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):
February 23, 1998
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 February 23, 1998, Registrant executed a Distribution
Agreement with Goldman, Sachs & Co., Merrill Lynch, Pierce, Fenner & Smith
Incorporated, Morgan Stanley & Co. Incorporated and Salomon Brothers Inc,
relating to $2,000,000,000 aggregate initial offering price of Medium-Term
Notes Series V, to be sold from time to time pursuant to the Distribution
Agreement.
On February 26, 1998, Registrant executed a Pricing
Agreement with Merrill Lynch, Pierce, Fenner & Smith Incorporated, as
Representative of the several underwriters named therein, relating to
$250,000,000 aggregate principal amount of Registrant's 7% Notes due
March 1, 2038 pursuant to an Underwriting Agreement dated September 18,
1997, with Merrill Lynch, Pierce, Fenner & Smith Incorporated, relating to
debt securities.
Item 7. Financial Statements, Pro Forma Financial
Information and Exhibits.
Exhibit No.
1(a) Distribution Agreement, dated August 22, 1996, among Registrant,
Sears, Roebuck and Co., Goldman, Sachs & Co., Merrill Lynch,
Pierce Fenner & Smith Incorporated, Morgan Stanley & Co.
Incorporated and Salomon Brothers Inc
1(b) Pricing Agreement, dated February 25, 1998, among Registrant,
Sears and Merrill Lynch, Pierce, Fenner & Smith Incorporated, as
the Underwriters named therein.
1(c) Underwriting Agreement, dated September 18, 1997, among
Registrant, Sears and Merrill Lynch, Pierce, Fenner & Smith
Incorporated herein by reference to Registrant's Current
Report on Form 8-K dated September 18, 1997 (File No. 1-4040).
4(a) Form of fixed rate Medium-Term Note Series V.
4(b) Form of floating rate Medium-Term Note Series V.
4(c) Form of 7% Note.
5 Opinion of Nancy K. Bellis dated Februry 23, 1998,
relating to the validity of $2,000,000,000 aggregate
initial offering price of Medium-Term Notes Series V and
$200,000,000 aggregate principal amount of7% Notes due
March 1, 2038.
23 Consent of Nancy K. Bellis (included in Exhibit 5).
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be
signed on its behalf by the undersigned thereunto duly
authorized.
SEARS ROEBUCK ACCEPTANCE CORP.
Date: March 5, 1998 By: /S/George F. Slook
George F. Slook
Vice President, Finance and
Assistant Secretary
<PAGE>
EXHIBIT INDEX
Exhibit No.
1(a) Distribution Agreement, dated August 22, 1996, among Registrant,
Sears, Roebuck and Co., Goldman, Sachs & Co., Merrill Lynch,
Pierce Fenner & Smith Incorporated, Morgan Stanley & Co.
Incorporated and Salomon Brothers Inc
1(b) Pricing Agreement, dated February 25, 1998, among Registrant,
Sears and Merrill Lynch, Pierce, Fenner & Smith Incorporated, as
the Underwriters named therein.
1(c) Underwriting Agreement, dated September 18, 1997, among
Registrant, Sears and Merrill Lynch, Pierce, Fenner & Smith
Incorporated herein by reference to Registrant's Current
Report on Form 8-K dated September 18, 1997 (File No. 1-4040).
4(a) Form of fixed rate Medium-Term Note Series V.
4(b) Form of floating rate Medium-Term Note Series V.
4(c) Form of 7% Note.
5 Opinion of Nancy K. Bellis dated Februry 23, 1998,
relating to the validity of $2,000,000,000 aggregate
initial offering price of Medium-Term Notes Series V and
$200,000,000 aggregate principal amount of7% Notes due
March 1, 2038.
23 Consent of Nancy K. Bellis (included in Exhibit 5).
Sears Roebuck Acceptance Corp.
$2,000,000,000 Medium-Term Notes Series V
DISTRIBUTION AGREEMENT
February 23, 1998
Sears Roebuck Acceptance Corp., a Delaware corporation (the
"Company"), proposes to issue and sell from time to time its medium-term debt
securities (the "Notes") in an aggregate initial offering price up to U.S.
$2,000,000,000 (or the equivalent in foreign currency or currency units), and
agrees with each person serving as an agent pursuant to this Agreement
(individually, an "Agent", and collectively, the "Agents") as set forth
herein. Subject to the terms and conditions stated herein, the Company
hereby (i) appoints each Agent as an agent of the Company for the purpose of
soliciting and receiving offers to purchase Notes from the Company and (ii)
agrees that whenever it determines to sell Notes directly to any Agent as
principal, it will enter into a separate agreement (each a "Terms
Agreement"), substantially in the form of Annex I hereto, relating to such
sale in accordance with Section 2(b) hereof (unless the Company and such
Agent shall otherwise agree).
The Notes will be issued under an indenture, dated as of May 15, 1995
(the "Indenture"), between the Company and The Chase Manhattan Bank, as
Trustee (the "Trustee"). The Notes shall have the currency denomination,
maturities, annual interest rates (whether fixed or floating), redemption
provisions and other terms set forth in the Prospectus referred to below as
it may be amended or supplemented from time to time. The Notes will be
issued, and the terms and rights thereof established, from time to time by
the Company in accordance with the Indenture and the Administrative Procedure
attached hereto as Annex II as it may be amended from time to time by written
agreement between the Agents and the Company (the "Procedure") and, if
applicable, will be specified in a related Terms Agreement.
1. Each of the Company and Sears, Roebuck and Co. ("Sears")
represents and warrants to, and agrees with, each Agent that:
(a) A registration statement on Form S-3 (Registration
No. 333-30879) in respect of U.S. $4,500,000,000 aggregate principal amount
(or the equivalent in foreign currency or currency units) of debt securities
of the Company, including the Notes, has been filed with the Securities and
Exchange Commission (the "Commission") in the form heretofore delivered to
such Agent, excluding exhibits (whether or not incorporated by reference) to
such registration statement but including all documents incorporated by
reference in the prospectus included therein, and such registration statement
in such form has been declared effective by the Commission and no stop order
suspending the effectiveness of such registration statement has been issued
and no proceeding for that purpose has been initiated or threatened by the
Commission (any preliminary prospectus included in such registration
statement being hereinafter called a "Preliminary Prospectus;" the various
parts of such registration statement, including all exhibits thereto but
excluding Form T-1, each as amended at the time such part became effective,
being hereinafter collectively called the "Registration Statement"; the
prospectus relating to the Notes, in the form in which it has most recently
been filed with the Commission on or prior to the date of this Agreement,
being hereinafter called the "Prospectus"; any reference herein to any
Preliminary Prospectus or the Prospectus shall be deemed to refer to and
include the documents incorporated by reference therein pursuant to the
applicable form under the Securities Act of 1933, as amended (the "Act") as
of the date of such Preliminary Prospectus or Prospectus, as the case may be;
any supplement to the Prospectus that sets forth only the terms of a
particular issue of Notes being hereinafter called a "Pricing Supplement;"
any reference to any amendment or supplement to any Preliminary Prospectus or
the Prospectus shall be deemed to refer to and include any documents filed
after the date of such Preliminary Prospectus or Prospectus, as the case may
be, under the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), and incorporated therein by reference; and any reference to the
Prospectus as amended or supplemented shall be deemed to refer to the
Prospectus as amended or supplemented with respect to Notes sold pursuant to
this Agreement, in the form in which it is filed with the Commission pursuant
to Rule 424(b) of Regulation C under the Act, including any documents
incorporated by reference therein as of the date of such filing);
(b) Except for statements in such documents which do not
constitute part of the Registration Statement or the Prospectus pursuant to
Rule 412 of Regulation C under the Act and after substituting therefor any
statements modifying or superseding such excluded statements (i) the
documents incorporated by reference in the Prospectus, when they became
effective or were filed with the Commission, as the case may be, conformed in
all material respects to the requirements of the Act or the Exchange Act, as
applicable, and the rules and regulations of the Commission thereunder, and
none of such documents, when they became effective or were so filed, as the
case may be, contained, in the case of documents which became effective under
the Act, an untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary to make the
statements therein not misleading, and, in the case of documents which were
filed under the Exchange Act with the Commission, an untrue statement of a
material fact or omitted to state a material fact necessary in order to make
the statements therein, in the light of the circumstances under which they
were made, not misleading, and (ii) any further documents so filed and
incorporated by reference in the Prospectus, when such documents become
effective or are filed with the Commission, as the case may be, will conform
in all material respects to the requirements of the Act or the Exchange Act,
as applicable, and the rules and regulations of the Commission thereunder and
will not contain, in the case of documents which become effective under the
Act, an untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading, and in the case of documents which are filed under the Exchange
Act with the Commission, an untrue statement of material fact or omit to
state a material fact necessary in order to make the statements therein, in
the light of the circumstances under which they were made, not misleading;
provided, however, that this representation and warranty shall not apply to
any statements or omissions made in reliance upon and in conformity with
information furnished in writing to the Company by any Agent expressly for
use in the Prospectus as amended or supplemented to relate to a particular
issuance of Notes; the Indenture has been duly qualified under, and conforms
in all material respects to the requirements of, the Trust Indenture Act of
1939, as amended (the "Trust Indenture Act"); and
(c) Except for statements in documents incorporated
therein by reference which do not constitute part of the Registration
Statement or the Prospectus pursuant to Rule 412 of Regulation C under the
Act and after substituting therefor any statements modifying or superseding
such excluded statements, the Registration Statement and the Prospectus
conformed, and any amendments or supplements thereto will, when they become
effective or are filed with the Commission, as the case may be, conform, in
all material respects to the requirements of the Act and the Trust Indenture
Act, and the rules and regulations of the Commission thereunder and do not
and will not, as of the applicable effective date in the case of the
Registration Statement and any amendment thereto and as of the applicable
filing date in the case of the Prospectus and any supplement thereto, contain
an untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading; provided, however, that this representation and warranty shall
not apply to any statements or omissions made in reliance upon and in
conformity with information furnished in writing to the Company by any Agent
expressly for use in the Prospectus as amended or supplemented.
2. The Company represents and warrants to, and agrees with, each
Agent that:
(a) Upon payment therefor as provided herein and in any
Terms Agreement, the Notes will have been duly and validly authorized, and
(assuming their due authentication by the Trustee) will have been duly and
validly issued and will be valid outstanding obligations of the Company in
accordance with their terms, except as the same may be limited by insolvency,
bankruptcy, reorganization, or other laws relating to or affecting the
enforcement of creditors' rights or by general equity principles, and will be
entitled to the benefits of the Indenture; provided, however, that The
Company makes no representation as to whether, with respect to any Notes
denominated in a currency other than United States dollars, a court located
in the United States would grant a judgment relating to the Notes in other
than United States dollars, nor as to the date which any such court would
utilize for determining the rate of convesion into United States dollars in
granting such judgment;
(b) The issue and sale of the Notes and the compliance
by the Company with all of the provisions of the Notes, the Indenture, this
Agreement and any Terms Agreement will not conflict with or result in any
breach which would constitute a material default under, or result in the
creation or imposition of any lien, charge or encumbrance upon any of the
property or assets of the Company material to the Company, pursuant to the
terms of, any indenture, loan agreement or other agreement or instrument for
borrowed money to which the Company is a party or by which the Company may be
bound or to which any of the property or assets of the Company material to
the Company, is subject, nor will such action result in any material
violation of the provisions of the Certificate of Incorporation, as amended,
or the By-Laws of the Company or, to the best of its knowledge, any statute
or any order, rule or regulation applicable to the Company of any court or
any Federal, State or other regulatory authority or other governmental body
having jurisdiction over the Company, and no consent, approval, authorization
or other order of, or filing with, any court or any such regulatory authority
or other governmental body is required for the solicitation of offers to
purchase Notes and the issue and sale of the Notes, except as may be required
under the Act, the Exchange Act, the Trust Indenture Act and securities laws
of the various states and other jurisdictions in which the Agents will
solicit offers to purchase Notes from the Company and will purchase Notes as
principal, as the case may be; and
(c) Immediately after the settlement of any sale of
Notes by the Company resulting from solicitation by such Agent hereunder and
immediately after any Time of Delivery (as defined below) relating to a sale
to an Agent as principal, the aggregate principal amount of Notes which shall
have been issued and sold by the Company hereunder or under any Terms
Agreement and of any debt securities of the Company (other than such Notes)
that shall have been issued and sold pursuant to the Registration Statement
will not exceed the amount of debt securities registered under the
Registration Statement.
3. (a) On the basis of the representations and warranties
herein contained, and subject to the terms and conditions herein set forth,
each of the Agents hereby severally and not jointly agrees to act as agent of
the Company, to use its reasonable efforts to solicit offers to purchase the
Notes from the Company upon the terms and conditions set forth in the
Prospectus relating to the Notes as amended or supplemented from time to time
and in the Procedure.
Subject to the provisions of this Section 3 and to the Procedure,
offers for the purchase of Notes may be solicited by each Agent as agent for
the Company at such time and in such amounts as such Agent deems advisable;
provided, however, that the Company reserves the right to sell Notes directly
on its own behalf or through other agents, dealers or underwriters, and to
appoint additional persons from time to time to serve as Agents pursuant to
this Agreement.
Each Agent agrees that it will not solicit an offer to purchase Notes
or deliver any of the Notes in any jurisdiction outside the United States of
America except under circumstances that will result in compliance with the
applicable laws thereof. Each Agent understands that no action has been
taken to permit a public offering in any jurisdiction outside the United
States of America where action would be required for such purpose. The
Agents further undertake that in connection with the distribution of Notes
denominated in any foreign currency or currency unit, they will as agent,
directly or indirectly, not solicit offers to purchase and as principal under
any Terms Agreement or otherwise, directly or indirectly, not offer, sell or
deliver, such Notes in or to residents of the country issuing such currency,
except as permitted by applicable law.
The Company reserves the right, in its sole discretion, to instruct
the Agents to suspend at any time, for any period of time or permanently, the
solicitation of offers to purchase the Notes. Promptly after receipt of
notice from the Company, but in any event not less than one business day
thereafter, the Agents will suspend solicitation of offers to purchase Notes
from the Company until such time as the Company has advised them that such
solicitation may be resumed.
The Company agrees to pay each Agent, at the time of settlement of
any sale of a Note by the Company, the purchase of which is solicited by such
Agent, a commission in United States dollars (which, in the case of Notes
denominated in other than United States dollars, shall be based upon the
Market Exchange Rate (as defined below) for such currency or currency unit at
the time of any acceptance of an offer to purchase a Note) in an amount equal
to the following percentage of the principal amount of such Note sold (or at
such other amount as may from time to time be negotiated between such Agent
and the Company):
Maturity Commission (percentage of aggregate principal amount of Notes
sold)
9 months to less than 1 year...................... .125%
1 year to less than 18 months.................... .150%
18 months to less than 2 years.................. .200%
2 years to less than 3 years....................... .250%
3 years to less than 4 years....................... .350%
4 years to less than 5 years....................... .450%
5 years to less than 6 years....................... .500%
6 years to less than 7 years....................... .550%
7 years to less than 11 years..................... .600%
11 years to less than 15 years................... .625%
15 years to less than 20 years................... .675%
20 years to 30 years.................................. .750%
Greater than 30 years............................... to be negotiated
Notwithstanding anything herein to the contrary, if, at or prior to the time
of settlement, the Company and an Agent have entered into, or such Agent has
arranged for the Company to enter into, a contract with respect to the sale
of Notes in the currency (other than United States dollars) or currency unit
in which a Note has been denominated and the purchase of which was solicited
by such Agent, the commission in United States dollars payable by the Company
to such Agent shall be based upon the same exchange rate set forth in such
contract.
The authorized denominations of Notes denominated in a currency or
currency unit other than United States dollars shall be equivalent, as
determined by the Market Exchange Rate for such currency or currency unit on
the business day immediately preceding the date on which the offer for such
Notes is accepted, of U.S.$1,000 (rounded down to an integral multiple of
1,000 units of such currency or currency unit), and any larger amount in an
integral multiple of 1,000 units of such currency or currency unit. The
authorized denominations of Notes denominated in United States dollars shall
be U.S.$1,000 and any larger amount in integral multiples of $1,000.
The "Market Exchange Rate" on a given date for a given foreign
currency means the noon buying rate in New York City for cable transfers in
such currency as certified for customs purposes by the Federal Reserve Bank
of New York on such date; provided, however, that in the case of European
Currency Units, Market Exchange Rate means, unless otherwise agreed by the
Company and the Agents, the rate of exchange determined by the Council of
European Communities (or any successor thereto) as published on such date or
the most recently available date in the Official Journal of the European
Communities (or any successor publication).
Unless otherwise agreed between the Company and each Agent, each
Agent shall communicate to the Company, orally or in writing, each offer to
purchase Notes received by it as Agent other than those rejected by such
Agent in accordance herewith. The Company shall have the sole right to
accept offers to purchase Notes and may reject any proposed purchase of
Notes. Each Agent shall have the right, in its discretion reasonably
exercised, to reject any proposed purchase of Notes received by it, and any
such rejection by it shall not be deemed a breach of its agreements contained
herein.
(b) Each sale of Notes to any Agent as principal shall be made
in accordance with the terms of this Agreement and (unless the Company and
such Agent shall otherwise agree) a Terms Agreement, which will provide for
the sale of such Notes. Terms Agreements, each of which shall be
substantially in the form of Annex I hereto, may take the form of an exchange
of any standard form of written telecommunication between any Agent, the
Company and Sears, including by telecopy or telex. The Company, Sears and
any Agent who is a party to a Terms Agreement agree to exchange executed
copies of such Terms Agreement as promptly as practicable after they have
entered into such Terms Agreement pursuant to the foregoing exchange of
written telecommunication. The Agents may utilize a selling or dealer group
in connection with the reoffering of the Notes purchased as principal.
For each sale of Notes to an Agent as principal that is not made
pursuant to a Terms Agreement, the procedural details relating to the issue
and delivery of such Notes and payment therefor shall be as set forth in the
Procedure. For each such sale of Notes to an Agent as principal that is not
made pursuant to a Terms Agreement, the Company agrees to pay such Agent a
commission (or grant an equivalent discount) as provided in Section 3(a) and
in accordance with the schedule set forth therein or established from time to
time pursuant thereto, except as the parties otherwise agree in writing.
Each time and date of delivery of and payment for Notes to be
purchased by an Agent as principal, whether set forth in a Terms Agreement or
in accordance with the Procedure, is referred to herein as a "Time of
Delivery."
(c) Procedural details relating to the issue and delivery of
Notes, the solicitation of offers to purchase Notes, and the payment in each
case therefor, shall be as set forth in the Procedure. The provisions of the
Procedure shall apply to all transactions contemplated hereunder other than
those made pursuant to a Terms Agreement. Each of the Agents and the Company
agrees to perform the respective duties and obligations specifically provided
to be performed by each of them in the Procedure. The Company will furnish
to the Trustee a copy of the Procedure as from time to time in effect.
4. The documents required to be delivered pursuant to Section
8 hereof shall be delivered at the offices of Latham & Watkins, Sears Tower,
Suite 5800, Chicago, Illinois, at 11:00 a.m., New York time, on the date of
this Agreement, or at such other date and time as the Agents and the Company
agree (such time and date being referred to herein as the "Closing Date").
5. Each of the Company and Sears covenants and agrees with each
Agent:
(a) Prior to the termination of the offering of the
Notes, to make no amendment or supplement to the Registration Statement or
the Prospectus (except for a Pricing Supplement or a supplement relating to
an offering of securities other than the Notes) without first having
furnished the Agents with a copy of the proposed form thereof, and giving the
Agents a reasonable opportunity to review the same; to advise the Agents
promptly of any such amendment or supplement after such Time of Delivery and
furnish the Agents with copies thereof; to prepare, with respect to any Notes
to be sold through or to such Agent pursuant to this Agreement, a Pricing
Supplement with respect to such Notes in a form previously approved by such
Agent and to file such Pricing Supplement pursuant to Rule 424(b)(2) under
the Act not later than the close of business of the Commission on the second
business day after the date on which such Pricing Supplement is first used or
the date of determination of the offering price; and to file promptly all
reports and any definitive proxy or information statements required to be
filed by the Company or Sears, respectively, with the Commission pursuant to
Section 13 or 14 of the Exchange Act for so long as the delivery of a
prospectus is required in connection with the offering or sale of the Notes,
and during such same period to advise the Agents, promptly after the Company
or Sears receives notice thereof, of the time when any amendment to the
Registration Statement has been filed or has become effective or any
supplement to the Prospectus or any amended Prospectus (other than any
Pricing Supplement and any supplement relating to any offering of securities
other than the Notes) has been filed with, or mailed for filing to, the
Commission, of the issuance by the Commission of any stop order or of any
order preventing or suspending the use of any prospectus relating to the
Notes, of the suspension of the qualification of the Notes for offering or
sale in any jurisdiction, of the initiation or threatening of any proceeding
for any such purpose, or of any request by the Commission for the amending or
supplementing of the Registration Statement or Prospectus or for additional
information; and, in the event of the issuance of any such stop order or of
any such order preventing or suspending the use of any such prospectus or
suspending any such qualification, to use promptly its best efforts to obtain
its withdrawal;
(b) Promptly from time to time to take such action as
the Agents reasonably may request to qualify the Notes for offering and sale
under the securities laws of such jurisdictions as the Agents may request and
to comply with such laws so as to permit the continuance of sales and
dealings therein for as long as may be necessary to complete the distribution
or sale of the Notes; provided that in connection therewith neither the
Company nor Sears shall be required to qualify as a foreign corporation or to
file a general consent to service of process in any jurisdiction;
(c) To furnish the Agents with copies of the
Registration Statement and each amendment thereto, and with copies of the
Prospectus as amended or supplemented, other than any Pricing Supplement
(except as provided in the Procedure), in the form in which it is filed with
the Commission pursuant to Rule 424 under the Act or in the form first used
to confirm sales which was not required to be filed pursuant to Rule 424
under the Act, in such quantities as the Agents may from time to time
reasonably request, and, if the delivery of a prospectus is required at any
time in connection with the offering or sale of the Notes (including Notes
purchased from the Company by such Agent as principal) and if at such time
any event shall have occurred as a result of which the Prospectus as then
amended or supplemented would include an untrue statement of a material fact
or omit to state any material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made when
such Prospectus is delivered, not misleading, or, if for any other reason it
shall be necessary during such same period to amend or supplement the
Prospectus or to file under the Exchange Act any document incorporated by
reference in the Prospectus in order to comply with the Act, the Exchange Act
or the Trust Indenture Act, to (i) notify the Agents to suspend solicitation
of offers to purchase Notes from the Company (and, if so notified, the Agents
shall promptly cease such solicitations), (ii) prepare and cause to be filed
with the Commission, after having furnished the Agents with a copy of the
proposed form and given the Agents a reasonable opportunity to review the
same, an amendment or supplement to the Registration Statement or the
Prospectus as then amended or supplemented that will correct such statement
or omission or effect such compliance and (iii) supply such Prospectus as
then amended or supplemented to the Agents in such quantities as the Agents
may reasonably request; if such amendment or supplement, and any documents,
certificates and opinions furnished to the Agents pursuant to Section 8 in
connection with the preparation or filing of such amendment or supplement are
reasonably satisfactory in all respects to the Agents, the Agents will, upon
the filing of such amendment or supplement with the Commission and upon the
effectiveness of an amendment to the Registration Statement if such an
amendment is required, resume the Agents' obligation to solicit offers to
purchase Notes hereunder; if such amendment or supplement, or any documents,
certificates and opinions furnished to the Agents pursuant to Section 8 in
connection with the preparation or filing of such amendment or supplement,
are not satisfactory to the Agents, the Agents will as promptly as reasonably
practicable notify the Company and Sears in writing;
(d) To make generally available to its security holders,
in accordance with the provisions of Rule 158 under the Act or otherwise, as
soon as practicable, but in any event not later than forty-five days after
the end of the fourth full fiscal quarter (ninety days in the case of the
last fiscal quarter in any fiscal year) following the fiscal quarter ending
after the latest of (x) the effective date of the Registration Statement, (y)
the effective date of the post-effective amendment thereto hereinafter
referred to and (z) the date of filing of the report hereinafter referred to,
an earning statement of the Company and Sears and its consolidated
subsidiaries, respectively, (which need not be audited) complying with
Section 11(a) of the Act and covering a period of at least twelve consecutive
months beginning after the latest of (i) the effective date of such
Registration Statement, (ii) the effective date of the post-effective
amendment, if any, to such Registration Statement (within the meaning of Rule
158) and (iii) the date of filing of the last report of the Company or Sears
incorporated by reference into the Prospectus (within the meaning of Rule
158); and
(e) That each acceptance by the Company of an offer to
purchase Notes hereunder shall be deemed to be an affirmation to such Agent
that the representations and warranties of the Company and Sears contained in
or made pursuant to this Agreement are true and correct in all material
respects as of the date of such acceptance as though made at and as of such
date, and an undertaking that, if a settlement occurs with respect to such
acceptance, such representations and warranties will be true and correct as
of such settlement date as though made at and as of such date (except that
such representations and warranties shall be deemed to relate to the
Registration Statement and the Prospectus as amended and supplemented
relating to such Notes).
6. The Company covenants and agrees with each Agent that, except
as may otherwise be specified in any Terms Agreement, during the period
beginning from the date of any Terms Agreement and continuing to and
including the earlier of (i) the termination of the trading restrictions for
the Notes purchased thereunder, of which termination such Agent or Agents
party to the Terms Agreement agree to give the Company prompt notice
confirmed in writing and (ii) the Time of Delivery for such Notes, not to
offer, sell, contract to sell or otherwise dispose of any debt securities of
the Company which (i) mature nine months or more after such Time of Delivery,
(ii) mature within six months of the maturity of such Notes and (iii) are
denominated in the same currency or currency unit specified in the Terms
Agreement, without the prior written consent of such Agent or Agents, which
consent shall not be unreasonably withheld, except pursuant to arrangements
of which such Agent or Agents have been advised by the Company prior to the
time of execution of such Terms Agreement, which advice is confirmed in
writing (which may be by telecopy or telex, receipt acknowledged) to such
Agent or Agents by the end of the business day following the date of such
Terms Agreement.
7. The Company covenants and agrees with each Agent that the
Company will pay or cause to be paid, whether or not any sale of Notes is
consummated, the following: (i) the fees and expenses of the Company's
counsel and accountants in connection with the registration of the Notes
under the Act and all other expenses in connection with the preparation,
printing and filing of the Registration Statement, any Preliminary
Prospectus, the Prospectus and amendments and supplements thereto and the
mailing and delivering of copies thereof to the Agents; (ii) the fees and
expenses of counsel for the Agents, which counsel has been approved by the
Company, incurred heretofore or hereafter in connection with the transactions
contemplated hereunder; (iii) the cost of printing or reproducing this
Agreement, any Terms Agreement, any Indenture, any Blue Sky and Legal
Investment Memoranda and any other documents in connection with the offering,
purchase, sale and delivery of the Notes; (iv) all expenses in connection
with the qualification of the Notes for offering and sale under state
securities laws as provided in Section 4(b) hereof, including fees and
disbursements of counsel for the Agents in connection with such qualification
and in connection with the Blue Sky and legal investment surveys; (v) any
fees charged by security rating services for rating the Notes; (vi) any
filing fees incident to any required review by the National Association of
Securities Dealers, Inc. of the terms of the sale of the Notes; (vii) the
cost of preparing the Notes; (viii) the fees and expenses of any Trustee and
any transfer or paying agent of the Company and the fees and disbursements of
counsel for any Trustee or such agent in connection with any Indenture and
the Notes; (ix) on a monthly basis all out-of-pocket expenses (including,
without limitation, advertising expenses) incurred by such Agent connected
with the solicitation of offers to purchase and the sale of Notes so long as
such expenses have been approved by the Company; and (x) all other costs and
expenses incident to the performance of the Company's obligations hereunder
(other than costs and expenses incurred by any Agent) which are not otherwise
specifically provided for in this Section 7.
8. The obligation of each Agent, as agent of the Company, at any
time ("Solicitation Time") to solicit offers to purchase the Notes and the
obligation of each Agent to purchase Notes as principal pursuant to any Terms
Agreement or otherwise shall in each case be subject, in such Agent's
discretion, to (i) the condition that all representations and warranties and
other statements of the Company or Sears herein are true and correct in all
material respects at and as of the Closing Date, as of the date of the
effectiveness of any amendment to the Registration Statement (including the
filing of any document incorporated by reference therein), as of the date any
supplement to the Prospectus is filed with the Commission, as of any Time of
Delivery, as of each acceptance by the Company of an offer to purchase Notes
hereunder and as of each settlement date relating to such sale, (ii) the
condition that each of the Company and Sears shall have performed all of its
obligations hereunder theretofore to be performed, and (iii) the following
additional conditions:
(a) No stop order suspending the effectiveness of the
Registration Statement shall have been issued and no proceeding for that
purpose shall have been initiated or threatened by the Commission; and all
requests for additional information on the part of the Commission shall have
been complied with to the Agents' reasonable satisfaction;
(b) All corporate proceedings and related matters in
connection with the organization of the Company, the validity of the
Indenture and the registration, authorization, issue, sale and delivery of
the Notes shall have been satisfactory to the Agents' counsel, and such
counsel shall have been furnished with such papers and information as they
may reasonably have requested to enable them to pass upon the matters
referred to in this Section 8(b);
(c) Counsel to the Company and Sears, who may be an
employee of the Company or of Sears, shall have furnished to the Agents such
counsel's written opinion, dated the Closing Date, and, if so specified in
any Terms Agreement, the applicable Time of Delivery and the date of
effectiveness of each amendment or the filing of each supplement to the
Registration Statement or the Prospectus (including the filing under the Act
or the Exchange Act of documents incorporated by reference in the Prospectus
as amended or supplemented but excluding amendments or supplements (i)
relating to an offering of securities other than the Notes, (ii) constituting
a Pricing Supplement, (iii) setting forth or incorporating by reference
financial statements or other information as of and for a fiscal quarter or
(iv) relating solely to the incorporation by reference of Sears proxy
statement for its annual meeting of shareholders or of a filing by the
Company or Sears of a Current Report on Form 8-K under the Exchange Act
unless in the case of clauses (iii) or (iv) above, in such Agent's reasonable
judgment, such financial statements or other information contained in such
documents are of such a character that an opinion of counsel should be
furnished), as the case may be, in form and substance satisfactory to the
Agents in the Agents' reasonable judgment to the effect that:
(i) Each of the Company and Sears has been duly
incorporated and is validly existing as a corporation in good standing under
the laws of its respective state of incorporation;
(ii) All of the outstanding shares of capital
stock of SRAC have been duly and validly issued and are fully paid and
non-assessable. The authorized capital stock of the Company consists of
500,000 shares of common stock, par value $100 per share, all of the issued
and outstanding shares of which are owned by Sears, Roebuck and Co., and the
authorized capital stock of Sears is as set forth or incorporated by
reference in the Registration Statement;
(iii) SRAC is not an "investment company" within
the meaning of the Investment Company Act of 1940, as amended;
(iv) Each of this Agreement and any applicable
Terms Agreement has been duly authorized, executed and delivered on the part
of the Company, and this Agreement has been duly authorized, executed and
delivered on the part of Sears;
(v) The issue and sale of the Notes and the
compliance by the Company with all of the provisions of the Notes, the
Indenture, this Agreement and any applicable Terms Agreement will not (a)
conflict with or result in any breach which would constitute a material
default under, or result in the creation or imposition of any lien, charge or
encumbrance upon any of the property or assets of the Company, material to
the Company, pursuant to the terms of, any indenture, loan agreement or other
agreement or instrument for borrowed money known to such counsel to which the
Company is a party or by which the Company may be bound or to which any of
the property or assets of the Company, material to the Company, is subject,
(b) result in any material violation of the provisions of the Certificate of
Incorporation, as amended, or the By-Laws of the Company or (c) to the best
of the knowledge of such counsel, result in any violation of any statute or
any order, rule or regulation applicable to the Company of any court or any
federal, state or other regulatory authority or other governmental body
having jurisdiction over the Company, other than the securities laws of the
various states or other jurisdictions which are applicable to the issue and
sale of the Notes, as to which such counsel need express no opinion; and, to
the best knowledge of such counsel, no consent, approval, authorization or
other order of, or filing with, any court or any such regulatory authority or
other governmental body is required for the issue and sale of the Notes
except as has been obtained or effected under the Act, the Exchange Act and
the Trust Indenture Act or as may be required by the securities laws of the
various states or other jurisdictions which are applicable to the issue and
sale of the Notes;
(vi) The Indenture has been duly authorized,
executed and delivered on the part of the Company and, as to the Company, is
a valid, binding and enforceable instrument in accordance with its terms
except as the foregoing may be limited by insolvency, bankruptcy,
reorganization or other laws relating to or affecting the enforcement of
creditors' rights or by general equity principles, and has been qualified
under the Trust Indenture Act; the Notes have been duly authorized and
(assuming due authentication by the Trustee) when duly executed, issued and
delivered pursuant to the Indenture and any Terms Agreement, will constitute
valid, binding and enforceable obligations of the Company in accordance with
their terms, entitled to the benefits of the Indenture, except as the
foregoing may be limited by insolvency, bankruptcy, reorganization or other
laws relating to or affecting the enforcement of creditors' rights or by
general equity principles;
(vii) The Fixed Charge Coverage and Ownership
Agreement dated May 15, 1995 and the Extension Agreement dated September 18,
1997, each between the Company and Sears, have been duly authorized, executed
and delivered by the parties thereto and are valid and binding instrument in
accordance with their terms except as the same may be limited by insolvency,
bankruptcy, reorganization or other laws relating to or affecting the
enforcement of creditors' rights or by general equity principles;
(viii) Such counsel does not know of any pending
legal or governmental proceedings required to be described in the Prospectus
as amended or supplemented (including documents incorporated by reference
therein) which are not described as required;
(ix) Except for statements in such documents
which do not constitute part of the Registration Statement or the Prospectus
pursuant to Rule 412 of Regulation C under the Act and after substituting
therefor any statements modifying or superseding such excluded statements,
the documents incorporated by reference in the Prospectus as amended or
supplemented (other than the financial statements and related schedules, the
analyses of operations and financial condition and other financial,
statistical and accounting data therein, as to which such counsel need
express no opinion), when they were filed with the Commission, complied as to
form in all material respects with the requirements of the Exchange Act and
the rules and regulations of the Commission thereunder;
(x) Except for statements in such documents
which do not constitute part of the Registration Statement or the Prospectus
pursuant to Rule 412 of Regulation C under the Act and after substituting
therefor any statements modifying or superseding such excluded statements,
the Registration Statement and the Prospectus as amended or supplemented
(excluding the documents incorporated by reference therein) (other than the
financial statements and related schedules, the analyses of operations and
financial condition and other financial, statistical and accounting data
therein, as to which such counsel need express no opinion) comply as to form
in all material respects with the requirements of the Act and the rules and
regulations thereunder; the answers in the Registration Statement to Items 9
and 10 (insofar as it relates to such counsel) of Form S-3 are to the best of
such counsel's knowledge accurate statements or summaries of the matters
therein set forth and fairly present the information called for with respect
to those matters by the Act and the rules and regulations thereunder; and
(xi) Such counsel does not know of any contract
or other document to which the Company or Sears is a party required to be
filed as an exhibit to the Registration Statement or required to be
incorporated by reference into the Prospectus as amended or supplemented or
required to be described in the Prospectus as amended or supplemented which
has not been so filed, incorporated by reference or described.
In rendering such opinion, such counsel may rely to the
extent such counsel deems appropriate upon certificates of officers or other
executives of the Company, Sears and its business groups and subsidiaries and
of public officials as to factual matters and upon opinions of other counsel.
In rendering the opinion referred to in subdivision (v) above, such counsel
need not express an opinion as to whether, with respect to any Notes
denominated in a currency other than United States dollars, a court located
in the United States of America would grant a judgment relating to the Notes
in other than United States dollars, nor an opinion as to the date which any
such court would utilize for determining the rate of conversion into United
States dollars in granting such judgment. Such counsel shall also state
that: (a) nothing has come to such counsel's attention which has caused such
counsel to believe that any of the documents referred to in subdivision (ix)
above (other than the financial statements, the analyses of operations and
financial condition and other financial, statistical and accounting data
therein, as to which such counsel need express no belief), in each case after
excluding any statement in any such document which does not constitute part
of the Registration Statement or the Prospectus as amended or supplemented
pursuant to Rule 412 of Regulation C under the Act and after substituting
therefor any statement modifying or superseding such excluded statement, when
such documents were so filed, contained an untrue statement of a material
fact or omitted to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading, and (b) nothing has come to such counsel's attention
which has caused such counsel to believe that the Registration Statement or
Prospectus as amended or supplemented (other than the financial statements,
the analyses of operations and financial condition and other financial,
statistical and accounting data therein, as to which such counsel need
express no belief) contains an untrue statement of a material fact or omits
to state a material fact required to be stated therein or necessary to make
the statements therein not misleading;
(d) On the Closing Date, and, if so specified in any
Terms Agreement, the applicable Time of Delivery and the date of
effectiveness of each amendment or the filing of each supplement to the
Registration Statement or the Prospectus setting forth or incorporating by
reference amended or supplemental financial information, as the case may be,
the independent certified public accountants who have certified the financial
statements of the Company and Sears and its subsidiaries included or
incorporated by reference in the Registration Statement shall have furnished
to the Agents a letter or letters, dated the Closing Date or such applicable
date, as the case may be, in form and substance satisfactory to the Agents,
to the effect set forth in Annex III hereto (modified in the case of amended
or supplemented financial information to reflect such amended and
supplemental financial information included or incorporated by reference in
the Registration Statement and the Prospectus as amended or supplemented to
the date of such letter, provided that if the Registration Statement or the
Prospectus is amended or supplemented solely to include or incorporate by
reference unaudited quarterly financial information, the scope of such
letter, which shall be satisfactory in form and substance to such Agent, may
be limited to relate to such unaudited financial information unless any other
accounting, financial or statistical information included or incorporated by
reference therein is of a character that, in the reasonable judgment of such
Agent, such letter should address such other information);
(e) (i) The Company and Sears shall not have sustained,
after the date of the latest audited financial statements included or
incorporated by reference in the Prospectus and (A) prior to the Closing
Date, any material loss or interference with its business from fire,
explosion, flood or other calamity, whether or not covered by insurance, or
from any labor dispute or court or governmental action, order or decree,
otherwise than as contemplated in the Prospectus as amended or supplemented
through the date of this Agreement and (B) prior to each Time of Delivery,
any such loss or interference, otherwise than as set forth or contemplated in
the Prospectus as amended or supplemented through the date that the Agent
agreed to purchase such Notes as principal; and (ii) since the respective
dates as of which information is given in the Prospectus as amended or
supplemented and (A) prior to the Closing Date, there shall not have been any
material change in the capital stock accounts or long-term debt of the
Company or any material adverse change in the general affairs, financial
position, stockholders' equity or results of operations of the Company,
otherwise than as set forth or contemplated in the Prospectus as amended or
supplemented through the date of this Agreement and (B) prior to each Time of
Delivery, there shall not have been any such change, otherwise than as set
forth or contemplated in the Prospectus as amended or supplemented through
the date that the Agent agreed to purchase such Notes as principal, the
effect of which, in any such case described in clause (i) or (ii), in the
judgment of such Agent makes it impracticable or inadvisable to proceed with
the solicitation by such Agent of offers to purchase Notes from the Company
or the purchase by such Agent of Notes from the Company as principal, as the
case may be;
(f) During the period in which the Agents are soliciting
offers to purchase Notes, including the period between the date that any
Agent agreed to purchase such Notes as principal and the related Time of
Delivery, no downgrading shall have occurred in the rating accorded the
Company's or Sears debt securities by Moody's Investors Service, Inc. or
Standard & Poor's; provided, however, that this Section 8(f) shall not apply
to any such rating agencies which shall have notified the Company of the
downgrading in the rating of such debt securities and of which the Company
shall have given the Agents written notice prior to the execution of the
Terms Agreement;
(g) During the period in which the Agents are soliciting
offers to purchase Notes, including the period between the date that any
Agent agreed to purchase such Notes as principal and the related Time of
Delivery, none of (i) the United States shall have become engaged in the
outbreak or escalation of hostilities involving the United States or there
has been a declaration by the United States of a national emergency or a
declaration of war, (ii) a banking moratorium shall have been declared by
either Federal or New York State authorities or, in the case of Notes
denominated in other than United States dollars, by the authorities of the
country of the currency in which such Notes are denominated, (iii) trading in
securities generally on the New York Stock Exchange shall have been suspended
or limited or minimum prices shall have been established by such Exchange, or
(iv) in the case of Notes denominated in other than United States dollars,
any change shall have occured involving such exchange controls, taxation or
similar matters, any of which events, in the Agents' judgment, renders it
inadvisable to proceed with the solicitation by the Agents of offers to
purchase Notes from the Company or the purchase by the Agents of Notes from
the Company as principal, as the case may be; and
(h) Each of the Company and Sears shall have furnished
or caused to be furnished to the Agents at the Closing Date, and, if so
specified in any Terms Agreement, the applicable Time of Delivery and the
date of effectiveness of each amendment or the filing of each supplement to
the Registration Statement or the Prospectus (including the filing under the
Act or the Exchange Act of documents which are incorporated by reference in
the Prospectus as amended or supplemented but excluding amendments or
supplements (i) relating to an offering of securities other than the Notes,
(ii) constituting a Pricing Supplement, or (iii) relating solely to the
incorporation by reference of Sears proxy statement for its annual meeting of
shareholders or of a filing by the Company or Sears of a Current Report on
Form 8-K under the Exchange Act, unless in the case of clause (iii) above, in
such Agent's reasonable judgment, the information contained in such documents
is of such a character that certificates of officers referred to below should
be furnished, as the case may be) certificates of officers of the Company and
Sears satisfactory to the Agents, as to the accuracy at and as of the Closing
Date or such applicable date, as the case may be, of the representations,
warranties and agreements of the Company and Sears, respectively, herein and
as to the performance by each of the Company and Sears of all its obligations
hereunder to be performed at or prior to the Closing Date or such applicable
date, as the case may be, and the Company shall have also furnished the
Agents similar certificates satisfactory to the Agents as to the matters set
forth in subdivision (a) of this Section 8.
9. (a) The Company will indemnify and hold harmless each
Agent against any losses, claims, damages or liabilities, joint or several,
to which such Agent may become subject, under the Act or otherwise, insofar
as such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in any Preliminary
Prospectus, the Registration Statement, the Prospectus or the Prospectus as
amended or supplemented, or any amendment or supplement thereto furnished by
the Company or Sears, or arise out of or are based upon the omission or
alleged omission to state therein a material fact required to be stated
therein or (in the case of the Registration Statement or the Prospectus as
amended or supplemented or any amendment or supplement thereto) necessary to
make the statements therein not misleading or (in the case of any Preliminary
Prospectus) necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading; and will reimburse
each Agent for any legal or other expenses reasonably incurred by such Agent
in connection with investigating or defending any such action or claim;
provided, however, that the Company shall not be liable in any such case to
the extent that any such loss, claim, damage or liability arises out of or is
based upon an untrue statement or alleged untrue statement or omission or
alleged omission made in any Preliminary Prospectus, or the Registration
Statement, the Prospectus or the Prospectus as amended or supplemented or any
such amendment or supplement in reliance upon and in conformity with written
information furnished to the Company by the Agents expressly for use therein;
and provided, further, that the Company shall not be liable to any Agent or
any person controlling such Agent under the indemnity agreement in this
subdivision (a) with respect to the Preliminary Prospectus or the Prospectus
or the Prospectus as amended or supplemented or any amendment or supplement
thereto, as the case may be, to the extent that any such loss, claim, damage
or liability of such Agent or controlling person results solely from the fact
that such Agent sold Notes to a person to whom there was not sent or given,
at or prior to the written confirmation of such sale, a copy of the
Prospectus (excluding documents incorporated by reference) or of the
Prospectus as then amended or supplemented (excluding documents incorporated
by reference), whichever is most recent, if the Company has previously
furnished copies thereof to such Agent.
(b) Each Agent will indemnify and hold harmless the Company
against any losses, claims, damages or liabilities to which the Company may
become subject, under the Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are
based upon any untrue statement or alleged untrue statement of any material
fact contained in any Preliminary Prospectus, the Registration Statement, the
Prospectus, or the Prospectus as amended or supplemented, or any amendment or
supplement thereto, or arise out of or are based upon the omission or the
alleged omission to state therein a material fact required to be stated
therein or (in the case of the Registration Statement or the Prospectus or
the Prospectus as amended or supplemented or any amendment or supplement
thereto) necessary to make the statements therein not misleading or (in the
case of any Preliminary Prospectus) necessary to make the statements therein,
in the light of the circumstances under which they were made, not misleading,
in each case to the extent, but only to the extent, that such untrue
statement or alleged untrue statement or omission or alleged omission was
made in any Preliminary Prospectus or the Registration Statement or the
Prospectus or the Prospectus as amended or supplemented or such amendment or
supplement in reliance upon and in conformity with written information
furnished to the Company by such Agent expressly for use therein; and will
reimburse the Company for any legal or other expenses reasonably incurred by
the Company in connection with investigating or defending any such action or
claim.
(c) Within a reasonable period after receipt by an indemnified
party under subdivision (a) or (b) above of notice of the commencement of any
action with respect to which indemnification is sought under such subdivision
or contribution may be sought under subdivision (d) below, such indemnified
party shall notify the indemnifying party in writing of the commencement
thereof. In case any such action shall be brought against any indemnified
party, the indemnifying party shall be entitled to participate in, and, to
the extent that it shall wish, jointly with any other indemnifying party
similarly notified, to assume the defense thereof, with counsel satisfactory
to such indemnified party, and after notice from the indemnifying party to
such indemnified party of its election so to assume the defense thereof, the
indemnifying party shall not be liable to such indemnified party for any
legal or other expenses subsequently incurred by such indemnified party in
connection with the defense thereof other than reasonable costs of
investigation.
(d) If the indemnification provided for in this Section 9 is
unavailable to an indemnified party under subdivision (a) or (b) above in
respect of any losses, claims, damages or liabilities (or actions in respect
thereof) referred to therein, then each indemnifying party shall contribute
to the amount paid or payable by such indemnified party as a result of such
losses, claims, damages or liabilities (or actions in respect thereof) in
such proportion as is appropriate to reflect the relative benefits received
by the Company on the one hand and the contributing Agent on the other from
the offering of the Notes and also the relative fault of the Company and
Sears on the one hand and the contributing Agent on the other in connection
with the statements or omissions which resulted in such losses, claims,
damages or liabilities (or actions in respect thereof), as well as any other
relevant equitable considerations. The relative benefits received by the
Company on the one hand and the contributing Agent on the other shall be
deemed to be in the same proportion as the total net proceeds from the sale
of Notes (before deducting expenses) received by the Company bear to the
total commissions or discounts received by the contributing Agent. The
relative fault shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by the Company or Sears on the one hand or the contributing Agent on
the other and the parties' relative intent, knowledge, access to information
and opportunity to correct or prevent such statement or omission of the
Company or Sears on the one hand and the contributing Agent on the other
hand. With respect to any Agent, such relative fault shall also be
determined by reference to the extent (if any) to which such losses, claims,
damages or liabilities (or actions in respect thereof) with respect to any
Preliminary Prospectus result from the fact that such Agent sold Notes to a
person to whom there was not sent or given, at or prior to the written
confirmation of such sale, a copy of the Prospectus (excluding documents
incorporated by reference) or of the Prospectus as then amended or
supplemented (excluding documents incorporated by reference) if the Company
has previously furnished copies thereof to such Agent. The Company and the
contributing Agent agree that it would not be just and equitable if
contribution pursuant to this subdivision (d) were determined by per capita
allocation (even if all Agents were treated as one entity for such purpose)
or by any other method of allocation which does not take account of the
equitable considerations referred to above in this subdivision (d). The
amount paid or payable by an indemnified party as a result of the losses,
claims, damages or liabilities (or actions in respect thereof) referred to
above in this subdivision (d) shall be deemed to include any legal or other
expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim. Notwithstanding the
provisions of this subdivision (d), no Agent shall be required to contribute
any amount in excess of the amount by which the total price at which the
Notes purchased by or through such Agent were sold exceeds the amount of any
damages which such Agent has otherwise been required to pay by reason of such
untrue or alleged untrue statement or omission or alleged omission. No
person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Act) shall be entitled to contribution from any person who was
not guilty of such fraudulent misrepresentation. The obligations of each of
the Agents under this subdivision (d) to contribute are several in proportion
to the respective purchases made by or through it to which such loss, claim,
damage or liability (or action in respect thereof) relates and are not joint.
(e) The obligations of the Company under this Section 9 shall be
in addition to any liability which the Company may otherwise have and shall
extend, upon the same terms and conditions, to each person, if any, who
controls any Agent within the meaning of the Act; and each Agent's
obligations under this Section 9 shall be in addition to any liability which
such Agent may otherwise have and shall extend, upon the same terms and
conditions, to each officer and director of the Company or Sears and to each
person, if any, who controls the Company within the meaning of the Act.
10. In soliciting offers to purchase Notes from the Company and
in performing the other obligations of such Agent hereunder (other than in
respect of any purchase by an Agent as principal, pursuant to a Terms
Agreement or otherwise), each Agent is acting solely as agent for the Company
and not as principal. Each Agent will make reasonable efforts to assist the
Company in obtaining performance by each purchaser whose offer to purchase
Notes from the Company was solicited by such Agent and has been accepted by
the Company, but such Agent shall not have any liability to the Company in
the event such purchase is not consummated for any reason. If the Company
shall default on its obligation to deliver Notes to a purchaser whose offer
it has accepted, the Company shall hold each Agent harmless against any loss,
claim or damage arising from or as a result of such default by the Company.
11. The respective indemnities, agreements, representations,
warranties and other statements by any Agent, the Company and Sears set forth
in or made pursuant to this Agreement shall remain in full force and effect
regardless of any investigation (or any statement as to the results thereof)
made by or on behalf of any Agent, the Company, Sears, or any officer or
director or any controlling person of the Company, Sears or any Agent, and
shall survive each delivery of and payment for any of the Notes.
12. The provisions of this Agreement relating to the solicitation
of offers to purchase Notes from the Company may be suspended or this
Agreement may be terminated at any time by the Company as to any or all
Agents or by any Agent insofar as this Agreement relates to such Agent upon
the giving of written notice of such suspension or termination to such Agent
or the Company, as the case may be. Unless otherwise agreed by the
respective parties, any such suspension or termination shall be effective
immediately with respect to the party giving such notice and, in the case of
the party receiving such notice, at the close of business on the first
business day following the receipt of such notice. In the event of such
suspension or termination with respect to any Agent, (x) this Agreement shall
remain in full force and effect with respect to any Agent as to which such
suspension or termination has not occurred, and (y) the Company shall not
have any liability to such Agent and such Agent shall not have any liability
to the Company, except as provided in any Terms Agreements and in the fifth
paragraph of Section 3(a), Section 7, Section 9, Section 10 and Section 11.
13. Except as otherwise specifically provided herein or in the
Procedure, all statements, requests, notices and advices hereunder shall be
in writing, or by telephone if promptly confirmed in writing, and if to an
Agent shall be sufficient in all respects when delivered or sent by facsimile
transmission or registered mail to such Agent at the address or facsimile
transmission number set forth in the Appointment and Acceptance of Agent
relating to the appointment of such Agent, and if to the Company shall be
sufficient in all respects when delivered or sent by facsimile transmission
or registered mail to the Company at 3711 Kennett Pike, Greenville, Delaware
19807, Attention: Nancy K. Bellis, Secretary, Facsimile Transmission No.
(302) 888-3150, and if to Sears shall be sufficient in all respects when
delivered or sent by facsimile transmission or registered mail to Sears at
3333 Beverly Road, Hoffman Estates, Illinois 60179, Attention: Senior Vice
President, General Counsel and Secretary, Facsimile Transmission No. (847)
286-2471 with a copy to the Vice President and Treasurer, Facsimile
Transmission No. (847) 286-3690. Upon request of any party hereto, any
statements, requests, notices and advices transmitted by facsimile shall be
promptly followed by delivery of executed documents by registered mail.
14. This Agreement and any Terms Agreement shall be binding upon,
and inure solely to the benefit of, each Agent, the Company and Sears, and to
the extent provided in Section 9, Section 10 and Section 11 hereof, the
officers and directors of the Company and Sears and any person who controls
any Agent or the Company, and their respective heirs, executors,
administrators, successors and assigns, and no other person shall acquire or
have any right under or by virtue of this Agreement or any Terms Agreement.
No purchaser of any of the Notes through or from any Agent hereunder shall be
deemed a successor or assign by reason merely of such purchase.
15. Time shall be of the essence in this Agreement and any Terms
Agreement. As used herein, the term "business day" shall mean any day when
the office of the Commission in Washington, D.C. is normally open for
business or each Monday, Tuesday, Wednesday, Thursday and Friday which is not
a legal holiday for banking institutions in any of the City of Chicago, The
City of New York or the City of Wilmington.
16. This Agreement and any Terms Agreement shall be governed by,
and construed in accordance with, the internal laws of the State of New York.
17. This Agreement (including such Appointments and Acceptances
of Agent as may be executed and delivered by the Company and Sears and
accepted by one or more Agents from time to time) and any Terms Agreement may
be executed by any one or more of the parties hereto and thereto in any
number of counterparts, each of which shall be an original, but all of such
respective counterparts shall together constitute one and the same
instrument.
APPOINTMENT AND ACCEPTANCE OF AGENT
Each agent designated below is hereby appointed as an Agent on the
terms and conditions set forth in the Distribution Agreement. Upon
acceptance of such appointment by signing and returning to us three
counterparts hereof, the Distribution Agreement shall constitute a binding
agreement between the Company, Sears and each such Agent in accordance with
its terms.
Very truly yours,
SEARS ROEBUCK ACCEPTANCE CORP.
By:/S/Keith E. Trost
President
SEARS, ROEBUCK AND CO.
By:/S/Larry R. Raymond
Assistant Treasurer
Agents Designated Hereby:
Accepted in New York, New York, as of the date set forth on the first page of
the Distribution Agreement:
GOLDMAN, SACHS & CO.
Address: 85 Broad Steet, New York, New York 10004, Attn: Registration
Department
Facsimile Transmission No.: (212) 902-3000
By:/S/Goldman, Sachs & Co.
Authorized Signatory
MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED
Address: 250 Vesey Street, 23rd Floor, World Financial Center,
North Tower, New York, New York
10281, Attn: MTN Product Management
Facsimile Transaction No.: (212) 449-2234
By:/S/Scott Primrose
Authorized Signatory
MORGAN STANLEY & CO. INCORPORATED
Address: 1585 Broadway, New York, New York 10036,
Attn: Managing Director, Short-and Medium-Term Note
Department
Facsimile Transmission No.: (212) 761-0780
Copy to: 1585 Broadway, New York, New York 10036,
Attn: Investment Banking Information Center
Facsimile Transmission No.: (212) 761-0260
By:/S/Steven Anderson
Authorized Signatory
SALOMON BROTHERS INC
Address: Seven World Trade Center, 32nd Floor, New York, New York
10048, Attn: Medium-Term Note Department
Facsimile Transmission No.: (212) 783-2274
By: /S/Anne Clarke Wolff
Authorized Signatory
ANNEX I
Sears Roebuck Acceptance Corp.
$ Medium-Term Notes Series __
TERMS AGREEMENT
_______________________
_______________________
_______________________
Dear Sirs:
,199
Sears Roebuck Acceptance Corp. (the "Company") proposes, subject to
the terms and conditions stated herein and in the Distribution Agreement,
dated ___________, 199_ (the "Distribution Agreement"), between the Company
and Sears, Roebuck and Co. ("Sears") on the one hand and the Agents
thereunder on the other, to issue and sell to you the securities specified in
the Schedule hereto (the "Purchased Notes"). Each of the provisions of the
Distribution Agreement not specifically related to the solicitation by such
firms, as agents of the Company, of offers to purchase Notes is incorporated
herein by reference in its entirety, and shall be deemed to be part of this
Agreement to the same extent as if such provisions had been set forth in full
herein, provided that for purposes of this Agreement all references in the
Distribution Agreement to the "Agents" shall be deemed to refer to you alone.
Nothing contained herein or in the Distribution Agreement shall make any
party hereto an agent of the Company or make such party subject to the
provisions in the Distribution Agreement relating to the solicitation of
offers to purchase securities from the Company, solely by virtue of its
execution of this Terms Agreement. Each of the representations and
warranties set forth therein shall be deemed to have been made at and as of
the date of this Terms Agreement, except that each representation and
warranty in Sections 1 and 2 of the Distribution Agreement which makes
reference to the Prospectus shall be deemed to be a representation and
warranty as of the date of the Distribution Agreement in relation to the
Prospectus (as therein defined), and also a representation and warranty as of
the date of this Terms Agreement in relation to the Prospectus as amended and
supplemented to relate to the Purchased Notes. Unless otherwise defined
herein, terms defined in the Distribution Agreement are used herein as
therein defined.
An amendment to the Registration Statement, or a supplement to the
Prospectus, as the case may be, relating to the Purchased Notes, in the form
heretofore delivered to you, is now proposed to be filed with, or in the case
of a supplement, mailed for filing to, the Commission.
Subject to the terms and conditions set forth herein and in the
Distribution Agreement incorporated herein by reference, the Company agrees
to issue and sell to you and you agree to purchase from the Company the
Purchased Notes, at the time and place, in the principal amount and at the
purchase price set forth in the Schedule hereto.
If the foregoing is in accordance with your understanding, please
sign and return to us two counterparts hereof, and upon acceptance hereof by
you this letter and such acceptance hereof, including those provisions of the
Distribution Agreement incorporated herein by reference, shall constitute a
binding agreement between you, the Company and Sears.
SEARS ROEBUCK ACCEPTANCE CORP.
By:
SEARS, ROEBUCK AND CO.
By:
Accepted:
[_______________________________________
By: ]
SCHEDULE TO ANNEX I
Title of Purchased Notes:
[Medium-Term Notes, Series V]
[ % Notes due ]
Aggregate Principal Amount:
[$ or units of other Specified Currency]
[Currency Swap or Forward Arrangements:]
[Price to Public:]
Purchase Price by :
% of the principal amount of the Purchased Notes [, plus accrued
interest from to ] [and accrued amortization, from
to ]
Specified Funds for Payment of Purchase Price:
immediately available funds
Indenture:
Indenture, dated as of May 15, 1995, as supplemented to the date
hereof, between the Company and The Chase Manhattan Bank, as Trustee
Form of Purchased Notes:
[Certificated form only][Global form only]
Time of Delivery:
Closing Location:
Maturity:
Interest Rate:
[ %] [Specify floating rate provisions, if any]
Interest Payment Dates:
[months and dates]
Documents to be Delivered:
The following documents referred to in the Distribution Agreement
shall be delivered as a condition to the Closing:
[(1) The opinion referred to in Section 8(c).]
[(2) The accountants' letter referred to in Section 8(d).]
[(3) The officers' certificate referred to in Section 8(h).]
Lock-Out Provisions:
[Describe modifications, if any, to the lock-out provisions set forth
in Section 6 of the Distribution Agreement.]<PAGE>
Syndicate Provisions:
[Set forth any provisions relating to underwriters' default and
step-up of amounts to be purchased by underwriters acting with
]
ANNEX II
Sears Roebuck Acceptance Corp.
ADMINISTRATIVE PROCEDURE
Medium-term notes (the "Notes") in the aggregate initial offering
price of up to $2,000,000,000 are to be offered from time to time by Sears
Roebuck Acceptance Corp. (the "Company") through agents of the Company
(together, in such capacity, the "Agents"). Each Agent has agreed to use its
reasonable efforts to solicit offers to purchase Notes directly from the
Company (an Agent, in relation to a purchase of a particular Note by a
purchaser solicited by such Agent, being herein referred to as the "Selling
Agent") and may also purchase Notes from the Company as principal (an Agent,
in relation to a purchase of a Note by such Agent as principal other than
pursuant to a Terms Agreement being herein referred to as the "Purchasing
Agent"). The Notes are being sold pursuant to a Distribution Agreement,
dated February 23, 1998 (the "Distribution Agreement"), between the Company,
Sears, Roebuck and Co. ("Sears") and the Agents, to which this Administrative
Procedure is attached as Annex II.
The Notes will be issued pursuant to an Indenture, dated as of May
15, 1995 (the "Indenture"), between the Company and The Chase Manhattan Bank,
as Trustee (the "Trustee").
Unless otherwise defined herein, terms defined in the Indenture or
the Notes shall be used herein as therein defined.
In the case of purchases of Notes by any Agent as principal, the
relevant terms and settlement details related thereto, including the Time of
Delivery referred to in the first paragraph of Section 8, will (unless the
Company and such Agent otherwise agree) be set forth in a Terms Agreement
entered into between such Agent and the Company and Sears pursuant to the
Distribution Agreement.
The procedures to be followed during, and the specific terms of, the
solicitation of offers by the Agents and the sale as a result thereof by the
Company are explained below. The procedures are subject, and are qualified
in their entirety by reference, to all of the respective provisions of the
Distribution Agreement and the Indenture.
The Company will advise each Agent in writing of those persons
handling administrative responsibilities ("Designated Persons") with whom
such Agent is to communicate regarding offers to purchase Notes and the
details of their delivery.
I. General Procedures
Registration:
Notes will be issued only in fully registered form and will be either
(a) Book-Entry Notes represented by one or more global notes (each a "Global
Note") held by the Trustee, as agent for The Depository Trust Company ("DTC")
and recorded in the book-entry system maintained by DTC or (b) Certificated
Notes delivered in certificated form to the Selling Agent or Purchasing
Agent. All Notes will be issued as Book-Entry Notes except as otherwise
approved in advance by the Company and except that non-U.S.
dollar-denominated Notes will be issued as Certificated Notes only unless
otherwise specified in a Prospectus Supplement or Pricing Supplement.
Maturities:
Each Note will mature on a date, selected by the purchaser and agreed
to by the Company, which will be at least nine months from the date of
original issuance by the Company of such Note (the "Settlement Date").
Price to Public:
Each Note will be issued at the percentage of principal amount
specified in the Prospectus (as defined in Section 1(a) of the Distribution
Agreement) relating to the Notes.
Currencies:
Notes will be denominated in U.S. dollars or in such other currency
or currency unit as is specified in the Prospectus (the "Specified
Currency").
Denominations:
The denomination of any Book-Entry, Global or Certificated Note will
be a minimum of U.S. $1,000 or any amount in excess thereof in integral
multiples of $1,000 or the equivalent, as determined pursuant to the
provisions of the Indenture, of U.S. $1,000 (rounded down to an integral
multiple of 1,000 units of such Specified Currency) and any amounts in excess
thereof in integral mutliples of 1,000 units.
Interest Payments:
As specified in the Indenture and the Note.
Acceptance of
Offers:
Each Agent will promptly advise the Company by telephone or other
appropriate means of offers to purchase Notes received by it other than those
rejected by such Agent. Each Agent may, in its discretion reasonably
exercised, reject any offer received by it. Each Agent also may make offers
to the Company to purchase Notes as a Purchasing Agent in accordance with
Section 2(b) of the Distribution Agreement. The Company will have the sole
right to accept offers to purchase Notes and may reject any such offer.
If the Company accepts an offer to purchase Notes, it will confirm
such acceptance in writing to the Selling Agent or Purchasing Agent, as the
case may be. If the Company rejects an offer, it will promptly notify the
Agent involved.
Filing and Delivery
of Prospectus:
If the Company accepts an offer to purchase a Note, the Company will
prepare a Pricing Supplement reflecting the terms of such Note and will
arrange to have a Pricing Supplement filed with the Securities and Exchange
Commission (the "Commission") as soon as practicable after the preparation
thereof and will supply at least one such Pricing Supplement to the Selling
Agent or the Purchasing Agent, as the case may be, not later than 5:00 p.m.,
New York City time, on the Business Day following the date of acceptance of
such offer.
With respect to each Note sold pursuant to the Distribution
Agreement, the Selling Agent shall send a copy of the Prospectus as most
recently amended or supplemented (together with the Pricing Supplement
relating to such Note) to the purchaser or its agent prior to or together
with the delivery of (a) the written confirmation of sale (including, in the
case of a book-entry security, the confirmation through DTC's Institutional
Delivery System) or (b) the delivery of such Note, whichever is earlier.
Confirmation:
For each offer accepted by the Company, the Selling Agent will issue
a written confirmation to each purchaser containing the Sale Information (as
defined below), plus delivery and payment instructions.
Currency Swaps:
Unless otherwise requested by the Company, each time an Agent advises
the Company of an offer to purchase Notes denominated in a currency or
currency unit other than U.S. dollars, such Agent will provide the Company
information with respect to currency swap or forward arrangements that, as of
the time the offer is communicated to the Company, such Agent is prepared to
enter into or arrange with a third party to enter into in order to exchange
amounts to be received from the purchaser of such Note at the Settlement Date
and to exchange amounts to be paid by the Company on the interest payment
dates and at maturity.
Settlement--
Sales as Principal:
In the event of a purchase of Notes by an Agent or Agents, as
principal or underwriter (other than as Purchasing Agent), appropriate
settlement details will be set forth in the applicable Terms Agreement to be
entered into between such Agent or Agents and the Company pursuant to the
Distribution Agreement.
Settlement--
Sales as Agent:
All offers solicited by the Agents and accepted by the Company will
be settled on the third Business Day (as defined below) after the date of
acceptance unless otherwise agreed by the purchaser and the Company and the
Settlement Date shall be specified upon acceptance of such offer. The term
"Business Day" means a Monday, Tuesday, Wednesday, Thursday or Friday which
is not a legal holiday for banking institutions in any of the City of New
York, New York, the City of Chicago, Illinois or the City of Wilmington,
Delaware or the city in which the principal corporate trust office of the
Trustee is located or (i) if the Note is denominated in a currency other than
U.S. dollars, in the principal financial center of the country of the
Specified Currency, or (ii) if the Note is denominated in European Currency
Units, in Brussels.
Communication of Sale
Information to the
Company by Selling
Agent:
For each offer accepted by the Company, the Selling Agent or
Purchasing Agent, as the case may be, will provide (unless provided by the
purchaser directly to the Company) to a Designated Person by facsimile
transmission or other acceptable means the following information (the "Sale
Information"):
(1) If a Certificated Note, exact name of the
registered owner,
(2) If a Certificated Note, exact address of
the registered owner,
(3) If a Certificated Note, taxpayer identification number of the
registered owner (if available),
(4) If a Book-Entry Note, the DTC Participant Number of the
institution through which the customer will hold the
beneficial interest in the Global Note,
(5) Principal amount of the Note,
(6) Trade date of Note,
(7) If a Fixed Rate Note, the interest rate,
(8) Settlement Date,
(9) Maturity date,
(10) Currency or currency unit in which the Note is to be
denominated and, if other than U.S. dollars, the applicable
Exchange Rate for such currency or currency unit,
(11) Indexed Currency, the Base Rate and the Exchange Rate
Determination Date, if applicable,
(12) Issue Price,
(13) Selling Agent's commission or Purchasing Agent's discount,
as the case may be (to be paid upon settlement as a discount
from gross proceeds of sale except as provided below under
"Delivery of Notes and Cash Payment"),
(14) Net proceeds to the Company,
(15) If a redeemable Note with a Redemption Commencement Date,
such of the following as are applicable:
(i) Redemption Commencement Date,
(ii) Initial Redemption Price (% of par), and
(iii) Amount (% of par) that the Redemption Price shall
decline (but not below par) on each anniversary of
the Redemption Commencement Date,
(16) If a redeemable or repayable Note with a Stated Redemption
Date or Stated Redemption Dates, such of the following as are
applicable:
(i) the Stated Redemption Date or Stated Redemption
Dates,
(ii) whether the Note is redeemable or repayable at the
option of the Company or the Holder or both,
(iii) the Redemption Price (% of par) on each Stated
Redemption Date,
(iv) the notice period during which the option to redeem
may be exercised, and
(v) the method by which notice of redemption is to be
given,
(17) If a Floating Rate Note, such of the following as are
applicable:
(i) Interest Rate Basis,
(ii) Index Maturity,
(iii) Spread,
(iv) Spread Multiplier,
(v) Maximum Rate,
(vi) Minimum Rate,
(vii) Initial Interest Determination Date,
(viii) Interest Reset Dates,
(ix) Calculation Dates,
(x) Interest Determination Dates, and
(xi) Calculation Agent,
(18) Interest Payment Dates,
(19) Regular Record Dates,
(20) Denomination of certificates to be delivered at settlement,
and
(21) That the Note is a Certificated Note (if applicable),
(22) To the extent known to the Agent, any information not
otherwise expressly set forth in the Prospectus Supplement
which is required pursuant to Item 501(c)(7) or 508 of
Regulation S-K promulgated by the Commission, including, but
not limited to, the initial public offering price of the
Notes, if other than 100% of the principal amount, and
(23) If an Agent purchases Notes as a principal, the extent, if
any, to which the items specified in Sections 8(c), 8(d) and
8(h) of the Distribution Agreement are required to be
furnished as of the Time of Delivery.
In addition, the Selling Agent will use its reasonable efforts to
provide in writing the following information to the Company and the Trustee:
(24) One of the following:
a. In the case of a foreign registered owner (other
than a Financial Institution (as defined below)), an
IRS Form W-8 that has been duly and properly signed
by the registered owner.
b. In the case of a registered owner which is a
Financial Institution, a statement from the
Financial Institution signed under penalties of
perjury stating that the Financial Institution has
received from the beneficial owner an IRS Form W-8
that has been duly and properly signed by the
registered owner together with a copy of such Form
W-8.
c. In the case of a registered owner who is a United
States person, an IRS Form W-9 that has been duly
and properly signed by the registered owner.
A "Financial Institution" is a securities clearing organization, a
bank, or another financial institution that holds customers' securities in
the ordinary course of its trade or business which holds a Note for a
beneficial owner who is a foreign person.
After receiving the Sale Information the Company will, after
recording the Sale Information and any necessary calculations, provide
appropriate documentation to the Trustee necessary for the preparation,
authentication and delivery of such Note.
Change in Interest
Rate, Maturity or
Currency Denomination:
The Company and the Agents will discuss from time to time the rates
of interest per annum to be borne by, and the maturity and currency
denomination of, Notes that may be sold as a result of the solicitation of
offers by the Agents.
Suspension of
Solicitation;
Amendment or
Supplement:
The Company may instruct the Agents to suspend solicitation of offers
to purchase Notes at any time, whereupon the Agents will as promptly as
possible (but in any event not later than one business day after receipt of
such instruction) suspend solicitation until such time as the Company has
advised the Agents that solicitation of offers to purchase Notes may be
resumed. If the Company proposes to amend or supplement the Registration
Statement or the Prospectus relating to the Notes (except in the case of a
Pricing Supplement), it will promptly advise the Agents and will furnish to
the Agents such proposed amendment or supplement and, after the Agents have
been afforded a reasonable opportunity to review such amendment or
supplement, will cause such amendment or supplement to be filed with the
Commission. The Company will promptly provide the Agents with copies of any
such amendment or supplement and confirm to the Agents that such amendment or
supplement has been filed with the Commission.
In the event that at the time the Agents suspend solicitation of
offers to purchase Notes there shall be any outstanding offers to purchase
Notes that have been accepted by the Company but for which settlement has not
occurred, the Company, consistent with its obligations under the Distribution
Agreement, promptly will advise the Agents whether such sales may be settled
and whether copies of the Prospectus as supplemented at the time of the
suspension may be delivered in connection with the settlement of such sales.
The Company will have the sole responsibility for such decision and for any
arrangements which may be made in the event that the Company determines that
such sales may not be settled or that copies of such Prospectus may not be so
delivered.
Authenticity of
Signatures:
The Trustee will furnish the Agents from time to time with the
specimen signatures of each of the Trustee's officers, employees or agents
who have been authorized by the Trustee to authenticate Notes, but the Agents
will have no obligation or liability to the Company or the Trustee in respect
of the authenticity of the signature of any officer, employee or agent of the
Company or the Trustee on any Note.
Advertising Cost:
The Company will determine with the Agents the amount of advertising
that may be appropriate in the solicitation of offers to purchase the Notes.
Advertising expenses will be paid by the Company.
II. Book-Entry Procedures
In connection with the qualification of Book-Entry Notes for
eligibility in the book-entry system maintained by DTC, the Trustee will
perform the custodial, document control and administrative functions
described below, in accordance with its obligations under a Letter of
Representations from the Company and the Trustee to DTC, dated February 23,
1998, and a Medium-Term Note Certificate Agreement, dated March 10, 1989
between the Trustee and DTC (the "Certificate Agreement"), and the Trustee's
obligations as a participant in DTC including DTC's Same-Day Funds Settlement
System ("SDFS").
Issuance:
All Fixed Rate Notes which have the same original issue date,
redemption or repayment provisions, Interest Payment Dates, Regular Record
Dates, interest rate, Specified Currency and maturity date (collectively, the
"Fixed Rate Terms") will be represented initially by a single Global Note in
fully registered form without coupons.
All Floating Rate Notes which have the same original issue date,
redemption or repayment provisions, Interest Payment Dates, Regular Record
Dates, Interest Rate Basis, Interest Determination Dates, Interest Reset
Dates, Calculation Dates, Index Maturity, Spread or Spread Multiplier, if
any, Minimum Rate, if any, Maximum Rate, if any, Specified Currency and
maturity date (collectively, the "Floating Rate Terms") will be represented
initially be a single Global Note in fully registered form without coupons.
Identification:
The Company has received from the CUSIP Service Bureau of Standard
& Poor's (the "CUSIP Service Bureau") a series of approximately 900 CUSIP
numbers for future assignment to Global Notes, and the Company has delivered
to the Trustee and DTC such list of such CUSIP numbers. The Trustee will
assign CUSIP numbers to Global Notes as described below. DTC will notify the
CUSIP Service Bureau periodically of the CUSIP numbers that have been
assigned to Global Notes. The Trustee will notify the Company at any time
when fewer than 100 of the reserved CUSIP numbers remain unassigned to Global
Notes, and, if it deems necessary, the Company will reserve additional CUSIP
numbers for assignment to Global Notes. Upon obtaining such additional CUSIP
numbers, the Company will deliver a list of such additional numbers to the
Trustee and DTC.
Registration:
Each Global Note will be registered in the name of Cede & Co., as
nominee for DTC, on the Security Register maintained under the Indenture.
The beneficial owner of a Book-Entry Note (or one or more indirect
participants in DTC designated by such owner) will designate one or more
participants in DTC (the "Participants") to act as agent or agents for such
owner in connection with the book-entry system maintained by DTC, and DTC
will record in book-entry form, in accordance with instructions provided by
such Participants, a credit balance with respect to such Book-Entry Note in
the account of such Participants. The ownership interest of such beneficial
owner in such Book-Entry Note will be recorded through the records of such
Participants or through the separate records of such Participants and one or
more indirect participants in DTC.
Transfers:
Transfers of a Book-Entry Note will be accomplished by book entries
made by DTC and, in turn, by Participants (and in certain cases, one or more
indirect participants in DTC) acting on behalf of beneficial transferors and
transferees of such Book-Entry Note.
Exchanges:
The Trustee, at the Company's request, may deliver to DTC and the
CUSIP Service Bureau at any time a written notice of consolidation specifying
(a) the CUSIP numbers of two or more outstanding Global Notes having the same
Fixed Rate Terms or Floating Rate Terms, as the case may be (except that
original issue dates need not be the same), and for which interest has been
paid to the same date; (b) a date, occurring at least 30 days after such
written notice is delivered and at least 30 days before the next Interest
Payment Date for the related Book-Entry Notes, on which such Global Notes
shall be exchanged for a single replacement Global Note; and (c) a new CUSIP
number to be assigned to such replacement Global Note. Upon receipt of such
a notice, DTC will send to its participants (including the Trustee) a written
reorganization notice to the effect that such exchange will occur on such
date.
Prior to the specified exchange date, the Trustee will deliver to the
CUSIP Service Bureau written notice setting forth such exchange date and the
new CUSIP number and stating that, as of such exchange date, the CUSIP
numbers of the Global Notes to be exchanged will no longer be valid.
On the specified exchange date, the Trustee will exchange such Global
Notes for a single Global Note bearing the new CUSIP number. The CUSIP
numbers of the exchanged Global Notes will, in accordance with CUSIP Service
Bureau procedures, be cancelled and not immediately reassigned.
Notwithstanding the foregoing, if the Global Notes to be exchanged
exceed $200,000,000 in aggregate principal amount, one replacement Global
Note will be authenticated and issued to represent each $200,000,000 of
principal amount of the exchanged Global Notes and an additional Global Note
will be authenticated and issued to represent any remaining principal amount
of such Global Notes, subject to the minimum denomination restrictions
described in General Procedures - Denominations (see "Denominations" below).
Denominations:
Global Notes representing Book-Entry Notes will be denominated in
principal amounts not in excess of $200,000,000. If one or more Book-Entry
Notes having an aggregate principal amount in excess of $200,000,000 would,
but for the preceding sentence, be represented by a single Global Note, then
one Global Note will be issued to represent each $200,000,000 principal
amount of such Book-Entry Note or Book-Entry Notes and an additional Global
Note will be issued to represent any remaining principal amount of such
Book-Entry Note or Book-Entry Notes, subject to the minimum denomination
restrictions described in General Procedures - Denominations. In such a
case, each of the Global Notes representing such Book-Entry Note or Notes
shall be assigned the same CUSIP number.
Interest:
DTC will arrange for each pending deposit message described under
Settlement Procedure B below to be transmitted to Standard & Poor's, which
will use the message to include certain terms of the related Global Note in
the appropriate daily bond report published by Standard & Poor's.
Payments of Principal,
Premium, if any,
and Interest:
Payments of Interest Only. Promptly after each Regular Record Date
(or as soon thereafter as such information is determined), the Trustee will
deliver to the Company and DTC a written notice specifying by CUSIP number
the amount of interest to be paid on each Global Note on the following
Interest Payment Date (other than an Interest Payment Date coinciding with
the Maturity) and the total of such amounts. DTC will confirm the amount
payable on each Global Note on such Interest Payment Date by reference to the
daily bond reports published by Standard & Poor's. On such Interest Payment
Date, the Company will pay to the Trustee, and the Trustee in turn will pay
to DTC, such total amount of interest due (other than at Maturity), at the
times and in the manner set forth below under "Manner of Payment."
Payments at Maturity. On or about the first Business Day of each
month (or as soon thereafter as such information is determined), the Trustee
will deliver to the Company and DTC a written list of principal, premium, if
any, and interest to be paid on each Global Note maturing or subject to
redemption or repayment in the following month. The Trustee, the Company and
DTC will confirm the amounts of such principal, premium (if any) and interest
payments with respect to each such Global Note on or about the fifth Business
Day preceding the maturity date of such Global Note. At such maturity date,
the Company will pay to the Trustee, and the Trustee in turn will pay to DTC,
the principal of and premium, if any, on such Global Note, together with
interest due at such maturity date, at the times and in the manner set forth
below under "Manner of Payment." Promptly after payment to DTC of the
principal, premium, if any, and interest due at maturity of all Book-Entry
Notes represented by a particular Global Note, the Trustee will cancel such
Global Note, make appropriate entries in its records and dispose of such
Global Note as provided in the Indenture.
Manner of Payment. The total amount of any principal, premium and
interest due on Global Notes on any Interest Payment Date or at maturity
shall be paid by the Company to the Trustee in funds immediately available
for use by the Trustee as of noon, New York City time, on such date. The
Company will make such payment on such Global Notes by wire transfer to the
Trustee or by instructing the Trustee to withdraw funds from an account
maintained by the Company at the Trustee. The Company will confirm any such
instructions in writing to the Trustee. For maturity, redemption and other
principal payments, prior to 1:00 p.m., New York City time, on each such date
or as soon as possible thereafter following receipt of such funds from the
Company, the Trustee will pay by separate wire transfer (using Fedwire
message entry instructions in a form previously specified by DTC) to an
account at the Federal Reserve Bank of New York previously specified by DTC,
in funds available for immediate use by DTC, each payment of interest,
principal and premium, if any, due on Global Notes on such date; and for
interest payments, the Trustee will pay DTC in same day funds on the Interest
Payment Date in accordance with existing arrangements between the Trustee and
DTC. Thereafter on each such date, DTC will pay, in accordance with its SDFS
operating procedures then in effect, such amounts in funds available for
immediate use to the respective Participants with payments in amounts
proportionate to their respective holdings in principal amount of beneficial
interest in such Global Note as are recorded in the book-entry system
maintained by DTC. Once payment has been made to DTC, neither the Company
nor the Trustee shall have any responsibility or liability for the payment by
DTC of the principal of, or premium, if any, or interest on, the Book-Entry
Notes to such Participants.
Withholding Taxes. The amount of any taxes required under applicable
law to be withheld from any interest payment on a Book-Entry Note will be
determined and withheld by the Participant, indirect participant in DTC or
other Person responsible for forwarding payments and materials directly to
the beneficial owner of such Book-Entry Note, or as applicable law may
otherwise require.
Settlement Procedures:
Settlement Procedures with regard to each Book-Entry Note sold by
each Agent will be as follows:
A. Upon receiving the Sale Information, the Company will, as
soon as practicable, advise the Trustee by facsimile transmission of the Sale
Information and the name of such Agent.
B. The Trustee will assign a CUSIP number to the Global Note
representing such Book-Entry Note and will communicate to DTC and the Agent
through DTC's Participant Terminal System, a pending deposit message
specifying such of the following Settlement information as applicable:
1. The following information:
(a) Principal amount of the purchase.
(b) In the case of a Fixed Rate Note, the interest rate,
or, in the case of a Floating Rate Note, the initial
interest rate, the Interest Reset Dates, the
Interest Payment Dates, the Interest Rate Basis,
Index Maturity, Spread or Spread Multiplier, if any,
and the Minimum Rate and Maximum Rate, if any.
(c) Settlement date.
(d) Maturity date.
(e) Price.
(f) DTC Participant Number of the institution through
which the customer will hold the beneficial interest
in the Global Note.
2. The numbers of the participant accounts maintained
by DTC on behalf of the Trustee and the Agent.
3. Identification as a Fixed Rate Note or a Floating
Rate Note.
4. The initial Interest Payment Date for such Note,
number of days by which such date succeeds the
related DTC record date (which term means the
Regular Record Date, or in the case of Floating Rate
Notes which reset weekly, the date five calendar
days immediately preceding the applicable Interest
Payment Date) and, for Fixed Rate Notes, the amount
of interest payable on such Interest Payment Date
per $1,000 principal amount of Note.
5. The frequency of interest payments.
6. The frequency of interest rate resets.
7. The CUSIP number of the Global Note representing
such Book-Entry Notes.
8. Whether such Global Note represents any other
Book-Entry Notes issued or to be issued.
The Trustee will also orally notify the Agent of the CUSIP number
assigned to the Global Note.
C. The Trustee will prepare a Global Note representing such
Book-Entry Note in a form that has been approved by the Company.
D. The Trustee will authenticate the Global Note representing
such Book-Entry Note and maintain possession of such Global Note.
E. DTC will credit such Book-Entry Note to the participant
account of the Trustee maintained by DTC.
F. The Trustee will enter an SDFS deliver order through DTC's
Participant Terminal System instructing DTC to (i) debit such Book-Entry Note
to the Trustee's participant account and credit such Book-Entry Note to the
participant account of the Agent maintained by DTC and (ii) debit the
settlement account of the Agent and credit the settlement account of the
Trustee maintained by DTC, in an amount equal to the price of such Book-Entry
Note less the Agent's commission. The entry of such a deliver order shall be
deemed to constitute a representation and warranty by the Trustee to DTC that
(a) the Global Note representing such Book-Entry Note has been issued and
authenticated and (b) the Trustee is holding such Global Note pursuant to the
Certificate Agreement.
G. The Agent will enter an SDFS deliver order through DTC's
Participant Terminal System instructing DTC to (i) debit such Book-Entry Note
to the Agent's participant account and credit such Book-Entry Note to the
participant accounts of the Participants to whom such Book-Entry Note is to
be credited maintained by DTC and (ii) debit the settlement accounts of such
Participants and credit the settlement account of the Agent maintained by
DTC, in an amount equal to the initial public offering price of the
Book-Entry Note so credited to their accounts.
H. Transfers of funds in accordance with SDFS deliver orders
described in Settlement Procedures F and G will be settled in accordance with
SDFS operating procedures in effect on the Settlement Date.
I. The Trustee will credit to an account of the Company
maintained at The Chase Manhattan Bank funds available for immediate use in
an amount equal to the amount credited to the Trustee's DTC settlement
account in accordance with Settlement Procedure F.
J. The Agent will confirm the purchase of each Book-Entry Note
to the purchaser thereof either by transmitting to the Participant to whose
account such Note has been credited a confirmation order through DTC's
Participant Terminal System or by mailing a written confirmation to such
purchaser. In all cases the Prospectus as most recently amended or
supplemented (including the applicable Pricing Supplement) must accompany or
precede such confirmation.
Settlement Procedures
Timetable:
For offers accepted by the Company, Settlement Procedures A through
J shall occur no later than the respective times (New York City time) listed
below:
Settlement
Procedure Time
- ---------- --------------------------------------------------------
A 11:00 a.m. on the Business Day following the date
of acceptance.
B 2:00 p.m. on the Business Day following the date of
acceptance.
C 5:00 p.m. on the Business Day before the Settlement Date.
D 9:00 a.m. on the Settlement Date.
E 10:00 a.m. on the Settlement Date.
F-G 2:00 p.m. on the Settlement Date.
H 4:45 p.m. on the Settlement Date.
I-J 5:00 p.m. on the Settlement Date.
Settlement Procedure H is subject to extension in accordance with any
extension of Fedwire closing deadlines and in the other events
specified in the SDFS operating procedures in effect on the
Settlement Date.
If Settlement of a Book-Entry Note is rescheduled or cancelled, the
Trustee will deliver to DTC, through DTC's Participant Terminal
System, a cancellation message to such effect by no later than 2:00
p.m., New York City time, on the Business Day immediately preceding
the scheduled Settlement Date.
Failures:
If the Trustee has not entered an SDFS deliver order with respect to
a Book-Entry Note pursuant to Settlement Procedure F (which may be evidenced
by facsimile transmission), the Trustee, at the Company's direction, shall
deliver to DTC, through DTC's Participant Terminal System, as soon as
practicable, but no later than 2:00 p.m. on any business day, a withdrawal
message instructing DTC to debit such Book-Entry Note to the participant
account of the Trustee maintained at DTC. DTC will process the withdrawal
message, provided that such participant account contains a principal amount
of the Global Note representing such Book-Entry Note that is at least equal
to the principal amount of such Book-Entry Note to be debited. If withdrawal
messages are processed with respect to all the Book-Entry Notes issued or to
be issued represented by a Global Note, the Trustee will void such Global
Note, make appropriate entries in its records and, unless otherwise directed
by the Company, destroy the Certificate. The CUSIP number assigned to such
Global Note shall, in accordance with CUSIP Service Bureau procedures, be
cancelled and not immediately reassigned. If withdrawal messages are
processed with respect to a portion of the Book-Entry Notes represented by a
Global Note, the Trustee will exchange such Global Note for two Global Notes,
one of which shall represent such Book-Entry Notes (which shall be cancelled
immediately after issuance), and the other of which shall represent the
remaining Book-Entry Notes previously represented by the surrendered Global
Note and shall bear the CUSIP number of the surrendered Global Note. If the
purchase price for any Book-Entry Note is not timely paid to the Participants
with respect to such Note by the beneficial purchaser (other than a
Purchasing Agent) thereof (or a person, including an indirect participant in
DTC, acting on behalf of such purchaser), such Participants and, in turn, the
related Agent may enter SDFS deliver orders through DTC's Participant
Terminal System debiting such Note free to such Agent's Participant Account
and crediting such Note free to the Participant Account of the Trustee and
shall notify the Trustee and the Company thereof. Thereafter, the Trustee,
(i) will immediately notify the Company, once the Trustee has confirmed that
such Note has been credited to its Participant Account, and the Company shall
transfer by Fedwire (immediately available funds) to such Agent an amount
equal to the price of such Note which was previously sent by wire transfer to
the account of the Company maintained at The Chase Manhattan Bank in
accordance with settlement procedure I, and (ii) the Trustee will deliver the
withdrawal message and take the related actions described in the preceding
sentences of this paragraph. Such debits and credits will be made on the
Settlement Date, if possible, and in any event not later than 5:00 p.m. on
the following Business Day. If such failure shall have occurred for any
reason other than default by the Agent in the performance of its obligations
hereunder or under the Distribution Agreement, the Company will reimburse the
Agent on an equitable basis for its loss of the use of funds during the
period when they were credited to the account of the Company. In addition,
if such failure shall have occurred by reason of a default by the Company in
the performance of its obligations under the Distribution Agreement, the
Company will pay the Selling Agent any commission to which it would have been
entitled in connection with such sale.
Notwithstanding the foregoing, upon any failure to settle with
respect to a Book-Entry Note, DTC may take any actions in accordance with its
SDFS operating procedures then in effect. In the event of a failure to
settle with respect to a Book-Entry Note that was to have been represented by
a Global Note also representing other Book-Entry Notes, the Trustee will
provide, in accordance with Settlement Procedures C and D, for the
authentication and issuance of a Global Note representing such other
Book-Entry Notes and will make appropriate entries in its records.
Trustee Not to Risk
Funds:
Nothing herein shall be deemed to require the Trustee to risk or
expend its own funds in connection with any payment to the Company, or the
Agents or DTC, it being understood by all parties that payments made by the
Trustee to either the Company, DTC or the Agents shall be made only to the
extent that funds are provided to the Trustee for such purpose.
III. Certificated Notes procedures
Payment at
Maturity:
As specified in the Indenture and the Form of Note.
Settlement:
Prior to 3:00 p.m., New York City time, on the Business Day prior to
the Settlement Date, the Company will instruct the Trustee or its agent by
facsimile transmission or other acceptable written means to authenticate and
deliver the Certificated Notes no later than 2:15 p.m., New York City time,
on the Settlement Date.
If the Settlement Date is the same day as the date of acceptance,
then prior to 11:00 a.m., New York City time, on the Settlement Date the
Company will instruct the Trustee or its agent by facsimile transmission or
other acceptable written means to authenticate and deliver the Certificated
Notes no later than 2:15 p.m., New York time, on the Settlement Date.
Certificated Notes denominated in a currency or currency unit other than U.S.
dollars shall have a Settlement Date not less than two Business Days after
the acceptance of the offer by the Company.
Delivery of
Notes
and Cash
Payment:
Upon receipt of appropriate documentation and instructions, the
Company will cause the Trustee to prepare and authenticate each Note and
appropriate receipts.
Each Certificated Note shall be authenticated and dated on the
Settlement Date therefor. The Trustee will deliver each authenticated
Certificated Note to the Selling Agent for the benefit of the purchaser in
accordance with written instructions (or oral instructions confirmed in
writing (which may be given by telex or telecopy) on the next business day)
from the Company. Delivery by the Trustee of each Certificated Note will be
made against a receipt therefor.
Upon verification by the Selling Agent that a Certificated Note has
been prepared and properly authenticated and delivered by the Trustee and
registered in the name of the purchaser in the proper principal amount and
other terms in accordance with the Sale Information, payment will be made to
the Company's account at The Chase Manhattan Bank on behalf of the Company by
the Selling Agent on behalf of the purchaser the same day as the Selling
Agent's receipt of such Certificated Note in immediately available funds. If
either (i) the Certificated Note is denominated in U.S. dollars or (ii) the
Certificated Note is denominated in a currency or currency unit other than
U.S. dollars and, at or prior to the Settlement Date, the Company and the
Selling Agent have entered into, or the Selling Agent has arranged for the
Company to enter into, a contract with respect to the sale of the Specified
Currency, the amount payable by the Selling Agent pursuant to the preceding
sentence shall be the issue price of the Certificated Note (or the U.S.
dollar equivalent pursuant to such contract) less the Selling Agent's
commission determined in accordance with Section 2(a) of the Distribution
Agreement. In all other cases, the Selling Agent's commission shall not be
discounted from the gross proceeds but shall be paid separately by the
Company in U.S. dollars in immediately available funds on the Settlement
Date. The payment by the Selling Agent shall be made only upon prior receipt
by such Agent of immediately available funds from or on behalf of the
purchaser in the Specified Currency unless such Agent decides, at its option,
to advance its own funds for such payment against subsequent receipt of funds
from the purchaser.
Upon delivery of a Certificated Note to the Selling Agent and the
verification provided in the preceding paragraph, the Selling Agent shall
promptly deliver such Certificated Note to the purchaser or its agent.
Failures:
In the event that a purchaser (other than a Purchasing Agent) shall
fail to accept delivery of and make payment for any Certificated Note, the
Selling Agent will forthwith notify the Trustee and the Company by telephone
or by facsimile transmission. If the Certificated Note has been delivered to
the Selling Agent on behalf of the purchaser, the Selling Agent will
immediately return the Certificated Note to the Trustee. If funds have been
advanced by the Selling Agent for the purchase of such Note, The Chase
Manhattan Bank will, upon instruction by the Company and upon receipt of the
Certificated Note, debit the account of the Company in an amount equal to the
amount previously credited thereto in respect of the Note and will either
credit the account of or return such funds to the Selling Agent. Such debits
and credits or returns will be made on the Settlement Date if possible and,
in any event, not later than the business day following the Settlement Date.
If such failure shall have occurred for any reason other than default by the
Selling Agent in the performance of its obligations under the Distribution
Agreement, the Company will reimburse the Selling Agent on an equitable basis
for its loss of the use of the funds during the period when they were
credited to the account of the Company. In addition, if such failure shall
have occurred by reason of a default by the Company in the performance of its
obligations under the Distribution Agreement, the Company will pay the
Selling Agent any commission to which it would have been entitled in
connection with such sale.
Immediately upon receipt of the certificate representing the Note in
respect of which the failure occurred, the Trustee will void such
Certificated Note, make appropriate entries in its records and, unless
otherwise instructed by the Company, destroy the certificate.
ANNEX III
Pursuant to Section 8(d) of the Distribution Agreement, the Company's
and Sears independent certified public accountants shall furnish letters to
the effect that:
(i) They are independent certified public accountants with
respect to the Company and Sears and its consolidated subsidiaries within the
meaning of the Act and the applicable published rules and regulations of the
Commission thereunder and the answer to Item 10 of the Registration Statement
is correct insofar as it relates to them;
(ii) In their opinion, the financial statements and
schedules and the additional financial information examined by them and
included or incorporated by reference in the Registration Statement or the
Prospectus comply as to form in all material respects with the applicable
accounting requirements of the Act or the Exchange Act, as applicable, and
the published rules and regulations thereunder;
(iii) On the basis of limited procedures, not constituting
an examination in accordance with generally accepted auditing standards,
including a reading of the unaudited financial statements and schedules and
other information referred to below, a reading of the latest available
interim financial statements of the Company and Sears and certain of its
subsidiaries, inspection of the minute books of the Company and Sears and
certain of its subsidiaries since the date of the latest audited financial
statements included or incorporated by reference in the Prospectus, inquiries
of officials of the Company and Sears and its subsidiaries responsible for
financial and accounting matters and such other inquiries and procedures as
may be specified in such letter, nothing came to their attention that caused
them to believe that:
(A) the unaudited consolidated statements of income,
consolidated statements of financial position and consolidated statements of
changes in financial position of the Company and of Sears and its
consolidated subsidiaries included or incorporated by reference in the
Prospectus do not comply as to form in all material respects with the
applicable accounting requirements of the Exchange Act and the published
rules and regulations thereunder; or
(B) as of a specified date not more than five business
days prior to the date of delivery of such letter, there have been any
changes in the capital stock accounts, long-term debt, short-term debt, or
any decreases in net assets or other items specified by the Agents, in each
case as compared with amounts shown or included in the latest statement of
financial position of the Company included or incorporated by reference in
the Prospectus, except in each case for changes, increases or decreases which
the Prospectus discloses have occurred or may occur or which are described in
such letter; and
(iv) In addition to the examination referred to in their
report(s) included or incorporated by reference in the Prospectus and the
limited procedures, inspection of minute books, inquiries and other
procedures referred to in clause (iii) above, they have carried out certain
specified procedures, not constituting an audit, with respect to certain
amounts, percentages and financial information specified by the Agents which
are derived from the general accounting records of the Company and Sears and
its subsidiaries, which appear in the Prospectus (excluding documents
incorporated by reference), or in Part II of, or in exhibits and schedules
to, the Registration Statement specified by the Agents or in documents
incorporated by reference in the Prospectus specified by the Agents, and have
compared certain of such amounts, percentages and financial information with
the accounting records of the Company and Sears and its subsidiaries and have
found them to be in agreement.
All references in this Annex III to the Prospectus shall be
deemed to refer to the Prospectus as amended or supplemented (including the
documents incorporated by reference therein) as of the Closing Date referred
to in Section 8(d) thereof and to the Prospectus as amended or supplemented
(including the documents incorporated by reference therein) as of the date of
the amendment, supplement, incorporation or the Time of Delivery relating to
the Terms Agreement requiring the delivery of such letter under Section 8(d)
thereof.
PRICING AGREEMENT
MERRILL LYNCH & CO.
MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED
As Representatives of the several Underwriters named
in Schedule I hereto
World Financial Center
North Tower
New York, NY 10281
February 26, 1998
Dear Sirs:
Sears Roebuck Acceptance Corp., a Delaware corporation (the
"Company"), proposes subject to the terms and conditions stated herein and in
the Underwriting Agreement, dated September 18, 1997 (the "Underwriting
Agreement"), executed between the Company and Sears, Roebuck and Co.
("Sears"), on the one hand, and Merrill Lynch, Pierce, Fenner & Smith
Incorporated, on the other hand, to issue and sell to the Underwriters named
in Schedule I hereto (the "Underwriters") the Securities specified in
Schedule II hereto (the "Designated Securities"). Each of the provisions of
the Underwriting Agreement is incorporated herein by reference in its
entirety, and shall be deemed to be a part of this Agreement to the same
extent as if such provisions had been set forth in full herein; and each of
the representations and warranties set forth therein shall be deemed to have
been made at and, except where otherwise specified, as of the date of this
Pricing Agreement, except that each representation and warranty with respect
to the Prospectus in Sections 2 and 3 of the Underwriting Agreement shall be
deemed to be a representation and warranty as of the date of the Underwriting
Agreement in relation to the Prospectus (as therein defined) and also a
representation and warranty as of the date of this Pricing Agreement in
relation to the Prospectus as amended or supplemented. Unless otherwise
defined herein, terms defined in the Underwriting Agreement are used herein
as therein defined.
An amendment to the Registration Statement, or a supplement to the
Prospectus, as the case may be, relating to the Designated Securities, in the
form heretofore delivered to you is now proposed to be filed with the
Commission.
Subject to the terms and conditions set forth herein and in the
Underwriting Agreement incorporated herein by reference, the Company agrees
to issue and sell to each of the Underwriters, and each of the Underwriters
agrees, severally and not jointly, to purchase from the Company, at the time
and place and at a purchase price to the Underwriters set forth in Schedule
II hereto, the principal amount of Designated Securities set forth opposite
the name of such Underwriter in Schedule I hereto, less the principal amount
of Designated Securities covered by Delayed Delivery Contracts, if any, as
may be specified in such Schedule II. The obligations of the Underwriters
hereunder are subject to the condition that Baker & McKenzie, special tax
counsel for the Company, shall have furnished to you their written opinion,
dated the Time of Delivery for the Desginated Securities, as to matters set
forth under "United States Tax Considerations" in the Prospectus Supplement.<PAGE>
If the foregoing is in accordance with your understanding, please
sign and return two counterparts hereof, and upon acceptance hereof by you on
behalf of each of the Underwriters, this letter and such acceptance hereof,
including the provisions of the Underwriting Agreement incorporated herein by
reference, shall constitute a binding agreement between the Company, Sears
and each of the Underwriters. It is understood that your acceptance of this
letter on behalf of each of the Underwriters is pursuant to the authority set
forth in a form of Agreement among Underwriters, the form of which shall be
supplied to the Company upon request. You represent that you are authorized
on behalf of yourselves and on behalf of each of the other Underwriters named
in Schedule I hereto to enter into this Agreement.
Very truly yours,
SEARS ROEBUCK ACCEPTANCE CORP.
By: /S/George F. Slook
SEARS, ROEBUCK AND CO.
By: /S/Larry R. Raymond
Accepted as of the date hereof:
MERRILL LYNCH, PIERCE,
FENNER & SMITH INCORPORATED
As Representative of the several Underwriters
By: /S/Scott Primrose
Managing Director
SCHEDULE I
Underwriter Principal Amount of Designated
Securities to be purchased
Merrill Lynch, Pierce,
Fenner & Smith Incorporated $ 75,312,500
Morgan Stanley & Co. Incorporated 75,312,500
Smith Barney Inc. 75,312,500
Bear, Stearns & Co. Inc. 3,437,500
CIBC Oppenheimer Corp. 3,437,500
Dain Rauscher Incorporated 3,437,500
A.G. Edwards & Sons, Inc. 3,437,500
Piper Jaffray Inc. 3,437,500
Tucker Anthony Incorporated 3,437,500
US Clearing Corp. 3,437,500
Total $250,000,000
SCHEDULE II
Title of Designated Securities:
7% Notes due March 1, 2038
Aggregate principal amount:
$250,000,000
Price to Public:
100.00% of the principal amount of
the Designated Securities, plus accrued
interest from March 3, 1998 to the Time of
Delivery
Purchase Price by Underwriters:
96.85% of the principal amount of the
Designated Securities, plus accrued
interest from March 3, 1998 to the Time of
Delivery
Indenture:
Indenture, dated as of May 15, 1995,
between the Company and The Chase Manhattan
Bank, N.A., as Trustee
Maturity:1
Interest Rate:1
Interest Payment dates:1
Redemption Provisions: 1
Sinking Fund Provisions:
None
Time of Delivery:
9:00 A.M., Chicago time, March 3, 1998
Funds in which payment by Underwriters to Company to be made:
Same day funds
Method of Payment:
Wire transfer to The Chase Manhattan Bank, for the Account of Sears
Roebuck Acceptance
Corp., Account No. 910-2587590, ABA No. 021000021
Closing Location:
Chicago, Illinois and Delaware
Delayed Delivery:
None
Counsel:
To the Company and Sears, Nancy K. Bellis, Assistant General
Counsel-Corporate & Securities,
Sears, Roebuck and Co.
Latham & Watkins
To the Underwriters, Cleary, Gottlieb, Steen & Hamilton
FORM OF NOTE
[FORM OF FACE OF NOTE]
UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF
TRANSFER, EXCHANGE OR PAYMENT, AND ANY NOTE ISSUED IS REGISTERED IN THE NAME
OF CEDE & CO. OR IN SUCH OTHER NAME AS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (AND ANY PAYMENT IS MADE TO
CEDE & CO., OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY), ANY TRANSFER, PLEDGE OR
OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL
INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
Number $
CUSIP NO.__________________
SEARS ROEBUCK ACCEPTANCE CORP.
7% Note due March 1, 2038
7% 7%
Due 2038 Due 2038
Sears Roebuck Acceptance Corp., a corporation organized and existing
under the laws of the State of Delaware (hereinafter called the "Company"),
for value received, hereby promises to pay to , or
registered assigns, the principal sum of _____________________________ upon
presentation and surrender of this Note, on the first day of March, 2038, at
the office or agency of the Company in the Borough of Manhattan of The City
of New York or, at the option of the holder hereof, such office or agency, if
any, maintained by the Company in the city in which the principal executive
offices of the Company are located or the city in which the principal
corporate trust office of the Trustee is located, in such coin or currency of
the United States of America as at the time of payment is legal tender for
public and private debts, and to pay interest on said principal sum at the
rate of 7% per annum, either, at the option of the Company, by check mailed
to the address of the person entitled thereto as such address shall appear on
the Security Register or at either of such offices or agencies, in like coin
or currency, from the March 1, June 1, September 1 or December 1, as the case
may be, next preceding the date hereof to which interest has been paid on the
Notes referred to on the reverse hereof (unless the date hereof is the date
to which interest has been paid on such Notes, in which case from the date
hereof, or unless the date hereof is prior to June 1, 1998, in which case
from March 3, 1998), quarterly, commencing on June 1, 1998, on March 1, June
1, September 1, and December 1, until payment of said principal sum has been
made or duly provided for. Notwithstanding the foregoing, if this Note is
dated after any February 14 (February 15 in the case of any Leap Year) and
before the following March 1, or after any May 17 and before the following
June 1, or after any August 17 and before the following September 1, or after
any November 16 and before the following December 1, then this Note shall
bear interest from such following March 1, June 1, September 1 or December 1,
as applicable, provided, however, that if the Company shall default in the
payment of interest due on such following March 1, June 1, September 1 or
December 1, this Note shall bear interest from the next preceding March 1,
June 1, September 1 or December 1 to which interest has been paid on such
Note, or if no interest has been paid on such Note, then from March 3, 1998.
The interest so payable on any March 1, June 1, September 1 or December 1,
will, subject to certain exceptions provided in the Indenture referred to on
the reverse hereof, be paid to the person in whose name this Note is
registered at the close of business on the February 14 (February 15 in the
case of any Leap Year) prior to such March 1, the May 17 prior to such June
1, the August 17 prior to such September 1, or the November 16 prior to such
December 1. Any such interest not so punctually paid or duly provided for
shall forthwith cease to be payable to the registered holder on such Interest
Payment Date, and may be paid to the Person in whose name this Note is
registered at the close of business on a Special Record Date for the payment
of such Defaulted Interest to be fixed by the Trustee, notice of which shall
be given to Noteholders not less than 10 days prior to such Special Record
Date, or may be paid, at any time in any other lawful manner, all as more
fully provided in such Indenture.
This Note is subject to redemption, at the option of the Company, on
each March 1, June 1, September 1 and December 1, commencing on March 1,
2003, as a whole or from time to time in part, upon not less than 30 nor more
than 60 days' notice, at a redemption price equal to 100% of the principal
amount redeemed plus accrued and unpaid interest to the date fixed for
redemption. In addition, this Note is subject to redemption, at the option
of the Company, in whole but not in part, at any time upon not less than 30
nor more than 60 days' notice, at a redemption price equal to 100% of the
principal amount redeemed plus accrued and unpaid interest to the date fixed
for redemption, if there is a substantial likelihood that the Company will
not be entitled to deduct currently for United States federal income tax
purposes the full amount of interest accrued in respect of the Note as a
result of any of the following occurring, becoming effective or being issued
after March 2, 1998:
(i) any actual or proposed change in or amendment to the laws ( or any
regulations or rulings promulgated thereunder) of the United States , or any
change in the application, official interpretation or enforcement of such
laws, regulations or rulings;
(ii) any action taken by a taxing authority which action is generally
applied or is taken with respect to the Company;
(iii) a decision rendered by a court of competent jurisdiction in the
United States, whether or not such decision was rendered with respect to the
Company; or
(iv) a technical advice memorandum or letter ruling or other
administrative pronouncement issued by the National Office of the United
States Internal Revenue Service, on substantially the same facts as those
pertaining to the Company.
If any Interest Payment Date or the Maturity Date falls on a day that
is not a Business Day, the interest or principal payment shall be made on the
next day that is a Business Day, and no interest on such payments shall
accrue for the period from and after the Interest Payment Date or the
Maturity Date. Interest on the Note well be computed on the basis of a
360-day year of twelve 30-day months.
Reference is hereby made to the further provisions of this Note set
forth on the reverse hereof, and such further provisions shall for all
purposes have the same effect as though fully set forth at this place.
This Note shall not be entitled to any benefit under the Indenture
referred to on the reverse hereof or any indenture supplemental thereto, or
become valid or obligatory for any purpose, until the certificate of
authentication hereon shall have been signed by or on behalf of the Trustee
under such Indenture.
IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed under its corporate seal.
Dated: March 3, 1998
Sears Roebuck Acceptance Corp.
By _______________________________
President
By ___________________________
Secretary
[Corporate Seal]
[FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION]
This is one of the Securities of the series designated and referred to
in the within-mentioned Indenture.
The Chase Manhattan Bank
as Trustee
By:___________________________________
Authorized Officer
[FORM OF REVERSE SIDE OF NOTE]
SEARS ROEBUCK ACCEPTANCE CORP.
7% Note due March 1, 2038
1. This Note is one of a duly authorized issue of debentures, notes,
bonds or other evidences of indebtedness of the Company (hereinafter called
the "Securities") of the series hereinafter specified, unlimited in aggregate
principal amount, all issued or to be issued under or pursuant to an
indenture dated as of May 15, 1995, executed between the Company and THE
CHASE MANHATTAN BANK, as Trustee; to which indenture and all indentures
supplemental thereto (herein collectively called the "Indenture") reference
is hereby made for a specification of the rights and limitation of rights
thereunder of the Holders of the Securities, the rights and obligations
thereunder of the Company and the rights, duties and immunities thereunder of
the Trustee. The Securities may be issued in one or more series, which
different series may be issued in various aggregate principal amounts, may
mature at different times, may bear interest (if any) at different rates, may
be subject to different redemption provisions (if any), may be subject to
different sinking, purchase or analogous funds (if any), may be subject to
different covenants and Events of Default and may otherwise vary as in the
Indenture provided. This Note is one of a series designated as the "7% Notes
due March 1, 2038" of the Company, limited in aggregate principal amount to
$250,000,000 (hereinafter referred to as the "Notes"). All terms used in
this Note which are defined in the Indenture shall have the meanings assigned
to them in the Indenture.
2. In case a default, as defined in the Indenture, shall occur and
be continuing with respect to the Notes, the principal amount of all Notes
then outstanding under the Indenture may be declared or may become due and
payable upon the conditions and in the manner and with the effect provided in
the Indenture. The Indenture provides that such declaration may in certain
events be annulled by the Holders of a majority in principal amount of the
Notes outstanding.
3. To the extent permitted by, and as provided in, the Indenture,
indentures supplemental thereto may be entered into with the consent of the
Company and with the consent of the Holders of not less than a majority in
principal amount of the outstanding Securities (as defined in the Indenture)
of each series to be affected; provided, however, that no such supplemental
indenture shall (i) change the Stated Maturity of the principal of (and
premium, if any, on), or the interest on, any Security, or reduce the
principal amount of (and premium, if any, on), or the rate of interest on any
Security, or change the Currency in which the principal of (and premium, if
any) or interest on such Securities is denominated or payable, or reduce the
amount of the principal of an Original Issue Discount Security that would be
payable upon a declaration of acceleration of the Maturity thereof pursuant
to Section 6.1 of the Indenture without the consent of the Holder of each
outstanding Security so affected, or (ii) reduce the aforesaid percentage of
Securities of any series the Holders of which are required to consent to any
such supplemental indenture, without the consent of the Holders of each
outstanding Security affected thereby.
4. The Indenture also provides that the Holders of a majority in
principal amount of the Securities of any series then outstanding may waive
any past default under the Indenture and its consequences, except a default
in the payment of the principal of or interest or premium, if any, on any of
the Securities.
5. No reference herein to the Indenture and no provision of this
Note or of the Indenture shall alter or impair the obligation of the Company,
which is absolute and unconditional, to pay the principal of and interest on
this Note at the place, at the respective times, at the rate, and in the
Currency, herein prescribed.
6. This Note is transferable by the registered Holder hereof or by
his attorney duly authorized in writing at the office or agency of the
Company in the Borough of Manhattan of The City of New York or, at the option
of the Holder hereof, such office or agency, if any, maintained by the
Company in the city in which the principal executive offices of the Company
are located or the city in which the principal corporate trust office of the
Trustee is located, without charge except for any tax or other governmental
charge imposed in relation thereto, but only in the manner and subject to the
limitations provided in the Indenture and upon surrender of this Note. Upon
any such transfer a Note or Notes of authorized denominations for a like
aggregate principal amount and bearing a number not contemporaneously
outstanding will be issued in exchange herefor.
7. The Notes are issuable only as registered Notes without coupons,
in denominations of $25 and any multiple of $25. In the manner and subject
to the limitations provided in the Indenture, Notes are exchangeable, without
charge except for any tax or other governmental charge imposed in relation
thereto, for other Notes of authorized denominations for a like aggregate
principal amount, at the office or agency of the Company in the Borough of
Manhattan of The City of New York or, at the option of the Holder hereof,
such office or agency, if any, maintained by the Company in the city in which
the principal executive offices of the Company are located or the city in
which the principal corporate trust office of the Trustee is located.
8. The Company, the Trustee, any Authenticating Agent, any paying
agent and any Security registrar may deem and treat the registered Holder
hereof as the absolute owner hereof (whether or not this Note shall be
overdue and notwithstanding any notation of ownership or other writing hereon
by anyone other than the Company or any Security registrar) for the purpose
of receiving payment of or on account of the principal hereof and interest
hereon and for all other purposes, and neither the Company, the Trustee, an
Authenticating Agent, a paying agent nor Security registrar shall be affected
by any notice to the contrary. All such payments shall be valid and
effectual to satisfy and discharge the liability upon this Note to the extent
of the sum or sums so paid.
9. No recourse shall be had for the payment of the principal of or
the interest on this Note or for any claim based hereon or otherwise in any
manner in respect hereof, or in respect of the Indenture, against any
incorporator, shareholder, officer or director, past, present or future, of
the Company or of any predecessor or successor corporation, whether by virtue
of any constitutional provision or statute or rule of law, or by the
enforcement of any assessment or penalty or in any other manner, all such
liability being expressly waived and released by the acceptance hereof and as
part of the consideration for the issue hereof. In the event of any sale or
transfer of its assets and liabilities substantially as an entirety to a
successor corporation, the predecessor corporation may be dissolved and
liquidated as more fully set forth in the Indenture.
1 Incorporated by reference to attached form of security.
REGISTERED SEARS ROEBUCK ACCEPTANCE CORP. REGISTERED
No. FXR- MEDIUM-TERM NOTE SERIES V CUSIP
(FIXED RATE)
[Except as otherwise provided in Section 2.10 of the Indenture referred to on
the reverse hereof, this Note may be transferred, in whole but not in part,
only to another nominee of the Depository or to a successor Depository or to
a nominee of such successor Depository.
Unless this Note is presented by an authorized representative of The
Depository Trust Company (55 Water Street, New York, New York) to the Company
or its agent for registration of transfer, exchange or payment, and any Note
issued upon registration of transfer of, or in exchange for, or in lieu of,
this Note is registered in the name of Cede & Co. or such other name as
requested by an authorized representative of The Depository Trust Company and
any payment hereon is made to Cede & Co., ANY TRANSFER, PLEDGE OR OTHER USE
HEREOF FOR VALUE OF OTHERWISE BY OR TO ANY PERSON IS WRONGFUL since the
registered owner hereof, Cede & Co., has an interest herein.]
ORIGINAL ISSUE DATE:
INTEREST RATE: %
REDEMPTION COMMENCEMENT DATE:
REDEMPTION PRICE: IF A REDEMPTION COMMENCEMENT DATE IS
SPECIFIED ABOVE, THE REDEMPTION PRICE SHALL
BE % OF THE PRINCIPAL
AMOUNT OF THIS NOTE TO BE REDEEMED AND THE
REDEMPTION PRICE SHALL DECLINE AT EACH
ANNIVERSARY OF THE REDEMPTION COMMENCEMENT
DATE BY % OF THE PRINCIPAL
AMOUNT OF THIS NOTE TO BE REDEEMED UNTIL THE
REDEMPTION PRICE IS 100% OF SUCH PRINCIPAL
AMOUNT.
STATED REDEMPTION DATE(S) AND REDEMPTION PRICE(S):
Stated Redemption Redemption Price if Redeemed Redemption Price if Repaid
Date at the Option of Company at Option of Holder
IF ONE OR MORE STATED REDEMPTION DATES ARE SPECIFIED ABOVE, THE REDEMPTION
PRICE SHALL BE THE PERCENTAGE OF THE PRINCIPAL AMOUNT OF THIS NOTE TO BE
REDEEMED OR REPAID AS REFLECTED ABOVE.
REDEEMABLE AT OPTION OF: [THE COMPANY,] [THE HOLDER,] OR [THE COMPANY OR THE
HOLDER]
NOTICE PROVISIONS FOR REDEMPTION ON A STATED REDEMPTION DATE:
MATURITY DATE:
INTEREST PAYMENT DATES: FEBRUARY 15 AND AUGUST 15, COMMENCING
OTHER PROVISIONS:
Sears Roebuck Acceptance Corp., a corporation duly organized and
existing under the laws of the State of Delaware (herein referred to as the
"Company," which term includes any successor corporation under the Indenture
hereinafter referred to), for value received, hereby promises to pay to
or registered assigns, upon presentation and surrender of this Note, on the
Maturity Date shown above (except to the extent redeemed prior to the
Maturity Date) at the office or agency of the Company in the Borough of
Manhattan of The City of New York, or, at the option of the Holder, such
office or agency, if any, maintained by the Company in the city in which the
principal executive offices of the Company are located or the city in which
the principal corporate trust office of the Trustee is located, the principal
sum of
_______________________________ ______________________________
Principal Amount Specified Currency
and to pay interest thereon at the rate per annum shown above.
This Note will bear interest from the Original Issue Date specified
above or from the most recent Interest Payment Date to which interest on this
Note has been paid or duly provided for. Unless otherwise specified above,
interest will be computed on the basis of a 360-day year of twelve 30-day
months.
Interest on this Note shall be payable on the Interest Payment Dates
and on the Maturity Date indicated above (or the date of redemption), except
that if this Note was originally issued between a Regular Record Date and an
Interest Payment Date, the first payment of interest will be made on the
Interest Payment Date following the next succeeding Regular Record Date to
the registered Holder on such next succeeding Regular Record Date. If any
Interest Payment Date falls on a day that is not a Business Day, the interest
payment shall be postponed to the next succeeding Business Day, and no
interest on such payment shall accrue for the period from and after the
Interest Payment Date. If the Maturity Date of this Note falls on a day that
is not a Business Day, the payment of interest and principal may be made on
the next succeeding Business Day with the same force and effect as if made at
maturity, and no interest on such payment shall accrue for the period from
and after the Maturity Date.
The Regular Record Date shall be the February 1 and August 1 next
preceding any February 15 or August 15 Interest Payment Date and the date 15
calendar days prior to any other Interest Payment Date, whether or not such
date shall be a Business Day.
"Business Day" as used herein means each Monday, Tuesday, Wednesday,
Thursday or Friday which is not a legal holiday for banking institutions in
any of the City of Wilmington, Delaware, the City of Chicago, Illinois The
City of New York, New York or the city in which the principal corporate trust
office of the Trustee is located or, if this Note is denominated in a
currency other than Dollars, in
______________________________________________________________________.
Principal Financial Center of Country Issuing Currency
Payments of interest with respect to any Interest Payment Date or
Maturity Date (or date of redemption) will include interest accrued to, but
excluding, such Interest Payment Date or Maturity Date (or date of
redemption).
The principal (and premium, if any), and interest on, this Note is
payable by the Company in the Specified Currency. Interest payable on any
Interest Payment Date (other than Defaulted Interest) shall be payable to the
person who is the registered Holder at the close of business on the
immediately preceding Regular Record Date. Interest payable upon redemption
or at maturity (other than a redemption or maturity occurring on an Interest
Payment Date) will be paid to the same person to whom the principal amount of
this Note is payable.
Payment of principal (and premium, if any), and interest on, this
Note on any day (if the Holder of this Note is a Depository as defined in the
Indenture referred to on the reverse hereof or a nominee of such a
Depository) will be made in accordance with any applicable provisions of such
written agreement between the Company, the Trustee and such Depository (or
its nominee) as may be in effect from time to time or (if the Holder of this
Note holds an aggregate principal amount of $10,000,000 or more of Notes with
respect to which such payment of principal (and premium, if any) or interest,
as applicable, is to be made on such day) will be made by wire transfer if
the Holder shall have designated in writing to the Trustee an account with a
bank located in the country issuing the Specified Currency or such other
country as shall be satisfactory to the Company and the Trustee. If payment
of interest is to be made by wire transfer, such information must be received
by the Trustee at its corporate trust office in the Borough of Manhattan of
The City of New York on or prior to the Regular Record Date for an Interest
Payment Date. The Trustee will, subject to applicable laws and regulations
and until it receives notice to the contrary, make such payment to such
Holder by wire transfer to the designated account. If a payment of interest
is not made in accordance with such a written agreement or by wire transfer,
payment will be made by check. Checks for payment of interest on an Interest
Payment Date will be mailed to the Holder at the address of such Holder
appearing on the Security Register on the applicable Regular Record Date.
To receive payment of a U.S. dollar denominated Note upon redemption
or at maturity, a Holder must make presentation and surrender of such Note on
or before the Redemption Date or Maturity Date, as applicable. Payment
(other than payment in accordance with a written agreement between the
Company, the Trustee and a Depository (or its nominee) as set forth above)
will be made by check unless proper wire instructions are on file with the
Trustee or are received at presentment. To receive payment of a Note
denominated in a Foreign Currency upon redemption or at maturity, a Holder
must make presentation and surrender such Note not less than two Business
Days prior to the Redemption Date or Maturity Date, as applicable. Upon
presentation and surrender of a Note denominated in a Foreign Currency at any
time after the date two Business Days prior to the Redemption Date or
Maturity Date, as applicable, the Company will pay the principal amount (and
premium, if any) of such Note, and any interest due upon redemption or at
maturity (unless the Redemption Date or Maturity Date is an Interest Payment
Date), two Business Days after such presentation and surrender.
The Company will pay any administrative costs imposed by banks in
connection with sending payments by wire transfer, but any tax, assessment or
governmental charge imposed upon payments will be borne by the Holders of the
Notes in respect of which payments are made.
Reference is hereby made to the further provisions of this Note set
forth on the reverse hereof, and such further provisions shall for all
purposes have the same effect as though fully set forth at this place.
This Note shall not be entitled to any benefit under the Indenture
referred to on the reverse hereof, or become valid or obligatory for any
purpose, until the certificate of authentication hereon shall have been
signed by or on behalf of the Trustee under such Indenture.
IN WITNESS WHEREOF, the Company has caused this Instrument to be duly
executed under its corporate seal.
Dated: SEARS ROEBUCK ACCEPTANCE CORP.
CERTIFICATE OF AUTHENTICATION By _________________________________
This is one of the Notes President
designated and referred to in the
within-mentioned Indenture.
THE CHASE MANHATTAN BANK,
as Trustee
By__________________________ By _________________________________
Authorized Signatory Vice President and
Assistant Secretary
SEARS ROEBUCK ACCEPTANCE CORP.
Medium-Term Note Series V
This Note is one of a duly authorized issue of debentures, notes,
bonds or other evidences of indebtedness of the Company (hereinafter called
the "Securities") of the series hereinafter specified, unlimited in
aggregate principal amount, all issued or to be issued under or pursuant to
an indenture dated as of May 15, 1995, executed between the Company and THE
CHASE MANHATTAN BANK, as Trustee; to which indenture and all indentures
supplemental thereto (herein collectively called the "Indenture") reference
is hereby made for a specification of the rights and limitation of rights
thereunder of the Holders of the Securities, the rights and obligations
thereunder of the Company and the rights, duties and immunities thereunder of
the Trustee. The Securities may be issued in one or more series, which
different series may be issued in various aggregate principal amounts, may
mature at different times, may bear interest (if any) at different rates, may
be subject to different redemption provisions (if any), may be subject to
different covenants and defaults and may otherwise vary as in the Indenture
provided. This Note is one of a series designated as the "Medium-Term Notes
Series V" (hereinafter referred to as the "Notes") of the Company, of up to
$2,000,000,000 in aggregate principal amount. All terms used in this Note
which are defined in the Indenture and which are not otherwise defined in
this Note shall have the meanings assigned to them in the Indenture.
For purposes of the Notes, the term "Fixed Charge Coverage and
Ownership Agreement" shall mean the Fixed Charge Coverage and Ownership
Agreement as extended by the Extension Agreement relating to debt securities
of which the Notes are a part.
The Notes are issuable only in registered form without coupons and
will be either (a) Book-Entry Notes represented by one or more global notes
(each a "Global Note") recorded in the book-entry system maintained by the
Depository or (b) certificated notes issued to, and registered in the names
of, the beneficial owners or their nominees ("Certificated Notes"). Notes
are issuable in minimum denominations of (i) in the case of Notes denominated
in Dollars, U.S.$1,000 and in any larger amount in integral multiples of
$1,000 and (ii) in the case of Notes denominated in any Foreign Currency, the
equivalent in such Foreign Currency determined in accordance with the Market
Exchange Rate for such Foreign Currency on the Business Day immediately
preceding the date on which the Company accepts an offer to purchase a Note,
of U.S.$1,000 (rounded to an integral multiple of 1,000 units of the Foreign
Currency), and in any larger amount in integral multiples of 1,000 units. In
the manner and subject to the limitations provided in the Indenture, the
Global Notes or Certificated Notes are exchangeable, without charge except
for any tax or other governmental charge imposed in relation thereto, for
other Notes of authorized denominations for a like aggregate principal
amount, at the office or agency of the Company in the Borough of Manhattan of
The City of New York, or, at the option of the Holders thereof, such office
or agency, if any, maintained by the Company in the city in which the
principal executive offices of the Company are located or the city in which
the principal corporate trust office of the Trustee is located.
Unless this Note is denominated in Dollars, in the event that the
currency in which this Note is denominated is not available for payment at a
time at which any payment is required hereunder due to the imposition of
exchange controls or other circumstances beyond its control, the Company may,
in full satisfaction of its obligation to make such payment, make instead a
payment in an equivalent amount of Dollars, determined in accordance with the
Market Exchange Rate for such currency on the latest date for which such rate
was established on or before the date on which payment is due, and such
substituted payment of Dollars shall not constitute a default under this Note
or the Indenture.
If a Redemption Commencement Date is specified above, this Note may
be redeemed, whether or not any other Note is concurrently redeemed, at the
option of the Company, as a whole, or from time to time in part, on any
Business Day on or after the Redemption Commencement Date and prior to the
Maturity Date, upon mailing by first-class mail, postage prepaid, a notice of
such redemption not less than 30 nor more than 60 days prior to the
Redemption Date, to the Holder of this Note at such Holder's address
appearing in the Security Register, as provided in the Indenture (provided
that, if the Holder of this Note is a Depository or a nominee of a
Depository, notice of such redemption shall be given in accordance with any
applicable provisions of such written agreement between the Company, the
Trustee and such Depository (or its nominee) as may be in effect from time to
time), at the Redemption Price specified on the face of this Note (expressed
in percentages of the principal amount hereof to be redeemed) together in
each case with interest accrued to the Redemption Date (subject to the right
of the Holder of record on a Regular Record Date to receive interest due on
an Interest Payment Date). If a Stated Redemption Date or Stated Redemption
Dates are specifed above, this Note may be redeemed or repaid, whether or not
any other Note is concurrently redeemed or repaid, at the option of the
Company, the Holder, or either the Company or the Holder, as specified above,
as a whole or in part, on such Stated Redemption Date, at the Redemption
Price set forth in the table above (expresed in percentages of the principal
amount hereof to be redeemed), together in each case with interest accrued to
the Redemption Date (subject to the right of the Holder of record on a
Regular Record Date to receive interest due on an Interest Payment Date) upon
delivery of the notice specified above. In the event of redemption of this
Note in part only, a new Note or Notes of this series, and of like tenor, for
the unredeemed portion hereof will be issued in the name of the Holder hereof
upon the cancellation hereof.
In case a default, as defined in the Indenture, shall occur and be
continuing with respect to the Notes, the principal amount of all Notes then
outstanding under the Indenture may be declared or may become due and payable
upon the conditions and in the manner and with the effect provided in the
Indenture. The Indenture provides that such declaration may in certain
events be annulled by the Holders of a majority in principal amount of the
Notes outstanding.
To the extent permitted by, and as provided in, the Indenture,
modifications or alterations of the Indenture, or of any indenture
supplemental thereto, and of the rights and obligations of the Company and
the Holders of the Notes, may be made without the consent of any Holders of
Notes, for the limited purposes described in Section 11.1 of the Indenture.
To the extent permitted by, and as provided in, the Indenture,
modifications or alterations of the Indenture, or of any indenture
supplemental thereto, and of the rights and obligations of the Company and
the Holders of the Notes, may be made with the consent of the Company by the
affirmative vote or consent of the Holders of not less than a majority in
principal amount of the Securities then outstanding (as defined in the
Indenture) of each series to be affected, evidenced as provided in the
Indenture; provided, however, that no such modification or alteration shall
(i) change the stated maturity of the principal of (and premium, if any), or
interest on, any Security, or reduce the principal amount of (and premium, if
any), or the rate of interest on, any Security, or change the Currency in
which the principal of (and premium, if any), or interest on, such Security
is denominated or payable, or reduce the amount of the principal of an
Original Issue Discount Security that would be payable upon a declaration of
acceleration of the Maturity thereof pursuant to Section 6.1 of the Indenture
without the consent of the Holder of each outstanding Security so affected,
or (ii) reduce the percentage of Securities, the vote or consent of the
Holders of which is required for such modifications and alterations, without
the consent of the Holders of all Securities affected. The Indenture also
provides that the Holders of a majority in principal amount of the Securities
of any series then outstanding may waive any past default with respect to
Securities of such series under the Indenture and its consequences, except a
default in the payment of the principal (or premium, if any), or interest on,
any of the Securities.
This Note is transferable by the registered Holder hereof or by his
attorney duly authorized in writing at the office or agency of the Company in
the Borough of Manhattan of The City of New York or, at the option of the
Holder hereof, such office or agency, if any, maintained by the Company in
the city in which the principal executive offices of the Company are located
or the city in which the principal corporate trust office of the Trustee is
located, without charge except for any tax, assessment or other governmental
charge imposed in relation thereto, but only in the manner and subject to the
limitations provided in the Indenture and upon surrender of this Note. Upon
any such transfer a Note or Notes of authorized denominations for a like
aggregate principal amount and bearing a number not contemporaneously
outstanding will be issued in exchange herefor.
The Company, the Trustee, any Authenticating Agent, any paying agent
and any Security registrar may deem and treat the registered Holder hereof as
the absolute owner hereof (whether or not this Note shall be overdue and
notwithstanding any notice of ownership or other writing hereon by anyone
other than the Company or any Security registrar) for the purpose of
receiving payment of or on account of the principal hereof (and premium, if
any), and interest hereon, and for all other purposes, and none of the
Company, the Trustee, an Authenticating Agent, a paying agent nor the
Security registrar shall be affected by any notice to the contrary. All such
payments shall be valid and effectual to satisfy and discharge the liability
upon this Note to the extent of the sum or sums so paid.
.No recourse under or upon any obligation, covenant or agreement of
the Indenture or of this Note, or for any claim based thereon or otherwise in
respect thereof, shall be had against any incorporator, stockholder, officer
or director, as such, past, present or future, of the Company or of any
successor corporation, either directly or through the Company, whether by
virtue of any constitution, statute or rule of law, or by the enforcement of
any assessment or penalty or otherwise; it being expressly understood that
the Indenture and this Note are solely corporate obligations, and that no
such personal liability whatever shall attach to, or is or shall be incurred
by the incorporators, stockholders, officers or directors, as such, of the
Company or of any successor corporation, or any of them, because of the
creation of the indebtedness authorized by the Indenture, or under or by
reason of the obligations, covenants or agreements contained in the Indenture
or this Note or implied thereform; and that any and all such personal
liability, either at common law or in equity or by constitution or statute,
or, any and all such rights and claims against, every such incorporator,
stockholder, officer or director, as such, because of the creation of the
indebtedness authorized by the Indenture, or under or by reason of the
obligations, covenants or agreements contained in the Indenture or this Note
or implied therefrom, are, by acceptance of this Note, hereby expressly
waived and released as a condition of, and as consideration for, the issue of
this Note. In the event of any sale or transfer of its assets and
liabilities substantially as an entirety to a successor corporation, the
predecessor corporation may be dissolved and liquidated as more fully set
forth in the Indenture.
All Dollar amounts used in or resulting from calculations referred
to in this Note shall be rounded to the nearest cent (with one half cent
being rounded upwards).
This Note shall be governed by, and construed in accordance with, the
internal laws of the State of Delaware.
ASSIGNMENT FORM
To assign this Note, fill in the form below:
I or we assign and transfer this Note to:
_________________________________________________
(Insert assignee's soc. sec. or tax I.D. no.)
__________________________________________________________________________
(Print or type assignee's name, address and zip code)
__________________________________________________________________________
___________________________________________________________________________
___________________________________________________________________________
_____________________________________________
and irrevocably appoint_______________________________________________agent
to transfer this Note on the books of the Company. The agent may substitute
another to act for him.
Date _______________________________________________
Your signature ________________________________________________________
(Sign exactly as your name appears on the other side of this Note. The
signature to this assignment must be guaranteed by a commercial bank or trust
company having its principal office or a correspondent in The City of New
York or by a member of The New York Stock Exchange.)
REGISTERED SEARS ROEBUCK ACCEPTANCE CORP. REGISTERED
No. FLR- MEDIUM-TERM NOTE SERIES V CUSIP
(FLOATING RATE)
[Except as otherwise provided in Section 2.10 of the Indenture referred to on
the reverse hereof, this Note may be transferred, in whole but not in part,
only to another nominee of the Depository or to a successor Depository or to
a nominee of such successor Depository.
Unless this Note is presented by an authorized representative of The
Depository Trust Company (55 Water Street, New York, New York) to the Company
or its agent for registration of transfer, exchange or payment, and any Note
issued upon registration of transfer of, or in exchange for, or in lieu of,
this Note is registered in the name of Cede & Co. or such other name as
requested by an authorized representative of The Depository Trust Company and
any payment hereon is made to Cede & Co. ANY TRANSFER, PLEDGE OR OTHER USE
HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL since the
registered owner hereof, Cede & Co., has an interest herein.]
ORIGINAL ISSUE DATE:
MATURITY DATE:
INITIAL INTEREST RATE:
MAXIMUM RATE:
INDEX MATURITY:
MINIMUM RATE:
SPREAD (plus or minus):
CALCULATION AGENT:
SPREAD MULTIPLIER:
INTEREST RATE BASIS:
DESIGNATED CMT MATURITY INDEX:
INTEREST PAYMENT DATES:
DESIGNATED CMT TELERATE PAGE:
INTEREST RESET DATES:
REDEMPTION COMMENCEMENT DATE:
REDEMPTION PRICE: IF A REDEMPTION COMMENCEMENT DATE IS
SPECIFIED ABOVE, THE
REDEMPTION PRICE SHALL BE % OF THE
PRINCIPAL AMOUNT OF THIS NOTE TO BE REDEEMED
AND THE REDEMPTION PRICE SHALL DECLINE AT
EACH ANNIVERSARY OF THE
REDEMPTION COMMENCEMENT DATE BY % OF THE
PRINCIPAL AMOUNT OF THIS NOTE TO BE REDEEMED
UNTIL THE REDEMPTION PRICE IS 100% OF SUCH
PRINCIPAL AMOUNT.
STATED REDEMPTION DATE(S) AND REDEMPTION PRICE(S):
Stated Redemption Redemption Price if Redeemed Redemption Price if Repaid
Date at Option of the Company at Option of Holder
IF ONE OR MORE STATED REDEMPTION DATES ARE SPECIFIED ABOVE, THE REDEMPTION
PRICE SHALL BE THE PERCENTAGE OF THE PRINCIPAL AMOUNT OF THIS NOTE TO BE
REDEEMED OR REPAID AS REFLECTED ABOVE.
REDEEMABLE AT OPTION OF: [THE COMPANY,] [THE HOLDER,] OR [THE COMPANY OR THE
HOLDER]
NOTICE PROVISIONS FOR REDEMPTION ON A STATED REDEMPTION DATE:
OTHER PROVISIONS:
Sears Roebuck Acceptance Corp., a corporation duly organized and
existing under the laws of the State of New York (herein referred to as the
"Company", which term includes any successor corporation under the
indenture hereinafter referred to), for value received, hereby promises to
pay to
or registered assigns, upon presentation and surrender of this Note on the
Maturity Date shown above (except to the extent redeemed prior to the
Maturity Date) at the office or agency of the Company in the Borough of
Manhattan of The City of New York, or, at the option of the Holder, such
office or agency, if any, maintained by the Company in the city in which the
principal executive offices of the Company are located or the city in which
the principal corporate trust office of the Trustee is located, the principal
sum of
_________________________________ _____________________________
Principal Amount Specified Currency
and to pay interest thereon at the rate per annum equal to the Initial
Interest Rate shown above until the first Interest Reset Date shown above and
thereafter at the rate determined in accordance with the provisions on the
reverse hereof depending on the Interest Rate Basis shown above.
This Note will bear interest from the Original Issue Date specified
above or from the most recent Interest Payment Date to which interest on this
Note has been paid or duly provided for.
Interest on this Note shall be payable on the Interest Payment Dates
and on the Maturity Date indicated above (or the date of redemption), except
that if this Note was originally issued between a Regular Record Date and an
Interest Payment Date, the first payment of interest will be made on the
Interest Payment Date following the next succeeding Regular Record Date to
the registered Holder on such next succeeding Regular Record Date. If any
Interest Payment Date would fall on a day that is not a Business Day, such
Interest Payment Date shall be the next succeeding Business Day (or, if the
Interest Rate Basis on this Note is LIBOR, if such day falls in the next
calendar month, the next preceding Business Day). If the Maturity Date of
this Note falls on a day that is not a Business Day, the payment of interest
and principal may be made on the next succeeding Business Day with the same
force and effect as if made at maturity, and no interest on such payment
shall accrue for the period from and after the Maturity Date.
The Regular Record Date shall be the date 15 calendar days prior to
each Interest Payment Date, whether or not such date shall be a Business Day.
"Business Day" as used herein means each Monday, Tuesday, Wednesday,
Thursdayor Friday (a) that is not a legal holiday for banking institutions in
any of the City of Wilmington, Delaware, the City of Chicago, Illinois, The
City of New York, New York or the city in which the principal corporate trust
office of the Trustee is located, and (b) if this Note is denominated in a
currency other than Dollars, that is not a legal holiday for banking
institutions in any of the City of Wilmington, Delaware, the City of Chicago,
Illinois, the City of New York, New York or
________________________________________________________________________
Principal Financial Center of Country Issuing Currency
(or Brussels for European Currency Units) and (c) if the Interest Rate Basis
with respect to this Note is LIBOR, that is a day on which dealings in
deposits in U.S. dollars are transacted in the London interbank market and is
not a legal holiday for banking institutions in any of the City of
Wilmington, Delaware, the City of Chicago, Illinois or the City of New York,
New York.
The principal of (and premium, if any), and interest on, this Note
is payable by the Company in the Specified Currency. Interest payable on any
Interest Payment Date (other than Defaulted Interest) shall be payable to the
person who is the registered Holder at the close of business on the
immediately preceding Regular Record Date. Interest payable upon redemption
or at maturity (other than a redemption or maturity occurring on an Interest
Payment Date) will be paid to the same person to whom the principal amount of
this Note is payable.
Payment of principal of (and premium, if any), and interest on, this
Note (if the Holder of this Note is a Depository as defined in the Indenture
referred to on the reverse hereof or a nominee of such a Depository) will be
made in accordance with any applicable provisions of such written agreement
between the Company, the Trustee and such Depository (or its nominee) as may
be in effect from time to time or (if the Holder of this Note holds an
aggregate principal amount of $10,000,000 or more of Notes with respect to
which such payment of principal (and premium, if any) or interest, as
applicable, is to be made on such day) will be made by wire transfer if the
Holder shall have designated in writing to the Trustee an account with a bank
located in the country issuing the Specified Currency or such other country
as shall be satisfactory to the Company and the Trustee. If payment of
interest is to be made by wire transfer, such information must be received by
the Trustee at its corporate trust office in the Borough of Manhattan of The
City of New York on or prior to the Regular Record Date for an Interest
Payment Date. The Trustee will, subject to applicable laws and regulations
and until it receives notice to the contrary, make such payment to such
Holder by wire transfer to the designated account. If a payment of interest
is not made in accordance with such a written agreement or by wire transfer,
payment will be made by check. Checks for payment of interest on an Interest
Payment Date will be mailed to the Holder at the address of such Holder
appearing on the Security Register on the applicable Regular Record Date.
To receive payment of a U.S. dollar-denominated Note upon redemption
or at maturity, a Holder must make presentation and surrender of such Note on
or before the Redemption Date or Maturity Date, as applicable. Payment
(other than payment in accordance with a written agreement between the
Company, the Trustee and a Depository (or its nominee) as set forth above)
will be made by check unless proper wire instructions are on file with the
Trustee or are received at presentment. To receive payment of a Note
denominated in a Foreign Currency upon redemption or at maturity, a Holder
must make presentation and surrender not less than two Business Days prior to
the Redemption Date or Maturity Date, as applicable. Upon presentation and
surrender of a Note denominated in a Foreign Currency at any time after the
date two Business Days prior to the Redemption Date or Maturity Date, as
applicable, the Company will pay the principal amount (and premium, if any)
of such Note, and any interest due upon redemption or at maturity (unless the
Redemption Date or Maturity Date is an Interest Payment Date), two Business
Days after such presentation and surrender.
The Company will pay any administrative costs imposed by banks in
connection with sending payments by wire transfer, but any tax, assessment
or governmental charge imposed upon payments will be borne by the Holders of
the Notes in respect of which payments are made.
Reference is hereby made to the further provisions of this Note set
forth on the reverse hereof, and such further provisions shall for all
proposes have the same effect as though fully set forth at this place.
This Note shall not be entitled to any benefit under the Indenture
referred to on the reverse hereof, or become valid or obligatory for any
purpose, until the certificate of authentication hereon shall have been
signed by or on behalf of the Trustee under such Indenture.
IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed under its corporate seal.
Dated:
SEARS ROEBUCK ACCEPTANCE CORP.
By ________________________________
CERTIFICATE OF AUTHENTICATION President
This is one of the Notes designated
and referred to in the
within-mentioned Indenture.
THE CHASE MANHATTAN BANK,
as Trustee By _____________________________
Vice President and
Assistant Secretary
By ____________________________
Authorized Signatory
SEARS ROEBUCK ACCEPTANCE CORP.
Medium-Term Note Series V
This Note is one of a duly authorized issue of debentures, notes,
bonds or other evidences of indebtedness of the Company (hereinafter called
the "Securities") of the series hereinafter specified, unlimited in aggregate
principal amount, all issued or to be issued under or pursuant to an
indenture dated as of May 15, 1995, executed between the Company and THE
CHASE MANHATTAN BANK, as Trustee; to which indenture and all indentures
supplemental thereto (herein collectively called the "Indenture") reference
is hereby made for a specification of the rights and limitation of rights
thereunder of the Holders of the Securities, the rights and obligations
thereunder of the Company and the rights, duties and immunities thereunder of
the Trustee. The Securities may be issued in one or more series, which
different series may be issued in various aggregate principal amounts, may
mature at different times, may bear interest (if any) at different rates, may
be subject to different redemption provisions (if any), may be subject to
different covenants and defaults and may otherwise vary as in the Indenture
provided. This Note is one of a series designated as the "Medium-Term Notes
Series V" (hereinafter referred to as the "Notes") of the Company, up to
$2,000,000,000 in aggregate principal amount. All terms used in this Note
which are defined in the Indenture and which are not otherwise defined in
this Note shall have the meanings assigned to them in the Indenture.
For purposes of the Notes, the term "Fixed Charge Coverage and
Ownership Agreement" shall mean the Fixed Charge Coverage and Ownership
Agreement as extended by the Extension Agreement relating to debt securities
of which the Notes are a part.
This Note will bear interest at a rate per annum equal to the Initial
Interest Rate shown on the face hereof until the first Interest Reset Date
shown on the face hereof and thereafter at the rate determined in accordance
with the applicable provisions below by reference to the Interest Rate Basis
shown on the face hereof based on the Index Maturity, if any, shown on the
face hereof (i) plus or minus the Spread, if any, specified on the face
hereof, or (ii) multiplied by the Spread Multiplier, if any, specified on the
face hereof. The rate of interest on this Note shall be reset on each
Interest Reset Date; provided, however, that the Initial Interest Rate shall
be in effect from the Original Issue Date to the first Interest Reset Date.
If any Interest Reset Date would be a day that is not a Market Day, the
Interest Reset Date shall be postponed to the next day that is a Market Day,
except that if the Interest Rate Basis on this Note is LIBOR and if such
Market Day is in the next succeeding calendar month, such Interest Reset Date
shall be the immediately preceding Market Day. The term "Market Day" means
any day that is not a legal holiday for banking institutions in The City of
New York, except that if the Interest Rate Basis on this Note is LIBOR,
"Market Day" shall mean any such day on which dealings in deposits in U.S.
dollars are transacted in the London interbank market.
The "Interest Determination Date" pertaining to an Interest Reset
Date, if the Interest Rate Basis for this Note is the Commercial Paper Rate,
Prime Rate, LIBOR, CD Rate, CMT Rate or Federal Funds Rate, shall be the
second Market Day preceding such Interest Reset Date. The "Interest
Determination Date" pertaining to an Interest Reset Date, if the Interest
Rate Basis for this Note is the Treasury Rate, shall be the day of the week
in which such Interest Reset Date falls on which Treasury bills would
normally be auctioned. Treasury bills are usually sold at auction on the
Monday of each week, unless that day is a legal holiday, in which case the
auction is usually held on the following Tuesday, except that such auction
may be held on the preceding Friday. If the Interest Rate Basis on this Note
is the Treasury Rate and, as the result of a legal holiday, an auction is so
held on the preceding Friday, such Friday shall be the Interest Determination
Date pertaining to the Interest Reset Date occurring in the next succeeding
week. If an auction date shall fall on any Interest Reset Date, then, if the
Interest Rate Basis on this Note is the Treasury Rate, such Interest Reset
Date shall instead be the first Market Day immediately following such auction
date.
The "Calculation Date" pertaining to an Interest Determination Date
shall be the earlier of (i) the tenth calendar day after each Interest
Determination Date or, if such day is not a Business Day, the next succeeding
Business Day or (ii) the Business Day immediately preceding the applicable
Interest Payment Date or the date of maturity, redemption or repayment.
Determination of Commercial Paper Rate. If the Interest Rate Basis
on this Note is the Commercial Paper Rate, the Commercial Paper Rate with
respect to this Note for each Interest Reset Date shall equal the Money
Market Yield (calculated as described below) of the per annum rate (quoted on
a bank discount basis) for the relevant Interest Determination Date for
commercial paper having the Index Maturity specified on the face hereof as
such rate is published by the Board of Governors of the Federal Reserve
System in "Statistical Release H.15(519) Selected Interest Rates" or any
successor publication of the Board of Governors of the Federal Reserve System
("H.15(519)") under the heading "Commercial Paper," or such other heading
representing commercial paper of non-financial issuers whose bond rating is
"AA," or the equivalent, from a nationally recognized statistical rating
agency. In the event that such rate is not published prior to 9:00 A.M., New
York City time, on the relevant Calculation Date, then the Commercial Paper
Rate with respect to such Interest Reset Date shall be the Money Market Yield
of such rate on such Interest Determination Date for commercial paper having
the Index Maturity specified on the face hereof as published by the Federal
Reserve Bank of New York in its daily statistical release, "Composite 3:30
P.M. Quotations for U.S. Government Securities" or any successor publication
published by the Federal Reserve Bank of New York ("Composite Quotations")
under the heading "Commercial Paper." If by 3:00 P.M., New York City time,
on such Calculation Date such rate is not yet published in either H.15(519)
or Composite Quotations, the Commercial Paper Rate with respect to such
Interest Reset Date shall be calculated by the Calculation Agent and shall be
the Money Market Yield of the arithmetic mean of the offered per annum rates
(quoted on a bank discount basis), as of 11:00 A.M., New York City time, on
such Interest Determination Date, of three leading dealers of commercial
paper in The City of New York selected by the Calculation Agent for
commercial paper of the Index Maturity specified on the face hereof placed
for an industrial issuer whose bond rating is "AA", or the equivalent, from
a nationally recognized statistical rating agency; provided, however, that if
fewer than three dealers selected as aforesaid by the Calculation Agent are
quoting as mentioned in this sentence, the Commercial Paper Rate with respect
to such Interest Reset Date shall be the Commercial Paper Rate in effect on
such Interest Determination Date.
"Money Market Yield" means the rate for which is quoted on a bank
discount basis, a yield (expressed as a percentage) calculated in accordance
with the following formula:
Money Market Yield = D X 360 X 100
-------------
360 - (D X M)
where "D" refers to the per annum rate for a security, quoted on a bank
discount basis and expressed as a decimal; and "M" refers to the number of
days in the period for which accrued interest is being calculated.
Determination of Prime Rate. If the Interest Rate Basis on this Note
is the Prime Rate, the Prime Rate with respect to this Note for each Interest
Reset Date shall equal the rate set forth for the relevant Interest
Determination Date in H.15(519) under the heading "Bank Prime Loan." In the
event that such rate is not published prior to 9:00 A.M., New York City time,
on the relevant Calculation Date, then the Prime Rate with respect to such
Interest Reset Date shall be the arithmetic mean of the rates of interest
publicly announced by each bank that appears on the display designated as
page "USPRIME1" on the Reuter Monitor Money Rates Service (or such other page
as may replace the USPRIME1 page on that service for the purpose of
displaying prime rates or base lending rates of major United States banks)
("Reuters Screen USPRIME1 Page") as such bank's prime rate or base lending
rate as in effect for such Interest Determination Date as quoted on the
Reuters Screen USPRIME1 Page on such Interest Determination Date. If fewer
than four such rates appear on the Reuters Screen USPRIME1 Page on such
Interest Determination Date, the Prime Rate with respect to such Interest
Reset Date shall be the arithmetic mean of the prime rates or base lending
rates (quoted on the basis of the actual number of days in the year divided
by a 360-day year) as of the close of business on such Interest Determination
Date by three major banks in The City of New York selected by the Calculation
Agent; provided, however, that if fewer than three banks selected as
aforesaid by the Calculation Agent are quoting as mentioned in this sentence,
the Prime Rate with respect to such Interest Reset Date will be the Prime
Rate in effect on such Interest Determination Date.
Determination of LIBOR. If the Interest Rate Basis on this Note is
LIBOR, LIBOR with respect to this Note for each Interest Reset Date shall be
determined in accordance with the following provisions:
(i) On the relevant Interest Determination Date, LIBOR will
be the rate for deposits in U.S. dollars having the Index Maturity specified
on the face hereof, commencing on the second Market Day immediately following
such Interest Determination Date that appears on the display designated as
page "3750" on the Dow Jones Telerate Service (or such other page as may
replace page 3750 on that service for the purposes of displaying London
interbank offered rates of major banks) ("Telerate Page 3750") as of 11:00
A.M., London time, on such Interest Determination Date. If such rate does
not appear on Telerate Page 3750, LIBOR with respect to such Interest Reset
Date shall be determined as described in (ii) below.
(ii) With respect to an Interest Determination Date on which
no such rate appears on Telerate Page 3750 as described in (i) above, LIBOR
shall be determined on the basis of the rates at approximately 11:00 A.M.,
London time, on such Interest Determination Date at which deposits in U.S.
dollars having the Index Maturity specified on the face hereof are offered to
prime banks in the London interbank market by four major banks in the London
interbank market selected by the Calculation Agent commencing on the second
Market Day immediately following such Interest Determination Date and in a
principal amount equal to an amount of not less than U.S.$1,000,000 that in
the Calculation Agent's judgment is representative for a single transaction
in such market at such time (a "Representative Amount"). The Calculation
Agent shall request the principal London office of each of such banks to
provide a quotation of its rate. If at least two such quotations are
provided, LIBOR with respect to such Interest Reset Date shall be the
arithmetic mean of such quotations. If fewer than two quotations are
provided, LIBOR with respect to such Interest Reset Date shall be the
arithmetic mean of the rates quoted at approximately 11:00 A.M., New York
City time, on such Interest Determination Date by three major banks in The
City of New York, selected by the Calculation Agent, for loans in U.S.
dollars to leading European banks having the Index Maturity specified on the
face hereof commencing on the Interest Reset Date and in a Representative
Amount; provided, however, that if fewer than three banks selected as
aforesaid by the Calculation Agent are quoting as mentioned in this sentence,
LIBOR with respect to such Interest Reset Date shall be the LIBOR in effect
on such Interest Determination Date.
Determination of Treasury Rate. If the Interest Rate Basis on this
Note is the Treasury Rate, the Treasury Rate with respect to this Note for
each Interest Reset Date shall equal the rate for the auction on the relevant
Interest Determination Date of direct obligations of the United States
("Treasury bills") having the Index Maturity specified on the face hereof as
published in H.15(519) under the heading "U.S. Government Securities/Treasury
Bills/Auction Average (Investment)" or, if not so published by 9:00 A.M., New
York City time, on the relevant Calculation Date, the auction average rate
(expressed as a bond equivalent, on the basis of a year of 365 or 366 days,
as applicable, and applied on a daily basis) for such auction as otherwise
announced by the United States Department of the Treasury. In the event that
the results of such auction of Treasury bills having the Index Maturity
specified on the face hereof are not published or reported as provided above
by 3:00 P.M., New York City time, on such Calculation Date, or if no such
auction is held during such week, then the Treasury Rate shall be the rate
set forth in H.15(519) for the relevant Interest Determination Date for the
Index Maturity specified on the face hereof under the heading "U.S.
Government Securities/Treasury Bills/Secondary Market." In the event such
rate is not so published by 3:00 P.M., New York City time, on the relevant
Calculation Date, the Treasury Rate with respect to such Interest Reset Date
shall be calculated by the Calculation Agent and shall be a yield to maturity
(expressed as a bond equivalent, on the basis of a year of 365 or 366 days,
as applicable, and applied on a daily basis) of the arithmetic mean of the
secondary market bid rates as of approximately 3:30 P.M., New York City
time, on such Interest Determination Date, of three primary United States
government securities dealers in The City of New York selected by the
Calculation Agent for the issue of Treasury bills with a remaining maturity
closest to the Index Maturity specified on the face hereof; provided,
however, that if fewer than three dealers selected as aforesaid by the
Calculation Agent are quoting as mentioned in this sentence, the Treasury
Rate with respect to such Interest Reset Date shall be the Treasury Rate in
effect on such Interest Determination Date.
Determination of CD Rate. If the Interest Rate Basis on this Note
is the CD Rate, the CD Rate with respect to this Note for each Interest Reset
Date shall equal the rate for the relevant Interest Determination Date for
negotiable certificates of deposit having the Index Maturity specified on the
face hereof as published in H.15(519) under the heading "CDs (Secondary
Market)". In the event that such rate is not published prior to 9:00 A.M.,
New York City time, on the relevant Calculation Date, then the CD Rate with
respect to such Interest Reset Date shall be the rate on such Interest
Determination Date for negotiable certificates of deposit having the Index
Maturity specified on the face hereof as published in Composite Quotations
under the heading "Certificates of Deposit." If by 3:00 P.M., New York City
time, on such Calculation Date such rate is not published in either H.15(519)
or Composite Quotations, the CD Rate with respect to such Interest Reset Date
shall be calculated by the Calculation Agent and shall be the arithmetic mean
of the secondary market offered rates, as of 10:00 A.M., New York City time,
on such Interest Determination Date, of three leading nonbank dealers of
negotiable U.S. dollar certificates of deposit in The City of New York
selected by the Calculation Agent for negotiable certificates of deposit of
major United States money market banks with a remaining maturity closest to
the Index Maturity specified on the face hereof in a denomination of
U.S.$5,000,000; provided, however, that if fewer than three dealers selected
as aforesaid by the Calculation Agent are quoting as mentioned in this
sentence, the CD Rate with respect to such Interest Reset Date shall be the
CD Rate in effect on such Interest Determination Date.
Determination of Federal Funds Rate. If the Interest Rate Basis on
this Note is the Federal Funds Rate, the Federal Funds Rate with respect to
this Note for each Interest Reset Date shall equal the rate on the relevant
Interest Determination Date for Federal Funds as published in H.15(519) under
the heading "Federal Funds (Effective)." In the event that such rate is not
published prior to 9:00 A.M., New York City time, on the relevant Calculation
Date, then the Federal Funds Rate with respect to such Interest Reset Date
will be the rate on such Interest Determination Date as published in
Composite Quotations under the heading "Federal Funds/Effective Rate". If by
3:00 P.M., New York City time, on such Calculation Date such rate is not
published in either H.15(519) or Composite Quotations, the Federal Funds Rate
with respect to such Interest Reset Date shall be calculated by the
Calculation Agent and shall be the arithmetic mean of the rates, as of 9:00
A.M., New York City time, on such Interest Determination Date, for the last
transaction in overnight Federal Funds arranged by three leading brokers of
Federal Funds transactions in The City of New York selected by the
Calculation Agent; provided, however, that if fewer than three brokers
selected as aforesaid by the Calculation Agent are quoting as mentioned in
this sentence, the Federal Funds Rate with respect to such Interest Reset
Date shall be the Federal Funds Rate in effect on such Interest Determination
Date.
Determination of CMT Rate. If the Interest Rate Basis on this Note
is the CMT Rate, the CMT Rate with respect to this Note for each Interest
Reset Date shall equal the rate displayed on the Designated CMT Telerate Page
under the caption "...Treasury Constant Maturities...Federal Reserve Board
Release H.15...Mondays Approximately 3:45 P.M.," under the column for the
Designated CMT Maturity Index for (i) if the Designated CMT Telerate Page is
7055, the rate on such Interest Determination Date and (ii) if the Designated
CMT Telerate Page is 7052, the week, or the month, as applicable, ended
immediately preceding the week in which the related Interest Determination
Date occurs. If such rate is no longer displayed on the relevant page, or if
not displayed by 3:00 P.M., New York City time, on the relevant Calculation
Date, the CMT Rate shall be such treasury constant maturity rate for the
Designated CMT Maturity Index as published in the relevant H.15(519). If
such rate is no longer published, or if not published by 3:00 P.M., New York
City time, on the relevant Calculation Date, the CMT Rate shall be such
treasury constant maturity rate for the Designated CMT Maturity Index (or
other United States Treasury rate for the Designated CMT Maturity Index) for
the Interest Determination Date with respect to such Interest Reset Date as
may then be published by either the Board of Governors of the Federal Reserve
System or the United States Department of the Treasury that the Calculation
Agent determines to be comparable to the rate formerly displayed on the
Designated CMT Telerate Page and published in the relevant H.15(519). If
such information is not published by 3:00 P.M., New York City time, on the
relevant Calculation Date, the CMT Rate shall be calculated by the
Calculation Agent and will be a yield to maturity, based on the arithmetic
mean of the secondary market closing offer side prices as of approximately
3:30 P.M., New York City time, on the Interest Determination Date reported,
according to their written records, by three leading primary United States
government securities dealers (each, a "Reference Dealer") in The City of New
York selected by the Calculation Agent (from five such Reference Dealers
selected by the Calculation Agent and eliminating the highest quotation (or,
in the event of equality, one of the highest) and the lowest quotation (or,
in the event of equality, one of the lowest)), for the most recently issued
direct noncallable fixed rate obligations of the United States ("Treasury
Notes") with an original maturity of approximately the Designated CMT
Maturity Index and a remaining term to maturity of not less than such
Designated CMT Maturity Index minus one year. If three or four (and not
five) of such Reference Dealers are quoting, than the CMT Rate shall be based
on the arithmetic mean of the offer prices obtained and neither the highest
nor the lowest of such quotes will be eliminated. If the Calculation Agent
cannot obtain three such Treasury Note quotations, the CMT Rate shall be
calculated by the Calculation Agent and will be a yield to maturity based on
the arithmetic mean of the secondary market offer side prices as of
approximately 3:30 P.M., New York City time, on the Interest Determination
Date of three Reference Dealers in The City of New York (from five such
Reference Dealers selected by the Calculation Agent and eliminating the
highest quotation (or, in the event of equality, one of the highest) and the
lowest quotation (or, in the event of equality, one of the lowest)), for
Treasury Notes with an original maturity of the number of years that is the
next highest to the Designated CMT Maturity Index and a remaining term to
maturity closest to the Designated CMT Maturity Index and in an amount of at
least $100 million. If three or four (and not five) of such Reference
Dealers are quoting, than the CMT Rate shall be based on the arithmetic mean
of the offer prices obtained and neither the highest nor the lowest of such
quotes will be eliminated; provided, however, that if fewer than three
Reference Dealers selected by the Calculation Agent are quoting, the CMT Rate
shall be the CMT Rate in effect on such Interest Determination Date. If two
Treasury Notes with an original maturity as described in the second preceding
sentence have remaining terms to maturity equally close to the Designated CMT
Maturity Index, the quotes for the Treasury Note with the shorter remaining
term to maturity will be used.
Notwithstanding the foregoing, the interest rate on this Note shall
not be greater than the Maximum Interest Rate, if any, or less than the
Minimum Interest Rate, if any, shown on the face hereof.
At the request of the Holder hereof, the Calculation Agent will
provide to the Holder hereof the interest rate then in effect and, if
determined, the interest rate which will become effective as of the next
Interest Reset Date. The Calculation Agent shall calculate the interest rate
hereon in accordance with the provisions hereof on or before each Calculation
Date. The Calculation Agent's determination of any interest rate will be
final and binding in the absence of manifest error.
Unless otherwise specified on the face of this Note, accrued interest
on this Note from the date of issue or from the last date to which interest
has been paid shall be calculated by multiplying the face amount hereof by an
accrued interest factor. Unless otherwise specified on the face of this
Note, such accrued interest factor is computed by adding the interest factor
calculated for each day from the date of issue, or from the last date to
which interest has been paid, to but excluding the date for which accrued
interest is being calculated. Unless otherwise specified on the face of this
Note, the interest factor (expressed as a decimal, rounded if necessary to
the next higher one hundred thousandth of a percentage point for each such
day) shall be computed by dividing the interest rate (expressed as a decimal)
applicable to such date by 360 if the Interest Rate Basis with respect to
this Note is the Commercial Paper Rate, Prime Rate, LIBOR, CD Rate or Federal
Funds Rate, or by the actual number of days in the year, if the Interest Rate
Basis with respect to this Note is the Treasury Rate or the CMT Rate. The
applicable interest rate on any Interest Reset Date will be the interest rate
as reset on such date. The applicable interest rate on any other day will be
the interest rate from the immediately preceding Interest Reset Date (or, if
none, the Initial Interest Rate).
Payments of interest on this Note with respect to any Interest
Payment Date or Maturity Date (or date of redemption) will include interest
accrued to but excluding such Interest Payment Date or Maturity Date (or date
of redemption); provided, however, that if the Interest Reset Dates with
respect hereto are daily or weekly, interest payable hereon on any Interest
Payment Date, other than interest payable on the date on which principal
hereon is payable, will include interest accrued to but excluding the day
following the next preceding Regular Record Date.
The Notes are issuable only in registered form without coupons and
will be either (a) Book-Entry Notes represented by one or more global notes
(each a "Global Note") recorded in the book-entry system maintained by the
Depository or (b) certificated notes issued to, and registered in the names
of, the beneficial owners or their nominees ("Certificated Notes"). Notes
are issuable in minimum denominations of (i) in the case of Notes denominated
in Dollars, U.S.$1,000 and in any larger amount in integral multiples of
$1,000, and (ii) in the case of Notes denominated in any Foreign Currency,
the equivalent in such Foreign Currency determined in accordance with the
Market Exchange Rate for such Foreign Currency on the Business Day
immediately preceding the date on which the Company accepts an offer to
purchase a Note, of U.S. $1,000 (rounded to an integral multiple of 1,000
units of the Foreign Currency), and in any larger amount in integral
multiples of 1,000 units. In the manner and subject to the limitations
provided in the Indenture, the Global Notes or Certificated Notes are
exchangeable, without charge except for any tax or other governmental charge
imposed in relation thereto, for other Notes of authorized denominations for
a like aggregate principal amount, at the office or agency of the Company in
the Borough of Manhattan of The City of New York, or, at the option of the
Holders thereof, such office or agency, if any, maintained by the Company in
the city in which the principal executive offices of the Company are located
or the city in which the principal corporate trust office of the Trustee is
located.
Unless this Note is denominated in Dollars, in the event that the
currency in which this Note is denominated is not available for payment at a
time at which any payment is required hereunder due to the imposition of
exchange controls or other circumstances beyond its control, the Company may,
in full satisfaction of its obligation to make such payment, make instead a
payment in an equivalent amount of Dollars, determined in accordance with the
Market Exchange Rate for such currency on the latest date for which such rate
was established on or before the date on which payment is due, and such
substituted payment of Dollars shall not constitute a default under this Note
or the Indenture.
If a Redemption Commencement Date is specified above, this Note may
be redeemed, whether or not any other Note is concurrently redeemed, at the
option of the Company, as a whole, or from time to time in part, on any
Business Day on or after the Redemption Commencement Date and prior to the
Maturity Date, upon mailing by first-class mail, postage prepaid, a notice of
such redemption not less than 30 nor more than 60 days prior to the
Redemption Date, to the Holder of this Note at such Holder's address
appearing in the Security Register, as provided in the Indenture (provided
that, if the Holder of this Note is a Depository or a nominee of a
Depository, notice of such redemption shall be given in accordance with any
applicable provisions of such written agreement between the Company, the
Trustee and such Depository (or its nominee) as may be in effect from time to
time), at the Redemption Price specified on the face of this Note (expressed
in percentages of the principal amount hereof to be redeemed) together in
each case with interest accrued to the Redemption Date (subject to the right
of the Holder of record on a Regular Record Date to receive interest due on
an Interest Payment Date). If a Stated Redemption Date or Stated Redemption
Dates are specifed above, this Note may be redeemed or repaid, whether or not
any other Note is concurrently redeemed or repaid, at the option of the
Company, the Holder, or either the Company or the Holder, as specified above,
as a whole or in part, on such Stated Redemption Date, at the Redemption
Price set forth in the table above (expresed in percentages of the principal
amount hereof to be redeemed), together in each case with interest accrued to
the Redemption Date (subject to the right of the Holder of record on a
Regular Record Date to receive interest due on an Interest Payment Date) upon
delivery of the notice specified above. In the event of redemption of this
Note in part only, a new Note or Notes of this series, and of like tenor, for
the unredeemed portion hereof will be issued in the name of the Holder hereof
upon the cancellation hereof.
In case a default, as defined in the Indenture, shall occur and be
continuing with respect to the Notes, the principal amount of all Notes then
outstanding under the Indenture may be declared or may become due and payable
upon the conditions and in the manner and with the effect provided in the
Indenture. The Indenture provides that such declaration may in certain
events be annulled by the Holders of a majority in principal amount of the
Notes outstanding.
To the extent permitted by, and as provided in, the Indenture,
modifications or alterations of the Indenture, or of any indenture
supplemental thereto, and of the rights and obligations of the Company and
the Holders of the Notes, may be made without the consent of any Holders of
Notes, for the limited purposes described in Section 11.1 of the Indenture.
To the extent permitted by, and as provided in, the Indenture,
modifications or alterations of the Indenture, or of any indenture
supplemental thereto, and of the rights and obligations of the Company and
the Holders of the Notes, may be made with the consent of the Company by the
affirmative vote or consent of the Holders of not less than a majority in
principal amount of the Securities then outstanding (as defined in the
Indenture) of each series to be affected, evidenced as provided in the
Indenture; provided, however, that no such modification or alteration shall
(i) change the stated maturity of the principal of (and premium, if any), or
the interest on, any Security, or reduce the principal amount of (and
premium, if any), or the rate of interest on, any Security, or change the
Currency in which the principal of (and premium, if any), or interest on such
Security is denominated or payable, or reduce the amount of the principal of
an Original Issue Discount Security that would be payable upon a declaration
of acceleration of the Maturity thereof pursuant to Section 6.1 of the
Indenture without the consent of the Holder of each outstanding Security so
affected, or (ii) reduce the percentage of Securities, the vote or consent of
the Holders of which is required for such modifications and alterations,
without the consent of the Holders of all Securities affected. The Indenture
also provides that the Holders of a majority in principal amount of the
Securities of any series then outstanding may waive any past default with
respect to Securities of such series under the Indenture and its
consequences, except a default in the payment of the principal of (or
premium, if any), or interest on, any of the Securities.
This Note is transferable by the registered Holder hereof or by his
attorney duly authorized in writing at the office or agency of the Company in
the Borough of Manhattan of The City of New York, or, at the option of the
Holder hereof, such office or agency, if any, maintained by the Company in
the city in which the principal executive offices of the Company are located
or the city in which the principal corporate trust office of the Trustee is
located, without charge except for any tax, assessment or other governmental
charge imposed in relation thereto, but only in the manner and subject to the
limitations provided in the Indenture and upon surrender of this Note. Upon
any such transfer a Note or Notes of authorized denominations for a like
aggregate principal amount and bearing a number not contemporaneously
outstanding will be issued in exchange herefor.
The Company, the Trustee, any Authenticating Agent, any paying agent
and any Security registrar may deem and treat the registered Holder hereof as
the absolute owner hereof (whether or not this Note shall be overdue and
notwithstanding any notice of ownership or other writing hereon by anyone
other than the Company or any Security registrar) for the purpose of
receiving payment of or on account of the principal hereof (and premium, if
any), and interest hereon, and for all other purposes, and none of the
Company, the Trustee, an Authenticating Agent, a paying agent or the Security
registrar shall be affected by any notice to the contrary. All such payments
shall be valid and effectual to satisfy and discharge the liability upon this
Note to the extent of the sum or sums so paid.
No recourse under or upon any obligation, covenant or agreement of
the Indenture or of this Note, or for any claim based thereon or otherwise in
respect thereof, shall be had against any incorporator, stockholder, officer
or director, as such, past, present or future, of the Company or of any
successor corporation, either directly or through the Company, whether by
virtue of any constitution, statute or rule of law, or by the enforcement of
any assessment or penalty or otherwise; it being expressly understood that
the Indenture and this Note are solely corporate obligations, and that no
such personal liability whatever shall attach to, or is or shall be incurred
by the incorporators, stockholders, officers or directors, as such, of the
Company or of any successor corporation, or any of them, because of the
creation of the indebtedness authorized by the Indenture, or under or by
reason of the obligations, covenants or agreements contained in the Indenture
or this Note or implied thereform; and that any and all such personal
liability, either at common law or in equity or by constitution or statute,
or, any and all such rights and claims against, every such incorporator,
stockholder, officer or director, as such, because of the creation of the
indebtedness authorized by the Indenture, or under or by reason of the
obligations, covenants or agreements contained in the Indenture or this Note
or implied therefrom, are, by acceptance of this Note, hereby expressly
waived and released as a condition of, and as consideration for, the issue of
this Note. In the event of any sale or transfer of its assets and
liabilities substantially as an entirety to a successor corporation, the
predecessor corporation may be dissolved and liquidated as more fully set
forth in the Indenture.
All Dollar amounts used in or resulting from calculations referred
to in this Note shall be rounded to the nearest cent (with one half cent
being rounded upwards).
This Note shall be governed by, and construed in accordance with, the
internal laws of the State of Delaware.<PAGE>
ASSIGNMENT FORM To assign this Note, fill in the form below: I or we assign
and transfer this Note to
(Insert assignee's soc. sec. or tax I.D. no.)
_____________________________________________________________________
(Print or type assignee's name, address and zip code)
_____________________________________________________________________
_____________________________________________________________________
_____________________________________________________________________
and irrevocably appoint_________________________________________ agent
to transfer this Note on the books of the Company. The agent may substitute
another to act for him.
____________________________________________________________________________
Date __________________________
Your signature _____________________________________
_______________________________________________________________________
(Sign exactly as your name appears on the other side of this Note. The
signature to this assignment must be guaranteed by a commercial bank or trust
company having its principal office or a correspondent in The City of New
York or by a member of The New York Stock Exchange.)
FORM OF NOTE
[FORM OF FACE OF NOTE]
UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF
TRANSFER, EXCHANGE OR PAYMENT, AND ANY NOTE ISSUED IS REGISTERED IN THE NAME
OF CEDE & CO. OR IN SUCH OTHER NAME AS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (AND ANY PAYMENT IS MADE TO
CEDE & CO., OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY), ANY TRANSFER, PLEDGE OR
OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL
INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
Number $
CUSIP NO.__________________
SEARS ROEBUCK ACCEPTANCE CORP.
7% Note due March 1, 2038
7% 7%
Due 2038 Due 2038
Sears Roebuck Acceptance Corp., a corporation organized and existing
under the laws of the State of Delaware (hereinafter called the "Company"),
for value received, hereby promises to pay to , or
registered assigns, the principal sum of _____________________________ upon
presentation and surrender of this Note, on the first day of March, 2038, at
the office or agency of the Company in the Borough of Manhattan of The City
of New York or, at the option of the holder hereof, such office or agency, if
any, maintained by the Company in the city in which the principal executive
offices of the Company are located or the city in which the principal
corporate trust office of the Trustee is located, in such coin or currency of
the United States of America as at the time of payment is legal tender for
public and private debts, and to pay interest on said principal sum at the
rate of 7% per annum, either, at the option of the Company, by check mailed
to the address of the person entitled thereto as such address shall appear on
the Security Register or at either of such offices or agencies, in like coin
or currency, from the March 1, June 1, September 1 or December 1, as the case
may be, next preceding the date hereof to which interest has been paid on the
Notes referred to on the reverse hereof (unless the date hereof is the date
to which interest has been paid on such Notes, in which case from the date
hereof, or unless the date hereof is prior to June 1, 1998, in which case
from March 3, 1998), quarterly, commencing on June 1, 1998, on March 1, June
1, September 1, and December 1, until payment of said principal sum has been
made or duly provided for. Notwithstanding the foregoing, if this Note is
dated after any February 14 (February 15 in the case of any Leap Year) and
before the following March 1, or after any May 17 and before the following
June 1, or after any August 17 and before the following September 1, or after
any November 16 and before the following December 1, then this Note shall
bear interest from such following March 1, June 1, September 1 or December 1,
as applicable, provided, however, that if the Company shall default in the
payment of interest due on such following March 1, June 1, September 1 or
December 1, this Note shall bear interest from the next preceding March 1,
June 1, September 1 or December 1 to which interest has been paid on such
Note, or if no interest has been paid on such Note, then from March 3, 1998.
The interest so payable on any March 1, June 1, September 1 or December 1,
will, subject to certain exceptions provided in the Indenture referred to on
the reverse hereof, be paid to the person in whose name this Note is
registered at the close of business on the February 14 (February 15 in the
case of any Leap Year) prior to such March 1, the May 17 prior to such June
1, the August 17 prior to such September 1, or the November 16 prior to such
December 1. Any such interest not so punctually paid or duly provided for
shall forthwith cease to be payable to the registered holder on such Interest
Payment Date, and may be paid to the Person in whose name this Note is
registered at the close of business on a Special Record Date for the payment
of such Defaulted Interest to be fixed by the Trustee, notice of which shall
be given to Noteholders not less than 10 days prior to such Special Record
Date, or may be paid, at any time in any other lawful manner, all as more
fully provided in such Indenture.
This Note is subject to redemption, at the option of the Company, on
each March 1, June 1, September 1 and December 1, commencing on March 1,
2003, as a whole or from time to time in part, upon not less than 30 nor more
than 60 days' notice, at a redemption price equal to 100% of the principal
amount redeemed plus accrued and unpaid interest to the date fixed for
redemption. In addition, this Note is subject to redemption, at the option
of the Company, in whole but not in part, at any time upon not less than 30
nor more than 60 days' notice, at a redemption price equal to 100% of the
principal amount redeemed plus accrued and unpaid interest to the date fixed
for redemption, if there is a substantial likelihood that the Company will
not be entitled to deduct currently for United States federal income tax
purposes the full amount of interest accrued in respect of the Note as a
result of any of the following occurring, becoming effective or being issued
after March 2, 1998:
(i) any actual or proposed change in or amendment to the laws ( or any
regulations or rulings promulgated thereunder) of the United States , or any
change in the application, official interpretation or enforcement of such
laws, regulations or rulings;
(ii) any action taken by a taxing authority which action is generally
applied or is taken with respect to the Company;
(iii) a decision rendered by a court of competent jurisdiction in the
United States, whether or not such decision was rendered with respect to the
Company; or
(iv) a technical advice memorandum or letter ruling or other
administrative pronouncement issued by the National Office of the United
States Internal Revenue Service, on substantially the same facts as those
pertaining to the Company.
If any Interest Payment Date or the Maturity Date falls on a day that
is not a Business Day, the interest or principal payment shall be made on the
next day that is a Business Day, and no interest on such payments shall
accrue for the period from and after the Interest Payment Date or the
Maturity Date. Interest on the Note well be computed on the basis of a
360-day year of twelve 30-day months.
Reference is hereby made to the further provisions of this Note set
forth on the reverse hereof, and such further provisions shall for all
purposes have the same effect as though fully set forth at this place.
This Note shall not be entitled to any benefit under the Indenture
referred to on the reverse hereof or any indenture supplemental thereto, or
become valid or obligatory for any purpose, until the certificate of
authentication hereon shall have been signed by or on behalf of the Trustee
under such Indenture.
IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed under its corporate seal.
Dated: March 3, 1998
Sears Roebuck Acceptance Corp.
By _______________________________
President
By ___________________________
Secretary
[Corporate Seal]
[FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION]
This is one of the Securities of the series designated and referred to
in the within-mentioned Indenture.
The Chase Manhattan Bank
as Trustee
By:___________________________________
Authorized Officer
[FORM OF REVERSE SIDE OF NOTE]
SEARS ROEBUCK ACCEPTANCE CORP.
7% Note due March 1, 2038
1. This Note is one of a duly authorized issue of debentures, notes,
bonds or other evidences of indebtedness of the Company (hereinafter called
the "Securities") of the series hereinafter specified, unlimited in aggregate
principal amount, all issued or to be issued under or pursuant to an
indenture dated as of May 15, 1995, executed between the Company and THE
CHASE MANHATTAN BANK, as Trustee; to which indenture and all indentures
supplemental thereto (herein collectively called the "Indenture") reference
is hereby made for a specification of the rights and limitation of rights
thereunder of the Holders of the Securities, the rights and obligations
thereunder of the Company and the rights, duties and immunities thereunder of
the Trustee. The Securities may be issued in one or more series, which
different series may be issued in various aggregate principal amounts, may
mature at different times, may bear interest (if any) at different rates, may
be subject to different redemption provisions (if any), may be subject to
different sinking, purchase or analogous funds (if any), may be subject to
different covenants and Events of Default and may otherwise vary as in the
Indenture provided. This Note is one of a series designated as the "7% Notes
due March 1, 2038" of the Company, limited in aggregate principal amount to
$250,000,000 (hereinafter referred to as the "Notes"). All terms used in
this Note which are defined in the Indenture shall have the meanings assigned
to them in the Indenture.
2. In case a default, as defined in the Indenture, shall occur and
be continuing with respect to the Notes, the principal amount of all Notes
then outstanding under the Indenture may be declared or may become due and
payable upon the conditions and in the manner and with the effect provided in
the Indenture. The Indenture provides that such declaration may in certain
events be annulled by the Holders of a majority in principal amount of the
Notes outstanding.
3. To the extent permitted by, and as provided in, the Indenture,
indentures supplemental thereto may be entered into with the consent of the
Company and with the consent of the Holders of not less than a majority in
principal amount of the outstanding Securities (as defined in the Indenture)
of each series to be affected; provided, however, that no such supplemental
indenture shall (i) change the Stated Maturity of the principal of (and
premium, if any, on), or the interest on, any Security, or reduce the
principal amount of (and premium, if any, on), or the rate of interest on any
Security, or change the Currency in which the principal of (and premium, if
any) or interest on such Securities is denominated or payable, or reduce the
amount of the principal of an Original Issue Discount Security that would be
payable upon a declaration of acceleration of the Maturity thereof pursuant
to Section 6.1 of the Indenture without the consent of the Holder of each
outstanding Security so affected, or (ii) reduce the aforesaid percentage of
Securities of any series the Holders of which are required to consent to any
such supplemental indenture, without the consent of the Holders of each
outstanding Security affected thereby.
4. The Indenture also provides that the Holders of a majority in
principal amount of the Securities of any series then outstanding may waive
any past default under the Indenture and its consequences, except a default
in the payment of the principal of or interest or premium, if any, on any of
the Securities.
5. No reference herein to the Indenture and no provision of this
Note or of the Indenture shall alter or impair the obligation of the Company,
which is absolute and unconditional, to pay the principal of and interest on
this Note at the place, at the respective times, at the rate, and in the
Currency, herein prescribed.
6. This Note is transferable by the registered Holder hereof or by
his attorney duly authorized in writing at the office or agency of the
Company in the Borough of Manhattan of The City of New York or, at the option
of the Holder hereof, such office or agency, if any, maintained by the
Company in the city in which the principal executive offices of the Company
are located or the city in which the principal corporate trust office of the
Trustee is located, without charge except for any tax or other governmental
charge imposed in relation thereto, but only in the manner and subject to the
limitations provided in the Indenture and upon surrender of this Note. Upon
any such transfer a Note or Notes of authorized denominations for a like
aggregate principal amount and bearing a number not contemporaneously
outstanding will be issued in exchange herefor.
7. The Notes are issuable only as registered Notes without coupons,
in denominations of $25 and any multiple of $25. In the manner and subject
to the limitations provided in the Indenture, Notes are exchangeable, without
charge except for any tax or other governmental charge imposed in relation
thereto, for other Notes of authorized denominations for a like aggregate
principal amount, at the office or agency of the Company in the Borough of
Manhattan of The City of New York or, at the option of the Holder hereof,
such office or agency, if any, maintained by the Company in the city in which
the principal executive offices of the Company are located or the city in
which the principal corporate trust office of the Trustee is located.
8. The Company, the Trustee, any Authenticating Agent, any paying
agent and any Security registrar may deem and treat the registered Holder
hereof as the absolute owner hereof (whether or not this Note shall be
overdue and notwithstanding any notation of ownership or other writing hereon
by anyone other than the Company or any Security registrar) for the purpose
of receiving payment of or on account of the principal hereof and interest
hereon and for all other purposes, and neither the Company, the Trustee, an
Authenticating Agent, a paying agent nor Security registrar shall be affected
by any notice to the contrary. All such payments shall be valid and
effectual to satisfy and discharge the liability upon this Note to the extent
of the sum or sums so paid.
9. No recourse shall be had for the payment of the principal of or
the interest on this Note or for any claim based hereon or otherwise in any
manner in respect hereof, or in respect of the Indenture, against any
incorporator, shareholder, officer or director, past, present or future, of
the Company or of any predecessor or successor corporation, whether by virtue
of any constitutional provision or statute or rule of law, or by the
enforcement of any assessment or penalty or in any other manner, all such
liability being expressly waived and released by the acceptance hereof and as
part of the consideration for the issue hereof. In the event of any sale or
transfer of its assets and liabilities substantially as an entirety to a
successor corporation, the predecessor corporation may be dissolved and
liquidated as more fully set forth in the Indenture.
1 Incorporated by reference to attached form of security.
March 6, 1998
Sears Roebuck Acceptance Corp.
3711 Kennett Pike
Greenville, Delaware 19807
Sears, Roebuck and Co.
3333 Beverly Road
Hoffman Estates, Illinois 60179
Ladies and Gentlemen:
I am an Assistant General Counsel of Sears, Roebuck and Co.
("Sears"). I have examined (i) Registration Statement No. 333-
30879 as filed with the Securities and Exchange Commission on
July 8, 1997 thereto (the "Registration Statement") in connection
with the registration under the Securities Act of 1933, as
amended (the "Act") of $4,500,000,000 aggregate initial offering
price of debt securities of Sears Roebuck Acceptance Corp. (the
"Company"), for several offerings to be made on a continuous or
delayed basis pursuant to the provisions of Rule 415 under the
Act; (ii) the final prospectus, dated February 23, 1998, relating
to the offering and sale of $4,000,000,000 of the aforesaid debt
securities, which is part of the Registration Statement (the
"Prospectus"), and the Prospectus Supplements, dated February 23
and February 26, 1998, (collectively, the "Prospectus
Supplement") relating to the offering and sale of (a) up to
$2,000,000,000 aggregate principal amount of Medium-Term Notes
Series V ("Medium-Term Notes") and (b) $250,000,000 aggregate
principal amount of 7% Notes due March 1, 2038 (the "7% Notes")
of the Company; (iii) the Indenture dated as of May 15, 1995
between the Company and Chase Manhattan Bank, as Trustee,
relating to the aforesaid debt securities; (iv) (a) the
Underwriting Agreement dated September 18, 1997 among the
Company, Sears and Merrill Lynch, Pierce, Fenner & Smith
Incorporated, (b) the Pricing Agreement dated February 26, 1998
among the Company, Sears and Merrill Lynch, Pierce, Fenner &
Smith Incorporated, as Representative of the several Underwriters
identified in Schedule I thereto, relating to the sale of the 7%
Notes, and (c) the Distribution Agreement dated February 23, 1998
among the Company, Sears, Goldman, Sachs & Co., Merrill Lynch,
Pierce, Fenner & Smith Incorporated, Morgan Stanley & Co.
Incorporated and Salomon Brothers Inc, as Agents for the Medium-
Term Notes; and (v) the form of (a) the 7% Notes, (b) the Fixed
Rate Medium Term Notes and (c) the Floating Rate Medium Term
Notes. I am familiar with the proceedings heretofore taken by
the Company in connection with the authorization, registration,
issuance and sale of the Notes.
I am of the opinion that each of the 7% Notes are, and the
Medium-Term Notes, when issued in the manner set forth in the
Distribution Agreement, will be, legally issued and binding
obligations of the Company in accordance with their terms,
subject to insolvency, bankruptcy, reorganization, moratorium,
liquidation, fraudulent conveyance and transfer or other similar
laws relating to or affecting the enforcement of creditors'
rights generally or by general equity principles, including,
without limitation, concepts of materiality, reasonableness, good
faith and fair dealing (regardless of whether such enforceability
is considered in a proceeding in equity or at law). In giving
the above opinion, I have relied, with their permission, on
opinions from Morris, Nichols, Arsht & Tunnell addressed to me
and dated February 23 and March 3, 1998.
I consent to the incorporation by reference of this opinion
into the Registration Statement, and to the references to me in
the Prospectus and Prospectus Supplement.
Very truly yours,
/S/Nancy K. Bellis
Nancy K. Bellis
