing on the date of such
Borrowing and ending such number of days thereafter (but not
less than 30 days) as the Borrower may elect in accordance
with Section 2.03; provided that:
(a) any Interest Period which would otherwise end
on a day which is not a Euro-Dollar Business Day shall,
subject to clause (b) below, be extended to the next
succeeding Euro-Dollar Business Day; and
(b) any Interest Period which would otherwise end
after the Termination Date shall end on the Termination
Date.
"Internal Revenue Code" means the Internal Revenue
Code of 1986, as amended, or any successor statute.
"Lead Managers" means each Bank listed on the
signature pages hereof as a Lead Manager, each in its
capacity as lead manager hereunder.
"Letter Agreement" means the letter agreement
dated September 28, 1984 between the Borrower and Sears, as
amended as of October 17, 1991, and as the same may further
be amended from time to time in accordance with the terms
thereof and of Section 5.05.
"LIBOR Auction" means a solicitation of Money
Market Quotes setting forth Money Market Margins based on
the London Interbank Offered Rate pursuant to Section 2.03.
"Lien" means (i) any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in
respect of any asset recorded as such on the financial
statements of the Borrower or any Subsidiary or (ii) the
interest of a vendor or lessor under any conditional sales
agreement, capital lease or other title retention agreement
relating to any asset recorded as such on the financial
statements of the Borrower or any Subsidiary.
"Loan" means a Domestic Loan or a Euro-Dollar Loan
or a Money Market Loan and "Loans" means Domestic Loans or
Euro-Dollar Loans or Money Market Loans or any combination
of the foregoing.
"London Interbank Offered Rate" has the meaning
set forth in Section 2.07(c).
"Managing Agent" means Chemical Bank in its
capacity as managing agent hereunder.
"Material Company" means any of the Borrower, any
Subsidiary, Sears, any Person of which Sears is a subsidiary
or any Material Sears Subsidiary.
"Material Plan" means at any time a Plan or Plans
having aggregate Unfunded Liabilities in excess of
$75,000,000.
"Material Sears Subsidiary" means any Sears
Subsidiary having consolidated total assets in excess of
$6,000,000,000 at the time of any determination of its
status hereunder.
"Maturity Date" means, with respect to any
Committed Loan, the date that is 365 days after the first
day of the Borrowing pursuant to which such Committed Loan
was made, or, if such day is not a Euro-Dollar Business Day,
the next succeeding Euro-Dollar Business Day unless such
Euro-Dollar Business Day falls in another calendar month, in
which case the Maturity Date of such Committed Loan shall be
the next preceding Euro-Dollar Business Day.
"Money Market Absolute Rate" has the meaning set
forth in Section 2.03(d).
"Money Market Absolute Rate Loan" means a loan to
be made by a Bank pursuant to an Absolute Rate Auction.
"Money Market Lending Office" means, as to each
Bank, its Domestic Lending Office or such other office,
branch or affiliate of such Bank as it may hereafter
designate as its Money Market Lending Office by notice to
the Borrower and the Agent; provided that any Bank may from
time to time by notice to the Borrower and the Agent
designate separate Money Market Lending Offices for its
Money Market LIBOR Loans, on the one hand, and its Money
Market Absolute Rate Loans, on the other hand, in which case
all references herein to the Money Market Lending Office of
such Bank shall be deemed to refer to either or both of such
offices, as the context may require.
"Money Market LIBOR Loan" means a loan to be made
by a Bank pursuant to a LIBOR Auction (including such a loan
bearing interest at the Base Rate pursuant to Section
8.01(a)).
"Money Market Loan" means a Money Market LIBOR
Loan or a Money Market Absolute Rate Loan.
"Money Market Margin" has the meaning set forth in
Section 2.03(d).
"Money Market Quote" means an offer by a Bank to
make a Money Market Loan in accordance with Section 2.03.
"Multiemployer Plan" means at any time an employee
pension benefit plan within the meaning of Section
4001(a)(3) of ERISA to which any member of the ERISA Group
is then making or accruing an obligation to make
contributions or has within the preceding five plan years
made contributions, including for these purposes any Person
which ceased to be a member of the ERISA Group during such
five year period.
"Non-U.S. Bank" shall mean any Bank other than a
Bank that is organized under the laws of the United States
or any State thereof or the District of Columbia.
"Notes" means promissory notes of the Borrower,
substantially in the form of Exhibit A hereto, evidencing
the obligation of the Borrower to repay the Loans, and
"Note" means any one of such promissory notes issued
hereunder.
"Notice of Borrowing" means a Notice of Committed
Borrowing (as defined in Section 2.02) or a Notice of Money
Market Borrowing (as defined in Section 2.03(f)).
"Notice of Interest Rate Election" has the meaning
set forth in Section 2.10.
"Obligor" means, with respect to any Account, the
Person or Persons obligated to make payments with respect to
such Account, including any guarantor thereof.
"Parent" means, with respect to any Bank, any
Person controlling such Bank.
"Participant" has the meaning set forth in
Section 9.06(b).
"PBGC" means the Pension Benefit Guaranty
Corporation or any entity succeeding to any or all of its
functions under ERISA.
"Person" means an individual, a corporation, a
partnership, an association, a trust or any other entity or
organization, including a government or political
subdivision or an agency or instrumentality thereof.
"Plan" means at any time an employee pension
benefit plan (other than a Multiemployer Plan) which is
covered by Title IV of ERISA or subject to the minimum
funding standards under Section 412 of the Internal Revenue
Code and either (i) is maintained, or contributed to, by any
member of the ERISA Group for employees of any member of the
ERISA Group or (ii) has at any time within the preceding
five years been maintained, or contributed to, by any Person
which was at such time a member of the ERISA Group for
employees of any Person which was at such time a member of
the ERISA Group.
"Prime Rate" means the rate of interest publicly
announced by Morgan Guaranty Trust Company of New York in
New York City from time to time as its Prime Rate.
"Receivable" means, at any date, any amounts owing
at such date by the Obligors under an Account, including,
without limitation, amounts owing for the payment of goods
and services, cash advances, if applicable, finance charges
and other charges, if any.
"Reference Banks" means the CD Reference Banks or
the Euro-Dollar Reference Banks, as the context may require,
and "Reference Bank" means any one of such Reference Banks.
"Regulation U" means Regulation U of the Board of
Governors of the Federal Reserve System, as in effect from
time to time.
"Required Banks" means at any time Banks having at
least 66-2/3% of the aggregate amount of the Commitments or,
if the Commitments shall have been terminated, holding Notes
evidencing at least 66-2/3% of the aggregate unpaid
principal amount of the Loans.
"Revolving Credit Period" means the period from
and including the Effective Date to and including the
Termination Date.
"Sears" means Sears, Roebuck and Co., a New York
corporation, and its successors.
"Sears Subsidiary" means any corporation or other
entity of which securities or other ownership interests
having ordinary voting power to elect a majority of the
Board of Directors or other persons performing similar
functions are at the time directly or indirectly owned or
controlled by Sears or one or more other Sears Subsidiaries,
or by Sears and one or more other Sears Subsidiaries,
provided that any such securities or other ownership
interests held in a fiduciary capacity for others, or as
portfolio investments, by Sears (to the extent it engages in
a financial or insurance business) or by any Sears
Subsidiary engaged in the insurance business or a financial
business shall be disregarded for purposes of this
definition.
"SRAC Preferred Stock" means at any time one or
more series of preferred stock of the Borrower outstanding
at such time; provided that (i) neither the voluntary or
involuntary liquidation preference nor the redemption price
of all such preferred stock outstanding at any time shall
exceed $150,000,000 and (ii) the terms of such preferred
stock shall not grant voting rights to the holders thereof
to elect members of the board of directors of the Borrower
except the right to elect not more than the lesser of two
members or 25% of the members of such board upon the failure
of the Borrower to pay dividends or similar contingency.
"SRAC Subordinated Debt" means any indebtedness
for borrowed money of the Borrower to any of (w) Sears,
(x) a Wholly-Owned Subsidiary of Sears, (y) a corporation of
which Sears is a Wholly-Owned Subsidiary or (z) a
Wholly-Owned Subsidiary of a corporation described in clause
(y) above, evidenced by notes or other evidences of
indebtedness for borrowed money which is made subordinate
and junior in right of payment to the Notes and such other
indebtedness for borrowed money of the Borrower as may be
specified (whether expressly or by category) in the
instruments evidencing such indebtedness (the Notes and all
other obligations of the Borrower hereunder and such other
indebtedness of the Borrower to which the SRAC Subordinated
Debt is subordinate and junior being herein called "Superior
Debt") by provisions no less favorable to the holders of the
Superior Debt than those set forth in Exhibit J.
"Subsidiary" means any corporation or other entity
of which securities or other ownership interests having
ordinary voting power to elect a majority of the board of
directors or other persons performing similar functions are
at the time directly or indirectly owned by the Borrower.
"Termination Date" means June 27, 1996 or, if such
day is not a Euro-Dollar Business Day, the next preceding
Euro-Dollar Business Day.
"Unfunded Liabilities" means, with respect to any
Plan at any time, the amount (if any) by which (i) the
present value of all benefits under such Plan exceeds (ii)
the fair market value of all Plan assets allocable to such
benefits (excluding any accrued but unpaid contributions),
all determined as of the then most recent valuation date for
such Plan, but only to the extent that such excess
represents a potential liability of a member of the ERISA
Group to the PBGC or any other Person under Title IV of
ERISA.
"Wholly-Owned Subsidiary" of a given Person means
any Person all of the shares of capital stock or other
ownership interests of which (except directors' qualifying
shares) are at the time directly or indirectly owned by the
given Person or one or more other Wholly-Owned Subsidiaries
or by the given Person and one or more other Wholly-Owned
Subsidiaries.
SECTION 1.02. Accounting Terms and
Determinations. Unless otherwise specified herein, all
accounting terms used herein shall be interpreted, all
accounting determinations hereunder shall be made, and all
financial statements required to be delivered hereunder
shall be prepared in accordance with U.S. generally accepted
accounting principles as in effect from time to time,
applied on a basis consistent (except for changes concurred
in by the Borrower's independent public accountants) with
the most recent audited financial statements delivered to
the Banks by the Borrower pursuant to this Agreement;
provided that, if the Borrower notifies the Agent that the
Borrower wishes to amend any provision hereof to eliminate
the effect of any change after the date hereof in such
generally accepted accounting principles (which, for
purposes of this proviso shall include the generally
accepted application or interpretation thereof) on the
operation of such provision (or if the Agent notifies the
Borrower that the Required Banks wish to amend any such
provision for such purpose), then such provision shall be
interpreted and the Borrower's compliance with such
provision shall be determined, and all accounting
determinations with respect thereto shall be made, on the
basis of such generally accepted accounting principles in
effect immediately before the relevant change in such
generally accepted accounting principles became effective,
until either such notice is withdrawn or such provision is
amended in a manner satisfactory to the Borrower and the
Required Banks.
ARTICLE II
THE CREDITS
SECTION 2.01. Commitments to Lend. During the
Revolving Credit Period each Bank severally agrees, on the
terms and conditions set forth in this Agreement, to make
loans to the Borrower pursuant to this Section 2.01 from
time to time in amounts such that the aggregate principal
amount of Committed Loans by such Bank at any one time
outstanding shall not exceed the amount of its Commitment.
Each Borrowing under this Section 2.01 shall be in an
aggregate principal amount of $75,000,000 or any larger
multiple of $5,000,000 (except that any such Borrowing may
be in the aggregate amount available in accordance with
Section 3.02(b)) and shall be made from the several Banks
ratably in proportion to their respective Commitments.
Within the foregoing limits, the Borrower may borrow under
this Section 2.01, prepay Loans (to the extent permitted by
Section 2.11) and reborrow at any time during the Revolving
Credit Period under this Section 2.01. Amounts of Loans
repaid or prepaid after the end of the Revolving Credit
Period may not be reborrowed.
SECTION 2.02. Notice of Committed Borrowing. The
Borrower shall give the Agent notice, substantially in the
form attached hereto as Exhibit B (a "Notice of Committed
Borrowing"), not later than 11:00 A.M. (New York City time)
on (x) the date of each Base Rate Borrowing, (y) the second
Domestic Business Day before each CD Borrowing and (z) the
third Euro-Dollar Business Day before each Euro-Dollar
Borrowing, specifying:
(i) the date of such Borrowing, which shall be a
Domestic Business Day in the case of a Domestic
Borrowing or a Euro-Dollar Business Day in the case of
a Euro-Dollar Borrowing,
(ii) the aggregate amount of such Borrowing,
(iii) whether the Loans comprising such Borrowing
are to bear interest initially at the Base Rate or at a
rate based upon the CD Base Rate or the London
Interbank Offered Rate, and
(iv) in the case of a Fixed Rate Borrowing, the
duration of the initial Interest Period applicable
thereto, subject to the provisions of the definition of
Interest Period.
SECTION 2.03. Money Market Borrowings.
(a) The Money Market Option. In addition to
Committed Borrowings pursuant to Section 2.01, the Borrower
may, as set forth in this Section, request the Banks during
the Revolving Credit Period to make offers to make Money
Market Loans to the Borrower. The Banks may, but shall have
no obligation to, make such offers and the Borrower may, but
shall have no obligation to, accept any such offers in the
manner set forth in this Section.
(b) Money Market Quote Request. When the
Borrower wishes to request offers to make Money Market Loans
under this Section, it shall transmit to the Agent by telex
or facsimile transmission a Money Market Quote Request
substantially in the form of Exhibit D hereto so as to be
received no later than 10:00 A.M. (New York City time) on
(x) the fifth Euro-Dollar Business Day prior to the date of
Borrowing proposed therein, in the case of a LIBOR Auction
or (y) the Domestic Business Day next preceding the date of
Borrowing proposed therein, in the case of an Absolute Rate
Auction (or, in either case, such other time or date as the
Borrower and the Agent shall have mutually agreed and shall
have notified to the Banks not later than the date of the
Money Market Quote Request for the first LIBOR Auction or
Absolute Rate Auction for which such change is to be
effective) specifying:
(i) the proposed date of Borrowing, which shall
be a Euro-Dollar Business Day in the case of a LIBOR
Auction or a Domestic Business Day in the case of an
Absolute Rate Auction,
(ii) the aggregate amount of such Borrowing, which
shall be $75,000,000 or a larger multiple of $5,000,000
(or an amount equal to the aggregate amount available
in accordance with Section 3.02(b), if less than
$75,000,000),
(iii) the duration of the Interest Period
applicable thereto, subject to the provisions of the
definition of Interest Period, and
(iv) whether the Money Market Quotes requested are
to set forth a Money Market Margin or a Money Market
Absolute Rate.
The Borrower may request offers to make Money Market Loans
for more than one Interest Period in a single Money Market
Quote Request. No Money Market Quote Request shall be given
until the Borrower has notified the Agent of its acceptance
or non-acceptance of the Money Market Quotes relating to any
outstanding Money Market Quote Request.
(c) Invitation for Money Market Quotes. Promptly
upon receipt of a Money Market Quote Request, the Agent
shall send to the Banks by telex or facsimile transmission
an Invitation for Money Market Quotes substantially in the
form of Exhibit E hereto, which shall constitute an
invitation by the Borrower to each Bank to submit Money
Market Quotes offering to make the Money Market Loans to
which such Money Market Quote Request relates in accordance
with this Section.
(d) Submission and Contents of Money Market
Quotes. (i) Each Bank may submit a Money Market Quote
containing an offer or offers to make Money Market Loans in
response to any Invitation for Money Market Quotes. Each
Money Market Quote must comply with the requirements of this
subsection (d) and must be submitted to the Agent by telex
or facsimile transmission at its offices specified in or
pursuant to Section 9.01 not later than (x) 2:00 P.M. (New
York City time) on the fourth Euro-Dollar Business Day prior
to the proposed date of Borrowing, in the case of a LIBOR
Auction or (y) 9:30 A.M. (New York City time) on the
proposed date of Borrowing, in the case of an Absolute Rate
Auction (or, in either case, such other time or date as the
Borrower and the Agent shall have mutually agreed and shall
have notified to the Banks not later than the date of the
Money Market Quote Request for the first LIBOR Auction or
Absolute Rate Auction for which such change is to be
effective); provided that Money Market Quotes submitted by
the Agent (or any affiliate of the Agent) in the capacity of
a Bank may be submitted, and may only be submitted, if the
Agent or such affiliate notifies the Borrower of the terms
of the offer or offers contained therein not later than (x)
one hour prior to the deadline for the other Banks, in the
case of a LIBOR Auction or (y) 15 minutes prior to the
deadline for the other Banks, in the case of an Absolute
Rate Auction. Subject to Articles III and VI, any Money
Market Quote so made shall be irrevocable except with the
written consent of the Agent given on the instructions of
the Borrower.
(ii) Each Money Market Quote shall be in
substantially the form of Exhibit F hereto and shall in any
case specify:
(A) the proposed date of Borrowing,
(B) the principal amount of the Money Market Loan
for which each such offer is being made, which
principal amount (w) may be greater than or less than
the Commitment of the quoting Bank, (x) must be
$5,000,000 or a larger multiple of $1,000,000, (y) may
not exceed the principal amount of Money Market Loans
for which offers were requested and (z) may be subject
to an aggregate limitation as to the principal amount
of Money Market Loans for which offers being made by
such quoting Bank may be accepted,
(C) in the case of a LIBOR Auction, the margin
above or below the applicable London Interbank Offered
Rate (the "Money Market Margin") offered for each such
Money Market Loan, expressed as a percentage (specified
to the nearest 1/10,000th of 1%) to be added to or
subtracted from such base rate,
(D) in the case of an Absolute Rate Auction, the
rate of interest per annum (specified to the nearest
1/10,000th of 1%) (the "Money Market Absolute Rate")
offered for each such Money Market Loan, and
(E) the identity of the quoting Bank.
A Money Market Quote may set forth up to five separate
offers by the quoting Bank with respect to each Interest
Period specified in the related Invitation for Money Market
Quotes.
(iii) Any Money Market Quote shall be disregarded
if it:
(A) is not substantially in conformity with
Exhibit F hereto or does not specify all of the
information required by subsection (d)(ii);
(B) contains qualifying, conditional or similar
language;
(C) proposes terms other than or in addition to
those set forth in the applicable Invitation for Money
Market Quotes; or
(D) arrives after the time set forth in
subsection (d)(i).
(e) Notice to Borrower. The Agent shall promptly
notify the Borrower of the terms (x) of any Money Market
Quote submitted by a Bank that is in accordance with
subsection (d) and (y) of any Money Market Quote that
amends, modifies or is otherwise inconsistent with a
previous Money Market Quote submitted by such Bank with
respect to the same Money Market Quote Request. Any such
subsequent Money Market Quote shall be disregarded by the
Agent unless such subsequent Money Market Quote is submitted
solely to correct a manifest error in such former Money
Market Quote. The Agent's notice to the Borrower shall
specify (A) the aggregate principal amount of Money Market
Loans for which offers have been received for each Interest
Period specified in the related Money Market Quote Request,
(B) the respective principal amounts and Money Market
Margins or Money Market Absolute Rates, as the case may be,
so offered, and the identity of the respective Banks
submitting such offers, and (C) if applicable, limitations
on the aggregate principal amount of Money Market Loans for
which offers in any single Money Market Quote may be
accepted.
(f) Acceptance and Notice by Borrower. Not later
than 10:30 A.M. (New York City time) on (x) the third
Euro-Dollar Business Day prior to the proposed date of
Borrowing, in the case of a LIBOR Auction or (y) the
proposed date of Borrowing, in the case of an Absolute Rate
Auction (or, in either case, such other time or date as the
Borrower and the Agent shall have mutually agreed and shall
have notified to the Banks not later than the date of the
Money Market Quote Request for the first LIBOR Auction or
Absolute Rate Auction for which such change is to be
effective), the Borrower shall notify the Agent of its
acceptance or non-acceptance of the offers so notified to it
pursuant to subsection (e). In the case of acceptance, such
notice (a "Notice of Money Market Borrowing") shall specify
the aggregate principal amount of offers for each Interest
Period that are accepted. The Borrower may accept any Money
Market Quote in whole or in part; provided that:
(i) the aggregate principal amount of each Money
Market Borrowing may not exceed the applicable amount
set forth in the related Money Market Quote Request,
(ii) the principal amount of each Money Market
Borrowing must be (A) $75,000,000 or a larger multiple
of $5,000,000, (B) an amount equal to the aggregate
amount available in accordance with Section 3.02(b), if
less than $75,000,000 or (C) the aggregate principal
amount of offers, if less than both $75,000,000 and the
amount referred to in clause (B),
(iii) acceptance of offers may only be made on the
basis of ascending Money Market Margins or Money Market
Absolute Rates, as the case may be, and
(iv) the Borrower may not accept any offer that is
described in subsection (d)(iii) or that otherwise
fails to comply with the requirements of this
Agreement.
(g) Allocation by Agent. If offers are made by
two or more Banks with the same Money Market Margins or
Money Market Absolute Rates, as the case may be, for a
greater aggregate principal amount than the amount in
respect of which such offers are accepted for the related
Interest Period, the principal amount of Money Market Loans
in respect of which such offers are accepted shall be
allocated by the Agent among such Banks as nearly as
possible (in multiples of $1,000,000, as the Agent may deem
appropriate) in proportion to the aggregate principal
amounts of such offers. Determinations by the Agent of the
amounts of Money Market Loans shall be conclusive in the
absence of manifest error.
SECTION 2.04. Notice to Banks; Funding of Loans.
(a) Upon receipt of a Notice of Borrowing, the
Agent shall promptly notify each Bank of the contents
thereof and of such Bank's share (if any) of such Borrowing
and such Notice of Borrowing shall not thereafter be
revocable by the Borrower.
(b) Not later than (x) 1:00 P.M. (New York City
time) on the date of each Base Rate Borrowing, (y) 12:00
Noon (New York City time) on the date of any Money Market
Absolute Rate Borrowing and (z) 11:00 A.M. (New York City
time) on the date of any other Borrowing, each Bank shall
make available its ratable share of such Borrowing, in
Federal or other funds immediately available in New York
City, to the Agent at its address specified in or pursuant
to Section 9.01. Unless the Agent determines that any
applicable condition specified in Article III has not been
satisfied, the Agent will make the funds so received from
the Banks available to the Borrower promptly after the
Agent's receipt thereof at the Agent's aforesaid address.
(c) Unless the Agent shall have received notice
from a Bank prior to the date of any Borrowing (or, in the
case of any Base Rate Borrowing, prior to 11:00 A.M. (New
York City time) on the date of such Borrowing) that such
Bank will not make available to the Agent such Bank's share
of such Borrowing, the Agent may assume that such Bank has
made such share available to the Agent on the date of such
Borrowing in accordance with subsection (b) of this Section
2.04 and the Agent may, in reliance upon such assumption,
make available to the Borrower on such date a corresponding
amount. If and to the extent that such Bank shall not have
so made such share available to the Agent, the Agent shall
notify the Borrower thereof as soon as practicable, and such
Bank and the Borrower severally agree to repay to the Agent
forthwith on demand (delivered, in the case of the Borrower,
in accordance with the next succeeding sentence) such
corresponding amount together with interest thereon, for
each day from the date such amount is made available to the
Borrower until the date such amount is repaid to the Agent,
at (i) in the case of the Borrower, a rate per annum equal
to the higher of the Federal Funds Rate and the interest
rate applicable thereto pursuant to Section 2.07 and (ii) in
the case of such Bank, the Federal Funds Rate. Any such
demand for repayment shall be made first upon such Bank and,
if such Bank shall have failed to repay such amount within
two Euro-Dollar Business Days after such demand, then upon
the Borrower. If such Bank shall repay to the Agent such
corresponding amount, such amount so repaid shall constitute
such Bank's Loan included in such Borrowing for purposes of
this Agreement.
SECTION 2.05. Notes. (a) The Loans of each Bank
shall be evidenced by a single Note payable to the order of
such Bank for the account of its Applicable Lending Office
in an amount equal to the aggregate unpaid principal amount
of such Bank's Loans.
(b) Each Bank may, by notice to the Borrower and
the Agent, request that its Loans of a particular type be
evidenced by a separate Note in an amount equal to the
aggregate unpaid principal amount of such Loans. Each such
Note shall be in substantially the form of Exhibit A hereto
with appropriate modifications to reflect the fact that it
evidences solely Loans of the relevant type. Each reference
in this Agreement to the "Note" of such Bank shall be deemed
to refer to and include any or all of such Notes, as the
context may require.
(c) Upon receipt of each Bank's Note pursuant to
Section 3.01(b), the Agent shall mail such Note to such
Bank. Each Bank shall record the date and amount of each
Loan made by it and the date and amount of each payment of
principal made by the Borrower with respect thereto, and
may, if such Bank so elects in connection with any transfer
or enforcement of its Note, endorse on the schedule forming
a part thereof appropriate notations to evidence the
foregoing information with respect to each such Loan then
outstanding; provided that the failure of any Bank to make
any such recordation or endorsement shall not affect the
obligations of the Borrower hereunder or under the Notes.
Each Bank is hereby irrevocably authorized by the Borrower
so to endorse its Note and to attach to and make a part of
its Note a continuation of any such schedule as and when
required.
SECTION 2.06. Mandatory Termination of
Commitments and Repayment of Loans. Each Money Market Loan
included in any Money Market Borrowing shall mature, and the
principal amount thereof (together with accrued interest
thereon) shall be due and payable, on the last day of the
Interest Period applicable to such Money Market Borrowing.
Each Committed Loan shall mature, and the principal amount
thereof (together with accrued interest thereon) shall be
due and payable, on the Maturity Date with respect thereto.
The Commitments shall terminate at the close of business on
the Termination Date.
SECTION 2.07. Interest Rates. (a) Each Base
Rate Loan shall bear interest on the outstanding principal
amount thereof, for each day from the date such Loan is made
until it becomes due, at a rate per annum equal to the Base
Rate for such day. Such interest shall be payable monthly
in arrears on the date in each calendar month that
numerically corresponds to the date such Loan is made (or,
in the case of any calendar month in which there is no such
date, on the last day of such month) and on each date a Base
Rate Loan is converted to a Fixed Rate Loan. Any overdue
principal of or interest on any Base Rate Loan shall bear
interest, payable on demand, for each day until paid at a
rate per annum equal to the sum of 2% plus the rate
otherwise applicable to Base Rate Loans for such day.
(b) Each CD Loan shall bear interest on the
outstanding principal amount thereof, for each day during
each Interest Period applicable thereto, at a rate per annum
equal to the sum of the CD Margin for such day plus the
Adjusted CD Rate applicable to such Interest Period;
provided that if any CD Loan or any portion thereof shall,
as a result of clause (2)(b) of the definition of Interest
Period, have an Interest Period of less than 30 days, such
portion shall bear interest during such Interest Period at
the rate applicable to Base Rate Loans during such period.
Such interest shall be payable for each Interest Period on
the last day thereof and, if such Interest Period is longer
than 90 days, at intervals of 90 days after the first day
thereof. Any overdue principal of or interest on any CD
Loan shall bear interest, payable on demand, for each day
until paid at a rate per annum equal to the sum of 2% plus
the higher of (i) the sum of the CD Margin plus the Adjusted
CD Rate applicable to such Loan and (ii) the rate applicable
to Base Rate Loans for such day.
"CD Margin" means for any day 0.34%.
The "Adjusted CD Rate" applicable to any Interest
Period means a rate per annum determined pursuant to the
following formula:
[ CDBR ]*
ACDR = [ ---------- ] + AR
[ 1.00 - DRP ]
ACDR = Adjusted CD Rate
CDBR = CD Base Rate
DRP = Domestic Reserve Percentage
AR = Assessment Rate
__________
* The amount in brackets being rounded upward, if
necessary, to the next higher 1/100 of 1%
The "CD Base Rate" applicable to any Interest
Period is the rate of interest determined by the Agent to be
the average (rounded upward, if necessary, to the next
higher 1/100 of 1%) of the prevailing rates per annum bid at
10:00 A.M. (New York City time) (or as soon thereafter as
practicable) on the first day of such Interest Period by two
or more New York certificate of deposit dealers of
recognized standing for the purchase at face value from each
CD Reference Bank of its certificates of deposit in an
amount comparable to the principal amount of the CD Loan of
such CD Reference Bank to which such Interest Period applies
and having a maturity comparable to such Interest Period.
"Domestic Reserve Percentage" means for any day
that percentage (expressed as a decimal) which is in effect
on such day, as prescribed by the Board of Governors of the
Federal Reserve System (or any successor) for determining
the maximum reserve requirement (including without
limitation any basic, supplemental or emergency reserves)
for a member bank of the Federal Reserve System in New York
City with deposits exceeding five billion dollars in respect
of new non-personal time deposits in dollars in New York
City having a maturity comparable to the related Interest
Period and in an amount of $100,000 or more. The Adjusted
CD Rate shall be adjusted automatically on and as of the
effective date of any change in the Domestic Reserve
Percentage.
"Assessment Rate" means for any day the annual
assessment rate in effect on such day which is payable by a
member of the Bank Insurance Fund classified as adequately
capitalized and within supervisory subgroup "A" (or a
comparable successor assessment risk classification) within
the meaning of 12 C.F.R. Section 327.4(a) (or any successor
provision) to the Federal Deposit Insurance Corporation (or
any successor) for such Corporation's (or such successor's)
insuring time deposits at offices of such institution in the
United States. The Adjusted CD Rate shall be adjusted
automatically on and as of the effective date of any change
in the Assessment Rate.
(c) Each Euro-Dollar Loan shall bear interest on
the outstanding principal amount thereof, for each day
during each Interest Period applicable thereto, at a rate
per annum equal to the sum of the Euro-Dollar Margin for
such day plus the London Interbank Offered Rate applicable
to such Interest Period. Such interest shall be payable for
each Interest Period on the last day thereof and, if such
Interest Period is longer than three months, at intervals of
three months after the first day thereof.
"Euro-Dollar Margin" means for any day 0.215%.
The "London Interbank Offered Rate" applicable to
any Interest Period means the average (rounded upward, if
necessary, to the next higher 1/16 of 1%) of the respective
rates per annum at which deposits in dollars are offered to
each of the Euro-Dollar Reference Banks in the London
interbank market at approximately 11:00 A.M. (London time)
two Euro-Dollar Business Days before the first day of such
Interest Period in an amount approximately equal to the
principal amount of the Euro-Dollar Loan of such Euro-Dollar
Reference Bank to which such Interest Period is to apply and
for a period of time comparable to such Interest Period.
(d) Any overdue principal of or interest on any
Euro-Dollar Loan shall bear interest, payable on demand, for
each day from and including the date payment thereof was due
to but excluding the date of actual payment, at a rate per
annum equal to the sum of 2% plus the higher of (i) the sum
of the Euro-Dollar Margin plus the London Interbank Offered
Rate applicable to such Loan and (ii) the Euro-Dollar Margin
plus the quotient obtained (rounded upward, if necessary, to
the next higher 1/100 of 1%) by dividing (x) the average
(rounded upward, if necessary, to the next higher 1/16 of
1%) of the respective rates per annum at which one day (or,
if such amount due remains unpaid more than three
Euro-Dollar Business Days, then for such other period of
time not longer than six months as the Agent may select)
deposits in dollars in an amount approximately equal to such
overdue payment due to each of the Euro-Dollar Reference
Banks are offered to such Euro-Dollar Reference Bank in the
London interbank market for the applicable period determined
as provided above by (y) 1.00 minus the Euro-Dollar Reserve
Percentage (or, if the circumstances described in clause (a)
or (b) of Section 8.01 shall exist, at a rate per annum
equal to the sum of 2% plus the rate applicable to Base Rate
Loans for such day).
(e) Subject to Section 8.01(a), each Money Market
LIBOR Loan shall bear interest on the outstanding principal
amount thereof, for the Interest Period applicable thereto,
at a rate per annum equal to the sum of the London Interbank
Offered Rate for such Interest Period (determined in
accordance with Section 2.07(c) as if the related Money
Market LIBOR Borrowing were a Committed Euro-Dollar
Borrowing) plus (or minus) the Money Market Margin quoted by
the Bank making such Loan in accordance with Section 2.03.
Each Money Market Absolute Rate Loan shall bear interest on
the outstanding principal amount thereof, for the Interest
Period applicable thereto, at a rate per annum equal to the
Money Market Absolute Rate quoted by the Bank making such
Loan in accordance with Section 2.03. Such interest shall
be payable for each Interest Period on the last day thereof
and, if such Interest Period is longer than three months, at
intervals of three months after the first day thereof. Any
overdue principal of or interest on any Money Market Loan
shall bear interest, payable on demand, for each day until
paid at a rate per annum equal to the sum of 2% plus the
Base Rate for such day.
(f) The Agent shall determine each interest rate
applicable to the Loans hereunder. The Agent shall give
prompt notice to the Borrower (by facsimile) and the Banks
(by telex or cable) of each rate of interest so determined,
and its determination thereof shall be conclusive in the
absence of manifest error. The Agent will, at the request
of the Borrower, furnish such additional information
concerning the calculation of the interest rate on any Fixed
Rate Loan as the Borrower may reasonably request.
(g) Each Reference Bank agrees to use its best
efforts to furnish quotations to the Agent as contemplated
hereby. If any Reference Bank does not furnish a timely
quotation, the Agent shall determine the relevant interest
rate on the basis of the quotation or quotations furnished
by the remaining Reference Bank or Banks or, if none of such
quotations is available on a timely basis, the provisions of
Section 8.01 shall apply.
SECTION 2.08. Facility Fee. The Borrower shall
pay to the Agent for the account of the Banks ratably in
proportion to their Commitments a facility fee for each day
at the per annum rate of 0.06%. Such facility fee shall
accrue (x) from and including the Effective Date to but
excluding the Termination Date (or earlier date of
termination of the Commitments in their entirety), on the
daily aggregate amount of the Commitments (whether used or
unused) and (y) from and including the Termination Date (or
such earlier date of termination) to but excluding the date
the Loans shall be repaid in their entirety, on the daily
average aggregate outstanding principal amount of the Loans.
Accrued fees under this Section shall be payable quarterly
on each March 31, June 30, September 30 and December 31
prior to the final Maturity Date and (if no Loans are then
outstanding) upon the date of termination of the Commitments
in their entirety (and, if later, the date the Loans shall
be repaid in their entirety).
SECTION 2.09. Optional Termination or Reduction
of Commitments. During the Revolving Credit Period, the
Borrower may, upon at least three Domestic Business Days'
notice to the Agent, (i) terminate the Commitments at any
time, if no Loans are outstanding at such time or (ii)
proportionately reduce from time to time by an aggregate
amount of $75,000,000 or any larger multiple of $5,000,000,
the aggregate amount of the Commitments in excess of the
aggregate outstanding principal amount of the Loans. If the
Commitments are terminated in their entirety, all accrued
fees shall be payable on the effective date of such
termination.
SECTION 2.10. Method of Electing Interest Rates.
(a) The Loans included in each Committed Borrowing shall
bear interest initially at the type of rate specified by the
Borrower in the applicable Notice of Committed Borrowing.
Thereafter, the Borrower may from time to time elect to
change or continue the type of interest rate borne by each
Group of Committed Loans (subject in each case to the
provisions of Article VIII), as follows:
(i) if such Loans are Base Rate Loans, the
Borrower may elect to convert such Loans to CD Loans as
of any Domestic Business Day or to Euro-Dollar Loans as
of any Euro-Dollar Business Day;
(ii) if such Loans are CD Loans, the Borrower may
elect to convert such Loans to Base Rate Loans or
Euro-Dollar Loans or elect to continue such Loans as CD
Loans for an additional Interest Period, in each case
effective on the last day of the then current Interest
Period applicable to such Loans; or
(iii) if such Loans are Euro-Dollar Loans, the
Borrower may elect to convert such Loans to Base Rate
Loans or CD Loans or elect to continue such Loans as
Euro-Dollar Loans for an additional Interest Period, in
each case effective on the last day of the then current
Interest Period applicable to such Loans.
Each such election shall be made by delivering a notice
substantially in the form attached hereto as Exhibit C (a
"Notice of Interest Rate Election") to the Agent at least
three Euro-Dollar Business Days before the conversion or
continuation selected in such notice is to be effective
(unless the relevant Loans are to be converted from Domestic
Loans to Domestic Loans of the other type or continued as
Domestic Loans of the same type for an additional Interest
Period, in which case such notice shall be delivered to the
Agent at least three Domestic Business Days before such
conversion or continuation is to be effective). A Notice of
Interest Rate Election may, if it so specifies, apply to
only a portion of the aggregate principal amount of the
relevant Group of Loans; provided that (i) such portion is
allocated ratably among the Loans comprising such Group and
(ii) the portion to which such Notice applies, and the
remaining portion to which it does not apply, are each
$75,000,000 or any larger multiple of $5,000,000.
(b) Each Notice of Interest Rate Election shall
specify:
(i) the Group of Committed Loans (or portion
thereof) to which such notice applies;
(ii) the date on which the conversion or
continuation selected in such notice is to be
effective, which shall comply with the applicable
clause of subsection (a) above;
(iii) if the Loans comprising such Group are to be
converted, the new type of Loans and, if such new Loans
are Fixed Rate Loans, the duration of the initial
Interest Period applicable thereto; and
(iv) if such Loans are to be continued as CD Loans
or Euro-Dollar Loans for an additional Interest Period,
the duration of such additional Interest Period.
Each Interest Period specified in a Notice of Interest Rate
Election shall comply with the provisions of the definition
of Interest Period.
(c) Upon receipt of a Notice of Interest Rate
Election from the Borrower pursuant to subsection (a) above,
such notice shall not thereafter be revocable by the
Borrower and the Agent shall promptly notify each Bank of
the contents thereof. If the Borrower fails to deliver a
timely Notice of Interest Rate Election to the Agent for any
Group of Fixed Rate Loans, such Loans shall be converted
into Base Rate Loans on the last day of the then current
Interest Period applicable thereto.
(d) An election by the Borrower to change or
continue the rate of interest applicable to any Group of
Loans pursuant to this Section 2.10 shall not constitute a
"Borrowing" subject to the provisions of Section 3.02.
SECTION 2.11. Optional Prepayments. (a) The
Borrower may, upon at least one Domestic Business Day's
notice to the Agent, prepay a Group of Base Rate Loans (or
any Money Market Borrowing bearing interest at the Base Rate
pursuant to Section 8.01(a)) in whole at any time, or from
time to time in part in amounts aggregating $75,000,000 or
any larger multiple of $5,000,000, by paying the principal
amount to be prepaid together with accrued interest thereon
to the date of prepayment. Each such optional prepayment
shall be applied to prepay ratably the Loans of the several
Banks included in such Group.
(b) The Borrower may, upon at least three
Domestic Business Days' notice to the Agent, in the case of
a Group of CD Loans or upon at least three Euro-Dollar
Business Days' notice to the Agent, in the case of a Group
of Euro-Dollar Loans, prepay the Loans comprising such Group
in whole at any time, or from time to time in part, in
amounts aggregating $75,000,000 or any larger multiple of
$5,000,000, by paying the principal amount to be prepaid
together with accrued interest thereon to the date of
prepayment; provided that in the case of any such prepayment
in whole or in part on any day other than the last day of
any Interest Period applicable to such Group of Loans, the
Borrower shall reimburse each Bank for any loss or expense
incurred by it as a result of any such prepayment in
accordance with Section 2.13. Each such optional prepayment
shall be applied to prepay ratably the Loans of the several
Banks included in such Group. The Borrower may not prepay
all or any portion of the principal amount of any Money
Market Loan (other than any Money Market Borrowing bearing
interest at the Base Rate pursuant to Section 8.01(a)) prior
to the maturity thereof.
(c) Upon receipt of a notice of prepayment
pursuant to this Section, the Agent shall promptly notify
each Bank of the contents thereof and of such Bank's ratable
share (if any) of such prepayment and such notice shall not
thereafter be revocable by the Borrower.
SECTION 2.12. General Provisions as to Payments.
(a) The Borrower shall make each payment of principal of,
and interest on, the Loans and of fees hereunder, not later
than 11:00 A.M. (New York City time) on the date when due,
in Federal or other funds immediately available in New York
City, to the Agent at its address referred to in Section
9.01. The Agent will promptly distribute to each Bank its
ratable share of each such payment received by the Agent for
the account of the Banks. Whenever any payment of principal
of, or interest on, the Domestic Loans or of fees shall be
due on a day which is not a Domestic Business Day, the date
for payment thereof shall be extended to the next succeeding
Domestic Business Day. Whenever any payment of principal
of, or interest on, the Euro-Dollar Loans shall be due on a
day which is not a Euro-Dollar Business Day, the date for
payment thereof shall be extended to the next succeeding
Euro-Dollar Business Day unless such Euro-Dollar Business
Day falls in another calendar month, in which case the date
for payment thereof shall be the next preceding Euro-Dollar
Business Day. Whenever any payment of principal of, or
interest on, the Money Market Loans shall be due on a day
which is not a Euro-Dollar Business Day, the date for
payment thereof shall be extended to the next succeeding
Euro-Dollar Business Day. If the date for any payment of
principal is extended by operation of law or otherwise,
interest thereon shall be payable for such extended time.
(b) Unless the Agent shall have received notice
from the Borrower prior to the date on which any payment is
due to the Banks hereunder that the Borrower will not make
such payment in full, the Agent may assume that the Borrower
has made such payment in full to the Agent on such date and
the Agent may, in reliance upon such assumption, cause to be
distributed to each Bank on such due date an amount equal to
the amount then due such Bank. If and to the extent that
the Borrower shall not have so made such payment, each Bank
shall repay to the Agent forthwith on demand such amount
distributed to such Bank together with interest thereon, for
each day from the date such amount is distributed to such
Bank until the date such Bank repays such amount to the
Agent, at the Federal Funds Rate.
SECTION 2.13. Funding Losses. If the Borrower
makes any payment of principal with respect to any Fixed
Rate Loan or any Fixed Rate Loan is converted to a Base Rate
Loan (pursuant to Article VI or VIII or otherwise) on any
day other than the last day of an Interest Period applicable
thereto, or the end of an applicable period fixed pursuant
to Section 2.07(d), or if the Borrower fails to borrow or
prepay any Fixed Rate Loans after notice has been given to
any Bank in accordance with Section 2.04(a) or 2.11(c), the
Borrower shall reimburse each Bank within 15 days after
demand for any resulting loss or expense incurred by it,
including (without limitation) any loss incurred in
obtaining, liquidating or employing deposits from third
parties, but excluding loss of margin for the period after
any such payment or conversion or failure to borrow or
prepay, provided that such Bank shall have delivered to the
Borrower a certificate as to the amount of such loss or
expense, which certificate shall be conclusive in the
absence of manifest error, and provided further that such
loss shall in no event exceed the interest which would have
been payable for the balance of such Interest Period or
other period, less the applicable CD Margin or Euro-Dollar
Margin, as the case may be. Such Bank will, at the request
of the Borrower, furnish such additional information
concerning the determination of such loss as the Borrower
may reasonably request.
SECTION 2.14. Computation of Interest and Fees.
Interest based on the Prime Rate hereunder shall be computed
on the basis of a year of 365 days (or 366 days in a leap
year) and paid for the actual number of days elapsed
(including the first day but excluding the last day). All
other interest and fees shall be computed on the basis of a
year of 360 days and paid for the actual number of days
elapsed (including the first day but excluding the last
day).
SECTION 2.15. Taxes. (a) All payments of
principal, interest and fees to be made by the Borrower or
the Agent (in respect of such amounts received by it from
the Borrower) pursuant to this Agreement to any Bank with
respect to any Loan or fee shall be made free and clear of
and without reduction or withholding for or on account of
any present or future income, excise, or other taxes,
levies, imposts, duties, charges, or fees of whatever nature
now or hereafter imposed by any governmental or other taxing
authority, excluding any taxes on or measured by overall net
income (all such non-excluded taxes, levies, imposts,
deductions, charges or withholdings, "Taxes"), unless the
withholding or other payment of such Taxes is required by
applicable law. In the event that the Borrower or the Agent
is required by applicable law to make any such withholding
or deduction of Taxes with respect to any Loan or fee, the
Borrower shall pay to such Agent or Bank additional amounts
as may be necessary in order that the net amount received by
such Agent or Bank after the required withholding or other
payment (including any required withholding or other payment
on such additional amounts) shall equal the amount such
Agent or Bank would have received had no such withholding or
other payment been made; provided, however, that no such
additional amounts shall be paid by the Borrower (i) except
on account of Taxes imposed by the United States (or any
political subdivision, possession, territory or taxing
authority thereof or therein) and (ii) on account of any
federal withholding tax imposed by the United States of
America ("United States Tax"):
(1) if such Bank or a Participant of such Bank
shall have delivered Internal Revenue Service Form 4224
("Form 4224") to the Borrower pursuant to clause (b) or
(c) of this Section 2.15 and such Bank or Participant
shall at any time not be entitled to complete exemption
from United States Tax for any reason other than a
change in United States federal income tax law,
regulation or official interpretation of such law after
the date hereof (or, in the case of any Assignee or
Participant, the date of the relevant assignment or
participation agreement); or
(2) if such Bank or a Participant of such Bank
shall have delivered Internal Revenue Service Form 1001
("Form 1001") to the Borrower pursuant to clause (b) or
(c) of this Section 2.15 and such Bank or Participant
shall at any time not be entitled to complete exemption
from United States Tax for any reason other than (i) an
amendment, modification or revocation of an applicable
income tax convention or a change in official position
regarding the application or interpretation of such
treaty after the date hereof (or, in the case of any
Assignee or Participant, the date of the relevant
assignment or participation agreement) or (ii) a change
in United States federal income tax laws, regulation or
official interpretation of such law after the date
hereof (or, in the case of any Assignee or Participant,
the date of the relevant assignment or participation
agreement); or
(3) if such Bank or a Participant of such Bank
shall have failed to comply with its obligations
pursuant to clause (b) or (c) of this Section 2.15.
(b) Each Bank that is a Non-U.S. Bank hereby
severally covenants and agrees to and for the benefit of the
Borrower and the Agent that
(1) at, or prior to, the Effective Date,
such Non-U.S. Bank shall have delivered to both
the Borrower and the Agent either:
(i) two accurate and complete original
signed copies of Form 1001, appropriately
completed and claiming complete exemption
from withholding and deduction of United
States Taxes, with respect to each three-year
calendar period, any portion of which falls
within the Revolving Credit Period, dated as
of the date hereof; or
(ii) two accurate and complete original
signed copies of Form 4224, appropriately
completed and claiming complete exemption
from withholding and deduction of United
States Taxes, with respect to each tax year
of such Bank, any portion of which falls
within the Revolving Credit Period, dated as
of the date hereof; and
(2) in each fiscal year of such Bank after
the Effective Date, at or prior to the first
scheduled payment date in such fiscal year, such
Non-U.S. Bank shall have delivered to both the
Borrower and the Agent either:
(i) two accurate and complete original
signed copies of Form 1001, appropriately
completed and claiming complete exemption
from withholding and deduction of United
States Taxes, with respect to the three-year
calendar period commencing with the then
current calendar year; or
(ii) two accurate and complete original
signed copies of Form 4224, appropriately
completed and claiming complete exemption
from withholding and deduction of United
States Taxes, with respect to such Bank's
then current tax year.
(c) Each Non-U.S. Bank severally covenants and
agrees to deliver to the Borrower and the Agent:
(1) before or promptly after the date on
which any form previously delivered by such Bank
pursuant to Section 2.15(b) may no longer be
relied upon by the Borrower and the Agent as a
result of an act by such Bank, two accurate and
complete original signed copies of Form 1001 or
Form 4224 (or such additional or successor Forms
as shall be adopted from time to time by the
relevant United States taxing authorities),
appropriately completed and claiming complete
exemption from withholding and deduction of United
States Taxes, to replace the like Form previously
delivered by such Non-U.S. Bank; and
(2) if any form previously delivered by such
Non-U.S. Bank pursuant to Section 2.15(b) may no
longer be relied upon by the Borrower and the
Agent for any reasons (other than as a result of
an act by the Bank), two accurate and complete
original signed copies of Form 4224 or Form 1001,
as the case may be, (or such additional or
successor Forms as shall be adopted from time to
time by the relevant United States taxing
authorities), appropriately completed and claiming
complete exemption from withholding and deduction
of United States Taxes, as the Borrower or the
Agent may reasonably request.
Notwithstanding the foregoing subsections (b)(2), (c)(1) and
(c)(2) of this Section 2.15, a Non-U.S. Bank will not be
required to provide a form if due to any change in treaty,
law or regulation or official interpretation that occurred
after the date hereof (or, in the case of any Non-U.S. Bank
that is an Assignee or any Participant complying with
subsections (b)(2), (c)(1) and (c)(2) of this Section 2.15
pursuant to Section 9.06(b), the date of the relevant
assignment or participation agreement) and prior to the date
on which any such delivery would otherwise be required, all
such forms are inapplicable or such Bank is not entitled to
any exemption from the United States Tax as claimed in the
form previously delivered. In any such case, each Non-U.S.
Bank shall provide such forms as the Borrower or the Agent
may reasonably request to establish entitlement, if any, to
any reduction in United States Tax to which such Bank may be
entitled from and after the occurrence of any such change in
treaty, law or regulation.
(d) In the event that the Borrower will be
required to pay an additional amount pursuant to
Section 2.15(a) to any Bank, the Borrower shall have the
rights set forth in Section 8.05. The agreements in this
Section 2.15 shall survive the termination of this Agreement
and the payment of the Notes and all other amounts payable
hereunder.
SECTION 2.16. Regulation D Compensation. For so
long as any Bank is required to maintain reserves against
"Eurocurrency liabilities" (or any other category of
liabilities which includes deposits by reference to which
the interest rate on Euro-Dollar Loans is determined or any
category of extensions of credit or other assets which
includes loans by a non-United States office of such Bank to
United States residents), and, as a result, the cost to such
Bank (or its Euro-Dollar Lending Office) of making or
maintaining its Euro-Dollar Loans is increased, then such
Bank may require the Borrower to pay, contemporaneously with
each payment of interest on the Euro-Dollar Loans,
additional interest on the related Euro-Dollar Loan of such
Bank at a rate per annum up to but not exceeding the excess
of (i) (A) the applicable London Interbank Offered Rate
divided by (B) one minus the Euro-Dollar Reserve Percentage
over (ii) the applicable London Interbank Offered Rate. Any
Bank wishing to require payment of such additional interest
(x) shall so notify the Borrower and the Agent, in which
case such additional interest on the Euro-Dollar Loans of
such Bank shall be payable to such Bank at the place
indicated in such notice with respect to each Interest
Period commencing at least three Euro-Dollar Business Days
after the giving of such notice and (y) shall furnish to the
Borrower at least five Euro-Dollar Business Days prior to
each date on which interest is payable on the Euro-Dollar
Loans an officer's certificate setting forth the amount to
which such Bank is then entitled under this Section (which
shall be consistent with such Bank's good faith estimate of
the level at which the related reserves are maintained by
it). Each such certificate shall be accompanied by such
information as the Borrower may reasonably request as to the
computation set forth therein.
ARTICLE III
CONDITIONS
SECTION 3.01. Effectiveness. This Agreement
shall become effective on the date that each of the
following conditions shall have been satisfied (or waived in
accordance with Section 9.05):
(a) receipt by the Agent of counterparts
hereof signed by each of the parties hereto (or,
in the case of any party as to which an executed
counterpart shall not have been received, receipt
by the Agent in form satisfactory to it of
telegraphic, telex or other written confirmation
from such party of execution of a counterpart
hereof by such party);
(b) receipt by the Agent for the account of
each Bank of a duly executed Note dated on or
before the Effective Date complying with the
provisions of Section 2.05;
(c) receipt by the Agent of an opinion of
counsel for the Borrower, who may be Latham &
Watkins or Senior Counsel for Sears, substantially
in the form of Exhibit G hereto;
(d) receipt by the Agent of an opinion of
Davis Polk & Wardwell, special counsel for the
Agent, substantially in the form of Exhibit H
hereto;
(e) receipt by the Agent, for its own
account and for the account of the Banks, of all
fees payable on or before the Effective Date; and
(f) receipt by the Agent of all documents it
may reasonably request relating to the existence
of the Borrower, the corporate authority for and
the validity of this Agreement and the Notes, and
any other matters relevant hereto, all in form and
substance satisfactory to the Agent;
provided that this Agreement shall not become effective or
be binding on any party hereto unless all of the foregoing
conditions are satisfied not later than July 20, 1995. The
Agent shall promptly notify the Borrower and the Banks of
the Effective Date, and such notice shall be conclusive and
binding on all parties hereto.
SECTION 3.02. Borrowings. The obligation of any
Bank to make a Loan on the occasion of any Borrowing is
subject to the satisfaction of the following conditions:
(a) receipt by the Agent of a Notice of
Borrowing as required by Section 2.02 or 2.03, as
the case may be;
(b) the fact that, immediately after such
Borrowing, the aggregate outstanding principal amount
of the Loans will not exceed the aggregate amount of
the Commitments;
(c) the fact that, immediately before and
after such Borrowing, no Event of Default and no
event or condition which, with the giving of
notice or lapse of time or both, would become an
Event of Default, shall have occurred and be
continuing;
(d) the fact that the representations and
warranties of the Borrower contained in this
Agreement (other than in Section 4.04(c) hereof)
shall be true on and as of the date of such
Borrowing; and
(e) the fact that there shall have been no
material adverse change in the business,
consolidated financial position or Consolidated
Net Income of the Borrower and its Consolidated
Subsidiaries since March 31, 1995 not disclosed in
writing to the Banks on or prior to the date of
such Borrowing.
Each Borrowing hereunder shall be deemed to be a
representation and warranty by the Borrower on the date of
such Borrowing as to the facts specified in clauses (b),
(c), (d) and (e) of this Section.
For all purposes of this Agreement, (a) no change
in consolidated financial position of the Borrower and its
Consolidated Subsidiaries shall be deemed material and
adverse unless such change is a reduction in Consolidated
Stockholder's Equity of the Borrower and its Consolidated
Subsidiaries of 5% or more as compared with Consolidated
Stockholder's Equity as at the date of the consolidated
balance sheet of the Borrower and its Consolidated
Subsidiaries most recently delivered under Section 4.04 or
5.01 hereof, (b) no change in Consolidated Net Income shall
be deemed to be material and adverse unless such change is a
reduction therein for a period of the four most recent full
consecutive fiscal quarters in respect of which results of
operations have been made available to the public ("most
recent four quarters") of 25% or more as compared with
Consolidated Net Income for the period of four consecutive
fiscal quarters immediately preceding the most recent four
quarters and (c) no change in business shall be deemed
material and adverse unless it would be required to be
disclosed in an annual report on Form 10-K (or successor
reports) filed with the Commission on the date as of which
the existence of a material adverse change is being
determined. It is understood that, for all purposes of this
Agreement, no change in business shall be deemed to be
required to be so disclosed if, in the written opinion of
counsel for the Borrower, the laws, rules and regulations
then applicable to required disclosure in Forms 10-K (or
successor reports) do not require such disclosure. Such an
opinion will be deemed sufficient for purposes hereof if it
shall be based on (i) such investigation of law as such
counsel shall have deemed necessary in the circumstances and
(ii) facts as certified in writing to such counsel by
officers of the Borrower or its Affiliates, it being
understood that counsel shall have no duty to independently
verify any such facts. In case Borrower relies on such an
opinion of counsel, it will promptly distribute a copy
thereof to each Bank.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
The Borrower represents and warrants that:
SECTION 4.01. Corporate Existence and Power. The
Borrower has been duly incorporated and is validly existing
as a corporation in good standing under the laws of the
State of Delaware with full corporate power to conduct its
business as presently conducted.
SECTION 4.02. Corporate and Governmental
Authorization; No Contravention.
(a) The Borrower has full corporate power to
enter into this Agreement and to issue the Notes and to
comply with all of the provisions of this Agreement and the
Notes, and all necessary corporate proceedings of the
Borrower have been duly taken to authorize the execution,
delivery and performance of this Agreement and the issuance
of the Notes by the Borrower.
(b) The issuance by the Borrower of the Notes and
compliance by the Borrower with all of the provisions of
this Agreement will not conflict with or result in a breach
which would constitute a material default under, or result
in the creation or imposition of any Lien, charge or
encumbrance upon any of the property or assets of the
Borrower, material to the Borrower, pursuant to the terms
of, any indenture, loan agreement, or other agreement or
instrument for borrowed money to which the Borrower is a
party or by which the Borrower may be bound or to which any
of the property or assets of the Borrower, material to the
Borrower, is subject, nor will such action result in any
material violation of the provisions of the Certificate of
Incorporation or the By-Laws of the Borrower or any statute
or any order, rule or regulation applicable to the Borrower
of any court or any Federal, state or other regulatory
authority or other governmental body having jurisdiction
over the Borrower, and no consent, approval, authorization
or other order of, or filing with, any court or any such
regulatory authority or other governmental body is required
for the issuance by the Borrower of the Notes and the
compliance by the Borrower with all of the provisions of
this Agreement; provided, that the Borrower makes no
representations or warranties with respect to any usury laws
or any securities or blue sky laws of political subdivisions
of the United States or any laws or treaties of any country
(or political subdivision thereof) other than the United
States.
SECTION 4.03. Binding Effect. This Agreement
constitutes a valid and binding agreement of the Borrower
and the Notes, when executed and delivered in accordance
with this Agreement, will constitute valid and binding
obligations of the Borrower. The Letter Agreement is in
full force and effect and constitutes a valid and binding
agreement of the Borrower and Sears.
SECTION 4.04. Financial Information.
(a) The statement of financial position of the
Borrower as of December 31, 1994 and the related statements
of income, shareholder's equity and cash flows for the
fiscal year then ended, reported on by Deloitte & Touche LLP
and set forth in the Borrower's 1994 Form 10-K, a copy of
which has been delivered to each of the Banks, present
fairly in all material respects, in conformity with
generally accepted accounting principles, the financial
position of the Borrower as of such date and its results of
operations and cash flows for such fiscal year.
(b) The unaudited statement of financial
position of the Borrower as of March 31, 1995 and the
related unaudited statements of income, shareholder's equity
and cash flows for the three months then ended, set forth in
the Borrower's quarterly report for the fiscal quarter ended
March 31, 1995 as filed with the Commission on Form 10-Q, a
copy of which (excluding the exhibits thereto) has been
delivered to each of the Banks, present fairly in all
material respects, in conformity with generally accepted
accounting principles applied on a basis consistent with the
financial statements referred to in subsection (a) of this
Section, the financial position of the Borrower as of such
date and its results of operations and cash flows for such
three month period (subject to normal year-end adjustments).
(c) Since March 31, 1995, there has been no
material adverse change in the business, financial position
or results of operations of the Borrower not disclosed in
writing to the Banks prior to the date of this Agreement.
SECTION 4.05. Litigation. The Borrower does not
know of any pending legal or governmental proceeding
required to be described in the Annual Report on Form 10-K
of the Borrower most recently filed with the Commission
pursuant to the Exchange Act, or in the Quarterly Reports on
Form 10-Q of the Borrower filed with the Commission pursuant
to the Exchange Act subsequent thereto, which are not
described as required, and the Borrower does not know of any
pending legal or governmental proceedings not so described
which would be required to be described in a subsequent
filing with the Commission and which have not been
previously disclosed in writing to the Banks.
SECTION 4.06. Compliance with ERISA. Each member
of the ERISA Group has fulfilled its obligations under the
minimum funding standards of ERISA and the Internal Revenue
Code with respect to each Plan and is in compliance in all
material respects with the presently applicable provisions
of ERISA and the Internal Revenue Code with respect to each
Plan. No member of the ERISA Group has (i) sought a waiver
of the minimum funding standard under Section 412 of the
Internal Revenue Code in respect of any Plan, (ii) failed to
make any contribution or payment to any Plan or
Multiemployer Plan or in respect of any Benefit Arrangement,
or made any amendment to any Plan or Benefit Arrangement,
which has resulted or could result in the imposition of a
Lien or the posting of a bond or other security under ERISA
or the Internal Revenue Code or (iii) incurred any liability
under Title IV of ERISA other than a liability to the PBGC
for premiums under Section 4007 of ERISA.
SECTION 4.07. Environmental Matters. The
Borrower has reasonably concluded that Environmental Laws
are unlikely to have a material adverse effect on the
business, consolidated financial condition or results of
operations of the Borrower and its Consolidated
Subsidiaries.
SECTION 4.08. Taxes. United States Federal
income tax returns of the Borrower and its Subsidiaries have
been closed through the fiscal year ended December 31, 1982.
All United States Federal income tax returns and all other
material tax returns which are required to be filed have
been filed by or on behalf of the Borrower and its
Subsidiaries and all taxes due with respect to the Borrower
and its Subsidiaries pursuant to such returns or pursuant to
any assessment received by the Borrower or any Subsidiary
have been paid. The charges, accruals and reserves on the
books of the Borrower and its Subsidiaries in respect of
taxes or other governmental charges are, in the opinion of
the Borrower, adequate.
SECTION 4.09. Subsidiaries. At the date of this
Agreement, the Borrower has no Subsidiaries. If during the
term of this Agreement, the Borrower shall acquire or
otherwise come to have one or more Subsidiaries, each of
such corporate Subsidiaries shall be a corporation duly
incorporated and validly existing as a corporation in good
standing under the laws of its jurisdiction of
incorporation, and shall have full corporate powers to
conduct its business as conducted.
SECTION 4.10. Full Disclosure. All written
factual information heretofore furnished by the Borrower to
the Agent or any Bank for purposes of or in connection with
this Agreement was true and accurate in all material
respects on the date as of which such information was stated
or certified; provided that the Borrower makes no
representations or warranties with respect to any
projections or other non-factual information contained in
any such information.
ARTICLE V
COVENANTS
The Borrower agrees that, so long as any Bank has
any Commitment hereunder or any amount payable under any
Note remains unpaid:
SECTION 5.01. Information. The Borrower will
deliver to each of the Banks:
(a) as soon as available and in any event within
120 days after the end of each fiscal year of the
Borrower, a statement of financial position of the
Borrower as of the end of such fiscal year and the
related statements of income, shareholder's equity and
cash flows for such fiscal year, setting forth in each
case in comparative form the figures for the previous
fiscal year, all reported on by Deloitte & Touche LLP
or other independent public accountants of nationally
recognized standing;
(b) as soon as available and in any event within
60 days after the end of each of the first three
quarters of each fiscal year of the Borrower, a
statement of financial position of the Borrower as of
the end of such quarter and the related statements of
income, shareholder's equity and cash flows for such
quarter and for the portion of the Borrower's fiscal
year ended at the end of such quarter, setting forth in
each case in comparative form the figures for the
corresponding quarter and the corresponding portion of
the Borrower's previous fiscal year, all certified
(subject to normal year-end adjustments) as to fairness
of presentation, generally accepted accounting
principles and consistency by the chief financial
officer or the chief accounting officer of the
Borrower;
(c) simultaneously with the delivery of each set
of financial statements referred to in clauses (a) and
(b) above, a certificate of the chief financial officer
or the chief accounting officer of the Borrower (i)
setting forth in reasonable detail the calculations
required to establish whether the Borrower was in
compliance with the requirements of Sections 5.10 and
5.11 on the date of such financial statements and (ii)
stating whether any Event of Default or any event or
condition which, with the giving of notice or lapse of
time or both, would become an Event of Default, exists
on the date of such certificate and, if any Event of
Default or any such event or condition then exists,
setting forth the details thereof and the action which
the Borrower is taking or proposes to take with respect
thereto;
(d) simultaneously with the delivery of each set
of financial statements referred to in clause (a)
above, a statement of the firm of independent public
accountants which reported on such statements to the
effect that in the course of their examination of such
statements, nothing came to their attention that caused
them to believe that the Borrower was not in compliance
with any of the terms, covenants, provisions or
conditions of Sections 5.01 to 6.01, inclusive, insofar
as such terms, covenants, provisions or conditions came
within the scope of their examination;
(e) within five days after any officer of the
Borrower obtains knowledge of any Event of Default or
any event or condition which, with the giving of notice
or lapse of time or both, would become an Event of
Default, if such Event of Default or event or condition
is then continuing, a certificate of the chief
financial officer or the chief accounting officer of
the Borrower setting forth the details thereof and the
action which the Borrower is taking or proposes to take
with respect thereto;
(f) promptly after the commencement thereof,
notice of all actions, suits or proceedings of the type
described in Section 4.05;
(g) promptly after the filing thereof, copies
(without exhibits thereto) of all registration
statements (other than any registration statements on
Form S-8 or its equivalent) and reports on Forms 10-K,
10-Q and 8-K (or their equivalents) which the Borrower
shall have filed with the Commission;
(h) if and when any member of the ERISA Group (i)
gives or is required to give notice to the PBGC of any
"reportable event" (as defined in Section 4043 of
ERISA) with respect to any Plan which might constitute
grounds for a termination of such Plan under Title IV
of ERISA, or knows that the plan administrator of any
Plan has given or is required to give notice of any
such reportable event, a copy of the notice of such
reportable event given or required to be given to the
PBGC; (ii) receives notice of complete or partial
withdrawal liability under Title IV of ERISA or notice
that any Multiemployer Plan is in reorganization, is
insolvent or has been terminated, a copy of such
notice; (iii) receives notice from the PBGC under Title
IV of ERISA of an intent to terminate, impose liability
(other than for premiums under Section 4007 of ERISA)
in respect of, or appoint a trustee to administer any
Plan, a copy of such notice; (iv) applies for a waiver
of the minimum funding standard under Section 412 of
the Internal Revenue Code, a copy of such application;
(v) gives notice of intent to terminate any Plan under
Section 4041(c) of ERISA, a copy of such notice and
other information filed with the PBGC; (vi) gives
notice of withdrawal from any Plan pursuant to Section
4063 of ERISA, a copy of such notice; or (vii) fails to
make any payment or contribution to any Plan or
Multiemployer Plan or in respect of any Benefit
Arrangement or makes any amendment to any Plan or
Benefit Arrangement which has resulted or could result
in the imposition of a Lien or the posting of a bond or
other security, a certificate of the chief financial
officer or the chief accounting officer of the Borrower
setting forth details as to such occurrence and action,
if any, which the Borrower or applicable member of the
ERISA Group is required or proposes to take; and
(i) from time to time such additional information
regarding the financial position or business of the
Borrower and its Subsidiaries as the Agent, at the
request of any Bank, may reasonably request.
If during the term of this Agreement, the Borrower shall
acquire or otherwise come to have one or more Subsidiaries,
the financial statements required to be delivered pursuant
to clauses (a) and (b) above shall be consolidated financial
statements of the Borrower and its Consolidated
Subsidiaries.
SECTION 5.02. Maintenance of Property; Insurance.
(a) The Borrower will keep, and will cause each Subsidiary
to keep, all property useful and necessary in its business
in good working order and condition, ordinary wear and tear
excepted.
(b) The Borrower will insure or act as
self-insurer, and will cause each Subsidiary to insure or
act as self-insurers, to such extent as the Borrower may
determine to be not unreasonably prejudicial to the
interests of the Banks.
SECTION 5.03. Conduct of Business and Maintenance
of Existence. Subject to Section 5.07, the Borrower will,
and will cause each Subsidiary to, engage exclusively in
(i) the business now conducted by the Borrower, including
the extension of credit to Sears pursuant to the Letter
Agreement, (ii) the purchase of Receivables from Sears or
its Affiliates on terms and conditions reasonably determined
by the Borrower to be substantially as favorable to the
Borrower or such Subsidiary as the terms and conditions
which would apply in a similar transaction with a Person
that is not an Affiliate of the Borrower and/or
(iii) insurance or financial activities supporting
businesses conducted by Sears or any of its Affiliates.
Subject to Section 5.07, the Borrower will preserve, renew
and keep in full force and effect, and will cause each
Subsidiary to preserve, renew and keep in full force and
effect their respective corporate existence and their
respective rights, privileges and franchises necessary or
desirable in the normal conduct of business; provided that
the Borrower may terminate the corporate existence of any
Subsidiary if such termination could not reasonably be
expected to have a material adverse effect on the business,
consolidated financial position or consolidated net income
of the Borrower and its Consolidated Subsidiaries taken as a
whole, or otherwise to be materially disadvantageous to the
Banks.
SECTION 5.04. Compliance with Laws. The Borrower
will make all good faith efforts to comply, and cause each
Subsidiary to make all good faith efforts to comply, with
all material applicable laws, ordinances, rules,
regulations, and requirements of governmental authorities
(including, without limitation, Environmental Laws and ERISA
and the rules and regulations thereunder) except where the
necessity of compliance therewith is contested in good faith
by appropriate proceedings.
SECTION 5.05. Letter Agreement. The Borrower
will not, without the prior written consent of the Required
Banks, amend, waive, terminate or otherwise modify any
provision of the Letter Agreement; provided that the
Borrower may amend the Letter Agreement to reduce the fixed
charge coverage ratio set forth in paragraph 3 thereof to no
less than 1.15. The Borrower will perform all its
obligations under the Letter Agreement and will enforce the
Letter Agreement and all notes and other instruments
delivered thereunder against Sears in accordance with their
respective terms.
SECTION 5.06. Negative Pledge. Neither the
Borrower nor any Subsidiary will create, assume or suffer to
exist any Lien securing Debt on any asset now owned or
hereafter acquired by it, except:
(a) any Lien existing on the date of this
Agreement;
(b) any Lien existing on any asset of any
corporation at the time such corporation becomes a
Subsidiary and not created in contemplation of such
event;
(c) any Lien on any asset securing Debt incurred
or assumed for the purpose of financing all or any part
of the cost of acquiring such asset, provided that such
Lien attaches to such asset concurrently with or within
90 days after the acquisition thereof;
(d) any Lien on any asset of any corporation
existing at the time such corporation is merged with or
consolidated with or otherwise acquired by the Borrower
or a Subsidiary and not created in contemplation of
such event;
(e) any Lien existing on any asset prior to the
acquisition thereof by the Borrower or a Subsidiary and
not created in contemplation of such acquisition;
(f) any Lien on assets to secure obligations
incurred in connection with the issuance of revenue
bonds, interest on which is exempt from Federal income
tax pursuant to Section 103(b) of the Internal Revenue
Code;
(g) any Lien arising out of the refinancing,
extension, renewal or refunding of any Debt secured by
any Lien permitted by any of the foregoing clauses of
this Section, provided that such Debt is not increased
and is not secured by any additional assets;
(h) any Lien arising pursuant to any order of
attachment, distraint or similar legal process arising
in connection with court proceedings so long as the
execution or other enforcement thereof is effectively
stayed and the claims secured thereby are being
contested in good faith by appropriate proceedings; and
(i) Liens not otherwise permitted by the
foregoing clauses of this Section securing Debt in an
aggregate principal amount not to exceed 5% of
Consolidated Tangible Net Worth at any time
outstanding.
SECTION 5.07. Consolidations, Mergers and Sales
of Assets. The Borrower shall not merge or consolidate
with, or sell or transfer all or substantially all of its
property and assets to, any Person, except that nothing
herein shall prevent any consolidation or merger of the
Borrower with or into any other corporation organized under
the laws of the United States or any state thereof which is
(w) Sears, (x) a Wholly-Owned Subsidiary of Sears, (y) a
corporation of which Sears is a Wholly-Owned Subsidiary or
(z) a Wholly-Owned Subsidiary of a corporation described in
clause (y) above, or any consolidation or merger of any
other such corporation with or into the Borrower, or any
sale or transfer of all or substantially all of the property
and assets of the Borrower to any other such corporation
lawfully entitled to acquire the same; provided, that
(i) immediately after giving effect to such consolidation,
merger, sale or transfer, no Event of Default or any event
or condition that, with the giving of notice or the lapse of
time or both, would become an Event of Default, shall have
occurred and be continuing; and (ii) the Borrower covenants
that any such consolidation, merger, sale or transfer shall
be upon the conditions that the due and punctual payment of
the principal and accrued interest on the Notes, and the due
and punctual performance and observance of all the terms,
covenants and conditions of this Agreement to be kept or
performed by the Borrower shall, by an agreement
supplemental hereto, be assumed by the corporation (other
than the Borrower) formed by or resulting from any such
consolidation or merger, or which shall have received the
transfer of all or substantially all of the property and
assets of the Borrower, just as fully and effectually as if
such successor had been the original Borrower; and in the
event of any such sale or transfer the predecessor Borrower
may be dissolved, wound up and liquidated at any time
thereafter.
SECTION 5.08. Use of Proceeds. The proceeds of
the Loans made under this Agreement will be used by the
Borrower for its general corporate purposes. None of such
proceeds will be used, directly or indirectly, for the
purpose, whether immediate, incidental or ultimate, of
purchasing or carrying any "margin stock", within the
meaning of Regulation U, other than in the ordinary course
of business of Sears or any Sears Subsidiary.
SECTION 5.09. Subsidiary Debt. The Borrower will
not permit any Subsidiary to issue, assume, incur or have
outstanding any Debt or capital stock having any preference
as to dividends or upon any distribution of assets except
(a) such Debt or stock issued to and held by Borrower and/or
one or more Wholly-Owned Subsidiaries of the Borrower,
(b) such Debt or stock of a Subsidiary whose business
activities are confined exclusively to raising capital
outside the United States, financing the Borrower and its
other Subsidiaries and other activities incidental thereto,
(c) such Debt or stock of a Person existing at the time such
Person is merged or consolidated with or otherwise acquired
by the Borrower or a Subsidiary and not created in
contemplation thereof and (d) other such Debt or stock
which, in the aggregate, does not exceed at any time 5% of
Consolidated Tangible Net Worth (with such stock taken at
the higher of its voluntary or involuntary liquidation
preference), it being understood that such Debt and stock
referred to in clauses (b), (c) and (d) shall be permitted
under this Section only if, at the time, the provisions of
this Agreement other than this Section would permit the
Borrower to issue, assume, incur or have outstanding an
equal amount of its own Debt in the same amount together
with all other Debt of the Borrower then outstanding.
SECTION 5.10. Fixed Charge Coverage. The Fixed
Charge Coverage Ratio for any fiscal quarter will be not
less than 1.15.
SECTION 5.11. Debt. Consolidated Debt will at no
time exceed 700% of Consolidated Tangible Net Worth. For
purposes of this Section any preferred stock of a
Consolidated Subsidiary held by a Person other than the
Borrower or a Wholly-Owned Subsidiary of the Borrower that
is a Consolidated Subsidiary shall be included, at the
higher of its voluntary or involuntary liquidation value, in
"Consolidated Debt" and in the "Debt" of such Consolidated
Subsidiary.
ARTICLE VI
DEFAULTS
SECTION 6.01. Events of Default. If one or more
of the following events ("Events of Default") shall have
occurred and be continuing:
(a) the Borrower shall fail to pay (i) any
principal of any Loan when due or (ii) any interest on
any Loan or any fee or any other amount payable by it
hereunder within ten days after the due date thereof;
(b) the Borrower shall fail to observe or perform
any covenant contained in Sections 5.05 to 5.11,
inclusive, for more than five days;
(c) the Borrower shall fail to observe or perform
any covenant or agreement contained in this Agreement
(other than those covered by clause (a) or (b) above)
for 30 days after written notice thereof has been given
to the Borrower by the Agent at the request of any
Bank;
(d) any representation, warranty, certification
or statement made by the Borrower in this Agreement or
in any certificate, financial statement or other
document delivered pursuant to this Agreement shall
prove to have been incorrect in any material respect
when made (or deemed made);
(e) the Borrower or any Subsidiary shall fail to
make any payment, when due or within any applicable
grace period, in respect of any Debt or Debts or SRAC
Subordinated Debt of the Borrower and/or one or more
Subsidiaries, arising in one or more related or
unrelated transactions, in an aggregate principal
amount not less than $50,000,000 (other than the
Notes);
(f) any event or condition shall occur which (i)
results in the acceleration of the maturity of (x) any
Debt or Debts or SRAC Subordinated Debt of the Borrower
or any Subsidiary in an aggregate principal amount not
less than $50,000,000 (other than the Notes) or (y) any
Debt or Debts of any Material Company other than the
Borrower or any Subsidiary in an aggregate principal
amount not less than $100,000,000, in any case by
holders thereof exercising their rights so to
accelerate, or (ii) entitles the holder of any such
Debt (or SRAC Subordinated Debt) or any Person acting
on such holder's behalf to accelerate the maturity
thereof;
(g) any Material Company shall commence a
voluntary case or other proceeding seeking liquidation,
reorganization or other relief with respect to itself
or its debts under any bankruptcy, insolvency or other
similar law now or hereafter in effect or seeking the
appointment of a trustee, receiver, liquidator,
custodian or other similar official of it or any
substantial part of its property, or shall consent to
any such relief or to the appointment of or taking
possession by any such official in an involuntary case
or other proceeding commenced against it, or shall make
a general assignment for the benefit of creditors, or
shall fail generally to pay its debts as they become
due, or shall take any corporate action to authorize
any of the foregoing;
(h) an involuntary case or other proceeding shall
be commenced against any Material Company seeking
liquidation, reorganization or other relief with
respect to it or its debts under any bankruptcy,
insolvency or other similar law now or hereafter in
effect or seeking the appointment of a trustee,
receiver, liquidator, custodian or other similar
official of it or any substantial part of its property,
and such involuntary case or other proceeding shall
remain undismissed and unstayed for a period of 90
days; or an order for relief shall be entered against
any Material Company (in an involuntary case or other
proceeding against such Material Company) under the
federal bankruptcy laws as now or hereafter in effect;
(i) any member of the ERISA Group shall fail to
pay when due an amount or amounts aggregating in excess
of $10,000,000 which it shall have become liable to pay
under Title IV of ERISA; or notice of intent to
terminate a Material Plan shall be filed under Title IV
of ERISA by any member of the ERISA Group, any plan
administrator or any combination of the foregoing; or
the PBGC shall institute proceedings under Title IV of
ERISA to terminate, to impose liability (other than for
premiums under Section 4007 of ERISA) in respect of, or
to cause a trustee to be appointed to administer any
Material Plan; or a condition shall exist by reason of
which the PBGC would be entitled to obtain a decree
adjudicating that any Material Plan must be terminated;
or there shall occur a complete or partial withdrawal
from, or a default, within the meaning of Section
4219(c)(5) of ERISA, with respect to, one or more
Multiemployer Plans which could cause one or more
members of the ERISA Group to incur a current payment
obligation in excess of $50,000,000;
(j) a judgment or order for the payment of money
in excess of $10,000,000 shall be rendered against the
Borrower or any Subsidiary and such judgment or order
shall continue unsatisfied and unstayed (pursuant to
laws, rules or court orders) for a period of 10 days;
(k) other than by reason of a transaction
permitted by Section 5.07 in which Sears is the
successor or transferee, either Sears or a corporation
organized under the laws of the United States or any
state thereof which is (i) a Wholly-Owned Subsidiary of
Sears, (ii) any such corporation of which Sears is a
Wholly-Owned Subsidiary or (iii) a Wholly-Owned
Subsidiary of a corporation described in clause (ii)
above, shall cease to own beneficially and free and
clear of all Liens 100% of the issued and outstanding
capital stock of the Borrower (or any transferee of the
property and assets of the Borrower pursuant to a
transaction permitted by Section 5.07), other than any
SRAC Preferred Stock; or
(l) the Letter Agreement shall for any reason
cease to be in full force and effect;
then, and in every such event, the Agent shall (i) if
requested by the Required Banks, by notice to the Borrower
terminate the Commitments and they shall thereupon
terminate, and (ii) if requested by the Required Banks, by
notice to the Borrower declare the Notes (together with
accrued interest thereon) to be, and the Notes shall
thereupon become, immediately due and payable without
presentment, demand, protest or other notice of any kind,
all of which are hereby waived by the Borrower; provided
that in the case of any of the Events of Default specified
in clause (g) or (h) above, without any notice to the
Borrower or any other act by the Agent or the Banks, the
Commitments shall thereupon terminate and the Notes
(together with accrued interest thereon) shall become
immediately due and payable without presentment, demand,
protest or other notice of any kind, all of which are hereby
waived by the Borrower.
SECTION 6.02. Notice of Default. The Agent shall
give notice to the Borrower under Section 6.01(c) promptly
upon being requested to do so by any Bank and shall
thereupon notify all the Banks thereof.
ARTICLE VII
THE AGENT
SECTION 7.01. Appointment and Authorization.
Each Bank irrevocably appoints and authorizes the Agent to
take such action as agent on its behalf and to exercise such
powers under this Agreement and the Notes as are delegated
to the Agent by the terms hereof or thereof, together with
all such powers as are reasonably incidental thereto.
SECTION 7.02. Agent and Affiliates. Morgan
Guaranty Trust Company of New York shall have the same
rights and powers under this Agreement as any other Bank and
may exercise or refrain from exercising the same as though
it were not the Agent, and Morgan Guaranty Trust Company of
New York and its Affiliates may accept deposits from, lend
money to, and generally engage in any kind of business with
the Borrower or any Subsidiary or Affiliate of the Borrower
as if it were not the Agent hereunder.
SECTION 7.03. Action by Agent. The obligations
of the Agent hereunder are only those expressly set forth
herein. Without limiting the generality of the foregoing,
the Agent shall not be required to take any action with
respect to any Event of Default or any event or condition
which, with the giving of notice or lapse of time or both,
would become an Event of Default, except as expressly
provided in Article VI.
SECTION 7.04. Consultation with Experts. The
Agent may consult with legal counsel (who may be counsel for
the Borrower), independent public accountants and other
experts selected by it and shall not be liable to any Bank
for any action taken or omitted to be taken by it in good
faith in accordance with the advice of such counsel,
accountants or experts.
SECTION 7.05. Liability of Agent. Neither the
Agent nor any of its directors, officers, agents, or
employees shall be liable to any Bank for any action taken
or not taken by it in connection herewith (i) with the
consent or at the request of the Required Banks or (ii) in
the absence of its own gross negligence or willful
misconduct. Neither the Agent nor any of its directors,
officers, agents or employees shall be responsible for or
have any duty to ascertain, inquire into or verify (i) any
statement, warranty or representation made in connection
with this Agreement or any borrowing hereunder; (ii) the
performance or observance of any of the covenants or
agreements of the Borrower; (iii) the satisfaction of any
condition specified in Article III, except receipt of items
required to be delivered to the Agent; or (iv) the validity,
effectiveness or genuineness of this Agreement, the Notes or
any other instrument or writing furnished in connection
herewith. The Agent shall not incur any liability by acting
in reliance upon any notice, consent, certificate,
statement, or other writing (which may be a bank wire, telex
or similar writing) believed by it to be genuine or to be
signed by the proper party or parties.
SECTION 7.06. Indemnification. Each Bank shall,
ratably in accordance with its Commitment, indemnify the
Agent (to the extent not reimbursed by the Borrower pursuant
to a claim made by the Agent pursuant to Section 9.03)
against any cost, expense (including counsel fees and
disbursements), claim, demand, action, loss or liability
(except such as result from the Agent's gross negligence or
willful misconduct) that the Agent may suffer or incur in
connection with this Agreement or any action taken or
omitted by the Agent hereunder.
SECTION 7.07. Credit Decision. Each Bank
acknowledges that it has, independently and without reliance
upon the Agent or any other Bank, and based on such
documents and information as it has deemed appropriate, made
its own credit analysis and decision to enter into this
Agreement. Each Bank also acknowledges that it will,
independently and without reliance upon the Agent or any
other Bank, and based on such documents and information as
it shall deem appropriate at the time, continue to make its
own credit decisions in taking or not taking any action
under this Agreement.
SECTION 7.08. Successor Agent. The Agent may
resign at any time by giving written notice thereof to the
Banks and the Borrower. Upon any such resignation, the
Required Banks shall have the right to appoint a successor
Agent. If no successor Agent shall have been so appointed
by the Required Banks, and shall have accepted such
appointment, within 30 days after the retiring Agent gives
notice of resignation, then the retiring Agent may, on
behalf of the Banks, appoint a successor Agent, which shall
be a commercial bank organized or licensed under the laws of
the United States of America or of any State thereof and
having a combined capital and surplus of at least
$100,000,000. Upon the acceptance of its appointment as
Agent hereunder by a successor Agent, such successor Agent
shall thereupon succeed to and become vested with all the
rights and duties of the retiring Agent, and the retiring
Agent shall be discharged from its duties and obligations
hereunder; provided that until such acceptance, the retiring
Agent shall continue to perform its obligations as Agent
hereunder. After any retiring Agent's resignation hereunder
as Agent, the provisions of this Article shall inure to its
benefit as to any actions taken or omitted to be taken by it
while it was Agent.
SECTION 7.09. Agent Fee. The Borrower shall
pay to the Agent for its own account fees in the amounts and
at the times previously agreed upon between the Borrower and
the Agent.
SECTION 7.10. Managing Agent, Co-Arrangers,
Co-Agents and Lead Managers. None of the Managing Agent,
any Co-Arranger, Co-Agent or Lead Manager shall have any
responsibility or obligation under this Agreement in its
capacity as Managing Agent, Co-Arranger, Co-Agent or Lead
Manager, as the case may be.
ARTICLE VIII
CHANGE IN CIRCUMSTANCES
SECTION 8.01. Basis for Determining Interest Rate
Inadequate or Unfair. If on or prior to the first day of
any Interest Period for any Fixed Rate Borrowing:
(a) the Agent is advised by the Reference Banks
that deposits in dollars (in the applicable amounts)
are not being offered to the Reference Banks in the
relevant market for such Interest Period, or
(b) in the case of a Committed Borrowing, Banks
having 50% or more of the aggregate amount of the
Commitments advise the Agent that the Adjusted CD Rate
or the London Interbank Offered Rate, as the case may
be, as determined by the Agent will not adequately and
fairly reflect the cost to such Banks of funding their
CD Loans or Euro-Dollar Loans, as the case may be, for
such Interest Period,
the Agent shall forthwith give notice thereof to the
Borrower and the Banks, whereupon until the Agent notifies
the Borrower that the circumstances giving rise to such
suspension no longer exist, (i) the obligations of the Banks
to make CD Loans or Euro-Dollar Loans, as the case may be,
or to convert outstanding Loans into CD Loans or Euro-Dollar
Loans, as the case may be, shall be suspended and (ii) each
outstanding CD Loan or Euro-Dollar Loan, as the case may be,
shall be converted into a Base Rate Loan on the last day of
the then current Interest Period applicable thereto. Unless
the Borrower notifies the Agent at least one Domestic
Business Day before the date of any Fixed Rate Borrowing for
which a Notice of Borrowing has previously been given that
it elects not to borrow on such date, (i) if such Fixed Rate
Borrowing is a Committed Borrowing, such Borrowing shall
instead be made as a Base Rate Borrowing and (ii) if such
Fixed Rate Borrowing is a Money Market LIBOR Borrowing, the
Money Market LIBOR Loans comprising such Borrowing shall
bear interest for each day from and including the first day
to but excluding the last day of the Interest Period
applicable thereto at the Base Rate for such day.
SECTION 8.02. Illegality. If, on or after the
date of this Agreement, the adoption of any applicable law,
rule or regulation, or any change therein, or any change in
the interpretation or administration thereof by any
governmental authority, central bank or comparable agency
charged with the interpretation or administration thereof,
or compliance by any Bank (or its Euro-Dollar Lending
Office) with any request or directive (whether or not having
the force of law) of any such authority, central bank or
comparable agency shall make it unlawful or impossible for
any Bank (or its Euro-Dollar Lending Office) to make,
maintain or fund its Euro-Dollar Loans and such Bank shall
so notify the Agent, the Agent shall forthwith give notice
thereof to the other Banks and the Borrower, whereupon until
such Bank notifies the Borrower and the Agent that the
circumstances giving rise to such suspension no longer
exist, the obligation of such Bank to make Euro-Dollar
Loans, or to convert outstanding Loans into Euro-Dollar
Loans, shall be suspended. Before giving any notice to the
Agent pursuant to this Section, such Bank shall, if
practicable, with the consent of the Borrower (which consent
shall not unreasonably be withheld), designate a different
Euro-Dollar Lending Office if such designation will avoid
the need for giving such notice and will not, in the
judgment of such Bank, be otherwise disadvantageous to such
Bank. If such notice is given, (i) the Borrower shall be
entitled upon its request to a reasonable explanation of the
factors underlying such notice and (ii) each Euro-Dollar
Loan of such Bank then outstanding shall be converted to a
Base Rate Loan either (a) on the last day of the then
current Interest Period applicable to such Euro-Dollar Loan
if such Bank may lawfully continue to maintain and fund such
Loan to such day or (b) immediately if such Bank shall
determine that it may not lawfully continue to maintain and
fund such Loan to such day.
SECTION 8.03. Increased Cost and Reduced Return.
(a) In the event that (x) after the date hereof, in the
case of any Committed Loan or any obligation to make
Committed Loans or (y) on or after the date of the related
Money Market Quote, in the case of any Money Market Loan,
the adoption of any applicable law, rule or regulation, or
any change therein or in the interpretation or application
thereof by any governmental authority, central bank or
comparable agency charged with the interpretation or
administration thereof or compliance by any Bank with any
request or directive after the date hereof (whether or not
having the force of law) of any such authority, central bank
or comparable agency:
(i) does or shall subject such Bank to any
additional tax of any kind whatsoever with respect
to this Agreement, any Note or any Fixed Rate Loan
made by it, or change the basis or the applicable
rate of taxation of payments to such Bank of
principal, interest or any other amount payable
hereunder (except for (A) the imposition of or
change in any tax on or measured by the overall
net income of such Bank, (B) the imposition of or
change in any United States Tax described in
Section 2.15(a) in respect of which the Borrower
is not obligated to pay an additional amount by
reason of the proviso to Section 2.15(a) or (C)
the imposition of or change in any income tax
imposed by any governmental or other taxing
authority of or in any jurisdiction other than the
United States);
(ii) does or shall impose, modify or hold
applicable any reserve, special deposit, insurance
assessment, compulsory loan or similar requirement
against assets held by, or deposits or other
liabilities in or for the account of, advances or
loans by, or other credit extended by, or any
other acquisition of funds by, any office of such
Bank which are not otherwise included in the
determination of the rate of interest on Fixed
Rate Loans hereunder; or
(iii) does or shall impose on such Bank any
other condition;
and the result of any of the foregoing is to increase the
cost to such Bank of making or maintaining Fixed Rate Loans
or to reduce any amount receivable hereunder or under any
Note with respect thereto, then, in any such case, the
Borrower shall promptly pay such Bank, upon its demand, any
additional amounts necessary to compensate such Bank for
such increased cost or reduced amount receivable which such
Bank deems to be material as determined by such Bank with
respect to its Fixed Rate Loans.
(b) If any Bank shall have determined that, after
the date hereof, the adoption of any applicable law, rule or
regulation regarding capital adequacy, or any change
therein, or any change in the interpretation or
administration thereof by any governmental authority,
central bank or comparable agency charged with the
interpretation or administration thereof, or any request or
directive regarding capital adequacy (whether or not having
the force of law) of any such authority, central bank or
comparable agency, has or would have the effect of reducing
the rate of return on capital of such Bank (or its Parent)
as a consequence of such Bank's obligations hereunder to a
level below that which such Bank (or its Parent) could have
achieved but for such adoption, change, request or directive
(taking into consideration its policies with respect to
capital adequacy) by an amount deemed by such Bank to be
material, then from time to time, within 15 days after
demand by such Bank (with a copy to the Agent), the Borrower
shall pay to such Bank such additional amount or amounts as
will compensate such Bank (or its Parent) for such
reduction.
(c) Each Bank will promptly notify the Borrower
and the Agent of any event of which it has knowledge,
occurring after the date hereof, which will entitle such
Bank to compensation pursuant to this Section and will, if
practicable, with the consent of the Borrower (which consent
shall not unreasonably be withheld), designate a different
Applicable Lending Office if such designation will avoid the
need for, or reduce the amount of, such compensation and
will not, in the judgment of such Bank, be otherwise
disadvantageous to such Bank. A certificate of any Bank
claiming compensation under this Section and setting forth
in reasonable detail its computation of the additional
amount or amounts to be paid to it hereunder shall be
conclusive in the absence of manifest error. In determining
such amount, such Bank may use any reasonable averaging and
attribution methods. Notwithstanding the foregoing
subsections (a) and (b) of this Section 8.03, the Borrower
shall only be obligated to compensate any Bank for any
amount arising or accruing both:
(i) during (A) any time or period commencing
(x) in the case of subsection (a), not earlier
than the first day of any Interest Period in
effect on the date which, and (y) in the case of
subsection (b), not earlier than the date on
which, such Bank notifies the Agent and the
Borrower that it proposes to demand such
compensation and identifies to the Agent and the
Borrower the statute, regulation or other basis
upon which the claimed compensation is or will be
based and (B) any time or period during which,
because of the retroactive application of such
statute, regulation or other basis, such Bank did
not know that such amount would arise or accrue;
and
(ii) within six months prior to any demand
therefor, accompanied by a certificate of such Bank
claiming compensation and setting forth in reasonable
detail its computation of the additional amount or
amounts to be paid to it hereunder.
This Section shall survive the termination of this Agreement
and payment of the outstanding Notes.
SECTION 8.04. Base Rate Loans Substituted for
Affected Fixed Rate Loans. If (i) the obligation of any
Bank to make or maintain Euro-Dollar Loans has been
suspended pursuant to Section 8.02 or (ii) any Bank has
demanded compensation under Section 8.03(a) and the Borrower
shall, by at least five Euro-Dollar Business Days' prior
notice to such Bank through the Agent, have elected that the
provisions of this Section shall apply to such Bank, then,
unless and until such Bank notifies the Borrower that the
circumstances giving rise to such suspension or demand for
compensation no longer apply:
(a) all Loans which would otherwise be made
by such Bank as (or continued as or converted
into) CD Loans or Euro-Dollar Loans, as the case
may be, shall instead be Base Rate Loans (on which
interest and principal shall be payable
contemporaneously with the related Fixed Rate
Loans of the other Banks), and
(b) after each of its CD Loans or
Euro-Dollar Loans, as the case may be, has been
repaid (or converted to a Base Rate Loan), all
payments of principal which would otherwise be
applied to repay such Fixed Rate Loans shall be
applied to repay its Base Rate Loans instead.
If such Bank notifies the Borrower that the circumstances
giving rise to such notice no longer apply, the principal
amount of each such Base Rate Loan shall be converted into a
CD Loan or Euro-Dollar Loan, as the case may be, on the
first day of the next succeeding Interest Period applicable
to the related CD Loans or Euro-Dollar Loans of the other
Banks.
SECTION 8.05. Substitution of Bank. If (i) the
obligation of any Bank to make Euro-Dollar Loans has been
suspended pursuant to Section 8.02, (ii) any Bank has
demanded compensation or given notice of its intention to
demand compensation under Section 8.03 or (iii) the Borrower
is required to pay any additional amount to any Bank
pursuant to Section 2.15(a), the Borrower shall have the
right, with the assistance of the Agent, to seek a mutually
satisfactory substitute bank or banks (which may be one or
more of the Banks) to replace such Bank under this
Agreement.
ARTICLE IX
MISCELLANEOUS
SECTION 9.01. Notices. All notices, requests and
other communications to any party hereunder shall be in
writing (including bank wire, facsimile transmission or
similar writing) and shall be given to such party: (w) in
the case of the Borrower, at its address or telecopy number
set forth on the signature pages hereof, (x) in the case of
the Agent, at its address, telecopy number or telex number
set forth on the signature pages hereof, (y) in the case of
any Bank, at its address, telecopy number or telex number
set forth in its Administrative Questionnaire or (z) in the
case of any party, such other address, telecopy number or
telex number as such party may hereafter specify for the
purpose by notice to the Agent and the Borrower. Each such
notice, request or other communication shall be effective
(i) if given by telex, when such telex is transmitted to the
telex number specified in this Section and the appropriate
answerback is received, (ii) if given by mail, 72 hours
after such communication is deposited in the mails with
first class postage prepaid, addressed as aforesaid or
(iii) if given by telecopy or any other means, when
delivered at the address specified in this Section (and
confirmed by telephone by the sender, in the case of any
telecopy notice to the Borrower); provided that notices to
the Agent under Article II or Article VIII shall not be
effective until received.
SECTION 9.02. No Waivers. No failure or delay by
the Agent or any Bank or the Borrower in exercising any
right, power or privilege hereunder or under any Note shall
operate as a waiver thereof nor shall any single or partial
exercise thereof preclude any other or further exercise
thereof or the exercise of any other right, power or
privilege. The rights and remedies herein provided shall be
cumulative and not exclusive of any rights or remedies
provided by law.
SECTION 9.03. Expenses; Documentary Taxes;
Indemnification. (a) The Borrower shall pay (i) all
reasonable out-of-pocket expenses of the Agent, including
fees and disbursements of special counsel for the Agent, in
connection with the preparation of this Agreement, any
waiver or consent hereunder or any amendment hereof or any
Event of Default or any event or condition which, with the
giving of notice or lapse of time or both, would become an
Event of Default or any alleged Event of Default or such
event or condition hereunder and (ii) if an Event of Default
occurs, all reasonable out-of-pocket expenses incurred by
the Agent and each Bank, including fees and disbursements of
counsel, in connection with such Event of Default and
collection, bankruptcy, insolvency and other enforcement
proceedings resulting therefrom. The Borrower shall
indemnify each Bank against any transfer taxes, documentary
taxes, assessments or similar charges made by any
governmental authority solely by reason of the execution and
delivery of this Agreement or the Notes.
(b) The Borrower agrees to indemnify the Agent
and each Bank and their respective affiliates (each an
"Indemnitee") and hold each Indemnitee harmless from and
against any and all liabilities, losses, damages, costs and
expenses of any kind, including, without limitation, the
reasonable fees and disbursements of counsel, which may be
incurred by such Indemnitee in connection with any
investigative, administrative or judicial proceeding
(whether or not such Indemnitee shall be designated a party
thereto) relating to or arising out of this Agreement or any
actual or proposed use of proceeds of Loans hereunder;
provided that no Indemnitee shall have the right to be
indemnified hereunder (i) for its own gross negligence or
willful misconduct as determined by a court of competent
jurisdiction or (ii) in respect of any litigation instituted
by (x) any Participant against any Bank or the Agent, (y)
any Bank against any Participant, any Bank or the Agent, or
(z) any holder of any security of any Bank (in its capacity
as such) against any Bank, to the extent any such litigation
does not arise out of any misconduct (alleged in good faith
by such Bank) by or on behalf of the Borrower.
SECTION 9.04. Sharing of Set-Offs. Each Bank
agrees that if it shall, by exercising any right of set-off
or counterclaim or otherwise, receive payment of a
proportion of the aggregate amount of principal and interest
due with respect to any Note held by it which is greater
than the proportion received by any other Bank in respect of
the aggregate amount of principal and interest due with
respect to any Note held by such other Bank, the Bank
receiving such proportionately greater payment shall
purchase such participations in the Notes held by the other
Banks, and such other adjustments shall be made, as may be
required so that all such payments of principal and interest
with respect to the Notes held by the Banks shall be shared
by the Banks pro rata; provided that nothing in this Section
shall impair the right of any Bank to exercise any right of
set-off or counterclaim it may have and to apply the amount
subject to such exercise to the payment of indebtedness of
the Borrower other than its indebtedness under the Notes.
The Borrower agrees, to the fullest extent it may
effectively do so under applicable law, that any holder of a
participation in a Note, whether or not acquired pursuant to
the foregoing arrangements, may exercise rights of set-off
or counterclaim and other rights with respect to such
participation as fully as if such holder of a participation
were a direct creditor of the Borrower in the amount of such
participation.
SECTION 9.05. Amendments and Waivers. Any
provision of this Agreement or the Notes may be amended or
waived if, but only if, such amendment or waiver is in
writing and is signed by the Borrower and the Required Banks
(and, if the rights or duties of the Agent are affected
thereby, by the Agent); provided that no such amendment or
waiver shall, unless signed by all the Banks, (i) increase
or decrease the Commitment of any Bank (except for a ratable
decrease in the Commitments of all Banks) or subject any
Bank to any additional obligation, (ii) reduce the principal
of or rate of interest on any Loan or any fees hereunder
(except that, in the case of a reduction in the principal of
or rate of interest on Loans comprising a single Money
Market Borrowing, only the signatures of the Borrower and
the Banks making Loans included in such Borrowing shall be
required), (iii) postpone the date fixed for any payment of
principal of or interest on any Loan or any fees hereunder
or for the termination of any Commitment or (iv) change the
percentage of the Commitments or of the aggregate unpaid
principal amount of the Notes, or the number of Banks, which
shall be required for the Banks or any of them to take any
action under this Section or any other provision of this
Agreement.
SECTION 9.06. Successors and Assigns. (a) The
provisions of this Agreement shall be binding upon and inure
to the benefit of the parties hereto and their respective
successors and assigns, except that the Borrower may not
assign or otherwise transfer any of its rights under this
Agreement (other than pursuant to a transaction permitted by
Section 5.07) without the prior written consent of all
Banks.
(b) Any Bank may at any time grant to one or more
banks or other institutions (each a "Participant")
participating interests in its Commitment or any or all of
its Loans. In the event of any such grant by a Bank of a
participating interest to a Participant, such Bank shall
remain responsible for the performance of its obligations
hereunder, and the Borrower and the Agent shall continue to
deal solely and directly with such Bank in connection with
such Bank's rights and obligations under this Agreement.
Any agreement pursuant to which any Bank may grant such a
participating interest shall provide that such Bank shall
retain the sole right and responsibility to enforce the
obligations of the Borrower hereunder including, without
limitation, the right to approve any amendment, modification
or waiver of any provision of this Agreement; provided that
such participation agreement may provide that such Bank will
not agree to any modification, amendment or waiver of this
Agreement described in clause (i), (ii) or (iii) of Section
9.05 without the consent of the Participant. The Borrower
agrees that each Participant shall, to the extent provided
in its participation agreement, be entitled to the benefits
of Article VIII with respect to its participating interest.
If, pursuant to this Section 9.06(b), any interest in this
Agreement or any Note is proposed to be transferred to any
Participant that is not a bank organized under the laws of
the United States or any State thereof or the District of
Columbia, such proposed Participant shall, as a condition to
the effectiveness of such transfer, (i) deliver Internal
Revenue Service forms as provided in Section 2.15(b) to the
transferor Bank with copies to the Borrower and (ii) make
the covenants specified in subsections (b)(2), (c)(1) and
(c)(2) of Section 2.15 for the benefit of the transferor
Bank, the Borrower and the Agent. All such covenants shall
be made by an instrument in writing in form and substance
satisfactory to the Borrower.
(c) Any Bank may at any time assign to one or
more banks or other institutions (each an "Assignee") all,
or a proportionate part of all (such proportionate part to
comprise a Commitment of not less than $25,000,000), of its
rights and obligations under this Agreement and the Notes,
and such Assignee shall assume such rights and obligations,
pursuant to an Assignment and Assumption Agreement in
substantially the form of Exhibit I hereto executed by such
Assignee and such transferor Bank, with (and subject to) the
subscribed consent of the Borrower and the Agent; provided
that if an Assignee is an Affiliate of such transferor Bank,
no such consent shall be required, but such transferor Bank
shall deliver to the Borrower five Domestic Business Days'
prior written notice of any such assignment and, promptly
after the effectiveness thereof, a copy of the relevant
Assignment and Assumption Agreement; and provided further
that such assignment may, but need not, include rights of
the transferor Bank in respect of outstanding Money Market
Loans. Upon execution and delivery of such instrument and
payment by such Assignee to such transferor Bank of an
amount equal to the purchase price agreed between such
transferor Bank and such Assignee, such Assignee shall be a
Bank party to this Agreement and shall have all the rights
and obligations of a Bank with a Commitment as set forth in
such instrument of assumption, and the transferor Bank shall
be released from its obligations hereunder to a
corresponding extent, and no further consent or action by
any party shall be required. Upon the consummation of any
assignment pursuant to this subsection (c), the transferor
Bank, the Agent and the Borrower shall make appropriate
arrangements so that, if required, a new Note is issued to
the Assignee. In connection with any such assignment, the
transferor Bank shall pay to the Agent an administrative fee
for processing such assignment in the amount of $2,000. If
the Assignee is not incorporated under the laws of the
United States of America or a state thereof, it shall, prior
to the first date on which interest or fees are payable
hereunder for its account, deliver to the Borrower and the
Agent certification as to exemption from deduction or
withholding of any United States federal income taxes in
accordance with Section 2.15.
(d) Any Bank may at any time assign all or any
portion of its rights under this Agreement and its Note to a
Federal Reserve Bank. No such assignment shall release the
transferor Bank from its obligations hereunder.
(e) No Participant shall be entitled to receive
any greater payment under Section 8.03 than the relevant
transferor Bank would have been entitled to receive with
respect to the rights transferred. No Assignee or other
transferee of any Bank's rights (other than a Participant,
whose rights shall be governed by the immediately preceding
sentence) shall be entitled to receive any greater payment
under Section 8.03 than such Bank would have been entitled
to receive with respect to the rights transferred, unless
such transfer is made (x) with the Borrower's prior written
consent, (y) by reason of the provisions of Section 8.02 or
8.03 requiring such Bank to designate a different Applicable
Lending Office under certain circumstances or (z) at a time
when the circumstances giving rise to such greater payment
did not exist.
SECTION 9.07. Collateral. Each of the Banks
represents to the Agent and each of the other Banks that it
in good faith is not relying upon any "margin stock" (as
defined in Regulation U) as collateral in the extension or
maintenance of the credit provided for in this Agreement.
SECTION 9.08. Governing Law; Submission to
Jurisdiction. This Agreement and each Note shall be
governed by and construed in accordance with the laws of the
State of New York. The Borrower hereby submits to the
nonexclusive jurisdiction of the United States District
Court for the Southern District of New York and of any New
York State court sitting in New York City for purposes of
all legal proceedings arising out of or relating to this
Agreement or the transactions contemplated hereby. The
Borrower irrevocably waives, to the fullest extent permitted
by law, any objection which it may now or hereafter have to
the laying of the venue of any such proceeding brought in
such a court and any claim that any such proceeding brought
in such a court has been brought in an inconvenient forum.
SECTION 9.09. Counterparts; Integration. This
Agreement may be signed in any number of counterparts, each
of which shall be an original, with the same effect as if
the signatures thereto and hereto were upon the same
instrument. This Agreement (and, solely with respect to
information delivered by the Borrower to the Banks prior to
the date hereof, the confidentiality letter executed by each
of the Banks listed on the signature pages hereto)
constitutes the entire agreement and understanding among the
parties hereto and supersedes any and all prior agreements
and understandings, oral or written, relating to the subject
matter hereof.
SECTION 9.10. Restrictions on Transfers. Each
Bank agrees that it will not, except by operation of law,
transfer or propose to transfer all or any portion of its
rights and obligations under this Agreement and the Note
held by it, or any participation therein to any Person
except (i) banks (including without limitation Federal
Reserve Banks) or trust companies empowered by law to accept
deposits or (ii) their corporate parents or their Affiliates
which are in the business of lending money and which are
either wholly owned by them or are Wholly-Owned Subsidiaries
of a common corporate parent, unless such Bank shall have
first delivered to the Borrower an opinion of counsel as to
the legality of the transfer (including compliance of such
transfer with applicable federal securities laws) and such
other matters as the Borrower may reasonably request, which
opinion shall be satisfactory in form and substance to the
Borrower. Each Bank agrees that it will not transfer all or
any portion of any Note held by it, or any participation
therein, in violation of applicable securities laws.
SECTION 9.11. Confidentiality. The Agent and
each Bank represent that they will maintain the
confidentiality of any written or oral information provided
under this Agreement by or on behalf of the Borrower that
has been identified by its source as confidential
(hereinafter collectively called "Confidential
Information"), subject to the Agent's and each Bank's
(a) obligation to disclose any such Confidential Information
pursuant to a request or order under applicable laws and
regulations or pursuant to a subpoena or other legal
process, (b) right to disclose any such Confidential
Information to its bank examiners, Affiliates, auditors,
counsel and other professional advisors and to other Banks,
(c) right to disclose any such Confidential Information in
connection with any litigation or dispute involving the
Banks and the Borrower or any of its Subsidiaries and
Affiliates and (d) right to provide such information to
Participants (as defined in subsection 9.06(b)), prospective
Participants to which sales of participating interests are
permitted pursuant to subsection 9.06(b) and prospective
Assignees to which assignments of interests are permitted
pursuant to subsection 9.06(c), but only if (i) the Borrower
has theretofore given its written consent to the
participation to such Participant or prospective Participant
or the assignment to such prospective Assignee, (ii) such
Participant, prospective Participant or prospective Assignee
agrees in writing to maintain the confidentiality of such
information on terms substantially similar to those of this
Section as if it were a "Bank" party hereto and (iii) the
Borrower receives copies of such written agreement prior to
the release of such information. Notwithstanding the
foregoing, any such information supplied to a Bank,
Participant, prospective Participant or prospective Assignee
under this Agreement shall cease to be Confidential
Information if it is or becomes known to such Person by
other than unauthorized disclosure, or if it becomes a
matter of public knowledge.
SECTION 9.12. WAIVER OF JURY TRIAL. EACH OF THE
BORROWER, THE AGENT AND THE BANKS HEREBY IRREVOCABLY WAIVES
ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING
ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY.
IN WITNESS WHEREOF, the parties hereto have caused
this Agreement to be duly executed by their respective
authorized officers as of the day and year first above
written.
SEARS ROEBUCK ACCEPTANCE CORP.
By
Title:
3711 Kennett Pike
Greenville, Delaware 19807
Telefax: (302) 888-3156
$40,000,000 MORGAN GUARANTY TRUST COMPANY
OF NEW YORK
By
Title:
BANK AND MANAGING AGENT
$35,000,000 CHEMICAL BANK
By
Title:
BANKS AND CO-ARRANGERS
$30,000,000 BANK OF AMERICA ILLINOIS
By
Title:
$30,000,000 THE BANK OF NEW YORK
By
Title:
$30,000,000 THE CHASE MANHATTAN BANK N.A.
By
Title:
$30,000,000 CIBC, INC.
By
Title:
$30,000,000 CITIBANK N.A.
By
Title:
$30,000,000 CREDIT SUISSE
By
Title:
By
Title:
$30,000,000 THE FIRST NATIONAL BANK OF
CHICAGO
By
Title:
$30,000,000 NATIONSBANK OF NORTH CAROLINA,
N.A.
By
Title:
$30,000,000 ROYAL BANK OF CANADA
By
Title:
$30,000,000 SUMITOMO BANK, LTD.
By
Title:
$30,000,000 UNION BANK OF SWITZERLAND
By
Title:
By
Title:
BANKS AND CO-AGENTS
$25,000,000 DAI-ICHI KANGYO BANK, LTD.
By
Title:
$25,000,000 FIRST INTERSTATE BANK OF
CALIFORNIA
By
Title:
By
Title:
$25,000,000 THE INDUSTRIAL BANK OF JAPAN,
LTD.
By
Title:
$25,000,000 NATIONAL WESTMINSTER BANK PLC
By
Title:
NATIONAL WESTMINSTER BANK PLC,
NASSAU BRANCH
By
Title:
$25,000,000 SWISS BANK CORPORATION
NEW YORK BRANCH
By
Title:
By
Title:
$25,000,000 WACHOVIA BANK OF GEORGIA, N.A.
By
Title:
BANKS AND LEAD MANAGERS
$20,000,000 ABN AMRO BANK N.V.
By
Title:
$20,000,000 THE FIRST NATIONAL BANK OF BOSTON
By
Title:
$20,000,000 THE BANK OF TOKYO, LTD.,
CHICAGO BRANCH
By
Title:
$20,000,000 DEUTSCHE BANK AG, CHICAGO
AND/OR CAYMAN ISLANDS BRANCHES
By
Title:
By
Title:
$20,000,000 THE FUJI BANK, LIMITED
By
Title:
$20,000,000 MELLON BANK, N.A.
By
Title:
$20,000,000 THE MITSUBISHI BANK, LIMITED
By
Title:
$20,000,000 PNC BANK, NATIONAL ASSOCIATION
By
Title:
$20,000,000 THE SANWA BANK, LIMITED,
CHICAGO BRANCH
By
Title:
$20,000,000 SHAWMUT BANK, N.A.
By
Title:
$20,000,000 TORONTO DOMINION (TEXAS), INC.
By
Title:
OTHER BANKS
$15,000,000 BANCA COMMERCIALE ITALIANA
By
Title:
By
Title:
$15,000,000 BANK OF HAWAII
By
Title:
$15,000,000 CAISSE NATIONALE DE CREDIT
AGRICOLE
By
Title:
$15,000,000 COMERICA BANK
By
Title:
$15,000,000 CORESTATES BANK, N.A.
By
Title:
$15,000,000 CREDIT LYONNAIS, CHICAGO BRANCH
By
Title:
CREDIT LYONNAIS, CAYMAN ISLAND
BRANCH
By
Title:
$15,000,000 FIRST HAWAIIAN BANK
By
Title:
$15,000,000 FIRST UNION NATIONAL BANK OF
NORTH CAROLINA
By
Title:
$15,000,000 NBD BANK, N.A.
By
Title:
$15,000,000 THE NORTHERN TRUST COMPANY
By
Title:
$15,000,000 SOCIETE GENERALE
By
Title:
By
Title:
$15,000,000 THE SAKURA BANK, LIMITED...............
CHICAGO BRANCH
By
Title:
$15,000,000 THE TOKAI BANK, LIMITED
CHICAGO BRANCH
By
Title:
$15,000,000 TRUST COMPANY BANK
By
Title:
By
Title:
$15,000,000 WESTDEUTSCHE LANDESBANK
GIROZENTRALE, NEW YORK AND
CAYMAN ISLANDS BRANCHES
By
Title:
By
Title:
_________________
Total Commitments
$1,000,000,000
===============
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK, as Agent
By
Title:
60 Wall Street
New York, New York 10260
Attention: Charles H. King,
Vice President
Telex number: 177615
EXHIBIT A
NOTE
New York, New York
, 19
For value received, SEARS ROEBUCK ACCEPTANCE CORP., a
Delaware corporation (the "Borrower"), promises to pay to the
order of
(the "Bank"), for the account of its Applicable Lending Office,
the unpaid principal amount of each Loan made by the Bank to the
Borrower pursuant to the Credit Agreement referred to below on
the dates provided for in the Credit Agreement and, in any event,
on the maturity date provided for therein. The Borrower promises
to pay interest on the unpaid principal amount of each such Loan
on the dates and at the rate or rates provided for in the Credit
Agreement. All such payments of principal and interest shall be
made in lawful money of the United States in Federal or other
immediately available funds at the office of Morgan Guaranty
Trust Company of New York, 60 Wall Street, New York, New York.
All Loans made by the Bank and all repayments of the
principal thereof shall be recorded by the Bank and, if the Bank
so elects in connection with any transfer or enforcement hereof,
appropriate notations to evidence the foregoing information with
respect to each such Loan then outstanding may be endorsed by the
Bank on the schedule attached hereto, or on a continuation of
such schedule attached to and made a part hereof; provided that
the failure of the Bank to make any such recordation or
endorsement shall not affect the obligations of the Borrower
hereunder or under the Credit Agreement.
This note is one of the Notes referred to in the
$1,000,000,000 Credit Agreement dated as of June 29, 1995 among
the Borrower, the banks listed on the signature pages thereof,
the Managing Agent, Co-Arrangers, Co-Agents and Lead Managers
referred to therein and Morgan Guaranty Trust Company of New
York, as Agent (as the same may be amended from time to time, the
"Credit Agreement"). Terms defined in the Credit Agreement are
used herein with the same meanings. This Note is subject, and
reference is hereby made, to the terms and provisions of the
Credit Agreement, including the transfer restrictions set forth
in Section 9.10 thereof, the provisions for mandatory and
optional prepayment hereof and the acceleration of the maturity
hereof.
SEARS ROEBUCK ACCEPTANCE CORP.
By________________________
Title:
Note (cont'd)
LOANS AND PAYMENTS OF PRINCIPAL
_________________________________________________________________
Amount of
Amount of Principal Notation
Date Loan Repaid Made By
_________________________________________________________________
_________________________________________________________________
_________________________________________________________________
_________________________________________________________________
_________________________________________________________________
_________________________________________________________________
_________________________________________________________________
_________________________________________________________________
_________________________________________________________________
_________________________________________________________________
_________________________________________________________________
_________________________________________________________________
_________________________________________________________________
_________________________________________________________________
_________________________________________________________________
_________________________________________________________________
EXHIBIT B
NOTICE OF COMMITTED BORROWING
_________
1 Deliver no later than 11:00 A.M. (New York City time) on (x)
the day of a Base Rate Borrowing, (y) the second Domestic Business
Day before a CD Borrowing and (z) the third Euro-Dollar Business
Day before a Euro-Dollar Borrowing.
Borrowing Request
No. _____________
Morgan Guaranty Trust Company
of New York, as Agent
60 Wall Street
New York, New York 10260
Attention: _______________
This notice shall constitute a "Notice of Committed
Borrowing" pursuant to Section 2.02 of the $1,000,000,000 Credit
Agreement dated as of June 29, 1995 among Sears Roebuck
Acceptance Corp. (the "Borrower"), the banks listed on the
signature pages thereof, the Managing Agent, Co-Arrangers, Co-
Agents and Lead Managers referred to therein and Morgan Guaranty
Trust Company of New York, as Agent (the "Agent") (as amended
from time to time, the "Credit Agreement"). Capitalized terms
not otherwise defined herein have the meanings ascribed to them
in the Credit Agreement.
1. The date of the Borrowing will be
_______________, 199_.
2. The principal amount of the Borrowing will
be $____________.
_________
2 Must be aggregate principal amount of $75,000,000 or any
larger multiple of $5,000,000 (or the aggregate amount available in
accordance with Section 3.02(b) of the Credit Agreement, if less).
3. The Borrowing will consist of [CD Loans]
[Euro-Dollar Loans] [Base Rate Loans].
[4. The initial Interest Period for such Loans
shall be _____________.]
_________
3 Applicable only in the case of a Fixed Rate Borrowing. For
CD Rate Loans, insert "30 days," "60 days," "90 days" or "180 days"
(subject to the definition of Interest Period). For Euro-Dollar
Loans, insert "one month," "two months," "three months" or "six
months" (subject to the definition of Interest Period).
[5.] Transfer Instructions:
[insert appropriate delivery instructions, which
shall include bank and account number]
SEARS ROEBUCK ACCEPTANCE CORP.
By____________________________
Title:
Date: __________________, 199_
EXHIBIT C
NOTICE OF INTEREST RATE ELECTION
Morgan Guaranty Trust Company
of New York, as Agent
60 Wall Street
New York, New York 10260
Attention: _______________
This notice shall constitute a "Notice of Interest
Rate Election" pursuant to Section 2.10 of the $1,000,000,000
Credit Agreement dated as of June 29, 1995 among Sears Roebuck
Acceptance Corp. (the "Borrower"), the banks listed on the
signature pages thereof, the Managing Agent, Co-Arrangers, Co-
Agents and Lead Managers referred to therein and Morgan Guaranty
Trust Company of New York, as Agent (the "Agent") (as amended
from time to time, the "Credit Agreement"). Capitalized terms
not otherwise defined herein have the meanings ascribed to them
in the Credit Agreement.
1. The principal amount of the Group of Loans
(or portion thereof) to which this notice applies is
$__________.
2. The date on which the conversion/continuation
selected is to be effective is __________, 199_ (the
"Election Date").
3. The Group of Loans (or portion thereof) to
which this notice applies is [all or a portion of all
Base Rate Loans currently outstanding] [all or a
portion of all CD Loans currently outstanding having an
Interest Period of ___ days and ending on the Election
Date] [all or a portion of all Euro-Dollar Loans
currently outstanding having an Interest Period of __
months and ending on the Election Date].
_________
1 May apply to a portion of the aggregate principal amount of
the relevant Group of Loans; provided that (i) such portion is
allocated ratably among the Loans comprising such Group and (ii)
the portion to which such Notice applies, and the remaining portion
to which it does not apply, are each $75,000,000 or any larger
multiple of $5,000,000.
4a. The Group of Loans (or portion thereof) which
are to be converted will bear interest [at the Base
Rate] [based upon the CD Rate] [based upon the
Euro-Dollar Rate].
4b. The Group of Loans (or portion thereof) which
are to be continued will bear interest [at the Base
Rate] [based upon the CD Rate] [based upon the
Euro-Dollar Rate].
[5. The Interest Period for such Loans shall be
____________.]
_________
2 Applicable only in the case of a Fixed Rate Borrowing. For
CD Loans, insert "30 days," "60 days," "90 days" or "180 days."
For Euro-Dollar Loans, insert "one month," "two months," "three
months" or "six months." The Interest Period, however, may be
changed by agreement of the parties (see "Interest Period" in
Section 1.01 of the Credit Agreement).
SEARS ROEBUCK ACCEPTANCE CORP.
By:
Title:
Date: __________________, 199_
EXHIBIT D
Form of Money Market Quote Request
[Date]
To: Morgan Guaranty Trust Company
of New York (the "Agent")
From: Sears Roebuck Acceptance Corp. (the "Borrower")
Re: $1,000,000,000 Credit Agreement (the "Credit
Agreement") dated as of June 29, 1995 among the
Borrower, the banks listed on the signature pages
thereof, the Managing Agent, Co-Arrangers, Co-
Agents and Lead Managers referred to therein and
Morgan Guaranty Trust Company of New York, as Agent
We hereby give notice pursuant to Section 2.03 of the
Credit Agreement that we request Money Market Quotes for the
following proposed Money Market Borrowing(s):
Date of Borrowing: __________________
Principal Amount
_________
1 Amount must be $75,000,000 or a larger multiple of $5,000,000
(or an amount equal to the aggregate amount available in accordance
with Section 3.02(b), if less than $75,000,000).
Interest Period
_________
2 Not less than one month (LIBOR Auction) or not less than 30
days (Absolute Rate Auction), subject to the provisions of the
definition of Interest Period.
$
Such Money Market Quotes should offer a Money Market
[Margin] [Absolute Rate]. [The applicable base rate is the London
Interbank Offered Rate.]
Terms used herein have the meanings assigned to them
in the Credit Agreement.
SEARS ROEBUCK ACCEPTANCE CORP.
By_________________________
Title:
EXHIBIT E
Form of Invitation for Money Market Quotes
To: [Name of Bank]
Re: Invitation for Money Market Quotes to
Sears Roebuck Acceptance Corp. (the "Borrower")
Pursuant to Section 2.03 of the $1,000,000,000 Credit
Agreement (the "Credit Agreement") dated as of June 29, 1995
among the Borrower, the banks listed on the signature pages
thereof, the Managing Agent, Co-Arrangers, Co-Agents and Lead
Managers referred to therein and Morgan Guaranty Trust Company of
New York, as Agent, we are pleased on behalf of the Borrower to
invite you to submit Money Market Quotes to the Borrower for the
following proposed Money Market Borrowing(s):
Date of Borrowing: __________________
Principal Amount Interest Period
$
Such Money Market Quotes should offer a Money Market
[Margin] [Absolute Rate]. [The applicable base rate is the
London Interbank Offered Rate.]
Please respond to this invitation by no later than
[2:00 P.M.] [9:30 A.M.] (New York City time) on [date].
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK
By___________________________
Authorized Officer
EXHIBIT F
Form of Money Market Quote
To: Morgan Guaranty Trust Company
of New York (the "Agent")
Re: Money Market Quote to Sears Roebuck
Acceptance Corp. (the "Borrower")
In response to your invitation on behalf of the
Borrower dated _____________, 19__, we hereby make the following
Money Market Quote on the following terms:
1. Quoting Bank: ________________________________
2. Person to contact at Quoting Bank:
______________________________
3. Date of Borrowing: ____________________*
4. We hereby offer to make Money Market Loan(s) in the
following principal amounts, for the following Interest
Periods and at the following rates:
Principal Interest Money Market
Amount** Period*** [Margin****] [Absolute Rate*****]
$
$
[Provided, that the aggregate principal amount of Money
Market Loans for which the above offers may be accepted
shall not exceed $____________.]**
__________
* As specified in the related Invitation.
** Principal amount bid for each Interest Period may not exceed
principal amount requested. Specify aggregate limitation if the
sum of the individual offers exceeds the amount the Bank is
willing to lend. Bids must be made for $5,000,000 or a larger
multiple of $1,000,000.
(notes continued on following page)
We understand and agree that the offer(s) set forth
above, subject to the satisfaction of the applicable conditions
set forth in the $1,000,000,000 Credit Agreement (the "Credit
Agreement") dated as of June 29, 1995 among the Borrower, the
banks listed on the signature pages thereof, the Managing Agent,
Co-Arrangers, Co-Agents and Lead Managers referred to therein and
Morgan Guaranty Trust Company of New York, as Agent, irrevocably
obligates us to make the Money Market Loan(s) for which any
offer(s) are accepted, in whole or in part.
Very truly yours,
[NAME OF BANK]
Dated:_______________ By:__________________________
Authorized Officer
__________
*** Not less than one month or not less than 30 days, as
specified in the related Invitation. No more than five bids are
permitted for each Interest Period.
**** Margin over or under the London Interbank Offered Rate
determined for the applicable Interest Period. Specify
percentage (to the nearest 1/10,000 of 1%) and specify whether
"PLUS" or "MINUS".
***** Specify rate of interest per annum (to the nearest
1/10,000th of 1%).
EXHIBIT G
OPINION OF
COUNSEL FOR THE BORROWER
[Effective Date]
To the Banks and the Agent
Referred to Below
c/o Morgan Guaranty Trust Company
of New York, as Agent
60 Wall Street
New York, New York 10260
Dear Sirs:
I am [title of counsel] and have acted as counsel
for Sears Roebuck Acceptance Corp. (the "Borrower") in
connection with the $1,000,000,000 Credit Agreement (the
"Credit Agreement") dated as of June 29, 1995 among the
Borrower, the banks listed on the signature pages thereof,
the Managing Agent, Co-Arrangers, Co-Agents and Lead
Managers referred to therein and Morgan Guaranty Trust
Company of New York, as Agent. This opinion is rendered to
you at the request of the Borrower pursuant to Section
3.01(c) of the Credit Agreement. Terms defined in the
Credit Agreement are used herein as therein defined.
I have examined originals or copies, certified or
otherwise identified to my satisfaction, of such documents,
corporate records, certificates of public officials and
other instruments and have conducted such other
investigations of fact and law as I have deemed necessary or
advisable for purposes of this opinion. I have obtained and
relied upon, to the extent I deem appropriate, certificates
of officers of the Borrower and of public officials as to
factual matters. I call to your attention the fact that in
rendering my opinion, I am expressing my views only as to
the internal laws of the State of New York, in which I am
admitted to practice law, the Federal laws of the United
States and the General Corporation Law of the State of
Delaware.
Upon the basis of the foregoing, I am of the
opinion that:
1. The Borrower has been duly incorporated and is
validly existing as a corporation in good standing under the
laws of the State of Delaware with full corporate power to
conduct its business as presently conducted.
2. The Borrower has full corporate power to enter
into the Credit Agreement and to issue the Notes and to
comply with all of the provisions of the Credit Agreement
and the Notes, and all necessary corporate proceedings of
the Borrower have been duly taken to authorize the
execution, delivery and performance of the Credit Agreement
and the issuance of the Notes by the Borrower.
3. The issuance by the Borrower of the Notes and
compliance by the Borrower with all of the provisions of the
Credit Agreement will not conflict with or result in a
breach which would constitute a material default under, or
result in the creation or imposition of any Lien, charge or
encumbrance upon any of the property or assets of the
Borrower, material to the Borrower, pursuant to the terms
of, any material indenture, loan agreement, or other
agreement or instrument for borrowed money to which the
Borrower is a party or by which the Borrower may be bound or
to which any of the property or assets of the Borrower,
material to the Borrower, is subject, nor will any such
action conflict with or result in a breach which would
constitute a material default under, or result in the
creation or imposition of any Lien, charge or encumbrance
upon any of the property or assets of Sears, material to
Sears and its subsidiaries, taken as a whole, pursuant to
the terms of, any indenture, loan agreement or other
agreement or instrument for borrowed money relating to a
principal amount of outstanding indebtedness not less than
$100,000,000 to which Sears is a party or by which Sears may
be bound or to which any of the property or assets of Sears,
material to Sears and its subsidiaries, taken as a whole, is
subject, nor will such action result in any material
violation of the provisions of the Certificate of
Incorporation or the By-Laws of the Borrower or, to the best
of my knowledge, any statute or any order, rule or
regulation applicable to the Borrower of any court or any
Federal, state or other regulatory authority or other
governmental body having jurisdiction over the Borrower,
and, to the best of my knowledge, no consent, approval,
authorization or other order of, or filing with, any court
or any such regulatory authority or other governmental body
is required for the issuance by the Borrower of the Notes
and the compliance by the Borrower with all of the
provisions of the Credit Agreement and the Notes; provided
that I express no opinion with respect to any securities or
blue sky laws of political subdivisions of the United States
or any laws or treaties of any country (or political
subdivision thereof) other than the United States.
4. The Credit Agreement constitutes a valid and
binding agreement of the Borrower and the Notes constitute
valid and binding obligations of the Borrower, each
enforceable in accordance with their terms except as the
foregoing may be limited by: (a) the effect of bankruptcy,
insolvency, reorganization, moratorium or other similar laws
now or hereafter in effect relating to or affecting the
rights or remedies of creditors generally; (b) the effect of
general principles of equity, whether enforcement is
considered in a proceeding in equity or at law, and the
discretion of the court before which any proceeding therefor
may be brought; and (c) the unenforceability under certain
circumstances under law or court decisions of provisions
providing for the indemnification of or contribution to a
party with respect to a liability where such indemnification
or contribution is contrary to public policy.
5. I do not know of any pending legal or
governmental proceeding (i) required to be described in the
Borrower's 1994 Form 10-K or in the Quarterly Reports on
Form 10-Q of the Borrower filed with the Commission pursuant
to the Exchange Act subsequent thereto, which are not
described as required or (ii) which would be required to be
described in a Quarterly Report on Form 10-Q filed by the
Borrower if such filing were made on the date hereof.
6. The Borrower has no Subsidiaries.
In rendering my opinion, I have assumed that each
party to the Credit Agreement (other than the Borrower) has
the requisite corporate power and authority to execute and
deliver the Credit Agreement and to perform its obligations
under the Credit Agreement; that the Credit Agreement has
been duly authorized, executed and delivered by the parties
thereto other than the Borrower and constitutes their
legally valid and binding obligation, enforceable against
them in accordance with its terms; and that the signatures
(other than those on behalf of the Borrower) on all
documents examined by me are genuine, assumptions which I
have not independently verified. I express no opinion as to
the compliance by the parties to the Credit Agreement (other
than the Borrower) with any state or Federal laws or
regulations applicable to the transactions contemplated by
the Credit Agreement because of the nature of their
business.
This opinion is furnished by me as counsel for the
Borrower to you, and is solely for your benefit, and is not
to be otherwise used, circulated or relied upon without my
express written consent.
Very truly yours,
EXHIBIT H
OPINION OF
DAVIS POLK & WARDWELL, SPECIAL COUNSEL
FOR THE AGENT
[Effective Date]
To the Banks and the Agent
Referred to Below
c/o Morgan Guaranty Trust Company
of New York, as Agent
60 Wall Street
New York, New York 10260
Dear Sirs:
We have participated in the preparation of the
$1,000,000,000 Credit Agreement (the "Credit Agreement")
dated as of June 29, 1995 among Sears Roebuck Acceptance
Corp., a Delaware corporation (the "Borrower"), the banks
listed on the signature pages thereof (the "Banks"), the
Managing Agent, Co-Arrangers, Co-Agents and Lead Managers
referred to therein and Morgan Guaranty Trust Company of New
York, as Agent (the "Agent"), and have acted as special
counsel for the Agent for the purpose of rendering this
opinion pursuant to Section 3.01(d) of the Credit Agreement.
Terms defined in the Credit Agreement are used herein as
therein defined.
We have examined originals or copies, certified or
otherwise identified to our satisfaction, of such documents,
corporate records, certificates of public officials and
other instruments and have conducted such other
investigations of fact and law as we have deemed necessary
or advisable for purposes of this opinion.
Upon the basis of the foregoing, we are of the
opinion that:
1. The execution, delivery and performance by the
Borrower of the Credit Agreement and the Notes are within
the Borrower's corporate powers and have been duly
authorized by all necessary corporate action.
2. The Credit Agreement constitutes a valid and
binding agreement of the Borrower and the Notes constitute
valid and binding obligations of the Borrower, in each case
enforceable in accordance with its terms, except as the same
may be limited by bankruptcy, insolvency or similar laws
affecting creditors' rights generally and by general
principles of equity.
We are members of the Bar of the State of New York
and the foregoing opinion is limited to the laws of the
State of New York, the federal laws of the United States of
America and the General Corporation Law of the State of
Delaware. In giving the foregoing opinion, we express no
opinion as to the effect (if any) of any law of any
jurisdiction (except the State of New York) in which any
Bank is located which limits the rate of interest that such
Bank may charge or collect.
This opinion is rendered solely to you in
connection with the above matter. This opinion may not be
relied upon by you for any other purpose or relied upon by
any other person without our prior written consent.
Very truly yours,
EXHIBIT I
ASSIGNMENT AND ASSUMPTION AGREEMENT
AGREEMENT dated as of _________, 19__ among
[ASSIGNOR] (the "Assignor"), [ASSIGNEE] (the "Assignee"),
SEARS ROEBUCK ACCEPTANCE CORP. (the "Borrower") and MORGAN
GUARANTY TRUST COMPANY OF NEW YORK, as Agent (the "Agent").
W I T N E S S E T H
WHEREAS, this Assignment and Assumption Agreement
(the "Agreement") relates to the $1,000,000,000 Credit
Agreement dated as of June 29, 1995 among the Borrower, the
Assignor and the other Banks party thereto, as Banks, the
Managing Agent, Co-Arrangers, Co-Agents and Lead Managers
referred to therein and the Agent (the "Credit Agreement");
WHEREAS, as provided under the Credit Agreement,
the Assignor has a Commitment to make Loans to the Borrower
in an aggregate principal amount at any time outstanding not
to exceed $__________;
WHEREAS, Committed Loans made to the Borrower by
the Assignor under the Credit Agreement in the aggregate
principal amount of $__________ are outstanding at the date
hereof; and
WHEREAS, the Assignor proposes to assign to the
Assignee all of the rights of the Assignor under the Credit
Agreement in respect of a portion of its Commitment
thereunder in an amount equal to $__________ (the "Assigned
Amount"), together with a corresponding portion of its
outstanding Committed Loans, and the Assignee proposes to
accept assignment of such rights and assume the
corresponding obligations from the Assignor on such terms;
NOW, THEREFORE, in consideration of the foregoing
and the mutual agreements contained herein, the parties
hereto agree as follows:
SECTION 1. Definitions. All capitalized terms not
otherwise defined herein shall have the respective meanings
set forth in the Credit Agreement.
SECTION 2. Assignment. The Assignor hereby
assigns and sells to the Assignee all of the rights of the
Assignor under the Credit Agreement to the extent of the
Assigned Amount, and the Assignee hereby accepts such
assignment from the Assignor and assumes all of the
obligations of the Assignor under the Credit Agreement to
the extent of the Assigned Amount, including the purchase
from the Assignor of the corresponding portion of the
principal amount of the Committed Loans made by the Assignor
outstanding at the date hereof. Upon the execution and
delivery hereof by the Assignor, the Assignee, the Borrower
and the Agent and the payment of the amounts specified in
Section 3 required to be paid on the date hereof (i) the
Assignee shall, as of the date hereof, succeed to the rights
and be obligated to perform the obligations of a Bank under
the Credit Agreement with a Commitment in an amount equal to
the Assigned Amount, and (ii) the Commitment of the Assignor
shall, as of the date hereof, be reduced by a like amount
and the Assignor released from its obligations under the
Credit Agreement to the extent such obligations have been
assumed by the Assignee. The assignment provided for herein
shall be without recourse to the Assignor.
SECTION 3. Payments. As consideration for the
assignment and sale contemplated in Section 2 hereof, the
Assignee shall pay to the Assignor on the date hereof in
Federal funds an amount equal to $_________.
_________
1 Amount should combine principal together with accrued
interest and breakage compensation, if any, to be paid by the
Assignee, net of any portion of any upfront fee to be paid by the
Assignor to the Assignee. It may be preferable in an appropriate
case to specify these amounts generically or by formula rather than
as a fixed sum.
It is
understood that facility fees accrued to the date hereof are
for the account of the Assignor and such fees accruing from
and including the date hereof are for the account of the
Assignee. Each of the Assignor and the Assignee hereby
agrees that if it receives any amount under the Credit
Agreement which is for the account of the other party
hereto, it shall receive the same for the account of such
other party to the extent of such other party's interest
therein and shall promptly pay the same to such other party.
SECTION 4. Taxes. [The Assignee agrees (to the
extent it is permitted to do so under the laws and any
applicable double taxation treaties of the United States,
the jurisdiction of such Assignee's incorporation, and the
jurisdictions in which such Assignee's Domestic Lending
Office and Euro-Dollar Lending Office are located) to
execute and deliver to the Agent for delivery to the
Borrower at the times and for the periods required pursuant
to Section 2.15 of the Credit Agreement, two accurate and
complete original signed copies of Form 1001 or Form 4224
(or any successor form), appropriately completed and
claiming complete exemption from withholding and deduction
of United States Taxes. Attached hereto are two accurate
and complete original signed copies of Form 1001 with
respect to each three-year calendar period, any portion of
which falls within the Revolving Credit Period, dated as of
the date hereof, or two accurate and complete signed copies
of Form 4224 with respect to each tax year of the Assignee,
any portion of which falls within the Revolving Credit
Period, dated as of the date hereof, as applicable. The
Assignee hereby represents and warrants to the Borrower and
the Agent that on the date hereof it is permitted to take
the actions described in this Section 4 under the laws and
any applicable double taxation treaties of the jurisdictions
specified above.]
_________
2 Use if such Assignee is a Non-U.S. Bank.
[The Assignee represents to the Borrower
and the Agent that it is not a Non-U.S. Bank.]
_________
3 Use if such Assignee is not a Non-U.S. Bank.
SECTION 5. Consent of the Borrower and the Agent.
This Agreement is conditioned upon the consent of the
Borrower and the Agent pursuant to Section 9.06(c) of the
Credit Agreement. The execution of this Agreement by the
Borrower and the Agent is evidence of this consent.
Pursuant to Section 9.06(c) the Borrower agrees to execute
and deliver a Note payable to the order of the Assignee to
evidence the assignment and assumption provided for herein.
SECTION 6. Non-Reliance on Assignor. The
Assignor makes no representation or warranty in connection
with, and shall have no responsibility with respect to, the
solvency, financial condition, or statements of the
Borrower, or the validity and enforceability of the
obligations of the Borrower in respect of the Credit
Agreement or any Note. The Assignee acknowledges that it
has, independently and without reliance on the Assignor, and
based on such documents and information as it has deemed
appropriate, made its own credit analysis and decision to
enter into this Agreement and will continue to be
responsible for making its own independent appraisal of the
business, affairs and financial condition of the Borrower.
SECTION 7. Governing Law. This Agreement shall
be governed by and construed in accordance with the laws of
the State of New York.
SECTION 8. Counterparts. This Agreement may be
signed in any number of counterparts, each of which shall be
an original, with the same effect as if the signatures
thereto and hereto were upon the same instrument.
IN WITNESS WHEREOF, the parties have caused this
Agreement to be executed and delivered by their duly
authorized officers as of the date first above written.
[ASSIGNOR]
By_________________________
Title:
[ASSIGNEE]
By__________________________
Title:
SEARS ROEBUCK ACCEPTANCE CORP.
By__________________________
Title:
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK, as Agent
By__________________________
Title:
EXHIBIT J
TERMS OF SUBORDINATION
_________
1 These Terms of Subordination refer to the $1,000,000,000
Credit Agreement (the "Credit Agreement") dated as of June 29, 1995
among Sears Roebuck Acceptance Corp., the banks listed on the
signature pages thereof, the Managing Agent, Co-Arrangers, Co-
Agents and Lead Managers referred to therein and Morgan Guaranty
Trust Company of New York, as Agent. Capitalized terms used but
not defined herein are used herein as defined in the Credit
Agreement.
Section 1. Subordination to Superior Debt. The
Borrower and the lender of the SRAC Subordinated Debt (the
"Lender") agree for the benefit of the holders of the
Superior Debt that the SRAC Subordinated Debt shall, to the
extent hereinafter set forth, be subordinate and junior in
right of payment to all Superior Debt of the Borrower.
Section 2. Borrower Not to Make Payments
hereunder in Certain Circumstances. (a) Upon the maturity
of all or any part of the Superior Debt by lapse of time,
acceleration or otherwise, such Superior Debt shall first be
paid in full, or such payment shall be duly provided for in
cash or in a manner satisfactory to the holders of such
Superior Debt, before any payment by the Borrower or any
Subsidiary is made on account of the principal of or
premium, if any, or interest on the notes issued hereunder
(the "SRAC Subordinated Notes") or to acquire any of the
SRAC Subordinated Notes or on account of any sinking fund
for the SRAC Subordinated Notes.
(b) In the event and during the continuation of
any Event of Default or any event or condition that, with
the giving of notice or the lapse of time or both, would
become an Event of Default (as such term is defined in the
Credit Agreement, provided that any such event or condition
that would become an Event of Default only upon both the
giving of notice of such event or condition by the Agent to
the Borrower and the lapse of time shall constitute such an
event or condition for purposes of this Agreement only if
the Agent shall have given such notice to the Borrower) with
respect to any Superior Debt (each such Event of Default or
any such event or condition that, with the giving of notice
or the lapse of time, or both, being referred to in this
Agreement as a "Superior Debt Default"), (i) no payment
shall be made by the Borrower or any Subsidiary on or with
respect to the principal of, or, premium, if any, or
interest on, the SRAC Subordinated Notes or to acquire any
SRAC Subordinated Notes or on account of any sinking fund
for the SRAC Subordinated Notes unless and until such
Superior Debt Default shall have been remedied, nor shall
any such payment be made if after giving effect, as if paid,
to such payment, any Superior Debt Default would exist and
(ii) no holder of SRAC Subordinated Notes shall demand,
accept or receive, any direct or indirect payment (in cash
or property or by setoff, exercise of contractual or
statutory rights or otherwise) of or on account of any SRAC
Subordinated Notes, notwithstanding the terms of the SRAC
Subordinated Notes or of any agreement or instrument which
governs the SRAC Subordinated Notes, and no such payment
shall be due.
(c) Unless and until all principal of, premium,
if any, and interest on, and all other obligations of the
Borrower under, the Superior Debt shall have been paid in
full, no holder of SRAC Subordinated Notes will commence or
maintain any action, suit or any other legal or equitable
proceeding against the Borrower, or join with any creditor
in any such proceeding, under any insolvency, bankruptcy,
receivership, liquidation, reorganization or other similar
law, unless the holders of Superior Debt shall also join in
bringing such proceeding, provided that this Section 2(c)
shall not prohibit a holder of SRAC Subordinated Notes from
filing a proof of claim or otherwise participating in any
such proceeding not commenced by it.
Section 3. SRAC Subordinated Notes Subordinated
to Prior Payment of all Superior Debt on Dissolution,
Liquidation or Reorganization of Borrower. In the event of
any insolvency or bankruptcy proceedings, and any
receivership, liquidation, reorganization or other similar
proceedings in connection therewith, relative to the
Borrower or to its creditors, in their capacity as creditors
of the Borrower, or to substantially all of its property,
and in the event of any proceedings for voluntary
liquidation, dissolution or other winding up of the
Borrower, whether or not involving insolvency or bankruptcy,
then:
(a) the holders of all Superior Debt shall first be
entitled to receive payment in full of the principal
thereof, premium, if any, interest and all other amounts
payable thereon (accruing before and after the
commencement of the proceedings) before the holders of
the SRAC Subordinated Notes are entitled to receive any
payment on account of the principal of, premium, if any,
or interest on the SRAC Subordinated Notes; and
(b) all SRAC Subordinated Notes shall forthwith
(notwithstanding the terms of Section 2) become due and
payable and any payment or distribution of assets of the
Borrower of any kind or character, whether in cash,
property or securities to which the holders of the SRAC
Subordinated Notes would be entitled, but for the
provisions of these Terms of Subordination, shall be paid
or distributed by the liquidating trustee or agent or
other person making such payment or distribution, whether
a trustee in bankruptcy, a receiver or liquidating
trustee or other trustee or agent, directly to the Agent
or any other representative on behalf of the holders of
Superior Debt, to the extent necessary to make payment in
full of all principal, premium, if any, interest and all
other amounts payable on all Superior Debt remaining
unpaid, after giving effect to any concurrent payment or
distribution to the holders of the Superior Debt.
Section 4. Rights of Holders of Superior Debt;
Subrogation. (a) Should any payment or distribution or
security or the proceeds of any thereof be collected or
received by any holder of SRAC Subordinated Notes in respect
of the SRAC Subordinated Notes, and such collection or
receipt is prohibited hereunder prior to the payment in full
of the Superior Debt, such holder will forthwith deliver the
same to the Agent for the equal and ratable benefit of the
holders of the Superior Debt in precisely the form received
(except for the endorsement or the assignment of or by such
holder where necessary) for application to payment of all
Superior Debt in full, after giving effect to any concurrent
payment or distribution to the holders of Superior Debt and,
until so delivered, the same shall be held in trust by such
holder as the property of the holders of the Superior Debt.
(b) All payments and distributions received by the
Agent in respect of the SRAC Subordinated Notes, to the
extent received in or converted into cash, may be applied by
the Agent first to the payment of any and all reasonable
out-of-pocket expenses (including attorney's fees and legal
expenses) paid or incurred by the Agent or such
representative in enforcing the provisions hereof or in
endeavoring to collect or realize upon the SRAC Subordinated
Notes or any security therefor, and any balance thereof
shall, solely as between any holder of the SRAC Subordinated
Notes, on the one hand, and the holders of the Superior
Debt, on the other hand, be applied by the Agent in such
order of application as the Agent may from time to time
select, toward the payment of the Superior Debt remaining
unpaid.
(c) No holder of SRAC Subordinated Notes shall be
subrogated to the rights of the holders of the Superior Debt
to receive payments or distributions of assets of the
Borrower until all amounts payable with respect to the
Superior Debt shall be paid in full; and, for the purposes
of such subrogation, no payments or distributions to the
holders of the Superior Debt of any cash, property or
securities to which any holder of SRAC Subordinated Notes
would be entitled except for these provisions shall, as
between the Borrower, its creditors other than the holders
of the Superior Debt, and such holders of SRAC Subordinated
Notes, be deemed to be a payment by the Borrower to or on
account of the Superior Debt. The provisions of this
Agreement are and are intended solely for the purpose of
defining the relative rights of holders of SRAC Subordinated
Notes, on the one hand, and the holders of the Superior
Debt, on the other hand.
(d) Subject to the payment in full of all
Superior Debt, the holders of the SRAC Subordinated Notes
shall be subrogated (equally and ratably with the holders of
all subordinated indebtedness of the Borrower which, by its
terms, is not superior in right of payment to the SRAC
Subordinated Notes, and ranks on a parity with the SRAC
Subordinated Notes) to the rights of the holders of Superior
Debt to receive payments or distributions of cash, property
or securities of the Borrower applicable to the Superior
Debt until all amounts owing on the SRAC Subordinated Notes
shall be paid in full. For purposes of such subrogation, no
payments or distributions to the holders of the SRAC
Subordinated Notes of cash, property, securities or other
assets by virtue of the subrogation herein provided which
otherwise would have been made to the holders of the
Superior Debt shall, as between the Borrower, its creditors
other than the holders of Superior Debt and the holders of
the SRAC Subordinated Notes, be deemed to be a payment to or
on account of the SRAC Subordinated Notes. The holders of
SRAC Subordinated Notes agree that, in the event that all or
any part of any payment made on account of the Superior Debt
is recovered from the holders of Superior Debt as a
preference, fraudulent transfer or similar payment under any
bankruptcy, insolvency or similar law, any payment or
distribution received by the holders of SRAC Subordinated
Notes on account of the SRAC Subordinated Notes at any time
after the date of the payment so recovered, whether pursuant
to the right of subrogation provided for in this Section
4(d) or otherwise, shall be deemed to have been received by
such holders of SRAC Subordinated Notes in trust as the
property of the holders of the Superior Debt and such
holders shall forthwith deliver the same to the Agent for
the equal and ratable benefit of the holders of the Superior
Debt for application to payment of all Superior Debt in
full.
Section 5. Renewals, Extensions and Increases of
Superior Debt. Each holder of SRAC Subordinated Notes by
his acceptance thereof thereby waives any and all notice of
renewal, extension, accrual or increase in the amount of any
of the Superior Debt, present or future, and agrees and
consents that without notice to or assent by any holder or
holders of the SRAC Subordinated Notes:
(i) the obligation and liabilities of the Borrower
or any other party or parties for or upon the Superior
Debt (or any promissory note, security document or
guaranty evidencing or securing the same) may, from time
to time, in whole or in part, be renewed, extended,
increased, modified, amended, accelerated, compromised,
supplemented, terminated, sold, exchanged, waived or
released;
(ii) the Agent or any other representative acting
on behalf of the holders of the Superior Debt and the
holders of the Superior Debt may exercise or refrain from
exercising any right, remedy or power granted by or in
connection with any agreements relating to the Superior
Debt; and
(iii) any balance or balances of funds with any
holders of the Superior Debt at any time standing to the
credit of the Borrower may, from time to time, in whole
or in part, be surrendered or released;
all as the Agent or any other representative or
representatives acting on behalf of the holders of the
Superior Debt and the holders of the Superior Debt may deem
advisable and all without impairing, abridging, diminishing,
releasing or affecting the subordination of the SRAC
Subordinated Notes to the Superior Debt provided for herein.
Section 6. Obligation of Borrower Unconditional.
Nothing contained in these Terms of Subordination or in the
SRAC Subordinated Notes is intended to or shall impair, as
between the Borrower, its creditors other than the holders
of the Superior Debt, and the holders of the SRAC
Subordinated Notes, the obligation of the Borrower, which is
absolute and unconditional, to pay to the holders of the
SRAC Subordinated Notes the principal of, premium, if any,
and interest on the SRAC Subordinated Notes, as and when the
same shall become due and payable (except as provided in
Section 2), by lapse of time, acceleration or otherwise, in
accordance with their terms, or is intended to or shall
affect the relative rights of the holders of the SRAC
Subordinated Notes and other creditors of the Borrower other
than the holders of the Superior Debt, nor shall anything
herein or therein prevent the Trustee or the holder of any
SRAC Subordinated Notes (i) from taking all appropriate
actions to preserve its rights under the SRAC Subordinated
Notes not inconsistent with the rights of the holders of the
Superior Debt under these Terms of Subordination, or (ii)
from exercising all remedies otherwise permitted by
applicable law upon default under the SRAC Subordinated
Notes, subject to the rights, if any, of the holders of the
Superior Debt under Section 2 of these Terms of
Subordination and in respect of cash, property or securities
of the Borrower otherwise payable or delivered to such
holders of SRAC Subordinated Notes upon the exercise of any
such remedy.
Section 7. Miscellaneous. Each holder of SRAC
Subordinated Notes by its acceptance thereof thereby
acknowledges and agrees that the holders of the Superior
Debt have relied upon and will continue to rely upon the
subordination provided for herein in entering into the
agreements relating to Superior Debt and in extending credit
to the Borrower pursuant thereto.
(b) No present or future holder of Superior Debt
shall be prejudiced in his right to enforce the
subordination contained herein in accordance with the terms
hereof by any act or failure to act on the part of the
Borrower or any holder of the SRAC Subordinated Notes. The
subordination provisions contained herein are for the
benefit of the holders of the Superior Debt from time to
time and, so long as Superior Debt is outstanding under any
agreement, may not be rescinded, cancelled or modified in
any way without the prior written consent thereto of all
holders of Superior Debt.
(c) The subordination provisions hereof shall be
binding upon any holder of the SRAC Subordinated Notes and
upon the heirs, legal representatives, successors and
assigns of any holder of the SRAC Subordinated Notes; and,
to the extent that any holder of the SRAC Subordinated Notes
is either a partnership or a corporation, all references
herein to any holder of the SRAC Subordinated Notes shall be
deemed to include any successor or successors, whether
immediate or remote, to such partnership or corporation.
(d) These Terms of Subordination shall be
construed in accordance with and governed by the laws of the
State of New York.
