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) April 28, 1997
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 April 28, 1997, 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.
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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: April 28, 1997 By: /S/ Keith E. Trost
KEITH E. TROST
President
-3-
<PAGE>
EXHIBITS
4(a). $5,000,000,000 Amended and Restated Credit Agreement
dated as of April 28, 1997 among Sears Roebuck
Acceptance Corp., the banks parties thereto, 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.
4(b). Fixed Charge Coverage and Ownership Agreement dated
February 20, 1997, between Sears, Roebuck and Co. and
Sears Roebuck Acceptance Corp.
E-1
Exhitit 4(b) SEARS, ROEBUCK AND CO.
3333 BEVERLY ROAD
HOFFMAN ESTATES, IL 60179
February 20, 1997
Sears Roebuck Acceptance Corp.
3711 Kennett Pike
Greenville, Delaware 19807
Ladies and Gentlemen:
Sears Roebuck Acceptance Corp. ("SRAC") proposes to issue
and sell $300 million of its debt securities (the "Notes") in an
offering pursuant to Regulation S under the Securities Act of
1933, as amended. Subject to the provisions contained in the
forms of the Notes, SRAC will be required to maintain a Fixed
Charge Coverage Ratio (as defined in the Notes) for any fiscal
quarter of not less than 1.10 and SRAC has agreed to cause Sears,
Roebuck and Co. ("Sears") to continue to own and hold all legal
title to and beneficial interest in all of the outstanding voting
stock of SRAC.
This is to confirm our agreement ("Fixed Charge Coverage
and Ownership Agreement") that Seas will (a) pay SRAC such
amounts which, together with any other earnings available to SRAC
therefor, are sufficient for SRAC to maintain a Fixed Charge
Coverage Ratio for any fiscal quarter of not less than 1.10 as
long as SRAC is required by the provisions of any outstanding
Notes to maintain such Fixed Charge Coverage Ratio and (b)
continue to own and to hold all legal title to and beneficial
interest in all of the outstanding voting stock of SRAC as long
as SRAC is required by the provisions of any outstanding Notes to
cause Sears to own and hold such title and interest.
This agreement is made for the benefit of the holders of
outstanding Notes referenced herein (the "Holders"). SRAC will
cause Sears to observe and perform in all material respects all
covenants or agreements of Sears contained in this agreement.
Sears agrees that any Holder may bring a direct and immediate
action against Sears to enforce Sears obligations hereunder.
If the foregoing satisfactorily sets forth the terms and
conditions of our agreement, please indicate your acceptance
thereof by the signature of a duly authorized officer in the
space provided below and on the duplicate original of this letter
which is enclosed.
Very truly yours,
SEARS, ROEBUCK AND CO.
By: /S/ ALAN J. LACY
Alan J. Lacy
Executive Vice President and
Chief Financial Officer
<PAGE>
SEARS ROEBUCK ACCEPTANCE CORP.
By: /S/ KEITH E. TROST
Keith E. Trost
President
EXECUTION COPY
$5,000,000,000
AMENDED AND RESTATED
CREDIT AGREEMENT
dated as of April 28, 1997
among
Sears Roebuck Acceptance Corp.,
The Banks Listed Herein,
Morgan Guaranty Trust Company of New York,
as Agent,
The Chase Manhattan Bank,
as Senior Managing Agent,
The Managing Agents Referred to Herein
and
The Co-Arrangers, Co-Agents and Lead Managers
Referred to Herein
TABLE OF CONTENTS
Page
ARTICLE 1
Definitions
Section 1.01. Definitions 1
Section 1.02. Accounting Terms and Determinations . 16
ARTICLE 2
The Credits
Section 2.01. Commitments to Lend 16
Section 2.02. Notice of Committed Borrowing . . . . 19
Section 2.03. Money Market Borrowings . . . . . . . 19
Section 2.04. Notice to Banks; Funding of Loans . . 23
Section 2.05. Notes . . . . . . . . . . . . . . . . 24
Section 2.06. Mandatory Termination of Commitments and
Repayment of Loans. . . . . . . . . . . . . . 25
Section 2.07. Interest Rates. . . . . . . . . . . . 25
Section 2.08. Facility Fee. . . . . . . . . . . . . 29
Section 2.09. Optional Termination or Reduction of
Commitments . . . . . . . . . . . . . . . . . 29
Section 2.10. Method of Electing Interest Rates . . 29
Section 2.11. Optional Prepayments. . . . . . . . . 31
Section 2.12. General Provisions as to Payments . . 31
Section 2.13. Funding Losses. . . . . . . . . . . . 32
Section 2.14. Computation of Interest and Fees. . . 33
Section 2.15. Taxes . . . . . . . . . . . . . . . . 33
Section 2.16. Regulation D Compensation . . . . . . 36
Section 2.17. Optional Increase in Commitments. . . 36
ARTICLE 3
Conditions
Section 3.01. Effectiveness of Amendment 38
Section 3.02. Borrowings. . . . . . . . . . . . . . 39
ARTICLE 4
Representations and Warranties
Section 4.01. Corporate Existence and Power 40
Section 4.02. Corporate and Governmental Authorization; No
Contravention . . . . . . . . . . . . . . . . 40
Section 4.03. Binding Effect. . . . . . . . . . . . 41
Section 4.04. Financial Information . . . . . . . . 41
Section 4.05. Litigation. . . . . . . . . . . . . . 42
Section 4.06. Compliance with ERISA . . . . . . . . 42
Section 4.07. Environmental Matters . . . . . . . . 42
Section 4.08. Taxes . . . . . . . . . . . . . . . . 42
Section 4.09. Subsidiaries. . . . . . . . . . . . . 42
Section 4.10. Full Disclosure . . . . . . . . . . . 43
ARTICLE 5
Covenants
Section 5.01. Information 43
Section 5.02. Maintenance of Property; Insurance. . 45
Section 5.03. Conduct of Business and Maintenance of
Existence . . . . . . . . . . . . . . . . . . 46
Section 5.04. Compliance with Laws. . . . . . . . . 46
Section 5.05. Letter Agreement. . . . . . . . . . . 46
Section 5.06. Negative Pledge . . . . . . . . . . . 46
Section 5.07. Consolidations, Mergers and Sales
of Assets 48
Section 5.08. Use of Proceeds . . . . . . . . . . . 48
Section 5.09. Subsidiary Debt . . . . . . . . . . . 48
Section 5.10. Fixed Charge Coverage . . . . . . . . 49
Section 5.11. Debt. . . . . . . . . . . . . . . . . 49
ARTICLE 6
Defaults
Section 6.01. Events of Default 49
Section 6.02. Notice of Default . . . . . . . . . . 51
ARTICLE 7
The Agent
Section 7.01. Appointment and Authorization 52
Section 7.02. Agent and Affiliates. . . . . . . . . 52
Section 7.03. Action by Agent . . . . . . . . . . . 52
Section 7.04. Consultation with Experts . . . . . . 52
Section 7.05. Liability of Agent. . . . . . . . . . 52
Section 7.06. Indemnification . . . . . . . . . . . 53
Section 7.07. Credit Decision . . . . . . . . . . . 53
Section 7.08. Successor Agent . . . . . . . . . . . 53
Section 7.09. Agent's Fee . . . . . . . . . . . . . 53
Section 7.10. Senior Managing Agent, Managing Agents,
Co-Arrangers, Co-Agents and Lead Managers. . . . 53
ARTICLE 8
Change in Circumstances
Section 8.01. Basis for Determining Interest Rate Inadequate
or Unfair . . . 54
Section 8.02. Illegality. . . . . . . . . . . . . . 54
Section 8.03. Increased Cost and Reduced Return . . 55
Section 8.04. Base Rate Loans Substituted for Affected Fixed
Rate Loans. . . . . . . . . . . . . . . . . . 57
Section 8.05. Substitution of Bank. . . . . . . . . 58
ARTICLE 9
Miscellaneous
Section 9.01. Notices . 58
Section 9.02. No Waivers. . . . . . . . . . . . . . 59
Section 9.03. Expenses; Documentary Taxes; Indemnification59
Section 9.04. Sharing of Set-offs . . . . . . . . . 59
Section 9.05. Amendments and Waivers. . . . . . . . 60
Section 9.06. Successors and Assigns. . . . . . . . 60
Section 9.07. Collateral. . . . . . . . . . . . . . 62
Section 9.08. Governing Law; Submission to Jurisdiction62
Section 9.09. Counterparts; Integration . . . . . . 63
Section 9.10. Restrictions on Transfers . . . . . . 63
Section 9.11. Confidentiality . . . . . . . . . . . 63
Section 9.12. WAIVER OF JURY TRIAL. . . . . . . . . 64
Initial Pricing Schedule
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 and/or Repricing Agreement
CREDIT AGREEMENT
AMENDED AND RESTATED CREDIT AGREEMENT dated as of April 28, 1997 among
SEARS ROEBUCK ACCEPTANCE CORP., the BANKS listed on the signature pages
hereof, the SENIOR MANAGING AGENT, MANAGING AGENTS, CO-ARRANGERS, CO-AGENTS
and LEAD MANAGERS referred to herein and MORGAN GUARANTY TRUST COMPANY OF
NEW YORK, as Agent.
Certain of the parties hereto have entered into a Credit Agreement dated
as of June 28, 1996 and wish, upon satisfaction of the conditions set forth
in Section 3.01 hereof and effective upon the Amendment Effective Date
referred to below, to amend and restate such Credit Agreement as set forth
herein (such amendment and restatement, the "Amendment"; and such Credit
Agreement, as in effect from time to time prior to the Amendment Effective
Date, as amended and restated by the Amendment as of the Amendment
Effective Date and as further amended from time to time thereafter, this
"Agreement"). The parties hereto accordingly agree as follows:
ARTICLE 1
Definitions
Section 1.01. Definitions. The following terms, as used herein, have the
following meanings:
"Absolute Rate Auction" means a solicitation of Money Market Quotes setting
forth Money Market Absolute Rates pursuant to Section 2.03.
"Account" means an open-end charge plan for specified Persons, maintained
by Sears or an Affiliate of Sears.
"Adjusted CD Rate" has the meaning set forth in Section 2.07(b).
"Administrative Questionnaire" means, with respect to each Bank, an
administrative questionnaire in the form prepared by the Agent and
submitted to the Agent (with a copy to the Borrower) duly completed by such
Bank.
"Affiliate" of a given Person means any other Person that directly, or
indirectly through one or more intermediaries, controls, or is controlled
by, or is under common control with, such given Person.
"Agent" means Morgan Guaranty Trust Company of New York in its capacity as
agent for the Banks hereunder, and its successors in such capacity.
"Agreement" has the meaning set forth in the second introductory paragraph
hereof.
"Amendment" has the meaning set forth in the second introductory paragraph
hereof.
"Amendment Effective Date" means the date the Amendment becomes effective
in accordance with Section 3.01.
"Applicable Lending Office" means, with respect to any Bank, (i) in the
case of its Domestic Loans, its Domestic Lending Office, (ii) in the case
of its Euro-Dollar Loans, its Euro-Dollar Lending Office and (iii) in the
case of its Money Market Loans, its Money Market Lending Office.
"Assessment Rate" has the meaning set forth in Section 2.07(b).
"Assignee" has the meaning set forth in Section 9.06(c).
"Bank" means each bank listed on the signature pages hereof, each Assignee
which becomes a Bank pursuant to Section 9.06(c), and their respective
successors.
"Base Rate" means, for any day, a rate per annum equal to the higher of (i)
the Prime Rate for such day and (ii) the sum of 1/2 of 1% plus the Federal
Funds Rate for such day.
"Base Rate Loan" means (i) a Committed Loan which bears interest at the
Base Rate pursuant to the applicable Notice of Committed Borrowing or
Notice of Interest Rate Election or the provisions of Article VIII or (ii)
an overdue amount which was a Base Rate Loan immediately before it became
overdue.
"Benefit Arrangement" means at any time an employee benefit plan within the
meaning of Section 3(3) of ERISA which is not a Plan or a Multiemployer
Plan and which is maintained or otherwise contributed to by any member of
the ERISA Group.
"Borrower" means Sears Roebuck Acceptance Corp., a Delaware corporation,
and its successors.
"Borrower's 1996 Form 10-K" means the Borrower's annual report on Form 10-K
for 1996, 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" means, for any Bank and at any time, (i) if such Bank has not
theretofore become a party to any Extension and/or Repricing Agreement, a
rate per annum determined in accordance with the Initial Pricing Schedule
and (ii) if such Bank has theretofore become a party to one or more
Extension and/or Repricing Agreements, a rate per annum determined in
accordance with the Pricing Schedule attached to the most recent Extension
and/or Repricing Agreement to which such Bank is a party.
"CD Reference Banks" means Morgan Guaranty Trust Company of New York, The
Chase Manhattan 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
December 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.
"Designated Default" means (x) any Event of Default, (y) any event or
condition which, with the giving of notice or lapse of time or both, would
become an Event of Default (other than any event or condition referred to
in clause (e) or (f) of Section 6.01) or (z) any event or condition that
entitles the holder of any Material SRAC Debt or Material Company Material
Debt, or any Person acting on any such holder's behalf, to accelerate the
maturity thereof (but in the case of any event or condition referred to in
clause (e) of Section 6.01, only after the expiration of the three Domestic
Business Day period referred to in such clause (e)).
"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" means, for any Bank and at any time, (i) if such Bank
has not theretofore become a party to any Extension and/or Repricing
Agreement, a rate per annum determined in accordance with the Initial
Pricing Schedule and (ii) if such Bank has theretofore become a party to
one or more Extension and/or Repricing Agreements, a rate per annum
determined in accordance with the Pricing Schedule attached to the most
recent Extension and/or Repricing Agreement to which such Bank is a party.
"Euro-Dollar Reference Banks" means the principal London offices of Morgan
Guaranty Trust Company of New York, The Chase Manhattan Bank and Union Bank
of Switzerland.
"Euro-Dollar Reserve Percentage" means for any day that percentage
(expressed as a decimal) which is in effect on such day, as prescribed by
the Board of Governors of the Federal Reserve System (or any successor) for
determining the maximum reserve requirement for a member bank of the
Federal Reserve System in New York City with deposits exceeding five
billion dollars in respect of "Eurocurrency liabilities" (or in respect of
any other category of liabilities which includes deposits by reference to
which the interest rate on Euro-Dollar Loans is determined or any category
of extensions of credit or other assets which includes loans by a
non-United States office of any Bank to United States residents).
"Event of Default" has the meaning set forth in Section 6.01.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Extending Bank" has the meaning set forth in Section 2.01(b).
"Extension and/or Repricing Agreement" has the meaning set forth in Section
2.01(b).
"Extension and/or Repricing Request" has the meaning set forth in Section
2.01(b).
"Extension/Repricing Effective Date" has the meaning set forth in Section
2.01(b).
"Facility Fee Rate" means, for any Bank and at any time, (i) if such Bank
has not theretofore become a party to any Extension and/or Repricing
Agreement, a rate per annum determined in accordance with the Initial
Pricing Schedule and (ii) if such Bank has theretofore become a party to
one or more Extension and/or Repricing Agreements, a rate per annum
determined in accordance with the Pricing Schedule attached to the most
recent Extension and/or Repricing Agreement to which such Bank is a party.
"Federal Funds Rate" means, for any day, the rate per annum (rounded
upward, if necessary, to the nearest 1/100th of 1%) equal to the weighted
average of the rates on overnight Federal funds transactions with members
of the Federal Reserve System arranged by Federal funds brokers on such
day, as published by the Federal Reserve Bank of New York on the Domestic
Business Day next succeeding such day, provided that (i) if such day is not
a Domestic Business Day, the Federal Funds Rate for such day shall be such
rate on such transactions on the next preceding Domestic Business Day as so
published on the next succeeding Domestic Business Day, and (ii) if no such
rate is so published on such next succeeding Domestic Business Day, the
Federal Funds Rate for such day shall be the average rate quoted to Morgan
Guaranty Trust Company of New York on such day on such transactions as
determined by the Agent.
"Fixed Charge Coverage Ratio" means, for any period, the Borrower's ratio
of earnings to fixed charges, determined for such period in accordance with
Item 503(d) of Regulation S-K promulgated by the Commission, as in effect
on the date hereof.
"Fixed Rate Loans" means CD Loans or Euro-Dollar Loans or Money Market
Loans (excluding Money Market LIBOR Loans bearing interest at the Base Rate
pursuant to Section 8.01) 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.
"Initial Pricing Schedule" means the Schedule attached to this Agreement
identified as such.
"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 latest Termination Date of any Bank, as in
effect on the first day of such Interest Period, shall end on such
latest 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 latest Termination Date of any Bank, as in
effect on the first day of such Interest Period, shall end on such
latest 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.
"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 each Bank listed on the signature pages hereof as a
Managing Agent, each in its capacity as managing agent hereunder.
"Margin Stock" has the meaning set forth in Regulation U.
"Material Company" means any of the Borrower, any Subsidiary, Sears, any
Person of which Sears is a subsidiary or any Material Sears Subsidiary.
"Material Company Material Debt" means any Debt or Debts of any Material
Company other than the Borrower or any Subsidiary, arising in one or more
related or unrelated transactions, in an aggregate principal amount not
less than $100,000,000.
"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.
"Material SRAC Debt" means 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 Loans).
"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.
"New Termination Date" has the meaning set forth in Section 2.01(b).
"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 (either immediately before giving effect to the
Amendment or after giving effect thereto), 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.
"Pricing Schedule" means the Initial Pricing Schedule or, with respect to
any Extension and/or Repricing Agreement, the Schedule attached thereto
identified as such.
"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.
"Relevant Pricing" has the meaning set forth in Section 2.01(b).
"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.
"Sears" means Sears, Roebuck and Co., a New York corporation, and its
successors.
"Sears Subsidiary" means any corporation or other entity of which
securities or other ownership interests having ordinary voting power to
elect a majority of the Board of Directors or other persons performing
similar functions are at the time directly or indirectly owned or
controlled by Sears or one or more other Sears Subsidiaries, or by Sears
and one or more other Sears Subsidiaries, provided that any such securities
or other ownership interests held in a fiduciary capacity for others, or as
portfolio investments, by Sears (to the extent it engages in a financial or
insurance business) or by any Sears Subsidiary engaged in the insurance
business or a financial business shall be disregarded for purposes of this
definition.
"Senior Managing Agent" means each Bank listed on the signature pages
hereof as a Senior Managing Agent, each in its capacity as senior managing
agent hereunder.
"SRAC Preferred Stock" means at any time one or more series of preferred
stock of the Borrower outstanding at such time; provided that (i) neither
the voluntary or involuntary liquidation preference nor the redemption
price of all such preferred stock outstanding at any time shall exceed
$150,000,000 and (ii) the terms of such preferred stock shall not grant
voting rights to the holders thereof to elect members of the board of
directors of the Borrower except the right to elect not more than the
lesser of two members or 25% of the members of such board upon the failure
of the Borrower to pay dividends or similar contingency.
"SRAC Subordinated Debt" means any indebtedness for borrowed money of the
Borrower to any of (w) Sears, (x) a Wholly-Owned Subsidiary of Sears, (y) a
corporation of which Sears is a Wholly-Owned Subsidiary or (z) a
Wholly-Owned Subsidiary of a corporation described in clause (y) above,
evidenced by notes or other evidences of indebtedness for borrowed money
which is made subordinate and junior in right of payment to the Notes and
such other indebtedness for borrowed money of the Borrower as may be
specified (whether expressly or by category) in the instruments evidencing
such indebtedness (the Notes and all other obligations of the Borrower
hereunder and such other indebtedness of the Borrower to which the SRAC
Subordinated Debt is subordinate and junior being herein called "Superior
Debt") by provisions no less favorable to the holders of the Superior Debt
than those set forth in Exhibit J.
"Subsidiary" means any corporation or other entity of which securities or
other ownership interests having ordinary voting power to elect a majority
of the board of directors or other persons performing similar functions are
at the time directly or indirectly owned by the Borrower.
"Termination Date" means, for any Bank, April 22, 2002 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 2
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 and Modification of
Pricing for Extending Banks.
(i) If no Default shall have occurred and be continuing at such
time, then not more than once during each calendar year, the Borrower may
request an extension of the Termination Date and/or modification of pricing
of the Commitment and Loans of each Bank by delivering to the Agent a
notice thereof (an "Extension and/or Repricing Request"), setting forth (x)
the proposed effective date of the provisions of such Extension and/or
Repricing Request (for any such request, the "Extension/Repricing Effective
Date"), which shall be a date not less than 40 days and not more than 90
days after the date of such notice, and in any event not later than the
latest Termination Date then in effect, (y) to the extent part of such
request, the proposed new Termination Date (for any such request, the "New
Termination Date"), which shall be not later than the fifth anniversary of
the proposed Extension/Repricing Effective Date (subject in any case to the
definition of Termination Date), and (z) to the extent part of such
request, the proposed new Euro-Dollar Margin, CD Margin and Facility Fee
Rate (any of the foregoing margins or rates included in any such request,
the "Relevant Pricing") for Banks accepting such Extension and/or Repricing
Request, whereupon the Agent shall promptly send a copy of such Extension
and/or Repricing Request to each of the Banks. Each Bank will use its best
efforts to respond to such Extension and/or Repricing Request, whether
affirmatively (by executing and delivering to the Agent an Extension and/or
Repricing Agreement substantially in the form of Exhibit K and effective as
of the relevant Extension/Repricing Effective Date (each, an "Extension
and/or Repricing Agreement")) or negatively, as it may elect in its
discretion, within 30 days after receipt of such Extension and/or Repricing
Request (or if later, 30 days prior to the proposed Extension/Repricing
Effective Date). Any Bank which declines to accept an Extension and/or
Repricing Request (including by its failure to execute and deliver to the
Agent an Extension and/or Repricing Agreement, which shall be deemed to be
a refusal to accept such Extension and/or Repricing Request) will, from and
after the date at which it so declines or refuses to accept such Extension
and/or Repricing Request until a date (if any) on which, in response to a
subsequent Extension and/or Repricing Request, such Bank executes an
Extension and/or Repricing Agreement, be deemed a "Non-Extending Bank", and
will continue to have the same Termination Date and Relevant Pricing as in
effect immediately prior to the sending of such Extension and/or Repricing
Request. 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 any
Extension and/or Repricing Request by the date for acceptance referred to
above, then the Borrower shall have the right to replace each Bank that
does not elect to become a party to a relevant Extension and/or Repricing
Agreement with a substitute bank or banks that will agree to accept such
Extension and/or Repricing Request (which may be one or more of the Banks)
and purchase the Note and assume the Commitment of such Non-Extending Bank
pursuant to Section 9.06(c). Any Bank which declines to accept an Extension
and/or Repricing Request 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
and/or Repricing Agreement with respect to its assumed Commitment and
purchased Loans not later than the relevant Extension/Repricing Effective
Date, and shall thereupon become an Extending Bank party hereto. Each Bank
that executes an Assignment and Assumption Agreement pursuant to this
clause (ii) shall be entitled to all interest, fees and other amounts
payable to such Bank for the period during which it was a Bank hereunder,
except to the extent that such Assignment and Assumption Agreement
expressly provides that payment of such interest and fees are for the
account of the relevant assignee.
(iii) Each Extension and/or Repricing Agreement delivered
pursuant to clause (i) or (ii) above shall be effective on the relevant
Extension/Repricing Effective Date, including with respect to the Relevant
Pricing (if any) revised thereby and including with respect to Committed
Loans of each Bank that is a party thereto outstanding on such
Extension/Repricing Effective Date. Subject to receipt by the Agent of an
Extension and/or Repricing 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 Relevant Pricing for each Extending
Bank shall be modified from and after the relevant Extension/Repricing
Effective Date. No Termination Date or Relevant Pricing shall be extended
or modified with respect to the Commitment and Loans of any Bank that is a
Non-Extending Bank with respect to a particular Extension and/or Repricing
Request, but shall continue to be the Termination Date and Relevant Pricing
theretofore in effect for such Non-Extending Bank.
(iv) At the request of the Borrower at the time of, or
reasonably promptly after, the Extension/Repricing Effective Date of any
Extension and/or Repricing Agreements, each Bank (including without
limitation each Non-Extending Bank) shall promptly execute an amendment and
restatement of this Agreement incorporating solely the new Termination Date
and Relevant Pricing contained in any Extension and/or Repricing Agreement
with respect to each Bank that is a party thereto (but not any other Bank)
(and incorporating any such matters with respect to any prior Extension
and/or Repricing Agreement that have not theretofore been the subject of an
amendment and restatement hereof), and including any designations of any
such Banks as co-agents, arrangers or other titles or capacities as the
Borrower may elect to award in its discretion in connection with such
amendment and restatement hereof.
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 of any Bank 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 Bank 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 of any Bank 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 for such Bank for
such day 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. 327.4(a) (or any successor provision) to the Federal
Deposit Insurance Corporation (or any successor) for such Corporation's (or
such successor's) insuring time deposits at offices of such institution in
the United States. The Adjusted CD Rate shall be adjusted automatically on
and as of the effective date of any change in the Assessment Rate.
(c) Each Euro-Dollar Loan of any Bank 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 Bank 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
of any Bank 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 for such Bank for such day plus
the London Interbank Offered Rate applicable to such Loan and (ii) the
Euro-Dollar Margin for such Bank for such day 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 facsimile) of each rate of interest
so determined, and its determination thereof shall be conclusive in the
absence of manifest error. The Agent will, at the request of the Borrower,
furnish such additional information concerning the calculation of the
interest rate on any Fixed Rate Loan as the Borrower may reasonably
request.
(g) Each Reference Bank agrees to use its best efforts to
furnish quotations to the Agent as contemplated hereby. If any Reference
Bank does not furnish a timely quotation, the Agent shall determine the
relevant interest rate on the basis of the quotation or quotations
furnished by the remaining Reference Bank or Banks or, if none of such
quotations is available on a timely basis, the provisions of Section 8.01
shall apply.
Section 2.08. Facility Fee. The Borrower shall pay to the Agent for
the account of each Bank a facility fee for each day at the Facility Fee
Rate for such Bank 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,
but excluding any payment pursuant to Section 2.06) 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 Amendment 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 reason (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 3
Conditions
Section 3.01. Effectiveness of Amendment. The Amendment shall become
effective on the date that each of the following conditions shall have been
satisfied (or waived in accordance with Section 9.05):
(a) receipt by the Agent of counterparts hereof signed by each of
the parties hereto (or, in the case of any party as to which an executed
counterpart shall not have been received, receipt by the Agent in form
satisfactory to it of telegraphic, telex or other written confirmation
from such party of execution of a counterpart hereof by such party);
(b) in the case of any Bank that shall not have received a Note
prior to the Amendment Effective Date, receipt by the Agent for the
account of such Bank of a duly executed Note dated the Amendment
Effective Date complying with the provisions of Section 2.05;
(c) receipt by the Agent of an opinion of counsel for the Borrower,
who may be Latham & Watkins or Senior Counsel for Sears, substantially
in the form of Exhibit G hereto;
(d) receipt by the Agent of an opinion of Davis Polk & Wardwell,
special counsel for the Agent, substantially in the form of Exhibit H
hereto;
(e) receipt by the Agent, for its own account and for the account
of the Banks parties thereto, of all accrued but unpaid fees under
Section 2.08 of the Agreement as in effect immediately prior to the
Amendment Effective Date (including without limitation all facility fees
payable pursuant to Section 2.08 as so in effect), for the period up
to but excluding the Amendment Effective Date;
(f) receipt by the Agent of the consent to this Amendment of
each Person that was a Bank immediately prior to the Amendment Effective
Date but who is not a Bank party to the Agreement immediately after the
effectiveness of the Amendment (and whose Commitment shall thereupon be
reduced to $0 upon the Amendment Effective Date) which consent may
include being a signatory hereto; 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 the Amendment, the Agreement and the
Notes, and any other matters relevant hereto, all in form and substance
satisfactory to the Agent;
provided that the Amendment shall not become effective or be binding on any
party hereto unless all of the foregoing conditions are satisfied not later
than May 15, 1997. The Agent shall promptly notify the Borrower and the
Banks of the Amendment Effective Date, and such notice shall be conclusive
and binding on all parties hereto.
Section 3.02. Borrowings. The obligation of any Bank to make a Loan
on the occasion of any Borrowing is subject to the satisfaction of the
following conditions:
(a) receipt by the Agent of a Notice of Borrowing as required by
Section 2.02 or 2.03, as the case may be;
(b) the fact that, immediately after such Borrowing, the aggregate
outstanding principal amount of the Loans will not exceed the aggregate
amount of the Commitments;
(c) the fact that, immediately before and after such Borrowing,
there shall not have occurred and be continuing any Designated Default;
(d) the fact that the representations and warranties of the
Borrower contained in this Agreement (other than in Section 4.04(b)
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
December 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 4
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, 1996 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 1996 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) Since December 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 is 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 5
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.
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;
(i) any Lien on Margin Stock, but only if the value of all such
Margin Stock of the Borrower and its Subsidiaries exceeds 25% of the
value of the total assets subject to this Section and then only to the
extent of such excess; and
(j) 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 Designated 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, other than in the ordinary course of business of
Sears or any Sears Subsidiary and then only in compliance with Regulation U.
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 6
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) (i) the Borrower or any Subsidiary shall fail to make any
payment in respect of any Material SRAC Debt within three Domestic Business
Days after the date when due (or, if longer, within any applicable grace
period provided in the relevant instrument or agreement with respect
thereto); or (ii) any Material Company other than the Borrower or any
Subsidiary shall fail to make any payment in respect of any Material
Company Material Debt within three Domestic Business Days after the date
when due (or, if longer, within any applicable grace period provided in the
relevant instrument or agreement with respect thereto);
(f) any event or condition shall occur which results in the
acceleration of the maturity of (x) any Material SRAC Debt or (y) any
Material Company Material Debt, in any case by holders thereof exercising
their rights so to accelerate;
(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 7
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. Senior Managing Agent, Managing Agents, Co-Arrangers,
Co-Agents and Lead Managers. None of the Senior Managing Agent, any
Managing Agent, any Co-Arranger, Co-Agent, Lead Manager or Arranger shall
have any responsibility or obligation under this Agreement in its capacity
as Managing Agent, Senior Managing Agent, Co-Arranger, Co-Agent, Lead
Manager or Arranger, as the case may be.
ARTICLE 8
Change in Circumstances
Section 8.01. Basis for Determining Interest Rate Inadequate or
Unfair. If on or prior to the first day of any Interest Period for any
Fixed Rate Borrowing:
(a) the Agent is advised by the Reference Banks that deposits in
dollars (in the applicable amounts) are not being offered to the Reference
Banks in the relevant market for such Interest Period, or
(b) in the case of a Committed Borrowing, Banks having 50% or more
of the aggregate amount of the Commitments advise the Agent that the
Adjusted CD Rate or the London Interbank Offered Rate, as the case may be,
as determined by the Agent will not adequately and fairly reflect the cost
to such Banks of funding their CD Loans or Euro-Dollar Loans, as the case
may be, for such Interest Period, the Agent shall forthwith give notice
thereof to the Borrower and the Banks, whereupon until the Agent notifies
the Borrower that the circumstances giving rise to such suspension no
longer exist, (i) the obligations of the Banks to make CD Loans or
Euro-Dollar Loans, as the case may be, or to convert outstanding Loans into
CD Loans or Euro-Dollar Loans, as the case may be, shall be suspended and
(ii) each outstanding CD Loan or Euro-Dollar Loan, as the case may be,
shall be converted into a Base Rate Loan on the last day of the then
current Interest Period applicable thereto. Unless the Borrower notifies
the Agent at least one Domestic Business Day before the date of any Fixed
Rate Borrowing for which a Notice of Borrowing has previously been given
that it elects not to borrow on such date, (i) if such Fixed Rate Borrowing
is a Committed Borrowing, such Borrowing shall instead be made as a Base
Rate Borrowing and (ii) if such Fixed Rate Borrowing is a Money Market
LIBOR Borrowing, the Money Market LIBOR Loans comprising such Borrowing
shall bear interest for each day from and including the first day to but
excluding the last day of the Interest Period applicable thereto at the
Base Rate for such day.
Section 8.02. Illegality. If, on or after the date of this
Agreement, the adoption of any applicable law, rule or regulation, or any
change therein, or any change in the interpretation or administration
thereof by any governmental authority, central bank or comparable agency
charged with the interpretation or administration thereof, or compliance by
any Bank (or its Euro-Dollar Lending Office) with any request or directive
(whether or not having the force of law) of any such authority, central
bank or comparable agency shall make it unlawful or impossible for any Bank
(or its Euro-Dollar Lending Office) to make, maintain or fund its
Euro-Dollar Loans and such Bank shall so notify the Agent, the Agent shall
forthwith give notice thereof to the other Banks and the Borrower,
whereupon until such Bank notifies the Borrower and the Agent that the
circumstances giving rise to such suspension no longer exist, the
obligation of such Bank to make Euro-Dollar Loans, or to convert
outstanding Loans into Euro-Dollar Loans, shall be suspended. Before giving
any notice to the Agent pursuant to this Section, such Bank shall, if
practicable, with the consent of the Borrower (which consent shall not
unreasonably be withheld), designate a different Euro-Dollar Lending Office
if such designation will avoid the need for giving such notice and will
not, in the judgment of such Bank, be otherwise disadvantageous to such
Bank. If such notice is given, (i) the Borrower shall be entitled upon its
request to a reasonable explanation of the factors underlying such notice
and (ii) each Euro-Dollar Loan of such Bank then outstanding shall be
converted to a Base Rate Loan either (a) on the last day of the then
current Interest Period applicable to such Euro-Dollar Loan if such Bank
may lawfully continue to maintain and fund such Loan to such day or (b)
immediately if such Bank shall determine that it may not lawfully continue
to maintain and fund such Loan to such day.
Section 8.03. Increased Cost and Reduced Return. (a) In the event that
(x) after the Amendment Effective Date, in the case of any Committed Loan
or any obligation to make Committed Loans or (y) on or after the date of
the related Money Market Quote, in the case of any Money Market Loan, the
adoption of any applicable law, rule or regulation, or any change therein
or in the interpretation or application thereof by any governmental
authority, central bank or comparable agency charged with the
interpretation or administration thereof or compliance by any Bank with any
request or directive after the Amendment Effective Date (whether or not
having the force of law) of any such authority, central bank or comparable
agency:
(i) does or shall subject such Bank to any additional tax of any
kind whatsoever with respect to this Agreement, any Note or any Fixed
Rate Loan made by it, or change the basis or the applicable rate of
taxation of payments to such Bank of principal, interest or any other
amount payable hereunder (except for (A) the imposition of or change in
any tax on or measured by the overall net income of such Bank, (B) the
imposition of or change in any United States Tax described in Section
2.15(a) in respect of which the Borrower is not obligated to pay an
additional amount by reason of the proviso to Section 2.15(a) or (C) the
imposition of or change in any income tax imposed by any governmental or
other taxing authority of or in any jurisdiction other than the United
States);
(ii) does or shall impose, modify or hold applicable any reserve,
special deposit, insurance assessment, compulsory loan or similar
requirement against assets held by, or deposits or other liabilities in
or for the account of, advances or loans by, or other credit extended
by, or any other acquisition of funds by, any office of such Bank which
are not otherwise included in the determination of the rate of interest
on Fixed Rate Loans hereunder; or
(iii) does or shall impose on such Bank any other condition;
and the result of any of the foregoing is to increase the cost to such Bank
of making or maintaining Fixed Rate Loans or to reduce any amount
receivable hereunder or under any Note with respect thereto, then, in any
such case, the Borrower shall promptly pay such Bank, upon its demand, any
additional amounts necessary to compensate such Bank for such increased
cost or reduced amount receivable which such Bank deems to be material as
determined by such Bank with respect to its Fixed Rate Loans.
(b) If any Bank shall have determined that, after the Amendment
Effective Date, the adoption of any applicable law, rule or regulation
regarding capital adequacy, or any change therein, or any change in the
interpretation or administration thereof by any governmental authority,
central bank or comparable agency charged with the interpretation or
administration thereof, or any request or directive regarding capital
adequacy (whether or not having the force of law) of any such authority,
central bank or comparable agency, has or would have the effect of reducing
the rate of return on capital of such Bank (or its Parent) as a consequence
of such Bank's obligations hereunder to a level below that which such Bank
(or its Parent) could have achieved but for such adoption, change, request
or directive (taking into consideration its policies with respect to
capital adequacy) by an amount deemed by such Bank to be material, then
from time to time, within 15 days after demand by such Bank (with a copy to
the Agent), the Borrower shall pay to such Bank such additional amount or
amounts as will compensate such Bank (or its Parent) for such reduction.
(c) Each Bank will promptly notify the Borrower and the Agent of
any event of which it has knowledge, occurring after the Amendment
Effective Date, 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 on 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 Loans.
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 9
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 then 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 then 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 then due 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 Section 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 (x) 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 and (y) for a revision of Relevant Pricing with
respect to such Bank's Loans and Commitment pursuant to an Extension and/or
Repricing Agreement executed by such Bank in accordance with Section
2.01(b)), (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 pursuant
to an Extension and/or Repricing Agreement executed by such Bank 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 collateral in the extension or maintenance of the credit
provided for in this Agreement.
Section 9.08. Governing Law; Submission to Jurisdiction. This
Agreement and each Note shall be governed by and construed in accordance
with the laws of the State of New York. The Borrower hereby submits to the
nonexclusive jurisdiction of the United States District Court for the
Southern District of New York and of any New York State court sitting in
New York City for purposes of all legal proceedings arising out of or
relating to this Agreement or the transactions contemplated hereby. The
Borrower irrevocably waives, to the fullest extent permitted by law, any
objection which it may now or hereafter have to the laying of the venue of
any such proceeding brought in such a court and any claim that any such
proceeding brought in such a court has been brought in an inconvenient
forum.
Section 9.09. Counterparts; Integration. This Agreement may be
signed in any number of counterparts, each of which shall be an original,
with the same effect as if the signatures thereto and hereto were upon the
same instrument. This Agreement (and, solely with respect to information
delivered by the Borrower to the Banks prior to the date hereof, the
confidentiality letter executed by each of the Banks listed on the
signature pages hereto) constitutes the entire agreement and understanding
among the parties hereto and supersedes any and all prior agreements and
understandings, oral or written, relating to the subject matter hereof.
Section 9.10. Restrictions on Transfers. Each Bank agrees that it
will not, except by operation of law, transfer or propose to transfer all
or any portion of its rights and obligations under this Agreement and the
Note held by it, or any participation therein to any Person except (i)
banks (including without limitation Federal Reserve Banks) or trust
companies empowered by law to accept deposits or (ii) their corporate
parents or their Affiliates which are in the business of lending money and
which are either wholly owned by them or are Wholly-Owned Subsidiaries of a
common corporate parent, unless such Bank shall have first delivered to the
Borrower an opinion of counsel as to the legality of the transfer
(including compliance of such transfer with applicable federal securities
laws) and such other matters as the Borrower may reasonably request, which
opinion shall be satisfactory in form and substance to the Borrower. Each
Bank agrees that it will not transfer all or any portion of any Note held
by it, or any participation therein, in violation of applicable securities
laws.
Section 9.11. Confidentiality. The Agent and each Bank represent
that they will maintain the confidentiality of any written or oral
information provided under this Agreement by or on behalf of the Borrower
that has been identified by its source as confidential (hereinafter
collectively called "Confidential Information"), subject to the Agent's and
each Bank's (a) obligation to disclose any such Confidential Information
pursuant to a request or order under applicable laws and regulations or
pursuant to a subpoena or other legal process, (b) right to disclose any
such Confidential Information to its bank examiners, Affiliates, auditors,
counsel and other professional advisors and to other Banks, (c) right to
disclose any such Confidential Information in connection with any
litigation or dispute involving the Banks and the Borrower or any of its
Subsidiaries and Affiliates and (d) right to provide such information to
Participants (as defined in subsection 9.06(b)), prospective Participants
to which sales of participating interests are permitted pursuant to
subsection 9.06(b) and prospective Assignees to which assignments of
interests are permitted pursuant to subsection 9.06(c), but only if (i) the
Borrower has theretofore given its written consent to the participation to
such Participant or prospective Participant or the assignment to such
prospective Assignee, (ii) such Participant, prospective Participant or
prospective Assignee agrees in writing to maintain the confidentiality of
such information on terms substantially similar to those of this Section as
if it were a "Bank" party hereto and (iii) the Borrower receives copies of
such written agreement prior to the release of such information.
Notwithstanding the foregoing, any such information supplied to a Bank,
Participant, prospective Participant or prospective Assignee under this
Agreement shall cease to be Confidential Information if it is or becomes
known to such Person by other than unauthorized disclosure, or if it
becomes a matter of public knowledge.
Section 9.12. WAIVER OF JURY TRIAL. EACH OF THE BORROWER, THE AGENT
AND THE BANKS HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY
IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT
OR THE TRANSACTIONS CONTEMPLATED HEREBY.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed by their respective authorized officers as of the day and
year first above written.
SEARS ROEBUCK ACCEPTANCE CORP.
By:
Title:
3711 Kennett Pike
Greenville, Delaware 19807
Telefax: (302) 888-3156
Bank Agent and Arranger
$215,000,000 MORGAN GUARANTY TRUST COMPANY
OF NEW YORK
By:
Title:
Bank and Senior Managing Agent
$190,000,000 THE CHASE MANHATTAN BANK
By:
Title:
Banks and Managing Agents
$170,000,000 BANK OF AMERICA ILLINOIS
By:
Title:
$170,000,000 THE BANK OF NEW YORK
By:
Title:
$170,000,000 CANADIAN IMPERIAL BANK OF
COMMERCE
By:
Title:
$170,000,000 CITIBANK N.A.
By:
Title:
$170,000,000 CREDIT SUISSE FIRST BOSTON
By:
Title:
By:
Title:
$170,000,000 THE FIRST NATIONAL BANK OF
CHICAGO
By:
Title:
$170,000,000 NATIONSBANK, N.A.
By:
Title:
By:
Title:
$170,000,000 THE SUMITOMO BANK, LIMITED
By:
Title:
$170,000,000 UNION BANK OF SWITZERLAND,
NEW YORK BRANCH
By:
Title:
By:
Title:
$170,000,000 WACHOVIA BANK OF GEORGIA, N.A.
By:
Title:
$170,000,000 WELLS FARGO BANK N.A.
By:
Title:
By:
Title:
$105,000,000 BANK OF TOKYO-MITSUBISHI, LTD.
By:
Title:
$65,000,000 UNION BANK OF CALIFORNIA, N.A.
By:
Title:
Banks and Co-Arrangers
$140,000,000 BANK OF MONTREAL
By:
Title:
$140,000,000 ROYAL BANK OF CANADA
By:
Title:
Banks and Co-Agents
$115,000,000 BANKBOSTON, N.A.
By:
Title:
$115,000,000 CAISSE NATIONALE DE CREDIT
AGRICOLE
By:
Title:
$115,000,000 THE BANK OF NOVA SCOTIA
By:
Title:
$115,000,000 THE DAI-ICHI KANGYO BANK, LTD.,
CHICAGO BRANCH
By:
Title:
$115,000,000 FIRST UNION NATIONAL BANK OF
NORTH CAROLINA
By:
Title:
$115,000,000 FLEET NATIONAL BANK
By:
Title:
$115,000,000 MELLON BANK, N.A.
By:
Title:
$115,000,000 THE SAKURA BANK, LIMITED
By:
Title:
Banks and Lead Managers
$80,000,000 BANCA COMMERCIALE ITALIANA,
CHICAGO BRANCH
By:
Title:
By:
Title:
$80,000,000 BARCLAYS BANK PLC
By:
Title:
$80,000,000 CORESTATES BANK, N.A.
By:
Title:
$80,000,000 FIRST HAWAIIAN BANK
By:
Title:
$80,000,000 THE NORTHERN TRUST COMPANY
By:
Title:
$80,000,000 PNC BANK, NATIONAL ASSOCIATION
By:
Title:
Other Banks
$75,000,000 THE FUJI BANK, LIMITED
By:
Title:
$75,000,000 NORWEST BANK MINNESOTA, N.A.
By:
Title:
$65,000,000 COMERICA BANK
By:
Title:
$60,000,000 BANCA DI ROMA
By:
Title:
By:
Title:
$60,000,000 BANCA NAZIONALE DEL LAVORO SPA
NEW YORK BRANCH
By:
Title:
By:
Title:
$60,000,000 BANK OF HAWAII
By:
Title:
$60,000,000 BARNETT BANK, N.A.
By:
Title:
$60,000,000 THE INDUSTRIAL BANK OF JAPAN,
LIMITED
By:
Title:
$60,000,000 KEYBANK NATIONAL ASSOCIATION
By:
Title:
$60,000,000 THE LONG-TERM CREDIT BANK OF
JAPAN, LTD. CHICAGO BRANCH
By:
Title:
$60,000,000 THE MITSUI TRUST & BANKING
COMPANY, LIMITED
By:
Title:
$60,000,000 NATIONAL CITY BANK OF COLUMBUS
By:
Title:
60,000,000 STATE STREET BANK & TRUST
COMPANY
By:
Title:
$60,000,000 THE SUMITOMO TRUST & BANKING
CO., LTD.
By:
Title:
Total Commitments
$5,000,000,000
INITIAL PRICING SCHEDULE
Each of "CD Margin", "Euro-Dollar Margin" and "Facility Fee Rate"
means, for any day, the percentage set forth below in the row opposite such
term
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 0.255% 0.260% 0.2775% 0.3025% 0.400%
Euro-Dollar
Margin 0.130% 0.135% 0.1525% 0.1775% 0.2750%
Facility Fee
Rate 0.060% 0.065% 0.0725% 0.0825% 0.125%
"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 A2 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 A- or higher by S&P or A3 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 Baa1 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.
"Moody's" means Moody's Investors Service, Inc.
"S&P" means Standard & Poor's Ratings Services.
"Sears Long-Term Securities" means senior unsecured long-term debt
securities of Sears, without any direct third-party credit enhancement with
respect thereto.
"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.
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 Amended and Restated
Credit Agreement dated as of April 28, 1997 among the Borrower, the banks
parties thereto, 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 (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 and
the provisions for mandatory and optional prepayment hereof and the
acceleration of the maturity hereof.
SEARS ROEBUCK ACCEPTANCE CORP.
By:
Title:
Note (cont'd)
LOANS AND PAYMENTS OF PRINCIPAL
Date Amount of Loan Amount of Notation
Principal Repaid Made By
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
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 Amended and Restated Credit Agreement dated
as of April 28, 1997 among Sears Roebuck Acceptance Corp. (the "Borrower"),
the Banks parties thereto, 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 (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 _______________, ____.
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:
EXHIBIT C
NOTICE OF INTEREST RATE ELECTION
Morgan Guaranty Trust Company
of New York, as Agent
60 Wall Street
New York, New York 10260
Attention: _______________
This notice shall constitute a "Notice of Interest Rate Election"
pursuant to Section 2.10 of the Amended and Restated Credit Agreement dated
as of April 28, 1997 among Sears Roebuck Acceptance Corp. (the "Borrower"),
the Banks parties thereto, 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 (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 __________, ____ (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: __________________, ____
EXHIBIT D
Form of Money Market Quote Request
[Date]
To: Morgan Guaranty Trust Company
of New York (the "Agent")
From: Sears Roebuck Acceptance Corp. (the "Borrower")
Re: Amended and Restated Credit Agreement (the "Credit
Agreement") dated as of April 28, 1997 among the Borrower, the
Banks parties thereto, 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
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:
EXHIBIT E
Form of Invitation for Money Market Quotes
To: [Name of Bank]
Re: Invitation for Money Market Quotes to
Sears Roebuck Acceptance Corp. (the "Borrower")
Pursuant to Section 2.03 of the Amended and Restated Credit
Agreement (the "Credit Agreement") dated as of April 28, 1997 among the
Borrower, the Banks parties thereto, 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, 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, as Agent
By:
Authorized Officer
EXHIBIT F
Form of Money Market Quote
To: Morgan Guaranty Trust Company
of New York (the "Agent")
Re: Money Market Quote to Sears Roebuck
Acceptance Corp. (the "Borrower")
In response to your invitation on behalf of the Borrower
dated _____________, ____, we hereby make the following Money Market
Quote on the following terms:
1. Quoting Bank: ________________________________
2. Person to contact at Quoting Bank:
______________________________
3. Date of Borrowing: ____________________*
4. We hereby offer to make Money Market Loan(s) in the following
principal amounts, for the following Interest Periods and at the following
rates:
Principal Interest Money Market
Amount** Period*** [Margin****] [Absolute Rate*****]
$
$
[Provided, that the aggregate principal amount of Money Market Loans
for
which the above offers may be accepted shall not exceed
$____________.]**
* As specified in the related Invitation.
** Principal amount bid for each Interest Period may not exceed
principal amount requested. Specify aggregate limitation if the sum of the
individual offers exceeds the amount the Bank is willing to lend. Bids must
be made for $5,000,000 or a larger multiple of $1,000,000.
(notes continued on following page)
We understand and agree that the offer(s) set forth above,
subject to the satisfaction of the applicable conditions set forth in the
Amended and Restated Credit Agreement (the "Credit Agreement") dated as of
April 28, 1997 among the Borrower, the Banks parties thereto, 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, irrevocably obligates us to make the Money Market Loan(s) for which
any offer(s) are accepted, in whole or in part.
Very truly yours,
[NAME OF BANK]
Dated:_______________ By:__________________________
Authorized Officer
*** Not less than one month or not less than 30 days, as specified in the
related Invitation. No more than five bids are permitted for each Interest
Period.
**** Margin over or under the London Interbank Offered Rate determined for
the applicable Interest Period. Specify percentage (to the nearest 1/10,000
of 1%) and specify whether "PLUS" or "MINUS".
***** Specify rate of interest per annum (to the nearest 1/10,000th of 1%).
EXHIBIT G
OPINION OF
COUNSEL FOR THE BORROWER
[Amendment Effective Date]
To the Banks and the Agent
Referred to Below
c/o Morgan Guaranty Trust Company
of New York, as Agent
60 Wall Street
New York, New York 10260
Dear Sirs:
I am [title of counsel] and have acted as counsel for Sears Roebuck
Acceptance Corp. (the "Borrower") in connection with the Amended and
Restated Credit Agreement (the "Credit Agreement") dated as of April 28,
1997 among the Borrower, the Banks parties thereto, 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. 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 execution and delivery by the Borrower of the Credit
Agreement and the issuance by the Borrower of the Notes and compliance by
the Borrower with all of the provisions of the Credit Agreement and the
Notes 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 execution and delivery by the
Borrower of the Credit Agreement and 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 has been duly executed and delivered by
the Borrower and constitutes a valid and binding agreement of the Borrower
and the Notes have been duly executed and delivered by the Borrower and
constitute valid and binding obligations of the Borrower, each enforceable
in accordance with its 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 1996 Form 10-K or in the
Quarterly Reports on Form 10-Q of the Borrower filed with the Commission
pursuant to the Exchange Act subsequent thereto, which are not described as
required or (ii) which would be required to be described in a Quarterly
Report on Form 10-Q filed by the Borrower if such filing were made on the
date hereof.
6. The Borrower has no Subsidiaries.
In rendering my opinion, I have assumed that each party to the Credit
Agreement (other than the Borrower) has the requisite corporate power and
authority to execute and deliver the Credit Agreement and to perform its
obligations under the Credit Agreement; that the Credit Agreement has been
duly authorized, executed and delivered by the parties thereto other than
the Borrower and constitutes their legally valid and binding obligation,
enforceable against them in accordance with its terms; and that the
signatures (other than those on behalf of the Borrower) on all documents
examined by me are genuine, assumptions which I have not independently
verified. I express no opinion as to the compliance by the parties to the
Credit Agreement (other than the Borrower) with any state or Federal laws
or regulations applicable to the transactions contemplated by the Credit
Agreement because of the nature of their business.
This opinion is furnished by me as counsel for the Borrower to
you, and is solely for your benefit, and is not to be otherwise used,
circulated or relied upon without my express written consent.
Very truly yours,
EXHIBIT H
OPINION OF
SPECIAL COUNSEL FOR THE AGENT
April 28, 1997
To the Banks and the Agent
Referred to Below
c/o Morgan Guaranty Trust Company
of New York, as Agent
60 Wall Street
New York, New York 10260
Dear Sirs:
We have participated in the preparation of the Amended and Restated
Credit Agreement (the "Credit Agreement") dated as of April 28, 1997 among
Sears Roebuck Acceptance Corp., a Delaware corporation (the "Borrower"),
the Banks parties thereto (the "Banks"), 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 (the
"Agent"), and have acted as special counsel for the Agent for the purpose
of rendering this opinion pursuant to Section 3.01(d) of the Credit
Agreement. Terms defined in the Credit Agreement are used herein as therein
defined.
We have examined originals or copies, certified or otherwise
identified to our satisfaction, of such documents, corporate records,
certificates of public officials and other instruments and have conducted
such other investigations of fact and law as we have deemed necessary or
advisable for purposes of this opinion.
Upon the basis of the foregoing, we are of the opinion that:
1. The execution, delivery and performance by the Borrower of the
Credit Agreement and the Notes are within the Borrower's corporate powers
and have been duly authorized by all necessary corporate action.
2. The Credit Agreement constitutes a valid and binding agreement of
the Borrower and the Notes constitute valid and binding obligations of the
Borrower, in each case enforceable in accordance with its terms, except as
the same may be limited by bankruptcy, insolvency or similar laws affecting
creditors' rights generally and by general principles of equity.
We are members of the Bar of the State of New York and the foregoing
opinion is limited to the laws of the State of New York, the federal laws
of the United States of America and the General Corporation Law of the
State of Delaware. In giving the foregoing opinion, we express no opinion
as to the effect (if any) of any law of any jurisdiction (except the State
of New York) in which any Bank is located which limits the rate of interest
that such Bank may charge or collect.
This opinion is rendered solely to you in connection with the above
matter. This opinion may not be relied upon by you for any other purpose or
relied upon by any other person without our prior written consent.
Very truly yours,
EXHIBIT I
ASSIGNMENT AND ASSUMPTION AGREEMENT
AGREEMENT dated as of _________, ____ among [ASSIGNOR] (the
"Assignor"), [ASSIGNEE] (the "Assignee"), SEARS ROEBUCK ACCEPTANCE CORP.
(the "Borrower") and MORGAN GUARANTY TRUST COMPANY OF NEW YORK, as Agent
(the "Agent").
W I T N E S S E T H
WHEREAS, this Assignment and Assumption Agreement (the "Agreement")
relates to the Amended and Restated Credit Agreement dated as of April 28,
1997 among the Borrower, the Assignor and the other Banks parties thereto,
as Banks, the Senior Managing Agent, Managing Agents, 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 facility fees accrued to the date hereof are for the
account of the Assignor and such fees accruing with respect to the Assigned
Amount 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.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed and delivered by their duly authorized officers as of the date
first above written.
[ASSIGNOR]
By:
Title:
[ASSIGNEE]
By:
Title:
SEARS ROEBUCK ACCEPTANCE
CORP.
By:
Title:
MORGAN GUARANTY TRUST
COMPANY OF NEW YORK, as
Agent
By:
Title:
EXHIBIT J
TERMS OF SUBORDINATION
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.
EXHIBIT K
[FORM OF EXTENSION AND/OR REPRICING 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: Amended and Restated Credit Agreement dated as of April 28, 1997 (as
amended, the "Credit Agreement") among Sears Roebuck Acceptance Corp.,
the Banks parties thereto, 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
Dear Sir or Madam:
The undersigned Bank (the "Bank") hereby agrees as follows:
[(i) to extend, effective as of ________ __, ____ (the
"Extension/Repricing Effective Date"), the Termination Date for the
Bank under the Credit Agreement referred to above until [date to
which the Termination Date for the Bank is extended]; and]
[(ii) to revise the [Euro-Dollar Margin, CD Margin and Facility
Fee Rate] applicable to the [Loans and Commitment] of the Bank,
effective upon the Extension/Repricing Effective Date, to be
determined in accordance with the attached Pricing Schedule.]
Terms defined in the Credit Agreement are used herein as therein defined.
This Extension and/or Repricing Agreement shall be construed in
accordance with and governed by the law of the State of New York.
[NAME OF BANK]
By
Title:
Agreed and accepted:
SEARS ROEBUCK ACCEPTANCE CORP.
By
Title:
PRICING SCHEDULE
Each of ["CD Margin"], ["Euro-Dollar Margin"] and ["Facility Fee
Rate"] means: [to be provided in each case].
