SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
________________
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) June 28, 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 June 28, 1996, the Registrant entered into the credit
agreement attached hereto as Exhibit 4.
Item 7. Financial Statements, Pro Forma Financial Information and
Exhibits.
The exhibits are incorporated by reference to the exhibit
list attached hereto.
-2-<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: , 1996 By:
STEPHEN D. CARP
Vice President, Finance
and Assistant Secretary
(principal financial and
accounting officer
and authorized officer of
Registrant)
-3-<PAGE>
EXHIBIT LIST
4 $5,000,000,000 Credit Agreement dated as of June 28, 1996
among Sears Roebuck Acceptance Corp., the banks listed on
the signature pages thereof, the Senior Managing Agent,
Managing Agents, Co-Arrangers, Co-Agents and Lead Managers
referred to therein and Morgan Guaranty Trust Company of
New York, as Agent.
E-1
$5,000,000,000
CREDIT AGREEMENT
dated as of June 28, 1996
among
Sears Roebuck Acceptance Corp.,
The Banks Listed Herein,
Morgan Guaranty Trust Company of New York,
as Agent,
The Chase Manhattan Bank (National Association),
as Senior Managing Agent,
The Managing Agents Referred to Herein
and
The Co-Arrangers, Co-Agents and Lead Managers
Referred to Herein
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS
SECTION 1.01 Definitions. 1
1.02 Accounting Terms and Determinations 16
ARTICLE II
THE CREDITS
SECTION 2.01 Commitments to Lend 16
2.02 Notice of Committed Borrowing 18
2.03 Money Market Borrowings 18
2.04 Notice to Banks; Funding of Loans 23
2.05 Notes 24
2.06 Mandatory Termination of
Commitments and Repayment of Loans 24
2.07 Interest Rates 25
2.08 Facility Fee. 28
2.09 Optional Termination or
Reduction of Commitments 29
2.10 Method of Electing Interest Rates 29
2.11 Optional Prepayments 31
2.12 General Provisions as to Payments 32
2.13 Funding Losses 32
2.14 Computation of Interest and Fees 33
2.15 Taxes 33
2.16 Regulation D Compensation 37
2.17 Optional Increase in Commitments 37
ARTICLE III
CONDITIONS
SECTION 3.01 Effectiveness of Agreement. . . 38
3.02 Borrowings 39
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
SECTION 4.01 Corporate Existence and Power 41
4.02 Corporate and Governmental
Authorization; No Contravention 41
4.03 Binding Effect 42
4.04 Financial Information 42
4.05 Litigation. 43
4.06 Compliance with ERISA 43
4.07 Environmental Matters 43
4.08 Taxes. 44
4.09 Subsidiaries. 44
4.10 Full Disclosure 44
ARTICLE V
COVENANTS
SECTION 5.01 Information 44
5.02 Maintenance of Property; Insurance 47
5.03 Conduct of Business and
Maintenance of Existence 47
5.04 Compliance with Laws. 48
5.05 Letter Agreement 48
5.06 Negative Pledge 48
5.07 Consolidations, Mergers and Sales
of Assets 49
5.08 Use of Proceeds 50
5.09 Subsidiary Debt 50
5.10 Fixed Charge Coverage 51
5.11 Debt 51
ARTICLE VI
DEFAULTS
SECTION 6.01 Events of Default 51
6.02 Notice of Default 54
ARTICLE VII
THE AGENT
SECTION 7.01 Appointment and Authorization 54
7.02 Agent and Affiliates. 54
7.03 Action by Agent 54
7.04 Consultation with Experts. 54
7.05 Liability of Agent 55
7.06 Indemnification 55
7.07 Credit Decision 55
7.08 Successor Agent 55
7.09 Agent's Fee 56
7.10 Managing Agent, Senior Managing Agent,
Co-Arrangers, Co-Agents and Lead
Managers 56
ARTICLE VIII
CHANGE IN CIRCUMSTANCES
SECTION 8.01 Basis for Determining Interest
Rate Inadequate or Unfair 56
8.02 Illegality 57
8.03 Increased Cost and Reduced Return 58
8.04 Base Rate Loans Substituted for
Affected Fixed Rate Loans 60
8.05 Substitution of Bank 61
ARTICLE IX
MISCELLANEOUS
SECTION 9.01 Notices 61
9.02 No Waivers 62
9.03 Expenses; Documentary Taxes;
Indemnification 62
9.04 Sharing of Set-Offs 63
9.05 Amendments and Waivers 63
9.06 Successors and Assigns 64
9.07 Collateral 66
9.08 Governing Law; Submission to Jurisdiction 66
9.09 Counterparts; Integration 66
9.10 Restrictions on Transfers 67
9.11 Termination of Existing Credit Agreements. 67
9.12 Confidentiality 67
9.13 WAIVER OF JURY TRIAL 68
Exhibit A - Note
Exhibit B - Notice of Committed Borrowing
Exhibit C - Notice of Interest Rate Election
Exhibit D - Money Market Quote Request
Exhibit E - Invitation for Money Market Quotes
Exhibit F - Money Market Quote
Exhibit G - Opinion of Counsel for the Borrower
Exhibit H - Opinion of Special Counsel for the
Agent
Exhibit I - Assignment and Assumption Agreement
Exhibit J - Terms of Subordination
Exhibit K - Extension Agreement<PAGE>
CREDIT AGREEMENT
CREDIT AGREEMENT dated as of June 28, 1996 among SEARS
ROEBUCK ACCEPTANCE CORP., the BANKS listed on the signature pages
hereof, the MANAGING AGENT, CO-ARRANGERS, CO-AGENTS and LEAD
MANAGERS referred to herein and MORGAN GUARANTY TRUST COMPANY OF
NEW YORK, as Agent.
ARTICLE I
DEFINITIONS
SECTION 1.01. Definitions. The following terms, as
used herein, have the following meanings:
"Absolute Rate Auction" means a solicitation of Money
Market Quotes setting forth Money Market Absolute Rates pursuant
to Section 2.03.
"Account" means an open-end charge plan for specified
Persons, maintained by Sears or an Affiliate of Sears.
"Adjusted CD Rate" has the meaning set forth in Section
2.07(b).
"Administrative Questionnaire" means, with respect to
each Bank, an administrative questionnaire in the form prepared
by the Agent and submitted to the Agent (with a copy to the
Borrower) duly completed by such Bank.
"Affiliate" of a given Person means any other Person
that directly, or indirectly through one or more intermediaries,
controls, or is controlled by, or is under common control with,
such given Person.
"Agent" means Morgan Guaranty Trust Company of New York
in its capacity as agent for the Banks hereunder, and its
successors in such capacity.
"Applicable Lending Office" means, with respect to any
Bank, (i) in the case of its Domestic Loans, its Domestic Lending
Office, (ii) in the case of its Euro-Dollar Loans, its
Euro-Dollar Lending Office and (iii) in the case of its Money
Market Loans, its Money Market Lending Office.
"Assessment Rate" has the meaning set forth in Section
2.07(b).
"Assignee" has the meaning set forth in Section
9.06(c).
"Bank" means each bank listed on the signature pages
hereof, each Assignee which becomes a Bank pursuant to Section
9.06(c), and their respective successors.
"Base Rate" means, for any day, a rate per annum equal
to the higher of (i) the Prime Rate for such day and (ii) the sum
of 1/2 of 1% plus the Federal Funds Rate for such day.
"Base Rate Loan" means (i) a Committed Loan which bears
interest at the Base Rate pursuant to the applicable Notice of
Committed Borrowing or Notice of Interest Rate Election or the
provisions of Article VIII or (ii) an overdue amount which was a
Base Rate Loan immediately before it became overdue.
"Benefit Arrangement" means at any time an employee
benefit plan within the meaning of Section 3(3) of ERISA which is
not a Plan or a Multiemployer Plan and which is maintained or
otherwise contributed to by any member of the ERISA Group.
"Borrower" means Sears Roebuck Acceptance Corp., a
Delaware corporation, and its successors.
"Borrower's 1995 Form 10-K" means the Borrower's annual
report on Form 10-K for 1995, as filed with the Commission
pursuant to the Exchange Act (excluding the exhibits thereto).
"Borrowing" means a borrowing hereunder consisting of
Loans made to the Borrower at the same time by the Banks pursuant
to Article II on a single date and for a single Interest Period.
Borrowings are classified for purposes of this Agreement either
by reference to the pricing of Loans comprising such Borrowing
(e.g., a "Euro-Dollar Borrowing" is a Borrowing comprised of
Euro-Dollar Loans and a "Fixed Rate Borrowing" is a Borrowing
comprised of Fixed Rate Loans) or by reference to the provisions
of Article II under which participation therein is determined
(i.e., a "Committed Borrowing" is a Borrowing under Section 2.01
in which all Banks participate in proportion to their
Commitments, while a "Money Market Borrowing" is a Borrowing
under Section 2.03 in which the Bank participants are determined
on the basis of their bids in accordance therewith).
"CD Base Rate" has the meaning set forth in Section
2.07(b).
"CD Loan" means (i) a Committed Loan which bears
interest at a rate determined with reference to the CD Base Rate
pursuant to the applicable Notice of Committed Borrowing or
Notice of Interest Rate Election or (ii) an overdue amount which
was a CD Loan immediately before it became overdue.
"CD Margin" has the meaning set forth in Section
2.07(h).
"CD Reference Banks" means Morgan Guaranty Trust
Company of New York, Chemical Bank and Union Bank of Switzerland.
"Co-Agents" means each Bank listed on the signature
pages hereof as a Co-Agent, each in its capacity as co-agent
hereunder.
"Co-Arrangers" means each Bank listed on the signature
pages hereof as a Co-Arranger, each in its capacity as
co-arranger hereunder.
"Commission" means the Securities and Exchange
Commission.
"Commitment" means, with respect to each Bank, the
amount set forth opposite the name of such Bank on the signature
pages hereof, as such amount may be reduced from time to time
pursuant to Section 2.09 or increased from time to time pursuant
to Section 2.17.
"Committed Loan" means a loan made by a Bank pursuant
to Section 2.01.
"Consolidated Debt" means at any date the Debt of the
Borrower and its Consolidated Subsidiaries, determined on a
consolidated basis as of such date.
"Consolidated Net Income" means, for any period, the
net income of the Borrower and its Consolidated Subsidiaries for
such period.
"Consolidated Stockholder's Equity" means as of any
date the total stockholder's equity of the Borrower and its
Consolidated Subsidiaries, plus the amount of any SRAC
Subordinated Debt, as of such date.
"Consolidated Subsidiary" means at any date any
Subsidiary or other Person the accounts of which are consolidated
with those of the Borrower in its consolidated financial
statements as of such date.
"Consolidated Tangible Net Worth" means at any date the
Consolidated Stockholder's Equity less the consolidated
Intangible Assets of the Borrower and its Consolidated
Subsidiaries, all determined as of such date. For purposes of
this definition "Intangible Assets" means the amount (to the
extent reflected as an asset on the consolidated statement of
financial position of the Borrower and its Consolidated
Subsidiaries) of (i) all write-ups (other than write-ups
resulting from foreign currency translations and write-ups of
assets of a going concern business made within twelve months
after the acquisition of such business) subsequent to March 31,
1996 in the book value of any asset owned by the Borrower or a
Consolidated Subsidiary and (ii) all unamortized debt discount
and expense to the extent reflected as an asset on a consolidated
statement of financial position of Borrower and its Consolidated
Subsidiaries, unamortized deferred charges, goodwill, patents,
trademarks, service marks, trade names, anticipated future
benefit of tax loss carry-forwards, copyrights, organization or
developmental expenses and other intangible assets.
"Debt" of any Person means, at any date, without
duplication, (i) all obligations of such Person for borrowed
money properly recordable as a liability on the financial
statements of such Person, (ii) all obligations of such Person,
properly recordable as a liability on the financial statements of
such Person, evidenced by bonds, debentures, notes or other
similar instruments, (iii) all obligations of such Person to pay
the deferred purchase price of property except trade accounts
payable arising in the ordinary course of business, (iv) the net
present value of future minimum lease payments under capital
leases, (v) all direct recourse payment obligations of such
Person in respect of any accounts receivable sold by such Person,
(vi) all Debt (as defined in clauses (i) through (v) above) of
others secured by a Lien on any asset of such Person, whether or
not such Debt is assumed by such Person, and (vii) all Debt (as
defined in clauses (i) through (vi) above) of others Guaranteed
by such Person; provided that SRAC Subordinated Debt shall not be
deemed to be Debt for the purpose of determining the Debt of the
Borrower.
"Default" means any condition or event which
constitutes an Event of Default or which with the giving of
notice or lapse of time or both would, unless cured or waived,
become an Event of Default.
"Domestic Business Day" means any day except a
Saturday, Sunday or other day on which commercial banks in New
York City or Chicago are authorized by law to close.
"Domestic Lending Office" means, as to each Bank, its
office located at its address set forth in its Administrative
Questionnaire (or identified in its Administrative Questionnaire
as its Domestic Lending Office) or such other office as such Bank
may hereafter designate as its Domestic Lending Office by notice
to the Borrower and the Agent; provided that any Bank may so
designate separate Domestic Lending Offices for its Base Rate
Loans, on the one hand, and its CD Loans, on the other hand, in
which case all references herein to the Domestic Lending Office
of such Bank shall be deemed to refer to either or both of such
offices, as the context may require.
"Domestic Loans" means CD Loans or Base Rate Loans or
both.
"Domestic Reserve Percentage" has the meaning set forth
in Section 2.07(b).
"Effective Date" means the date this Agreement becomes
effective in accordance with Section 3.01.
"Environmental Laws" means any and all federal, state
and local statutes, laws, regulations, ordinances, rules,
judgments, orders, decrees, permits, licenses, agreements or
other governmental restrictions relating to the protection of the
environment or to emissions, discharges or releases of
pollutants, contaminants, petroleum or petroleum products,
chemicals or industrial, toxic or hazardous substances or wastes
into the environment or otherwise relating to the generation,
processing, use, treatment, storage, disposal, transport or
handling of pollutants, contaminants, petroleum or petroleum
products, chemicals or industrial, toxic or hazardous substances
or wastes, or the clean-up or other remediation thereof.
"ERISA" means the Employee Retirement Income Security
Act of 1974, as amended, or any successor statute.
"ERISA Group" means the Borrower and all members of a
controlled group of corporations and all trades or businesses
(whether or not incorporated) under common control which,
together with the Borrower, are treated as a single employer
under Section 414 of the Internal Revenue Code.
"Euro-Dollar Business Day" means any Domestic Business
Day on which commercial banks are open for international business
(including dealings in dollar deposits) in London.
"Euro-Dollar Lending Office" means, as to each Bank,
its office, branch or Affiliate located at its address set forth
in its Administrative Questionnaire (or identified in its
Administrative Questionnaire as its Euro-Dollar Lending Office)
or such other office, branch or Affiliate of such Bank as it may
hereafter designate as its Euro-Dollar Lending Office by notice
to the Borrower and the Agent.
"Euro-Dollar Loan" means (i) a Committed Loan which
bears interest at a rate determined with reference to the London
Interbank Offered Rate pursuant to the applicable Notice of
Committed Borrowing or Notice of Interest Rate Election or (ii)
an overdue amount which was a Euro-Dollar Loan immediately before
it became overdue.
"Euro-Dollar Margin" has the meaning set forth in
Section 2.07(h).
"Euro-Dollar Reference Banks" means the principal
London offices of Morgan Guaranty Trust Company of New York,
Chemical Bank and Union Bank of Switzerland.
"Euro-Dollar Reserve Percentage" means for any day that
percentage (expressed as a decimal) which is in effect on such
day, as prescribed by the Board of Governors of the Federal
Reserve System (or any successor) for determining the maximum
reserve requirement for a member bank of the Federal Reserve
System in New York City with deposits exceeding five billion
dollars in respect of "Eurocurrency liabilities" (or in respect
of any other category of liabilities which includes deposits by
reference to which the interest rate on Euro-Dollar Loans is
determined or any category of extensions of credit or other
assets which includes loans by a non-United States office of any
Bank to United States residents).
"Existing Credit Agreements" means (i) the Five-Year
Revolving Credit Agreement and (ii) the $1,000,000,000 Credit
Agreement dated as of June 29, 1995 among Sears Roebuck
Acceptance Corp., the banks listed therein, the "Managing Agent",
"Co-Arrangers", "Co-Agents" and "Lead Managers" referred to
therein and Morgan Guaranty Trust Company of New York, as agent
for the banks parties thereto.
"Event of Default" has the meaning set forth in Section
6.01.
"Exchange Act" means the Securities Exchange Act of
1934, as amended.
"Extending Bank" has the meaning set forth in Section
2.01(b).
"Facility Fee Rate" has the meaning set forth in
Section 2.07(h).
"Federal Funds Rate" means, for any day, the rate per
annum (rounded upward, if necessary, to the nearest 1/100th of
1%) equal to the weighted average of the rates on overnight
Federal funds transactions with members of the Federal Reserve
System arranged by Federal funds brokers on such day, as
published by the Federal Reserve Bank of New York on the Domestic
Business Day next succeeding such day, provided that (i) if such
day is not a Domestic Business Day, the Federal Funds Rate for
such day shall be such rate on such transactions on the next
preceding Domestic Business Day as so published on the next
succeeding Domestic Business Day, and (ii) if no such rate is so
published on such next succeeding Domestic Business Day, the
Federal Funds Rate for such day shall be the average rate quoted
to Morgan Guaranty Trust Company of New York on such day on such
transactions as determined by the Agent.
"Five-Year Revolving Credit Agreement" means the
$4,680,000,000 Amended and Restated Credit Agreement dated as of
June 29, 1995 among Sears Roebuck Acceptance Corp., the banks
listed therein, the "Managing Agent", "Co-Arrangers", "Co-Agents"
and "Lead Managers" referred to therein and Morgan Guaranty Trust
Company of New York, as agent for the banks parties thereto.
"Fixed Charge Coverage Ratio" means, for any period,
the Borrower's ratio of earnings to fixed charges, determined for
such period in accordance with Item 503(d) of Regulation S-K
promulgated by the Commission, as in effect on the date hereof.
"Fixed Rate Loans" means CD Loans or Euro-Dollar Loans
or Money Market Loans (excluding Money Market LIBOR Loans bearing
interest at the Base Rate pursuant to Section 8.01) or any
combination of the foregoing.
"Group of Loans" means at any time a group of Committed
Loans consisting of (i) all Loans which are Base Rate Loans at
such time, (ii) all Loans which are CD Loans having the same
Interest Period at such time or (iii) all Loans which are
Euro-Dollar Loans having the same Interest Period at such time;
provided that, if Loans of any particular Bank are converted to
or made as Base Rate Loans pursuant to Section 8.02 or 8.04, such
Loans shall be included in the same Group or Groups of Loans from
time to time as they would have been in if they had not been so
converted or made.
"Guarantee" by any Person means any obligation,
contingent or otherwise, of such Person directly or indirectly
guaranteeing any Debt (as defined in clauses (i) through (vi) of
the definition of Debt) of any other Person or in any manner
providing for the payment of any such Debt of any other Person or
otherwise protecting the holder of such Debt against loss
(whether by agreement to keep-well, to purchase assets, goods,
securities or services, or to take-or-pay or otherwise), provided
that the term Guarantee shall not include endorsements for
collection or deposit in the ordinary course of business. The
term "Guarantee" used as a verb has a correlative meaning.
"Interest Period" means: (1) with respect to each
Euro-Dollar Loan, a period commencing on the date of Borrowing
specified in the applicable Notice of Borrowing or on the date
specified in the applicable Notice of Interest Rate Election and
ending one, two, three or six months thereafter (or such other
number of months thereafter as the Borrower, the Agent and all
the Banks may agree), as the Borrower may elect in the applicable
Notice; provided that:
(a) any Interest Period which would otherwise end on a
day which is not a Euro-Dollar Business Day shall, subject to
clause (c) below, be extended to the next succeeding Euro-Dollar
Business Day unless such Euro-Dollar Business Day falls in
another calendar month, in which case such Interest Period shall
end on the next preceding Euro-Dollar Business Day;
(b) any Interest Period which begins on the last
Euro-Dollar Business Day of a calendar month (or on a day for
which there is no numerically corresponding day in the calendar
month at the end of such Interest Period) shall, subject to
clause (c) below, end on the last Euro-Dollar Business Day of a
calendar month; and
(c) any Interest Period which begins before and would
otherwise end after the Termination Date of any Bank, as in
effect on the first day of such Interest Period, shall end on
such Termination Date as so in effect.
(2) with respect to each CD Loan, a period commencing
on the date of Borrowing specified in the applicable Notice of
Borrowing or on the date specified in the applicable Notice of
Interest Rate Election and ending 30, 60, 90 or 180 days
thereafter (or such other number of days thereafter as the
Borrower, the Agent and all the Banks may agree), as the Borrower
may elect in the applicable Notice; provided that:
(a) any Interest Period which would otherwise end on a
day which is not a Euro-Dollar Business Day shall, subject to
clause (b) below, be extended to the next succeeding Euro-Dollar
Business Day; and
(b) any Interest Period which begins before and would
otherwise end after the Termination Date of any Bank, as in
effect on the first day of such Interest Period, shall end on
such Termination Date as so in effect.
(3) with respect to each Money Market LIBOR Borrowing,
the period commencing on the date of such Borrowing and ending
such whole number of months thereafter as the Borrower may elect
in accordance with Section 2.03; provided that:
(a) any Interest Period which would otherwise end on a
day which is not a Euro-Dollar Business Day shall, subject to
clause (c) below, be extended to the next succeeding Euro-Dollar
Business Day unless such Euro-Dollar Business Day falls in
another calendar month, in which case such Interest Period shall
end on the next preceding Euro-Dollar Business Day;
(b) any Interest Period which begins on the last
Euro-Dollar Business Day of a calendar month (or on a day for
which there is no numerically corresponding day in the calendar
month at the end of such Interest Period) shall, subject to
clause (c) below, end on the last Euro-Dollar Business Day of a
calendar month; and
(c) in the case of any Bank, any Interest Period which
would otherwise end after the Termination Date of such Bank, as
in effect on the first day of such Interest Period, shall end on
such Termination Date as so in effect.
(4) with respect to each Money Market Absolute Rate
Borrowing, the period commencing on the date of such Borrowing
and ending such number of days thereafter (but not less than 30
days) as the Borrower may elect in accordance with Section 2.03;
provided that:
(a) any Interest Period which would otherwise end on a
day which is not a Euro-Dollar Business Day shall, subject to
clause (b) below, be extended to the next succeeding Euro-Dollar
Business Day; and
(b) in the case of any Bank, any Interest Period which
would otherwise end after the Termination Date of such Bank, as
in effect on the first day of such Interest Period, shall end on
such Termination Date as so in effect.
"Internal Revenue Code" means the Internal Revenue Code
of 1986, as amended, or any successor statute.
"Lead Managers" means each Bank listed on the signature
pages hereof as a Lead Manager, each in its capacity as lead
manager hereunder.
"Letter Agreement" means the letter agreement dated
September 28, 1984 between the Borrower and Sears, as amended as
of October 17, 1991, and as the same may further be amended from
time to time in accordance with the terms thereof and of Section
5.05.
"Level I Status" exists at any date if, at such date,
Sears Long-Term Securities are rated A+ or higher by S&P or A1 or
higher by Moody's.
"Level II Status" exists at any date if, at such date,
(i) Level I Status does not exist and (ii) Sears Long-Term
Securities are rated A- or higher by S&P or A3 or higher by
Moody's.
"Level III Status" exists at any date if, at such date,
(i) neither Level I Status nor Level II Status exists and (ii)
Sears Long-Term Securities are rated BBB+ or higher by S&P or
Baa1 or higher by Moody's.
"Level IV Status" exists at any date if, at such date,
(i) none of Level I, Level II and Level III Status exists and
(ii) Sears Long-Term Securities are rated BBB or higher by S&P or
Baa2 or higher by Moody's.
"Level V Status" exists at any date if none of Level I,
Level II, Level III and Level IV Status exists at such date.
"LIBOR Auction" means a solicitation of Money Market
Quotes setting forth Money Market Margins based on the London
Interbank Offered Rate pursuant to Section 2.03.
"Lien" means (i) any mortgage, lien, pledge, charge,
security interest or encumbrance of any kind in respect of any
asset recorded as such on the financial statements of the
Borrower or any Subsidiary or (ii) the interest of a vendor or
lessor under any conditional sales agreement, capital lease or
other title retention agreement relating to any asset recorded as
such on the financial statements of the Borrower or any
Subsidiary.
"Loan" means a Domestic Loan or a Euro-Dollar Loan or a
Money Market Loan and "Loans" means Domestic Loans or Euro-Dollar
Loans or Money Market Loans or any combination of the foregoing.
"London Interbank Offered Rate" has the meaning set
forth in Section 2.07(c).
"Managing Agent" means Chemical Bank in its capacity as
managing agent hereunder.
"Material Company" means any of the Borrower, any
Subsidiary, Sears, any Person of which Sears is a subsidiary or
any Material Sears Subsidiary.
"Material Plan" means at any time a Plan or Plans
having aggregate Unfunded Liabilities in excess of $75,000,000.
"Material Sears Subsidiary" means any Sears Subsidiary
having consolidated total assets in excess of $6,000,000,000 at
the time of any determination of its status hereunder.
"Moody's" means Moody's Investors Service, Inc.
"Money Market Absolute Rate" has the meaning set forth
in Section 2.03(d).
"Money Market Absolute Rate Loan" means a loan to be
made by a Bank pursuant to an Absolute Rate Auction.
"Money Market Lending Office" means, as to each Bank,
its Domestic Lending Office or such other office, branch or
affiliate of such Bank as it may hereafter designate as its Money
Market Lending Office by notice to the Borrower and the Agent;
provided that any Bank may from time to time by notice to the
Borrower and the Agent designate separate Money Market Lending
Offices for its Money Market LIBOR Loans, on the one hand, and
its Money Market Absolute Rate Loans, on the other hand, in which
case all references herein to the Money Market Lending Office of
such Bank shall be deemed to refer to either or both of such
offices, as the context may require.
"Money Market LIBOR Loan" means a loan to be made by a
Bank pursuant to a LIBOR Auction (including such a loan bearing
interest at the Base Rate pursuant to Section 8.01(a)).
"Money Market Loan" means a Money Market LIBOR Loan or
a Money Market Absolute Rate Loan.
"Money Market Margin" has the meaning set forth in
Section 2.03(d).
"Money Market Quote" means an offer by a Bank to make a
Money Market Loan in accordance with Section 2.03.
"Multiemployer Plan" means at any time an employee
pension benefit plan within the meaning of Section 4001(a)(3) of
ERISA to which any member of the ERISA Group is then making or
accruing an obligation to make contributions or has within the
preceding five plan years made contributions, including for these
purposes any Person which ceased to be a member of the ERISA
Group during such five year period.
"Non-Extending Bank" has the meaning set forth in
Section 2.01(b).
"Non-U.S. Bank" shall mean any Bank other than a Bank
that is organized under the laws of the United States or any
State thereof or the District of Columbia.
"Notes" means promissory notes of the Borrower,
substantially in the form of Exhibit A hereto, evidencing the
obligation of the Borrower to repay the Loans, and "Note" means
any one of such promissory notes issued hereunder.
"Notice of Borrowing" means a Notice of Committed
Borrowing (as defined in Section 2.02) or a Notice of Money
Market Borrowing (as defined in Section 2.03(f)).
"Notice of Interest Rate Election" has the meaning set
forth in Section 2.10.
"Obligor" means, with respect to any Account, the
Person or Persons obligated to make payments with respect to such
Account, including any guarantor thereof.
"Parent" means, with respect to any Bank, any Person
controlling such Bank.
"Participant" has the meaning set forth in Section
9.06(b).
"PBGC" means the Pension Benefit Guaranty Corporation
or any entity succeeding to any or all of its functions under
ERISA.
"Person" means an individual, a corporation, a
partnership, an association, a trust or any other entity or
organization, including a government or political subdivision or
an agency or instrumentality thereof.
"Plan" means at any time an employee pension benefit
plan (other than a Multiemployer Plan) which is covered by Title
IV of ERISA or subject to the minimum funding standards under
Section 412 of the Internal Revenue Code and either (i) is
maintained, or contributed to, by any member of the ERISA Group
for employees of any member of the ERISA Group or (ii) has at any
time within the preceding five years been maintained, or
contributed to, by any Person which was at such time a member of
the ERISA Group for employees of any Person which was at such
time a member of the ERISA Group.
"Prime Rate" means the rate of interest publicly
announced by Morgan Guaranty Trust Company of New York in New
York City from time to time as its Prime Rate.
"Receivable" means, at any date, any amounts owing at
such date by the Obligors under an Account, including, without
limitation, amounts owing for the payment of goods and services,
cash advances, if applicable, finance charges and other charges,
if any.
"Reference Banks" means the CD Reference Banks or the
Euro-Dollar Reference Banks, as the context may require, and
"Reference Bank" means any one of such Reference Banks.
"Regulation U" means Regulation U of the Board of
Governors of the Federal Reserve System, as in effect from time
to time.
"Required Banks" means at any time Banks having at
least 66-2/3% of the aggregate amount of the Commitments or, if
the Commitments shall have been terminated, holding Notes
evidencing at least 66-2/3% of the aggregate unpaid principal
amount of the Loans.
"Revolving Credit Period" means, for any Bank, the
period from and including the Effective Date to and including the
Termination Date for such Bank.
"S&P" means Standard & Poor's Rating Services.
"Sears" means Sears, Roebuck and Co., a New York
corporation, and its successors.
"Sears Long-Term Securities" means senior unsecured
long-term debt securities of Sears, without any direct
third-party credit enhancement with respect thereto.
"Sears Subsidiary" means any corporation or other
entity of which securities or other ownership interests having
ordinary voting power to elect a majority of the Board of
Directors or other persons performing similar functions are at
the time directly or indirectly owned or controlled by Sears or
one or more other Sears Subsidiaries, or by Sears and one or more
other Sears Subsidiaries, provided that any such securities or
other ownership interests held in a fiduciary capacity for
others, or as portfolio investments, by Sears (to the extent it
engages in a financial or insurance business) or by any Sears
Subsidiary engaged in the insurance business or a financial
business shall be disregarded for purposes of this definition.
"SRAC Preferred Stock" means at any time one or more
series of preferred stock of the Borrower outstanding at such
time; provided that (i) neither the voluntary or involuntary
liquidation preference nor the redemption price of all such
preferred stock outstanding at any time shall exceed $150,000,000
and (ii) the terms of such preferred stock shall not grant voting
rights to the holders thereof to elect members of the board of
directors of the Borrower except the right to elect not more than
the lesser of two members or 25% of the members of such board
upon the failure of the Borrower to pay dividends or similar
contingency.
"SRAC Subordinated Debt" means any indebtedness for
borrowed money of the Borrower to any of (w) Sears, (x) a
Wholly-Owned Subsidiary of Sears, (y) a corporation of which
Sears is a Wholly-Owned Subsidiary or (z) a Wholly-Owned
Subsidiary of a corporation described in clause (y) above,
evidenced by notes or other evidences of indebtedness for
borrowed money which is made subordinate and junior in right of
payment to the Notes and such other indebtedness for borrowed
money of the Borrower as may be specified (whether expressly or
by category) in the instruments evidencing such indebtedness (the
Notes and all other obligations of the Borrower hereunder and
such other indebtedness of the Borrower to which the SRAC
Subordinated Debt is subordinate and junior being herein called
"Superior Debt") by provisions no less favorable to the holders
of the Superior Debt than those set forth in Exhibit J.
"Status" refers to the determination of which of Level
I Status, Level II Status, Level III Status, Level IV Status or
Level V Status exists at any date.
"Subsidiary" means any corporation or other entity of
which securities or other ownership interests having ordinary
voting power to elect a majority of the board of directors or
other persons performing similar functions are at the time
directly or indirectly owned by the Borrower.
"Termination Date" means, for any Bank, June 28, 2001
or such later date to which the Termination Date for such Bank
shall have been extended pursuant to Section 2.01(b), or in any
case if any such day is not a Euro-Dollar Business Day, the next
succeeding Euro-Dollar Business Day, unless such Euro-Dollar
Business Day falls in another calendar month, in which case the
Termination Date for such Bank shall be the next preceding
Euro-Dollar Business Day.
"Unfunded Liabilities" means, with respect to any Plan
at any time, the amount (if any) by which (i) the present value
of all benefits under such Plan exceeds (ii) the fair market
value of all Plan assets allocable to such benefits (excluding
any accrued but unpaid contributions), all determined as of the
then most recent valuation date for such Plan, but only to the
extent that such excess represents a potential liability of a
member of the ERISA Group to the PBGC or any other Person under
Title IV of ERISA.
"Wholly-Owned Subsidiary" of a given Person means any
Person all of the shares of capital stock or other ownership
interests of which (except directors' qualifying shares) are at
the time directly or indirectly owned by the given Person or one
or more other Wholly-Owned Subsidiaries or by the given Person
and one or more other Wholly-Owned Subsidiaries.
SECTION 1.02. Accounting Terms and Determinations.
Unless otherwise specified herein, all accounting terms used
herein shall be interpreted, all accounting determinations
hereunder shall be made, and all financial statements required to
be delivered hereunder shall be prepared in accordance with U.S.
generally accepted accounting principles as in effect from time
to time, applied on a basis consistent (except for changes
concurred in by the Borrower's independent public accountants)
with the most recent audited financial statements delivered to
the Banks by the Borrower pursuant to this Agreement; provided
that, if the Borrower notifies the Agent that the Borrower wishes
to amend any provision hereof to eliminate the effect of any
change after the date hereof in such generally accepted
accounting principles (which, for purposes of this proviso shall
include the generally accepted application or interpretation
thereof) on the operation of such provision (or if the Agent
notifies the Borrower that the Required Banks wish to amend any
such provision for such purpose), then such provision shall be
interpreted and the Borrower's compliance with such provision
shall be determined, and all accounting determinations with
respect thereto shall be made, on the basis of such generally
accepted accounting principles in effect immediately before the
relevant change in such generally accepted accounting principles
became effective, until either such notice is withdrawn or such
provision is amended in a manner satisfactory to the Borrower and
the Required Banks.
ARTICLE II
THE CREDITS
SECTION 2.01. Commitments to Lend. (a) Each Bank
severally agrees, on the terms and conditions set forth in this
Agreement, to make loans to the Borrower pursuant to this Section
from time to time during the Revolving Credit Period for such
Bank in amounts such that the aggregate principal amount of
Committed Loans by such Bank at any one time outstanding shall
not exceed the amount of its Commitment. Each Borrowing under
this Section shall be in an aggregate principal amount of
$75,000,000 or any larger multiple of $5,000,000 (except that any
such Borrowing may be in the aggregate amount available in
accordance with Section 3.02(b)) and shall be made from the
several Banks ratably in proportion to their respective
Commitments. Within the foregoing limits, the Borrower may
borrow under this Section, prepay Loans (to the extent permitted
by Section 2.11) and reborrow at any time during the Revolving
Credit Period under this Section.
(b) Extension of the Termination Date.
(i) If no Default shall have occurred and be
continuing, the Termination Date for any Bank may be extended
once during each calendar year in the manner set forth in this
Section 2.01(b) to June 28th of the calendar year next succeeding
that of the latest Termination Date then in effect for any Bank
(subject to the definition of Termination Date). If the Borrower
wishes to request an extension of the Termination Date for the
Banks, it shall give notice to that effect to the Agent not less
than 60 days prior to any anniversary of the Closing Date (which
shall not be later than the latest Termination Date then in
effect), whereupon the Agent shall promptly notify each of the
Banks of such request. Each Bank will use its best efforts to
respond to such request, whether affirmatively (by executing and
delivering to the Agent an Extension Agreement substantially in
the form of Exhibit K) or negatively, as it may elect in its
discretion, not less than 30 days prior to such anniversary. Any
Bank which declines to extend its Termination Date (including by
its failure to respond, which shall be deemed to be a
non-extension) will, from and after such date until a date (if
any) on which, in response to a subsequent extension request,
such Bank agrees to extend its Termination Date, be deemed a
"Non-Extending Bank." Each Bank that is not at the relevant time
of determination a Non-Extending Bank will be deemed an
"Extending Bank".
(ii) If less than all Banks respond affirmatively to
such request by such 30th day, then the Borrower shall have the
right to replace each Bank that does not elect to extend its
Termination Date with a substitute bank or banks that will agree
to extend such Termination Date (which may be one or more of the
Banks), which will purchase the Note and assume the Commitment of
such Non-Extending Bank pursuant to Section 9.06(c). Any Bank
which declines to extend its Termination Date hereby agrees
promptly to execute an Assignment and Assumption Agreement
substantially in the form of Exhibit I hereto with any substitute
bank or banks so designated by the Borrower (and the Borrower
agrees that it will pay the $2,000 administrative fee referred to
in Section 9.06(c) with respect to each such Assignment and
Assumption Agreement). Each such substitute bank shall,
contemporaneously with the effectiveness of the relevant
Assignment and Assumption Agreement or Agreements, execute and
deliver to the Agent and the Borrower an Extension Agreement with
respect to its assumed Commitment not later than the relevant
anniversary of the Closing Date, and shall thereupon become an
Extending Bank party hereto.
(iii) Each Extension Agreement delivered pursuant to
clause (i) or (ii) above shall be effective on the relevant
anniversary of the Closing Date. Subject to receipt by the Agent
of an Extension Agreement with respect to each Extending Bank
duly completed and signed in counterparts by such Extending Bank
and the Borrower, the Termination Date of each Extending Bank
shall be extended for the period specified above (and the
Termination Date of each Non-Extending Bank shall not thereby be
extended, but shall continue to be the Termination Date
theretofore in effect for such Non-Extending Bank).
SECTION 2.02. Notice of Committed Borrowing. The
Borrower shall give the Agent notice, substantially in the form
attached hereto as Exhibit B (a "Notice of Committed Borrowing"),
not later than 11:00 A.M. (New York City time) on (x) the date of
each Base Rate Borrowing, (y) the second Domestic Business Day
before each CD Borrowing and (z) the third Euro-Dollar Business
Day before each Euro-Dollar Borrowing, specifying:
(i) the date of such Borrowing, which shall be a
Domestic Business Day in the case of a Domestic Borrowing or a
Euro-Dollar Business Day in the case of a Euro-Dollar Borrowing,
(ii) the aggregate amount of such Borrowing,
(iii) whether the Loans comprising such Borrowing are to
bear interest initially at the Base Rate or at a rate based upon
the CD Base Rate or the London Interbank Offered Rate, and
(iv) in the case of a Fixed Rate Borrowing, the
duration of the initial Interest Period applicable thereto,
subject to the provisions of the definition of Interest Period.
SECTION 2.03. Money Market Borrowings.
(a) The Money Market Option. In addition to Committed
Borrowings pursuant to Section 2.01, the Borrower may, as set
forth in this Section, request the Banks during the Revolving
Credit Period to make offers to make Money Market Loans to the
Borrower. The Banks may, but shall have no obligation to, make
such offers and the Borrower may, but shall have no obligation
to, accept any such offers in the manner set forth in this
Section.
(b) Money Market Quote Request. When the Borrower
wishes to request offers to make Money Market Loans under this
Section, it shall transmit to the Agent by telex or facsimile
transmission a Money Market Quote Request substantially in the
form of Exhibit D hereto so as to be received no later than 10:00
A.M. (New York City time) on (x) the fifth Euro-Dollar Business
Day prior to the date of Borrowing proposed therein, in the case
of a LIBOR Auction or (y) the Domestic Business Day next
preceding the date of Borrowing proposed therein, in the case of
an Absolute Rate Auction (or, in either case, such other time or
date as the Borrower and the Agent shall have mutually agreed and
shall have notified to the Banks not later than the date of the
Money Market Quote Request for the first LIBOR Auction or
Absolute Rate Auction for which such change is to be effective)
specifying:
(i) the proposed date of Borrowing, which shall be a
Euro-Dollar Business Day in the case of a LIBOR Auction or a
Domestic Business Day in the case of an Absolute Rate Auction,
(ii) the aggregate amount of such Borrowing, which
shall be $75,000,000 or a larger multiple of $5,000,000 (or an
amount equal to the aggregate amount available in accordance with
Section 3.02(b), if less than $75,000,000),
(iii) the duration of the Interest Period applicable
thereto, subject to the provisions of the definition of Interest
Period, and
(iv) whether the Money Market Quotes requested are to
set forth a Money Market Margin or a Money Market Absolute Rate.
The Borrower may request offers to make Money Market Loans for
more than one Interest Period in a single Money Market Quote
Request. No Money Market Quote Request shall be given until the
Borrower has notified the Agent of its acceptance or
non-acceptance of the Money Market Quotes relating to any
outstanding Money Market Quote Request.
(c) Invitation for Money Market Quotes. Promptly upon
receipt of a Money Market Quote Request, the Agent shall send to
the Banks by telex or facsimile transmission an Invitation for
Money Market Quotes substantially in the form of Exhibit E
hereto, which shall constitute an invitation by the Borrower to
each Bank to submit Money Market Quotes offering to make the
Money Market Loans to which such Money Market Quote Request
relates in accordance with this Section.
(d) Submission and Contents of Money Market Quotes.
(i) Each Bank may submit a Money Market Quote containing an
offer or offers to make Money Market Loans in response to any
Invitation for Money Market Quotes. Each Money Market Quote must
comply with the requirements of this subsection (d) and must be
submitted to the Agent by telex or facsimile transmission at its
offices specified in or pursuant to Section 9.01 not later than
(x) 2:00 P.M. (New York City time) on the fourth Euro-Dollar
Business Day prior to the proposed date of Borrowing, in the case
of a LIBOR Auction or (y) 9:30 A.M. (New York City time) on the
proposed date of Borrowing, in the case of an Absolute Rate
Auction (or, in either case, such other time or date as the
Borrower and the Agent shall have mutually agreed and shall have
notified to the Banks not later than the date of the Money Market
Quote Request for the first LIBOR Auction or Absolute Rate
Auction for which such change is to be effective); provided that
Money Market Quotes submitted by the Agent (or any affiliate of
the Agent) in the capacity of a Bank may be submitted, and may
only be submitted, if the Agent or such affiliate notifies the
Borrower of the terms of the offer or offers contained therein
not later than (x) one hour prior to the deadline for the other
Banks, in the case of a LIBOR Auction or (y) 15 minutes prior to
the deadline for the other Banks, in the case of an Absolute Rate
Auction. Subject to Articles III and VI, any Money Market Quote
so made shall be irrevocable except with the written consent of
the Agent given on the instructions of the Borrower.
(ii) Each Money Market Quote shall be in substantially
the form of Exhibit F hereto and shall in any case specify:
(A) the proposed date of Borrowing,
(B) the principal amount of the Money Market Loan for
which each such offer is being made, which principal amount (w)
may be greater than or less than the Commitment of the quoting
Bank, (x) must be $5,000,000 or a larger multiple of $1,000,000,
(y) may not exceed the principal amount of Money Market Loans for
which offers were requested and (z) may be subject to an
aggregate limitation as to the principal amount of Money Market
Loans for which offers being made by such quoting Bank may be
accepted,
(C) in the case of a LIBOR Auction, the margin above
or below the applicable London Interbank Offered Rate (the "Money
Market Margin") offered for each such Money Market Loan,
expressed as a percentage (specified to the nearest 1/10,000th of
1%) to be added to or subtracted from such base rate,
(D) in the case of an Absolute Rate Auction, the rate
of interest per annum (specified to the nearest 1/10,000th of 1%)
(the "Money Market Absolute Rate") offered for each such Money
Market Loan, and
(E) the identity of the quoting Bank.
A Money Market Quote may set forth up to five separate offers by
the quoting Bank with respect to each Interest Period specified
in the related Invitation for Money Market Quotes.
(iii) Any Money Market Quote shall be disregarded if
it:
(A) is not substantially in conformity with Exhibit F
hereto or does not specify all of the information required by
subsection (d)(ii);
(B) contains qualifying, conditional or similar
language;
(C) proposes terms other than or in addition to those
set forth in the applicable Invitation for Money Market Quotes;
or
(D) arrives after the time set forth in subsection
(d)(i).
(e) Notice to Borrower. The Agent shall promptly
notify the Borrower of the terms (x) of any Money Market Quote
submitted by a Bank that is in accordance with subsection (d) and
(y) of any Money Market Quote that amends, modifies or is
otherwise inconsistent with a previous Money Market Quote
submitted by such Bank with respect to the same Money Market
Quote Request. Any such subsequent Money Market Quote shall be
disregarded by the Agent unless such subsequent Money Market
Quote is submitted solely to correct a manifest error in such
former Money Market Quote. The Agent's notice to the Borrower
shall specify (A) the aggregate principal amount of Money Market
Loans for which offers have been received for each Interest
Period specified in the related Money Market Quote Request, (B)
the respective principal amounts and Money Market Margins or
Money Market Absolute Rates, as the case may be, so offered, and
the identity of the respective Banks submitting such offers, and
(C) if applicable, limitations on the aggregate principal amount
of Money Market Loans for which offers in any single Money Market
Quote may be accepted.
(f) Acceptance and Notice by Borrower. Not later than
10:30 A.M. (New York City time) on (x) the third Euro-Dollar
Business Day prior to the proposed date of Borrowing, in the case
of a LIBOR Auction or (y) the proposed date of Borrowing, in the
case of an Absolute Rate Auction (or, in either case, such other
time or date as the Borrower and the Agent shall have mutually
agreed and shall have notified to the Banks not later than the
date of the Money Market Quote Request for the first LIBOR
Auction or Absolute Rate Auction for which such change is to be
effective), the Borrower shall notify the Agent of its acceptance
or non-acceptance of the offers so notified to it pursuant to
subsection (e). In the case of acceptance, such notice (a
"Notice of Money Market Borrowing") shall specify the aggregate
principal amount of offers for each Interest Period that are
accepted. The Borrower may accept any Money Market Quote in
whole or in part; provided that:
(i) the aggregate principal amount of each Money
Market Borrowing may not exceed the applicable amount set forth
in the related Money Market Quote Request,
(ii) the principal amount of each Money Market
Borrowing must be (A) $75,000,000 or a larger multiple of
$5,000,000, (B) an amount equal to the aggregate amount available
in accordance with Section 3.02(b), if less than $75,000,000 or
(C) the aggregate principal amount of offers, if less than both
$75,000,000 and the amount referred to in clause (B),
(iii) acceptance of offers may only be made on the basis
of ascending Money Market Margins or Money Market Absolute Rates,
as the case may be, and
(iv) the Borrower may not accept any offer that is
described in subsection (d)(iii) or that otherwise fails to
comply with the requirements of this Agreement.
(g) Allocation by Agent. If offers are made by two or
more Banks with the same Money Market Margins or Money Market
Absolute Rates, as the case may be, for a greater aggregate
principal amount than the amount in respect of which such offers
are accepted for the related Interest Period, the principal
amount of Money Market Loans in respect of which such offers are
accepted shall be allocated by the Agent among such Banks as
nearly as possible (in multiples of $1,000,000, as the Agent may
deem appropriate) in proportion to the aggregate principal
amounts of such offers. Determinations by the Agent of the
amounts of Money Market Loans shall be conclusive in the absence
of manifest error.
SECTION 2.04. Notice to Banks; Funding of Loans.
(a) Upon receipt of a Notice of Borrowing, the Agent
shall promptly notify each Bank of the contents thereof and of
such Bank's share (if any) of such Borrowing and such Notice of
Borrowing shall not thereafter be revocable by the Borrower.
(b) Not later than (x) 1:00 P.M. (New York City time)
on the date of each Base Rate Borrowing, (y) 12:00 Noon (New York
City time) on the date of any Money Market Absolute Rate
Borrowing and (z) 11:00 A.M. (New York City time) on the date of
any other Borrowing, each Bank shall make available its ratable
share of such Borrowing, in Federal or other funds immediately
available in New York City, to the Agent at its address specified
in or pursuant to Section 9.01. Unless the Agent determines that
any applicable condition specified in Article III has not been
satisfied, the Agent will make the funds so received from the
Banks available to the Borrower promptly after the Agent's
receipt thereof at the Agent's aforesaid address.
(c) Unless the Agent shall have received notice from a
Bank prior to the date of any Borrowing (or, in the case of any
Base Rate Borrowing, prior to 11:00 A.M. (New York City time) on
the date of such Borrowing) that such Bank will not make
available to the Agent such Bank's share of such Borrowing, the
Agent may assume that such Bank has made such share available to
the Agent on the date of such Borrowing in accordance with
subsection (b) of this Section 2.04 and the Agent may, in
reliance upon such assumption, make available to the Borrower on
such date a corresponding amount. If and to the extent that such
Bank shall not have so made such share available to the Agent,
the Agent shall notify the Borrower thereof as soon as
practicable, and such Bank and the Borrower severally agree to
repay to the Agent forthwith on demand (delivered, in the case of
the Borrower, in accordance with the next succeeding sentence)
such corresponding amount together with interest thereon, for
each day from the date such amount is made available to the
Borrower until the date such amount is repaid to the Agent, at
(i) in the case of the Borrower, a rate per annum equal to the
higher of the Federal Funds Rate and the interest rate applicable
thereto pursuant to Section 2.07 and (ii) in the case of such
Bank, the Federal Funds Rate. Any such demand for repayment
shall be made first upon such Bank and, if such Bank shall have
failed to repay such amount within two Euro-Dollar Business Days
after such demand, then upon the Borrower. If such Bank shall
repay to the Agent such corresponding amount, such amount so
repaid shall constitute such Bank's Loan included in such
Borrowing for purposes of this Agreement.
SECTION 2.05. Notes. (a) The Loans of each Bank
shall be evidenced by a single Note payable to the order of such
Bank for the account of its Applicable Lending Office in an
amount equal to the aggregate unpaid principal amount of such
Bank's Loans.
(b) Each Bank may, by notice to the Borrower and the
Agent, request that its Loans of a particular type be evidenced
by a separate Note in an amount equal to the aggregate unpaid
principal amount of such Loans. Each such Note shall be in
substantially the form of Exhibit A hereto with appropriate
modifications to reflect the fact that it evidences solely Loans
of the relevant type. Each reference in this Agreement to the
"Note" of such Bank shall be deemed to refer to and include any
or all of such Notes, as the context may require.
(c) Upon receipt of each Bank's Note pursuant to
Section 3.01(b), the Agent shall mail such Note to such Bank.
Each Bank shall record the date and amount of each Loan made by
it and the date and amount of each payment of principal made by
the Borrower with respect thereto, and may, if such Bank so
elects in connection with any transfer or enforcement of its
Note, endorse on the schedule forming a part thereof appropriate
notations to evidence the foregoing information with respect to
each such Loan then outstanding; provided that the failure of any
Bank to make any such recordation or endorsement shall not affect
the obligations of the Borrower hereunder or under the Notes.
Each Bank is hereby irrevocably authorized by the Borrower so to
endorse its Note and to attach to and make a part of its Note a
continuation of any such schedule as and when required.
SECTION 2.06. Mandatory Termination of Commitments and
Repayment of Loans. Each Money Market Loan included in any Money
Market Borrowing shall mature, and the principal amount thereof
(together with accrued interest thereon) shall be due and
payable, on the last day of the Interest Period applicable to
such Money Market Borrowing. The Commitment for each Bank shall
terminate on the Termination Date for such Bank, and any Loans
(including without limitation any Money Market Loans) of such
Bank then outstanding (together with accrued interest thereon)
shall be due and payable on such date.
SECTION 2.07. Interest Rates. (a) Each Base Rate
Loan shall bear interest on the outstanding principal amount
thereof, for each day from the date such Loan is made until it
becomes due, at a rate per annum equal to the Base Rate for such
day. Such interest shall be payable monthly in arrears on the
date in each calendar month that numerically corresponds to the
date such Loan is made (or, in the case of any calendar month in
which there is no such date, on the last day of such month) and
on each date a Base Rate Loan is converted to a Fixed Rate Loan.
Any overdue principal of or interest on any Base Rate Loan shall
bear interest, payable on demand, for each day until paid at a
rate per annum equal to the sum of 2% plus the rate otherwise
applicable to Base Rate Loans for such day.
(b) Each CD Loan shall bear interest on the
outstanding principal amount thereof, for each day during each
Interest Period applicable thereto, at a rate per annum equal to
the sum of the CD Margin for such day plus the Adjusted CD Rate
applicable to such Interest Period; provided that if any CD Loan
or any portion thereof shall, as a result of clause (2)(b) of the
definition of Interest Period, have an Interest Period of less
than 30 days, such portion shall bear interest during such
Interest Period at the rate applicable to Base Rate Loans during
such period. Such interest shall be payable for each Interest
Period on the last day thereof and, if such Interest Period is
longer than 90 days, at intervals of 90 days after the first day
thereof. Any overdue principal of or interest on any CD Loan
shall bear interest, payable on demand, for each day until paid
at a rate per annum equal to the sum of 2% plus the higher of (i)
the sum of the CD Margin plus the Adjusted CD Rate applicable to
such Loan and (ii) the rate applicable to Base Rate Loans for
such day.
The "Adjusted CD Rate" applicable to any Interest
Period means a rate per annum determined pursuant to the
following formula:
[ CDBR ]*
ACDR = [ ---------- ] + AR
[ 1.00 - DRP ]
ACDR = Adjusted CD Rate
CDBR = CD Base Rate
DRP = Domestic Reserve Percentage
AR = Assessment Rate
__________
* The amount in brackets being rounded upward, if
necessary, to the next higher 1/100 of 1%
The "CD Base Rate" applicable to any Interest Period is
the rate of interest determined by the Agent to be the average
(rounded upward, if necessary, to the next higher 1/100 of 1%) of
the prevailing rates per annum bid at 10:00 A.M. (New York City
time) (or as soon thereafter as practicable) on the first day of
such Interest Period by two or more New York certificate of
deposit dealers of recognized standing for the purchase at face
value from each CD Reference Bank of its certificates of deposit
in an amount comparable to the principal amount of the CD Loan of
such CD Reference Bank to which such Interest Period applies and
having a maturity comparable to such Interest Period.
"Domestic Reserve Percentage" means for any day that
percentage (expressed as a decimal) which is in effect on such
day, as prescribed by the Board of Governors of the Federal
Reserve System (or any successor) for determining the maximum
reserve requirement (including without limitation any basic,
supplemental or emergency reserves) for a member bank of the
Federal Reserve System in New York City with deposits exceeding
five billion dollars in respect of new non-personal time deposits
in dollars in New York City having a maturity comparable to the
related Interest Period and in an amount of $100,000 or more.
The Adjusted CD Rate shall be adjusted automatically on and as of
the effective date of any change in the Domestic Reserve
Percentage.
"Assessment Rate" means for any day the annual
assessment rate in effect on such day which is payable by a
member of the Bank Insurance Fund classified as adequately
capitalized and within supervisory subgroup "A" (or a comparable
successor assessment risk classification) within the meaning of
12 C.F.R. # 327.3(d) (or any successor provision) to the Federal
Deposit Insurance Corporation (or any successor) for such
Corporation's (or such successor's) insuring time deposits at
offices of such institution in the United States. The Adjusted
CD Rate shall be adjusted automatically on and as of the
effective date of any change in the Assessment Rate.
(c) Each Euro-Dollar Loan shall bear interest on the
outstanding principal amount thereof, for each day during each
Interest Period applicable thereto, at a rate per annum equal to
the sum of the Euro-Dollar Margin for such day plus the London
Interbank Offered Rate applicable to such Interest Period. Such
interest shall be payable for each Interest Period on the last
day thereof and, if such Interest Period is longer than three
months, at intervals of three months after the first day thereof.
The "London Interbank Offered Rate" applicable to any
Interest Period means the average (rounded upward, if necessary,
to the next higher 1/16 of 1%) of the respective rates per annum
at which deposits in dollars are offered to each of the
Euro-Dollar Reference Banks in the London interbank market at
approximately 11:00 A.M. (London time) two Euro-Dollar Business
Days before the first day of such Interest Period in an amount
approximately equal to the principal amount of the Euro-Dollar
Loan of such Euro-Dollar Reference Bank to which such Interest
Period is to apply and for a period of time comparable to such
Interest Period.
(d) Any overdue principal of or interest on any
Euro-Dollar Loan shall bear interest, payable on demand, for each
day from and including the date payment thereof was due to but
excluding the date of actual payment, at a rate per annum equal
to the sum of 2% plus the higher of (i) the sum of the
Euro-Dollar Margin plus the London Interbank Offered Rate
applicable to such Loan and (ii) the Euro-Dollar Margin plus the
quotient obtained (rounded upward, if necessary, to the next
higher 1/100 of 1%) by dividing (x) the average (rounded upward,
if necessary, to the next higher 1/16 of 1%) of the respective
rates per annum at which one day (or, if such amount due remains
unpaid more than three Euro-Dollar Business Days, then for such
other period of time not longer than six months as the Agent may
select) deposits in dollars in an amount approximately equal to
such overdue payment due to each of the Euro-Dollar Reference
Banks are offered to such Euro-Dollar Reference Bank in the
London interbank market for the applicable period determined as
provided above by (y) 1.00 minus the Euro-Dollar Reserve
Percentage (or, if the circumstances described in clause (a) or
(b) of Section 8.01 shall exist, at a rate per annum equal to the
sum of 2% plus the rate applicable to Base Rate Loans for such
day).
(e) Subject to Section 8.01(a), each Money Market
LIBOR Loan shall bear interest on the outstanding principal
amount thereof, for the Interest Period applicable thereto, at a
rate per annum equal to the sum of the London Interbank Offered
Rate for such Interest Period (determined in accordance with
Section 2.07(c) as if the related Money Market LIBOR Borrowing
were a Committed Euro-Dollar Borrowing) plus (or minus) the Money
Market Margin quoted by the Bank making such Loan in accordance
with Section 2.03. Each Money Market Absolute Rate Loan shall
bear interest on the outstanding principal amount thereof, for
the Interest Period applicable thereto, at a rate per annum equal
to the Money Market Absolute Rate quoted by the Bank making such
Loan in accordance with Section 2.03. Such interest shall be
payable for each Interest Period on the last day thereof and, if
such Interest Period is longer than three months, at intervals of
three months after the first day thereof. Any overdue principal
of or interest on any Money Market Loan shall bear interest,
payable on demand, for each day until paid at a rate per annum
equal to the sum of 2% plus the Base Rate for such day.
(f) The Agent shall determine each interest rate
applicable to the Loans hereunder. The Agent shall give prompt
notice to the Borrower (by facsimile) and the Banks (by telex or
cable) of each rate of interest so determined, and its
determination thereof shall be conclusive in the absence of
manifest error. The Agent will, at the request of the Borrower,
furnish such additional information concerning the calculation of
the interest rate on any Fixed Rate Loan as the Borrower may
reasonably request.
(g) Each Reference Bank agrees to use its best efforts
to furnish quotations to the Agent as contemplated hereby. If
any Reference Bank does not furnish a timely quotation, the Agent
shall determine the relevant interest rate on the basis of the
quotation or quotations furnished by the remaining Reference Bank
or Banks or, if none of such quotations is available on a timely
basis, the provisions of Section 8.01 shall apply.
(h) Each of "CD Margin", "Euro-Dollar Margin" and
"Facility Fee Rate" means, for any day, the amount set forth
below in the row opposite such term for such day and in the
column corresponding to the Status that exists on such day:
Level I
Level II
Level III
Level IV
Level V
CD Margin
0.280%
0.300%
0.325%
0.375%
0.450%
Euro-Dollar
Margin
0.155%
0.175%
0.200%
0.250%
0.325%
Facility Fee
Rate
0.070%
0.075%
0.090%
0.125%
0.175%
SECTION 2.08. Facility Fee. The Borrower shall pay to
the Agent for the account of the Banks ratably in proportion to
their Commitments in effect from time to time a facility fee for
each day at the Facility Fee Rate for such day. Such facility
fee shall accrue, for each Bank, (x) from and including the
Effective Date to but excluding the Termination Date for such
Bank (or earlier date of termination of the Commitments in their
entirety), on the daily amount of such Bank's Commitment (whether
used or unused) and (y) from and including the Termination Date
for such Bank (or such earlier date of termination) to but
excluding the date the Loans of such Bank shall be repaid in
their entirety, on the daily outstanding principal amount of the
Loans of such Bank. Accrued fees under this Section shall be
payable quarterly on each March 31, June 30, September 30 and
December 31 prior to the last Termination Date in effect and upon
the date of termination of the Commitments in their entirety
(and, if later, the date the Loans shall be repaid in their
entirety).
SECTION 2.09. Optional Termination or Reduction of
Commitments. During the Revolving Credit Period, the Borrower
may, upon at least three Domestic Business Days' notice to the
Agent, (i) terminate the Commitments at any time, if no Loans are
outstanding at such time or (ii) proportionately reduce from time
to time by an aggregate amount of $75,000,000 or any larger
multiple of $5,000,000, the aggregate amount of the Commitments
in excess of the aggregate outstanding principal amount of the
Loans. If the Commitments are terminated in their entirety, all
accrued fees shall be payable on the effective date of such
termination.
SECTION 2.10. Method of Electing Interest Rates. (a)
The Loans included in each Committed Borrowing shall bear
interest initially at the type of rate specified by the Borrower
in the applicable Notice of Committed Borrowing. Thereafter, the
Borrower may from time to time elect to change or continue the
type of interest rate borne by each Group of Committed Loans
(subject in each case to the provisions of Article VIII), as
follows:
(i) if such Loans are Base Rate Loans, the Borrower
may elect to convert such Loans to CD Loans as of any Domestic
Business Day or to Euro-Dollar Loans as of any Euro-Dollar
Business Day;
(ii) if such Loans are CD Loans, the Borrower may elect
to convert such Loans to Base Rate Loans or Euro-Dollar Loans or
elect to continue such Loans as CD Loans for an additional
Interest Period, in each case effective on the last day of the
then current Interest Period applicable to such Loans; or
(iii) if such Loans are Euro-Dollar Loans, the Borrower
may elect to convert such Loans to Base Rate Loans or CD Loans or
elect to continue such Loans as Euro-Dollar Loans for an
additional Interest Period, in each case effective on the last
day of the then current Interest Period applicable to such Loans.
Each such election shall be made by delivering a notice
substantially in the form attached hereto as Exhibit C (a "Notice
of Interest Rate Election") to the Agent at least three
Euro-Dollar Business Days before the conversion or continuation
selected in such notice is to be effective (unless the relevant
Loans are to be converted from Domestic Loans to Domestic Loans
of the other type or continued as Domestic Loans of the same type
for an additional Interest Period, in which case such notice
shall be delivered to the Agent at least three Domestic Business
Days before such conversion or continuation is to be effective).
A Notice of Interest Rate Election may, if it so specifies, apply
to only a portion of the aggregate principal amount of the
relevant Group of Loans; provided that (i) such portion is
allocated ratably among the Loans comprising such Group and (ii)
the portion to which such Notice applies, and the remaining
portion to which it does not apply, are each $75,000,000 or any
larger multiple of $5,000,000.
(b) Each Notice of Interest Rate Election shall
specify:
(i) the Group of Committed Loans (or portion thereof)
to which such notice applies;
(ii) the date on which the conversion or continuation
selected in such notice is to be effective, which shall comply
with the applicable clause of subsection (a) above;
(iii) if the Loans comprising such Group are to be
converted, the new type of Loans and, if such new Loans are Fixed
Rate Loans, the duration of the initial Interest Period
applicable thereto; and
(iv) if such Loans are to be continued as CD Loans or
Euro-Dollar Loans for an additional Interest Period, the duration
of such additional Interest Period.
Each Interest Period specified in a Notice of Interest Rate
Election shall comply with the provisions of the definition of
Interest Period.
(c) Upon receipt of a Notice of Interest Rate Election
from the Borrower pursuant to subsection (a) above, such notice
shall not thereafter be revocable by the Borrower and the Agent
shall promptly notify each Bank of the contents thereof. If the
Borrower fails to deliver a timely Notice of Interest Rate
Election to the Agent for any Group of Fixed Rate Loans, such
Loans shall be converted into Base Rate Loans on the last day of
the then current Interest Period applicable thereto.
(d) An election by the Borrower to change or continue
the rate of interest applicable to any Group of Loans pursuant to
this Section 2.10 shall not constitute a "Borrowing" subject to
the provisions of Section 3.02.
SECTION 2.11. Optional Prepayments. (a) The Borrower
may, upon at least one Domestic Business Day's notice to the
Agent, prepay a Group of Base Rate Loans (or any Money Market
Borrowing bearing interest at the Base Rate pursuant to Section
8.01(a)) in whole at any time, or from time to time in part in
amounts aggregating $75,000,000 or any larger multiple of
$5,000,000, by paying the principal amount to be prepaid together
with accrued interest thereon to the date of prepayment. Each
such optional prepayment shall be applied to prepay ratably the
Loans of the several Banks included in such Group.
(b) The Borrower may, upon at least three Domestic
Business Days' notice to the Agent, in the case of a Group of CD
Loans or upon at least three Euro-Dollar Business Days' notice to
the Agent, in the case of a Group of Euro-Dollar Loans, prepay
the Loans comprising such Group in whole at any time, or from
time to time in part, in amounts aggregating $75,000,000 or any
larger multiple of $5,000,000, by paying the principal amount to
be prepaid together with accrued interest thereon to the date of
prepayment; provided that in the case of any such prepayment in
whole or in part on any day other than the last day of any
Interest Period applicable to such Group of Loans, the Borrower
shall reimburse each Bank for any loss or expense incurred by it
as a result of any such prepayment in accordance with Section
2.13. Each such optional prepayment shall be applied to prepay
ratably the Loans of the several Banks included in such Group.
The Borrower may not prepay all or any portion of the principal
amount of any Money Market Loan (other than any Money Market
Borrowing bearing interest at the Base Rate pursuant to Section
8.01(a)) prior to the maturity thereof.
(c) Upon receipt of a notice of prepayment pursuant to
this Section, the Agent shall promptly notify each Bank of the
contents thereof and of such Bank's ratable share (if any) of
such prepayment and such notice shall not thereafter be revocable
by the Borrower.
SECTION 2.12. General Provisions as to Payments. (a)
The Borrower shall make each payment of principal of, and
interest on, the Loans and of fees hereunder, not later than
11:00 A.M. (New York City time) on the date when due, in Federal
or other funds immediately available in New York City, to the
Agent at its address referred to in Section 9.01. The Agent will
promptly distribute to each Bank its ratable share of each such
payment received by the Agent for the account of the Banks.
Whenever any payment of principal of, or interest on, the
Domestic Loans or of fees shall be due on a day which is not a
Domestic Business Day, the date for payment thereof shall be
extended to the next succeeding Domestic Business Day. Whenever
any payment of principal of, or interest on, the Euro-Dollar
Loans shall be due on a day which is not a Euro-Dollar Business
Day, the date for payment thereof shall be extended to the next
succeeding Euro-Dollar Business Day unless such Euro-Dollar
Business Day falls in another calendar month, in which case the
date for payment thereof shall be the next preceding Euro-Dollar
Business Day. Whenever any payment of principal of, or interest
on, the Money Market Loans shall be due on a day which is not a
Euro-Dollar Business Day, the date for payment thereof shall be
extended to the next succeeding Euro-Dollar Business Day. If the
date for any payment of principal is extended by operation of law
or otherwise, interest thereon shall be payable for such extended
time.
(b) Unless the Agent shall have received notice from
the Borrower prior to the date on which any payment is due to the
Banks hereunder that the Borrower will not make such payment in
full, the Agent may assume that the Borrower has made such
payment in full to the Agent on such date and the Agent may, in
reliance upon such assumption, cause to be distributed to each
Bank on such due date an amount equal to the amount then due such
Bank. If and to the extent that the Borrower shall not have so
made such payment, each Bank shall repay to the Agent forthwith
on demand such amount distributed to such Bank together with
interest thereon, for each day from the date such amount is
distributed to such Bank until the date such Bank repays such
amount to the Agent, at the Federal Funds Rate.
SECTION 2.13. Funding Losses. If the Borrower makes
any payment of principal with respect to any Fixed Rate Loan or
any Fixed Rate Loan is converted to a Base Rate Loan (pursuant to
Article VI or VIII or otherwise) on any day other than the last
day of an Interest Period applicable thereto, or the end of an
applicable period fixed pursuant to Section 2.07(d), or if the
Borrower fails to borrow or prepay any Fixed Rate Loans after
notice has been given to any Bank in accordance with Section
2.04(a) or 2.11(c), the Borrower shall reimburse each Bank within
15 days after demand for any resulting loss or expense incurred
by it, including (without limitation) any loss incurred in
obtaining, liquidating or employing deposits from third parties,
but excluding loss of margin for the period after any such
payment or conversion or failure to borrow or prepay, provided
that such Bank shall have delivered to the Borrower a certificate
as to the amount of such loss or expense, which certificate shall
be conclusive in the absence of manifest error, and provided
further that such loss shall in no event exceed the interest
which would have been payable for the balance of such Interest
Period or other period, less the applicable CD Margin or
Euro-Dollar Margin, as the case may be. Such Bank will, at the
request of the Borrower, furnish such additional information
concerning the determination of such loss as the Borrower may
reasonably request.
SECTION 2.14. Computation of Interest and Fees.
Interest based on the Prime Rate hereunder shall be computed on
the basis of a year of 365 days (or 366 days in a leap year) and
paid for the actual number of days elapsed (including the first
day but excluding the last day). All other interest and fees
shall be computed on the basis of a year of 360 days and paid for
the actual number of days elapsed (including the first day but
excluding the last day).
SECTION 2.15. Taxes. (a) All payments of principal,
interest and fees to be made by the Borrower or the Agent (in
respect of such amounts received by it from the Borrower)
pursuant to this Agreement to any Bank with respect to any Loan
or fee shall be made free and clear of and without reduction or
withholding for or on account of any present or future income,
excise, or other taxes, levies, imposts, duties, charges, or fees
of whatever nature now or hereafter imposed by any governmental
or other taxing authority, excluding any taxes on or measured by
overall net income (all such non-excluded taxes, levies, imposts,
deductions, charges or withholdings, "Taxes"), unless the
withholding or other payment of such Taxes is required by
applicable law. In the event that the Borrower or the Agent is
required by applicable law to make any such withholding or
deduction of Taxes with respect to any Loan or fee, the Borrower
shall pay to such Agent or Bank additional amounts as may be
necessary in order that the net amount received by such Agent or
Bank after the required withholding or other payment (including
any required withholding or other payment on such additional
amounts) shall equal the amount such Agent or Bank would have
received had no such withholding or other payment been made;
provided, however, that no such additional amounts shall be paid
by the Borrower (i) except on account of Taxes imposed by the
United States (or any political subdivision, possession,
territory or taxing authority thereof or therein) and (ii) on
account of any federal withholding tax imposed by the United
States of America ("United States Tax"):
(1) if such Bank or a Participant of such Bank shall
have delivered Internal Revenue Service Form 4224 ("Form 4224")
to the Borrower pursuant to clause (b) or (c) of this Section
2.15 and such Bank or Participant shall at any time not be
entitled to complete exemption from United States Tax for any
reason other than a change in United States federal income tax
law, regulation or official interpretation of such law after the
date hereof (or, in the case of any Assignee or Participant, the
date of the relevant assignment or participation agreement); or
(2) if such Bank or a Participant of such Bank shall
have delivered Internal Revenue Service Form 1001 ("Form 1001")
to the Borrower pursuant to clause (b) or (c) of this Section
2.15 and such Bank or Participant shall at any time not be
entitled to complete exemption from United States Tax for any
reason other than (i) an amendment, modification or revocation of
an applicable income tax convention or a change in official
position regarding the application or interpretation of such
treaty after the date hereof (or, in the case of any Assignee or
Participant, the date of the relevant assignment or participation
agreement) or (ii) a change in United States federal income tax
laws, regulation or official interpretation of such law after the
date hereof (or, in the case of any Assignee or Participant, the
date of the relevant assignment or participation agreement); or
(3) if such Bank or a Participant of such Bank shall
have failed to comply with its obligations pursuant to clause (b)
or (c) of this Section 2.15.
(b) Each Bank that is a Non-U.S. Bank hereby severally
covenants and agrees to and for the benefit of the Borrower and
the Agent that
(1) at, or prior to, the Effective Date, such Non-U.S.
Bank shall have delivered to both the Borrower and the Agent
either:
(i) two accurate and complete original signed
copies of Form 1001, appropriately completed and claiming
complete exemption from withholding and deduction of United
States Taxes, with respect to each three-year calendar period,
any portion of which falls within the Revolving Credit Period,
dated as of the date hereof; or
(ii) two accurate and complete original signed
copies of Form 4224, appropriately completed and claiming
complete exemption from withholding and deduction of United
States Taxes, with respect to each tax year of such Bank, any
portion of which falls within the Revolving Credit Period, dated
as of the date hereof; and
(2) in each fiscal year of such Bank after the
Effective Date, at or prior to the first scheduled payment date
in such fiscal year, such Non-U.S. Bank shall have delivered to
both the Borrower and the Agent either:
(i) two accurate and complete original signed
copies of Form 1001, appropriately completed and claiming
complete exemption from withholding and deduction of United
States Taxes, with respect to the three-year calendar period
commencing with the then current calendar year; or
(ii) two accurate and complete original signed
copies of Form 4224, appropriately completed and claiming
complete exemption from withholding and deduction of United
States Taxes, with respect to such Bank's then current tax year.
(c) Each Non-U.S. Bank severally covenants and agrees
to deliver to the Borrower and the Agent:
(1) before or promptly after the date on which any
form previously delivered by such Bank pursuant to Section
2.15(b) may no longer be relied upon by the Borrower and the
Agent as a result of an act by such Bank, two accurate and
complete original signed copies of Form 1001 or Form 4224 (or
such additional or successor Forms as shall be adopted from time
to time by the relevant United States taxing authorities),
appropriately completed and claiming complete exemption from
withholding and deduction of United States Taxes, to replace the
like Form previously delivered by such Non-U.S. Bank; and
(2) if any form previously delivered by such Non-U.S.
Bank pursuant to Section 2.15(b) may no longer be relied upon by
the Borrower and the Agent for any reasons (other than as a
result of an act by the Bank), two accurate and complete original
signed copies of Form 4224 or Form 1001, as the case may be, (or
such additional or successor Forms as shall be adopted from time
to time by the relevant United States taxing authorities),
appropriately completed and claiming complete exemption from
withholding and deduction of United States Taxes, as the Borrower
or the Agent may reasonably request.
Notwithstanding the foregoing subsections (b)(2), (c)(1) and
(c)(2) of this Section 2.15, a Non-U.S. Bank will not be required
to provide a form if due to any change in treaty, law or
regulation or official interpretation that occurred after the
date hereof (or, in the case of any Non-U.S. Bank that is an
Assignee or any Participant complying with subsections (b)(2),
(c)(1) and (c)(2) of this Section 2.15 pursuant to Section
9.06(b), the date of the relevant assignment or participation
agreement) and prior to the date on which any such delivery would
otherwise be required, all such forms are inapplicable or such
Bank is not entitled to any exemption from the United States Tax
as claimed in the form previously delivered. In any such case,
each Non-U.S. Bank shall provide such forms as the Borrower or
the Agent may reasonably request to establish entitlement, if
any, to any reduction in United States Tax to which such Bank may
be entitled from and after the occurrence of any such change in
treaty, law or regulation.
(d) In the event that the Borrower will be required to
pay an additional amount pursuant to Section 2.15(a) to any Bank,
the Borrower shall have the rights set forth in Section 8.05.
The agreements in this Section 2.15 shall survive the termination
of this Agreement and the payment of the Notes and all other
amounts payable hereunder.
SECTION 2.16. Regulation D Compensation. For so long
as any Bank is required to maintain reserves against
"Eurocurrency liabilities" (or any other category of liabilities
which includes deposits by reference to which the interest rate
on Euro-Dollar Loans is determined or any category of extensions
of credit or other assets which includes loans by a non-United
States office of such Bank to United States residents), and, as a
result, the cost to such Bank (or its Euro-Dollar Lending Office)
of making or maintaining its Euro-Dollar Loans is increased, then
such Bank may require the Borrower to pay, contemporaneously with
each payment of interest on the Euro-Dollar Loans, additional
interest on the related Euro-Dollar Loan of such Bank at a rate
per annum up to but not exceeding the excess of (i) (A) the
applicable London Interbank Offered Rate divided by (B) one minus
the Euro-Dollar Reserve Percentage over (ii) the applicable
London Interbank Offered Rate. Any Bank wishing to require
payment of such additional interest (x) shall so notify the
Borrower and the Agent, in which case such additional interest on
the Euro-Dollar Loans of such Bank shall be payable to such Bank
at the place indicated in such notice with respect to each
Interest Period commencing at least three Euro-Dollar Business
Days after the giving of such notice and (y) shall furnish to the
Borrower at least five Euro-Dollar Business Days prior to each
date on which interest is payable on the Euro-Dollar Loans an
officer's certificate setting forth the amount to which such Bank
is then entitled under this Section (which shall be consistent
with such Bank's good faith estimate of the level at which the
related reserves are maintained by it). Each such certificate
shall be accompanied by such information as the Borrower may
reasonably request as to the computation set forth therein.
SECTION 2.17. Optional Increase in Commitments. At
any time, if no Default shall have occurred and be continuing,
the Borrower may, if it so elects, increase the aggregate amount
of the Commitments, either by designating a bank not theretofore
a Bank to become a Bank (such designation to be effective only
with the prior written consent of the Agent, which consent will
not be unreasonably withheld) or by agreeing with an existing
Bank that such Bank's Commitment shall be increased. Upon
execution and delivery by the Borrower and such Bank or other
bank of an instrument in form satisfactory to the Agent, such
existing Bank shall have a Commitment as therein set forth or
such other bank shall become a Bank with a Commitment as therein
set forth and with a Termination Date the same as the latest
Termination Date then in effect for any Bank (or if the Borrower
and the other bank shall agree otherwise, with a Termination Date
the same as the Termination Date for any other Bank) and all the
rights and obligations of a Bank with such a Commitment and
Termination Date hereunder; provided that:
(a) the Borrower shall provide prompt notice of such
increase to the Agent, who shall promptly notify the Banks;
(b) no Commitment of any Bank shall exceed, as a
result of such increase, 10% of the aggregate amount of the
Commitments (after giving effect to such increase); and
(c) the amount of such increase, together with all
other increases in the aggregate amount of the Commitments
pursuant to this Section 2.17 since the date of this Agreement,
does not exceed $1,250,000,000.
Upon any increase in the aggregate amount of the Commitments
pursuant to this Section 2.17, within five Domestic Business
Days, in the case of any Group of Base Rate Loans then
outstanding, and at the end of the then current Interest Period,
in the case of each Group of Euro-Dollar Loans and Group of CD
Loans then outstanding, the Borrower shall prepay or repay such
Group in its entirety and, to the extent the Borrower elects to
do so and subject to the conditions specified in Article III, the
Borrower shall reborrow Committed Loans from the Banks in
proportion to their respective Commitments after giving effect to
such increase, until such time as all outstanding Committed Loans
are held by the Banks in such proportion.
ARTICLE III
CONDITIONS
SECTION 3.01. Effectiveness of Agreement. The
Agreement shall become effective on the date that each of the
following conditions shall have been satisfied (or waived in
accordance with Section 9.05):
(a) receipt by the Agent of counterparts hereof signed
by each of the parties hereto (or, in the case of any party as to
which an executed counterpart shall not have been received,
receipt by the Agent in form satisfactory to it of telegraphic,
telex or other written confirmation from such party of execution
of a counterpart hereof by such party);
(b) receipt by the Agent for the account of such Bank
of a duly executed Note dated on or before the Effective Date
complying with the provisions of Section 2.05;
(c) receipt by the Agent of an opinion of counsel for
the Borrower, who may be Latham & Watkins or Senior Counsel for
Sears, substantially in the form of Exhibit G hereto;
(d) receipt by the Agent of an opinion of Davis Polk &
Wardwell, special counsel for the Agent, substantially in the
form of Exhibit H hereto;
(e) receipt by the Agent, for its own account, of all
fees payable on or before the Effective Date;
(f) receipt by the Agent of evidence satisfactory to
it of (i) the termination, effective on or before the Effective
Date, of the commitments under each of the Existing Credit
Agreements, (ii) the repayment in full, not later than the
Effective Date, of all loans (if any) thereunder, together with
interest accrued thereon to the Effective Date, and (iii) the
receipt by Morgan Guaranty Trust Company of New York, as agent
under the Existing Credit Agreements, of all accrued and unpaid
facility fees and all other amounts due and payable for the
account of such agent or any other party under the Existing
Credit Agreements; and
(g) receipt by the Agent of all documents it may
reasonably request relating to the existence of the Borrower, the
corporate authority for and the validity of this Agreement and
the Notes, and any other matters relevant hereto, all in form and
substance satisfactory to the Agent;
provided that this Agreement shall not become effective or be
binding on any party hereto unless all of the foregoing
conditions are satisfied not later than July __, 1996. The Agent
shall promptly notify the Borrower and the Banks of the Effective
Date, and such notice shall be conclusive and binding on all
parties hereto.
SECTION 3.02. Borrowings. The obligation of any Bank
to make a Loan on the occasion of any Borrowing is subject to the
satisfaction of the following conditions:
(a) receipt by the Agent of a Notice of Borrowing as
required by Section 2.02 or 2.03, as the case may be;
(b) the fact that, immediately after such Borrowing,
the aggregate outstanding principal amount of the Loans will not
exceed the aggregate amount of the Commitments;
(c) the fact that, immediately before and after such
Borrowing, no Event of Default and no event or condition which,
with the giving of notice or lapse of time or both, would become
an Event of Default, shall have occurred and be continuing;
(d) the fact that the representations and warranties
of the Borrower contained in this Agreement (other than in
Section 4.04(c) hereof) shall be true on and as of the date of
such Borrowing; and
(e) the fact that there shall have been no material
adverse change in the business, consolidated financial position
or Consolidated Net Income of the Borrower and its Consolidated
Subsidiaries since March 31, 1996 not disclosed in writing to the
Banks on or prior to the date of such Borrowing.
Each Borrowing hereunder shall be deemed to be a representation
and warranty by the Borrower on the date of such Borrowing as to
the facts specified in clauses (b), (c), (d) and (e) of this
Section.
For all purposes of this Agreement, (a) no change in
consolidated financial position of the Borrower and its
Consolidated Subsidiaries shall be deemed material and adverse
unless such change is a reduction in Consolidated Stockholder's
Equity of the Borrower and its Consolidated Subsidiaries of 5% or
more as compared with Consolidated Stockholder's Equity as at the
date of the consolidated balance sheet of the Borrower and its
Consolidated Subsidiaries most recently delivered under Section
4.04 or 5.01 hereof, (b) no change in Consolidated Net Income
shall be deemed to be material and adverse unless such change is
a reduction therein for a period of the four most recent full
consecutive fiscal quarters in respect of which results of
operations have been made available to the public ("most recent
four quarters") of 25% or more as compared with Consolidated Net
Income for the period of four consecutive fiscal quarters
immediately preceding the most recent four quarters and (c) no
change in business shall be deemed material and adverse unless it
would be required to be disclosed in an annual report on Form
10-K (or successor reports) filed with the Commission on the date
as of which the existence of a material adverse change is being
determined. It is understood that, for all purposes of this
Agreement, no change in business shall be deemed to be required
to be so disclosed if, in the written opinion of counsel for the
Borrower, the laws, rules and regulations then applicable to
required disclosure in Forms 10-K (or successor reports) do not
require such disclosure. Such an opinion will be deemed
sufficient for purposes hereof if it shall be based on (i) such
investigation of law as such counsel shall have deemed necessary
in the circumstances and (ii) facts as certified in writing to
such counsel by officers of the Borrower or its Affiliates, it
being understood that counsel shall have no duty to independently
verify any such facts. In case Borrower relies on such an
opinion of counsel, it will promptly distribute a copy thereof to
each Bank.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
The Borrower represents and warrants that:
SECTION 4.01. Corporate Existence and Power. The
Borrower has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the State of
Delaware with full corporate power to conduct its business as
presently conducted.
SECTION 4.02. Corporate and Governmental
Authorization; No Contravention.
(a) The Borrower has full corporate power to enter
into this Agreement and to issue the Notes and to comply with all
of the provisions of this Agreement and the Notes, and all
necessary corporate proceedings of the Borrower have been duly
taken to authorize the execution, delivery and performance of
this Agreement and the issuance of the Notes by the Borrower.
(b) The issuance by the Borrower of the Notes and
compliance by the Borrower with all of the provisions of this
Agreement will not conflict with or result in a breach which
would constitute a material default under, or result in the
creation or imposition of any Lien, charge or encumbrance upon
any of the property or assets of the Borrower, material to the
Borrower, pursuant to the terms of, any indenture, loan
agreement, or other agreement or instrument for borrowed money to
which the Borrower is a party or by which the Borrower may be
bound or to which any of the property or assets of the Borrower,
material to the Borrower, is subject, nor will such action result
in any material violation of the provisions of the Certificate of
Incorporation or the By-Laws of the Borrower or any statute or
any order, rule or regulation applicable to the Borrower of any
court or any Federal, state or other regulatory authority or
other governmental body having jurisdiction over the Borrower,
and no consent, approval, authorization or other order of, or
filing with, any court or any such regulatory authority or other
governmental body is required for the issuance by the Borrower of
the Notes and the compliance by the Borrower with all of the
provisions of this Agreement; provided, that the Borrower makes
no representations or warranties with respect to any usury laws
or any securities or blue sky laws of political subdivisions of
the United States or any laws or treaties of any country (or
political subdivision thereof) other than the United States.
SECTION 4.03. Binding Effect. This Agreement
constitutes a valid and binding agreement of the Borrower and the
Notes, when executed and delivered in accordance with this
Agreement, will constitute valid and binding obligations of the
Borrower. The Letter Agreement is in full force and effect and
constitutes a valid and binding agreement of the Borrower and
Sears.
SECTION 4.04. Financial Information.
(a) The statement of financial position of the
Borrower as of December 31, 1995 and the related statements of
income, shareholder's equity and cash flows for the fiscal year
then ended, reported on by Deloitte & Touche LLP and set forth in
the Borrower's 1995 Form 10-K, a copy of which has been delivered
to each of the Banks, present fairly in all material respects, in
conformity with generally accepted accounting principles, the
financial position of the Borrower as of such date and its
results of operations and cash flows for such fiscal year.
(b) The unaudited statement of financial position of
the Borrower as of March 31, 1996 and the related unaudited
statements of income, shareholder's equity and cash flows for the
three months then ended, set forth in the Borrower's quarterly
report for the fiscal quarter ended March 31, 1996 as filed with
the Commission on Form 10-Q, a copy of which (excluding the
exhibits thereto) has been delivered to each of the Banks,
present fairly in all material respects, in conformity with
generally accepted accounting principles applied on a basis
consistent with the financial statements referred to in
subsection (a) of this Section, the financial position of the
Borrower as of such date and its results of operations and cash
flows for such three month period (subject to normal year-end
adjustments).
(c) Since March 31, 1996, there has been no material
adverse change in the business, financial position or results of
operations of the Borrower not disclosed in writing to the Banks
prior to the date of this Agreement.
SECTION 4.05. Litigation. The Borrower does not know
of any pending legal or governmental proceeding required to be
described in the Annual Report on Form 10-K of the Borrower most
recently filed with the Commission pursuant to the Exchange Act,
or in the Quarterly Reports on Form 10-Q of the Borrower filed
with the Commission pursuant to the Exchange Act subsequent
thereto, which are not described as required, and the Borrower
does not know of any pending legal or governmental proceedings
not so described which would be required to be described in a
subsequent filing with the Commission and which have not been
previously disclosed in writing to the Banks.
SECTION 4.06. Compliance with ERISA. Each member of
the ERISA Group has fulfilled its obligations under the minimum
funding standards of ERISA and the Internal Revenue Code with
respect to each Plan and is in compliance in all material
respects with the presently applicable provisions of ERISA and
the Internal Revenue Code with respect to each Plan. No member
of the ERISA Group has (i) sought a waiver of the minimum funding
standard under Section 412 of the Internal Revenue Code in
respect of any Plan, (ii) failed to make any contribution or
payment to any Plan or Multiemployer Plan or in respect of any
Benefit Arrangement, or made any amendment to any Plan or Benefit
Arrangement, which has resulted or could result in the imposition
of a Lien or the posting of a bond or other security under ERISA
or the Internal Revenue Code or (iii) incurred any liability
under Title IV of ERISA other than a liability to the PBGC for
premiums under Section 4007 of ERISA.
SECTION 4.07. Environmental Matters. The Borrower has
reasonably concluded that Environmental Laws are unlikely to have
a material adverse effect on the business, consolidated financial
condition or results of operations of the Borrower and its
Consolidated Subsidiaries.
SECTION 4.08. Taxes. All United States Federal income
tax returns and all other material tax returns which are required
to be filed have been filed by or on behalf of the Borrower and
its Subsidiaries and all taxes due with respect to the Borrower
and its Subsidiaries pursuant to such returns or pursuant to any
assessment received by the Borrower or any Subsidiary have been
paid. The charges, accruals and reserves on the books of the
Borrower and its Subsidiaries in respect of taxes or other
governmental charges are, in the opinion of the Borrower,
adequate.
SECTION 4.09. Subsidiaries. At the date of this
Agreement, the Borrower has no Subsidiaries. If during the term
of this Agreement, the Borrower shall acquire or otherwise come
to have one or more Subsidiaries, each of such corporate
Subsidiaries shall be a corporation duly incorporated and validly
existing as a corporation in good standing under the laws of its
jurisdiction of incorporation, and shall have full corporate
powers to conduct its business as conducted.
SECTION 4.10. Full Disclosure. All written factual
information heretofore furnished by the Borrower to the Agent or
any Bank for purposes of or in connection with this Agreement was
true and accurate in all material respects on the date as of
which such information was stated or certified; provided that the
Borrower makes no representations or warranties with respect to
any projections or other non-factual information contained in any
such information.
ARTICLE V
COVENANTS
The Borrower agrees that, so long as any Bank has any
Commitment hereunder or any amount payable under any Note remains
unpaid:
SECTION 5.01. Information. The Borrower will deliver
to each of the Banks:
(a) as soon as available and in any event within 120
days after the end of each fiscal year of the Borrower, a
statement of financial position of the Borrower as of the end of
such fiscal year and the related statements of income,
shareholder's equity and cash flows for such fiscal year, setting
forth in each case in comparative form the figures for the
previous fiscal year, all reported on by Deloitte & Touche LLP or
other independent public accountants of nationally recognized
standing;
(b) as soon as available and in any event within 60
days after the end of each of the first three quarters of each
fiscal year of the Borrower, a statement of financial position of
the Borrower as of the end of such quarter and the related
statements of income, shareholder's equity and cash flows for
such quarter and for the portion of the Borrower's fiscal year
ended at the end of such quarter, setting forth in each case in
comparative form the figures for the corresponding quarter and
the corresponding portion of the Borrower's previous fiscal year,
all certified (subject to normal year-end adjustments) as to
fairness of presentation, generally accepted accounting
principles and consistency by the chief financial officer or the
chief accounting officer of the Borrower;
(c) simultaneously with the delivery of each set of
financial statements referred to in clauses (a) and (b) above, a
certificate of the chief financial officer or the chief
accounting officer of the Borrower (i) setting forth in
reasonable detail the calculations required to establish whether
the Borrower was in compliance with the requirements of Sections
5.10 and 5.11 on the date of such financial statements and (ii)
stating whether any Event of Default or any event or condition
which, with the giving of notice or lapse of time or both, would
become an Event of Default, exists on the date of such
certificate and, if any Event of Default or any such event or
condition then exists, setting forth the details thereof and the
action which the Borrower is taking or proposes to take with
respect thereto;
(d) simultaneously with the delivery of each set of
financial statements referred to in clause (a) above, a statement
of the firm of independent public accountants which reported on
such statements to the effect that in the course of their
examination of such statements, nothing came to their attention
that caused them to believe that the Borrower was not in
compliance with any of the terms, covenants, provisions or
conditions of Sections 5.01 to 6.01, inclusive, insofar as such
terms, covenants, provisions or conditions came within the scope
of their examination;
(e) within five days after any officer of the Borrower
obtains knowledge of any Event of Default or any event or
condition which, with the giving of notice or lapse of time or
both, would become an Event of Default, if such Event of Default
or event or condition is then continuing, a certificate of the
chief financial officer or the chief accounting officer of the
Borrower setting forth the details thereof and the action which
the Borrower is taking or proposes to take with respect thereto;
(f) promptly after the commencement thereof, notice of
all actions, suits or proceedings of the type described in
Section 4.05;
(g) promptly after the filing thereof, copies (without
exhibits thereto) of all registration statements (other than any
registration statements on Form S-8 or its equivalent) and
reports on Forms 10-K, 10-Q and 8-K (or their equivalents) which
the Borrower shall have filed with the Commission;
(h) if and when any member of the ERISA Group (i)
gives or is required to give notice to the PBGC of any
"reportable event" (as defined in Section 4043 of ERISA) with
respect to any Plan which might constitute grounds for a
termination of such Plan under Title IV of ERISA, or knows that
the plan administrator of any Plan has given or is required to
give notice of any such reportable event, a copy of the notice of
such reportable event given or required to be given to the PBGC;
(ii) receives notice of complete or partial withdrawal liability
under Title IV of ERISA or notice that any Multiemployer Plan is
in reorganization, is insolvent or has been terminated, a copy of
such notice; (iii) receives notice from the PBGC under Title IV
of ERISA of an intent to terminate, impose liability (other than
for premiums under Section 4007 of ERISA) in respect of, or
appoint a trustee to administer any Plan, a copy of such notice;
(iv) applies for a waiver of the minimum funding standard under
Section 412 of the Internal Revenue Code, a copy of such
application; (v) gives notice of intent to terminate any Plan
under Section 4041(c) of ERISA, a copy of such notice and other
information filed with the PBGC; (vi) gives notice of withdrawal
from any Plan pursuant to Section 4063 of ERISA, a copy of such
notice; or (vii) fails to make any payment or contribution to any
Plan or Multiemployer Plan or in respect of any Benefit
Arrangement or makes any amendment to any Plan or Benefit
Arrangement which has resulted or could result in the imposition
of a Lien or the posting of a bond or other security, a
certificate of the chief financial officer or the chief
accounting officer of the Borrower setting forth details as to
such occurrence and action, if any, which the Borrower or
applicable member of the ERISA Group is required or proposes to
take; and
(i) from time to time such additional information
regarding the financial position or business of the Borrower and
its Subsidiaries as the Agent, at the request of any Bank, may
reasonably request.
If during the term of this Agreement, the Borrower shall acquire
or otherwise come to have one or more Subsidiaries, the financial
statements required to be delivered pursuant to clauses (a) and
(b) above shall be consolidated financial statements of the
Borrower and its Consolidated Subsidiaries.
SECTION 5.02. Maintenance of Property; Insurance. (a)
The Borrower will keep, and will cause each Subsidiary to keep,
all property useful and necessary in its business in good working
order and condition, ordinary wear and tear excepted.
(b) The Borrower will insure or act as self-insurer,
and will cause each Subsidiary to insure or act as self-insurers,
to such extent as the Borrower may determine to be not
unreasonably prejudicial to the interests of the Banks.
SECTION 5.03. Conduct of Business and Maintenance of
Existence. Subject to Section 5.07, the Borrower will, and will
cause each Subsidiary to, engage exclusively in (i) the business
now conducted by the Borrower, including the extension of credit
to Sears pursuant to the Letter Agreement, (ii) the purchase of
Receivables from Sears or its Affiliates on terms and conditions
reasonably determined by the Borrower to be substantially as
favorable to the Borrower or such Subsidiary as the terms and
conditions which would apply in a similar transaction with a
Person that is not an Affiliate of the Borrower and/or (iii)
insurance or financial activities supporting businesses conducted
by Sears or any of its Affiliates. Subject to Section 5.07, the
Borrower will preserve, renew and keep in full force and effect,
and will cause each Subsidiary to preserve, renew and keep in
full force and effect their respective corporate existence and
their respective rights, privileges and franchises necessary or
desirable in the normal conduct of business; provided that the
Borrower may terminate the corporate existence of any Subsidiary
if such termination could not reasonably be expected to have a
material adverse effect on the business, consolidated financial
position or consolidated net income of the Borrower and its
Consolidated Subsidiaries taken as a whole, or otherwise to be
materially disadvantageous to the Banks.
SECTION 5.04. Compliance with Laws. The Borrower will
make all good faith efforts to comply, and cause each Subsidiary
to make all good faith efforts to comply, with all material
applicable laws, ordinances, rules, regulations, and requirements
of governmental authorities (including, without limitation,
Environmental Laws and ERISA and the rules and regulations
thereunder) except where the necessity of compliance therewith is
contested in good faith by appropriate proceedings.
SECTION 5.05. Letter Agreement. The Borrower will
not, without the prior written consent of the Required Banks,
amend, waive, terminate or otherwise modify any provision of the
Letter Agreement; provided that the Borrower may amend the Letter
Agreement to reduce the fixed charge coverage ratio set forth in
paragraph 3 thereof to no less than 1.15. The Borrower will
perform all its obligations under the Letter Agreement and will
enforce the Letter Agreement and all notes and other instruments
delivered thereunder against Sears in accordance with their
respective terms.
SECTION 5.06. Negative Pledge. Neither the Borrower
nor any Subsidiary will create, assume or suffer to exist any
Lien securing Debt on any asset now owned or hereafter acquired
by it, except:
(a) any Lien existing on the date of this Agreement;
(b) any Lien existing on any asset of any corporation
at the time such corporation becomes a Subsidiary and not created
in contemplation of such event;
(c) any Lien on any asset securing Debt incurred or
assumed for the purpose of financing all or any part of the cost
of acquiring such asset, provided that such Lien attaches to such
asset concurrently with or within 90 days after the acquisition
thereof;
(d) any Lien on any asset of any corporation existing
at the time such corporation is merged with or consolidated with
or otherwise acquired by the Borrower or a Subsidiary and not
created in contemplation of such event;
(e) any Lien existing on any asset prior to the
acquisition thereof by the Borrower or a Subsidiary and not
created in contemplation of such acquisition;
(f) any Lien on assets to secure obligations incurred
in connection with the issuance of revenue bonds, interest on
which is exempt from Federal income tax pursuant to Section
103(b) of the Internal Revenue Code;
(g) any Lien arising out of the refinancing,
extension, renewal or refunding of any Debt secured by any Lien
permitted by any of the foregoing clauses of this Section,
provided that such Debt is not increased and is not secured by
any additional assets;
(h) any Lien arising pursuant to any order of
attachment, distraint or similar legal process arising in
connection with court proceedings so long as the execution or
other enforcement thereof is effectively stayed and the claims
secured thereby are being contested in good faith by appropriate
proceedings; and
(i) Liens not otherwise permitted by the foregoing
clauses of this Section securing Debt in an aggregate principal
amount not to exceed 5% of Consolidated Tangible Net Worth at any
time outstanding.
SECTION 5.07. Consolidations, Mergers and Sales of
Assets. The Borrower shall not merge or consolidate with, or
sell or transfer all or substantially all of its property and
assets to, any Person, except that nothing herein shall prevent
any consolidation or merger of the Borrower with or into any
other corporation organized under the laws of the United States
or any state thereof which is (w) Sears, (x) a Wholly-Owned
Subsidiary of Sears, (y) a corporation of which Sears is a
Wholly-Owned Subsidiary or (z) a Wholly-Owned Subsidiary of a
corporation described in clause (y) above, or any consolidation
or merger of any other such corporation with or into the
Borrower, or any sale or transfer of all or substantially all of
the property and assets of the Borrower to any other such
corporation lawfully entitled to acquire the same; provided, that
(i) immediately after giving effect to such consolidation,
merger, sale or transfer, no Event of Default or any event or
condition that, with the giving of notice or the lapse of time or
both, would become an Event of Default, shall have occurred and
be continuing; and (ii) the Borrower covenants that any such
consolidation, merger, sale or transfer shall be upon the
conditions that the due and punctual payment of the principal and
accrued interest on the Notes, and the due and punctual
performance and observance of all the terms, covenants and
conditions of this Agreement to be kept or performed by the
Borrower shall, by an agreement supplemental hereto, be assumed
by the corporation (other than the Borrower) formed by or
resulting from any such consolidation or merger, or which shall
have received the transfer of all or substantially all of the
property and assets of the Borrower, just as fully and
effectually as if such successor had been the original Borrower;
and in the event of any such sale or transfer the predecessor
Borrower may be dissolved, wound up and liquidated at any time
thereafter.
SECTION 5.08. Use of Proceeds. The proceeds of the
Loans made under this Agreement will be used by the Borrower for
its general corporate purposes. None of such proceeds will be
used, directly or indirectly, for the purpose, whether immediate,
incidental or ultimate, of purchasing or carrying any "margin
stock", within the meaning of Regulation U, other than in the
ordinary course of business of Sears or any Sears Subsidiary.
SECTION 5.09. Subsidiary Debt. The Borrower will not
permit any Subsidiary to issue, assume, incur or have outstanding
any Debt or capital stock having any preference as to dividends
or upon any distribution of assets except (a) such Debt or stock
issued to and held by Borrower and/or one or more Wholly-Owned
Subsidiaries of the Borrower, (b) such Debt or stock of a
Subsidiary whose business activities are confined exclusively to
raising capital outside the United States, financing the Borrower
and its other Subsidiaries and other activities incidental
thereto, (c) such Debt or stock of a Person existing at the time
such Person is merged or consolidated with or otherwise acquired
by the Borrower or a Subsidiary and not created in contemplation
thereof and (d) other such Debt or stock which, in the aggregate,
does not exceed at any time 5% of Consolidated Tangible Net Worth
(with such stock taken at the higher of its voluntary or
involuntary liquidation preference), it being understood that
such Debt and stock referred to in clauses (b), (c) and (d) shall
be permitted under this Section only if, at the time, the
provisions of this Agreement other than this Section would permit
the Borrower to issue, assume, incur or have outstanding an equal
amount of its own Debt in the same amount together with all other
Debt of the Borrower then outstanding.
SECTION 5.10. Fixed Charge Coverage. The Fixed Charge
Coverage Ratio for any fiscal quarter will be not less than 1.15.
SECTION 5.11. Debt. Consolidated Debt will at no time
exceed 700% of Consolidated Tangible Net Worth. For purposes of
this Section any preferred stock of a Consolidated Subsidiary
held by a Person other than the Borrower or a Wholly-Owned
Subsidiary of the Borrower that is a Consolidated Subsidiary
shall be included, at the higher of its voluntary or involuntary
liquidation value, in "Consolidated Debt" and in the "Debt" of
such Consolidated Subsidiary.
ARTICLE VI
DEFAULTS
SECTION 6.01. Events of Default. If one or more of
the following events ("Events of Default") shall have occurred
and be continuing:
(a) the Borrower shall fail to pay (i) any principal
of any Loan when due or (ii) any interest on any Loan or any fee
or any other amount payable by it hereunder within ten days after
the due date thereof;
(b) the Borrower shall fail to observe or perform any
covenant contained in Sections 5.05 to 5.11, inclusive, for more
than five days;
(c) the Borrower shall fail to observe or perform any
covenant or agreement contained in this Agreement (other than
those covered by clause (a) or (b) above) for 30 days after
written notice thereof has been given to the Borrower by the
Agent at the request of any Bank;
(d) any representation, warranty, certification or
statement made by the Borrower in this Agreement or in any
certificate, financial statement or other document delivered
pursuant to this Agreement shall prove to have been incorrect in
any material respect when made (or deemed made);
(e) the Borrower or any Subsidiary shall fail to make
any payment, when due or within any applicable grace period, in
respect of any Debt or Debts or SRAC Subordinated Debt of the
Borrower and/or one or more Subsidiaries, arising in one or more
related or unrelated transactions, in an aggregate principal
amount not less than $50,000,000 (other than the Notes);
(f) any event or condition shall occur which (i)
results in the acceleration of the maturity of (x) any Debt or
Debts or SRAC Subordinated Debt of the Borrower or any Subsidiary
in an aggregate principal amount not less than $50,000,000 (other
than the Notes) or (y) any Debt or Debts of any Material Company
other than the Borrower or any Subsidiary in an aggregate
principal amount not less than $100,000,000, in any case by
holders thereof exercising their rights so to accelerate, or (ii)
entitles the holder of any such Debt (or SRAC Subordinated Debt)
or any Person acting on such holder's behalf to accelerate the
maturity thereof;
(g) any Material Company shall commence a voluntary
case or other proceeding seeking liquidation, reorganization or
other relief with respect to itself or its debts under any
bankruptcy, insolvency or other similar law now or hereafter in
effect or seeking the appointment of a trustee, receiver,
liquidator, custodian or other similar official of it or any
substantial part of its property, or shall consent to any such
relief or to the appointment of or taking possession by any such
official in an involuntary case or other proceeding commenced
against it, or shall make a general assignment for the benefit of
creditors, or shall fail generally to pay its debts as they
become due, or shall take any corporate action to authorize any
of the foregoing;
(h) an involuntary case or other proceeding shall be
commenced against any Material Company seeking liquidation,
reorganization or other relief with respect to it or its debts
under any bankruptcy, insolvency or other similar law now or
hereafter in effect or seeking the appointment of a trustee,
receiver, liquidator, custodian or other similar official of it
or any substantial part of its property, and such involuntary
case or other proceeding shall remain undismissed and unstayed
for a period of 90 days; or an order for relief shall be entered
against any Material Company (in an involuntary case or other
proceeding against such Material Company) under the federal
bankruptcy laws as now or hereafter in effect;
(i) any member of the ERISA Group shall fail to pay
when due an amount or amounts aggregating in excess of
$10,000,000 which it shall have become liable to pay under Title
IV of ERISA; or notice of intent to terminate a Material Plan
shall be filed under Title IV of ERISA by any member of the ERISA
Group, any plan administrator or any combination of the
foregoing; or the PBGC shall institute proceedings under Title IV
of ERISA to terminate, to impose liability (other than for
premiums under Section 4007 of ERISA) in respect of, or to cause
a trustee to be appointed to administer any Material Plan; or a
condition shall exist by reason of which the PBGC would be
entitled to obtain a decree adjudicating that any Material Plan
must be terminated; or there shall occur a complete or partial
withdrawal from, or a default, within the meaning of Section
4219(c)(5) of ERISA, with respect to, one or more Multiemployer
Plans which could cause one or more members of the ERISA Group to
incur a current payment obligation in excess of $50,000,000;
(j) a judgment or order for the payment of money in
excess of $10,000,000 shall be rendered against the Borrower or
any Subsidiary and such judgment or order shall continue
unsatisfied and unstayed (pursuant to laws, rules or court
orders) for a period of 10 days;
(k) other than by reason of a transaction permitted by
Section 5.07 in which Sears is the successor or transferee,
either Sears or a corporation organized under the laws of the
United States or any state thereof which is (i) a Wholly-Owned
Subsidiary of Sears, (ii) any such corporation of which Sears is
a Wholly-Owned Subsidiary or (iii) a Wholly-Owned Subsidiary of a
corporation described in clause (ii) above, shall cease to own
beneficially and free and clear of all Liens 100% of the issued
and outstanding capital stock of the Borrower (or any transferee
of the property and assets of the Borrower pursuant to a
transaction permitted by Section 5.07), other than any SRAC
Preferred Stock; or
(l) the Letter Agreement shall for any reason cease to
be in full force and effect;
then, and in every such event, the Agent shall (i) if requested
by the Required Banks, by notice to the Borrower terminate the
Commitments and they shall thereupon terminate, and (ii) if
requested by the Required Banks, by notice to the Borrower
declare the Notes (together with accrued interest thereon) to be,
and the Notes shall thereupon become, immediately due and payable
without presentment, demand, protest or other notice of any kind,
all of which are hereby waived by the Borrower; provided that in
the case of any of the Events of Default specified in clause (g)
or (h) above, without any notice to the Borrower or any other act
by the Agent or the Banks, the Commitments shall thereupon
terminate and the Notes (together with accrued interest thereon)
shall become immediately due and payable without presentment,
demand, protest or other notice of any kind, all of which are
hereby waived by the Borrower.
SECTION 6.02. Notice of Default. The Agent shall give
notice to the Borrower under Section 6.01(c) promptly upon being
requested to do so by any Bank and shall thereupon notify all the
Banks thereof.
ARTICLE VII
THE AGENT
SECTION 7.01. Appointment and Authorization. Each
Bank irrevocably appoints and authorizes the Agent to take such
action as agent on its behalf and to exercise such powers under
this Agreement and the Notes as are delegated to the Agent by the
terms hereof or thereof, together with all such powers as are
reasonably incidental thereto.
SECTION 7.02. Agent and Affiliates. Morgan Guaranty
Trust Company of New York shall have the same rights and powers
under this Agreement as any other Bank and may exercise or
refrain from exercising the same as though it were not the Agent,
and Morgan Guaranty Trust Company of New York and its Affiliates
may accept deposits from, lend money to, and generally engage in
any kind of business with the Borrower or any Subsidiary or
Affiliate of the Borrower as if it were not the Agent hereunder.
SECTION 7.03. Action by Agent. The obligations of the
Agent hereunder are only those expressly set forth herein.
Without limiting the generality of the foregoing, the Agent shall
not be required to take any action with respect to any Event of
Default or any event or condition which, with the giving of
notice or lapse of time or both, would become an Event of
Default, except as expressly provided in Article VI.
SECTION 7.04. Consultation with Experts. The Agent
may consult with legal counsel (who may be counsel for the
Borrower), independent public accountants and other experts
selected by it and shall not be liable to any Bank for any action
taken or omitted to be taken by it in good faith in accordance
with the advice of such counsel, accountants or experts.
SECTION 7.05. Liability of Agent. Neither the Agent
nor any of its directors, officers, agents, or employees shall be
liable to any Bank for any action taken or not taken by it in
connection herewith (i) with the consent or at the request of the
Required Banks or (ii) in the absence of its own gross negligence
or willful misconduct. Neither the Agent nor any of its
directors, officers, agents or employees shall be responsible for
or have any duty to ascertain, inquire into or verify (i) any
statement, warranty or representation made in connection with
this Agreement or any borrowing hereunder; (ii) the performance
or observance of any of the covenants or agreements of the
Borrower; (iii) the satisfaction of any condition specified in
Article III, except receipt of items required to be delivered to
the Agent; or (iv) the validity, effectiveness or genuineness of
this Agreement, the Notes or any other instrument or writing
furnished in connection herewith. The Agent shall not incur any
liability by acting in reliance upon any notice, consent,
certificate, statement, or other writing (which may be a bank
wire, telex or similar writing) believed by it to be genuine or
to be signed by the proper party or parties.
SECTION 7.06. Indemnification. Each Bank shall,
ratably in accordance with its Commitment, indemnify the Agent
(to the extent not reimbursed by the Borrower pursuant to a claim
made by the Agent pursuant to Section 9.03) against any cost,
expense (including counsel fees and disbursements), claim,
demand, action, loss or liability (except such as result from the
Agent's gross negligence or willful misconduct) that the Agent
may suffer or incur in connection with this Agreement or any
action taken or omitted by the Agent hereunder.
SECTION 7.07. Credit Decision. Each Bank acknowledges
that it has, independently and without reliance upon the Agent or
any other Bank, and based on such documents and information as it
has deemed appropriate, made its own credit analysis and decision
to enter into this Agreement. Each Bank also acknowledges that
it will, independently and without reliance upon the Agent or any
other Bank, and based on such documents and information as it
shall deem appropriate at the time, continue to make its own
credit decisions in taking or not taking any action under this
Agreement.
SECTION 7.08. Successor Agent. The Agent may resign
at any time by giving written notice thereof to the Banks and the
Borrower. Upon any such resignation, the Required Banks shall
have the right to appoint a successor Agent. If no successor
Agent shall have been so appointed by the Required Banks, and
shall have accepted such appointment, within 30 days after the
retiring Agent gives notice of resignation, then the retiring
Agent may, on behalf of the Banks, appoint a successor Agent,
which shall be a commercial bank organized or licensed under the
laws of the United States of America or of any State thereof and
having a combined capital and surplus of at least $100,000,000.
Upon the acceptance of its appointment as Agent hereunder by a
successor Agent, such successor Agent shall thereupon succeed to
and become vested with all the rights and duties of the retiring
Agent, and the retiring Agent shall be discharged from its duties
and obligations hereunder; provided that until such acceptance,
the retiring Agent shall continue to perform its obligations as
Agent hereunder. After any retiring Agent's resignation
hereunder as Agent, the provisions of this Article shall inure to
its benefit as to any actions taken or omitted to be taken by it
while it was Agent.
SECTION 7.09. Agent's Fee. The Borrower shall pay to
the Agent for its own account fees in the amounts and at the
times previously agreed upon between the Borrower and the Agent.
SECTION 7.10. Managing Agent, Senior Managing Agent,
Co-Arrangers, Co-Agents and Lead Managers. None of the Managing
Agent, the Senior Managing Agent, any Co-Arranger, Co-Agent or
Lead Manager shall have any responsibility or obligation under
this Agreement in its capacity as Managing Agent, Senior Managing
Agent, Co-Arranger, Co-Agent or Lead Manager, as the case may be.
ARTICLE VIII
CHANGE IN CIRCUMSTANCES
SECTION 8.01. Basis for Determining Interest Rate
Inadequate or Unfair. If on or prior to the first day of any
Interest Period for any Fixed Rate Borrowing:
(a) the Agent is advised by the Reference Banks that
deposits in dollars (in the applicable amounts) are not being
offered to the Reference Banks in the relevant market for such
Interest Period, or
(b) in the case of a Committed Borrowing, Banks having
50% or more of the aggregate amount of the Commitments advise the
Agent that the Adjusted CD Rate or the London Interbank Offered
Rate, as the case may be, as determined by the Agent will not
adequately and fairly reflect the cost to such Banks of funding
their CD Loans or Euro-Dollar Loans, as the case may be, for such
Interest Period,
the Agent shall forthwith give notice thereof to the Borrower and
the Banks, whereupon until the Agent notifies the Borrower that
the circumstances giving rise to such suspension no longer exist,
(i) the obligations of the Banks to make CD Loans or Euro-Dollar
Loans, as the case may be, or to convert outstanding Loans into
CD Loans or Euro-Dollar Loans, as the case may be, shall be
suspended and (ii) each outstanding CD Loan or Euro-Dollar Loan,
as the case may be, shall be converted into a Base Rate Loan on
the last day of the then current Interest Period applicable
thereto. Unless the Borrower notifies the Agent at least one
Domestic Business Day before the date of any Fixed Rate Borrowing
for which a Notice of Borrowing has previously been given that it
elects not to borrow on such date, (i) if such Fixed Rate
Borrowing is a Committed Borrowing, such Borrowing shall instead
be made as a Base Rate Borrowing and (ii) if such Fixed Rate
Borrowing is a Money Market LIBOR Borrowing, the Money Market
LIBOR Loans comprising such Borrowing shall bear interest for
each day from and including the first day to but excluding the
last day of the Interest Period applicable thereto at the Base
Rate for such day.
SECTION 8.02. Illegality. If, on or after the date of
this Agreement, the adoption of any applicable law, rule or
regulation, or any change therein, or any change in the
interpretation or administration thereof by any governmental
authority, central bank or comparable agency charged with the
interpretation or administration thereof, or compliance by any
Bank (or its Euro-Dollar Lending Office) with any request or
directive (whether or not having the force of law) of any such
authority, central bank or comparable agency shall make it
unlawful or impossible for any Bank (or its Euro-Dollar Lending
Office) to make, maintain or fund its Euro-Dollar Loans and such
Bank shall so notify the Agent, the Agent shall forthwith give
notice thereof to the other Banks and the Borrower, whereupon
until such Bank notifies the Borrower and the Agent that the
circumstances giving rise to such suspension no longer exist, the
obligation of such Bank to make Euro-Dollar Loans, or to convert
outstanding Loans into Euro-Dollar Loans, shall be suspended.
Before giving any notice to the Agent pursuant to this Section,
such Bank shall, if practicable, with the consent of the Borrower
(which consent shall not unreasonably be withheld), designate a
different Euro-Dollar Lending Office if such designation will
avoid the need for giving such notice and will not, in the
judgment of such Bank, be otherwise disadvantageous to such Bank.
If such notice is given, (i) the Borrower shall be entitled upon
its request to a reasonable explanation of the factors underlying
such notice and (ii) each Euro-Dollar Loan of such Bank then
outstanding shall be converted to a Base Rate Loan either (a) on
the last day of the then current Interest Period applicable to
such Euro-Dollar Loan if such Bank may lawfully continue to
maintain and fund such Loan to such day or (b) immediately if
such Bank shall determine that it may not lawfully continue to
maintain and fund such Loan to such day.
SECTION 8.03. Increased Cost and Reduced Return. (a)
In the event that (x) after June 28, 1996, in the case of any
Committed Loan or any obligation to make Committed Loans or (y)
on or after the date of the related Money Market Quote, in the
case of any Money Market Loan, the adoption of any applicable
law, rule or regulation, or any change therein or in the
interpretation or application thereof by any governmental
authority, central bank or comparable agency charged with the
interpretation or administration thereof or compliance by any
Bank with any request or directive after June 28, 1996 (whether
or not having the force of law) of any such authority, central
bank or comparable agency:
(i) does or shall subject such Bank to any additional
tax of any kind whatsoever with respect to this Agreement, any
Note or any Fixed Rate Loan made by it, or change the basis or
the applicable rate of taxation of payments to such Bank of
principal, interest or any other amount payable hereunder (except
for (A) the imposition of or change in any tax on or measured by
the overall net income of such Bank, (B) the imposition of or
change in any United States Tax described in Section 2.15(a) in
respect of which the Borrower is not obligated to pay an
additional amount by reason of the proviso to Section 2.15(a) or
(C) the imposition of or change in any income tax imposed by any
governmental or other taxing authority of or in any jurisdiction
other than the United States);
(ii) does or shall impose, modify or hold applicable
any reserve, special deposit, insurance assessment, compulsory
loan or similar requirement against assets held by, or deposits
or other liabilities in or for the account of, advances or loans
by, or other credit extended by, or any other acquisition of
funds by, any office of such Bank which are not otherwise
included in the determination of the rate of interest on Fixed
Rate Loans hereunder; or
(iii) does or shall impose on such Bank any other
condition;
and the result of any of the foregoing is to increase the cost to
such Bank of making or maintaining Fixed Rate Loans or to reduce
any amount receivable hereunder or under any Note with respect
thereto, then, in any such case, the Borrower shall promptly pay
such Bank, upon its demand, any additional amounts necessary to
compensate such Bank for such increased cost or reduced amount
receivable which such Bank deems to be material as determined by
such Bank with respect to its Fixed Rate Loans.
(b) If any Bank shall have determined that, after June
28, 1996, the adoption of any applicable law, rule or regulation
regarding capital adequacy, or any change therein, or any change
in the interpretation or administration thereof by any
governmental authority, central bank or comparable agency charged
with the interpretation or administration thereof, or any request
or directive regarding capital adequacy (whether or not having
the force of law) of any such authority, central bank or
comparable agency, has or would have the effect of reducing the
rate of return on capital of such Bank (or its Parent) as a
consequence of such Bank's obligations hereunder to a level below
that which such Bank (or its Parent) could have achieved but for
such adoption, change, request or directive (taking into
consideration its policies with respect to capital adequacy) by
an amount deemed by such Bank to be material, then from time to
time, within 15 days after demand by such Bank (with a copy to
the Agent), the Borrower shall pay to such Bank such additional
amount or amounts as will compensate such Bank (or its Parent)
for such reduction.
(c) Each Bank will promptly notify the Borrower and
the Agent of any event of which it has knowledge, occurring after
June 28, 1996, which will entitle such Bank to compensation
pursuant to this Section and will, if practicable, with the
consent of the Borrower (which consent shall not unreasonably be
withheld), designate a different Applicable Lending Office if
such designation will avoid the need for, or reduce the amount
of, such compensation and will not, in the judgment of such Bank,
be otherwise disadvantageous to such Bank. A certificate of any
Bank claiming compensation under this Section and setting forth
in reasonable detail its computation of the additional amount or
amounts to be paid to it hereunder shall be conclusive in the
absence of manifest error. In determining such amount, such Bank
may use any reasonable averaging and attribution methods.
Notwithstanding the foregoing subsections (a) and (b) of this
Section 8.03, the Borrower shall only be obligated to compensate
any Bank for any amount arising or accruing both:
(i) during (A) any time or period commencing (x) in
the case of subsection (a), not earlier than the first day of any
Interest Period in effect on the date which, and (y) in the case
of subsection (b), not earlier than the date on which, such Bank
notifies the Agent and the Borrower that it proposes to demand
such compensation and identifies to the Agent and the Borrower
the statute, regulation or other basis upon which the claimed
compensation is or will be based and (B) any time or period
during which, because of the retroactive application of such
statute, regulation or other basis, such Bank did not know that
such amount would arise or accrue; and
(ii) within six months prior to any demand therefor,
accompanied by a certificate of such Bank claiming compensation
and setting forth in reasonable detail its computation of the
additional amount or amounts to be paid to it hereunder.
This Section shall survive the termination of this Agreement and
payment of the outstanding Notes.
SECTION 8.04. Base Rate Loans Substituted for Affected
Fixed Rate Loans. If (i) the obligation of any Bank to make or
maintain Euro-Dollar Loans has been suspended pursuant to Section
8.02 or (ii) any Bank has demanded compensation under Section
8.03(a) and the Borrower shall, by at least five Euro-Dollar
Business Days' prior notice to such Bank through the Agent, have
elected that the provisions of this Section shall apply to such
Bank, then, unless and until such Bank notifies the Borrower that
the circumstances giving rise to such suspension or demand for
compensation no longer apply:
(a) all Loans which would otherwise be made by such
Bank as (or continued as or converted into) CD Loans or
Euro-Dollar Loans, as the case may be, shall instead be Base Rate
Loans (on which interest and principal shall be payable
contemporaneously with the related Fixed Rate Loans of the other
Banks), and
(b) after each of its CD Loans or Euro-Dollar Loans,
as the case may be, has been repaid (or converted to a Base Rate
Loan), all payments of principal which would otherwise be applied
to repay such Fixed Rate Loans shall be applied to repay its Base
Rate Loans instead.
If such Bank notifies the Borrower that the circumstances giving
rise to such notice no longer apply, the principal amount of each
such Base Rate Loan shall be converted into a CD Loan or
Euro-Dollar Loan, as the case may be, on the first day of the
next succeeding Interest Period applicable to the related CD
Loans or Euro-Dollar Loans of the other Banks.
SECTION 8.05. Substitution of Bank. If (i) the
obligation of any Bank to make Euro-Dollar Loans has been
suspended pursuant to Section 8.02, (ii) any Bank has demanded
compensation or given notice of its intention to demand
compensation under Section 8.03 or (iii) the Borrower is required
to pay any additional amount to any Bank pursuant to Section
2.15(a), the Borrower shall have the right, with the assistance
of the Agent, to seek a mutually satisfactory substitute bank or
banks (which may be one or more of the Banks) to replace such
Bank under this Agreement.
ARTICLE IX
MISCELLANEOUS
SECTION 9.01. Notices. All notices, requests and
other communications to any party hereunder shall be in writing
(including bank wire, facsimile transmission or similar writing)
and shall be given to such party: (w) in the case of the
Borrower, at its address or telecopy number set forth on the
signature pages hereof, (x) in the case of the Agent, at its
address, telecopy number or telex number set forth on the
signature pages hereof, (y) in the case of any Bank, at its
address, telecopy number or telex number set forth in its
Administrative Questionnaire or (z) in the case of any party,
such other address, telecopy number or telex number as such party
may hereafter specify for the purpose by notice to the Agent and
the Borrower. Each such notice, request or other communication
shall be effective (i) if given by telex, when such telex is
transmitted to the telex number specified in this Section and the
appropriate answerback is received, (ii) if given by mail, 72
hours after such communication is deposited in the mails with
first class postage prepaid, addressed as aforesaid or (iii) if
given by telecopy or any other means, when delivered at the
address specified in this Section (and confirmed by telephone by
the sender, in the case of any telecopy notice to the Borrower);
provided that notices to the Agent under Article II or Article
VIII shall not be effective until received.
SECTION 9.02. No Waivers. No failure or delay by the
Agent or any Bank or the Borrower in exercising any right, power
or privilege hereunder or under any Note shall operate as a
waiver thereof nor shall any single or partial exercise thereof
preclude any other or further exercise thereof or the exercise of
any other right, power or privilege. The rights and remedies
herein provided shall be cumulative and not exclusive of any
rights or remedies provided by law.
SECTION 9.03. Expenses; Documentary Taxes;
Indemnification. (a) The Borrower shall pay (i) all reasonable
out-of-pocket expenses of the Agent, including fees and
disbursements of special counsel for the Agent, in connection
with the preparation of this Agreement, any waiver or consent
hereunder or any amendment hereof or any Event of Default or any
event or condition which, with the giving of notice or lapse of
time or both, would become an Event of Default or any alleged
Event of Default or such event or condition hereunder and (ii) if
an Event of Default occurs, all reasonable out-of-pocket expenses
incurred by the Agent and each Bank, including fees and
disbursements of counsel, in connection with such Event of
Default and collection, bankruptcy, insolvency and other
enforcement proceedings resulting therefrom. The Borrower shall
indemnify each Bank against any transfer taxes, documentary
taxes, assessments or similar charges made by any governmental
authority solely by reason of the execution and delivery of this
Agreement or the Notes.
(b) The Borrower agrees to indemnify the Agent and
each Bank and their respective affiliates (each an "Indemnitee")
and hold each Indemnitee harmless from and against any and all
liabilities, losses, damages, costs and expenses of any kind,
including, without limitation, the reasonable fees and
disbursements of counsel, which may be incurred by such
Indemnitee in connection with any investigative, administrative
or judicial proceeding (whether or not such Indemnitee shall be
designated a party thereto) relating to or arising out of this
Agreement or any actual or proposed use of proceeds of Loans
hereunder; provided that no Indemnitee shall have the right to be
indemnified hereunder (i) for its own gross negligence or willful
misconduct as determined by a court of competent jurisdiction or
(ii) in respect of any litigation instituted by (x) any
Participant against any Bank or the Agent, (y) any Bank against
any Participant, any Bank or the Agent, or (z) any holder of any
security of any Bank (in its capacity as such) against any Bank,
to the extent any such litigation does not arise out of any
misconduct (alleged in good faith by such Bank) by or on behalf
of the Borrower.
SECTION 9.04. Sharing of Set-Offs. Each Bank agrees
that if it shall, by exercising any right of set-off or
counterclaim or otherwise, receive payment of a proportion of the
aggregate amount of principal and interest due with respect to
any Note held by it which is greater than the proportion received
by any other Bank in respect of the aggregate amount of principal
and interest due with respect to any Note held by such other
Bank, the Bank receiving such proportionately greater payment
shall purchase such participations in the Notes held by the other
Banks, and such other adjustments shall be made, as may be
required so that all such payments of principal and interest with
respect to the Notes held by the Banks shall be shared by the
Banks pro rata; provided that nothing in this Section shall
impair the right of any Bank to exercise any right of set-off or
counterclaim it may have and to apply the amount subject to such
exercise to the payment of indebtedness of the Borrower other
than its indebtedness under the Notes. The Borrower agrees, to
the fullest extent it may effectively do so under applicable law,
that any holder of a participation in a Note, whether or not
acquired pursuant to the foregoing arrangements, may exercise
rights of set-off or counterclaim and other rights with respect
to such participation as fully as if such holder of a
participation were a direct creditor of the Borrower in the
amount of such participation.
SECTION 9.05. Amendments and Waivers. Any provision
of this Agreement or the Notes may be amended or waived if, but
only if, such amendment or waiver is in writing and is signed by
the Borrower and the Required Banks (and, if the rights or duties
of the Agent are affected thereby, by the Agent); provided that
no such amendment or waiver shall, unless signed by all the
Banks, (i) increase or decrease the Commitment of any Bank
(except for a ratable decrease in the Commitments of all Banks
pursuant to Secton 2.09 or an increase of Commitments in
accordance with Section 2.17) or subject any Bank to any
additional obligation, (ii) reduce the principal of or rate of
interest on any Loan or any fees hereunder (except that, in the
case of a reduction in the principal of or rate of interest on
Loans comprising a single Money Market Borrowing, only the
signatures of the Borrower and the Banks making Loans included in
such Borrowing shall be required), (iii) postpone the date fixed
for any payment of principal of or interest on any Loan or any
fees hereunder or for the termination of any Commitment (except
for an extension of any Bank's Termination Date in accordance
with Section 2.01(b)) or (iv) change the percentage of the
Commitments or of the aggregate unpaid principal amount of the
Notes, or the number of Banks, which shall be required for the
Banks or any of them to take any action under this Section or any
other provision of this Agreement.
SECTION 9.06. Successors and Assigns. (a) The
provisions of this Agreement shall be binding upon and inure to
the benefit of the parties hereto and their respective successors
and assigns, except that the Borrower may not assign or otherwise
transfer any of its rights under this Agreement (other than
pursuant to a transaction permitted by Section 5.07) without the
prior written consent of all Banks.
(b) Any Bank may at any time grant to one or more
banks or other institutions (each a "Participant") participating
interests in its Commitment or any or all of its Loans. In the
event of any such grant by a Bank of a participating interest to
a Participant, such Bank shall remain responsible for the
performance of its obligations hereunder, and the Borrower and
the Agent shall continue to deal solely and directly with such
Bank in connection with such Bank's rights and obligations under
this Agreement. Any agreement pursuant to which any Bank may
grant such a participating interest shall provide that such Bank
shall retain the sole right and responsibility to enforce the
obligations of the Borrower hereunder including, without
limitation, the right to approve any amendment, modification or
waiver of any provision of this Agreement; provided that such
participation agreement may provide that such Bank will not agree
to any modification, amendment or waiver of this Agreement
described in clause (i), (ii) or (iii) of Section 9.05 without
the consent of the Participant. The Borrower agrees that each
Participant shall, to the extent provided in its participation
agreement, be entitled to the benefits of Article VIII with
respect to its participating interest. If, pursuant to this
Section 9.06(b), any interest in this Agreement or any Note is
proposed to be transferred to any Participant that is not a bank
organized under the laws of the United States or any State
thereof or the District of Columbia, such proposed Participant
shall, as a condition to the effectiveness of such transfer, (i)
deliver Internal Revenue Service forms as provided in Section
2.15(b) to the transferor Bank with copies to the Borrower and
(ii) make the covenants specified in subsections (b)(2), (c)(1)
and (c)(2) of Section 2.15 for the benefit of the transferor
Bank, the Borrower and the Agent. All such covenants shall be
made by an instrument in writing in form and substance
satisfactory to the Borrower.
(c) Any Bank may at any time assign to one or more
banks or other institutions (each an "Assignee") all, or a
proportionate part of all (such proportionate part to comprise a
Commitment of not less than $25,000,000 or, in the case of an
assignment to a Bank, not less than $10,000,000), of its rights
and obligations under this Agreement and the Notes, and such
Assignee shall assume such rights and obligations, pursuant to an
Assignment and Assumption Agreement in substantially the form of
Exhibit I hereto executed by such Assignee and such transferor
Bank, with (and subject to) the subscribed consent of the
Borrower and the Agent; provided that if an Assignee is an
Affiliate of such transferor Bank, no such consent shall be
required, but such transferor Bank shall deliver to the Borrower
five Domestic Business Days' prior written notice of any such
assignment and, promptly after the effectiveness thereof, a copy
of the relevant Assignment and Assumption Agreement; and provided
further that such assignment may, but need not, include rights of
the transferor Bank in respect of outstanding Money Market Loans.
Upon execution and delivery of such instrument and payment by
such Assignee to such transferor Bank of an amount equal to the
purchase price agreed between such transferor Bank and such
Assignee, such Assignee shall be a Bank party to this Agreement
and shall have all the rights and obligations of a Bank with a
Commitment as set forth in such instrument of assumption, and the
transferor Bank shall be released from its obligations hereunder
to a corresponding extent, and no further consent or action by
any party shall be required. Upon the consummation of any
assignment pursuant to this subsection (c), the transferor Bank,
the Agent and the Borrower shall make appropriate arrangements so
that, if required, a new Note is issued to the Assignee. In
connection with any such assignment, the transferor Bank shall
pay to the Agent an administrative fee for processing such
assignment in the amount of $2,000. If the Assignee is not
incorporated under the laws of the United States of America or a
state thereof, it shall, prior to the first date on which
interest or fees are payable hereunder for its account, deliver
to the Borrower and the Agent certification as to exemption from
deduction or withholding of any United States federal income
taxes in accordance with Section 2.15.
(d) Any Bank may at any time assign all or any portion
of its rights under this Agreement and its Note to a Federal
Reserve Bank. No such assignment shall release the transferor
Bank from its obligations hereunder.
(e) No Participant shall be entitled to receive any
greater payment under Section 8.03 than the relevant transferor
Bank would have been entitled to receive with respect to the
rights transferred. No Assignee or other transferee of any
Bank's rights (other than a Participant, whose rights shall be
governed by the immediately preceding sentence) shall be entitled
to receive any greater payment under Section 8.03 than such Bank
would have been entitled to receive with respect to the rights
transferred, unless such transfer is made (x) with the Borrower's
prior written consent, (y) by reason of the provisions of Section
8.02 or 8.03 requiring such Bank to designate a different
Applicable Lending Office under certain circumstances or (z) at a
time when the circumstances giving rise to such greater payment
did not exist.
SECTION 9.07. Collateral. Each of the Banks
represents to the Agent and each of the other Banks that it in
good faith is not relying upon any "margin stock" (as defined in
Regulation U) as collateral in the extension or maintenance of
the credit provided for in this Agreement.
SECTION 9.08. Governing Law; Submission to
Jurisdiction. This Agreement and each Note shall be governed by
and construed in accordance with the laws of the State of New
York. The Borrower hereby submits to the nonexclusive
jurisdiction of the United States District Court for the Southern
District of New York and of any New York State court sitting in
New York City for purposes of all legal proceedings arising out
of or relating to this Agreement or the transactions contemplated
hereby. The Borrower irrevocably waives, to the fullest extent
permitted by law, any objection which it may now or hereafter
have to the laying of the venue of any such proceeding brought in
such a court and any claim that any such proceeding brought in
such a court has been brought in an inconvenient forum.
SECTION 9.09. Counterparts; Integration. This
Agreement may be signed in any number of counterparts, each of
which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument.
This Agreement (and, solely with respect to information delivered
by the Borrower to the Banks prior to the date hereof, the
confidentiality letter executed by each of the Banks listed on
the signature pages hereto) constitutes the entire agreement and
understanding among the parties hereto and supersedes any and all
prior agreements and understandings, oral or written, relating to
the subject matter hereof.
SECTION 9.10. Restrictions on Transfers. Each Bank
agrees that it will not, except by operation of law, transfer or
propose to transfer all or any portion of its rights and
obligations under this Agreement and the Note held by it, or any
participation therein to any Person except (i) banks (including
without limitation Federal Reserve Banks) or trust companies
empowered by law to accept deposits or (ii) their corporate
parents or their Affiliates which are in the business of lending
money and which are either wholly owned by them or are
Wholly-Owned Subsidiaries of a common corporate parent, unless
such Bank shall have first delivered to the Borrower an opinion
of counsel as to the legality of the transfer (including
compliance of such transfer with applicable federal securities
laws) and such other matters as the Borrower may reasonably
request, which opinion shall be satisfactory in form and
substance to the Borrower. Each Bank agrees that it will not
transfer all or any portion of any Note held by it, or any
participation therein, in violation of applicable securities
laws.
SECTION 9.11. Termination of Existing Credit Agreements.
The Borrower and each of the Banks that is also a "Bank" party to
the Five-Year Revolving Credit Agreement agrees that the
"Commitments" as defined in the Five-Year Revolving Credit
Agreement shall be terminated in their entirety on the Effective
Date. Each of such Banks waives any requirement of notice of
such termination of the Five-Year Revolving Credit Agreement.
The Borrower (i) represents and warrants that (x) after giving
effect to the preceding sentences of this Section 9.11, the
commitments under each of the Existing Credit Agreements will be
terminated effective not later than the Effective Date, (y) no
loans are, as of the date hereof, or will be, as of the Effective
Date, outstanding under any of the Existing Credit Agreements and
(ii) covenants that all accrued and unpaid commitment fees and
any other amounts due and payable under the Existing Credit
Agreements shall have been paid on or prior to the Effective
Date.
SECTION 9.12. Confidentiality. The Agent and each
Bank represent that they will maintain the confidentiality of any
written or oral information provided under this Agreement by or
on behalf of the Borrower that has been identified by its source
as confidential (hereinafter collectively called "Confidential
Information"), subject to the Agent's and each Bank's (a)
obligation to disclose any such Confidential Information pursuant
to a request or order under applicable laws and regulations or
pursuant to a subpoena or other legal process, (b) right to
disclose any such Confidential Information to its bank examiners,
Affiliates, auditors, counsel and other professional advisors and
to other Banks, (c) right to disclose any such Confidential
Information in connection with any litigation or dispute
involving the Banks and the Borrower or any of its Subsidiaries
and Affiliates and (d) right to provide such information to
Participants (as defined in subsection 9.06(b)), prospective
Participants to which sales of participating interests are
permitted pursuant to subsection 9.06(b) and prospective
Assignees to which assignments of interests are permitted
pursuant to subsection 9.06(c), but only if (i) the Borrower has
theretofore given its written consent to the participation to
such Participant or prospective Participant or the assignment to
such prospective Assignee, (ii) such Participant, prospective
Participant or prospective Assignee agrees in writing to maintain
the confidentiality of such information on terms substantially
similar to those of this Section as if it were a "Bank" party
hereto and (iii) the Borrower receives copies of such written
agreement prior to the release of such information.
Notwithstanding the foregoing, any such information supplied to a
Bank, Participant, prospective Participant or prospective
Assignee under this Agreement shall cease to be Confidential
Information if it is or becomes known to such Person by other
than unauthorized disclosure, or if it becomes a matter of public
knowledge.
SECTION 9.13. WAIVER OF JURY TRIAL. EACH OF THE
BORROWER, THE AGENT AND THE BANKS HEREBY IRREVOCABLY WAIVES ANY
AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING
OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed by their respective authorized
officers as of the day and year first above written.
SEARS ROEBUCK ACCEPTANCE CORP.
By
Title:
3711 Kennett Pike
Greenville, Delaware 19807
Telefax: (302) 888-3156
<PAGE>
BANK AGENT AND ARRANGER
$ 190,000,000 MORGAN GUARANTY TRUST COMPANY
OF NEW YORK
By
Title:
BANK AND SENIOR MANAGING AGENT
$ 170,000,000 THE CHASE MANHATTAN BANK,
N.A.
By
Title:
BANKS AND MANAGING AGENTS
$ 160,000,000 BANK OF AMERICA ILLINOIS
By
Title:
$ 160,000,000 THE BANK OF NEW YORK
By
Title:
$ 160,000,000 CIBC INC.
By
Title:
$ 160,000,000 CITIBANK, N.A.
By
Title:
$ 160,000,000 CREDIT SUISSE
By
Title:
By
Title:
$ 160,000,000 THE FIRST NATIONAL BANK OF
CHICAGO
By
Title:
$ 160,000,000 NATIONSBANK, N.A.
By
Title:
$ 160,000,000 THE SUMITOMO BANK, LIMITED,
CHICAGO BRANCH
By
Title:
$ 160,000,000 UNION BANK OF SWITZERLAND
By
Title:
By
Title:
$ 160,000,000 WACHOVIA BANK OF GEORGIA, N.A.
By
Title:
$ 100,000,000 THE BANK OF TOKYO-MITSUBISHI,
LTD., CHICAGO BRANCH
By
Title:
$ 60,000,000 UNION BANK, A DIVISION OF UNION
BANK OF
CALIFORNIA, N.A.
By
Title:
BANKS AND CO-ARRANGERS
$ 130,000,000 BANK OF MONTREAL
By
Title:
$ 130,000,000 THE INDUSTRIAL BANK OF JAPAN,
LTD.
By
Title:
$ 130,000,000 ROYAL BANK OF CANADA
By
Title:
$ 130,000,000 THE SAKURA BANK, LIMITED
By
Title:
BANKS AND CO-AGENTS
$ 105,000,000 WELLS FARGO BANK, N.A.
By
Title:
$ 105,000,000 THE FIRST NATIONAL BANK OF
BOSTON
By
Title:
$ 105,000,000 THE BANK OF NOVA SCOTIA
By
Title:
$ 105,000,000 DEUTSCHE BANK AG, CHICAGO
AND/OR CAYMAN ISLANDS
BRANCHES
By
Title:
By
Title:
$ 105,000,000 THE DAI-ICHI KANGYO BANK, LTD.,
CHICAGO BRANCH
By
Title:
$ 105,000,000 FIRST UNION NATIONAL BANK
OF NORTH CAROLINA
By
Title:
$ 105,000,000 FLEET NATIONAL BANK
By
Title:
$ 105,000,000 MELLON BANK, N.A.
By
Title:
BANKS AND LEAD MANAGERS
$ 80,000,000 CORESTATES BANK, N.A.
By
Title:
$ 80,000,000 CAISSE NATIONALE DE CREDIT
AGRICOLE
By
Title:
$ 80,000,000 PNC BANK, NATIONAL ASSOCIATION
By
Title:
$ 80,000,000 THE FUJI BANK, LIMITED
By
Title:
$ 70,000,000 BARCLAYS BANK PLC
By
Title:
$ 70,000,000 BANCA COMMERCIALE ITALIANA,
CHICAGO BRANCH
By
Title:
By
Title:
$ 70,000,000 COMERICA BANK
By
Title:
$ 70,000,000 FIRST HAWAIIAN BANK
By
Title:
$ 70,000,000 THE NORTHERN TRUST COMPANY
By
Title:
$ 70,000,000 NORWEST BANK MINNESOTA,
NATIONAL ASSOCIATION
By
Title:
$ 70,000,000 THE TOKAI BANK, LIMITED
By
Title:
$ 70,000,000 SUNTRUST BANK, ATLANTA
By
Title:
$ 70,000,000 ABN AMRO BANK N.V.
By
Title:
By
Title:
<PAGE>
OTHER BANKS
$ 60,000,000 BANK OF HAWAII
By
Title:
$ 60,000,000 BANCA DI ROMA - CHICAGO BRANCH
By
Title:
By
Title:
<PAGE>
$ 60,000,000 BARNETT BANK OF JACKSONVILLE,
N.A.
By
Title:
$ 60,000,000 THE BOATMEN'S NATIONAL BANK OF
ST. LOUIS
By
Title:
$ 60,000,000 THE MITSUI TRUST AND BANKING
COMPANY, LIMITED NEW YORK
BRANCH
By
Title:
$ 60,000,000 THE SANWA BANK, LIMITED,
CHICAGO BRANCH
By
Title:
$ 60,000,000 NATIONAL CITY BANK OF COLUMBUS
By
Title:
$ 50,000,000 BANCA NAZIONALE DEL LAVORO
S.p.A. - NEW YORK BRANCH
By
Title:
$ 50,000,000 THE LONG-TERM CREDIT BANK OF
JAPAN, LTD., CHICAGO BRANCH
By
Title:
$ 50,000,000 THE SUMITOMO TRUST & BANKING
CO., LTD., NEW YORK BRANCH
By
Title:
_________________
Total Commitments
$5,000,000,000
=================
<PAGE>
EXHIBIT A
NOTE
New York, New York
, 19
For value received, SEARS ROEBUCK ACCEPTANCE CORP., a
Delaware corporation (the "Borrower"), promises to pay to the
order of
(the "Bank"), for the account of its Applicable Lending Office,
the unpaid principal amount of each Loan made by the Bank to the
Borrower pursuant to the Credit Agreement referred to below on
the dates provided for in the Credit Agreement and, in any event,
on the maturity date provided for therein. The Borrower promises
to pay interest on the unpaid principal amount of each such Loan
on the dates and at the rate or rates provided for in the Credit
Agreement. All such payments of principal and interest shall be
made in lawful money of the United States in Federal or other
immediately available funds at the office of Morgan Guaranty
Trust Company of New York, 60 Wall Street, New York, New York.
All Loans made by the Bank and all repayments of the
principal thereof shall be recorded by the Bank and, if the Bank
so elects in connection with any transfer or enforcement hereof,
appropriate notations to evidence the foregoing information with
respect to each such Loan then outstanding may be endorsed by the
Bank on the schedule attached hereto, or on a continuation of
such schedule attached to and made a part hereof; provided that
the failure of the Bank to make any such recordation or
endorsement shall not affect the obligations of the Borrower
hereunder or under the Credit Agreement.
This note is one of the Notes referred to in the Credit
Agreement dated as of June 28, 1996 among the Borrower, the banks
listed on the signature pages thereof, the Managing Agent,
Co-Arrangers, Co-Agents and Lead Managers referred to therein and
Morgan Guaranty Trust Company of New York, as Agent (as the same
may be amended from time to time, the "Credit Agreement"). Terms
defined in the Credit Agreement are used herein with the same
meanings. This Note is subject, and reference is hereby made, to
the terms and provisions of the Credit Agreement, including the
transfer restrictions set forth in Section 9.10 thereof, the
provisions for mandatory and optional prepayment hereof and the
acceleration of the maturity hereof.
SEARS ROEBUCK ACCEPTANCE CORP.
By________________________
Title:
<PAGE>
Note (cont'd)
LOANS AND PAYMENTS OF PRINCIPAL
_________________________________________________________________
Amount of
Amount of Principal Notation
Date Loan Repaid Made By
_________________________________________________________________
_________________________________________________________________
_________________________________________________________________
_________________________________________________________________
_________________________________________________________________
_________________________________________________________________
_________________________________________________________________
_________________________________________________________________
_________________________________________________________________
_________________________________________________________________
_________________________________________________________________
_________________________________________________________________
_________________________________________________________________
_________________________________________________________________
_________________________________________________________________
_________________________________________________________________
_________________________________________________________________
_________________________________________________________________
_________________________________________________________________
<PAGE>
EXHIBIT B
NOTICE OF COMMITTED BORROWING
Borrowing Request
No. _____________
Morgan Guaranty Trust Company
of New York, as Agent
60 Wall Street
New York, New York 10260
Attention: _______________
This notice shall constitute a "Notice of Committed
Borrowing" pursuant to Section 2.02 of the Credit Agreement dated
as of June 28, 1996 among Sears Roebuck Acceptance Corp. (the
"Borrower"), the banks listed on the signature pages thereof, the
Managing Agent, Co-Arrangers, Co-Agents and Lead Managers
referred to therein and Morgan Guaranty Trust Company of New
York, as Agent (the "Agent") (as amended from time to time, the
"Credit Agreement"). Capitalized terms not otherwise defined
herein have the meanings ascribed to them in the Credit
Agreement.
1. The date of the Borrowing will be _______________,
199_.
2. The principal amount of the Borrowing will be
$____________.
3. The Borrowing will consist of [CD Loans]
[Euro-Dollar Loans] [Base Rate Loans].
[4. The initial Interest Period for such Loans shall
be _____________.]
[5.] Transfer Instructions:
[insert appropriate delivery instructions, which shall
include bank and account number]
SEARS ROEBUCK ACCEPTANCE CORP.
By____________________________
Title:
Date: __________________, 199_
<PAGE>
EXHIBIT C
NOTICE OF INTEREST RATE ELECTION
Morgan Guaranty Trust Company
of New York, as Agent
60 Wall Street
New York, New York 10260
Attention: _______________
This notice shall constitute a "Notice of Interest Rate
Election" pursuant to Section 2.10 of the Credit Agreement dated
as of June 28, 1996 among Sears Roebuck Acceptance Corp. (the
"Borrower"), the banks listed on the signature pages thereof, the
Managing Agent, Co-Arrangers, Co-Agents and Lead Managers
referred to therein and Morgan Guaranty Trust Company of New
York, as Agent (the "Agent") (as amended from time to time, the
"Credit Agreement"). Capitalized terms not otherwise defined
herein have the meanings ascribed to them in the Credit
Agreement.
1. The principal amount of the Group of Loans (or
portion thereof) to which this notice applies is $__________.
2. The date on which the conversion/continuation
selected is to be effective is __________, 199_ (the "Election
Date").
3. The Group of Loans (or portion thereof) to which
this notice applies is [all or a portion of all Base Rate Loans
currently outstanding] [all or a portion of all CD Loans
currently outstanding having an Interest Period of ___ days and
ending on the Election Date] [all or a portion of all Euro-Dollar
Loans currently outstanding having an Interest Period of __
months and ending on the Election Date].
4a. The Group of Loans (or portion thereof) which are
to be converted will bear interest [at the Base Rate] [based upon
the CD Rate] [based upon the Euro-Dollar Rate].
4b. The Group of Loans (or portion thereof) which are
to be continued will bear interest [at the Base Rate] [based upon
the CD Rate] [based upon the Euro-Dollar Rate].
[5. The Interest Period for such Loans shall be
____________.]
SEARS ROEBUCK ACCEPTANCE CORP.
By:
Title:
Date: __________________, 199_
<PAGE>
EXHIBIT D
Form of Money Market Quote Request
[Date]
To: Morgan Guaranty Trust Company
of New York (the "Agent")
From: Sears Roebuck Acceptance Corp. (the "Borrower")
Re: Credit Agreement (the "Credit Agreement") dated as of
June 28, 1996 among the Borrower, the banks listed on the
signature pages thereof, the Managing Agent, Co-Arrangers,
Co-Agents and Lead Managers referred to therein and Morgan
Guaranty Trust Company of New York, as Agent
We hereby give notice pursuant to Section 2.03 of the
Credit Agreement that we request Money Market Quotes for the
following proposed Money Market Borrowing(s):
Date of Borrowing: __________________
Principal Amount Interest Period
$
Such Money Market Quotes should offer a Money Market
[Margin] [Absolute Rate]. [The applicable base rate is the London
Interbank Offered Rate.]
Terms used herein have the meanings assigned to them in
the Credit Agreement.
SEARS ROEBUCK ACCEPTANCE CORP.
By_________________________
Title:
<PAGE>
EXHIBIT E
Form of Invitation for Money Market Quotes
To: [Name of Bank]
Re: Invitation for Money Market Quotes to
Sears Roebuck Acceptance Corp. (the "Borrower")
Pursuant to Section 2.03 of the Credit Agreement (the
"Credit Agreement") dated as of June 28, 1996 among the Borrower,
the banks listed on the signature pages thereof, the Managing
Agent, Co-Arrangers, Co-Agents and Lead Managers referred to
therein and Morgan Guaranty Trust Company of New York, as Agent,
we are pleased on behalf of the Borrower to invite you to submit
Money Market Quotes to the Borrower for the following proposed
Money Market Borrowing(s):
Date of Borrowing: __________________
Principal Amount Interest Period
$
Such Money Market Quotes should offer a Money Market
[Margin] [Absolute Rate]. [The applicable base rate is the
London Interbank Offered Rate.]
Please respond to this invitation by no later than
[2:00 P.M.] [9:30 A.M.] (New York City time) on [date].
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK
By___________________________
Authorized Officer
<PAGE>
EXHIBIT F
Form of Money Market Quote
To: Morgan Guaranty Trust Company
of New York (the "Agent")
Re: Money Market Quote to Sears Roebuck
Acceptance Corp. (the "Borrower")
In response to your invitation on behalf of the
Borrower dated _____________, 19__, we hereby make the following
Money Market Quote on the following terms:
1. Quoting Bank: ________________________________
2. Person to contact at Quoting Bank:
______________________________
3. Date of Borrowing: ____________________*
4. We hereby offer to make Money Market Loan(s) in the
following principal amounts, for the following Interest Periods
and at the following rates:
Principal Interest Money Market
Amount** Period*** [Margin****] [Absolute Rate*****]
$
$
[Provided, that the aggregate principal amount of Money
Market Loans for which the above offers may be accepted shall not
exceed $____________.]**
__________
* As specified in the related Invitation.
** Principal amount bid for each Interest Period may not exceed
principal amount requested. Specify aggregate limitation if the
sum of the individual offers exceeds the amount the Bank is
willing to lend. Bids must be made for $5,000,000 or a larger
multiple of $1,000,000.
(notes continued on following page)
We understand and agree that the offer(s) set forth
above, subject to the satisfaction of the applicable conditions
set forth in the Credit Agreement (the "Credit Agreement") dated
as of June 28, 1996 among the Borrower, the banks listed on the
signature pages thereof, the Managing Agent, Co-Arrangers,
Co-Agents and Lead Managers referred to therein and Morgan
Guaranty Trust Company of New York, as Agent, irrevocably
obligates us to make the Money Market Loan(s) for which any
offer(s) are accepted, in whole or in part.
Very truly yours,
[NAME OF BANK]
Dated:_______________ By:__________________________
Authorized Officer
__________
*** Not less than one month or not less than 30 days, as
specified in the related Invitation. No more than five bids are
permitted for each Interest Period.
**** Margin over or under the London Interbank Offered Rate
determined for the applicable Interest Period. Specify
percentage (to the nearest 1/10,000 of 1%) and specify whether
"PLUS" or "MINUS".
***** Specify rate of interest per annum (to the nearest
1/10,000th of 1%).<PAGE>
EXHIBIT G
OPINION OF
COUNSEL FOR THE BORROWER
[Effective Date]
To the Banks and the Agent
Referred to Below
c/o Morgan Guaranty Trust Company
of New York, as Agent
60 Wall Street
New York, New York 10260
Dear Sirs:
I am [title of counsel] and have acted as counsel for
Sears Roebuck Acceptance Corp. (the "Borrower") in connection
with the Credit Agreement (the "Credit Agreement") dated as of
June 28, 1996 among the Borrower, the banks listed on the
signature pages thereof, the Managing Agent, Co-Arrangers,
Co-Agents and Lead Managers referred to therein and Morgan
Guaranty Trust Company of New York, as Agent. This opinion is
rendered to you at the request of the Borrower pursuant to
Section 3.01(c) of the Credit Agreement. Terms defined in the
Credit Agreement are used herein as therein defined.
I have examined originals or copies, certified or
otherwise identified to my satisfaction, of such documents,
corporate records, certificates of public officials and other
instruments and have conducted such other investigations of fact
and law as I have deemed necessary or advisable for purposes of
this opinion. I have obtained and relied upon, to the extent I
deem appropriate, certificates of officers of the Borrower and of
public officials as to factual matters. I call to your attention
the fact that in rendering my opinion, I am expressing my views
only as to the internal laws of the State of New York, in which I
am admitted to practice law, the Federal laws of the United
States and the General Corporation Law of the State of Delaware.
Upon the basis of the foregoing, I am of the opinion
that:
1. The Borrower has been duly incorporated and is
validly existing as a corporation in good standing under the laws
of the State of Delaware with full corporate power to conduct its
business as presently conducted.
2. The Borrower has full corporate power to enter into
the Credit Agreement and to issue the Notes and to comply with
all of the provisions of the Credit Agreement and the Notes, and
all necessary corporate proceedings of the Borrower have been
duly taken to authorize the execution, delivery and performance
of the Credit Agreement and the issuance of the Notes by the
Borrower.
3. The issuance by the Borrower of the Notes and
compliance by the Borrower with all of the provisions of the
Credit Agreement will not conflict with or result in a breach
which would constitute a material default under, or result in the
creation or imposition of any Lien, charge or encumbrance upon
any of the property or assets of the Borrower, material to the
Borrower, pursuant to the terms of, any material indenture, loan
agreement, or other agreement or instrument for borrowed money to
which the Borrower is a party or by which the Borrower may be
bound or to which any of the property or assets of the Borrower,
material to the Borrower, is subject, nor will any such action
conflict with or result in a breach which would constitute a
material default under, or result in the creation or imposition
of any Lien, charge or encumbrance upon any of the property or
assets of Sears, material to Sears and its subsidiaries, taken as
a whole, pursuant to the terms of, any indenture, loan agreement
or other agreement or instrument for borrowed money relating to a
principal amount of outstanding indebtedness not less than
$100,000,000 to which Sears is a party or by which Sears may be
bound or to which any of the property or assets of Sears,
material to Sears and its subsidiaries, taken as a whole, is
subject, nor will such action result in any material violation of
the provisions of the Certificate of Incorporation or the By-Laws
of the Borrower or, to the best of my knowledge, any statute or
any order, rule or regulation applicable to the Borrower of any
court or any Federal, state or other regulatory authority or
other governmental body having jurisdiction over the Borrower,
and, to the best of my knowledge, no consent, approval,
authorization or other order of, or filing with, any court or any
such regulatory authority or other governmental body is required
for the issuance by the Borrower of the Notes and the compliance
by the Borrower with all of the provisions of the Credit
Agreement and the Notes; provided that I express no opinion with
respect to any securities or blue sky laws of political
subdivisions of the United States or any laws or treaties of any
country (or political subdivision thereof) other than the United
States.
4. The Credit Agreement constitutes a valid and
binding agreement of the Borrower and the Notes constitute valid
and binding obligations of the Borrower, each enforceable in
accordance with their terms except as the foregoing may be
limited by: (a) the effect of bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereafter
in effect relating to or affecting the rights or remedies of
creditors generally; (b) the effect of general principles of
equity, whether enforcement is considered in a proceeding in
equity or at law, and the discretion of the court before which
any proceeding therefor may be brought; and (c) the
unenforceability under certain circumstances under law or court
decisions of provisions providing for the indemnification of or
contribution to a party with respect to a liability where such
indemnification or contribution is contrary to public policy.
5. I do not know of any pending legal or governmental
proceeding (i) required to be described in the Borrower's 1995
Form 10-K or in the Quarterly Reports on Form 10-Q of the
Borrower filed with the Commission pursuant to the Exchange Act
subsequent thereto, which are not described as required or (ii)
which would be required to be described in a Quarterly Report on
Form 10-Q filed by the Borrower if such filing were made on the
date hereof.
6. The Borrower has no Subsidiaries.
In rendering my opinion, I have assumed that each party
to the Credit Agreement (other than the Borrower) has the
requisite corporate power and authority to execute and deliver
the Credit Agreement and to perform its obligations under the
Credit Agreement; that the Credit Agreement has been duly
authorized, executed and delivered by the parties thereto other
than the Borrower and constitutes their legally valid and binding
obligation, enforceable against them in accordance with its
terms; and that the signatures (other than those on behalf of the
Borrower) on all documents examined by me are genuine,
assumptions which I have not independently verified. I express
no opinion as to the compliance by the parties to the Credit
Agreement (other than the Borrower) with any state or Federal
laws or regulations applicable to the transactions contemplated
by the Credit Agreement because of the nature of their business.
This opinion is furnished by me as counsel for the
Borrower to you, and is solely for your benefit, and is not to be
otherwise used, circulated or relied upon without my express
written consent.
Very truly yours,
<PAGE>
EXHIBIT I
ASSIGNMENT AND ASSUMPTION AGREEMENT
AGREEMENT dated as of _________, 19__ among [ASSIGNOR]
(the "Assignor"), [ASSIGNEE] (the "Assignee"), SEARS ROEBUCK
ACCEPTANCE CORP. (the "Borrower") and MORGAN GUARANTY TRUST
COMPANY OF NEW YORK, as Agent (the "Agent").
W I T N E S S E T H
WHEREAS, this Assignment and Assumption Agreement (the
"Agreement") relates to the Credit Agreement dated as of June 28,
1996 among the Borrower, the Assignor and the other Banks party
thereto, as Banks, the Managing Agent, Co-Arrangers, Co-Agents
and Lead Managers referred to therein and the Agent (the "Credit
Agreement");
WHEREAS, as provided under the Credit Agreement, the
Assignor has a Commitment to make Loans to the Borrower in an
aggregate principal amount at any time outstanding not to exceed
$__________;
WHEREAS, Committed Loans made to the Borrower by the
Assignor under the Credit Agreement in the aggregate principal
amount of $__________ are outstanding at the date hereof; and
WHEREAS, the Assignor proposes to assign to the
Assignee all of the rights of the Assignor under the Credit
Agreement in respect of a portion of its Commitment thereunder in
an amount equal to $__________ (the "Assigned Amount"), together
with a corresponding portion of its outstanding Committed Loans,
and the Assignee proposes to accept assignment of such rights and
assume the corresponding obligations from the Assignor on such
terms;
NOW, THEREFORE, in consideration of the foregoing and
the mutual agreements contained herein, the parties hereto agree
as follows:
SECTION 1. Definitions. All capitalized terms not
otherwise defined herein shall have the respective meanings set
forth in the Credit Agreement.
SECTION 2. Assignment. The Assignor hereby assigns
and sells to the Assignee all of the rights of the Assignor under
the Credit Agreement to the extent of the Assigned Amount, and
the Assignee hereby accepts such assignment from the Assignor and
assumes all of the obligations of the Assignor under the Credit
Agreement to the extent of the Assigned Amount, including the
purchase from the Assignor of the corresponding portion of the
principal amount of the Committed Loans made by the Assignor
outstanding at the date hereof. Upon the execution and delivery
hereof by the Assignor, the Assignee, the Borrower and the Agent
and the payment of the amounts specified in Section 3 required to
be paid on the date hereof (i) the Assignee shall, as of the date
hereof, succeed to the rights and be obligated to perform the
obligations of a Bank under the Credit Agreement with a
Commitment in an amount equal to the Assigned Amount, and (ii)
the Commitment of the Assignor shall, as of the date hereof, be
reduced by a like amount and the Assignor released from its
obligations under the Credit Agreement to the extent such
obligations have been assumed by the Assignee. The assignment
provided for herein shall be without recourse to the Assignor.
SECTION 3. Payments. As consideration for the
assignment and sale contemplated in Section 2 hereof, the
Assignee shall pay to the Assignor on the date hereof in Federal
funds an amount equal to $_________. It is understood that any
commitment fees and facility fees accrued to the date hereof are
for the account of the Assignor and such fees accruing from and
including the date hereof are for the account of the Assignee.
Each of the Assignor and the Assignee hereby agrees that if it
receives any amount under the Credit Agreement which is for the
account of the other party hereto, it shall receive the same for
the account of such other party to the extent of such other
party's interest therein and shall promptly pay the same to such
other party.
SECTION 4. Taxes. [The Assignee agrees (to the extent
it is permitted to do so under the laws and any applicable double
taxation treaties of the United States, the jurisdiction of such
Assignee's incorporation, and the jurisdictions in which such
Assignee's Domestic Lending Office and Euro-Dollar Lending Office
are located) to execute and deliver to the Agent for delivery to
the Borrower at the times and for the periods required pursuant
to Section 2.15 of the Credit Agreement, two accurate and
complete original signed copies of Form 1001 or Form 4224 (or any
successor form), appropriately completed and claiming complete
exemption from withholding and deduction of United States Taxes.
Attached hereto are two accurate and complete original signed
copies of Form 1001 with respect to each three-year calendar
period, any portion of which falls within the Revolving Credit
Period, dated as of the date hereof, or two accurate and complete
signed copies of Form 4224 with respect to each tax year of the
Assignee, any portion of which falls within the Revolving Credit
Period, dated as of the date hereof, as applicable. The Assignee
hereby represents and warrants to the Borrower and the Agent that
on the date hereof it is permitted to take the actions described
in this Section 4 under the laws and any applicable double
taxation treaties of the jurisdictions specified above.] [The
Assignee represents to the Borrower and the Agent that it is not
a Non-U.S. Bank.]
SECTION 5. Consent of the Borrower and the Agent.
This Agreement is conditioned upon the consent of the Borrower
and the Agent pursuant to Section 9.06(c) of the Credit
Agreement. The execution of this Agreement by the Borrower and
the Agent is evidence of this consent. Pursuant to Section
9.06(c) the Borrower agrees to execute and deliver a Note payable
to the order of the Assignee to evidence the assignment and
assumption provided for herein.
SECTION 6. Non-Reliance on Assignor. The Assignor
makes no representation or warranty in connection with, and shall
have no responsibility with respect to, the solvency, financial
condition, or statements of the Borrower, or the validity and
enforceability of the obligations of the Borrower in respect of
the Credit Agreement or any Note. The Assignee acknowledges that
it has, independently and without reliance on the Assignor, and
based on such documents and information as it has deemed
appropriate, made its own credit analysis and decision to enter
into this Agreement and will continue to be responsible for
making its own independent appraisal of the business, affairs and
financial condition of the Borrower.
SECTION 7. Governing Law. This Agreement shall be
governed by and construed in accordance with the laws of the
State of New York.
SECTION 8. Counterparts. This Agreement may be signed
in any number of counterparts, each of which shall be an
original, with the same effect as if the signatures thereto and
hereto were upon the same instrument.
<PAGE>
IN WITNESS WHEREOF, the parties have caused this
Agreement to be executed and delivered by their duly authorized
officers as of the date first above written.
[ASSIGNOR]
By_________________________
Title:
[ASSIGNEE]
By__________________________
Title:
SEARS ROEBUCK ACCEPTANCE CORP.
By__________________________
Title:
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK, as Agent
By__________________________
Title:<PAGE>
EXHIBIT J
TERMS OF SUBORDINATION
Section 1. Subordination to Superior Debt. The
Borrower and the lender of the SRAC Subordinated Debt (the
"Lender") agree for the benefit of the holders of the Superior
Debt that the SRAC Subordinated Debt shall, to the extent
hereinafter set forth, be subordinate and junior in right of
payment to all Superior Debt of the Borrower.
Section 2. Borrower Not to Make Payments hereunder in
Certain Circumstances. (a) Upon the maturity of all or any part
of the Superior Debt by lapse of time, acceleration or otherwise,
such Superior Debt shall first be paid in full, or such payment
shall be duly provided for in cash or in a manner satisfactory to
the holders of such Superior Debt, before any payment by the
Borrower or any Subsidiary is made on account of the principal of
or premium, if any, or interest on the notes issued hereunder
(the "SRAC Subordinated Notes") or to acquire any of the SRAC
Subordinated Notes or on account of any sinking fund for the SRAC
Subordinated Notes.
(b) In the event and during the continuation of any
Event of Default or any event or condition that, with the giving
of notice or the lapse of time or both, would become an Event of
Default (as such term is defined in the Credit Agreement,
provided that any such event or condition that would become an
Event of Default only upon both the giving of notice of such
event or condition by the Agent to the Borrower and the lapse of
time shall constitute such an event or condition for purposes of
this Agreement only if the Agent shall have given such notice to
the Borrower) with respect to any Superior Debt (each such Event
of Default or any such event or condition that, with the giving
of notice or the lapse of time, or both, being referred to in
this Agreement as a "Superior Debt Default"), (i) no payment
shall be made by the Borrower or any Subsidiary on or with
respect to the principal of, or, premium, if any, or interest on,
the SRAC Subordinated Notes or to acquire any SRAC Subordinated
Notes or on account of any sinking fund for the SRAC Subordinated
Notes unless and until such Superior Debt Default shall have been
remedied, nor shall any such payment be made if after giving
effect, as if paid, to such payment, any Superior Debt Default
would exist and (ii) no holder of SRAC Subordinated Notes shall
demand, accept or receive, any direct or indirect payment (in
cash or property or by setoff, exercise of contractual or
statutory rights or otherwise) of or on account of any SRAC
Subordinated Notes, notwithstanding the terms of the SRAC
Subordinated Notes or of any agreement or instrument which
governs the SRAC Subordinated Notes, and no such payment shall be
due.
(c) Unless and until all principal of, premium, if
any, and interest on, and all other obligations of the Borrower
under, the Superior Debt shall have been paid in full, no holder
of SRAC Subordinated Notes will commence or maintain any action,
suit or any other legal or equitable proceeding against the
Borrower, or join with any creditor in any such proceeding, under
any insolvency, bankruptcy, receivership, liquidation,
reorganization or other similar law, unless the holders of
Superior Debt shall also join in bringing such proceeding,
provided that this Section 2(c) shall not prohibit a holder of
SRAC Subordinated Notes from filing a proof of claim or otherwise
participating in any such proceeding not commenced by it.
Section 3. SRAC Subordinated Notes Subordinated to
Prior Payment of all Superior Debt on Dissolution, Liquidation or
Reorganization of Borrower. In the event of any insolvency or
bankruptcy proceedings, and any receivership, liquidation,
reorganization or other similar proceedings in connection
therewith, relative to the Borrower or to its creditors, in their
capacity as creditors of the Borrower, or to substantially all of
its property, and in the event of any proceedings for voluntary
liquidation, dissolution or other winding up of the Borrower,
whether or not involving insolvency or bankruptcy, then:
(a) the holders of all Superior Debt shall first be
entitled to receive payment in full of the principal thereof,
premium, if any, interest and all other amounts payable thereon
(accruing before and after the commencement of the proceedings)
before the holders of the SRAC Subordinated Notes are entitled to
receive any payment on account of the principal of, premium, if
any, or interest on the SRAC Subordinated Notes; and
(b) all SRAC Subordinated Notes shall forthwith
(notwithstanding the terms of Section 2) become due and payable
and any payment or distribution of assets of the Borrower of any
kind or character, whether in cash, property or securities to
which the holders of the SRAC Subordinated Notes would be
entitled, but for the provisions of these Terms of Subordination,
shall be paid or distributed by the liquidating trustee or agent
or other person making such payment or distribution, whether a
trustee in bankruptcy, a receiver or liquidating trustee or other
trustee or agent, directly to the Agent or any other
representative on behalf of the holders of Superior Debt, to the
extent necessary to make payment in full of all principal,
premium, if any, interest and all other amounts payable on all
Superior Debt remaining unpaid, after giving effect to any
concurrent payment or distribution to the holders of the Superior
Debt.
Section 4. Rights of Holders of Superior Debt;
Subrogation. (a) Should any payment or distribution or security
or the proceeds of any thereof be collected or received by any
holder of SRAC Subordinated Notes in respect of the SRAC
Subordinated Notes, and such collection or receipt is prohibited
hereunder prior to the payment in full of the Superior Debt, such
holder will forthwith deliver the same to the Agent for the equal
and ratable benefit of the holders of the Superior Debt in
precisely the form received (except for the endorsement or the
assignment of or by such holder where necessary) for application
to payment of all Superior Debt in full, after giving effect to
any concurrent payment or distribution to the holders of Superior
Debt and, until so delivered, the same shall be held in trust by
such holder as the property of the holders of the Superior Debt.
(b) All payments and distributions received by the
Agent in respect of the SRAC Subordinated Notes, to the extent
received in or converted into cash, may be applied by the Agent
first to the payment of any and all reasonable out-of-pocket
expenses (including attorney's fees and legal expenses) paid or
incurred by the Agent or such representative in enforcing the
provisions hereof or in endeavoring to collect or realize upon
the SRAC Subordinated Notes or any security therefor, and any
balance thereof shall, solely as between any holder of the SRAC
Subordinated Notes, on the one hand, and the holders of the
Superior Debt, on the other hand, be applied by the Agent in such
order of application as the Agent may from time to time select,
toward the payment of the Superior Debt remaining unpaid.
(c) No holder of SRAC Subordinated Notes shall be
subrogated to the rights of the holders of the Superior Debt to
receive payments or distributions of assets of the Borrower until
all amounts payable with respect to the Superior Debt shall be
paid in full; and, for the purposes of such subrogation, no
payments or distributions to the holders of the Superior Debt of
any cash, property or securities to which any holder of SRAC
Subordinated Notes would be entitled except for these provisions
shall, as between the Borrower, its creditors other than the
holders of the Superior Debt, and such holders of SRAC
Subordinated Notes, be deemed to be a payment by the Borrower to
or on account of the Superior Debt. The provisions of this
Agreement are and are intended solely for the purpose of defining
the relative rights of holders of SRAC Subordinated Notes, on the
one hand, and the holders of the Superior Debt, on the other
hand.
(d) Subject to the payment in full of all Superior
Debt, the holders of the SRAC Subordinated Notes shall be
subrogated (equally and ratably with the holders of all
subordinated indebtedness of the Borrower which, by its terms, is
not superior in right of payment to the SRAC Subordinated Notes,
and ranks on a parity with the SRAC Subordinated Notes) to the
rights of the holders of Superior Debt to receive payments or
distributions of cash, property or securities of the Borrower
applicable to the Superior Debt until all amounts owing on the
SRAC Subordinated Notes shall be paid in full. For purposes of
such subrogation, no payments or distributions to the holders of
the SRAC Subordinated Notes of cash, property, securities or
other assets by virtue of the subrogation herein provided which
otherwise would have been made to the holders of the Superior
Debt shall, as between the Borrower, its creditors other than the
holders of Superior Debt and the holders of the SRAC Subordinated
Notes, be deemed to be a payment to or on account of the SRAC
Subordinated Notes. The holders of SRAC Subordinated Notes agree
that, in the event that all or any part of any payment made on
account of the Superior Debt is recovered from the holders of
Superior Debt as a preference, fraudulent transfer or similar
payment under any bankruptcy, insolvency or similar law, any
payment or distribution received by the holders of SRAC
Subordinated Notes on account of the SRAC Subordinated Notes at
any time after the date of the payment so recovered, whether
pursuant to the right of subrogation provided for in this Section
4(d) or otherwise, shall be deemed to have been received by such
holders of SRAC Subordinated Notes in trust as the property of
the holders of the Superior Debt and such holders shall forthwith
deliver the same to the Agent for the equal and ratable benefit
of the holders of the Superior Debt for application to payment of
all Superior Debt in full.
Section 5. Renewals, Extensions and Increases of
Superior Debt. Each holder of SRAC Subordinated Notes by his
acceptance thereof thereby waives any and all notice of renewal,
extension, accrual or increase in the amount of any of the
Superior Debt, present or future, and agrees and consents that
without notice to or assent by any holder or holders of the SRAC
Subordinated Notes:
(i) the obligation and liabilities of the Borrower or
any other party or parties for or upon the Superior Debt (or any
promissory note, security document or guaranty evidencing or
securing the same) may, from time to time, in whole or in part,
be renewed, extended, increased, modified, amended, accelerated,
compromised, supplemented, terminated, sold, exchanged, waived or
released;
(ii) the Agent or any other representative acting on
behalf of the holders of the Superior Debt and the holders of the
Superior Debt may exercise or refrain from exercising any right,
remedy or power granted by or in connection with any agreements
relating to the Superior Debt; and
(iii) any balance or balances of funds with any
holders of the Superior Debt at any time standing to the credit
of the Borrower may, from time to time, in whole or in part, be
surrendered or released;
all as the Agent or any other representative or representatives
acting on behalf of the holders of the Superior Debt and the
holders of the Superior Debt may deem advisable and all without
impairing, abridging, diminishing, releasing or affecting the
subordination of the SRAC Subordinated Notes to the Superior Debt
provided for herein.
Section 6. Obligation of Borrower Unconditional.
Nothing contained in these Terms of Subordination or in the SRAC
Subordinated Notes is intended to or shall impair, as between the
Borrower, its creditors other than the holders of the Superior
Debt, and the holders of the SRAC Subordinated Notes, the
obligation of the Borrower, which is absolute and unconditional,
to pay to the holders of the SRAC Subordinated Notes the
principal of, premium, if any, and interest on the SRAC
Subordinated Notes, as and when the same shall become due and
payable (except as provided in Section 2), by lapse of time,
acceleration or otherwise, in accordance with their terms, or is
intended to or shall affect the relative rights of the holders of
the SRAC Subordinated Notes and other creditors of the Borrower
other than the holders of the Superior Debt, nor shall anything
herein or therein prevent the Trustee or the holder of any SRAC
Subordinated Notes (i) from taking all appropriate actions to
preserve its rights under the SRAC Subordinated Notes not
inconsistent with the rights of the holders of the Superior Debt
under these Terms of Subordination, or (ii) from exercising all
remedies otherwise permitted by applicable law upon default under
the SRAC Subordinated Notes, subject to the rights, if any, of
the holders of the Superior Debt under Section 2 of these Terms
of Subordination and in respect of cash, property or securities
of the Borrower otherwise payable or delivered to such holders of
SRAC Subordinated Notes upon the exercise of any such remedy.
Section 7. Miscellaneous. Each holder of SRAC
Subordinated Notes by its acceptance thereof thereby acknowledges
and agrees that the holders of the Superior Debt have relied upon
and will continue to rely upon the subordination provided for
herein in entering into the agreements relating to Superior Debt
and in extending credit to the Borrower pursuant thereto.
(b) No present or future holder of Superior Debt shall
be prejudiced in his right to enforce the subordination contained
herein in accordance with the terms hereof by any act or failure
to act on the part of the Borrower or any holder of the SRAC
Subordinated Notes. The subordination provisions contained
herein are for the benefit of the holders of the Superior Debt
from time to time and, so long as Superior Debt is outstanding
under any agreement, may not be rescinded, cancelled or modified
in any way without the prior written consent thereto of all
holders of Superior Debt.
(c) The subordination provisions hereof shall be
binding upon any holder of the SRAC Subordinated Notes and upon
the heirs, legal representatives, successors and assigns of any
holder of the SRAC Subordinated Notes; and, to the extent that
any holder of the SRAC Subordinated Notes is either a partnership
or a corporation, all references herein to any holder of the SRAC
Subordinated Notes shall be deemed to include any successor or
successors, whether immediate or remote, to such partnership or
corporation.
(d) These Terms of Subordination shall be construed in
accordance with and governed by the laws of the State of New
York.<PAGE>
EXHIBIT K
[FORM OF EXTENSION AGREEMENT]
Sears Roebuck Acceptance Corp.
3711 Kennett Pike
Greenville, Delaware 19807
Attn: Keith E. Trost
Morgan Guaranty Trust Company
of New York, as Agent
60 Wall Street
New York, NY 10260
Re: Credit Agreement dated as of June 28, 1996 (as amended,
the "Credit Agreement") among Sears Roebuck Acceptance Corp., the
banks listed therein, the Managing Agent referred to therein, the
Co-Arrangers, Co-Agents and Lead Managers referred to therein and
Morgan Guaranty Trust Company of New York, as Agent
Dear Sir or Madam:
The undersigned hereby agrees to extend, effective as
of June 28, ____, the Termination Date under the Credit Agreement
referred to above until [date to which the Termination Date for
each such Bank is extended]. Terms defined in the Credit
Agreement are used herein as therein defined.
This Extension Agreement shall be construed in
accordance with and governed by the law of the State of New York.
[NAME OF BANK]
By____________________________
Title:
[NAME OF BANK]
By____________________________
Title:
Agreed and accepted:
SEARS ROEBUCK ACCEPTANCE CORP.
By___________________
Title:
<PAGE>
