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) August 22, 1996
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) 888-3112
<PAGE>
Item 5. Other Events.
On August 22, 1996, Registrant executed a Distribution Agreement
with Goldman, Sachs, & Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated,
Morgan, Stanley & Co. Incorporated and Salomon Brothers Inc (the "Distribution
Agreement"), relating to $2,000,000,000 aggregate initial offering price of
Medium-Term Notes Series III, to be sold from time to time pursuant to the
Distribution Agreement.
Also on August 22, 1996, Registrant and Sears, Roebuck and
Co. entered into an agreement (the "Extension Agreement") to extend the terms
of the Fixed Charge Coverage and Ownership Agreement dated May 15, 1995 to
cover the securities registered under Registration Statement No. 333-9817.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
1 Distribution Agreement, dated August 22, 1996, among Registrant,
Sears, Roebuck and Co., Goldman, Sachs & Co., Merrill Lynch,
Pierce Fenner & Smith Incorporated, Morgan Stanley & Co.
Incorporated and Salomon Brothers Inc
4(a) Form of fixed rate Medium Term Note Series III.
4(b) Form of floating rate Medium Term Note Series III.
4(c) Extension Agreement dated August 22, 1996 between Registrant
and Sears, Roebuck and Co.
5 Opinion of Robert J. Pence dated August 28, 1996, relating to
the validity of $2,000,000,000 aggregate principal amount of
Medium-Term Notes Series III.
8 Opinion of Baker & McKenzie, special tax counsel to Registrant,
dated August 27, 1996.
23(a) Consent of Robert J. Pence (included in Exhibit 5).
23(b) Consent of Baker & McKenzie (included in Exhibit 8).
99 Letter of Representations, dated as of August 27, 1996, between
the Registrant, Chase Manhattan Bank and The Depository Trust
Company.
<PAGE>
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: September 4, 1996 By: /s/ STEPHEN D. CARP
STEPHEN D. CARP
Vice President, Finance
EXHIBIT INDEX
1 Distribution Agreement, dated August 22, 1996, among Registrant, Sears,
Roebuck and Co., Goldman, Sachs & Co., Merrill Lynch, Pierce Fenner &
Smith Incorporated, Morgan Stanley & Co. Incorporated and Salomon
Brothers Inc
4(a) Form of fixed rate Medium Term Note Series III.
4(b) Form of floating rate Medium Tern Note Series III.
4(c) Extension Agreement dated August 22, 1996 between Registrant
and Sears, Roebuck and Co.
5 Opinion of Robert J. Pence dated August 28, 1996, relating to the
validity of $2,000,000,000 aggregate principal amount of Medium-Term
Notes Series III.
8 Opinion of Baker & McKenzie, special tax counsel to Registrant, dated
August 27, 1996.
23(a) Consent of Robert J. (included in Exhibit 5).
23(b) Consent of Baker & McKenzie (included in Exhibit 8).
99 Letter of Representations, dated as of August 27, 1996, between the
Registrant, Chase Manhattan Bank and The Depository Trust Company.
Exhibit 1
Sears Roebuck Acceptance Corp.
$2,000,000,000 Medium-Term Notes Series III
DISTRIBUTION AGREEMENT
August 22, 1996
Sears Roebuck Acceptance Corp., a Delaware corporation (the
"Company"), proposes to issue and sell from time to time its
medium-term debt securities (the "Notes") in an aggregate
initial offering price up to U.S. $2,000,000,000 (the equivalent
in foreign currency or currency units), and agrees with each
person serving as an agent pursuant to this Agreement
(individually, an "Agent", and collectively, the "Agents") as
set forth herein. Subject to the terms and conditions stated
herein, the Company hereby (i) appoints each Agent as an agent
of the Company for the purpose of soliciting and receiving
offers to purchase Notes from the Company and (ii) agrees that
whenever it determines to sell Notes directly to any Agent as
principal, it will enter into a separate agreement (each a
"Terms Agreement"), substantially in the form of Annex I hereto,
relating to such sale in accordance with Section 2(b) hereof
(unless the Company and such Agent shall otherwise agree).
The Notes will be issued under an indenture, dated as of May
15, 1995 (the "Indenture"), between the Company and The Chase
Manhattan Bank, N.A., as Trustee (the "Trustee"). The Notes
shall have the currency denomination, maturities, annual
interest rates (whether fixed or floating), redemption
provisions and other terms set forth in the Prospectus referred
to below as it may be amended or supplemented from time to time.
The Notes will be issued, and the terms and rights thereof
established, from time to time by the Company in accordance with
the Indenture and the Administrative Procedure attached hereto
as Annex II as it may be amended from time to time by written
agreement between the Agents and the Company (the "Procedure")
and, if applicable, will be specified in a related Terms
Agreement.
1. Each of the Company and Sears, Roebuck and Co. ("Sears")
represents and warrants to, and agrees with, each Agent that:
(a) A registration statement on Form S-3 (Registration No.
33-9817) in respect of U.S. $4,000,000,000 aggregate principal
amount (or the equivalent in foreign currency or currency units)
of debt securities of the Company, including the Notes, has been
filed with the Securities and Exchange Commission (the
"Commission") in the form heretofore delivered to such Agent,
excluding exhibits (whether or not incorporated by reference) to
such registration statement but including all documents
incorporated by reference in the prospectus included therein,
and such registration statement in such form has been declared
effective by the Commission and no stop order suspending the
effectiveness of such registration statement has been issued and
no proceeding for that purpose has been initiated or threatened
by the Commission (any preliminary prospectus included in such
registration statement being hereinafter called a "Preliminary
Prospectus;" the various parts of such registration statement,
including all exhibits thereto but excluding Form T-1, each as
amended at the time such part became effective, being
hereinafter collectively called the "Registration Statement;"
the prospectus relating to the Notes, in the form in which it
has most recently been filed with the Commission on or prior to
the date of this Agreement, being hereinafter called the
"Prospectus;" any reference herein to any Preliminary Prospectus
or the Prospectus shall be deemed to refer to and include the
documents incorporated by reference therein pursuant to the
applicable form under the Securities Act of 1933, as amended
(the "Act") as of the date of such Preliminary Prospectus or
Prospectus, as the case may be; any supplement to the Prospectus
that sets forth only the terms of a particular issue of Notes
being hereinafter called a "Pricing Supplement;" any reference
to any amendment or supplement to any Preliminary Prospectus or
the Prospectus shall be deemed to refer to and include any
documents filed after the date of such Preliminary Prospectus or
Prospectus, as the case may be, under the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), and incorporated
therein by reference; and any reference to the Prospectus as
amended or supplemented shall be deemed to refer to the
Prospectus as amended or supplemented with respect to Notes sold
pursuant to this Agreement, in the form in which it is filed
with the Commission pursuant to Rule 424(b) of Regulation C
under the Act, including any documents incorporated by reference
therein as of the date of such filing);
(b)Except for statements in such documents which do not
constitute part of the Registration Statement or the Prospectus
pursuant to Rule 412 of Regulation C under the Act and after
substituting therefor any statements modifying or superseding
such excluded statements (i) the documents incorporated by
reference in the Prospectus, when they became effective or were
filed with the Commission, as the case may be, conformed in all
material respects to the requirements of the Act or the Exchange
Act, as applicable, and the rules and regulations of the
Commission thereunder, and none of such documents, when they
became effective or were so filed, as the case may be,
contained, in the case of documents which became effective under
the Act, an untrue statement of a material fact or omitted to
state a material fact required to be stated therein or necessary
to make the statements therein not misleading, and, in the case
of documents which were filed under the Exchange Act with the
Commission, an untrue statement of a material fact or omitted to
state a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were
made, not misleading, and (ii) any further documents so filed
and incorporated by reference in the Prospectus, when such
documents become effective or are filed with the Commission, as
the case may be, will conform in all material respects to the
requirements of the Act or the Exchange Act, as applicable, and
the rules and regulations of the Commission thereunder and will
not contain, in the case of documents which become effective
under the Act, an untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary
to make the statements therein not misleading, and in the case
of documents which are filed under the Exchange Act with the
Commission, an untrue statement of material fact or omit to
state a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were
made, not misleading; provided, however, that this
representation and warranty shall not apply to any statements or
omissions made in reliance upon and in conformity with
information furnished in writing to the Company by any Agent
expressly for use in the Prospectus as amended or supplemented
to relate to a particular issuance of Notes; the Indenture has
been duly qualified under, and conforms in all material respects
to the requirements of, the Trust Indenture Act of 1939, as
amended (the "Trust Indenture Act"); and
(c)Except for statements in documents incorporated therein by
reference which do not constitute part of the Registration
Statement or the Prospectus pursuant to Rule 412 of Regulation C
under the Act and after substituting therefor any statements
modifying or superseding such excluded statements, the
Registration Statement and the Prospectus conformed, and any
amendments or supplements thereto will, when they become
effective or are filed with the Commission, as the case may be,
conform, in all material respects to the requirements of the Act
and the Trust Indenture Act, and the rules and regulations of
the Commission thereunder and do not and will not, as of the
applicable effective date in the case of the Registration
Statement and any amendment thereto and as of the applicable
filing date in the case of the Prospectus and any supplement
thereto, contain an untrue statement of a material fact or omit
to state a material fact required to be stated therein or
necessary to make the statements therein not misleading;
provided, however, that this representation and warranty shall
not apply to any statements or omissions made in reliance upon
and in conformity with information furnished in writing to the
Company by any Agent expressly for use in the Prospectus as
amended or supplemented to relate to a particular issuance of
Notes.
2. The Company represents and warrants to, and agrees with,
each Agent that:
(a)Upon payment therefor as provided herein and in any Terms
Agreement, the Notes will have been duly and validly authorized,
and (assuming their due authentication by the Trustee) will have
been duly and validly issued and will be valid outstanding
obligations of the Company in accordance with their terms,
except as the same may be limited by insolvency, bankruptcy,
reorganization, or other laws relating to or affecting the
enforcement of creditors' rights or by general equity
principles, and will be entitled to the benefits of the
Indenture;
(b)The issue and sale of the Notes and the compliance by the
Company with all of the provisions of the Notes, the Indenture,
this Agreement and any Terms Agreement will not conflict with or
result in any breach which would constitute a material default
under, or result in the creation or imposition of any lien,
charge or encumbrance upon any of the property or assets of the
Company material to the Company, pursuant to the terms of, any
indenture, loan agreement or other agreement or instrument for
borrowed money to which the Company is a party or by which the
Company may be bound or to which any of the property or assets
of the Company material to the Company, is subject, nor will
such action result in any material violation of the provisions
of the Certificate of Incorporation, as amended, or the By-Laws
of the Company or, to the best of its knowledge, any statute or
any order, rule or regulation applicable to the Company of any
court or any Federal, State or other regulatory authority or
other governmental body having jurisdiction over the Company,
and no consent, approval, authorization or other order of, or
filing with, any court or any such regulatory authority or other
governmental body is required for the solicitation of offers to
purchase Notes and the issue and sale of the Notes, except as
may be required under the Act, the Exchange Act, the Trust
Indenture Act and securities laws of the various states and
other jurisdictions in which the Agents will solicit offers to
purchase Notes from the Company and will purchase Notes as
principal, as the case may be; and
(c)Immediately after the settlement of any sale of Notes by
the Company resulting from solicitation by such Agent hereunder
and immediately after any Time of Delivery (as defined below)
relating to a sale to an Agent as principal, the aggregate
principal amount of Notes which shall have been issued and sold
by the Company hereunder or under any Terms Agreement and of any
debt securities of the Company (other than such Notes) that
shall have been issued and sold pursuant to the Registration
Statement will not exceed the amount of debt securities
registered under the Registration Statement.
3.(a) On the basis of the representations and warranties
herein contained, and subject to the terms and conditions herein
set forth, each of the Agents hereby severally and not jointly
agrees to act as agent of the Company, to use its reasonable
efforts to solicit offers to purchase the Notes from the Company
upon the terms and conditions set forth in the Prospectus
relating to the Notes as amended or supplemented from time to
time and in the Procedure.
Subject to the provisions of this Section 3 and to the
Procedure, offers for the purchase of Notes may be solicited by
each Agent as agent for the Company at such time and in such
amounts as such Agent deems advisable; provided, however, that
the Company reserves the right to sell Notes directly on its own
behalf or through other agents, dealers or underwriters, and to
appoint additional persons from time to time to serve as Agents
pursuant to this Agreement.
Each Agent agrees that it will not solicit an offer to purchase
Notes or deliver any of the Notes in any jurisdiction outside
the United States of America except under circumstances that
will result in compliance with the applicable laws thereof.
Each Agent understands that no action has been taken to permit a
public offering in any jurisdiction outside the United States of
America where action would be required for such purpose. The
Agents further undertake that in connection with the
distribution of Notes denominated in any foreign currency or
currency unit, they will as agent, directly or indirectly, not
solicit offers to purchase and as principal under any Terms
Agreement or otherwise, directly or indirectly, not offer, sell
or deliver, such Notes in or to residents of the country issuing
such currency, except as permitted by applicable law.
The Company reserves the right, in its sole discretion, to
instruct the Agents to suspend at any time, for any period of
time or permanently, the solicitation of offers to purchase the
Notes. Promptly after receipt of notice from the Company, but
in any event not less than one business day thereafter, the
Agents will suspend solicitation of offers to purchase Notes
from the Company until such time as the Company has advised them
that such solicitation may be resumed.
The Company agrees to pay each Agent, at the time of settlement
of any sale of a Note by the Company, the purchase of which is
solicited by such Agent, a commission in United States dollars
(which, in the case of Notes denominated in other than United
States dollars, shall be based upon the Market Exchange Rate (as
defined below) for such currency or currency unit at the time of
any acceptance of an offer to purchase a Note) in an amount
equal to the following percentage of the principal amount of
such Note sold (or at such other amount as may from time to time
be negotiated between such Agent and the Company):
Maturity Commission (percentage of aggregate principal
amount of Notes sold)
9 months to less than 1 year.................... .125%
1 year to less than 18 months.................... .150%
18 months to less than 2 years.................. .200%
2 years to less than 3 years.................... .250%
3 years to less than 4 years.................... .350%
4 years to less than 5 years................... .450%
5 years to less than 6 years................... .500%
6 years to less than 7 years................... .550%
7 years to less than 11 years.................. .600%
11 years to less than 15 years................. .625%
15 years to less than 20 years................. .675%
20 years to 30 years........................... .750%
Greater than 30 years.......................... to be
negotiated
Notwithstanding anything herein to the contrary, if, at or prior
to the time of settlement, the Company and an Agent have entered
into, or such Agent has arranged for the Company to enter into,
a contract with respect to the sale of the currency (other than
United States dollars) or currency unit in which a Note has been
denominated and the purchase of which was solicited by such
Agent, the commission in United States dollars payable by the
Company to such Agent shall be based upon the same exchange rate
set forth in such contract.
The authorized denominations of Notes denominated in a currency
or currency unit other than United States dollars shall be
equivalent, as determined by the Market Exchange Rate for such
currency or currency unit on the business day immediately
preceding the date on which the offer for such Notes is
accepted, of U.S. $1,000 (rounded down to an integral multiple
of 1,000 units of such currency or currency unit), and any
larger amount. The authorized denominations of Notes
denominated in United States dollars shall be U.S. $1,000 and
any larger amount in integral multiples of $1,000.
The "Market Exchange Rate" on a given date for a given foreign
currency means the noon buying rate in New York City for cable
transfers in such currency as certified for customs purposes by
the Federal Reserve Bank of New York on such date; provided,
however, that in the case of European Currency Units, Market
Exchange Rate means, unless otherwise agreed by the Company and
the Agents, the rate of exchange determined by the Council of
European Communities (or any successor thereto) as published on
such date or the most recently available date in the Official
Journal of the European Communities (or any successor
publication).
Unless otherwise agreed between the Company and each Agent,
each Agent shall communicate to the Company, orally or in
writing, each offer to purchase Notes received by it as Agent
other than those rejected by such Agent in accordance herewith.
The Company shall have the sole right to accept offers to
purchase Notes and may reject any proposed purchase of Notes.
Each Agent shall have the right, in its discretion reasonably
exercised, to reject any proposed purchase of Notes received by
it, and any such rejection by it shall not be deemed a breach of
its agreements contained herein.
(b) Each sale of Notes to any Agent as principal shall be made
in accordance with the terms of this Agreement and (unless the
Company and such Agent shall otherwise agree) a Terms Agreement
which will provide for the sale of such Notes. Terms
Agreements, each of which shall be substantially in the form of
Annex I hereto, may take the form of an exchange of any standard
form of written telecommunication between any Agent, the Company
and Sears, including by telecopy or telex. The Company, Sears
and any Agent who is a party to a Terms Agreement agree to
exchange executed copies of such Terms Agreement as promptly as
practicable after they have entered into such Terms Agreement
pursuant to the foregoing exchange of written telecommunication.
The Agents may utilize a selling or dealer group in connection
with the reoffering of the Notes purchased as principal.
For each sale of Notes to an Agent as principal that is not
made pursuant to a Terms Agreement, the procedural details
relating to the issue and delivery of such Notes and payment
therefor shall be as set forth in the Procedure. For each such
sale of Notes to an Agent as principal that is not made pursuant
to a Terms Agreement, the Company agrees to pay such Agent a
commission (or grant an equivalent discount) as provided in
Section 3(a) and in accordance with the schedule set forth
therein or established from time to time pursuant thereto,
except as the parties otherwise agree in writing.
Each time and date of delivery of and payment for Notes to be
purchased by an Agent as principal, whether set forth in a Terms
Agreement or in accordance with the Procedure, is referred to
herein as a "Time of Delivery."
(c) Procedural details relating to the issue and delivery of
Notes, the solicitation of offers to purchase Notes, and the
payment in each case therefor, shall be as set forth in the
Procedure. The provisions of the Procedure shall apply to all
transactions contemplated hereunder other than those made
pursuant to a Terms Agreement. Each of the Agents and the
Company agrees to perform the respective duties and obligations
specifically provided to be performed by each of them in the
Procedure. The Company will furnish to the Trustee a copy of
the Procedure as from time to time in effect.
4. The documents required to be delivered pursuant to Section 8
hereof shall be delivered at the offices of the Company, 3711
Kennett Pike, Greenville, Delaware, at 11:00 a.m., New York
time, on the date of this Agreement, or at such other date and
time as the Agents and the Company agree (such time and date
being referred to herein as the "Closing Date").
5. Each of the Company and Sears covenants and agrees with
each Agent:
(a) Prior to the termination of the offering of the Notes, to
make no amendment or supplement to the Registration Statement or
the Prospectus (except for a Pricing Supplement or a supplement
relating to an offering of securities other than the Notes)
without first having furnished the Agents with a copy of the
proposed form thereof and given the Agents a reasonable
opportunity to review the same; to advise the Agents promptly of
any such amendment or supplement after such Time of Delivery and
furnish the Agents with copies thereof, to prepare, with respect
to any Notes to be sold through or to such Agent pursuant to
this Agreement, a Pricing Supplement with respect to such Notes
in a form previously approved by such Agent and to file such
Pricing Supplement pursuant to Rule 424(b)(2) under the Act not
later than the close of business of the Commission on the second
business day after the date on which such Pricing Supplement is
first used or the date of determination of the offering price;
and to file promptly all reports and any definitive proxy or
information statements required to be filed by the Company or
Sears, respectively, with the Commission pursuant to Section 13
or 14 of the Exchange Act for so long as the delivery of a
prospectus is required in connection with the offering or sale
of the Notes, and during such same period to advise the Agents,
promptly after the Company or Sears receives notice thereof, of
the time when any amendment to the Registration Statement has
been filed or has become effective or any supplement to the
Prospectus or any amended Prospectus (other than any Pricing
Supplement and any supplement relating to any offering of
securities other than the Notes) has been filed with, or mailed
for filing to, the Commission, of the issuance by the Commission
of any stop order or of any order preventing or suspending the
use of any prospectus relating to the Notes, of the suspension
of the qualification of the Notes for offering or sale in any
jurisdiction, of the initiation or threatening of any proceeding
for any such purpose, or of any request by the Commission for
the amending or supplementing of the Registration Statement or
Prospectus or for additional information; and, in the event of
the issuance of any such stop order or of any such order
preventing or suspending the use of any such prospectus or
suspending any such qualification, to use promptly its best
efforts to obtain its withdrawal;
(b) Promptly from time to time to take such action as the
Agents reasonably may request to qualify the Notes for offering
and sale under the securities laws of such jurisdictions as the
Agents may request and to comply with such laws so as to permit
the continuance of sales and dealings therein for as long as may
be necessary to complete the distribution or sale of the Notes
provided that in connection therewith neither the Company nor
Sears shall be required to qualify as a foreign corporation or
to file a general consent to service of process in any
jurisdiction;
(c) To furnish the Agents with copies of the Registration
Statement and each amendment thereto, and with copies of the
Prospectus as amended or supplemented, other than any Pricing
Supplement (except as provided in the Procedure), in the form in
which it is filed with the Commission pursuant to Rule 424 under
the Act or in the form first used to confirm sales which was not
required to be filed pursuant to Rule 424 under the Act, in such
quantities as the Agents may from time to time reasonably
request, and, if the delivery of a prospectus is required at any
time in connection with the offering or sale of the Notes
(including Notes purchased from the Company by such Agent as
principal) and if at such time any event shall have occurred as
a result of which the Prospectus as then amended or supplemented
would include an untrue statement of a material fact or omit to
state any material fact necessary in order to make the
statements therein, in the light of the circumstances under
which they were made when such Prospectus is delivered, not
misleading, or, if for any other reason it shall be necessary
during such same period to amend or supplement the Prospectus or
to file under the Exchange Act any document incorporated by
reference in the Prospectus in order to comply with the Act, the
Exchange Act or the Trust Indenture Act, to (i) notify the
Agents to suspend solicitation of offers to purchase Notes from
the Company (and, if so notified, the Agents shall promptly
cease such solicitations), (ii) prepare and cause to be filed
with the Commission, after having furnished the Agents with a
copy of the proposed form and given the Agents a reasonable
opportunity to review the same, an amendment or supplement to
the Registration Statement or the Prospectus as then amended or
supplemented that will correct such statement or omission or
effect such compliance and (iii) supply such Prospectus as then
amended or supplemented to the Agents in such quantities as the
Agents may reasonably request; if such amendment or supplement,
and any documents, certificates and opinions furnished to the
Agents pursuant to Section 8 in connection with the preparation
or filing of such amendment or supplement are reasonably
satisfactory in all respects to the Agents, the Agents will,
upon the filing of such amendment or supplement with the
Commission and upon the effectiveness of an amendment to the
Registration Statement if such an amendment is required, resume
the Agents obligation to solicit offers to purchase Notes
hereunder; if such amendment or supplement, or any documents,
certificates and opinions furnished to the Agents pursuant to
Section 8 in connection with the preparation or filing of such
amendment or supplement, are not satisfactory to the Agents, the
Agents will as promptly as reasonably practicable notify the
Company and Sears in writing;
(d) To make generally available to its security holders, in
accordance with the provisions of Rule 158 under the Act or
otherwise, as soon as practicable, but in any event not later
than forty-five days after the end of the fourth full fiscal
quarter (ninety days in the case of the last fiscal quarter in
any fiscal year) following the fiscal quarter ending after the
latest of (x) the effective date of the Registration Statement,
(y) the effective date of the post-effective amendment thereto
hereinafter referred to and (z) the date of filing of the report
hereinafter referred to, an earning statement of the Company and
Sears and its consolidated subsidiaries, respectively, (which
need not be audited) complying with Section 11(a) of the Act and
covering a period of at least twelve consecutive months
beginning after the latest of (i) the effective date of such
Registration Statement, (ii) the effective date of the
post-effective amendment, if any, to such Registration Statement
(within the meaning of Rule 158) and (iii) the date of filing of
the last report of the Company or Sears incorporated by
reference into the Prospectus (within the meaning of Rule 158);
and
(e) That each acceptance by the Company of an offer to
purchase Notes hereunder shall be deemed to be an affirmation to
such Agent that the representations and warranties of the
Company and Sears contained in or made pursuant to this
Agreement are true and correct as of the date of such acceptance
as though made at and as of such date, and an undertaking that,
if a settlement occurs with respect to such acceptance, such
representations and warranties will be true and correct as of
such settlement date as though made at and as of such date
(except that such representations and warranties shall be deemed
to relate to the Registration Statement and the Prospectus as
amended and supplemented relating to such Notes).
6. The Company covenants and agrees with each Agent that,
except as may otherwise be specified in any Terms Agreement,
during the period beginning from the date of any Terms Agreement
and continuing to and including the earlier of (i) the
termination of the trading restrictions for the Notes purchased
thereunder, of which termination such Agent or Agents party to
the Terms Agreement agree to give the Company prompt notice
confirmed in writing and (ii) the Time of Delivery for such
Notes, not to offer, sell, contract to sell or otherwise dispose
of any debt securities of the Company which (i) mature nine
months or more after such Time of Delivery, (ii) mature within
six months of the maturity of such Notes and (iii) are
denominated in the same currency or currency unit specified in
the Terms Agreement, without the prior written consent of such
Agent or Agents, which consent shall not be unreasonably
withheld, except pursuant to arrangements of which such Agent or
Agents have been advised by the Company prior to the time of
execution of such Terms Agreement, which advice is confirmed in
writing (which may be by telecopy or telex, receipt
acknowledged) to such Agent or Agents by the end of the business
day following the date of such Terms Agreement.
7. The Company covenants and agrees with each Agent that the
Company will pay or cause to be paid, whether or not any sale of
Notes is consummated, the following: (i) the fees and expenses
of the Company's counsel and accountants in connection with the
registration of the Notes under the Act and all other expenses
in connection with the preparation, printing and filing of the
Registration Statement, any Preliminary Prospectus, the
Prospectus and amendments and supplements thereto and the
mailing and delivering of copies thereof to the Agents; (ii) the
fees and expenses of counsel for the Agents, which counsel has
been approved by the Company, incurred heretofore or hereafter
in connection with the transactions contemplated hereunder;
(iii) the cost of printing or reproducing this Agreement, any
Terms Agreement, any Indenture, any Blue Sky and Legal
Investment Memoranda and any other documents in connection with
the offering, purchase, sale and delivery of the Notes; (iv) all
expenses in connection with the qualification of the Notes for
offering and sale under state securities laws as provided in
Section 4(b) hereof, including fees and disbursements of counsel
for the Agents in connection with such qualification and in
connection with the Blue Sky and legal investment surveys; (v)
any fees charged by security rating services for rating the
Notes; (vi) any filing fees incident to any required review by
the National Association of Securities Dealers, Inc. of the
terms of the sale of the Notes; (vii) the cost of preparing the
Notes; (viii) the fees and expenses of any Trustee and any
transfer or paying agent of the Company and the fees and
disbursements of counsel for any Trustee or such agent in
connection with any Indenture and the Notes; (ix) on a monthly
basis all out-of-pocket expenses (including without limitation
advertising expenses) incurred by such Agent connected with the
solicitation of offers to purchase and the sale of Notes so long
as such expenses have been approved by the Company; and (x) all
other costs and expenses incident to the performance of the
Company's obligations hereunder (other than costs and expenses
incurred by any Agent) which are not otherwise specifically
provided for in this Section 7.
8. The obligation of each Agent, as agent of the Company, at
any time ("Solicitation Time") to solicit offers to purchase the
Notes and the obligation of each Agent to purchase Notes as
principal pursuant to any Terms Agreement or otherwise shall in
each case be subject, in such Agent's discretion, to the
condition that all representations and warranties and other
statements of the Company or Sears herein are true and correct
at and as of the Closing Date, as of the date of the
effectiveness of any amendment to the Registration Statement
(including the filing of any document incorporated by reference
therein), as of the date any supplement to the Prospectus is
filed with the Commission, as of any Time of Delivery, as of
each acceptance by the Company of an offer to purchase Notes
hereunder and as of each settlement date relating to such sale,
the condition that each of the Company and Sears shall have
performed all of its obligations hereunder theretofore to be
performed, and the following additional conditions:
(a) No stop order suspending the effectiveness of the
Registration Statement shall have been issued and no proceeding
for that purpose shall have been initiated or threatened by the
Commission; and all requests for additional information on the
part of the Commission shall have been complied with to the
Agents reasonable satisfaction;
(b) All corporate proceedings and related matters in
connection with the organization of the Company, the validity of
the Indenture and the registration, authorization, issue, sale
and delivery of the Notes shall have been satisfactory to the
Agents' counsel, and such counsel shall have been furnished with
such papers and information as they may reasonably have
requested to enable them to pass upon the matters referred to in
this Section 8(b);
(c) Counsel to the Company and Sears, who may be an employee
of the Company or of Sears, shall have furnished to the Agents
such counsel's written opinion, dated the Closing Date, each
Time of Delivery and the date of effectiveness of each amendment
or the filing of each supplement to the Registration Statement
or the Prospectus (including the filing under the Act or the
Exchange Act of documents incorporated by reference in the
Prospectus as amended or supplemented but excluding amendments
or supplements (i) relating to an offering of securities other
than the Notes, (ii) constituting a Pricing Supplement, (iii)
setting forth or incorporating by reference financial statements
or other information as of and for a fiscal quarter or (iv)
relating solely to the incorporation by reference of Sears proxy
statement for its annual meeting of shareholders or of a filing
by the Company or Sears of a Current Report on Form 8-K under
the Exchange Act unless in the case of clauses (iii) or (iv)
above, in such Agent's reasonable judgment, such financial
statements or other information contained in such documents are
of such a character that an opinion of counsel should be
furnished), as the case may be, in form and substance
satisfactory to the Agents in the Agents' reasonable judgement
to the effect that:
(i) Each of the Company and Sears has been duly incorporated
and is validly existing as a corporation in good standing under
the laws of its respective state of incorporation;
(ii) The authorized capital stock of the Company consists of
500,000 shares of common stock, par value $100 per share, all of
the issued and outstanding shares of which are owned by Sears,
Roebuck and Co., and the authorized capital stock of Sears is as
set forth or incorporated by reference in the Registration
Statement;
(iii) SRAC is not an "investment company" within the meaning
of the Investment Company Act of 1940, as amended;
(iv) Each of this Agreement and any applicable Terms
Agreement has been duly authorized, executed and delivered on
the part of the Company, and this Agreement has been duly
authorized, executed and delivered on the part of Sears;
(v) The issue and sale of the Notes and the compliance by the
Company with all of the provisions of the Notes, the Indenture,
this Agreement and any applicable Terms Agreement will not (a)
conflict with or result in any breach which would constitute a
material default under, or result in the creation or imposition
of any lien, charge or encumbrance upon any of the property or
assets of the Company, material to the Company, pursuant to the
terms of, any indenture, loan agreement or other agreement or
instrument for borrowed money known to such counsel to which the
Company is a party or by which the Company may be bound or to
which any of the property or assets of the Company, material to
the Company, is subject, (b) result in any material violation of
the provisions of the Certificate of Incorporation, as amended,
or the By-Laws of the Company or (c) to the best of the
knowledge of such counsel, result in any material violation of
any statute or any order, rule or regulation applicable to the
Company of any court or any Federal, State or other regulatory
authority or other governmental body having jurisdiction over
the Company, other than the Act, the Exchange Act, the Trust
Indenture Act, and the rules and regulations pursuant to each
such act, and other than the securities laws of the various
states or other jurisdictions which are applicable to the issue
and sale of the Notes; and, to the best knowledge of such
counsel, no consent, approval, authorization or other order of,
or filing with, any court or any such regulatory authority or
other governmental body is required for the issue and sale of
the Notes except as may be required under the Act, the Exchange
Act, the Trust Indenture Act and securities laws of the various
states or other jurisdictions which are applicable to the issue
and sale of the Notes;
(vi) The Indenture has been duly authorized, executed and
delivered on the part of the Company and, as to the Company, is
a valid and binding instrument in accordance with its terms
except as the foregoing may be limited by insolvency,
bankruptcy, reorganization or other laws relating to or
affecting the enforcement of creditors' rights or by general
equity principles, and has been qualified under the Trust
Indenture Act; the Notes have been duly authorized and (assuming
due authentication by the Trustee) when duly executed, issued
and delivered pursuant to the Indenture and any Terms Agreement,
will constitute valid and binding obligations of the Company in
accordance with their terms, entitled to the benefits of the
Indenture, except as the foregoing may be limited by insolvency,
bankruptcy, reorganization or other laws relating to or
affecting the enforcement of creditors' rights or by general
equity principles;
(vii) The Fixed Charge Coverage and Ownership Agreement and
the Extension Agreement have been duly authorized, executed and
delivered by the parties thereto and are valid and binding
instrument in accordance with their terms except as the same may
be limited by insolvency, bankruptcy, reorganization or other
laws relating to or affecting the enforcement of creditors'
rights or by general equity principles;
(viii) Such counsel does not know of any pending legal or
governmental proceedings required to be described in the
Prospectus as amended or supplemented which are not described as
required;
(ix) Except for statements in such documents which do not
constitute part of the Registration Statement or the Prospectus
pursuant to Rule 412 of Regulation C under the Act and after
substituting therefor any statements modifying or superseding
such excluded statements, the documents incorporated by
reference in the Prospectus as amended or supplemented (other
than the financial statements and related schedules, the
analyses of operations and financial condition and other
financial, statistical and accounting data therein, as to which
such counsel need express no opinion), when they became
effective or were filed with the Commission, as the case may be,
complied as to form in all material respects with the
requirements of the Act or the Exchange Act, as applicable, and
the rules and regulations of the Commission thereunder;
(x) Except for statements in such documents which do not
constitute part of the Registration Statement or the Prospectus
pursuant to Rule 412 of Regulation C under the Act and after
substituting therefor any statements modifying or superseding
such excluded statements, the Registration Statement and the
Prospectus as amended or supplemented (excluding the documents
incorporated by reference therein) (other than the financial
statements and related schedules, the analyses of operations and
financial condition and other financial, statistical and
accounting data therein, as to which such counsel need express
no opinion) comply as to form in all material respects with the
requirements of the Act and the rules and regulations
thereunder; the answers in the Registration Statement to Items 9
and 10 (insofar as it relates to such counsel) of Form S-3 are
to the best of such counsel's knowledge accurate statements or
summaries of the matters therein set forth and fairly present
the information called for with respect to those matters by the
Act and the rules and regulations thereunder; and
(xi) Such counsel does not know of any contract or other
document to which the Company or Sears is a party required to be
filed as an exhibit to the Registration Statement or required to
be incorporated by reference into the Prospectus as amended or
supplemented or required to be described in the Prospectus as
amended or supplemented which has not been so filed,
incorporated by reference or described.
In rendering such opinion, such counsel may rely to the extent
such counsel deems appropriate upon certificates of officers or
other executives of the Company, Sears and its business groups
and subsidiaries and of public officials as to factual matters
and upon opinions of other counsel. In rendering the opinion
referred to in subdivision (v) above, such counsel need not
express an opinion as to whether, with respect to any Notes
denominated in a currency other than United States dollars, a
court located in the United States of America would grant a
judgment relating to the Notes in other than United States
dollars, nor an opinion as to the date which any such court
would utilize for determining the rate of conversion into United
States dollars in granting such judgment. Such counsel shall
also state that: (a) nothing has come to such counsel's
attention which has caused such counsel to believe that any of
the documents referred to in subdivision (ix) above (other than
the financial statements, the analyses of operations and
financial condition and other financial, statistical and
accounting data therein, as to which such counsel need express
no belief), in each case after excluding any statement in any
such document which does not constitute part of the Registration
Statement or the Prospectus as amended or supplemented pursuant
to Rule 412 of Regulation C under the Act and after substituting
therefor any statement modifying or superseding such excluded
statement, when such documents became effective or were filed,
as the case may be, contained, in the case of documents which
became effective under the Act, an untrue statement of a
material fact or omitted to state a material fact required to be
stated therein or necessary to make the statements therein not
misleading, and, in the case of documents which were filed under
the Exchange Act with the Commission, an untrue statement of a
material fact or omitted to state a material fact necessary in
order to make the statements therein, in the light of the
circumstances under which they were made, not misleading, and
(b) nothing has come to such counsel's attention which has
caused such counsel to believe that the Registration Statement
or Prospectus as amended or supplemented (other than the
financial statements, the analyses of operations and financial
condition and other financial, statistical and accounting data
therein, as to which such counsel need express no belief)
contains an untrue statement of a material fact or omits to
state a material fact required to be stated therein or necessary
to make the statements therein not misleading;
(d) On the Closing Date, each Time of Delivery and the date of
effectiveness of each amendment or the filing of each supplement
to the Registration Statement or the Prospectus setting forth or
incorporating by reference amended or supplemental financial
information, as the case may be, the independent certified
public accountants who have certified the financial statements
of the Company and Sears and its subsidiaries included or
incorporated by reference in the Registration Statement shall
have furnished to the Agents a letter or letters, dated the
Closing Date or such applicable date, as the case may be, in
form and substance satisfactory to the Agents, to the effect set
forth in Annex III hereto (modified in the case of amended or
supplemented financial information to reflect such amended and
supplemental financial information included or incorporated by
reference in the Registration Statement and the Prospectus as
amended or supplemented to the date of such letter, provided
that if the Registration Statement or the Prospectus is amended
or supplemented solely to include or incorporate by reference
unaudited quarterly financial information, the scope of such
letter, which shall be satisfactory in form and substance to
such Agent, may be limited to relate to such unaudited financial
information unless any other accounting, financial or
statistical information included or incorporated by reference
therein is of a character that, in the reasonable judgment of
such Agent, such letter should address such other information);
(e) (i) The Company and Sears shall not have sustained, after
the date of the latest audited financial statements included or
incorporated by reference in the Prospectus and (A) prior to the
Closing Date, any material loss or interference with its
business from fire, explosion, flood or other calamity, whether
or not covered by insurance, or from any labor dispute or court
or governmental action, order or decree, otherwise than as
contemplated in the Prospectus as amended or supplemented
through the date of this Agreement and (B) prior to each Time of
Delivery, any such loss or interference, otherwise than as set
forth or contemplated in the Prospectus as amended or
supplemented through the date that the Agent agreed to purchase
such Notes as principal; and (ii) since the respective dates as
of which information is given in the Prospectus as amended or
supplemented and (A) prior to the Closing Date, there shall not
have been any material change in the capital stock accounts or
long-term debt of the Company or any material adverse change in
the general affairs, financial position, stockholders' equity or
results of operations of the Company, otherwise than as set
forth or contemplated in the Prospectus as amended or
supplemented through the date of this Agreement and (B) prior to
each Time of Delivery, there shall not have been any such
change, otherwise than as set forth or contemplated in the
Prospectus as amended or supplemented through the date that the
Agent agreed to purchase such Notes as principal, the effect of
which, in any such case described in clause (i) or (ii), in the
judgment of such Agent makes it impracticable or inadvisable to
proceed with the solicitation by such Agent of offers to
purchase Notes from the Company or the purchase by such Agent of
Notes from the Company as principal, as the case may be;
(f) During the period in which the Agents are soliciting
offers to purchase Notes, including the period between the date
that any Agent agreed to purchase such Notes as principal and
the related Time of Delivery, no downgrading shall have occurred
in the rating accorded the Company's or Sears debt securities by
Moody's Investors Service, Inc. or Standard & Poor's
Corporation; provided, however, that this Section 6(f) shall not
apply to any such rating agencies which shall have notified the
Company of the downgrading in the rating of such debt securities
and of which the Company shall have given the Agents written
notice prior to the execution of the Terms Agreement;
(g) During the period in which the Agents are soliciting
offers to purchase Notes, including the period between the date
that any Agent agreed to purchase such Notes as principal and
the related Time of Delivery, neither (i) the United States
shall have become engaged in the outbreak or escalation of
hostilities involving the United States or there has been a
declaration by the United States of a national emergency or a
declaration of war, (ii) a banking moratorium shall have been
declared by either Federal or New York State authorities or, in
the case of Notes denominated in other than United States
dollars, by the authorities of the country of the currency in
which such Notes are denominated, (iii) trading in securities
generally on the New York Stock Exchange shall have been
suspended nor limited or minimum prices shall have been
established by such Exchange, nor (iv) in the case of Notes
denominated in other than United States dollars, any change
involving such currency exchange rates, exchange controls,
taxation or similar matters, any of which events, in the Agents'
judgment, renders it inadvisable to proceed with the
solicitation by the Agents of offers to purchase Notes from the
Company or the purchase by the Agents of Notes from the Company
as principal, as the case may be; and
(h) Each of the Company and Sears shall have furnished or
caused to be furnished to the Agents at the Closing Date, each
Time of Delivery and the date of effectiveness of each amendment
or the filing of each supplement to the Registration Statement
or the Prospectus (including the filing under the Act or the
Exchange Act of documents which are incorporated by reference in
the Prospectus as amended or supplemented but excluding
amendments or supplements (i) relating to an offering of
securities other than the Notes, (ii) constituting a Pricing
Supplement, or (iii) relating solely to the incorporation by
reference of Sears proxy statement for its annual meeting of
shareholders or of a filing by the Company or Sears of a Current
Report on Form 8-K under the Exchange Act, unless in the case of
clause (iii) above, in such Agent's reasonable judgment, the
information contained in such documents is of such a character
that certificates of officers referred to below should be
furnished, as the case may be) certificates of officers of the
Company and Sears satisfactory to the Agents, as to the accuracy
at and as of the Closing Date or such applicable date, as the
case may be, of the representations, warranties and agreements
of the Company and Sears, respectively, herein and as to the
performance by each of the Company and Sears of all its
obligations hereunder to be performed at or prior to the Closing
Date or such applicable date, as the case may be, and the
Company shall have also furnished the Agents similar
certificates satisfactory to the Agents as to the matters set
forth in subdivision (a) of this Section 8.
9. (a) The Company will indemnify and hold harmless each Agent
against any losses, claims, damages or liabilities, joint or
several, to which such Agent may become subject, under the Act
or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are
based upon any untrue statement or alleged untrue statement of
any material fact contained in any Preliminary Prospectus, the
Registration Statement, the Prospectus or the Prospectus as
amended or supplemented, or any amendment or supplement thereto
furnished by the Company or Sears, or arise out of or are based
upon the omission or alleged omission to state therein a
material fact required to be stated therein or (in the case of
the Registration Statement or the Prospectus as amended or
supplemented or any amendment or supplement thereto) necessary
to make the statements therein not misleading or (in the case of
any Preliminary Prospectus) necessary to make the statements
therein, in the light of the circumstances under which they were
made, not misleading; and will reimburse each Agent for any
legal or other expenses reasonably incurred by such Agent in
connection with investigating or defending any such action or
claim; provided, however, that the Company shall not be liable
in any such case to the extent that any such loss, claim, damage
or liability arises out of or is based upon an untrue statement
or alleged untrue statement or omission or alleged omission made
in any Preliminary Prospectus, or the Registration Statement,
the Prospectus or the Prospectus as amended or supplemented or
any such amendment or supplement in reliance upon and in
conformity with written information furnished to the Company by
the Agents expressly for use therein; and provided, further,
that the Company shall not be liable to any Agent or any person
controlling such Agent under the indemnity agreement in this
subdivision (a) with respect to the Preliminary Prospectus or
the Prospectus or the Prospectus as amended or supplemented or
any amendment or supplement thereto, as the case may be, to the
extent that any such loss, claim, damage or liability of such
Agent or controlling person results solely from the fact that
such Agent sold Notes to a person to whom there was not sent or
given, at or prior to the written confirmation of such sale, a
copy of the Prospectus (excluding documents incorporated by
reference) or of the Prospectus as then amended or supplemented
(excluding documents incorporated by reference), whichever is
most recent, if the Company has previously furnished copies
thereof to such Agent.
(b) Each Agent will indemnify and hold harmless the Company
against any losses, claims, damages or liabilities to which the
Company may become subject, under the Act or otherwise, insofar
as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon any untrue
statement or alleged untrue statement of any material fact
contained in any Preliminary Prospectus, the Registration
Statement, the Prospectus, or the Prospectus as amended or
supplemented, or any amendment or supplement thereto, or arise
out of or are based upon the omission or the alleged omission to
state therein a material fact required to be stated therein or
(in the case of the Registration Statement or the Prospectus or
the Prospectus as amended or supplemented or any amendment or
supplement thereto) necessary to make the statements therein not
misleading or (in the case of any Preliminary Prospectus)
necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading, in
each case to the extent, but only to the extent, that such
untrue statement or alleged untrue statement or omission or
alleged omission was made in any Preliminary Prospectus or the
Registration Statement or the Prospectus or the Prospectus as
amended or supplemented or such amendment or supplement in
reliance upon and in conformity with written information
furnished to the Company by such Agent expressly for use
therein; and will reimburse the Company for any legal or other
expenses reasonably incurred by the Company in connection with
investigating or defending any such action or claim.
(c) Within a reasonable period after receipt by an indemnified
party under subdivision (a) or (b) above of notice of the
commencement of any action with respect to which indemnification
is sought under such subdivision or contribution may be sought
under subdivision (d) below, such indemnified party shall notify
the indemnifying party in writing of the commencement thereof.
In case any such action shall be brought against any indemnified
party, the indemnifying party shall be entitled to participate
in, and, to the extent that it shall wish, jointly with any
other indemnifying party similarly notified, to assume the
defense thereof, with counsel satisfactory to such indemnified
party, and after notice from the indemnifying party to such
indemnified party of its election so to assume the defense
thereof, the indemnifying party shall not be liable to such
indemnified party for any legal or other expenses subsequently
incurred by such indemnified party in connection with the
defense thereof other than reasonable costs of investigation.
(d) If the indemnification provided for in this Section 9 is
unavailable to an indemnified party under subdivision (a) or (b)
above in respect of any losses, claims, damages or liabilities
(or actions in respect thereof) referred to therein, then each
indemnifying party shall contribute to the amount paid or
payable by such indemnified party as a result of such losses,
claims, damages or liabilities (or actions in respect thereof)
in such proportion as is appropriate to reflect the relative
benefits received by the Company on the one hand and the
contributing Agent on the other from the offering of the Notes
and also the relative fault of the Company and Sears on the one
hand and the contributing Agent on the other in connection with
the statements or omissions which resulted in such losses,
claims, damages or liabilities (or actions in respect thereof),
as well as any other relevant equitable considerations. The
relative benefits received by the Company on the one hand and
the contributing Agent on the other shall be deemed to be in the
same proportion as the total net proceeds from the sale of Notes
(before deducting expenses) received by the Company bear to the
total commissions or discounts received by the contributing
Agent. The relative fault shall be determined by reference to,
among other things, whether the untrue or alleged untrue
statement of a material fact or the omission or alleged omission
to state a material fact relates to information supplied by the
Company or Sears on the one hand or the contributing Agent on
the other and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement
or omission of the Company or Sears on the one hand and the
contributing Agent on the other hand. With respect to any
Agent, such relative fault shall also be determined by reference
to the extent (if any) to which such losses, claims, damages or
liabilities (or actions in respect thereof) with respect to any
Preliminary Prospectus result from the fact that such Agent sold
Notes to a person to whom there was not sent or given, at or
prior to the written confirmation of such sale, a copy of the
Prospectus (excluding documents incorporated by reference) or of
the Prospectus as then amended or supplemented (excluding
documents incorporated by reference) if the Company has
previously furnished copies thereof to such Agent. The Company
and the contributing Agent agree that it would not be just and
equitable if contribution pursuant to this subdivision (d) were
determined by per capita allocation (even if all Agents were
treated as one entity for such purpose) or by any other method
of allocation which does not take account of the equitable
considerations referred to above in this subdivision (d). The
amount paid or payable by an indemnified party as a result of
the losses, claims, damages or liabilities (or actions in
respect thereof) referred to above in this subdivision (d) shall
be deemed to include any legal or other expenses reasonably
incurred by such indemnified party in connection with
investigating or defending any such action or claim.
Notwithstanding the provisions of this subdivision (d), no Agent
shall be required to contribute any amount in excess of the
amount by which the total price at which the Notes purchased by
or through such Agent were sold exceeds the amount of any
damages which such Agent has otherwise been required to pay by
reason of such untrue or alleged untrue statement or omission or
alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the
Act) shall be entitled to contribution from any person who was
not guilty of such fraudulent misrepresentation. The
obligations of each of the Agents under this subdivision (d) to
contribute are several in proportion to the respective purchases
made by or through it to which such loss, claim, damage or
liability (or action in respect thereof) relates and are not
joint.
(e) The obligations of the Company under this Section 9 shall
be in addition to any liability which the Company may otherwise
have and shall extend, upon the same terms and conditions, to
each person, if any, who controls any Agent within the meaning
of the Act; and each Agent's obligations under this Section 9
shall be in addition to any liability which such Agent may
otherwise have and shall extend, upon the same terms and
conditions, to each officer and director of the Company or Sears
and to each person, if any, who controls the Company within the
meaning of the Act.
10. In soliciting offers to purchase Notes from the Company and
in performing the other obligations of such Agent hereunder
(other than in respect of any purchase by an Agent as principal,
pursuant to a Terms Agreement or otherwise), each Agent is
acting solely as agent for the Company and not as principal.
Each Agent will make reasonable efforts to assist the Company in
obtaining performance by each purchaser whose offer to purchase
Notes from the Company was solicited by such Agent and has been
accepted by the Company, but such Agent shall not have any
liability to the Company in the event such purchase is not
consummated for any reason. If the Company shall default on its
obligation to deliver Notes to a purchaser whose offer it has
accepted, the Company shall hold each Agent harmless against any
loss, claim or damage arising from or as a result of such
default by the Company.
11. The respective indemnities, agreements, representations,
warranties and other statements by any Agent, the Company and
Sears set forth in or made pursuant to this Agreement shall
remain in full force and effect regardless of any investigation
(or any statement as to the results thereof) made by or on
behalf of any Agent, the Company, Sears, or any officer or
director or any controlling person of the Company, Sears or any
Agent, and shall survive each delivery of and payment for any of
the Notes.
12. The provisions of this Agreement relating to the
solicitation of offers to purchase Notes from the Company may be
suspended or this Agreement may be terminated at any time by the
Company as to any or all Agents or by any Agent insofar as this
Agreement relates to such Agent upon the giving of written
notice of such suspension or termination to such Agent or the
Company, as the case may be. Unless otherwise agreed by the
respective parties, any such suspension or termination shall be
effective immediately with respect to the party giving such
notice and, in the case of the party receiving such notice, at
the close of business on the first business day following the
receipt of such notice. In the event of such suspension or
termination with respect to any Agent, (x) this Agreement shall
remain in full force and effect with respect to any Agent as to
which such suspension or termination has not occurred, and (y)
the Company shall not have any liability to such Agent and such
Agent shall not have any liability to the Company, except as
provided in any Terms Agreements and in the fifth paragraph of
Section 3(a), Section 7, Section 9, Section 10 and Section 11.
13. Except as otherwise specifically provided herein or in the
Procedure, all statements, requests, notices and advices
hereunder shall be in writing, or by telephone if promptly
confirmed in writing, and if to an Agent shall be sufficient in
all respects when delivered or sent by facsimile transmission or
registered mail to such Agent at the address or facsimile
transmission number set forth in the Appointment and Acceptance
of Agent relating to the appointment of such Agent, and if to
the Company shall be sufficient in all respects when delivered
or sent by facsimile transmission or registered mail to the
Company at 3711 Kennett Pike, Greenville, Delaware 19807,
Attention: Richard F. Kotz, Secretary, Facsimile Transmission
No. (302) 888-3150, and if to Sears shall be sufficient in all
respects when delivered or sent by facsimile transmission or
registered mail to Sears at 3333 Beverly Road, Hoffman Estates,
Illinois 60179, Attention: Senior Vice President, General
Counsel and Secretary, Facsimile Transmission No. (847) 286-2471
with a copy to the Vice President and Treasurer, Facsimile
Transmission No. (847) 286-3690. Upon request of any party
hereto, any statements, requests, notices and advices
transmitted by facsimile shall be promptly followed by delivery
of executed documents by registered mail.
14. This Agreement and any Terms Agreement shall be binding
upon, and inure solely to the benefit of, each Agent, the
Company and Sears, and to the extent provided in Section 9,
Section 10 and Section 11 hereof, the officers and directors of
the Company and Sears and any person who controls any Agent or
the Company, and their respective heirs, executors,
administrators, successors and assigns, and no other person
shall acquire or have any right under or by virtue of this
Agreement or any Terms Agreement. No purchaser of any of the
Notes through or from any Agent hereunder shall be deemed a
successor or assign by reason merely of such purchase.
15. Time shall be of the essence in this Agreement and any
Terms Agreement. As used herein, the term "business day" shall
mean any day when the office of the Commission in Washington,
D.C. is normally open for business or each Monday, Tuesday,
Wednesday, Thursday and Friday which is not a legal holiday for
banking institutions in any of the City of Chicago, The City of
New York or the City of Wilmington.
16. This Agreement and any Terms Agreement shall be governed
by, and construed in accordance with, the internal laws of the
State of New York.
17. This Agreement (including such Appointments and Acceptances
of Agent as may be executed and delivered by the Company and
Sears and accepted by one or more Agents from time to time) and
any Terms Agreement may be executed by any one or more of the
parties hereto and thereto in any number of counterparts, each
of which shall be an original, but all of such respective
counterparts shall together constitute one and the same
instrument.
APPOINTMENT AND ACCEPTANCE OF AGENT
Each agent designated below is hereby appointed as an Agent on
the terms and conditions set forth in the Distribution
Agreement. Upon acceptance of such appointment by signing and
returning to us three counterparts hereof, the Distribution
Agreement shall constitute a binding agreement between the
Company, Sears and each such Agent in accordance with its terms.
Very truly yours,
SEARS ROEBUCK ACCEPTANCE CORP.
By: /S/Stephen D. Carp
Vice President, Finance
SEARS, ROEBUCK AND CO.
By: /S/Alice M. Peterson
Vice President and Treasurer
Agents Designated Hereby:
Accepted in New York, New York, as of the date set forth on the
first page of the Distribution Agreement:
GOLDMAN, SACHS & CO.
Address: 85 Broad Steet, New York, New York 10004, Attn:
Registration Department
Facsimile Transmission No.: (212) 902-3000
/S/Goldman, Sachs & Co.
MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED
Address: 250 Vesey Street, 23rd Floor, World Financial Center,
North Tower, New York, New York 10281, Attn: MTN Product Management
Facsimile Transaction No.: (212) 449-2234
By:/S/Scott G. Primrose
Authorized Signatory
MORGAN STANLEY & CO. INCORPORATED
Address: 1585 Broadway, New York, New York 10036, Attn: Managing
Director, Short- and Medium-Term Note Department
Facsimile Transmission No.: (212) 761-0780
Copy to: 1585 Broadway, New York, New York 10036, Attn:
Investment Banking Information Center
Facsimile Transmission No.: (212) 761-0260
By:/S/Catherine A. Kennedy
SALOMON BROTHERS INC.
Address: Seven World Trade Center, 32st Floor, New York, New
York 10048, Attn: Medium-Term Note Department
Facsimile Transmission No.: (212) 783-2274
By:/S/Anne Clark Wolff
<PAGE>
ANNEX I
Sears Roebuck Acceptance Corp.
$ Medium Term Notes Series __
TERMS AGREEMENT
_______________________
_______________________
_______________________
Dear Sirs:
,199
Sears Roebuck Acceptance Corp. (the "Company") proposes,
subject to the terms and conditions stated herein and in the
Distribution Agreement, dated ___________, 199_ (the
"Distribution Agreement"), between the Company and Sears,
Roebuck and Co. ("Sears") on the one hand and the Agents
thereunder on the other, to issue and sell to you the securities
specified in the Schedule hereto (the "Purchased Notes"). Each
of the provisions of the Distribution Agreement not specifically
related to the solicitation by such firms, as agents of the
Company, of offers to purchase Notes is incorporated herein by
reference in its entirety, and shall be deemed to be part of
this Agreement to the same extent as if such provisions had been
set forth in full herein, provided that for purposes of this
Agreement all references in the Distribution Agreement to the
"Agents" shall be deemed to refer to you alone. Nothing
contained herein or in the Distribution Agreement shall make any
party hereto an agent of the Company or make such party subject
to the provisions in the Distribution Agreement relating to the
solicitation of offers to purchase securities from the Company,
solely by virtue of its execution of this Terms Agreement. Each
of the representations and warranties set forth therein shall be
deemed to have been made at and as of the date of this Terms
Agreement, except that each representation and warranty in
Sections 1 and 2 of the Distribution Agreement which makes
reference to the Prospectus shall be deemed to be a
representation and warranty as of the date of the Distribution
Agreement in relation to the Prospectus (as therein defined),
and also a representation and warranty as of the date of this
Terms Agreement in relation to the Prospectus as amended and
supplemented to relate to the Purchased Notes. Unless otherwise
defined herein, terms defined in the Distribution Agreement are
used herein as therein defined.
An amendment to the Registration Statement, or a supplement to
the Prospectus, as the case may be, relating to the Purchased
Notes, in the form heretofore delivered to you is now proposed
to be filed with, or in the case of a supplement, mailed for
filing to, the Commission.
Subject to the terms and conditions set forth herein and in the
Distribution Agreement incorporated herein by reference, the
Company agrees to issue and sell to you and you agree to
purchase from the Company the Purchased Notes, at the time and
place, in the principal amount and at the purchase price set
forth in the Schedule hereto.
If the foregoing is in accordance with your understanding,
please sign and return to us two counterparts hereof, and upon
acceptance hereof by you this letter and such acceptance hereof,
including those provisions of the Distribution Agreement
incorporated herein by reference, shall constitute a binding
agreement between you, the Company and Sears.
SEARS ROEBUCK ACCEPTANCE CORP.
By:
SEARS, ROEBUCK AND CO.
By:
Accepted:
[_______________________________________
By: ]
SCHEDULE TO ANNEX I
Title of Purchased Notes:
[Medium-Term Notes, Series III]
[ % Notes due ]
Aggregate Principal Amount:
[$ or units of other Specified Currency]
[Currency Swap or Forward Arrangements:]
[Price to Public:]
Purchase Price by :
% of the principal amount of the Purchased Notes [, plus
accrued interest from to ] [and accrued
amortization, from to ]
Specified Funds for Payment of Purchase Price:
immediately available funds
Indenture:
Indenture, dated as of May 15, 1995, as supplemented to the
date hereof, between the Company and The Chase Manhattan Bank,
N.A., as Trustee
Form of Purchased Notes:
[Certificated form only][Global form only]
Time of Delivery:
Closing Location:
Maturity:
Interest Rate:
[ %] [Specify floating rate provisions, if any]
Interest Payment Dates:
[months and dates]
Documents to be Delivered:
The following documents referred to in the Distribution
Agreement shall be delivered as a condition to the Closing:
[(1) The opinion referred to in Section 8(c).]
[(2) The accountants' letter referred to in Section 8(d).]
[(3) The officers' certificate referred to in Section 8(h).]
Lock-Out Provisions:
[Describe modifications, if any, to the lock-out provisions set
forth in Section 6 of the Distribution Agreement.]
Syndicate Provisions:
[Set forth any provisions relating to underwriters' default and
step-up of amounts to be purchased by underwriters acting with
]
<PAGE>
ANNEX II
Sears Roebuck Acceptance Corp.
ADMINISTRATIVE PROCEDURE
Medium-term notes (the "Notes") in the aggregate initial
offering price of up to $2,000,000,000 are to offered from time
to time by Sears Roebuck Acceptance Corp. (the "Company")
through agents of the Company (together, in such capacity, the
"Agents"). Each Agent has agreed to use its reasonable efforts
to solicit offers to purchase Notes directly from the Company
(an Agent, in relation to a purchase of a particular Note by a
purchaser solicited by such Agent, being herein referred to as
the "Selling Agent") and may also purchase Notes from the
Company as principal (an Agent, in relation to a purchase of a
Note by such Agent as principal other than pursuant to a Terms
Agreement being herein referred to as the "Purchasing Agent").
The Notes are being sold pursuant to a Distribution Agreement,
dated August 22, 1996 (the "Distribution Agreement"), between
the Company, Sears, Roebuck and Co. ("Sears") and the Agents, to
which this Administrative Procedure is attached as Annex II.
The Notes will be issued pursuant to an Indenture, dated as of
May 15, 1995 (the "Indenture"), between the Company and The
Chase Manhattan Bank, N.A., as Trustee (the "Trustee").
Unless otherwise defined herein, terms defined in the Indenture
or the Notes shall be used herein as therein defined.
In the case of purchases of Notes by any Agent as principal,
the relevant terms and settlement details related thereto,
including the Time of Delivery referred to in the first
paragraph of Section 8, will (unless the Company and such Agent
otherwise agree) be set forth in a Terms Agreement entered into
between such Agent and the Company and Sears pursuant to the
Distribution Agreement.
The procedures to be followed during, and the specific terms
of, the solicitation of offers by the Agents and the sale as a
result thereof by the Company are explained below. The
procedures are subject, and are qualified in their entirety by
reference, to all of the respective provisions of the
Distribution Agreement and the Indenture.
The Company will advise each Agent in writing of those persons
handling administrative responsibilities ("Designated Persons")
with whom such Agent is to communicate regarding offers to
purchase Notes and the details of their delivery.
I. General Procedures
Registration: Notes will be issued only in fully registered
form and will be either (a) Book-Entry Notes represented by
one or more global notes (each a "Global Note") held by the
Trustee, as agent for The Depository Trust Company ("DTC") and
recorded in the book-entry system maintained by DTC or (b)
Certificated Notes delivered in certificated form to the Selling
Agent or Purchasing Agent. All Notes will be issued as
Book-Entry Notes except as otherwise approved in advance by the
Company and except that non-U.S. dollar denominated Notes will
be issued as Certificated Notes only unless otherwise specified
in a Prospectus Supplement or Pricing Supplement.
Maturities: Each Note will mature on a date, selected by the
purchaser and agreed to by the Company, which will be at least
nine months from the date of original issuance by the Company of
such Note (the "Settlement Date").
Price to Public: Each Note will be issued at the percentage of
principal amount specified in the Prospectus (as defined in
Section 1(a) of the Distribution Agreement) relating to the
Notes.
Currencies: Notes will be denominated in U.S. dollars or in
such other currency or currency unit as is specified in the
Prospectus (the "Specified Currency").
Denominations: The denomination of any Book-Entry, Global or
Certificated Note will be a minimum of U.S. $1,000 or any amount
in excess thereof in integral multiples of $1,000 or the
equivalent, as determined pursuant to the provisions of the
Indenture, of U.S. $1,000 (rounded down to an integral multiple
of 1,000 units of such Specified Currency) and any amounts in
excess thereof.
Interest Payments: As specified in the Indenture and the Form
of Note.
Acceptance of
Offers: Each Agent will promptly advise the Company by
telephone or other appropriate means of offers to purchase Notes
received by it other than those rejected by such Agent. Each
Agent may, in its discretion reasonably exercised, reject any
offer received by it. Each Agent also may make offers to the
Company to purchase Notes as a Purchasing Agent in accordance
with Section 2(b) of the Distribution Agreement. The Company
will have the sole right to accept offers to purchase Notes and
may reject any such offer.
If the Company accepts an offer to purchase Notes,
it will confirm such acceptance in writing to the Selling Agent or
Purchasing Agent, as the case may be. If the Company rejects an
offer, it will promptly notify the Agent involved.
Filing and Delivery
of Prospectus: If the Company accepts an offer to purchase a
Note, the Company will prepare a Pricing Supplement reflecting
the terms of such Note and will arrange to have a Pricing
Supplement filed with the Securities and Exchange Commission
(the "Commission") as soon as practicable after the preparation
thereof and will supply at least one such Pricing Supplement to
the Selling Agent or the Purchasing Agent, as the case may be,
not later than 5:00 p.m., New York City time, on the Business
Day following the date of acceptance of such offer.
With respect to each Note sold pursuant to the
Distribution Agreement, the Selling Agent shall send a copy of
the Prospectus as most recently amended or supplemented (together
with the Pricing Supplement relating to such Note) to the purchaser
or its agent prior to or together with the delivery of (a) the
written confirmation of sale (including, in the case of a
book-entry security, the confirmation through DTC's
Institutional Delivery System) or (b) the delivery of such Note,
whichever is earlier.
Confirmation: For each offer accepted by the Company, the
Selling Agent will issue a written confirmation to each
purchaser containing the Sale Information (as defined below),
plus delivery and payment instructions.
Currency Swaps: Unless otherwise requested by the Company, each
time an Agent advises the Company of an offer to purchase Notes
denominated in a currency or currency unit other than U.S.
dollars, such Agent will provide the Company information with
respect to currency swap or forward arrangements that, as of the
time the offer is communicated to the Company, such Agent is
prepared to enter into or arrange with a third party to enter
into in order to exchange amounts to be received from the
purchaser of such Note at the Settlement Date and to exchange
amounts to be paid by the Company on the interest payment dates
and at maturity.
Settlement--
Sales as Principal: In the event of a purchase of Notes by an
Agent or Agents, as principal or underwriter (other than
as Purchasing Agent), appropriate settlement details will be set
forth in the applicable Terms Agreement to be entered into
between such Agent or Agents and the Company pursuant to the
Distribution Agreement.
Settlement--
Sales as Agent: All offers solicited by the Agents and
accepted by the Company will be settled on the third Business
Day (as defined below) after the date of acceptance unless
otherwise agreed by the purchaser and the Company and the
Settlement Date shall be specified upon acceptance of such
offer. The term "Business Day" means a Monday, Tuesday,
Wednesday, Thursday or Friday on which commercial banks in any
of New York City, the City of Chicago or the City of Wilmington
and, (i) if the Note is denominated in a currency other than
U.S. dollars, in the capital of the country of the Specified
Currency, or (ii) if the Note is denominated in European
Currency Units, in Brussels, are not required or authorized to
be closed.
Communication of Sale
Information to the
Company by Selling
Agent: For each offer accepted by the Company, the
Selling Agent or Purchasing Agent, as the case may be, will provide
(unless provided by the purchaser directly to the Company) to a
Designated Person by facsimile transmission or other acceptable
means the following information (the "Sale Information"):
(1) If a Certificated Note, exact name of the registered owner,
(2) If a Certificated Note, exact address of the registered owner,
(3) If a Certificated Note, taxpayer identification number
of the registered owner (if available),
(4) If a Book-Entry Note, the DTC Participant Number of the
institution through which the customer will hold the beneficial
interest in the Global Note,
(5) Principal amount of the Note,
(6) Trade date of Note,
(7) If a Fixed Rate Note, the interest rate,
(8) Settlement Date,
(9) Maturity date,
(10) Currency or currency unit in which the Note is to be
denominated and, if other than U.S. dollars, the applicable
Exchange Rate for such currency or currency unit,
(11) Indexed Currency, the Base Rate and the Exchange Rate
Determination Date, if applicable,
(12) Issue Price,
(13) Selling Agent's commission or Purchasing Agent's discount,
as the case may be (to be paid upon settlement as a
discount from gross proceeds of sale except as provided below
under "Delivery of Notes and Cash Payment"),
(14) Net proceeds to the Company,
(15) If a redeemable Note with a Redemption
Commencement Date, such of the following as are applicable:
(i) Redemption Commencement Date,
(ii) Initial Redemption Price (% of par), and
(iii) Amount (% of par) that the Redemption Price shall
decline (but not below par) on each anniversary of the
Redemption Commencement Date,
(16) If a redeemable or repayable Note with a Redemption
Date or Redemption Dates, such of the following as are
applicable:
(i) the Redemption Date or Redemption Dates,
(ii) whether the Note is redeemable or repayable at the
option of the Company or the Holder or both,
(iii) the Redemption Price (% of par) on each Redemption
Date,
(iv) the notice period during which the option to redeem
may be exercised, and
(v) the method by which notice of redemption is to be
given,
(17) If a Floating Rate Note, such of the following as are
applicable:
(i) Interest Rate Basis,
(ii) Index Maturity,
(iii) Spread,
(iv) Spread Multiplier,
(v) Maximum Rate,
(vi) Minimum Rate,
(vii) Initial Interest Determination Date,
(viii) Interest Reset Dates,
(ix) Calculation Dates,
(x) Interest Determination Dates, and
(xi) Calculation Agent,
(18) Interest Payment Dates,
(19) Regular Record Dates,
(20) Denomination of certificates to be delivered at
settlement, and
(21) That the Note is a Certificated Note (if applicable),
(22) To the extent known to the Agent, any information not
otherwise expressly set forth in the Prospectus Supplement which
is required pursuant to Item 501(c)(7) or 508 of Regulation S-K
promulgated by the Commission, including, but not limited to,
the initial public offering price of the Notes, if other than
100% of the principal amount, and
(23) If an Agent purchases Notes as a principal, the extent,
if any, to which the items specified in Sections 8(c), 8(d) and
8(h) of the Distribution Agreement are required to be furnished
as of the Time of Delivery.
In addition, the Selling Agent will use its reasonable
efforts to provide in writing the following information to the
Company and the Trustee:
(24) One of the following:
a. In the case of a foreign registered owner (other than a
Financial Institution (as defined below)), an IRS Form W-8 that
has been duly and properly signed by the registered owner.
b. In the case of a registered owner which is a Financial
Institution, a statement from the Financial Institution signed
under penalties of perjury stating that the Financial
Institution has received from the beneficial owner an IRS Form
W-8 that has been duly and properly signed by the registered
owner together with a copy of such Form W-8.
c. In the case of a registered owner who is a United
States person, an IRS Form W-9 that has been duly and properly
signed by the registered owner.
A "Financial Institution" is a securities clearing
organization, a bank, or another financial institution that
holds customers' securities in the ordinary course of its trade
or business which holds a Note for a beneficial owner who is a
foreign person.
After receiving the Sale Information the Company will, after
recording the Sale Information and any necessary calculations,
provide appropriate documentation to the Trustee necessary for
the preparation, authentication and delivery of such Note.
Change in Interest
Rate, Maturity or
Currency Denomination: The Company and the Agents will discuss
from time to time the rates of interest per annum to be borne
by, and the maturity and currency denomination of, Notes that
may be sold as a result of the solicitation of offers by the
Agents.
Suspension of
Solicitation;
Amendment or
Supplement: The Company may instruct the Agents to suspend
solicitation of offers to purchase Notes at any time, whereupon
the Agents will as promptly as possible (but in any event not
later than one business day after receipt of such instruction)
suspend solicitation until such time as the Company has advised
the Agents that solicitation of offers to purchase Notes may be
resumed. If the Company proposes to amend or supplement the
Registration Statement or the Prospectus relating to the Notes
(except in the case of a Pricing Supplement), it will promptly
advise the Agents and will furnish to the Agents such proposed
amendment or supplement and, after the Agents have been afforded
a reasonable opportunity to review such amendment or supplement,
will cause such amendment or supplement to be filed with the
Commission. The Company will promptly provide the Agents with
copies of any such amendment or supplement and confirm to the
Agents that such amendment or supplement has been filed with the
Commission.
In the event that at the time the Agents suspend
solicitation of offers to purchase Notes there shall be any
outstanding offers to purchase Notes that have been accepted by
the Company but for which settlement has not occurred, the
Company, consistent with its obligations under the Distribution
Agreement, promptly will advise the Agents whether such sales
may be settled and whether copies of the Prospectus as
supplemented at the time of the suspension may be delivered in
connection with the settlement of such sales. The Company will
have the sole responsibility for such decision and for any
arrangements which may be made in the event that the Company
determines that such sales may not be settled or that copies of
such Prospectus may not be so delivered.
Authenticity of
Signatures: The Trustee will furnish the Agents from time to
time with the specimen signatures of each of the Trustee's
officers, employees or agents who have been authorized by the
Trustee to authenticate Notes, but the Agents will have no
obligation or liability to the Company or the Trustee in respect
of the authenticity of the signature of any officer, employee or
agent of the Company or the Trustee on any Note.
Advertising Cost: The Company will determine with the Agents
the amount of advertising that may be appropriate in the
solicitation of offers to purchase the Notes. Advertising
expenses will be paid by the Company.
II. Book-Entry Procedures
In connection with the qualification of Book-Entry Notes for
eligibility in the book-entry system maintained by DTC, the
Trustee will perform the custodial, document control and
administrative functions described below, in accordance with its
obligations under a Letter of Representations from the Company
and the Trustee to DTC, dated March 28, 1996, and a Medium-Term
Note Certificate Agreement, dated March 10, 1989 between the
Trustee and DTC (the "Certificate Agreement"), and the Trustee's
obligations as a participant in DTC including DTC's Same-Day
Funds Settlement System ("SDFS").
Issuance: All Fixed Rate Notes which have the same original
issue date, redemption or repayment provisions, Interest Payment
Dates, Regular Record Dates, interest rate, Specified Currency
and maturity date (collectively, the "Fixed Rate Terms") will be
represented initially by a single Global Note in fully
registered form without coupons.
All Floating Rate Notes which have the same original issue
date, redemption or repayment provisions, Interest Payment
Dates, Regular Record Dates, Interest Rate Basis, Interest
Determination Dates, Interest Reset Dates, Calculation Dates,
Index Maturity, Spread or Spread Multiplier, if any, Minimum
Rate, if any, Maximum Rate, if any, Specified Currency and
maturity date (collectively, the "Floating Rate Terms") will be
represented initially be a single Global Note in fully
registered form without coupons.
Identification: The Company has received from the CUSIP Service
Bureau of Standard & Poor's Corporation (the "CUSIP Service
Bureau") a series of approximately 900 CUSIP numbers for future
assignment to Global Notes, and the Company has delivered to the
Trustee and DTC such list of such CUSIP numbers. The Trustee
will assign CUSIP numbers to Global Notes as described below.
DTC will notify the CUSIP Service Bureau periodically of the
CUSIP numbers that have been assigned to Global Notes. The
Trustee will notify the Company at any time when fewer than 100
of the reserved CUSIP numbers remain unassigned to Global Notes,
and, if it deems necessary, the Company will reserve additional
CUSIP numbers for assignment to Global Notes. Upon obtaining
such additional CUSIP numbers, the Company will deliver a list
of such additional numbers to the Trustee and DTC.
Registration: Each Global Note will be registered in the name
of Cede & Co., as nominee for DTC, on the Security Register
maintained under the Indenture. The beneficial owner of a
Book-Entry Note (or one or more indirect participants in DTC
designated by such owner) will designate one or more
participants in DTC (the "Participants") to act as agent or
agents for such owner in connection with the book-entry system
maintained by DTC, and DTC will record in book-entry form, in
accordance with instructions provided by such Participants, a
credit balance with respect to such Book-Entry Note in the
account of such Participants. The ownership interest of such
beneficial owner in such Book-Entry Note will be recorded
through the records of such Participants or through the separate
records of such Participants and one or more indirect
participants in DTC.
Transfers: Transfers of a Book-Entry Note will be accomplished
by book entries made by DTC and, in turn, by Participants (and
in certain cases, one or more indirect participants in DTC)
acting on behalf of beneficial transferors and transferees of
such Book-Entry Note.
Exchanges: The Trustee, at the Company's request, may deliver
to DTC and the CUSIP Service Bureau at any time a written notice
of consolidation specifying (a) the CUSIP numbers of two or more
outstanding Global Notes having the same Fixed Rate Terms or
Floating Rate Terms, as the case may be (except that original
issue dates need not be the same), and for which interest has
been paid to the same date; (b) a date, occurring at least 30
days after such written notice is delivered and at least 30 days
before the next Interest Payment Date for the related Book-Entry
Notes, on which such Global Notes shall be exchanged for a
single replacement Global Note; and (c) a new CUSIP number to be
assigned to such replacement Global Note. Upon receipt of such
a notice, DTC will send to its participants (including the
Trustee) a written reorganization notice to the effect that such
exchange will occur on such date.
Prior to the specified exchange date, the Trustee will
deliver to the CUSIP Service Bureau written notice setting forth
such exchange date and the new CUSIP number and stating that, as
of such exchange date, the CUSIP numbers of the Global Notes to
be exchanged will no longer be valid.
On the specified exchange date, the Trustee will exchange
such Global Notes for a single Global Note bearing the new CUSIP
number. The CUSIP numbers of the exchanged Global Notes will,
in accordance with CUSIP Service Bureau procedures, be cancelled
and not immediately reassigned.
Notwithstanding the foregoing, if the Global Notes to be
exchanged exceed $200,000,000 in aggregate principal amount,
one replacement Global Note will be authenticated and issued to
represent each $200,000,000 of principal amount of the exchanged
Global Notes and an additional Global Note will be authenticated
and issued to represent any remaining principal amount of such
Global Notes, subject to the minimum denomination restrictions
described in General Procedures - Denominations (see
"Denominations" below).
Denominations: Global Notes representing Book-Entry Notes will
be denominated in principal amounts not in excess of
$200,000,000. If one or more Book-Entry Notes having an
aggregate principal amount in excess of $200,000,000 would, but
for the preceding sentence, be represented by a single Global
Note, then one Global Note will be issued to represent each
$200,000,000 principal amount of such Book-Entry Note or
Book-Entry Notes and an additional Global Note will be issued to
represent any remaining principal amount of such Book-Entry Note
or Book-Entry Notes, subject to the minimum denomination
restrictions described in General Procedures - Denominations.
In such a case, each of the Global Notes representing such
Book-Entry Note or Notes shall be assigned the same CUSIP number.
Interest: DTC will arrange for each pending deposit message
described under Settlement Procedure B below to be transmitted
to Standard & Poor's Corporation, which will use the message to
include certain terms of the related Global Note in the
appropriate daily bond report published by Standard & Poor's
Corporation.
Payments of Principal,
Premium, if any,
and Interest: Payments of Interest Only. Promptly after each
Regular Record Date (or as soon thereafter as such information
is determined), the Trustee will deliver to the Company and DTC
a written notice specifying by CUSIP number the amount of
interest to be paid on each Global Note on the following
Interest Payment Date (other than an Interest Payment Date
coinciding with the Maturity) and the total of such amounts.
DTC will confirm the amount payable on each Global Note on such
Interest Payment Date by reference to the daily bond reports
published by Standard & Poor's Corporation. On such Interest
Payment Date, the Company will pay to the Trustee, and the
Trustee in turn will pay to DTC, such total amount of interest
due (other than at Maturity), at the times and in the manner set
forth below under "Manner of Payment."
Payments at Maturity. On or about the first Business Day of
each month (or as soon thereafter as such information is
determined), the Trustee will deliver to the Company and DTC a
written list of principal, premium, if any, and interest to be
paid on each Global Note maturing or subject to redemption or
repayment in the following month. The Trustee, the Company and
DTC will confirm the amounts of such principal, premium (if any)
and interest payments with respect to each such Global Note on
or about the fifth Business Day preceding the maturity date of
such Global Note. At such maturity date, the Company will pay
to the Trustee, and the Trustee in turn will pay to DTC, the
principal of and premium, if any, on such Global Note, together
with interest due at such maturity date, at the times and in the
manner set forth below under "Manner of Payment." Promptly
after payment to DTC of the principal, premium, if any, and
interest due at maturity of all Book-Entry Notes represented by
a particular Global Note, the Trustee will cancel such Global
Note, make appropriate entries in its records and dispose of
such Global Note as provided in the Indenture.
Manner of Payment. The total amount of any principal,
premium and interest due on Global Notes on any Interest Payment
Date or at maturity shall be paid by the Company to the Trustee
in funds immediately available for use by the Trustee as of
noon, New York City time, on such date. The Company will make
such payment on such Global Notes by wire transfer to the
Trustee or by instructing the Trustee to withdraw funds from an
account maintained by the Company at the Trustee. The Company
will confirm any such instructions in writing to the Trustee.
For maturity, redemption and other principal payments, prior to
1:00 p.m., New York City time, on each such date or as soon as
possible thereafter following receipt of such funds from the
Company, the Trustee will pay by separate wire transfer (using
Fedwire message entry instructions in a form previously
specified by DTC) to an account at the Federal Reserve Bank of
New York previously specified by DTC, in funds available for
immediate use by DTC, each payment of interest, principal and
premium, if any, due on Global Notes on such date; and for
interest payments, the Trustee will pay DTC in same day funds on
the Interest Payment Date in accordance with existing
arrangements between the Trustee and DTC. Thereafter on each
such date, DTC will pay, in accordance with its SDFS operating
procedures then in effect, such amounts in funds available for
immediate use to the respective Participants with payments in
amounts proportionate to their respective holdings in principal
amount of beneficial interest in such Global Note as are
recorded in the book-entry system maintained by DTC. Once
payment has been made to DTC, neither the Company nor the
Trustee shall have any responsibility or liability for the
payment by DTC of the principal of, or premium, if any, or
interest on, the Book-Entry Notes to such Participants.
Withholding Taxes. The amount of any taxes required under
applicable law to be withheld from any interest payment on a
Book-Entry Note will be determined and withheld by the
Participant, indirect participant in DTC or other Person
responsible for forwarding payments and materials directly to
the beneficial owner of such Book-Entry Note, or as applicable
law may otherwise require.
Settlement Procedures: Settlement Procedures with regard to each
Book-Entry Note sold by each Agent will be as follows:
A. Upon receiving the Sale Information, the Company will,
as soon as practicable, advise the Trustee by facsimile
transmission of the Sale Information and the name of such Agent.
B. The Trustee will assign a CUSIP number to the Global
Note representing such Book-Entry Note and will communicate to
DTC and the Agent through DTC's Participant Terminal System, a
pending deposit message specifying such of the following
Settlement information as applicable:
1. The following information:
(a) Principal amount of the purchase.
(b) In the case of a Fixed Rate Note, the interest rate,
or, in the case of a Floating Rate Note, the initial interest
rate, the Interest Reset Dates, the Interest Payment Dates, the
Interest Rate Basis, Index Maturity, Spread or Spread
Multiplier, if any, and the Minimum Rate and Maximum Rate, if
any.
(c) Settlement date.
(d) Maturity date.
(e) Price.
(f) DTC Participant Number of the institution through
which the customer will hold the beneficial interest in the
Global Note.
2. The numbers of the participant accounts maintained by
DTC on behalf of the Trustee and the Agent.
3. Identification as a Fixed Rate Note or a Floating Rate
Note.
4. The initial Interest Payment Date for such Note, number
of days by which such date succeeds the related DTC record date
(which term means the Regular Record Date, or in the case of
Floating Rate Notes which reset weekly, the date five calendar
days immediately preceding the applicable Interest Payment Date)
and, for Fixed Rate Notes, the amount of interest payable on
such Interest Payment Date per $1,000 principal amount of Note.
5. The frequency of interest payments.
6. The frequency of interest rate resets.
7. The CUSIP number of the Global Note representing such
Book-Entry Notes.
8. Whether such Global Note represents any other
Book-Entry Notes issued or to be issued.
The Trustee will also orally notify the Agent of the CUSIP
number assigned to the Global Note.
C. The Trustee will prepare a Global Note
representing such Book-Entry Note in a form that has been
approved by the Company.
D. The Trustee will authenticate the Global Note
representing such Book-Entry Note and maintain possession of
such Global Note.
E. DTC will credit such Book-Entry Note to the participant
account of the Trustee maintained by DTC.
F. The Trustee will enter an SDFS deliver order through
DTC's Participant Terminal System instructing DTC to (i) debit
such Book-Entry Note to the Trustee's participant account and
credit such Book-Entry Note to the participant account of the
Agent maintained by DTC and (ii) debit the settlement account of
the Agent and credit the settlement account of the Trustee
maintained by DTC, in an amount equal to the price of such
Book-Entry Note less the Agent's commission. The entry of such
a deliver order shall be deemed to constitute a representation
and warranty by the Trustee to DTC that (a) the Global Note
representing such Book-Entry Note has been issued and
authenticated and (b) the Trustee is holding such Global Note
pursuant to the Certificate Agreement.
G. The Agent will enter an SDFS deliver order through DTC's
Participant Terminal System instructing DTC to (i) debit such
Book-Entry Note to the Agent's participant account and credit
such Book-Entry Note to the participant accounts of the
Participants to whom such Book-Entry Note is to be credited
maintained by DTC and (ii) debit the settlement accounts of such
Participants and credit the settlement account of the Agent
maintained by DTC, in an amount equal to the initial public
offering price of the Book-Entry Note so credited to their
accounts.
H. Transfers of funds in accordance with SDFS deliver
orders described in Settlement Procedures F and G will be settled
in accordance with SDFS operating procedures in effect on the
Settlement Date.
I. The Trustee will credit to an account of the Company
maintained at The Chase Manhattan Bank, N.A. funds available for
immediate use in an amount equal to the amount credited to the
Trustee's DTC settlement account in accordance with Settlement
Procedure F.
J. The Agent will confirm the purchase of each Book-
Entry Note to the purchaser thereof either by transmitting to the
Participant to whose account such Note has been credited a
confirmation order through DTC's Participant Terminal System or
by mailing a written confirmation to such purchaser. In all
cases the Prospectus as most recently amended or supplemented
(including the applicable Pricing Supplement) must accompany or
precede such confirmation.
Settlement Procedures
Timetable: For offers accepted by the Company, Settlement
Procedures A through J shall occur no later than the respective
times (New York City time) listed below:
Settlement
Procedure Time
A 11:00 a.m. on the Business Day
following the date
of acceptance.
B 2:00 p.m. on the Business Day
following the date of
acceptance.
C 5:00 p.m. on the Business Day
before the Settlement Date.
D 9:00 a.m. on the Settlement Date.
E 10:00 a.m. on the Settlement Date.
F-G 2:00 p.m. on the Settlement Date.
H 4:45 p.m. on the Settlement Date.
I-J 5:00 p.m. on the Settlement Date.
Settlement Procedure H is subject to extension in accordance
with any extension of Fedwire closing deadlines and in the
other events specified in the SDFS operating procedures in
effect on the Settlement Date.
If Settlement of a Book-Entry Note is rescheduled or
cancelled, the Trustee will deliver to DTC, through DTC's
Participant Terminal System, a cancellation message to such
effect by no later than 2:00 p.m., New York City time, on the
Business Day immediately preceding the scheduled Settlement Date.
Failures: If the Trustee has not entered an SDFS deliver order
with respect to a Book-ntry Note pursuant to Settlement
Procedure F (which may be evidenced by facsimile transmission),
the Trustee, at the Company's direction, shall deliver to DTC,
through DTC's Participant Terminal System, as soon as
practicable, but no later than 2:00 p.m. on any business day, a
withdrawal message instructing DTC to debit such Book-Entry Note
to the participant account of the Trustee maintained at DTC.
DTC will process the withdrawal message, provided that such
participant account contains a principal amount of the Global
Note representing such Book-Entry Note that is at least equal to
the principal amount of such Book-Entry Note to be debited. If
withdrawal messages are processed with respect to all the
Book-Entry Notes issued or to be issued represented by a Global
Note, the Trustee will void such Global Note, make appropriate
entries in its records and, unless otherwise directed by the
Company, destroy the Certificate. The CUSIP number assigned to
such Global Note shall, in accordance with CUSIP Service Bureau
procedures, be cancelled and not immediately reassigned. If
withdrawal messages are processed with respect to a portion of
the Book-Entry Notes represented by a Global Note, the Trustee
will exchange such Global Note for two Global Notes, one of
which shall represent such Book-Entry Notes (which shall be
cancelled immediately after issuance), and the other of which
shall represent the remaining Book-Entry Notes previously
represented by the surrendered Global Note and shall bear the
CUSIP number of the surrendered Global Note. If the purchase
price for any Book-Entry Note is not timely paid to the
Participants with respect to such Note by the beneficial
purchaser (other than a Purchasing Agent) thereof (or a person,
including an indirect participant in DTC, acting on behalf of
such purchaser), such Participants and, in turn, the related
Agent may enter SDFS deliver orders through DTC's Participant
Terminal System debiting such Note free to such Agent's
Participant Account and crediting such Note free to the
Participant Account of the Trustee and shall notify the Trustee
and the Company thereof. Thereafter, the Trustee, (i) will
immediately notify the Company, once the Trustee has confirmed
that such Note has been credited to its Participant Account, and
the Company shall transfer by Fedwire (immediately available
funds) to such Agent an amount equal to the price of such Note
which was previously sent by wire transfer to the account of the
Company maintained at The Chase Manhattan Bank, N.A. in
accordance with settlement procedure I, and (ii) the Trustee
will deliver the withdrawal message and take the related actions
described in the preceding sentences of this paragraph. Such
debits and credits will be made on the Settlement Date, if
possible, and in any event not later than 5:00 p.m. on the
following Business Day. If such failure shall have occurred for
any reason other than default by the Agent in the performance of
its obligations hereunder or under the Distribution Agreement,
the Company will reimburse the Agent on an equitable basis for
its loss of the use of funds during the period when they were
credited to the account of the Company. In addition, if such
failure shall have occurred by reason of a default by the
Company in the performance of its obligations under the
Distribution Agreement, the Company will pay the Selling Agent
any commission to which it would have been entitled in
connection with such sale.
Notwithstanding the foregoing, upon any failure to settle
with respect to a Book-Entry Note, DTC may take any actions
in accordance with its SDFS operating procedures then in effect.
In the event of a failure to settle with respect to a
Book-Entry Note that was to have been represented by a Global
Note also representing other Book-Entry Notes, the Trustee will
provide, in accordance with Settlement Procedures C and D, for
the authentication and issuance of a Global Note representing
such other Book-Entry Notes and will make appropriate entries in
its records.
Trustee Not to Risk
Funds: Nothing herein shall be deemed to require the Trustee
to risk or expend its own funds in connection with any payment
to the Company, or the Agents or DTC, it being understood by all
parties that payments made by the Trustee to either the Company,
DTC or the Agents shall be made only to the extent that funds
are provided to the Trustee for such purpose.
III. Certificated Notes procedures
Payment at
Maturity: As specified in the Indenture and the Form of Note.
Settlement: Prior to 3:00 p.m., New York City time, on the
Business Day prior to the Settlement Date, the Company will
instruct the Trustee or its agent by facsimile transmission or
other acceptable written means to authenticate and deliver the
Certificated Notes no later than 2:15 p.m., New York City time,
on the Settlement Date.
If the Settlement Date is the same day as the date of
acceptance, then prior to 11:00 a.m., New York City time, on the
Settlement Date the Company will instruct the Trustee or its
agent by facsimile transmission or other acceptable written
means to authenticate and deliver the Certificated Notes no
later than 2:15 p.m., New York time, on the Settlement Date.
Certificated Notes denominated in a currency or currency unit
other than U.S. dollars shall have a Settlement Date not less
than two Business Days after the acceptance of the offer by the
Company.
Delivery of
Notes
and Cash
Payment: Upon receipt of appropriate documentation and
instructions, the Company will cause the Trustee to prepare and
authenticate each Note and appropriate receipts.
Each Certificated Note shall be authenticated and
dated on the Settlement Date therefor. The Trustee will deliver
each authenticated Certificated Note to the Selling Agent for the
benefit of the purchaser in accordance with written instructions
(or oral instructions confirmed in writing (which may be given
by telex or telecopy) on the next business day) from the
Company. Delivery by the Trustee of each Certificated Note will
be made against a receipt therefor.
Upon verification by the Selling Agent that a
Certificated Note has been prepared and properly authenticated and
delivered by the Trustee and registered in the name of the
purchaser in the proper principal amount and other terms in
accordance with the Sale Information, payment will be made to
the Company's account at The Chase Manhattan Bank, N.A. on
behalf of the Company by the Selling Agent on behalf of the
purchaser the same day as the Selling Agent's receipt of such
Certificated Note in immediately available funds. If either (i)
the Certificated Note is denominated in U.S. dollars or (ii) the
Certificated Note is denominated in a currency or currency unit
other than U.S. dollars and, at or prior to the Settlement Date,
the Company and the Selling Agent have entered into, or the
Selling Agent has arranged for the Company to enter into, a
contract with respect to the sale of the Specified Currency, the
amount payable by the Selling Agent pursuant to the preceding
sentence shall be the issue price of the Certificated Note (or
the U.S. dollar equivalent pursuant to such contract) less the
Selling Agent's commission determined in accordance with Section
2(a) of the Distribution Agreement. In all other cases, the
Selling Agent's commission shall not be discounted from the
gross proceeds but shall be paid separately by the Company in
U.S. dollars in immediately available funds on the Settlement
Date. The payment by the Selling Agent shall be made only upon
prior receipt by such Agent of immediately available funds from
or on behalf of the purchaser in the Specified Currency unless
such Agent decides, at its option, to advance its own funds for
such payment against subsequent receipt of funds from the
purchaser.
Upon delivery of a Certificated Note to the Selling Agent
and the verification provided in the preceding paragraph, the
Selling Agent shall promptly deliver such Certificated Note to
the purchaser or its agent.
Failures: In the event that a purchaser (other than a
Purchasing Agent) shall fail to accept delivery of and make
payment for any Certificated Note, the Selling Agent will
forthwith notify the Trustee and the Company by telephone or by
facsimile transmission. If the Certificated Note has been
delivered to the Selling Agent on behalf of the purchaser, the
Selling Agent will immediately return the Certificated Note to
the Trustee. If funds have been advanced by the Selling Agent
for the purchase of such Note, The Chase Manhattan Bank, N.A.
will, upon instruction by the Company and upon receipt of the
Certificated Note, debit the account of the Company in an amount
equal to the amount previously credited thereto in respect of
the Note and will either credit the account of or return such
funds to the Selling Agent. Such debits and credits or returns
will be made on the Settlement Date if possible and, in any
event, not later than the business day following the Settlement
Date. If such failure shall have occurred for any reason other
than default by the Selling Agent in the performance of its
obligations under the Distribution Agreement, the Company will
reimburse the Selling Agent on an equitable basis for its loss
of the use of the funds during the period when they were
credited to the account of the Company. In addition, if such
failure shall have occurred by reason of a default by the
Company in the performance of its obligations under the
Distribution Agreement, the Company will pay the Selling Agent
any commission to which it would have been entitled in
connection with such sale.
Immediately upon receipt of the certificate representing the
Note in respect of which the failure occurred, the Trustee
will void such Certificated Note, make appropriate entries in
its records and, unless otherwise instructed by the Company,
destroy the certificate.
ANNEX III
Pursuant to Section 8(d) of the Distribution Agreement, the
Company's and Sears independent certified public accountants
shall furnish letters to the effect that:
(i) They are independent certified public accountants with
respect to the Company and Sears and its consolidated
subsidiaries within the meaning of the Act and the applicable
published rules and regulations of the Commission thereunder and
the answer to Item 10 of the Registration Statement is correct
insofar as it relates to them;
(ii) In their opinion, the financial statements and schedules
and the additional financial information examined by them and
included or incorporated by reference in the Registration
Statement or the Prospectus comply as to form in all material
respects with the applicable accounting requirements of the Act
or the Exchange Act, as applicable, and the published rules and
regulations thereunder;
(iii) On the basis of limited procedures, not constituting an
examination in accordance with generally accepted auditing
standards, including a reading of the unaudited financial
statements and schedules and other information referred to
below, a reading of the latest available interim financial
statements of the Company and Sears and certain of its
subsidiaries, inspection of the minute books of the Company and
Sears and certain of its subsidiaries since the date of the
latest audited financial statements included or incorporated by
reference in the Prospectus, inquiries of officials of the
Company and Sears and its subsidiaries responsible for financial
and accounting matters and such other inquiries and procedures
as may be specified in such letter, nothing came to their
attention that caused them to believe that:
(A) the unaudited consolidated statements of income,
consolidated statements of financial position and consolidated
statements of changes in financial position of the Company and
of Sears and its consolidated subsidiaries included or
incorporated by reference in the Prospectus do not comply as to
form in all material respects with the applicable accounting
requirements of the Exchange Act and the published rules and
regulations thereunder; or
(B) as of a specified date not more than five business
days prior to the date of delivery of such letter, there have
been any changes in the capital stock accounts, long-term debt,
short-term debt, or any decreases in net assets or other items
specified by the Agents, in each case as compared with amounts
shown or included in the latest statement of financial position
of the Company included or incorporated by reference in the
Prospectus, except in each case for changes, increases or
decreases which the Prospectus discloses have occurred or may
occur or which are described in such letter; and
(iv) In addition to the examination referred to in their
report(s) included or incorporated by reference in the
Prospectus and the limited procedures, inspection of minute
books, inquiries and other procedures referred to in clause
(iii) above, they have carried out certain specified procedures,
not constituting an audit, with respect to certain amounts,
percentages and financial information specified by the Agents
which are derived from the general accounting records of the
Company and Sears and its subsidiaries, which appear in the
Prospectus (excluding documents incorporated by reference), or
in Part II of, or in exhibits and schedules to, the Registration
Statement specified by the Agents or in documents incorporated
by reference in the Prospectus specified by the Agents, and have
compared certain of such amounts, percentages and financial
information with the accounting records of the Company and Sears
and its subsidiaries and have found them to be in agreement.
All references in this Annex III to the Prospectus shall be
deemed to refer to the Prospectus as amended or supplemented
(including the documents incorporated by reference therein) as
of the Closing Date referred to in Section 8(d) thereof and to
the Prospectus as amended or supplemented (including the
documents incorporated by reference therein) as of the date of
the amendment, supplement, incorporation or the Time of Delivery
relating to the Terms Agreement requiring the delivery of such
letter under Section 8(d) thereof.
REGISTERED SEARS ROEBUCK ACCEPTANCE CORP.
REGISTERED
No. FXR- MEDIUM-TERM NOTE SERIES III
CUSIP
(FIXED RATE)
Except as otherwise provided in Section 2.10 of the Indenture,
this Note may be transferred, in whole but not in part, only to
another nominee of the Depository or to a successor Depository
or to a nominee of such successor Depository.
Unless this Note is presented by an authorized representative of
The Depository Trust Company (55 Water Street, New York, New
York) to the Company or its agent for registration of transfer,
exchange or payment, and any Note issued upon registration of
transfer of, or in exchange for, or in lieu of, this Note is
registered in the name of Cede & Co. or such other name as
requested by an authorized representative of The Depository
Trust Company and any payment hereon is made to Cede & Co., ANY
TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OF OTHERWISE BY
OR TO ANY PERSON IS WRONGFUL since the registered owner hereof,
Cede & Co., has an interest herein.
ORIGINAL ISSUE DATE:
REDEMPTION COMMENCEMENT DATE:
INTEREST RATE:
REDEMPTION PRICE: IF A REDEMPTION COMMENCEMENT DATE IS SPECIFIED
ABOVE, THE
REDEMPTION PRICE SHALL BE % OF THE PRINCIPAL
AMOUNT OF THIS NOTE TO BE REDEEMED AND THE REDEMPTION
PRICE SHALL DECLINE AT EACH ANNIVERSARY OF THE
REDEMPTION COMMENCEMENT DATE BY % OF THE PRINCIPAL
AMOUNT OF THIS NOTE TO BE REDEEMED UNTIL THE REDEMPTION
PRICE IS 100% OF SUCH PRINCIPAL AMOUNT.
MATURITY DATE:
INTEREST PAYMENT DATES:
OTHER PROVISIONS:
Sears Roebuck Acceptance Corp., a corporation duly organized
and existing under the laws of the State of Delaware (herein
referred to as the "Company", which term includes any successor
corporation under the Indenture hereinafter referred to), for
value received, hereby promises to pay to
or registered assigns, upon presentation and surrender of this
Note, on the Maturity Date shown above (except to the extent
redeemed prior to the Maturity Date) at the office or agency of
the Company in the Borough of Manhattan of The City of New York,
or, at the option of the Holder, such office or agency, if any,
maintained by the Company in the city in which the principal
executive offices of the Company are located or the city in
which the principal corporate trust office of the Trustee is
located, the principal sum of
_______________________________ ______________________________
Principal Amount Specified Currency
and to pay interest thereon at the rate per annum shown above.
This Note will bear interest from the Original Issue Date
specified above or from the most recent Interest Payment Date to
which interest on this Note has been paid or duly provided for.
Unless otherwise specified above, interest will be computed on
the basis of a 360-day year of twelve 30-day months.
Interest on this Note shall be payable on the Interest Payment
Dates and on the Maturity Date indicated above (or the date of
redemption), except that if this Note was originally issued
between a Regular Record Date and an Interest Payment Date, the
first payment of interest will be made on the Interest Payment
Date following the next succeeding Regular Record Date to the
registered Holder on such next succeeding Regular Record Date.
If any Interest Payment Date falls on a day that is not a
Business Day, the interest payment shall be postponed to the
next succeeding Business Day, and no interest on such payment
shall accrue for the period from and after the Interest Payment
Date. If the Maturity Date of this Note falls on a day that is
not a Business Day, the payment of interest and principal may be
made on the next succeeding Business Day with the same force and
effect as if made at maturity, and no interest on such payment
shall accrue for the period from and after the Maturity Date.
The Regular Record Date shall be the May 1 and November 1 next
preceding any May 15 or November 15 Interest Payment Date and
the date 15 calendar days prior to any other Interest Payment
Date, whether or not such date shall be a Business Day.
"Business Day" as used herein means each Monday, Tuesday,
Wednesday, Thursday, and Friday which is not a legal holiday for
banking institutions in any of the City of Wilmington, Delaware,
the City of Chicago, The City of New York or the city in which
the principal corporate trust office of the Trustee is located
and, if this Note is denominated in a currency other than
Dollars, in
________________________________________________________________
_____________.
Principal Financial Center of Country Issuing Currency
Payments of interest with respect to any Interest Payment Date
or Maturity Date (or date of redemption) will include interest
accrued to, but excluding, such Interest Payment Date or
Maturity Date (or date of redemption).
The principal of (and premium, if any), and interest on, this
Note is payable by the Company in the Specified Currency.
Interest payable on any Interest Payment Date (other than
Defaulted Interest) shall be payable to the person who is the
registered Holder at the close of business on the immediately
preceding Regular Record Date. Interest payable upon redemption
or at maturity (other than a redemption or maturity occurring on
an Interest Payment Date) will be paid to the same person to
whom the principal amount of this Note is payable.
Payment of principal of (and premium, if any), and interest on,
this Note on any day (if the Holder of this Note is a Depository
as defined in the Indenture referred to on the reverse hereof or
a nominee of such a Depository) will be made in accordance with
any applicable provisions of such written agreement between the
Company, the Trustee and such Depository (or its nominee) as may
be in effect from time to time or (if the Holder of this Note
holds an aggregate principal amount of $10,000,000 or more of
Notes with respect to which such payment of principal (and
premium, if any) or interest, as applicable, is to be made on
such day) will be made by wire transfer if the Holder shall have
designated in writing to the Trustee an account with a bank
located in the country issuing the Specified Currency or such
other country as shall be satisfactory to the Company and the
Trustee. If payment of interest is to be made by wire transfer,
such information must be received by the Trustee at its
corporate trust office in the Borough of Manhattan of The City
of New York on or prior to the Regular Record Date for an
Interest Payment Date. The Trustee will, subject to applicable
laws and regulations and until it receives notice to the
contrary, make such payment to such Holder by wire transfer to
the designated account. If a payment of interest is not made in
accordance with such a written agreement or by wire transfer,
payment will be made by check. Checks for payment of interest
on an Interest Payment Date will be mailed to the Holder at the
address of such Holder appearing on the Security Register on the
applicable Regular Record Date.
To receive payment of a U.S. dollar denominated Note upon
redemption or at maturity, a Holder must make presentation and
surrender of such Note on or before the Redemption Date or
Maturity Date, as applicable. Payment (other than payment in
accordance with a written agreement between the Company, the
Trustee and a Depository (or its nominee) as set forth above)
will be made by check unless proper wire instructions are on
file with the Trustee or are received at presentment. To
receive payment of a Note denominated in a Foreign Currency upon
redemption or at maturity, a Holder must make presentation and
surrender not less than two Business Days prior to the
Redemption Date or Maturity Date, as applicable. Upon
presentation and surrender of a Note denominated in a Foreign
Currency at any time after the date two Business Days prior to
the Redemption Date or Maturity Date, as applicable, the Company
will pay the principal amount (and premium, if any) of such
Note, and any interest due upon redemption or at maturity
(unless the Redemption Date or Maturity Date is an Interest
Payment Date), two Business Days after such presentation and
surrender.
The Company will pay any administrative costs imposed by banks
in connection with sending payments by wire transfer, but any
tax, assessment or governmental charge imposed upon payments
will be borne by the Holders of the Notes in respect of which
payments are made.
Reference is hereby made to the further provisions of this Note
set forth on the reverse hereof, and such further provisions
shall for all purposes have the same effect as though fully set
forth at this place.
This Note shall not be entitled to any benefit under the
Indenture referred to on the reverse hereof, or become valid or
obligatory for any purpose, until the certificate of
authentication hereon shall have been signed by or on behalf of
the Trustee under such Indenture.
IN WITNESS WHEREOF, the Company has caused this Instrument to
be duly executed under its corporate seal.
Dated: SEARS ROEBUCK ACCEPTANCE CORP.
CERTIFICATE OF AUTHENTICATION By
This is one of the Notes designated
and referred to in the
within-mentioned Indenture.
THE CHASE MANHATTAN BANK, President
as Trustee
By By
Authorized Signatory
Vice President, Finance and
Assistant Secretary
SEARS ROEBUCK ACCEPTANCE CORP.
Medium-Term Note Series III
This Note is one of a duly authorized issue of debentures,
notes, bonds or other evidences of indebtedness of the Company
(hereinafter called the "Securities") of the series hereinafter
specified, unlimited in aggregate principal amount, all issued
or to be issued under or pursuant to an indenture dated as of
May 15, 1995, executed between the Company and THE CHASE
MANHATTAN BANK, N.A., as Trustee; to which indenture and all
indentures supplemental thereto (herein collectively called the
"Indenture") reference is hereby made for a specification of
the rights and limitation of rights thereunder of the Holders of
the Securities, the rights and obligations thereunder of the
Company and the rights, duties and immunities thereunder of the
Trustee. The Securities may be issued in one or more series,
which different series may be issued in various aggregate
principal amounts, may mature at different times, may bear
interest (if any) at different rates, may be subject to
different redemption provisions (if any), may be subject to
different covenants and defaults and may otherwise vary as in
the Indenture provided. This Note is one of a series designated
as the "Medium-Term Notes Series III" (hereinafter referred to
as the "Notes") of the Company, unlimited in aggregate
principal amount. All terms used in this Note which are defined
in the Indenture and which are not otherwise defined in this
Note shall have the meanings assigned to them in the Indenture.
For purposes of the Notes, the term "Fixed Charge Coverage and
Ownership Agreement shall mean the Fixed Charge Coverage and
Ownership Agreement as extended by the Extension Agreement
relating to debt securities of which the Notes are a part.
The Notes are issuable only in registered form without coupons
and will be either (a) Book-Entry Notes represented by one or
more global notes (each a "Global Note") recorded in the
book-entry system maintained by the Depository or (b)
certificated notes issued to, and registered in the names of,
the beneficial owners or their nominees ("Certificated Notes").
Notes are issuable in minimum denominations of (i) in the case
of Notes denominated in Dollars, U.S. $1,000 and in any larger
amount in integral multiples of $1,000 and (ii) in the case of
Notes denominated in any Foreign Currency, the equivalent in
such Foreign Currency determined in accordance with the Market
Exchange Rate for such Foreign Currency on the Business Day
immediately preceding the date on which the Company accepts an
offer to purchase a Note, of U.S. $1,000 (rounded to an integral
multiple of 1,000 units of the Foreign Currency), and in any
larger amount. In the manner and subject to the limitations
provided in the Indenture, the Global Notes or Certificated
Notes are exchangeable, without charge except for any tax or
other governmental charge imposed in relation thereto, for other
Notes of authorized denominations for a like aggregate principal
amount, at the office or agency of the Company in the Borough of
Manhattan of The City of New York, or, at the option of the
Holders thereof, such office or agency, if any, maintained by
the Company in the city in which the principal executive offices
of the Company are located or the city in which the principal
corporate trust office of the Trustee is located.
Unless this Note is denominated in Dollars, in the event that
the currency in which this Note is denominated is not available
for payment at a time at which any payment is required hereunder
due to the imposition of exchange controls or other
circumstances beyond its control, the Company may, in full
satisfaction of its obligation to make such payment, make
instead a payment in an equivalent amount of Dollars, determined
in accordance with the Market Exchange Rate for such currency on
the latest date for which such rate was established on or before
the date on which payment is due, and such substituted payment
of Dollars shall not constitute a default under this Note or the
Indenture.
If a Redemption Commencement Date is specified above, this Note
may be redeemed, whether or not any other Note is concurrently
redeemed, at the option of the Company, as a whole, or from time
to time in part, on any Business Day on or after the Redemption
Commencement Date and prior to the Maturity Date, upon mailing
by first-class mail, postage prepaid, a notice of such
redemption not less than 30 nor more than 60 days prior to the
Redemption Date, to the Holder of this Note at his address
appearing in the Security Register, as provided in the Indenture
(provided that, if the Holder of this Note is a Depository or a
nominee of a Depository, notice of such redemption shall be
given in accordance with any applicable provisions of such
written agreement between the Company, the Trustee and such
Depository (or its nominee) as may be in effect from time to
time), at the Redemption Price specified on the face of this
Note (expressed in percentages of the principal amount hereof to
be redeemed) together in each case with interest accrued to the
Redemption Date (subject to the right of the Holder of record on
a Regular Record Date to receive interest due on an Interest
Payment Date). In the event of redemption of this Note in part
only, a new Note or Notes of this series, and of like tenor, for
the unredeemed portion hereof will be issued in the name of the
Holder hereof upon the cancellation hereof.
In case a default, as defined in the Indenture, shall occur and
be continuing with respect to the Notes, the principal amount of
all Notes then outstanding under the Indenture may be declared
or may become due and payable upon the conditions and in the
manner and with the effect provided in the Indenture. The
Indenture provides that such declaration may in certain events
be annulled by the Holders of a majority in principal amount of
the Notes outstanding.
To the extent permitted by, and as provided in, the Indenture,
modifications or alterations of the Indenture, or of any
indenture supplemental thereto, and of the rights and
obligations of the Company and the Holders of the Notes, may be
made with the consent of the Company by the affirmative vote or
consent of the Holders of not less than a majority in principal
amount of the Securities then outstanding (as defined in the
Indenture) of each series to be affected, evidenced as in the
Indenture provided; provided, however, that no such modification
or alteration shall (i) change the stated maturity of the
principal of (and premium, if any), or interest on, any
Security, or reduce the principal amount of (and premium, if
any), or the rate of interest on, any Security, or change the
Currency in which the principal of (and premium, if any), or
interest on, such Security is denominated or payable, or reduce
the amount of the principal of an Original Issue Discount
Security that would be payable upon a declaration of
acceleration of the Maturity thereof pursuant to Section 6.1 of
the Indenture without the consent of the Holder of each
outstanding Security so affected, or (ii) reduce the percentage
of Securities, the vote or consent of the Holders of which is
required for such modifications and alterations, without the
consent of the Holders of all Securities affected. The
Indenture also provides that the Holders of a majority in
principal amount of the Securities of any series then
outstanding may waive any past default with respect to
Securities of such series under the Indenture and its
consequences, except a default in the payment of the principal
of (or premium, if any), or interest on, any of the Securities.
This Note is transferable by the registered Holder hereof or by
his attorney duly authorized in writing at the office or agency
of the Company in the Borough of Manhattan of The City of New
York or, at the option of the Holder hereof, such office or
agency, if any, maintained by the Company in the city in which
the principal executive offices of the Company are located or
the city in which the principal corporate trust office of the
Trustee is located, without charge except for any tax,
assessment or other governmental charge imposed in relation
thereto, but only in the manner and subject to the limitations
provided in the Indenture and upon surrender of this Note. Upon
any such transfer a Note or Notes of authorized denominations
for a like aggregate principal amount and bearing a number not
contemporaneously outstanding will be issued in exchange herefor.
The Company, the Trustee, any Authenticating Agent, any paying
agent and any Security registrar may deem and treat the
registered Holder hereof as the absolute owner hereof (whether
or not this Note shall be overdue and notwithstanding any
notation of ownership or other writing hereon by anyone other
than the Company or any Security registrar) for the purpose of
receiving payment of or on account of the principal hereof (and
premium, if any), and interest hereon, and for all other
purposes, and neither the Company, the Trustee, an
Authenticating Agent, a paying agent nor the Security registrar
shall be affected by any notice to the contrary. All such
payments shall be valid and effectual to satisfy and discharge
the liability upon this Note to the extent of the sum or sums so
paid.
No recourse shall be had for the payment of the principal of
(or premium, if any), or interest on, this Note or for any claim
based hereon or otherwise in any manner in respect hereof, or in
respect of the Indenture, against any incorporator, shareholder,
officer or director, past, present or future, of the Company or
of any predecessor or successor corporation, whether by virtue
of any constitutional provision or statute or rule of law, or by
the enforcement of any assessment or penalty or in any other
manner, all such liability being expressly waived and released
by the acceptance hereof and as part of the consideration for
the issue hereof. In the event of any sale or transfer of its
assets and liabilities substantially as an entirety to a
successor corporation, the predecessor corporation may be
dissolved and liquidated as more fully set forth in the
Indenture.
All Dollar amounts used in or resulting from calculations
referred to in this Note shall be rounded to the nearest cent
(with one half cent being rounded upwards).
This Note shall be governed by, and construed in accordance
with, the internal laws of the State of Delaware.
ASSIGNMENT FORM
To assign this Note, fill in the form below:
I or we assign and transfer this Note to:
(Insert assignee's soc. sec. or tax I.D.
no.)
_________________________________________________________________
_________________
(Print or type assignee's name, address and zip code)
_________________________________________________________________
_________________
_________________________________________________________________
_________________
_________________________________________________________________
_________________
and irrevocably appoint
_____________________________________________________agent
to transfer this Note on the books of the Company. The agent
may substitute
another to act for him.
Date ___________________________ Your signature
___________________________________
_________________________________________________________________
___________________
(Sign exactly as your name appears on the other side of this
Note.)
The signature to this assignment must be guaranteed by a
commercial bank or trust company having its principal office or
a correspondent in The City of New York or by a member of The
New York Stock Exchange.
August 27, 1996
Sears Roebuck Acceptance Corp.
3711 Kennett Pike
Greenville, Delaware 19807
Sears, Roebuck and Co.
3333 Beverly Road
Hoffman Estates, Illinois 60179
Ladies and Gentlemen:
At your request, I have examined (i) Registration Statement No.
333-9817, as filed with the Securities and Exchange Commission (the
"Commission"), (the "Registration Statement"), in connection with the
registration under the Securities Act of 1933, as amended (the "Act"), of
$4,000,000,000 principal amount of debt securities of Sears Roebuck
Acceptance Corp. ("SRAC"), for an offering to be made on a continuous or
delayed basis pursuant to the provisions of Rule 415
under the Act, (ii) the final prospectus, dated August 22, 1996, relating to the
offering and sale of $2,000,000,000 of the aforesaid debt securities, which is
part of the Registration Statement referred to in (i) above (the
"Prospectus"), and the Prospectus Supplement, dated August 22, 1996, (the
"Prospectus Supplement") relating to the offering and sale of up to
$2,000,000,000 aggregate principal amount (or its equivalent in foreign
currencies) of Medium-Term Notes Series III of SRAC (the "Notes"), (iii) the
Indenture dated as of May 15, 1995, between the Company and The Chase
Manhattan Bank, N.A., as Trustee, relating to the aforesaid debt securities,
(iv) the Distribution Agreement, dated August 22, 1996, between
SRAC, Sears, Goldman, Sachs & Co., Merrill Lynch, Pierce Fenner & Smith
Incorporated, Morgan Stanley & Co. Incorporated and Salomon Brothers Inc, and
(vi) the forms of the Notes. I am familiar with the proceedings heretofore
taken, and the additional proceedings proposed to be taken relating to the
determination of certain terms not set forth in the forms of Notes, by SRAC
in connection with the authorization, issuance and sale of the Notes.
Subject to the completion of the additional proceedings referred
to above, I am of the opinion that the Notes will, upon the issuance and sale
thereof in the manner referred to in the Prospectus and Prospectus Supplement,
be legally issued and binding obligations of SRAC in accordance with their
terms, subject to insolvency, bankruptcy, reorganization, or other laws
relating to or affecting the enforcement of creditors' rights or by general
equity principles.
I express no opinion as to whether, with respect to any Notes
denominated in a currency other than United States dollars, a court located in
the United States of America would grant a judgment relating to the Notes in
other than United States dollars nor an opinion as to the date which any such
court would utilize for determining the rate of conversion into United States
dollars in granting such judgment.
I consent to the incorporation by reference of this opinion into
the Registration Statement and to the references to me in the Prospectus.
Very truly yours,
/S/Robert J. Pence
Robert J. Pence
Vice President, Law
Sears, Roebuck and Co.
REGISTERED SEARS ROEBUCK ACCEPTANCE CORP. REGISTERED
No. FLR- MEDIUM-TERM NOTE SERIES III CUSIP
(FLOATING RATE)
Except as otherwise provided in Section 2.10 of the Indenture,
this Note may be transferred, in whole but not in part, only to
another nominee of the Depository or to a successor Depository
or to a nominee of such successor Depository.
Unless this Note is presented by an authorized representative of
The Depository Trust Company (55 Water Street, New York, New
York) to the Company or its agent for registration of transfer,
exchange or payment, and any Note issued upon registration of
transfer of, or in exchange for, or in lieu of, this Note is
registered in the name of Cede & Co. or such other name as
requested by an authorized representative of The Depository
Trust Company and any payment hereon is made to Cede & Co. ANY
TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY
OR TO ANY PERSON IS WRONGFUL since the registered owner herof,
Cede & Co., has an interest herein.
ORIGINAL ISSUE DATE:
MATURITY DATE:
INITIAL INTEREST RATE:
MAXIMUM RATE:
INDEX MATURITY:
MINIMUM RATE:
SPREAD (plus or minus):
CALCULATION AGENT:
SPREAD MULTIPLIER:
REDEMPTION COMMENCEMENT DATE:
INTEREST RATE BASIS:
DESIGNATED CMT MATURITY INDEX:
INTEREST PAYMENT DATES:
DESIGNATED CMT TELERATE PAGE:
INTEREST RESET DATES:
REDEMPTION PRICE: IF A REDEMPTION COMMENCEMENT DATE IS
SPECIFIED ABOVE, THE REDEMPTION PRICE SHALL BE
% OF THE PRINCIPAL AMOUNT OF
THIS NOTE TO BE REDEEMED AND THE REDEMPTION PRICE SHALL DECLINE
AT EACH ANNIVERSARY OF THE REDEMPTION COMMENCEMENT DATE BY
%
OF THE PRINCIPAL AMOUNT OF THIS NOTE TO BE REDEEMED UNTIL THE
REDEMPTION PRICE IS % OF SUCH
PRINCIPAL AMOUNT.
OTHER PROVISIONS:
Sears Roebuck Acceptance Corp., a corporation duly organized
and existing under the laws of the State of New York (herein
referred to as the "Company", which term includes any successor
corporation under the indenture hereinafter referred to), for
value received, hereby promises to pay to
or registered assigns, upon presentation and surrender of this
Note on the Maturity Date shown above (except to the extent
redeemed prior to the Maturity Date) at the office or agency of
the Company in the Borough of Manhattan of The City of New York,
or, at the option of the Holder, such office or agency, if any,
maintained by the Company in the city in which the principal
executive offices of the Company are located or the city in
which the principal corporate trust office of the Trustee is
located, the principal sum of
Principal Amount Specified Currency
and to pay interest thereon at the rate per annum equal to the
Initial Interest Rate shown above until the first Interest Reset
Date shown above and thereafter at the rate determined in
accordance with the provisions on the reverse hereof depending
on the Interest Rate Basis shown above.
This Note will bear interest from the Original Issue Date
specified above or from the most recent Interest Payment Date to
which interest on this Note has been paid or duly provided for.
Interest on this Note shall be payable on the Interest Payment
Dates and on the Maturity Date indicated above (or the date of
redemption), except that if this Note was originally issued
between a Regular Record Date and an Interest Payment Date, the
first payment of interest will be made on the Interest Payment
Date following the next succeeding Regular Record Date to the
registered Holder on such next succeeding Regular Record Date.
If any Interest Payment Date would fall on a day that is not a
Business Day, such Interest Payment Date shall be the next
succeeding Business Day (or, if the Interest Rate Basis on this
Note is LIBOR, if such day falls in the next calendar month, the
next preceding Business Day). If the Maturity Date of this Note
falls on a day that is not a Business Day, the payment of
interest and principal may be made on the next succeeding
Business Day with the same force and effect as if made at
maturity, and no interest on such payment shall accrue for the
period from and after the Maturity Date.
The Regular Record Date shall be the date 15 calendar days
prior to each Interest Payment Date, whether or not such date
shall be a Business Day.
"Business Day" as used herein means each Monday, Tuesday,
Wednesday, Thursday, and Friday which is (a) not a legal holiday
for banking institutions in any of the City of Wilmington,
Delaware, the City of Chicago, The City of New York or the city
in which the principal corporate trust office of the Trustee is
located, and (b) if this Note is denominated in a currency other
than Dollars, any such day that is not a legal holiday for
banking institutions in
, and (c) if the
Interest Rate Basis
Principal Financial Center of Country
Issuing Currency
with respect to this Note is LIBOR, any such day specified in
(a) on which dealings in deposits in U.S. dollars are transacted
in the London interbank market.
The principal of (and premium, if any), and interest on, this
Note is payable by the Company in the Specified Currency.
Interest payable on any Interest Payment Date (other than
Defaulted Interest) shall be payable to the person who is the
registered Holder at the close of business on the immediately
preceding Regular Record Date. Interest payable upon redemption
or at maturity (other than a redemption or maturity occurring on
an Interest Payment Date) will be paid to the same person to
whom the principal amount of this Note is payable.
Payment of principal of (and premium, if any), and interest on,
this Note (if the Holder of this Note is a Depository as defined
in the Indenture referred to on the reverse hereof or a nominee
of such a Depository) will be made in accordance with any
applicable provisions of such written agreement between the
Company, the Trustee and such Depository (or its nominee) as may
be in effect from time to time or (if the Holder of this Note
holds an aggregate principal amount of $10,000,000 or more of
Notes with respect to which such payment of principal (and
premium, if any) or interest, as applicable, is to be made on
such day) will be made by wire transfer if the Holder shall have
designated in writing to the Trustee an account with a bank
located in the country issuing the Specified Currency or such
other country as shall be satisfactory to the Company and the
Trustee. If payment of interest is to be made by wire transfer,
such information must be received by the Trustee at its
corporate trust office in the Borough of Manhattan of The City
of New York on or prior to the Regular Record Date for an
Interest Payment Date. The Trustee will, subject to applicable
laws and regulations and until it receives notice to the
contrary, make such payment to such Holder by wire transfer to
the designated account. If a payment of interest is not made in
accordance with such a written agreement or by wire transfer,
payment will be made by check. Checks for payment of interest
on an Interest Payment Date will be mailed to the Holder at the
address of such Holder appearing on the Security Register on the
applicable Regular Record Date.
To receive payment of a U.S. dollar denominated Note upon
redemption or at maturity, a Holder must make presentation and
surrender of such Note on or before the Redemption Date or
Maturity Date, as applicable. Payment (other than payment in
accordance with a written agreement between the Company, the
Trustee and a Depository (or its nominee) as set forth above)
will be made by check unless proper wire instructions are on
file with the Trustee or are received at presentment. To
receive payment of a Note denominated in a Foreign Currency upon
redemption or at maturity, a Holder must make presentation and
surrender not less than two Business Days prior to the
Redemption Date or Maturity Date, as applicable. Upon
presentation and surrender of a Note denominated in a Foreign
Currency at any time after the date two Business Days prior to
the Redemption Date or Maturity Date, as applicable, the Company
will pay the principal amount (and premium, if any) of such
Note, and any interest due upon redemption or at maturity
(unless the Redemption Date or Maturity Date is an Interest
Payment Date), two Business Days after such presentation and
surrender.
The Company will pay any administrative costs imposed by banks
in connection with sending payments by wire transfer, but any
tax, assessment or governmental charge imposed upon payments
will be borne by the Holders of the Notes in respect of which
payments are made.
Reference is hereby made to the further provisions of this Note
set forth on the reverse hereof, and such further provisions
shall for all proposes have the same effect as though fully set
forth at this place.
This Note shall not be entitled to any benefit under the
Indenture referred to on the reverse hereof, or become valid or
obligatory for any purpose, until the certificate of
authentication hereon shall have been signed by or on behalf of
the Trustee under such Indenture.
IN WITNESS WHEREOF, the Company has caused this instrument to
be duly executed under its corporate seal.
Dated: SEARS ROEBUCK ACCEPTANCE CORP.
By
CERTIFICATE OF AUTHENTICATION
This is one of the Notes designated
and referred to in the
within-mentioned Indenture. President
THE CHASE MANHATTAN BANK,
as Trustee By
By
Authorized Signatory Vice President, Finance and
Assistant Secretary
SEARS ROEBUCK ACCEPTANCE CORP.
Medium-Term Note Series III
This Note is one of a duly authorized issue of debentures,
notes, bonds or other evidences of indebtedness of the Company
(hereinafter called the "Securities") of the series hereinafter
specified, unlimited in aggregate principal amount, all issued
or to be issued under or pursuant to an indenture dated as of
May 15, 1995, executed between the Company and THE CHASE
MANHATTAN BANK, N.A., as Trustee; to which indenture and all
indentures supplemental thereto (herein collectively called the
"Indenture") reference is hereby made for a specification of the
rights and limitation of rights thereunder of the Holders of the
Securities, the rights and obligations thereunder of the Company
and the rights, duties and immunities thereunder of the Trustee.
The Securities may be issued in one or more series, which
different series may be issued in various aggregate principal
amounts, may mature at different times, may bear interest (if
any) at different rates, may be subject to different redemption
provisions (if any), may be subject to different covenants and
defaults and may otherwise vary as in the Indenture provided.
This Note is one of a series designated as the "Medium-Term
Notes Series III" (hereinafter referred to as the "Notes") of
the Company, unlimited in aggregate principal amount. All terms
used in this Note which are defined in the Indenture and which
are not otherwise defined in this Note shall have the meanings
assigned to them in the Indenture.
For purposes of the Notes, the term "Fixed Charge Coverage and
Ownership Agreement" shall mean the Fixed Charge Coverage and
Ownership Agreement as extended by the Extension Agreement
relating to debt securities of which the Notes are a part.
This Note will bear interest at a rate per annum equal to the
Initial Interest Rate shown on the face hereof until the first
Interest Reset Date shown on the face hereof and thereafter at
the rate determined in accordance with the applicable provisions
below by reference to the Interest Rate Basis shown on the face
hereof based on the Index Maturity, if any, shown on the face
hereof (i) plus or minus the Spread, if any, specified on the
face hereof, or (ii) multiplied by the Spread Multiplier, if
any, specified on the face hereof. The rate of interest on this
Note shall be reset on each Interest Reset Date; provided,
however, that the Initial Interest Rate shall be in effect from
the Original Issue Date to the first Interest Reset Date. If
any Interest Reset Date would be a day that is not a Market Day,
the Interest Reset Date shall be postponed to the next day that
is a Market Day, except that if the Interest Rate Basis on this
Note is LIBOR and if such Market Day is in the next succeeding
calendar month, such Interest Reset Date shall be the
immediately preceding Market Day. The term "Market Day" means
any day that is not a legal holiday for banking institutions in
The City of New York, except that if the Interest Rate Basis on
this Note is LIBOR, "Market Day" shall mean any such day on
which dealings in deposits in U.S. dollars are transacted in the
London interbank market.
The "Interest Determination Date" pertaining to an Interest
Reset Date, if the Interest Rate Basis for this Note is the
Commercial Paper Rate, Prime Rate, LIBOR, CD Rate or Federal
Funds Rate, shall be the second Market Day preceding such
Interest Reset Date. The "Interest Determination Date"
pertaining to an Interest Reset Date, if the Interest Rate Basis
for this Note is the Treasury Rate, shall be the day of the week
in which such Interest Reset Date falls on which Treasury bills
would normally be auctioned. Treasury bills are usually sold at
auction on the Monday of each week, unless that day is a legal
holiday, in which case the auction is usually held on the
following Tuesday, except that such auction may be held on the
preceding Friday. If the Interest Rate Basis on this Note is
the Treasury Rate and, as the result of a legal holiday, an
auction is so held on the preceding Friday, such Friday shall be
the Interest Determination Date pertaining to the Interest Reset
Date occurring in the next succeeding week. If an auction date
shall fall on any Interest Reset Date, then, if the Interest
Rate Basis on this Note is the Treasury Rate, such Interest
Reset Date shall instead be the first Market Day immediately
following such auction date.
The "Calculation Date" pertaining to an Interest Determination
Date shall be the earlier of (i) the tenth calendar day after
each Interest Determination Date or, if such day is not a
Business Day, the next succeeding Business Day or (ii) the
Business Day immediately preceding the applicable Interest
Payment Date or the date of maturity, redemption or repayment.
Determination of Commercial Paper Rate. If the Interest Rate
Basis on this Note is the Commercial Paper Rate, the Commercial
Paper Rate with respect to this Note for each Interest Reset
Date shall equal the Money Market Yield (calculated as described
below) of the per annum rate (quoted on a bank discount basis)
for the relevant Interest Determination Date for commercial
paper having the Index Maturity specified on the face hereof as
such rate is published by the Board of Governors of the Federal
Reserve System in "Statistical Release H.15(519) Selected
Interest Rates" or any successor publication of the Board of
Governors of the Federal Reserve System ("H.15(519)") under the
heading "Commercial Paper". In the event that such rate is not
published prior to 9:00 A.M., New York City time, on the
relevant Calculation Date, then the Commercial Paper Rate with
respect to such Interest Reset Date shall be the Money Market
Yield of such rate on such Interest Determination Date for
commercial paper having the Index Maturity specified on the face
hereof as published by the Federal Reserve Bank of New York in
its daily statistical release, "Composite 3:30 P.M. Quotations
for U.S. Government Securities" or any successor publication
published by the Federal Reserve Bank of New York ("Composite
Quotations") under the heading "Commercial Paper". If by 3:00
P.M., New York City time, on such Calculation Date such rate is
not yet published in either H.15(519) or Composite Quotations,
the Commercial Paper Rate with respect to such Interest Reset
Date shall be calculated by the Calculation Agent and shall be
the Money Market Yield of the arithmetic mean of the offered per
annum rates (quoted on a bank discount basis), as of 11:00 A.M.,
New York City time, on such Interest Determination Date, of
three leading dealers of commercial paper in The City of New
York selected by the Calculation Agent for commercial paper of
the Index Maturity specified on the face hereof placed for an
industrial issuer whose bond rating is "AA", or the equivalent,
from a nationally recognized statistical rating agency;
provided, however, that if fewer than three dealers selected as
aforesaid by the Calculation Agent are quoting as mentioned in
this sentence, the Commercial Paper Rate with respect to such
Interest Reset Date shall be the Commercial Paper Rate in effect
on such Interest Determination Date.
"Money Market Yield" means the rate for which is quoted on a
bank discount basis, a yield (expressed as a percentage)
calculated in accordance with the following formula: Money
Market Yield = D X 360 X 100 where "D" refers
to the per annum rate for a security, quoted on a bank discount
basis and expressed as a decimal; and "M" refers to the number
of days in the period for which accrued interest is being
calculated. 360 - (D X M)
Determination of Prime Rate. If the Interest Rate Basis on
this Note is the Prime Rate, the Prime Rate with respect to this
Note for each Interest Reset Date shall equal the rate set forth
for the relevant Interest Determination Date in H.15(519) under
the heading "Bank Prime Loan". In the event that such rate is
not published prior to 9:00 A.M., New York City time, on the
relevant Calculation Date, then the Prime Rate with respect to
such Interest Reset Date shall be the arithmetic mean of the
rates of interest publicly announced by each bank that appears
on the display designated as page "USPRIME1" on the Reuter
Monitor Money Rates Service (or such other page as may replace
the USPRIME1 page on that service for the purpose of displaying
prime rates or base lending rates of major United States banks)
("Reuters Screen USPRIME1 Page") as such bank's prime rate or
base lending rate as in effect for such Interest Determination
Date as quoted on the Reuters Screen USPRIME1 Page on such
Interest Determination Date. If fewer than four such rates
appear on the Reuters Screen USPRIME1 Page on such Interest
Determination Date, the Prime Rate with respect to such Interest
Reset Date shall be the arithmetic mean of the prime rates or
base lending rates (quoted on the basis of the actual number of
days in the year divided by a 360-day year) as of the close of
business on such Interest Determination Date by three major
banks in The City of New York selected by the Calculation Agent;
provided, however, that if fewer than three banks selected
as aforesaid by the Calculation Agent are quoting as mentioned
in this sentence, the Prime Rate with respect to such Interest
Reset Date will be the Prime Rate in effect on such Interest
Determination Date.
Determination of LIBOR. If the Interest Rate Basis on this
Note is LIBOR, LIBOR with respect to this Note for each Interest
Reset Date shall be determined in accordance with the following
provisions:
(i) On the relevant Interest Determination Date, LIBOR will
be the rate for deposits in U.S. dollars having the Index
Maturity specified on the face hereof, commencing on the second
Market Day immediately following such Interest Determination
Date that appears on the display designated as page "3750" on
the Dow Jones Telerate Service (or such other page as may
replace page 3750 on that service for the purposes of displaying
London interbank offered rates of major banks) ("Telerate Page
3750") as of 11:00 A.M., London time, on such Interest
Determination Date. If such rate does not appear on Telerate
Page 3750, LIBOR with respect to such Interest Reset Date shall
be determined as described in (ii) below.
(ii) With respect to an Interest Determination Date on which
no such rate appears on Telerate Page 3750 as described in (i)
above, LIBOR shall be determined on the basis of the rates at
approximately 11:00 A.M., London time, on such Interest
Determination Date at which deposits in U.S. dollars having the
Index Maturity specified on the face hereof are offered to prime
banks in the London interbank market by four major banks in the
London interbank market selected by the Calculation Agent
commencing on the second Market Day immediately following such
Interest Determination Date and in a principal amount equal to
an amount of not less than U.S. $1,000,000 that in the
Calculation Agent's judgment is representative for a single
transaction in such market at such time (a "Representative
Amount"). The Calculation Agent shall request the principal
London office of each of such banks to provide a quotation of
its rate. If at least two such quotations are provided, LIBOR
with respect to such Interest Reset Date shall be the arithmetic
mean of such quotations. If fewer than two quotations are
provided, LIBOR with respect to such Interest Reset Date shall
be the arithmetic mean of the rates quoted at approximately
11:00 A.M., New York City time, on such Interest Determination
Date by three major banks in The City of New York, selected by
the Calculation Agent, for loans in U.S. dollars to leading
European banks having the Index Maturity specified on the face
hereof commencing on the Interest Reset Date and in a
Representative Amount; provided, however, that if fewer than
three banks selected as aforesaid by the Calculation Agent are
quoting as mentioned in this sentence, LIBOR with respect to
such Interest Reset Date shall be the LIBOR in effect on such
Interest Determination Date.
Determination of Treasury Rate. If the Interest Rate Basis on
this Note is the Treasury Rate, the Treasury Rate with respect
to this Note for each Interest Reset Date shall equal the rate
for the auction on the relevant Interest Determination Date of
direct obligations of the United States ("Treasury bills")
having the Index Maturity specified on the face hereof as
published in H.15(519) under the heading "U.S. Government
Securities/Treasury Bills/Auction Average (Investment)" or, if
not so published by 9:00 A.M., New York City time, on the
relevant Calculation Date, the auction average rate (expressed
as a bond equivalent, on the basis of a year of 365 or 366 days,
as applicable, and applied on a daily basis) for such auction as
otherwise announced by the United States Department of the
Treasury. In the event that the results of such auction of
Treasury bills having the Index Maturity specified on the face
hereof are not published or reported as provided above by 3:00
P.M., New York City time, on such Calculation Date, or if no
such auction is held during such week, then the Treasury Rate
shall be the rate set forth in H.15(519) for the relevant
Interest Determination Date for the Index Maturity specified on
the face hereof under the heading "U.S. Government
Securities/Treasury Bills/Secondary Market". In the event such
rate is not so published by 3:00 P.M., New York City time, on
the relevant Calculation Date, the Treasury Rate with respect to
such Interest Reset Date shall be calculated by the Calculation
Agent and shall be a yield to maturity (expressed as a bond
equivalent, on the basis of a year of 365 or 366 days, as
applicable, and applied on a daily basis) of the arithmetic mean
of the secondary market bid rates as of approximately 3:30 P.M.,
New York City time, on such Interest Determination Date, of
three primary United States government securities dealers in The
City of New York selected by the Calculation Agent for the issue
of Treasury bills with a remaining maturity closest to the Index
Maturity specified on the face hereof; provided, however, that
if fewer than three dealers selected as aforesaid by the
Calculation Agent are quoting as mentioned in this sentence, the
Treasury Rate with respect to such Interest Reset Date shall be
the Treasury Rate in effect on such Interest Determination Date.
Determination of CD Rate. If the Interest Rate Basis on this
Note is the CD Rate, the CD Rate with respect to this Note for
each Interest Reset Date shall equal the rate for the relevant
Interest Determination Date for negotiable certificates of
deposit having the Index Maturity specified on the face hereof
as published in H.15(519) under the heading "CDs (Secondary
Market)". In the event that such rate is not published prior to
9:00 A.M., New York City time, on the relevant Calculation Date,
then the CD Rate with respect to such Interest Reset Date shall
be the rate on such Interest Determination Date for negotiable
certificates of deposit having the Index Maturity specified on
the face hereof as published in Composite Quotations under the
heading "Certificates of Deposit". If by 3:00 P.M., New York
City time, on such Calculation Date such rate is not published
in either H.15(519) or Composite Quotations, the CD Rate with
respect to such Interest Reset Date shall be calculated by the
Calculation Agent and shall be the arithmetic mean of the
secondary market offered rates, as of 10:00 A.M., New York City
time, on such Interest Determination Date, of three leading
nonbank dealers of negotiable U.S. dollar certificates of
deposit in The City of New York selected by the Calculation
Agent for negotiable certificates of deposit of major United
States money market banks with a remaining maturity closest to
the Index Maturity specified on the face hereof in a
denomination of U.S. $5,000,000; provided, however, that if
fewer than three dealers selected as aforesaid by the
Calculation Agent are quoting as mentioned in this sentence, the
CD Rate with respect to such Interest Reset Date shall be the CD
Rate in effect on such Interest Determination Date.
Determination of Federal Funds Rate. If the Interest Rate
Basis on this Note is the Federal Funds Rate, the Federal Funds
Rate with respect to this Note for each Interest Reset Date
shall equal the rate on the relevant Interest Determination Date
for Federal Funds as published in H.15(519) under the heading
"Federal Funds (Effective)". In the event that such rate is not
published prior to 9:00 A.M., New York City time, on the
relevant Calculation Date, then the Federal Funds Rate with
respect to such Interest Reset Date will be the rate on such
Interest Determination Date as published in Composite Quotations
under the heading "Federal Funds/Effective Rate". If by 3:00
P.M., New York City time, on such Calculation Date such rate is
not published in either H.15(519) or Composite Quotations, the
Federal Funds Rate with respect to such Interest Reset Date
shall be calculated by the Calculation Agent and shall be the
arithmetic mean of the rates, as of 9:00 A.M., New York City
time, on such Interest Determination Date, for the last
transaction in overnight Federal Funds arranged by three leading
brokers of Federal Funds transactions in The City of New York
selected by the Calculation Agent; provided, however, that if
fewer than three brokers selected as aforesaid by the
Calculation Agent are quoting as mentioned in this sentence, the
Federal Funds Rate with respect to such Interest Reset Date
shall be the Federal Funds Rate in effect on such Interest
Determination Date.
Determination of CMT Rate. If the Interest Rate Basis on this
Note is the CMT Rate, the CMT Rate with respect to this Note for
each Interest Reset Date shall equal the rate displayed on the
Designated CMT Telerate Page under the caption "...Treasury
Constant Maturities...Federal Reserve Board Release
H.15...Mondays Approximately 3:45 P.M.," under the column for
the Designated CMT Maturity Index for (i) if the Designated CMT
Telerate Page is 7055, the rate on such Interest Determination
Date and (ii) if the Designated CMT Telerate Page is 7052, the
week, or the month, as applicable, ended immediately preceding
the week in which the related Interest Determination Date
occurs. If such rate is no longer displayed on the relevant
page, or if not displayed by 3:00 P.M., New York City time, on
the relevant Calculation Date, the CMT Rate shall be such
treasury constant maturity rate for the Designated CMT Maturity
Index as published in the relevant H.15(519). If such rate is
no longer published, or if not published by 3:00 P.M., New York
City time, on the relevant Calculation Date, the CMT Rate shall
be such treasury constant maturity rate for the Designated CMT
Maturity Index (or other United States Treasury rate for the
Designated CMT Maturity Index) for the Interest Determination
Date with respect to such Interest Reset Date as may then be
published by either the Board of Governors of the Federal
Reserve System or the United States Department of the Treasury
that the Calculation Agent determines to be comparable to the
rate formerly displayed on the Designated CMT Telerate Page and
published in the relevant H.15(519). If such information is not
published by 3:00 P.M., New York City time, on the relevant
Calculation Date, the CMT Rate shall be calculated by the
Calculation Agent and will be a yield to maturity, based on the
arithmetic mean of the secondary market closing offer side
prices as of approximately 3:30 P.M., New York City time, on the
Interest Determination Date reported, according to their written
records, by three leading primary United States government
securities dealers (each, a "Reference Dealer") in The City of
New York selected by the Calculation Agent (from five such
Reference Dealers selected by the Calculation Agent and
eliminating the highest quotation (or, in the event of equality,
one of the highest) and the lowest quotation (or, in the event
of equality, one of the lowest)), for the most recently issued
direct noncallable fixed rate obligations of the United States
("Treasury Notes") with an original maturity of approximately
the Designated CMT Maturity Index and a remaining term to
maturity of not less than such Designated CMT Maturity Index
minus one year. If three or four (and not five) of such
Reference Dealers are quoting, than the CMT Rate shall be based
on the arithmetic mean of the offer prices obtained and neither
the highest nor the lowest of such quotes will be eliminated.
If the Calculation Agent cannot obtain three such Treasury Note
quotations, the CMT Rate shall be calculated by the Calculation
Agent and will be a yield to maturity based on the arithmetic
mean of the secondary market offer side prices as of
approximately 3:30 P.M., New York City time, on the Interest
Determination Date of three Reference Dealers in The City of New
York (from five such Reference Dealers selected by the
Calculation Agent and eliminating the highest quotation (or, in
the event of equality, one of the highest) and the lowest
quotation (or, in the event of equality, one of the lowest)),
for Treasury Notes with an original maturity closest to the
Designated CMT Maturity Index and in an amount of at least $100
million. If three or four (and not five) of such Reference
Dealers are quoting, than the CMT Rate shall be based on the
arithmetic mean of the offer prices obtained and neither the
highest nor the lowest of such quotes will be eliminated;
provided, however, that if fewer than three Reference Dealers
selected by the Calculation Agent are quoting, the CMT Rate
shall be the CMT Rate in effect on such CMT Interest
Determination Date. If two Treasury Notes with an original
maturity as described in the second preceding sentence have
remaining terms to maturity equally close to the Designated CMT
Maturity Index, the quotes for the Treasury Note with the
shorter remaining term to maturity will be used.
Notwithstanding the foregoing, the interest rate on this Note
shall not be greater than the Maximum Interest Rate, if any, or
less than the Minimum Interest Rate, if any, shown on the face
hereof.
At the request of the Holder hereof, the Calculation Agent will
provide to the Holder hereof the interest rate then in effect
and, if determined, the interest rate which will become
effective as of the next Interest Reset Date. The Calculation
Agent shall calculate the interest rate hereon in accordance
with the provisions hereof on or before each Calculation Date.
The Calculation Agent's determination of any interest rate will
be final and binding in the absence of manifest error.
Unless otherwise specified on the face of this Note, accrued
interest on this Note from the date of issue or from the last
date to which interest has been paid shall be calculated by
multiplying the face amount hereof by an accrued interest
factor. Unless otherwise specified on the face of this Note,
such accrued interest factor is computed by adding the interest
factor calculated for each day from the date of issue, or from
the last date to which interest has been paid, to but excluding
the date for which accrued interest is being calculated. Unless
otherwise specified on the face of this Note, the interest
factor (expressed as a decimal, rounded if necessary to the next
higher one hundred thousandth of a percentage point for each
such day) shall be computed by dividing the interest rate
(expressed as a decimal) applicable to such date by 360 if the
Interest Rate Basis with respect to this Note is the Commercial
Paper Rate, Prime Rate, LIBOR, CD Rate or Federal Funds Rate, or
by the actual number of days in the year, if the Interest Rate
Basis with respect to this Note is the Treasury Rate or the CMT
Rate. The applicable interest rate on any Interest Reset Date
will be the interest rate as reset on such date. The applicable
interest rate on any other day will be the interest rate from
the immediately preceding Interest Reset Date (or, if none, the
Initial Interest Rate).
Payments of interest on this Note with respect to any Interest
Payment Date or Maturity Date (or date of redemption) will
include interest accrued to but excluding such Interest Payment
Date or Maturity Date (or date of redemption); provided,
however, that if the Interest Reset Dates with respect hereto
are daily or weekly, interest payable hereon on any Interest
Payment Date, other than interest payable on the date on which
principal hereon is payable, will include interest accrued to
but excluding the day following the next preceding Regular
Record Date.
The Notes are issuable only in registered form without coupons
and will be either (a) Book-Entry Notes represented by one or
more global notes (each a "Global Note") recorded in the
book-entry system maintained by the Depository or (b)
certificated notes issued to, and registered in the names of,
the beneficial owners or their nominees ("Certificated Notes").
Notes are issuable in minimum denominations of (i) in the case
of Notes denominated in Dollars, U.S. $1,000 and in any larger
amount in integral multiples of $1,000, and (ii) in the case of
Notes denominated in any Foreign Currency, the equivalent in
such Foreign Currency determined in accordance with the Market
Exchange Rate for such Foreign Currency on the Business Day
immediately preceding the date on which the Company accepts an
offer to purchase a Note, of U.S. $1,000 (rounded to an integral
multiple of 1,000 units of the Foreign Currency), and in any
larger amount. In the manner and subject to the limitations
provided in the Indenture, the Global Notes or Certificated
Notes are exchangeable, without charge except for any tax or
other governmental charge imposed in relation thereto, for other
Notes of authorized denominations for a like aggregate principal
amount, at the office or agency of the Company in the Borough of
Manhattan of The City of New York, or, at the option of the
Holders thereof, such office or agency, if any, maintained by
the Company in the city in which the principal executive offices
of the Company are located or the city in which the principal
corporate trust office of the Trustee is located.
Unless this Note is denominated in Dollars, in the event that
the currency in which this Note is denominated is not available
for payment at a time at which any payment is required hereunder
due to the imposition of exchange controls or other
circumstances beyond its control, the Company may, in full
satisfaction of its obligation to make such payment, make
instead a payment in an equivalent amount of Dollars, determined
in accordance with the Market Exchange Rate for such currency on
the latest date for which such rate was established on or before
the date on which payment is due, and such substituted payment
of Dollars shall not constitute a default under this Note or the
Indenture.
If a Redemption Commencement Date is specified above, this Note
may be redeemed, whether or not any other Note is concurrently
redeemed, at the option of the Company, as a whole, or from time
to time in part, on any Business Day on or after the Redemption
Commencement Date and prior to the Maturity Date, upon mailing
by first-class mail, postage prepaid, a notice of such
redemption not less than 30 nor more than 60 days prior to the
Redemption Date, to the Holder of this Note at his address
appearing in the Security Register, as provided in the Indenture
(provided that, if the Holder of this Note is a Depository or a
nominee of a Depository, notice of such redemption shall be
given in accordance with any applicable provisions of such
written agreement between the Company, the Trustee and such
Depository (or its nominee) as may be in effect from time to
time), at the Redemption Price specified on the face of this
Note (expressed in percentages of the principal amount hereof to
be redeemed) together in each case with interest accrued to the
Redemption Date (subject to the right of the Holder of record on
a Regular Record Date to receive interest due on an Interest
Payment Date). In the event of redemption of this Note in part
only, a new Note or Notes of this series, and of like tenor, for
the unredeemed portion hereof will be issued in the name of the
Holder hereof upon the cancellation hereof.
In case a default, as defined in the Indenture, shall occur and
be continuing with respect to the Notes, the principal amount of
all Notes then outstanding under the Indenture may be declared
or may become due and payable upon the conditions and in the
manner and with the effect provided in the Indenture. The
Indenture provides that such declaration may in certain events
be annulled by the Holders of a majority in principal amount of
the Notes outstanding.
To the extent permitted by, and as provided in, the Indenture,
modifications or alterations of the Indenture, or of any
indenture supplemental thereto, and of the rights and
obligations of the Company and the Holders of the Notes, may be
made with the consent of the Company by the affirmative vote or
consent of the Holders of not less than a majority in principal
amount of the Securities then outstanding (as defined in the
Indenture) of each series to be affected, evidenced as in the
Indenture provided; provided, however, that no such modification
or alteration shall (i) change the stated maturity of the
principal of (and premium, if any), or the interest on, any
Security, or reduce the principal amount of (and premium, if
any), or the rate of interest on, any Security, or change the
Currency in which the principal of (and premium, if any), or
interest on, such Security is denominated or payable, or reduce
the amount of the principal of an Original Issue Discount
Security that would be payable upon a declaration of
acceleration of the Maturity thereof pursuant to Section 6.1 of
the Indenture without the consent of the Holder of each
outstanding Security so affected, or (ii) reduce the percentage
of Securities, the vote or consent of the Holders of which is
required for such modifications and alterations, without the
consent of the Holders of all Securities affected. The
Indenture also provides that the Holders of a majority in
principal amount of the Securities of any series then
outstanding may waive any past default with respect to
Securities of such series under the Indenture and its
consequences, except a default in the payment of the principal
of (or premium, if any), or interest on, any of the Securities.
This Note is transferable by the registered Holder hereof or by
his attorney duly authorized in writing at the office or agency
of the Company in the Borough of Manhattan of The City of New
York, or, at the option of the Holder hereof, such office or
agency, if any, maintained by the Company in the city in which
the principal executive offices of the Company are located or
the city in which the principal corporate trust office of the
Trustee is located, without charge except for any tax,
assessment or other governmental charge imposed in relation
thereto, but only in the manner and subject to the limitations
provided in the Indenture and upon surrender of this Note. Upon
any such transfer a Note or Notes of authorized denominations
for a like aggregate principal amount and bearing a number not
contemporaneously outstanding will be issued in exchange herefor.
The Company, the Trustee, any Authenticating Agent, any paying
agent and any Security registrar may deem and treat the
registered Holder hereof as the absolute owner hereof (whether
or not this Note shall be overdue and notwithstanding any
notation of ownership or other writing hereon by anyone other
than the Company or any Security registrar) for the purpose of
receiving payment of or on account of the principal hereof (and
premium, if any), and interest hereon, and for all other
purposes, and neither the Company, the Trustee, an
Authenticating Agent, a paying agent nor the Security registrar
shall be affected by any notice to the contrary. All such
payments shall be valid and effectual to satisfy and discharge
the liability upon this Note to the extent of the sum or sums so
paid.
No recourse shall be had for the payment of the principal of
(or premium, if any), or interest on, this Note or for any claim
based hereon or otherwise in any manner in respect hereof, or in
respect of the Indenture, against any incorporator, shareholder,
officer or director, past, present or future, of the Company or
of any predecessor or successor corporation, whether by virtue
of any constitutional provision or statute or rule of law, or by
the enforcement of any assessment or penalty or in any other
manner, all such liability being expressly waived and released
by the acceptance hereof and as part of the consideration for
the issue hereof. In the event of any sale or transfer of its
assets and liabilities substantially as an entirety to a
successor corporation, the predecessor corporation may be
dissolved and liquidated as more fully set forth in the
Indenture.
All Dollar amounts used in or resulting from calculations
referred to in this Note shall be rounded to the nearest cent
(with one half cent being rounded upwards).
This Note shall be governed by, and construed in accordance
with, the internal laws of the State of Illinois.
ASSIGNMENT FORM
To assign this Note, fill in the form below:
I or we assign and transfer this Note to
(Insert assignee's soc. sec. or tax I.D. no.)
_________________________________________________________________
_________________
(Print or type assignee's name, address and zip code)
_________________________________________________________________
_________________
_________________________________________________________________
_________________
_________________________________________________________________
_________________
and irrevocably appoint
_______________________________________________________________
agent
to transfer this Note on the books of the Company. The agent
may substitute another to act for him.
_________________________________________________________________
_________________
Date
__________________________
Your signature
_____________________________________
_________________________________________________________________
________________
(Sign exactly as your name appears on the other side of this
Note. The signature to this assignment must be guaranteed by a
commercial bank or trust company having its principal office or
a correspondent in
The City of New York or by a member of The New York Stock
Exchange.)
SEARS, ROEBUCK AND CO.
3333 BEVERLY ROAD
HOFFMAN ESTATES, ILLINOIS 60179
AUGUST 22, 1996
Sears Roebuck Acceptance Corp.
3711 Kennett Pike
Greenville, Delaware 19807
Gentlemen:
This is to confirm our agreement ("Extension Agreement") that the term "Debt
Securities" as defined in the Fixed Charge Coverage and Ownership Agreement
dated as of May 15, 1995 between Sears Roebuck Acceptance Corp. ("SRAC") and
Sears, Roebuck and Co. shall be expanded to include up to $4 billion
aggregate initial offering price of debt securities to be issued by SRAC
under Registration Statement No. 33-9817.
If the foregoing satisfactorily sets forth your understanding of our agreement,
please indicate your acceptance by the signature of a duly authorized officer
in the space provided below and on the duplicate original of this letter
which is enclosed.
Very truly yours,
SEARS, ROEBUCK AND CO.
By:/S/Alan J. Lacy
Alan J. Lacy
Executive Vice President and
Chief Financial Officer
Accepted:
SEARS ROEBUCK ACCEPTANCE CORP.
By: /S/Keith E. Trost
Keith E. Trost
President
Exhibit 8
August 27, 1996
Sears Roebuck Acceptance Corp.
3711 Kennett Pike
Greenville, DE 19807
Gentlemen:
Sears Roebuck Acceptance Corp. ("SRAC") may issue up to U.S.
$2,000,000,000 of Medium-Term Notes Series III (the "Notes") due at
least 9 months from the date of issue as described in the
Prospectus Supplement dated August 22, 1996 to the Prospectus dated
August 22, 1996 relating to the initial offering and sale of the
Notes (the "Prospectus").
This opinion is rendered to you in support of an opinion of
Robert J. Pence, Vice President, Law, of even date herewith, rendered
pursuant to Section 8(c) of the Distribution Agreement dated August
22, 1996, among SRAC, Goldman, Sachs & Co., Merrill Lynch, Pierce,
Fenner & Smith Incorporated, Morgan Stanley & Co., Incorporated and Salomon
Brothers Inc. (the "Distribution Agreement").
As special tax counsel to SRAC, we have examined such records
and documents of SRAC as we deemed necessary and relevant for
purposes of rendering our opinion as to the principal United States
federal income and estate tax consequences to persons holding
Notes, including (i) the Prospectus, (ii) the Prospectus
Supplement, (iii) the Indenture dated as of May 15, 1995 between
The Chase Manhattan Bank, N.A., and SRAC, (iv) the form of Notes to
be issued under the Indenture, and (v) the Distribution Agreement.
Unless otherwise defined herein, all capitalized terms shall have
the meanings assigned to them in the Prospectus and the Prospectus
Supplement.
We have been advised and for purposes of our opinion assume
that SRAC will characterize all Notes issued under the Indenture as
indebtedness of SRAC for all United States federal income tax
purposes.
This opinion does not address:
(1) Special tax situations, such as dealers in
securities or currencies, Holders whose functional currency is not
the United States dollar, or persons holding Notes as a hedge
against currency risk or as part of a larger integrated financial
transaction;
(2) Notes issued under the Indenture with a term of 12
months or less at issue prices of less than their stated redemption
price at maturity, giving rise to original issue discount for
federal income tax purposes;
(3) Notes issued under the Indenture providing for
<PAGE>
payments of principal in amounts to be determined by reference to
an index;
(4) Notes with original issue discount which are
denominated in more than one currency; and
(5) Notes with original issue discount with a term of
more than five years from the date of issue and having a fixed
yield to maturity that equals or exceeds the sum of the applicable
federal rate for the calendar month in which the obligation is
issued plus five percentage points, including Notes with maturities
of more than five years that could have yields in excess of the
applicable federal rate plus five percentage points because they
provide for contingent or variable payments or because they are
subject to redemption before maturity.
On the basis of the foregoing, we are of the opinion that
under present United States federal income and estate tax laws the
principal United States federal income and estate tax consequences
to persons holding Notes are as follows:
In the opinion of Baker & McKenzie, all Notes issued under the
Indenture will be properly characterized as indebtedness of SRAC,
and SRAC will so characterize all such Notes for all United States
federal income tax purposes. This characterization by SRAC will be
binding on every Holder of a Note, unless the Holder discloses its
inconsistent characterization on such Holder's federal income tax
return. The Internal Revenue Service will not be bound by the
characterization of the Notes by SRAC and the Holders.
United States Holders
As used herein, "United States Holder" means a Holder of a
Note who is, or which is, a United States Person. A "United States
Person" is (i) a citizen or resident of the United States of
America (including the States and the District of Columbia), its
territories, possessions and other areas subject to its
jurisdiction, including the Commonwealth of Puerto Rico (the
"United States"), (ii) a corporation or partnership created or
organized in the United States or under the laws of the United
States or of any State and (iii) an estate or trust the income of
which is subject to United States federal income taxation
regardless of its source.
Payments of Interest and Original Issue Discount. Stated
interest on a Note (whether in a foreign currency or U.S. dollars)
will be taxable to a United States Holder as ordinary interest
income at the time it accrues or is paid in accordance with the
United States Holder's method of accounting for tax purposes,
subject to the discussion in the succeeding paragraphs.
If Notes are issued at a discount from their stated redemption
price at maturity equal to or more than one-fourth of one percent
of the stated redemption price at maturity multiplied by the number
of full years to maturity, such Notes will be original issue
discount obligations ("Original Issue Discount Notes"). The
difference between the issue price and the stated redemption price
at maturity of each such Original Issue Discount Note will
constitute original issue discount ("Original Issue Discount").
The stated redemption price at maturity will include all payments
<PAGE>
other than interest based on a fixed rate or, unless otherwise
stated in a Pricing Supplement, a floating rate, payable
unconditionally at intervals of one year or less during the entire
term of the Original Issue Discount Notes ("Stated Interest").
Each initial Holder of an Original Issue Discount Note will be
required to include in gross income, in each taxable year during
which the Original Issue Discount Note is held, a portion of the
Original Issue Discount calculated on a yield to maturity basis in
addition to Stated Interest, if any, paid on such Note, regardless
of the United States Holder's method of accounting for tax
purposes. A United States Holder should be aware that, because of
the above original issue discount rules, such Holder will be
required to include increasingly greater amounts of Original Issue
Discount in gross income in each successive accrual period in
advance of the receipt of the cash attributable to such Original
Issue Discount income.
A United States Holder of an Original Issue Discount Note must
include in gross income the sum of the daily portions of Original
Issue Discount with respect to an Original Issue Discount Note for
each day during the taxable year such Holder holds such Note. The
daily portion is determined by allocating to each day of the
accrual period a ratable portion of an amount equal to the excess
of (i) the Adjusted Issue Price (as defined below) of the Original
Issue Discount Note at the beginning of the accrual period
multiplied by the yield to maturity of such Note (determined by
compounding at the close of each accrual period and adjusted for
the length of the accrual period) over (ii) the amount payable as
Stated Interest, if any, on such Note during such accrual period.
United States Holders may accrue Original Issue Discount using
accrual periods of any length, and such accrual periods may vary in
length over the term of the Original Issue Discount Note, provided
that each accrual period must be no longer than one year and each
scheduled payment of principal or interest must occur either on the
final day of an accrual period or on the first day of an accrual
period.
The Adjusted Issue Price of an Original Issue Discount Note
at the start of any accrual period is the issue price of the
Original Issue Discount Note increased by the amount of Original
Issue Discount accrued during all prior accrual periods. A United
States Holder of an Original Issue Discount Note must include in
income accrued Original Issue Discount regardless of whether such
Holder uses a cash receipts and disbursements method of tax
accounting or an accrual basis of tax accounting.
The United States tax treatment of any Indexed Notes will be
described in the applicable Pricing Supplement.
The face of each Original Issue Discount Note will set forth
the issue date, issue price, yield to maturity, amount of Original
Issue Discount, and any other information required by Treasury
regulations. SRAC will furnish to the Internal Revenue Service the
amount of Original Issue Discount, the issue date and any
additional information required by Treasury regulations. Holders,
including subsequent Holders, will be required to determine for
themselves the reportable amount of Original Issue Discount income
for a year.
<PAGE>
For a Holder who uses a cash receipts and disbursements basis
of tax accounting, if a receipt of payment of stated interest is
denominated in a foreign currency, the amount of interest income
will be the U.S. dollar value of the foreign currency payment
amount translated at the spot rate on the payment date, regardless
of whether the payment is in fact converted to U.S. dollars. For a
Holder who uses an accrual basis of tax accounting, if an accrual
of interest is denominated in a foreign currency, the amount of
interest income will be the U.S. dollar value of the amount of
interest accrued in foreign currency translated at the appropriate
accrual translation rate. The "appropriate accrual translation
rate" is the average spot rate in effect during such accrual period
or, at the Holder's election, the spot rate on the last day of such
accrual period (or on the day of receipt of such interest if such
day is within five days of the end of the applicable accrual
period). If the latter translation convention is elected, such
convention will apply with respect to all other debt instruments
held by the Holder during or after the taxable year for which the
election is made. Upon receipt of the interest payment in foreign
currency or upon disposition of the Note, a Holder will recognize
currency gain or loss with respect to the accrued interest equal to
the difference between the Holder's accrued foreign currency
interest income translated at the appropriate accrual translation
rate and the U.S. dollar value of the foreign currency payment
translated at the spot rate on the payment date, regardless of
whether the payment is in fact converted to U.S. dollars.
In the case of Original Issue Discount Notes, Treasury
regulations provide similar rules for both cash basis and accrual
basis United States Holders for calculating currency gain or loss
with respect to accrued Original Issue Discount. Original Issue
Discount will accrue in the currency in which the Note is
denominated and will be translated into U.S. dollars at the
appropriate accrual translation rate. Upon receipt of the accrued
Original Issue Discount or the disposition of the Note, such a
Holder will recognize currency gain or loss with respect to the
accrued Original Issue Discount equal to the difference between the
Holder's accrued Original Issue Discount income translated at the
appropriate accrual translation rate and the U.S. dollar value of
the foreign currency payment translated at the spot rate on the
payment date or the date of disposition.
Currency gain or loss recognized by a Holder upon receipt of a
foreign currency payment will be treated as ordinary income or
loss. In accordance with current Treasury regulations, currency
gain or loss will not be treated as interest income or expense.
If a United States Holder acquires a Note (including an
Original Issue Discount Note) other than upon original issue for an
amount less than the principal amount or, in the case of an
Original Issue Discount Note, less than the Revised Issue Price
(defined as the sum of the issue price of the Note and the
aggregate amount of Original Issue Discount includible in gross
income for all periods prior to the acquisition without regard to
acquisition premium) of such Original Issue Discount Note on the
date of acquisition, the Note may be considered to be a "market
discount bond". As a result, a portion of the gain on the sale or
redemption of the Note (see "United States Tax Considerations--
United States Holders--Purchase, Sale and Redemption of Notes")
equal to the amount of market discount accrued with respect to the
<PAGE>
Note while it was held by the United States Holder will be treated
as interest income. In addition, interest on indebtedness incurred
or continued to purchase or carry a Note that is a market discount
bond, to the extent that it exceeds in any year the interest
(including Original Issue Discount) on the Note includible in the
United States Holder's income for that year, may not be fully
deductible in that year. The foregoing market discount rules will
not apply if the United States Holder elects to include in income
in each taxable year the portion of the market discount
attributable to that year (accrued on either a straight line or
constant interest rate basis) with respect to all market discount
bonds acquired during or after the taxable year in which such
election is made. In the case of a Note denominated in a foreign
currency, the amount of market discount will be determined in units
of foreign currency in which the Note is denominated. Unless the
Holder elects to include in income in each taxable year such market
discount, the resultant market discount is required to be
translated at the spot rate on the date of sale or redemption of
the Note. No part of such market discount is treated as currency
gain or loss. If the Holder elects to include in income in each
taxable year such market discount, the accrued market discount
currently includible in income will be translated at the average
spot rate for the accrual period. Currency gain or loss with
respect to accrued market discount currently includible in income
will be determined in a manner similar to that for accrued Original
Issue Discount as discussed above.
If a United States Holder acquires a Note for an amount more than
the principal amount of the Note (or the stated redemption price at
maturity of a Note that is an Original Issue Discount), a Holder may elect
to amortize such bond premium on a yield to maturity basis. In the case
of a Note denominated in a foreign currency, the amount of bond premium
will be determined in units of the foreign currency in which the Note is
denominated. If a Holder elects to amortize such bond premium, the amount of
accrued bond premium in units of foreign currency in each taxable year will
reduce interest income in units of foreign currency for such taxable year.
Currency gain or loss will be taken into account with respect to accrued bond
premium in each taxable year by treating the portion of premium amortized with
respect to any period as a return of principal (see "United States Tax
Considerations--United States Holders--Purchase, Sale and Redemption of
Notes").
Proposed Treasury regulations have been issued that, if finalized in their
current form, would require a United States Holder that purchases a Note at a
premium under a constant yield method. As proposed, the new rules will be
applicable to debt instruments issued on or after 60 days after the regulations
are published in final form. However, a holder may elect to apply the new rules
to all Notes held on or after the first day of the taxable year that contains
the day which is 60 days after the new regulations are published in final form.
If a United States Holder acquires an Original Issue Discount
Note other than upon original issue for an amount more than the
Revised Issue Price of such Note on the date of acquisition, but
less than the redemption price of such Note, such a Holder will be
required to reduce each daily portion of accrued Original Issue
Discount by an allocable portion of such acquisition premium. The
allocable portion of such acquisition premium will be equal to the
daily portion of accrued Original Issue Discount multiplied by a
fraction (i) the numerator of which is the excess of the cost of
the Original Issue Discount Note incurred by such Holder over the
Revised Issue Price of such Note on the date of acquisition and
(ii) the denominator of which is the excess of the stated
redemption price of the Original Issue Discount Note at maturity
over the Revised Issue Price of such Note on the date of
acquisition. In the case of an Original Issue Discount Note
denominated in a foreign currency, the amount of acquisition
premium will be determined in units of foreign currency in which
<PAGE>
the Note is denominated. The amount of the allocable portion of
acquisition premium in units of foreign currency in each taxable
year will reduce accrued Original Issue Discount in units of
foreign currency for such taxable year. Currency gain or loss will
be taken into account with respect to accrued acquisition premium
in each taxable year by treating the portion of acquisition premium
amortized with respect to any period as a return of principal (see
"United States Tax Considerations--United States Holders--Purchase,
Sale and Redemption of Notes").
A Holder may elect to include in gross income its entire
return on a Note (i.e., the excess of all remaining payments to be
received on the Note over the amount paid for such Note by the
Holder) based on the compounding of interest at a constant rate.
This election for a Note with amortizable bond premium or market
discount results in a deemed election to apply the same accrual
principles to all of the Holder's debt instruments with amortizable
bond premium or market discount. This election may be revoked only
with the consent of the IRS.
Purchase, Sale and Redemption of Notes. A United States
Holder's tax basis in a Note will be its U.S. dollar cost. Such
Holder's original tax basis in a Note will be increased by (i) the
net amount of accrued Original Issue Discount included in income
and (ii) the amount of accrued market discount included in income.
Such Holder's tax basis in a Note will be decreased by (i) the
amount of accrued bond premium and (ii) payments other than Stated
Interest received by the Holder with respect to a Note. Although
the issue has not yet been directly addressed by Treasury
regulations, in the case of a Note denominated in a foreign
currency, such Holder's original tax basis likely will be increased
by (i) the net amount of accrued Original Issue Discount income in
units of foreign currency translated at the appropriate accrual
translation rate in effect during such accrual period and (ii) the
amount of accrued market discount included in income in units of
foreign currency translated at the average spot rate in effect
during such accrual period. Such Holder's tax basis likely will be
decreased by (i) payments treated as receipts of accrued bond
premium in units of foreign currency translated at the spot rate on
the date of acquisition; (ii) payments treated as receipts of
accrued Original Issue Discount translated at the appropriate
accrual translation rates, or accrued market discount translated at
the average spot rate, for the relevant accrual period; and
(iii) payments treated as receipts of principal translated at the
spot rate on the date of acquisition. In accordance with current
Treasury regulations, payments in units of foreign currency
received on a Note by such a Holder will be treated first as a
receipt of Stated Interest, second as a receipt of Original Issue
Discount to the extent accrued, and finally as a receipt of
principal.
Subject to the discussion below and the discussion of Notes
which are market discount bonds (see "United States Tax
Considerations--United States Holders--Payments of Interest and
Original Issue Discount"), upon the sale or redemption of a Note, a
United States Holder will recognize capital gain or loss equal to
the difference between the amount realized on the sale or
redemption of the Note and the tax basis of the Note. The amount
realized on a sale or redemption of a Note denominated in a foreign
currency will be equal to the sale proceeds or redemption price in
<PAGE>
units of foreign currency translated at the spot rate on the date
of sale or redemption. Except to the extent described in the next
paragraph or described in "United States Tax Considerations--United
States Holders--Payments of Interest and Original Issue Discount",
gain or loss will be long-term capital gain or loss if at the time
of the sale or redemption the Note has been held for more than one
year.
Except to the extent described in the discussion of market
discount bonds (see "United States Tax Considerations--United
States Holders--Payments of Interest and Original Issue Discount"),
the portion of the gain or loss recognized by a United States
Holder on the sale or redemption of a Note that is attributable to
changes in exchange rates will be treated as ordinary income or
loss. If a United States Holder acquires a Note denominated in a
foreign currency on or after the date of original issue, such
Holder's currency gain or loss with respect to principal will be
calculated by multiplying the principal amount in units of foreign
currency by the change in spot rates between the date such Holder
acquired the Note and the date it was sold or redeemed. For
purposes of computing currency gain or loss, the principal amount
of a Note will be a Holder's purchase price for the Note in units
of foreign currency. The sum of any currency gain or loss with
respect to the principal of and accrued but unpaid interest
(including accrued but unpaid Original Issue Discount, if any) on a
Note will be realized only to the extent of the total gain or loss
realized on the sale or redemption.
Exchange of Foreign Currency. Foreign currency received as
interest on a Note or on the sale or redemption of a Note will have
a tax basis equal to its U.S. dollar value (translated at the spot
rate) at the time such interest is received or at the time of sale
or redemption of the Note. Foreign currency purchased will
generally have a tax basis equal to the U.S. dollar cost of
acquisition. Any gain or loss recognized on a sale or other
disposition of the foreign currency (including its use to purchase
Notes or its exchange for U.S. dollars) will be ordinary income or
loss.
Foreign Holders
U.S. Withholding Tax. Under United States federal income tax
laws now in effect, and subject to the discussion of backup
withholding which follows, payments by SRAC or any paying agent
thereof (in its capacity as such) of principal of and interest
(including payments of Original Issue Discount, if any) on (and
premium, if any, on) a Note to a Holder who is not a United States
Person will not be subject to United States federal withholding
tax, provided in the case of interest (including payments of
Original Issue Discount, if any) that (i) such Holder does not
actually or constructively own 10 percent or more of the total
combined voting power of all classes of stock of SRAC entitled to
vote; (ii) such Holder is not a controlled foreign corporation for
United States tax purposes with respect to which SRAC is a "related
person" as defined in the Code; and (iii) (A) the beneficial owner
of the Note provides a signed written statement to SRAC or its
agent, under penalties of perjury, that certifies that it is not a
United States Person and provides its name and address, (B) a
securities clearing organization, bank or other financial
<PAGE>
institution that holds customers' securities in the ordinary course
of its trade or business (a "Financial Institution") and holds the
Note on behalf of the beneficial owner provides an intermediary
certificate to SRAC or its agent under penalties of perjury that
such a statement has been received from the beneficial owner by it
or by a Financial Institution between it and the beneficial owner
and furnishes the payor with a copy thereof, or (C) a securities
clearing organization that is the last intermediary in the chain
before SRAC or its agent (a "qualified clearing organization")
electronically provides an intermediary certificate to SRAC or its
agent under penalties of perjury that such a statement has been
received from the beneficial owner by it or by an intermediary that
is a member of the qualified clearing organization and agrees to
furnish (or to cause the relevant member intermediary to furnish)
promptly upon the request of SRAC or the Internal Revenue Service
such statement. A statement described in this paragraph is
effective only with respect to interest payments made to the
certifying Holder after the issuance of the statement in the
calendar year of its issuance and the two immediately succeeding
calendar years.
U.S. Income Tax. Except for the possible imposition of United
States withholding tax (see "United States Tax Considerations--
Foreign Holders--U.S. Withholding Tax") and backup withholding tax
(see "United States Tax Considerations--Backup Withholding"),
payments of principal of and interest (including accrued Original
Issue Discount, if any) on (and premium, if any, on) a Note to a
Holder who is not a United States Person will not be subject to
United States federal income tax, and gains from the sale,
redemption or other disposition of a Note will not be subject to
United States federal income tax, provided that:
(a) The Holder (or the fiduciary, settlor, or beneficiary of,
or a person holding a power over, such Holder, if such Holder is an
estate or trust; or a partner of such Holder, if such Holder is a
partnership) shall not be or have been engaged in a trade or
business, or be or have been present in, or have or have had a
permanent establishment in the United States;
(b) There shall not have been a present or former connection
between such Holder (or between the fiduciary, settlor, or
beneficiary of, or a person holding a power over, such Holder, if
such Holder is an estate or trust; or a partner of such Holder, if
such Holder is a partnership) and the United States, including,
without limitation, such Holder's status as a citizen or former
citizen thereof or resident or former resident thereof; and
(c) The Holder (or the fiduciary, settlor, or beneficiary of,
or a person holding a power over, such Holder, if such Holder is an
estate or trust; or a partner of such Holder, if such Holder is a
partnership) is not and has not been, for United States tax
purposes, (i) a personal holding company, (ii) a corporation that
accumulates earnings to avoid United States federal income tax, or
(iii) a person treated as making an election the effect of which is
to make payments of principal of and interest (including accrued
Original Issue Discount, if any) on (and premium, if any, on) Notes
subject to United States federal income tax.
If a Holder who is not a United States Person is engaged in a
trade or business in the United States and interest (including
<PAGE>
accrued Original Issue Discount, if any), gain or income in respect
of a Note of such Holder is effectively connected with the conduct
of such trade or business, the Holder, although exempt from the
withholding tax discussed in the preceding paragraphs, may be
subject to United States income tax on such interest (including
accrued Original Issue Discount, if any), gain or income at the
statutory rates provided for United States Persons after deduction
of deductible expenses allocable to such effectively connected
interest, gain or income. In addition, if such a Holder is a
foreign corporation, it may be subject to a branch profits tax
equal to 30% of its effectively connected earnings and profits for
the taxable year, as adjusted for certain items, unless a lower
rate applies under a United States income tax treaty with the
Holder's country of residence. For this purpose, interest
(including accrued Original Issue Discount, if any), gain or income
in respect of a Note will be included in earnings and profits
subject to the branch tax if the interest (including accrued
Original Issue Discount, if any), gain or income is effectively
connected with the conduct of the United States trade or business
of the Holder.
U.S. Estate Tax. A Note held by an individual who at the time
of death is not a citizen or resident of the United States will
generally not be subject to United States federal estate tax if the
individual does not actually or constructively own 10% or more of
the total combined voting power of all classes of stock of SRAC and
interest (including accrued Original Issue Discount, if any) on the
Note is not effectively connected with a United States trade or
business of the individual.
Backup Withholding
A 31% "backup" withholding tax and information reporting
requirements apply to certain payments of principal of and interest
(including payments of Original Issue Discount, if any) on (and
premium, if any, on) an obligation, and to proceeds of the sale of
an obligation before maturity, to certain noncorporate United
States Holders, if such Holders fail to provide correct taxpayer
identification numbers and other information or fail to comply with
certain other requirements. SRAC, its paying agent, or a broker,
as the case may be, will be required to withhold from any payment
that is subject to backup withholding, a tax equal to 31% of such
payment unless the Holder furnishes its taxpayer identification
number in the manner prescribed in applicable Treasury regulations
and certain other conditions are met.
In the case of payments of principal of and interest
(including payments of Original Issue Discount, if any) on (and
premium, if any, on) Notes by SRAC or paying agents of SRAC to
Holders who are not United States Persons, temporary Treasury
regulations provide that backup withholding and information
reporting will not apply if the Holder has provided the required
certification of its non-United States status under penalties of
perjury or has otherwise established an exemption (provided that
neither SRAC nor its paying agent has actual knowledge that the
Holder is a United States Person or the conditions of any other
exemption are not in fact satisfied). In addition, if payment is
collected by a foreign office of a custodian, nominee or other
agent acting on behalf of an owner of a Note, such custodian,
<PAGE>
nominee or other agent will not be required to apply backup
withholding to its payments to such owner. However, in such case
if the custodian, nominee or other agent is a United States Person,
a controlled foreign corporation for United States federal income
tax purposes, or a foreign person 50% or more of whose gross income
is from a United States trade or business for a specified three-
year period, such custodian, nominee or other agent will be subject
to certain information reporting requirements with respect to such
payment unless such custodian, nominee or other agent has evidence
in its records that the Holder is not a United States Person and no
actual knowledge that such evidence is false or the Holder
otherwise establishes an exemption or is an exempt recipient. An
exempt recipient includes a bank, corporation or Financial
Institution.
Under current regulations, payments of the proceeds of the
sale of a Note by a Holder who is not a United States Person to or
through a foreign office of a broker will not be subject to backup
withholding. Payments by foreign offices of a broker that is a
United States Person, a controlled foreign corporation for United
States federal income tax purposes or a foreign person 50% or more
of whose gross income is from a United States trade or business for
a specified three-year period are currently subject to certain
information reporting requirements, unless the payee is an exempt
recipient or the broker has evidence in its records that the payee
is not a United States Person and no actual knowledge that such
evidence is false. Payments of the proceeds of a sale to or
through the United States office of a broker will be subject to
information reporting and backup withholding unless the payee
certifies under penalty of perjury that he is not a United States
Person and provides his name and address or the payee otherwise
establishes an exemption.
Any amounts withheld under the backup withholding rules from a
payment to a Holder will be allowed as a refund or a credit against
such Holder's United States federal income tax, provided that the
required information is furnished to the United States Internal
Revenue Service.
The foregoing is based on the Internal Revenue Code of 1986,
as amended, regulations, rulings, administrative pronouncements and
judicial decisions as of the date hereof. Subsequent developments
in these areas could have a material effect on this opinion.
We hereby confirm that, as of the date hereof, the statements
as to United States law in the Prospectus Supplement contained
under the caption "United States Tax Considerations" are correct.
We hereby consent to the use of our opinion as set forth in the
Prospectus Supplement and the reference to our firm in said
Supplement.
The Chase Manhattan Bank, N.A., as Trustee, may rely on this
opinion as if it were addressed to them.
Very truly yours,
/s/ Baker & McKenzie
BAKER & MCKENZIE
RHD/LGH/JOD
Exhibit 99
BOOK-ENTRY-ONLY MEDIUM-TERM NOTE, DEPOSIT NOTE, OR
MEDIUM-TERM BANK NOTE
(MASTER NOTE AND/OR GLOBAL CERTIFICATES) PROGRAM
Letter of Representations
[To be Completed by Issuer, Issuing Agent, and Paying Agent]
SEARS ROEBUCK ACCEPTANCE CORP.
[Name of Issuer]
THE CHASE MANHATTAN BANK 2823
[Name and DTC Participant Number of Issuing Agent]
THE CHASE MANHATTAN BANK 2823
[Name and DTC Participant Number of Paying Agent]
August 27, 1996
Attention: General Counsel's Office
The Depository Trust Company
55 Water Street; 49th Floor
New York, NY 10041-0099
Re: SEARS ROEBUCK ACCEPTANCE CORP.
MEDIUM-TERM NOTES SERIES III
[Description of Note Program, including, as
applicable, (i) series designator; (ii) rank
of indebtedness; and (iii) reference to the
provision of the Securities Act of 1933, as
amended, pursuant to which Note Program is
exempt from registration]
Ladies and Gentlemen:
This letter sets forth our understanding with respect to
certain matters relating to the issuance by Issuer from time to
time of notes under its note program described above (the
"Securities"). Issuing Agent will act as issuing agent with
respect to the Securities. Paying Agent will act as paying agent
with respect to the Securities. The Securities will be issued
pursuant to a prospectus supplement, private placement
memorandum, or other such document authorizing the issuance of
the Securities, dated as of August 22, 1996.
Paying Agent has entered into a Money Market Instrument
Master Note and/or Global Certificates Certificate Agreement, or
a Medium-Term Note Certificate Agreement, with The Depository
Trust Company ("DTC") dated as of March 10, 1989, pursuant to
which Paying Agent will act as custodian of a Master Note
Certificate and/or Global Certificates evidencing the Securities,
when issued. Paying Agent will amend Exhibit A to such
Certificate Agreement to include the note program described
above, prior to issuance of the Securities.
To induce DTC to accept the Securities as eligible for
deposit at DTC and to act in accordance with its Rules with
respect to the Securities, Issuer, Issuing Agent, and Paying
Agent make the following representations to DTC:
1. All or certain issues of the Securities shall be
evidenced by one Master Note Certificate, or by one or more
Global Certificates for each issue, in registered form registered
in the name of DTC's nominee, Cede & Co., and such Certificate or
Certificates shall represent 100% of the principal amount of the
Securities issued through DTC. The Master Note Certificate, if
any, shall include the substance of all material provisions set
forth in the appropriate DTC model Master Note for the note
program described above, a copy of which previously has been
furnished to Issuing Agent and Paying Agent, and may include
additional provisions as long as they do not conflict with the
material provisions set forth in the DTC model. If the principal
amount of an issue of the Securities to be evidenced by one or
more Global Certificates, if any, exceeds $200,000,000, one
Global Certificate shall be issued with respect to each
$200,000,000 of principal amount and an additional Global
Certificate shall be issued with respect to any remaining
principal amount. Paying Agent shall cause each Global
Certificate to be stamped with the following legend:
Unless this certificate is presented by an
authorized representative of The Depository Trust
Company, a New York corporation ("DTC"), to Issuer
or its agent for registration of transfer, exchange,
or payment, and any certificate issued is registered
in the name of Cede & Co. or in such other name as is
requested by an authorized representative of DTC (and
any payment is made to Cede & Co. or to such other
entity as is requested by an authorized representative
of DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR
VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL
inasmuch as the registered owner hereof, Cede & Co.,
has an interest herein.
2. Issuer or Issuing Agent has obtained from the CUSIP
Service Bureau a written list of approximately 900 nine-character
numbers (the basic first six characters of which are the same and
uniquely identify Issuer and the Securities to be issued under
its note program described above). The CUSIP numbers on such
list have been reserved for future assignment to issues of the
Securities. At any time when fewer than 100 of the CUSIP numbers
on such list remain unassigned, Issuer or Issuing Agent shall
promptly obtain from the CUSIP Service Bureau an additional
written list of approximately 900 such numbers.
3. When Securities are to be issued through DTC, Issuing
Agent shall give notice to Paying Agent and issuance instructions
to DTC in accordance with DTC's Procedures, including DTC's Final
Plan for DTC Money Market Programs, and DTC's Issuing/Paying
Agent General Operating Procedures and Participant Terminal
System Procedures for Medium-Term Notes (MTNs) Including Deposit
Notes and Medium-Term Bank Notes (the "Procedures"), a copy of
which previously has been furnished to Issuing Agent and Paying
Agent. The giving of such issuance instructions, which include
delivery instructions, to DTC shall constitute: (a) a
representation that the Securities are issued in accordance with
applicable law; and (b) a confirmation that a Master Note
Certificate, or a Global Certificate (or Certificates),
evidencing such Securities, in the form described in Paragraph 1,
has been issued and authenticated.
4. Issuer recognizes that DTC does not in any way undertake
to, and shall not have any responsibility to, monitor or
ascertain the compliance of any transactions in the Securities
with any exemptions from registration under the Securities Act of
1933 or of any other state or federal securities laws.
5. If issuance of Securities through DTC is scheduled to
take place one or more days after Issuing Agent has given
issuance instructions to DTC, Issuing Agent may cancel such
issuance by giving a cancellation instruction to DTC in
accordance with the Procedures.
6. At any time that Paying Agent has Securities in its DTC
accounts, it may request withdrawal of such Securities from DTC
by giving a withdrawal instruction to DTC in accordance with the
Procedures. Upon DTC's acceptance of such withdrawal
instruction, Paying Agent shall reduce the principal amount of
the Securities evidenced, as the case may be, by the Master Note
Certificate, or by one or more Global Certificates, accordingly.
7. In the event of any solicitation of consents from or
voting by holders of the Securities, Issuer, Issuing Agent, or
Paying Agent shall establish a record date for such purposes
(with no provision for revocation of consents or votes by
subsequent holders) and shall, to the extent possible, send
notice of such record date to DTC not less than 15 calendar days
in advance of such record date. If delivered by hand or sent by
mail or overnight delivery, such notice shall be sent to:
Supervisor; Proxy
Reorganization Department
The Depository Trust Company
7 Hanover Square; 23rd Floor
New York, NY 10004-2695
If sent by telecopy, such notice shall be sent to (212) 709-6896
or (212) 709-6897. Issuer, Issuing Agent, or Paying Agent shall
confirm DTC's receipt of such telecopy by telephoning (212) 709-
6870.
8. Notices of reorganization events (corporate actions)
with respect to the Securities, including full or partial
redemptions (calls), repayments (puts), extensions of maturities,
resets of interest rates or spreads, mandatory tenders, and
consolidations of individual issues, shall be given to DTC by
Paying Agent in accordance with the Procedures.
9. Paying Agent may override DTC's determination of
interest and principal payment dates, in accordance with the
Procedures.
10. Notice regarding the amount of variable interest and
principal payments on the Securities shall be given to DTC by
Paying Agent in accordance with the Procedures.
11. All notices sent to DTC shall contain the CUSIP number
of the Securities.
12. Paying Agent shall confirm with DTC daily by CUSIP
number the face value of the Securities outstanding, and Paying
Agent's corresponding interest and principal payment obligations,
in accordance with the Procedures.
13. DTC may direct Issuer, Issuing Agent, or Paying Agent
to use any other number or address as the number or address to
which notices may be sent.
14. Payments on the Securities, including payments in
currencies other than the U.S. Dollar, shall be made by Paying
Agent in accordance with the Procedures.
15. In the event that Issuer determines that beneficial
owners of Securities shall be able to obtain certificated
Securities, Issuer or Paying Agent shall notify DTC of the
availability of certificates. In such event, Issuer or Paying
Agent shall issue, transfer, and exchange certificates in
appropriate amounts, as required by DTC and others.
16. DTC may discontinue providing its services as
securities depository with respect to the Securities at any time
by giving reasonable notice to Issuer or Paying Agent (at which
time DTC will confirm with Issuer or Paying Agent the aggregate
amount of Securities outstanding by CUSIP number). Under such
circumstances, at DTC's request Issuer and Paying Agent shall
cooperate fully with DTC by taking appropriate action to make
available one or more separate certificates evidencing Securities
to any DTC Participant having Securities credited to its DTC
accounts.
17. Issuer: (a) understands that DTC has no obligation to,
and will not, communicate to its Participants or to any person
having an interest in the Securities any information contained in
the Master Note Certificate, if any, or the Global Certificates,
if any; and (b) acknowledges that neither DTC's Participants nor
any person having an interest in the Securities shall be deemed
to have notice of the provisions of such Certificate or
Certificates by virtue of submission of such Certificate or
Certificates to DTC.
18. Issuer authorizes DTC to provide to Issuing Agent or
Paying Agent listings of DTC Participants' holdings with respect
to the Securities from time to time at the request of Issuing
Agent or Paying Agent. Issuer authorizes Issuing Agent and
Paying Agent to provide DTC with such signatures, exemplars of
signatures, and authorizations to act as may be deemed necessary
by DTC to permit DTC to discharge its obligations to DTC
Participants and appropriate regulatory authorities.
19. Nothing herein shall be deemed to require Issuing Agent
or Paying Agent to advance funds on behalf of Issuer.
Note: Very truly yours,
Schedule A contains
statements that DTC SEARS ROEBUCK ACCEPTANCE CORP.
believes accurately (Issuer)
describe DTC, the By: /s/ Stephen D. Carp
method of effecting book- (Authorized Officer's
entry transfers of securities Signature)
distributed through DTC,
and certain related THE CHASE MANHATTAN BANK, N.A.
matters. (Issuing Agent)
By: /s/ Tim Burke
(Authorized Officer's
Signature)
THE CHASE MANHATTAN BANK, N.A.
(Paying Agent)
By: /s/ Tim Burke
(Authorized Officer's
Signature)
Received and Accepted:
THE DEPOSITORY TRUST COMPANY
By: /s/ James Femia
SCHEDULE A
SAMPLE OFFERING DOCUMENT LANGUAGE
DESCRIBING BOOK-ENTRY-ONLY ISSUANCE
(Prepared by DTC--bracketed material may be applicable only to
certain issues)
1. The Depository Trust Company ("DTC"), New York, NY, will
act as securities depository for the securities (the
"Securities"). The Securities will be issued as fully-registered
securities registered in the name of Cede & Co. (DTC's
partnership nominee). One fully-registered Security certificate
will be issued for [each issue of] the Securities, [each] in the
aggregate principal amount of such issue, and will be deposited
with DTC. [If, however, the aggregate principal amount of [any]
issue exceeds $200 million, one certificate will be issued with
respect to each $200 million of principal amount and an
additional certificate will be issued with respect to any
remaining principal amount of such issue.]
2. DTC is a limited-purpose trust company organized under
the New York Banking Law, a "banking organization" within the
meaning of the New York Banking Law, a member of the Federal
Reserve System, a "clearing corporation" within the meaning of
the New York Uniform Commercial Code, and a "clearing agency"
registered pursuant to the provisions of Section 17A of the
Securities Exchange Act of 1934. DTC holds securities that its
participants ("Participants") deposit with DTC. DTC also
facilitates the settlement among Participants of securities
transactions, such as transfers and pledges, in deposited
securities through electronic computerized book-entry changes in
Participants' accounts, thereby eliminating the need for physical
movement of securities certificates. Direct Participants include
securities brokers and dealers, banks, trust companies, clearing
corporations, and certain other organizations. DTC is owned by a
number of its Direct Participants and by the New York Stock
Exchange, Inc., the American Stock Exchange, Inc. and the
National Association of Securities Dealers, Inc. Access to the
DTC system is also available to others such as securities brokers
and dealers, banks, and trust companies that clear through or
maintain a custodial relationship with a Direct Participant,
either directly or indirectly ("Indirect Participants"). The
Rules applicable to DTC and its Participants are on file with the
Securities and Exchange Commission.
3. Purchases of Securities under the DTC system must be
made by or through Direct Participants, which will receive a
credit for the Securities on DTC's records. The ownership
interest of each actual purchaser of each Security ("Beneficial
Owner") is in turn to be recorded on the Direct and Indirect
Participants' records. Beneficial Owners will not receive
written confirmation from DTC of their purchase, but Beneficial
Owners are expected to receive written confirmations providing
details of the transaction, as well as periodic statements of
their holdings, from the Direct or Indirect Participant through
which the Beneficial Owner entered into the transaction.
Transfers of ownership interests in the Securities are to be
accomplished by entries made on the books of Participants acting
on behalf on Beneficial Owners. Beneficial Owners will not
receive certificates representing their ownership interest in
Securities, except in the event that use of the book-entry system
for the Securities is discontinued.
4. To facilitate subsequent transfers, all Securities
deposited by Participants with DTC are registered in the name of
DTC's partnership nominee, Cede & Co. The deposit of Securities
with DTC and their registration in the name of Cede & Co. effect
no change in beneficial ownership. DTC has no knowledge of the
actual Beneficial Owners of the Securities; DTC's records reflect
only the identity of the Direct Participants to whose accounts
such Securities are credited, which may or may not be the
Beneficial Owners. The Participants will remain responsible for
keeping account of their holdings on behalf of their customers.
5. Conveyance of notices and other communications by DTC to
Direct Participants, by Direct Participants to Indirect
Participants, and by Direct Participants and Indirect
Participants to Beneficial Owners will be governed by
arrangements among them, subject to any statutory or regulatory
requirements as may be in effect from time to time.
[6. Redemption notices shall be sent to Cede & Co. If less
than all of the Securities within an issue are being redeemed,
DTC's practice is to determine by lot the amount of the interest
of each Direct Participant in such issue to be redeemed.]
7. Neither DTC nor Cede & Co. will consent or vote with
respect to Securities. Under its usual procedures, DTC mails an
Omnibus Proxy to the Issuer as soon as possible after the record
date. The Omnibus Proxy assigns Cede & Co.'s consenting or
voting rights to those Direct Participants to whose accounts the
Securities are credited on the record date (identified in a
listing attached to the Omnibus Proxy).
8. Principal and interest payments on the Securities will
be made to DTC, DTC's practice is to credit Direct Participants'
accounts on payable date in accordance with their respective
holdings shown on DTC's records unless DTC has reason to believe
that it will not receive payment on payable date. Payments by
Participants to Beneficial Owners will be governed by standing
instructions and customary practices, as is the case with
securities held for the accounts of customers in bearer form or
registered in "street name," and will be the responsibility of
such Participant and not of DTC, the Agent, or the Issuer,
subject to any statutory or regulatory requirements as may be in
effect from time to time. Payment of principal and interest to
DTC is the responsibility of the Issuer or the Agent, and
disbursement of such payments to the Beneficial Owners shall be
the responsibility of Direct and Indirect Participants.
[9. A Beneficial Owner shall give notice to elect to have
its Securities purchased or tendered through its Participant, to
the [Tender/Remarketing] Agent, and shall effect delivery of such
Securities by causing the Direct Participant to transfer the
Participant's interest in the Securities, on DTC's records, to
the [Tender/Remarketing] Agent. The requirement for physical
delivery of Securities in connection with a demand for purchase
or a mandatory purchase will be deemed satisfied when the
ownership rights in the Securities are transferred by Direct
Participants on DTC's records.]
10. DTC may discontinue providing its services as
securities depository with respect to the Securities at any time
by giving reasonable notice to the Issuer or the Agent. Under
such circumstances, in the event that a successor securities
depository is not obtained, Security certificates are required to
be printed and delivered.
11. The Issuer may decide to discontinue use of the system
of book-entry transfers through DTC (or a successor securities
depository). In that event, Security certificates will be
printed and delivered.
12. The information in the section concerning DTC and DTC's
book-entry system has been obtained from sources that the Issuer
believes to be reliable, but the Issuer takes no responsibility
for the accuracy thereof.
