-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, TDDiIov/ZI3zKuhp7uqExxh19TCTigh0Rh8+geU4Lypz0eRkkLMaKlmmYUIoWdKW aJsGzlnqlhcTwnkfDlBfVg== 0000319256-96-000011.txt : 19960229 0000319256-96-000011.hdr.sgml : 19960229 ACCESSION NUMBER: 0000319256-96-000011 CONFORMED SUBMISSION TYPE: S-3/A PUBLIC DOCUMENT COUNT: 13 FILED AS OF DATE: 19960227 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: SEARS ROEBUCK ACCEPTANCE CORP CENTRAL INDEX KEY: 0000088255 STANDARD INDUSTRIAL CLASSIFICATION: SHORT-TERM BUSINESS CREDIT INSTITUTIONS [6153] IRS NUMBER: 510080535 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-3/A SEC ACT: 1933 Act SEC FILE NUMBER: 033-64215 FILM NUMBER: 96527024 BUSINESS ADDRESS: STREET 1: 3711 KENNETT PIKE CITY: GREENVILLE STATE: DE ZIP: 19807 BUSINESS PHONE: 3028883112 S-3/A 1 AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON , 1996 REGISTRATION STATEMENT NO. 33-64215 - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 --------------- AMENDMENT NO. 1 TO FORM S-3 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 --------------- SEARS, ROEBUCK AND CO. SEARS ROEBUCK ACCEPTANCE CORP. (EXACT NAME OF CO-REGISTRANT AS (EXACT NAME OF REGISTRANT AS SPECIFIED SPECIFIED IN ITS CHARTER) IN ITS CHARTER) NEW YORK (STATE OF DELAWARE 51-0080535 INCORPORATION) 36-1750680 (STATE OF (I.R.S. EMPLOYER (I.R.S. EMPLOYER INCORPORATION) IDENTIFICATION IDENTIFICATION NO.) NO.) 3333 BEVERLY ROAD HOFFMAN ESTATES, ILLINOIS 60179 3711 KENNETT PIKE GREENVILLE, DELAWARE 19807 (847) 286-2500 (ADDRESS, INCLUDING ZIP CODE, AND (302) 888-3100 TELEPHONE NUMBER, (ADDRESS, INCLUDING ZIP CODE, AND INCLUDING AREA CODE, OF CO- TELEPHONE NUMBER, REGISTRANT'S PRINCIPAL EXECUTIVE INCLUDING AREA CODE, OF REGISTRANT'S OFFICES) PRINCIPAL EXECUTIVE OFFICES) KEITH E. TROST PRESIDENT MICHAEL D. LEVIN, ESQ. SEARS ROEBUCK ACCEPTANCE CORP. SENIOR VICE PRESIDENT AND GENERAL 3711 KENNETT PIKE COUNSEL SEARS, ROEBUCK AND CO. GREENVILLE, DELAWARE 19807 (302) 888-3100 3333 BEVERLY ROAD HOFFMAN ESTATES, ILLINOIS 60179 (847) 286-2500 (NAMES, ADDRESSES, INCLUDING ZIP CODE, AND TELEPHONE NUMBERS, INCLUDING AREA CODE, OF AGENTS FOR SERVICE) COPIES TO: RICHARD F. KOTZ, ESQ. ROBERT J. PENCE, ESQ. SECRETARY CARL E. WITSCHY, ESQ. ASSISTANT GENERAL COUNSEL SEARS ROEBUCK ACCEPTANCE LATHAM & WATKINS CORP. SEARS, ROEBUCK AND CO. 3711 KENNETT PIKE SEARS TOWER, SUITE 5800 3333 BEVERLY ROAD GREENVILLE, DELAWARE 19807 HOFFMAN ESTATES, ILLINOIS CHICAGO, ILLINOIS 60606 60179 --------------- APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From time to time after the effective date of this Registration Statement as determined by market conditions. If the only securities being registered on this Form are being offered pursuant to dividend or interest reinvestment plans, please check the following box. [_] If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, other than securities offered only in connection with dividend or interest reinvestment plans, please check the following box. [X] If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [_] If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [_] If delivery of the prospectus is expected to be made pursuant to Rule 434, please check the following box. [X] CALCULATION OF REGISTRATION FEE - ------------------------------------------------------------------------------- - -------------------------------------------------------------------------------
PROPOSED PROPOSED MAXIMUM TITLE OF EACH CLASS OF AMOUNT MAXIMUM AGGREGATE AMOUNT OF SECURITIES TO BE TO BE OFFERING PRICE OFFERING REGISTRATION REGISTERED REGISTERED PER UNIT(1) PRICE(1) FEE(2) - ---------------------------------------------------------------------------------- Debt Securities......... $2,000,000,000 100% $2,000,000,000 $689,655.17 - ----------------------------------------------------------------------------------
- ------------------------------------------------------------------------------- (1) Pursuant to Rule 429, the prospectus included in this registration statement is a combined prospectus and also relates to Debt Securities having an aggregate initial offering price not in excess of $543,900,000 which have not yet been offered for sale under the original Registration Statement No. 33-58139 on Form S-3. A filing fee of $1,034,490 was paid with respect to the $3,000,000,000 amount of Debt Securities registered pursuant to Registration Statement No. 33-58139, of which $187,553.03 represented the filing fee associated with the amount of such Debt Securities which has not yet been offered for sale. (2) A fee of $400,000 was paid with the filing of the registration statement; an additional fee of $289,655.17 is being paid with the filing of this amendment. --------------- THE REGISTRANT AND CO-REGISTRANT HEREBY AMEND THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT AND CO-REGISTRANT SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a), MAY DETERMINE. - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- ++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++ + + +INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A + +REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE + +SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY + +OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT + +BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR + +THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE + +SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE + +UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF + +ANY SUCH STATE. + ++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++ SUBJECT TO COMPLETION, DATED FEBRUARY 27, 1996 SEARS ROEBUCK ACCEPTANCE CORP. DEBT SECURITIES ----------- Sears Roebuck Acceptance Corp. ("SRAC") from time to time may offer up to $2,543,900,000 aggregate initial offering price of its debt securities consisting of debentures, notes and/or other unsecured evidences of indebtedness (the "Debt Securities"). If so provided in the accompanying Prospectus Supplement, the Debt Securities of any series may be represented in whole or in part by one or more Global Securities ("Global Securities") registered in the name of a depository's nominee and, if so represented, beneficial interests in such Global Securities will be shown on, and transfers thereof will be effected only through, records maintained by the depository and its participants. The Debt Securities may be offered as separate series in amounts, at prices and on terms to be set forth in supplements to this Prospectus. It is anticipated that SRAC will sell Debt Securities directly to institutional investors and may sell Debt Securities to or through underwriters, and also may sell Debt Securities directly to other purchasers or through agents. See "Plan of Distribution." The accompanying Prospectus Supplement or Prospectus Supplements (the "Prospectus Supplement") sets forth the names of any underwriters or agents involved in the sale of the Debt Securities in respect of which this Prospectus is being delivered, the principal amounts, if any, to be purchased by underwriters and the compensation, if any, of such underwriters or agents. The terms of the Debt Securities, including, where applicable, the specific designation, aggregate principal amount, denominations, maturity, premium, if any, rate (which may be fixed or variable) and time of payment of interest, if any, terms for redemption at the option of SRAC or the Holder, terms for sinking fund payments, the initial public offering price, the names of, and the principal amounts, if any, to be purchased by underwriters and the compensation of such underwriters, deferred pricing arrangements, if any, and the other terms in connection with the offering and sale of the Debt Securities in respect of which this Prospectus is being delivered, are set forth in the accompanying Prospectus Supplement. As used herein, Debt Securities shall include securities denominated in U.S. dollars or, at the option of SRAC if so specified in the applicable Prospectus Supplement, in any other currency or in composite currencies or in amounts determined by reference to an index. ----------- THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURI- TIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. February , 1996 NO DEALER, SALESMAN OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATION OTHER THAN THOSE CONTAINED OR INCORPORATED BY REFERENCE IN THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY ANY SECURITIES OTHER THAN THE REGISTERED SECURITIES TO WHICH IT RELATES OR AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY SUCH SECURITIES IN ANY JURISDICTION TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION IN SUCH JURISDICTION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF OR THAT THE INFORMATION IS CORRECT AS OF ANY TIME SUBSEQUENT TO ITS DATE. ---------------- TABLE OF CONTENTS
PAGE ---- Available Information...................................................... 3 Reports to Holders of Debt Securities...................................... 3 Incorporation of Certain Documents by Reference............................ 3 Sears Roebuck Acceptance Corp.............................................. 4 Use of Proceeds............................................................ 4 Summary Financial Information.............................................. 5 Ratio of Earnings to Fixed Charges......................................... 6 Description of Debt Securities............................................. 6 Plan of Distribution....................................................... 9 Legal Opinion.............................................................. 10 Experts.................................................................... 10
2 AVAILABLE INFORMATION SRAC and Sears, Roebuck and Co. ("Sears"), SRAC's parent, are subject to the informational requirements of the Securities Exchange Act of 1934, as amended (the "Exchange Act") and in accordance therewith file reports and other information with the Securities and Exchange Commission (the "Commission"). Sears also files proxy statements with the Commission. Such reports, proxy statements and other information can be inspected and copied at the public reference facilities of the Commission in Room 1024, 450 Fifth Street N.W., Washington, D.C. 20549; 7 World Trade Center, 13th Floor, New York, New York 10048; and Suite 1400, Citicorp Center, 500 W. Madison Street, Chicago, Illinois 60661; and copies of such materials can be obtained from the public reference section of the Commission at 450 Fifth Street N.W., Washington, D.C. 20549, at prescribed rates. Reports and other information concerning SRAC can also be inspected at the office of the New York Stock Exchange, Inc., 20 Broad Street, New York, New York 10005. Reports, proxy statements and other information concerning Sears can also be inspected at the offices of the New York Stock Exchange, Inc., the Chicago Stock Exchange Incorporated, 440 South LaSalle Street, Chicago, Illinois 60605, and the Pacific Stock Exchange, Inc., 301 Pine Street, San Francisco, California 94104. Additional information regarding SRAC, Sears and the Debt Securities is contained in the Registration Statement and the exhibits relating thereto, filed with the Commission under the Securities Act of 1933, as amended (the "Act"). For further information pertaining to SRAC, Sears and the Debt Securities, reference is made to the Registration Statement, and the exhibits thereto, which may be inspected without charge at the office of the Commission at 450 Fifth Street N.W., Washington, D.C. 20549, and copies thereof may be obtained from the Commission at prescribed rates. REPORTS TO HOLDERS OF DEBT SECURITIES Holders of Debt Securities will receive annual reports containing information, including financial information that has been audited and reported on by independent public accountants, about SRAC. INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE The Annual Reports on Form 10-K for the year ended December 31, 1994 and the Quarterly Reports on Form 10-Q for the quarterly periods ended March 31, June 30 and September 30, 1995 and April 1, July 1 and September 30, 1995, respectively, filed by SRAC and Sears, and the Current Reports on Form 8-K for January 17, February 7, April 20, April 25, May 15, June 1, June 20 and November 8, 1995 and February 7, 1996 filed by Sears and for June 8, November 4, 1995 and January 23, 1996 filed by SRAC with the Commission pursuant to Section 13 of the Exchange Act, are incorporated in and made part of this Prospectus by reference. Pursuant to Rule 412 promulgated by the Commission pursuant to the Act, the information incorporated by reference in Sears Annual Report on Form 10-K for the fiscal year ended December 31, 1994 under Items 6 (Selected Financial Data), 7 (Management's Discussion and Analysis of Financial Condition and Results of Operations) and 8 (Financial Statements and Supplementary Data) has been superseded by the restated financial information included in Sears Current Report on Form 8-K for May 15, 1995 reflecting Sears Allstate Insurance Group as discontinued operations. All documents filed by SRAC or Sears with the Commission pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to the date of this Prospectus and prior to the termination of the offering of the Debt Securities (other than those portions of such documents described in paragraphs (i), (k) and (l) of Item 402 of Regulation S-K promulgated by the Commission) shall be deemed to be incorporated by reference in this Prospectus and to be a part hereof from the date of filing of such documents. SRAC WILL PROVIDE WITHOUT CHARGE TO EACH PERSON TO WHOM A COPY OF THIS PROSPECTUS IS DELIVERED, ON THE WRITTEN OR ORAL REQUEST OF ANY SUCH PERSON, A COPY OF ANY OR ALL OF THE DOCUMENTS INCORPORATED HEREIN BY REFERENCE (NOT INCLUDING EXHIBITS TO SUCH DOCUMENTS UNLESS SUCH EXHIBITS ARE SPECIFICALLY INCORPORATED BY REFERENCE IN SUCH DOCUMENTS). WRITTEN OR TELEPHONE REQUESTS FOR SUCH COPIES SHOULD BE DIRECTED TO SEARS ROEBUCK ACCEPTANCE CORP., 3711 KENNETT PIKE, GREENVILLE, DELAWARE 19807, ATTENTION: VICE PRESIDENT, FINANCE (302/888-3100). 3 SEARS ROEBUCK ACCEPTANCE CORP. SRAC is a wholly-owned subsidiary of Sears and was incorporated in 1956 under the laws of Delaware. Its general offices are located at 3711 Kennett Pike, Greenville Delaware 19807 (302/888-3100). SRAC raises funds primarily from the direct placement of commercial paper with corporate and institutional investors and through intermediate-term loans, discrete underwritten debt and medium-term notes. SRAC uses borrowing proceeds to acquire short-term notes of Sears and purchase outstanding customer receivable balances from Sears. Sears, which is a multi-line retailer that conducts Domestic and International merchandising operations, uses the funds obtained from SRAC for general funding purposes. SRAC, and not Sears, will be the sole obligor on the Debt Securities. SRAC's income is derived primarily from the earnings on its investment in the notes and receivable balances of Sears. The interest rate on Sears notes is presently calculated so that SRAC maintains an earnings to fixed charge ratio of at least 1.25 times. The yield on the investment in Sears notes is related to SRAC's borrowing costs and, as a result, SRAC's earnings fluctuate in response to movements in interest rates and changes in Sears short-term borrowing requirements. Subject to the provisions of the Indenture relating to the Debt Securities, SRAC will be required to maintain a ratio of earnings to fixed charges (determined in accordance with Item 503(d) of Regulation S-K promulgated by the Commission) of not less than 1.10 for any fiscal quarter and cause Sears to maintain ownership of all voting stock of SRAC as long as any Debt Securities are outstanding, and Sears has agreed to pay SRAC such amounts as may be necessary for such purpose and to maintain such ownership. See "Description of Debt Securities." At December 31, 1995, SRAC had eleven employees. USE OF PROCEEDS The net proceeds to be received by SRAC from the sale of the Debt Securities offered hereby will be added to its general funds and initially used to reduce short-term indebtedness. As indicated under "Sears Roebuck Acceptance Corp.," SRAC's principal business is the purchase of short-term notes of Sears; also, on occasion, SRAC purchases customer receivable balances from Sears Domestic credit operations. SRAC expects to incur additional indebtedness, but the amount and nature thereof have not yet been determined and will depend on economic conditions and certain capital requirements of Sears. It is anticipated that Sears and its subsidiaries will continue their practice of short-term borrowing and will, from time to time, incur additional long-term debt and engage in securitization programs in which credit card receivables are sold in public or private transactions. Sears also may, from time to time, issue equity securities. 4 SUMMARY FINANCIAL INFORMATION The following table sets forth certain summary financial information of SRAC for the five years ended December 31, 1994. The summary information should be read in conjunction with the financial statements of SRAC and the notes thereto incorporated herein by reference.
1994 1993 1992 1991 1990 -------- -------- --------- --------- --------- (DOLLARS IN MILLIONS) Operating Results Total revenues............ $ 282.7 $ 337.5 $ 696.5 $ 1,100.8 $ 1,347.4 Expenses Interest and related expenses............... 218.5 236.1 482.8 825.9 1,072.1 Total Expenses.......... 220.4 276.7 532.3 894.1 1,077.2 Income taxes.............. 22.1 21.3 56.1 70.3 91.8 Net income................ 40.2 39.5 108.1 136.4 178.4 Financial Position Assets Notes of Sears.......... $6,842.5 $3,403.9 $10,493.6 $12,214.5 $14,578.2 Customer receivable balances purchased from Sears.................. 81.5 88.0 963.4 1,042.8 -- Total assets............ 7,031.2 4,145.8 12,415.2 14,676.2 15,373.3 Liabilities Debt payable within one year Commercial paper...... $4,912.9 $2,475.0 $ 8,515.3 $10,205.8 $10,331.0 Agreements with bank trust departments.... 87.4 139.8 397.9 510.1 571.9 Debentures and notes.... 845.0 -- -- 204.0 925.0 Loan agreements with SOFNV.................. -- 379.8 332.1 683.2 590.7 Total liabilities....... 5,853.5 3,008.3 9,287.0 11,656.1 12,489.6 Sears, Roebuck and Co. investment in SRAC Capital stock (including capital in excess of par value)............. 35.0 35.0 365.2 365.2 365.2 Retained income......... 1,142.7 1,102.5 2,763.0 2,654.9 2,518.5 Debt as percentage of equity................... 496% 263% 296% 384% 431% Other Pertinent Data Commercial paper Average daily outstandings........... $ 3,615 $ 3,812 $ 9,328 $ 10,543 $ 10,340 Agreements with bank trust departments Average daily outstandings........... 124 402 747 643 848 Contractual Credit Facilities (year-end).... 5,132 4,200 10,812 11,801 10,775
5 RATIO OF EARNINGS TO FIXED CHARGES The ratio of earnings to fixed charges for SRAC for each of the years ended December 31, 1994, 1993, 1992, 1991 and 1990 was 1.29, 1.26, 1.34, 1.25 and 1.25, respectively, and for the nine-month period ended September 30, 1995 was 1.26. Earnings consist of net income plus fixed charges and income taxes. Fixed charges consist of interest costs and amortization of debt discount and expense; rental expense is insignificant with no effect on the calculation. The interest rate paid by Sears to SRAC on its investment in Sears notes is presently calculated to produce earnings sufficient to cover SRAC's fixed charges at least 1.25 times. The ratio of income to fixed charges for Sears and its consolidated subsidiaries for each of the years ended December 31, 1994, 1993, 1991 and 1990 was 2.06, 1.66, 1.16 and 0.96, respectively, and for the nine- and twelve-month periods ended September 30, 1995 was 1.84 and 2.08, respectively. For the year ended December 31, 1992, earnings did not cover fixed charges by $2,869 million. In the computation of the ratio of income to fixed charges for Sears and its consolidated subsidiaries, income consists of income from continuing operations less undistributed net income of unconsolidated subsidiaries plus fixed charges (excluding capitalized interest) and federal and state income taxes. Fixed charges consist of interest costs plus the portion of operating lease rentals which is estimated to represent the interest element in such rentals. DESCRIPTION OF DEBT SECURITIES The following descriptions of the terms of the Debt Securities set forth certain general terms and provisions of the Debt Securities to which any Prospectus Supplement may relate. The particular terms of the Debt Securities offered by any Prospectus Supplement (the "Offered Debt Securities") and the extent, if any, to which such general provisions may apply to the Debt Securities so offered will be described in the Prospectus Supplement relating to such Offered Debt Securities. The Debt Securities are to be issued under one of the Indentures (each, an "Indenture") referred to in the following sentence, a copy of the form of which has been filed as an exhibit to the Registration Statement. SRAC has entered into an Indenture with The Chase Manhattan Bank, N.A., as Trustee, and may enter into Indentures with one or more other Trustees eligible to act as Trustee under an Indenture pursuant to the Trust Indenture Act of 1939, as amended (each, a "Trustee"). The particular Indenture under which any series of Debt Securities is to be issued, and the identity of the Trustee under such Indenture, will be identified in the Prospectus Supplement relating to such series of Debt Securities. The following summaries of certain provisions of the Debt Securities and the Indenture do not purport to be complete and are subject to, and are qualified in their entirety by reference to, all the provisions of the Indenture, including the definitions therein of certain terms. Whenever particular provisions or defined terms in the Indenture are referred to herein, such provisions or defined terms are incorporated by reference. GENERAL The Debt Securities will be unsecured obligations of SRAC. The Indenture does not limit the amount of Debt Securities that may be issued thereunder and provides that Debt Securities may be issued thereunder from time to time in one or more series. Reference is made to the Prospectus Supplement relating to the particular series of Offered Debt Securities offered thereby for the following terms of the Offered Debt Securities: (i) the title of the Offered Debt Securities; (ii) any limit on the aggregate principal amount of the Offered Debt Securities; (iii) the date or dates on which the Offered Debt Securities will mature; (iv) the price (expressed as a percentage of the aggregate principal amount thereof) at which the Offered Debt Securities will be issued; (v) the rate or rates (which may be fixed or variable) per annum at which the Offered Debt Securities will bear interest, if any; (vi) the date from which such interest, if any, on the Offered Debt Securities will accrue, the dates on which such interest, if any, will be payable, the date on which payment of such interest, if any, will commence and the Regular Record Dates for such Interest 6 Payment Dates, if any; (vii) the date or dates, if any, after or on which and the price or prices at which the Offered Debt Securities may, pursuant to any optional or mandatory redemption, conversion or exchange provisions, be redeemed, converted or exchanged at the option of SRAC or of the Holder thereof and the other detailed terms and provisions of such optional or mandatory redemption; (viii) any subordination provisions; (ix) the dates, if any, on which and the price or prices at which the Offered Debt Securities will, pursuant to any mandatory sinking fund provisions, or may, pursuant to any optional sinking fund provisions, be redeemed by SRAC, and the other detailed terms and provisions of such sinking fund; (x) if other than the principal amount thereof, the amount of Offered Debt Securities which shall be payable upon declaration of acceleration of the Maturity thereof; (xi) the terms of any warrants attached to the Offered Debt Securities; (xii) the currency or currencies, including European Currency Units or other composite currencies, in which Offered Debt Securities may be purchased and in which principal, premium, if any, and interest, if any, on the Offered Debt Securities will be payable; (xiii) any index used to determine the amount of payments of principal, premium, if any, and interest, if any, on the Offered Debt Securities; (xiv) whether the Offered Debt Securities are issuable in whole or in part as one or more Global Securities and, in such case, the name of the Depository for such Global Security or Global Securities; (xv) the place or places, if other than as set forth in the Indenture, where the principal, premium, if any, and interest, if any, on the Offered Debt Securities will be payable; and (xvi) any other terms relating to the Offered Debt Securities not inconsistent with the Indenture but which may modify or delete any provision of the Indenture insofar as it applies to such series; provided that no term thereof shall be modified or deleted if imposed under the Trust Indenture Act and that any modification or deletion of the rights, duties or immunities of the Trustee shall have been consented to in writing by the Trustee. Principal, premium, if any, and interest, if any, will be payable, and the Debt Securities (other than Debt Securities represented by Global Securities) will be transferable, at the office or agency of SRAC maintained for such purposes in the Borough of Manhattan of The City of New York, and at such other places, if any, in the city in which the principal executive offices of SRAC or the city in which the principal corporate trust office of the Trustee are located, as SRAC may designate, which, except as otherwise specified in the Prospectus Supplement relating to a particular series of Offered Debt Securities, will initially include the principal corporate trust office of the Trustee in the Borough of Manhattan of The City of New York and the principal executive offices of SRAC in Greenville, Delaware. Unless other arrangements are made, interest on the Debt Securities (other than Debt Securities represented by Global Securities) will be paid by checks mailed to the Holders at their registered addresses. (Sections 1.1, 2.5, 3.1, 3.2) Information with respect to payment of principal, premium, if any, and interest, if any, on, and transfers of beneficial interests in, Debt Securities represented by Global Securities will be set forth in the Prospectus Supplement relating thereto. If the principal, premium, if any, and interest, if any, will be payable in a currency other than U.S. dollars, including European Currency Units or another composite currency, and such currency is not available for payment due to the imposition of exchange controls or other circumstances beyond the control of SRAC, SRAC shall satisfy its payment obligations in U.S. dollars on the basis of 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. (Section 2.12) Unless otherwise indicated in the Prospectus Supplement relating thereto, the Debt Securities will be issued only in fully registered form, without coupons, in denominations of $1,000 or any integral multiple thereof. No service charge will be made for any registration of transfer or exchange of the Offered Debt Securities, but SRAC may require payment of a sum sufficient to cover any tax or other governmental charge payable in connection therewith. (Sections 2.2, 2.5) Debt Securities may be issued under the Indenture as Original Issue Discount Securities to be offered and sold at a substantial discount below their stated principal amount. Federal income tax consequences and other special considerations applicable to any such Original Issue Discount Securities will be described in the Prospectus Supplement relating thereto. "Original Issue Discount Security" means any security which provides for an amount less than the principal amount thereof to be due and payable upon the declaration of acceleration of the Maturity thereof upon the occurrence of a default and the continuation thereof. (Sections 1.1, 6.1) 7 CERTAIN RESTRICTIONS The Indenture provides that SRAC will maintain a Fixed Charge Coverage Ratio for any fiscal quarter of not less than 1.10 and that SRAC will cause Sears to maintain ownership of all the voting stock of SRAC. "Fixed Charge Coverage Ratio" means SRAC's ratio of earnings to fixed charges determined in accordance with Item 503(d) of Regulation S-K promulgated by the Commission, as in effect on the date of the Indenture. Pursuant to letter agreements between SRAC and Sears (the "Fixed Charge Coverage and Ownership Agreement"), Sears has agreed, for the benefit of holders of outstanding Debt Securities, that, (i) as long as SRAC is so required to maintain such Fixed Charge Coverage Ratio, Sears will pay SRAC such amounts which, together with any other earnings available therefore, are sufficient for SRAC to maintain such Fixed Charge Coverage Ratio and (ii) as long as SRAC is so required to cause Sears to maintain ownership of SRAC, Sears will maintain such ownership. The Indenture provides that SRAC (i) will cause Sears to observe and perform in all material respects all covenants or agreements of Sears contained in the Fixed Charge Coverage and Ownership Agreement and (ii) will not amend, waive, terminate or otherwise modify any provision of the Fixed Charge Coverage and Ownership Agreement. (Sections 1.1, 3.6) DEFAULTS The following are defaults with respect to any series of Debt Securities: (a) failure to pay the principal amount (and premium, if any) on such series when due and payable; (b) failure to pay any interest on such series when due, continued for 30 days (unless the entire amount of such payment is deposited by SRAC with the Trustee or with a paying agent prior to the expiration of 30 days); (c) failure to perform any other covenant of SRAC in the Indenture (other than a covenant included in the Indenture solely for the benefit of any series of Debt Securities other than that series), continued for 60 days after written notice; (d) acceleration of $100,000,000 or more in principal amount of indebtedness for borrowed money of SRAC (including acceleration with respect to Debt Securities other than that series) or Sears under the terms of the instrument under which such indebtedness is issued or secured (including the Indenture), if such indebtedness shall not have been discharged or such acceleration is not annulled within 30 days after written notice or prior to the time principal owed on the outstanding Debt Securities of that series shall be declared due and payable, except as a result of compliance with applicable laws, orders or decrees; and (e) certain events of bankruptcy, insolvency, or reorganization. In addition, a particular series of Debt Securities may provide for additional events of default, as may be described in the Prospectus Supplement. If a default shall occur and be continuing with respect to any series of Debt Securities, the Trustee or the Holders of a majority in principal amount of the outstanding Debt Securities of that series may declare the principal amount of such series (or, if the Debt Securities of that series are Original Issue Discount Securities, such portion of the principal amount as may be specified in the terms of that series) due and payable immediately, which declaration may, in certain instances, be annulled by the Holders of a majority of the principal amount of outstanding Debt Securities of that series. In the case of such declaration, there would become due and payable such principal amount plus any accrued interest or other periodic payments. (Section 6.1) No Holder of any Debt Security of any series will have any right to institute any proceeding with respect to the Indenture or for any remedy thereunder, unless such Holder previously shall have given to the Trustee written notice of a default and unless also the Holders of a majority of the principal amount of outstanding Debt Securities of that series shall have made written request upon the Trustee, offering reasonable indemnity, to institute such proceeding as Trustee, and the Trustee shall have neglected or refused to institute such proceeding within a reasonable time. However, the right of any Holder of any Debt Security of that series to enforce the payment of principal and interest on such Debt Security, on or after the due dates expressed in such Debt Security, may not be impaired or affected. (Section 6.7) SRAC is required to furnish annually to the Trustee statements as to the performance or fulfillment of its covenants, agreements or conditions in the Indenture and as to the absence of default. (Section 3.4) 8 MODIFICATION OR AMENDMENT OF THE INDENTURE Modifications and alterations of the Indenture may be made by SRAC with the consent of the Holders of a majority of the aggregate principal amount of the outstanding Debt Securities of each series affected by the modification or alteration, provided that no such change shall be made without the consent of the Holders of each Debt Security then outstanding affected thereby which will (a) permit the extension of the time of payment of any payment on any such Debt Security, or a reduction in any such payment or (b) reduce the above- stated percentage of Holders of any series of Debt Securities whose consent is required to modify or alter the Indenture. (Article XI) DEFEASANCE Unless otherwise provided for in the accompanying Prospectus Supplement, SRAC may discharge the Indenture with respect to Debt Securities of any series (except for certain obligations to register the transfer or exchange of Debt Securities of such series, replace mutilated, destroyed, lost and stolen Debt Securities of such series, maintain paying agencies and hold moneys for payment in trust) upon the deposit with the Trustee or a paying agent, in trust, of (1) money in an amount sufficient, or (2) U.S. Government Obligations (if the Debt Securities are denominated in U.S. dollars) or Eligible Obligations (if the Debt Securities are denominated in a Foreign Currency) which through the payment of interest and principal in respect thereof in accordance with their terms will provide money in an amount sufficient, or (3) any combination thereof in an amount sufficient, to pay the principal, premium, if any, and each installment of interest on the Debt Securities of such series on the dates such payments are due in accordance with the terms of the Indenture and such Debt Securities. Such a trust may only be established if, among other things, SRAC has received a ruling from the Internal Revenue Service or an opinion of recognized counsel who is not an employee of SRAC, in either case to the effect that, among other things, the Holders of the Debt Securities of such series will not recognize income, gain or loss for federal income tax purposes as a result of such deposit and defeasance of the Indenture and will be subject to federal income tax on the same amount and in the same manner and at the same times, as would have been the case if such deposit and defeasance had not occurred. Notwithstanding such deposit, the obligations of SRAC under the Indenture to pay interest and principal shall remain in full force and effect until the Debt Securities of such series have been paid in full. (Section 13.4) If and when a ruling from the Internal Revenue Service or an opinion of recognized counsel can be provided without reliance upon the continuation of SRAC's obligations regarding the payment of interest and principal, then such obligations of SRAC shall cease upon delivery to the Trustee of such ruling or opinion and compliance with the other conditions precedent provided for in the Indenture. Under present ruling positions of the Internal Revenue Service, such a ruling is not obtainable. (Section 13.4) REGARDING THE TRUSTEE The Chase Manhattan Bank, N.A., which is a Trustee under an Indenture, performs other services for SRAC. PLAN OF DISTRIBUTION General. SRAC may sell Debt Securities to or through underwriters, and also may sell Debt Securities directly to other purchasers or through agents. It is anticipated that SRAC will offer Debt Securities directly to brokers or dealers, investment companies, insurance companies, banks, savings and loan associations, trust companies or similar institutions, and trusts for which a bank, savings and loan association, trust company or investment adviser is the trustee or authorized to make investment decisions. The distribution of the Debt Securities may be effected from time to time in one or more transactions at a fixed price or prices, which may be changed, or at market prices prevailing at the time of sale, at prices related to such prevailing market prices or at negotiated prices. The Prospectus Supplement will describe the method of distribution of the Offered Debt Securities. 9 In connection with the sale of Debt Securities, underwriters may receive compensation from SRAC or from purchasers of Debt Securities for whom they may act as agents in the form of discounts, concessions or commissions. Underwriters may sell Debt Securities to or through dealers, and such dealers may receive compensation in the form of discounts, concessions or commissions from the underwriters and/or commissions from the purchasers for whom they may act as agent. Underwriters, dealers and agents that participate in the distribution of Debt Securities may be deemed to be underwriters, and any discounts or commissions received by them and any profit on the resale of Debt Securities by them may be deemed to be underwriting discounts and commissions, under the Act. Any such underwriter or agent will be identified, and any such compensation will be described, in the Prospectus Supplement. Under agreements which may be entered into by SRAC, underwriters, dealers and agents who participate in the distribution of Debt Securities may be entitled to indemnification by SRAC against certain liabilities, including liabilities under the Act. LEGAL OPINION Unless otherwise specified in the accompanying Prospectus Supplement, the legality of the Debt Securities is being passed upon for SRAC by Barbara E. Rohde, Counsel, Law Department, of Sears. At January 31, 1996, Ms. Rohde owned 407 Sears common shares, including shares credited to her account in The Savings and Profit Sharing Fund of Sears Employees as of December 31, 1995, and had options granted under the Sears employees stock plans relating to 2,122 shares. EXPERTS The financial statements and Summary Financial Information incorporated by reference and included in this prospectus, respectively, and the financial statements from which the Summary Financial Information included in this Prospectus have been derived, have been audited by Deloitte & Touche LLP, independent certified public accountants, as stated in their reports incorporated by reference herein, and with respect to the Summary Financial Information has been included as Exhibit 99 to the Registration Statement. Such financial statements and Summary Financial Information have been incorporated by reference and included herein, respectively, in the Registration Statement in reliance upon the reports of such firm and given upon their authority as experts in accounting and auditing. With respect to the unaudited interim financial information which is incorporated herein by reference, Deloitte & Touche LLP have applied limited procedures in accordance with professional standards for a review of such information. However, as stated in their reports included in the Quarterly Reports on Form 10-Q for the quarters ended April 1, July 1 and September 30, 1995 for Sears and March 31, June 30 and September 30, 1995 for SRAC and incorporated by reference herein, they did not audit and they did not express an opinion on that interim financial information. Accordingly, the degree of reliance on their reports on such information should be restricted in light of the limited nature of the review procedures applied. Deloitte & Touche LLP are not subject to the liability provisions of Section 11 of the Securities Act of 1933 for their reports on the unaudited interim financial information because those reports are not "reports" or a "part" of the registration statement prepared or certified by an accountant within the meaning of Sections 7 and 11 of the Act. 10 PART II. INFORMATION NOT REQUIRED IN PROSPECTUS ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION S.E.C. Registration Fee........................................... $689,655.17 *Rating Agency Fee......................................... 222,000.00 *State Qualification Expense (including legal fees)........ 40,000.00 *Trustee's Fees............................................ 9,000.00 *Printing and Engraving.................................... 60,000.00 *Legal Fees................................................ 70,000.00 *Auditors' Fees............................................ 50,000.00 *Miscellaneous............................................. 19,344.83 ------------- Total.................................................. $1,160,000.00 =============
- -------- *estimated ITEM 15. INDEMNIFICATION OF OFFICERS AND DIRECTORS. SRAC is a Delaware corporation. Section 145 of the General Corporation Law of the State of Delaware ("GCL") provides that a Delaware corporation has the power to indemnify its officers and directors in certain circumstances. Subsection (a) of Section 145 of the GCL empowers a corporation to indemnify any director or officer, or former director or officer, who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of the corporation), against expenses (including attorney's fees), judgments, fines and amounts paid in settlement actually and reasonably incurred in connection with such action, suit or proceeding provided that such director or officer acted in good faith in a manner reasonably believed to be in or not opposed to the best interests of the corporation, and, with respect to any criminal action or proceeding, provided that such director or officer had no cause to believe his or her conduct was unlawful. Subsection (b) of Section 145 empowers a corporation to indemnify any director or officer, or former director or officer, who was or is a party or is threatened to be made a party to any threatened, pending or completed action or suit by or in the right of the corporation to procure a judgment in its favor by reason of the fact that such person acted in any of the capacities set forth above, against expenses actually and reasonably incurred in connection with the defense or settlement of such action or suit provided that such director or officer acted in good faith and in a manner reasonably believed to be in or not opposed to the best interests of the corporation, except that no indemnification may be made in respect of any claim, issue or matter as to which such director or officer shall have been adjudged to be liable for negligence or misconduct in the performance of his or her duty to the corporation unless and only to the extent that the Court of Chancery or the court in which such action was brought shall determine that despite the adjudication of liability such director or officer is fairly and reasonably entitled to indemnity for such expenses which the court shall deem proper. Section 145 further provides that to the extent a director or officer of a corporation has been successful in the defense of any action, suit or proceeding referred to in subsections (a) and (b) or in the defense of any claim, issue or matter therein, he or she shall be indemnified against expenses (including attorneys' fees) actually and reasonably incurred by him or her in connection therewith; that indemnification provided for by Section 145 shall not be deemed exclusive of any other rights to which the indemnified party may be entitled; and empowers the corporation to purchase and maintain insurance on behalf of a director or officer of the corporation against any liability asserted against him or her or incurred by him or her in any such capacity or arising out of his or her status as such whether or not the corporation would have the power to indemnify him or her against such liabilities under Section 145. Article 11 of SRAC's Certificate of Incorporation provides for indemnification of SRAC's officers and directors to the fullest extent permitted by applicable law. II-1 Certain directors of SRAC are also officers of Sears, a New York corporation. Sections 721 through 724 of the New York Business Corporation Law ("BCL") provide that in certain circumstances a corporation may indemnify directors and officers against judgments, fines, amounts paid in settlement and reasonable expenses, including attorneys' fees, actually and necessarily incurred as a result of any action or proceeding by it or in the right of any other corporation which such directors or officers served in any capacity at the request of Sears, if such director or officer acted, in good faith, for a purpose which he or she reasonably believed not to be opposed to, the best interests of SRAC and, in criminal actions or proceedings, had no reasonable cause to believe that his conduct was unlawful; provided, however, that no indemnification may be provided where a person had been adjudged to have acted in bad faith or to have engaged in active and deliberate dishonesty and were material to the cause of action adjudicated, or to have gained a financial profit or other advantage to which he or she was not legally entitled. A corporation is required to indemnify against reasonable expenses (including attorneys' fees) any director or officer who successfully defends any such actions. The foregoing statements are subject to the detailed provisions of the BCL. Article V of the by-laws of Sears provides that Sears shall indemnify to the full extent permitted by law, any person made, or threatened to be made, a party to, or who is otherwise involved in, any action, suit or proceeding whether civil, criminal, administrative or investigative, by reason of the fact that such person or his testator or intestate, while a director or officer of Sears and at the request of Sears, is or was serving another corporation in any capacity, against judgments, fines, amounts paid in settlement and all expenses, including attorneys' fees, actually incurred as a result of such action. Article V states that the indemnification benefits provided thereby are contract rights, enforceable as if set forth in a written contract. Sears has in effect insurance policies in the amount of $100 million covering all of Sears and SRAC's directors and officers in certain instances where by law they may not be indemnified by Sears or SRAC. The form of Underwriting Agreement and the form of Distribution Agreement, filed as Exhibits 1(a) and 1(b) hereto, respectively, and incorporated herein by reference, contain certain provisions relating to indemnification. ITEM 16. EXHIBITS. 1(a) Form of Underwriting Agreement.* 1(b) Form of Distribution Agreement.* 4(a) Form of Indenture.* 4(b) Indenture dated as of May 15, 1995 between Sears Roebuck Acceptance Corp. and The Chase Manhattan Bank, N.A.* 4(c) Fixed Charge Coverage and Ownership Agreement dated as of May 15, 1995 between Sears Roebuck Acceptance Corp. and Sears, Roebuck and Co. (incorporated by reference to Exhibit 4(e) to registrant's Current Report on Form 8-K for June 8, 1995, File No. 1-4040). 4(d) Form of Extension Agreement between Sears Roebuck Acceptance Corp. and Sears, Roebuck and Co. 5 Opinion of Barbara E. Rohde.* 12(a) Calculation of Ratio of Earnings to Fixed Charges for Sears Roebuck Acceptance Corp. for the year ended December 31, 1994 (incorporated by reference to Exhibit 12 to registrant's Annual Report on Form 10-K for the year ended December 31, 1994, File No. 1-4040). 12(b) Calculation of Ratio of Earnings to Fixed Charges for Sears Roebuck Acceptance Corp. for the year ended December 31, 1993 (incorporated by reference to Exhibit 12 to registrant's Annual Report on Form 10-K for the year ended December 31, 1993, File No. 1-4040). 12(c) Calculation of Ratio of Earnings to Fixed Charges for Sears Roebuck Acceptance Corp. for the year ended December 31, 1992 (incorporated by reference to Exhibit 12 to registrant's Annual Report on Form 10-K for the year ended December 31, 1992, File No. 1-4040).
II-2 12(d) Calculation of Ratio of Earnings to Fixed Charges for Sears Roebuck Acceptance Corp. for the year ended December 31, 1991 (incorporated by reference to Exhibit 12 to registrant's Annual Report on Form 10-K for the year ended December 31, 1991, File No. 1-4040). 12(e) Calculation of Ratio of Earnings to Fixed Charges for Sears Roebuck Acceptance Corp. for the year ended December 31, 1990 (incorporated by reference to Exhibit 12 to registrant's Annual Report on Form 10-K for the year ended December 31, 1990, File No. 1-4040). 12(f) Calculation of Ratio of Earnings to Fixed Charges for Sears Roebuck Acceptance Corp. for the nine-month period ended September 30, 1995 (incorporated by reference to Exhibit 12 to registrant's Quarterly Report on Form 10-Q for the quarterly period ended September 30, 1995, File No. 1-4040). 12(g) Calculation of Ratio of Income to Fixed Charges for Sears, Roebuck and Co. and consolidated subsidiaries for each of the five years ended December 31, 1994, and for the twelve- and nine-month periods ended September 30, 1995 (incorporated by reference to Exhibit 12 to Sears Quarterly Report on Form 10-Q for the quarterly period ended September 30, 1995, File No. 1-416). 15(a) Acknowledgement of awareness from Deloitte & Touche LLP concerning unaudited interim financial information (Sears Roebuck Acceptance Corp.).* 15(b) Acknowledgement of awareness from Deloitte & Touche LLP concerning unaudited interim financial information (Sears, Roebuck and Co.).* 23(a) Consent of Deloitte & Touche LLP (Sears Roebuck Acceptance Corp.).* 23(b) Consent of Deloitte & Touche LLP (Sears, Roebuck and Co.).* 23(c) Consent of Barbara E. Rohde (included in Exhibit 5). 24(a) Power of Attorney of certain officers and directors of the Registrant.** 24(b) Power of Attorney of certain officers and directors of the Co-Registrant.** 26 Form T-1 Statement of Eligibility and Qualification under the Trust Indenture Act of 1939, as amended.* 99 Report of Independent Certified Public Accountants.*
- -------- *Filed herewith. **Previously filed. ITEM 17. UNDERTAKINGS The undersigned registrant and co-registrant hereby undertake: (1) To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement: (i) To include any prospectus required by section 10(a)(3) of the Securities Act of 1933; (ii) To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than a 20% change in the maximum aggregate offering price set forth in the "Calculation of Registration Fee" table in the effective registration statement; (iii) To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement; II-3 Provided, however, that paragraphs (i) and (ii) shall not apply if the information required to be included in a post-effective amendment by those paragraphs is contained in periodic reports filed by the registrant or co-registrant pursuant to section 13 or section 15(d) of the Securities Exchange Act of 1934 that are incorporated by reference in the registration statement. (2) That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (3) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering. The undersigned registrant and co-registrant hereby undertake that, for purposes of determining any liability under the Securities Act of 1933, each filing of the registrant's or co-registrant's annual report pursuant to section 13(a) or section 15(d) of the Securities Exchange Act of 1934 that is incorporated by reference in the registration statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant or co-registrant pursuant to the provisions described in this registration statement above, or otherwise, the registrant and the co- registrant have been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant or co-registrant in the successful defense of any action, suit or proceeding) is asserted against the registrant or co- registrant by such director, officer or controlling person in connection with the securities being registered, the registrant or co-registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue. II-4 SIGNATURES PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT AND CO-REGISTRANT CERTIFY THAT THEY HAVE REASONABLE GROUNDS TO BELIEVE THAT THEY MEET ALL OF THE REQUIREMENTS FOR FILING ON FORM S-3 AND HAVE DULY CAUSED THIS AMENDMENT TO THE REGISTRATION STATEMENT TO BE SIGNED ON THEIR BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN GREENVILLE, STATE OF DELAWARE, AND HOFFMAN ESTATES, STATE OF ILLINOIS, RESPECTIVELY, ON THE 27TH DAY OF FEBRUARY, 1996. Sears Roebuck Acceptance Corp. Keith E. Trost* By___________________________________ Keith E. Trost President Sears, Roebuck and Co. Alice M. Peterson** By___________________________________ Alice M. Peterson Vice President and Treasurer PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS AMENDMENT TO THE REGISTRATION STATEMENT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS IN THE CAPACITIES AND ON THE DATE INDICATED.
SIGNATURE TITLE DATE --------- ----- ---- /s/ Keith E. Trost* Director and President of February 27, 1996 ____________________________________ Sears Roebuck Acceptance Keith E. Trost Corp. (Principal Executive Officer) /s/ Stephen D. Carp* Vice President, Finance and February 27, 1996 ____________________________________ Assistant Secretary of Stephen D. Carp Sears Roebuck Acceptance Corp. (Principal Financial and Accounting Officer) /s/ James A. Blanda* Director of Sears Roebuck February 27, 1996 ____________________________________ Acceptance Corp. James A. Blanda /s/ James D. Constantine* Director of Sears Roebuck February 27, 1996 ____________________________________ Acceptance Corp. James D. Constantine /s/ Alan J. Lacy* Director of Sears Roebuck February 27, 1996 ____________________________________ Acceptance Corp. Alan J. Lacy /s/ Alice M. Peterson** Director of Sears Roebuck February 27, 1996 ____________________________________ Acceptance Corp. Alice M. Peterson /s/ Larry R. Raymond* Director of Sears Roebuck February 27, 1996 ____________________________________ Acceptance Corp. Larry R. Raymond /s/ George F. Slook* Director of Sears Roebuck February 27, 1996 ____________________________________ Acceptance Corp. George F. Slook
II-5
SIGNATURE TITLE DATE --------- ----- ---- /s/ Arthur C. Martinez** Director, Chairman of the February 27, 1996 ____________________________________ Board of Directors, Arthur C. Martinez President and Chief Executive Officer of Sears, Roebuck and Co. (Principal Executive Officer) /s/ Alan J. Lacy** Executive Vice President and February 27, 1996 ____________________________________ Chief Financial Officer of Alan J. Lacy Sears, Roebuck and Co. (Principal Financial Officer) /s/ James A. Blanda** Vice President and February 27, 1996 ____________________________________ Controller of Sears, James A. Blanda Roebuck and Co. (Principal Accounting Officer) /s/ Hall Adams, Jr.** Director of Sears, Roebuck February 27, 1996 ____________________________________ and Co. Hall Adams, Jr. /s/ Warren L. Batts** Director of Sears, Roebuck February 27, 1996 ____________________________________ and Co. Warren L. Batts /s/ James W. Cozad** Director of Sears, Roebuck February 27, 1996 ____________________________________ and Co. James W. Cozad /s/ William E. Lamothe** Director of Sears, Roebuck February 27, 1996 ____________________________________ and Co. William E. Lamothe /s/ Michael A. Miles** Director of Sears, Roebuck February 27, 1996 ____________________________________ and Co. Michael A. Miles /s/ Nancy C. Reynolds** Director of Sears, Roebuck February 27, 1996 ____________________________________ and Co. Nancy C. Reynolds /s/ Clarence B. Rogers, Jr.** Director of Sears, Roebuck February 27, 1996 ____________________________________ and Co. Clarence B. Rogers, Jr. /s/ Donald H. Rumsfeld** Director of Sears, Roebuck February 27, 1996 ____________________________________ and Co. Donald H. Rumsfeld
/s/ Keith E. Trost *By____________________________ Keith E. Trost Individually and as Attorney-in-fact /s/ Alice M. Peterson **By___________________________ Alice M. Peterson Individually and as Attorney-in-fact II-6 EX-4.A 2 FORM OF INDENTURE Exhibit 4(a) - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- SEARS ROEBUCK ACCEPTANCE CORP. AND TRUSTEE ---------------- INDENTURE DATED AS OF ---------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- SEARS ROEBUCK ACCEPTANCE CORP. INDENTURE DATED AS OF TABLE OF CONTENTS*
PAGE ---- Parties................................................................... 1 Recitals.................................................................. 1 ARTICLE I Definitions of Certain Terms Section 1.1. Definitions............................................... I-1 Affiliate................................................ I-1 Authenticating Agent..................................... I-1 Board.................................................... I-1 Business Day............................................. I-1 Certified Resolution..................................... I-1 Commission............................................... I-1 Company.................................................. I-1 Currency................................................. I-1 Defaulted Interest....................................... I-1 Depository............................................... I-1 Dollar................................................... I-2 ECU...................................................... I-2 Eligible Obligations..................................... I-2 European Communities..................................... I-2 Fixed Charge Coverage and Ownership Agreement............ I-2 Fixed Charge Coverage Ratio.............................. I-2 Foreign Currency......................................... I-2 Global Security.......................................... I-2 Holder................................................... I-2 Indenture................................................ I-3 Interest................................................. I-3 Market Exchange Rate..................................... I-3 Maturity................................................. I-3 [New York Location....................................... I-3] Officers' Certificate.................................... I-3 Opinion of Counsel....................................... I-4 Original Issue Discount Security......................... I-4 Outstanding.............................................. I-4 Person................................................... I-4 Redemption Date.......................................... I-4 Redemption Price......................................... I-4 Regular Record Date...................................... I-4 Responsible Officer...................................... I-5 Sears.................................................... I-5 Securities............................................... I-5 Security Register........................................ I-5 Special Record Date...................................... I-5 Stated Maturity.......................................... I-5 Subsidiary; Voting Stock................................. I-5 Trustee.................................................. I-5 U.S. Government Obligations.............................. I-6
- -------- *This table of contents shall not, for any purpose, be deemed to be a part of the Indenture.
PAGE ----- Section 1.2. Trust Indenture Act definitions controlling............. I-6 ARTICLE II The Securities Section 2.1. Amount Unlimited; Issuable in Series; Forms Generally; Form of Trustee's Certificate of Authentication........ II-1 Section 2.2. Denominations........................................... II-3 Section 2.3. Execution, Authentication, Delivery and Dating.......... II-3 Section 2.4. Temporary Securities.................................... II-4 Section 2.5. Registration, Registration of Transfer and Exchange..... II-4 Section 2.6. Mutilated, Destroyed, Lost and Stolen Securities........ II-5 Section 2.7. Payment of Interest; Interest Rights Preserved.......... II-5 Section 2.8. Persons Deemed Owners................................... II-6 Section 2.9. Cancellation............................................ II-7 Section 2.10. Securities Issuable as a Global Security................ II-7 Section 2.11. Currency of Payments in Respect of Securities........... II-7 Section 2.12. Availability of Currency of Payment in Respect of Securities............................................. II-8 ARTICLE III Covenants of the Company Section 3.1. Payment of principal and interest....................... III-1 Section 3.2. Maintenance of office or agency for notices and demands. III-1 Section 3.3. File certain reports and information with the Trustee and the Securities and Exchange Commission............. III-1 Transmit to Holders summaries of certain documents filed with the Trustee....................................... III-2 Furnish list of Holders to the Trustee.................. III-2 Section 3.4. File statement by officers annually with the Trustee.... III-2 Section 3.5. Duties of paying agent.................................. III-2 Section 3.6. Certain restrictions.................................... III-3 ARTICLE IV Redemption of Securities Section 4.1. Applicability of Article................................ IV-1 Section 4.2. Election to Redeem; Notice to Trustee................... IV-1 Section 4.3. Selection by Trustee of Securities to Be Redeemed....... IV-1 Section 4.4. Notice of Redemption.................................... IV-1 Section 4.5. Deposit of Redemption Price............................. IV-2 Section 4.6. Securities Payable on Redemption Date................... IV-2 Section 4.7. Securities Redeemed in Part............................. IV-2 ARTICLE V Sinking Funds Section 5.1. Applicability of Article................................ V-1 Section 5.2. Satisfaction of Sinking Fund Payments with Securities... V-1 Section 5.3. Redemption of Securities for Sinking Fund............... V-1 ARTICLE VI Remedies Upon Default Section 6.1. Defaults defined--acceleration of maturity upon default--waiver of default............................. VI-1
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PAGE ------ Section 6.2. Covenant of Company to pay to Trustee whole amount due on default in payment of principal or interest- Trustee may recover judgment for whole amount due-- application of moneys received by the Trustee........ VI-2 Section 6.3. Trustee may enforce rights of action without possession of Securities............................. VI-4 Section 6.4. Delays or omissions not to impair any rights or powers accruing upon default................................ VI-4 Section 6.5. In event of default Trustee may protect and enforce its rights by appropriate proceedings--holders of a majority in principal amount of Securities of a particular series may waive default.................. VI-4 Section 6.6. Holders of a majority in principal amount of Securities of a particular series may direct exercise of remedies.......................................... VI-5 Section 6.7. Limitation on suits by Holders........................ VI-5 Section 6.8. No Securities owned or held by or for the account of the Company to be deemed outstanding for purpose of payment or distribution.............................. VI-5 Section 6.9. Company and Trustee restored to former position on discontinuance or abandonment of proceedings......... VI-6 ARTICLE VII Concerning the Holders Section 7.1. Evidence of action by Holders......................... VII-1 Section 7.2. Proof of execution of instruments and holding of Securities........................................... VII-1 Section 7.3. Who may be deemed owners of Securities................ VII-1 Section 7.4. Securities owned by Company or its affiliates disregarded for certain purposes..................... VII-2 Section 7.5. Action by Holders binds future Holders................ VII-2 ARTICLE VIII Immunity of Incorporators, Shareholders, Officers and Directors Section 8.1. No recourse against incorporators or others........... VIII-1 ARTICLE IX Merger, Consolidation or Sale Section 9.1. Merger, consolidation, sale or conveyance of property not prohibited except under certain conditions-- execution of supplemental indenture.................. IX-1 Section 9.2. Rights and duties of successor corporation............ IX-1 Issuance of Securities by successor corporation....... IX-1 Section 9.3. Opinion of Counsel to Trustee......................... IX-1 ARTICLE X Concerning the Trustee Section 10.1. Acceptance of Trust................................... X-1 Trustee not relieved from liability for negligence or misconduct........................................... X-1 Trustee not responsible for validity or execution of Indenture or of Securities or for recitals in Indenture or Securities.............................. X-1 Trustee may rely upon documents believed genuine--may consult with counsel--may accept officers' certificates--may require indemnity--not to be liable for action taken in good faith....................... X-2 Prior to default and after curing of defaults Trustee not bound to investigate unless requested by Holders of majority in principal amount of Securities of a series--may require indemnification.................. X-2 Trustee may execute trusts or powers directly or by attorneys............................................ X-2
iii
PAGE ------ Section 10.2. Trustee to be entitled to compensation--Trustee not to be accountable for application of proceeds-- moneys held by Trustee to be trust funds.................... X-2 Section 10.3. Trustee to give Holders notice of default............. X-3 Section 10.4. Trustee acquiring conflicting interest must eliminate it or resign; Definition of conflicting interest; Definition of certain terms.......................... X-3 Calculation of percentages of securities.............. X-6 Section 10.5. Eligibility of Trustee................................ X-7 Section 10.6. Resignation or removal of Trustee..................... X-8 Section 10.7. Acceptance by successor Trustee....................... X-8 Section 10.8. Successor to Trustee by merger or consolidation....... X-9 Section 10.9. Limitations on right of Trustee as a creditor to obtain payment of certain claims..................... X-9 Section 10.10. Trustee to make annual report to Holders.............. X-12 Trustee to make other reports to Holders.............. X-13 Holders to whom reports to be transmitted............. X-13 Section 10.11. Preservation of information by Trustee................ X-13 Trustee to give certain information to Holders upon application.......................................... X-13 Section 10.12. Trustee or an Authenticating Agent may hold Securities and otherwise deal with Company ..................... X-14 Section 10.13. Trustee may comply with any rule, regulation or order of the Securities and Exchange Commission............ X-14 Section 10.14. Authenticating Agent.................................. X-15 ARTICLE XI Supplemental Indentures Section 11.1. Purposes for which supplemental indentures may be entered into without consent of Holders.............. XI-1 Section 11.2. Modification of Indenture with consent of Holders of a majority in principal amount of Securities of any series............................................... XI-1 Section 11.3. Effect of supplemental indentures..................... XI-2 Section 11.4. Securities may bear notation of changes............... XI-2 Section 11.5. Trustee may rely upon Opinion of Counsel.............. XI-3 Section 11.6. Instruments of further assurance...................... XI-3 ARTICLE XII Meetings of Holders Section 12.1. Purposes for which meetings may be called............. XII-1 Section 12.2. Manner of calling meetings............................ XII-1 Section 12.3. Call of meetings by Company or Holders................ XII-1 Section 12.4. Who may attend and vote at meetings................... XII-1 Section 12.5. Regulations may be made by Trustee--conduct of the meeting--voting rights--adjournment.................. XII-2 Section 12.6. Manner of voting at meetings and record to be kept.... XII-2 Section 12.7. Exercise of rights of Trustee or Holders may not be hindered or delayed by call of meeting of Holders.... XII-3 ARTICLE XIII Satisfaction and Discharge of Indenture or Certain Obligations Section 13.1. Satisfaction and discharge of Indenture............... XIII-1 Section 13.2. Deposits for payment or redemption of Securities to be held in trust........................................ XIII-1
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PAGE ------ Section 13.3. Repayment of moneys held by Trustee; Repayment of moneys held by paying agent........................... XIII-2 Section 13.4. Defeasance of Securities of any series................. XIII-2 Section 13.5. Application of Trust Money............................. XIII-3 ARTICLE XIV Miscellaneous Provisions Section 14.1. Rights under Indenture limited to the parties and Holders of Securities................................. XIV-1 Section 14.2. Certificate of independent accountants conclusive...... XIV-1 Section 14.3. Remaining provisions not affected by invalidity of any other provisions--required provisions of Trust Indenture Act of 1939, as amended, to control......... XIV-1 Section 14.4. Company released from Indenture requirements if entitled to have Indenture cancelled.................. XIV-1 Section 14.5. Date of execution...................................... XIV-1 Section 14.6. Officers' certificates and Opinions of Counsel to be furnished Trustee..................................... XIV-1 Section 14.7. Payments and deposits due other than on a Business Day. XIV-2 Section 14.8. Presentation of notices and demands.................... XIV-2 Section 14.9. Successors and assigns bound by Indenture.............. XIV-2 Section 14.10. Descriptive headings for convenience only.............. XIV-2 Section 14.11. Indenture may be executed in counterparts.............. XIV-2 Section 14.12. Controlling law........................................ XIV-2 Testimonium............................................................ XIV-3 Signatures and Seals................................................... XIV-3 Acknowledgments........................................................ XIV-4
v SEARS ROEBUCK ACCEPTANCE CORP. RECONCILIATION AND TIE BETWEEN INDENTURE DATED AS OF MAY 15, 1995 AND TRUST INDENTURE ACT OF 1939, AS AMENDED
TRUST INDENTURE ACT SECTION INDENTURE SECTION 310(a)(1) 10.5 (a)(2) 10.5 (a)(3) Not applicable (a)(4) Not applicable (a)(5) 10.5 (b) 10.4, 10.5 (c) Not applicable 311(a) 10.9 (a), (c) (b) 10.9 (b) (c) Not applicable 312(a) 3.3 (d), 10.11 (b) 10.11 (c) 10.11 313(a) 10.10 (a) (b)(1) Not applicable (b)(2) 10.10 (b) (c) 10.10 (c) (d) 10.10 (c) 314(a)(1) 3.3 (a) (a)(2) 3.3 (b) (a)(3) 3.3 (c) (a)(4) 3.4 (b) Not applicable (c) 14.6 (d) Not applicable (e) 14.6 (f) Not required 315(a)(1) 10.1 (a), (b) (a)(2) 10.1 (a), (b), (d) (b) 10.3 (c) 10.1 (a) (d) 10.1 (a), (b) (e) 6.7 316(a)(1A) 6.6 (a)(1B) 6.5 (a)(2) Not required (b) 6.7 (c) 7.1 317(a)(1) 6.2 (a)(2) 6.2 (b) 3.5 318(a) 14.3
Note: This reconciliation and tie shall not, for any purpose, be deemed to be a part of the Indenture. vi INDENTURE, dated as of the day of , between Sears Roebuck Acceptance Corp. (hereinafter called the "Company"), a corporation organized and existing under the laws of the State of Delaware, and (hereinafter called the "Trustee"), a organized and existing under the laws of , as Trustee: Recitals of the Company The Company has duly authorized the execution and delivery of this Indenture to provide for the issuance from time to time of its unsecured debentures, notes or other evidences of indebtedness (herein called the "Securities"), to be issued in one or more series as in this Indenture provided. All things necessary to make this Indenture a valid agreement of the Company, in accordance with its terms, have been done. Now, Therefore, this Indenture Witnesseth: For and in consideration of the premises and the purchase of the Securities by the Holders thereof, it is mutually covenanted and agreed, for the equal and proportionate benefit of all Holders of the Securities or of series thereof, as follows: ARTICLE I Definitions of Certain Terms Section 1.1. Unless the context otherwise requires, the terms defined in this Article I shall for all purposes of this Indenture and of any indenture supplemental hereto have the meaning herein specified, the following definitions to be equally applicable to both the singular and plural forms of any of the terms herein defined: Affiliate An "Affiliate" of a specified Person shall mean another Person directly or indirectly controlling or controlled by or under direct or indirect common control with such first Person. Authenticating Agent The term "Authenticating Agent" shall mean any Authenticating Agent appointed by the Trustee pursuant to Section 10.14. Board The term "Board" or "Board of Directors" shall mean the Board of Directors of the Company or the Executive Committee of such Board. Business Day The term "Business Day" shall mean each Monday, Tuesday, Wednesday, Thursday and Friday which is not a legal holiday for banking institutions in any of the City of Wilmington, the City of Chicago, The City of New York or the city in which the principal corporate trust office of the Trustee is located. Certified Resolution The term "Certified Resolution" shall mean a copy of a resolution certified by the Secretary or an Assistant Secretary of the Company to have been duly adopted by the Board of Directors and to be in full force and effect on the date of such certification. Commission The term "Commission" shall mean the Securities and Exchange Commission. Company The term "Company" shall mean Sears Roebuck Acceptance Corp. and, subject to the provisions of Article IX, shall also include its successors and assigns. Currency The term "Currency" shall mean Dollars or Foreign Currency. Defaulted Interest The term "Defaulted Interest" shall have the meaning specified in Section 2.7. Depository The term "Depository" shall mean, with respect to Securities of any series for which the Company shall determine that such Securities will be issued in whole or in part as one or I-1 more Global Securities, The Depository Trust Company, New York, New York, another clearing agency or any successor registered under the Securities Exchange Act of 1934, as amended, or other applicable statute or regulation, which, in each case, shall be designated by the Company pursuant to either Section 2.1 or 2.10. Dollar The term "Dollar" shall mean the currency issued by the government of the United States. ECU The term "ECU" shall mean the European Currency Unit as defined and revised from time to time by the Council of the European Communities. Eligible Obligations The term "Eligible Obligations" shall mean obligations as a result of the deposit of which (along with the simultaneous deposit, if any, of money or U.S. Government Obligations or both) the relevant series of Securities will be rated in the highest generic long term debt rating category assigned by one or more nationally recognized rating agencies to debt with respect to which the issuer thereof has been released from its obligations to the same extent that the Company has been released from its obligations under this Indenture pursuant to Section 13.4 hereof. European Communities The term "European Communities" shall mean the European Economic Community, the European Coal and Steel Community and the European Atomic Energy Community. Fixed Charge Coverage and Ownership Agreement The term "Fixed Charge Coverage and Ownership Agreement" shall mean the letter agreement between the Company and Sears dated May 15, 1995. Fixed Charge Coverage Ratio The term "Fixed Charge Coverage Ratio" shall mean, for any period, the Company's ratio of earnings to fixed charges, determined for such period in accordance with Item 503(d) of Regulation S-K promulgated by the Commission, as in effect on the date hereof. Foreign Currency The term "Foreign Currency" shall mean either (i) a currency issued by the government of any country other than the United States or (ii) ECU's or another composite currency the value of which is determined by reference to the values of the currencies of any group of countries. Global Security The term "Global Security" shall mean, with respect to any series of Securities, a Security executed by the Company and authenticated and held by the Trustee as agent for the Depository or delivered pursuant to the Depository's instruction, all in accordance with this Indenture and pursuant to a Company order, which (i) shall be registered in the name of the Depository or its nominee and (ii) shall constitute, and shall be denominated in an amount equal to the aggregate principal amount of, all or part of the Outstanding Securities of such series. I-2 Holder The terms "Holder", "Holder of Securities" or other similar terms, shall mean the person in whose name a particular Security shall be registered on the books of the Company kept for that purpose in accordance with the terms hereof, and the word "majority", used in connection with the terms "Holder", "Holder of Securities", or other similar terms, shall signify the "majority in principal amount" whether or not so expressed. Indenture The term "Indenture" shall mean this instrument as originally executed or, if amended or supplemented as herein provided, as so amended or supplemented, and shall include the terms of particular series of Securities established as contemplated by Section 2.1. Interest The term "Interest", when used with respect to an Original Issue Discount Security which by its terms bears interest only after Maturity, shall mean interest payable after Maturity. Interest Payment Date The term "Interest Payment Date", when used with respect to any Security, shall mean the Stated Maturity of any installment of interest on the Security. Market Exchange Rate The "Market Exchange Rate" on a given date for a given foreign currency shall mean 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 shall mean 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). Maturity The term "Maturity", when used with respect to any Security, shall mean the date on which the principal of such Security or an installment of principal becomes due and payable as therein or herein provided, whether at Stated Maturity or by declaration of acceleration, call for redemption or otherwise. [New York Location The Term "New York Location" shall mean the location in the Borough of Manhattan of The City of New York at which at any particular time the Trustee receives and redelivers securities pursuant to applicable securities exchange rules, which location at the date of execution of this Indenture is .] Officers' Certificate The term "Officers' Certificate" shall mean a certificate signed by the Chairman of the Board, the Chief Executive Officer, the President or any Vice President and by the Vice President, Finance, Treasurer or any Assistant Treasurer or the Secretary or any Assistant Secretary of the Company. I-3 Opinion of Counsel The term "Opinion of Counsel" shall mean an opinion in writing signed by legal counsel (who may be counsel to the Company) acceptable to the Trustee. Original Issue Discount Security The term "Original Issue Discount Security" shall mean any Security which provides for an amount less than the principal amount thereof to be due and payable upon a declaration of acceleration of the Maturity thereof pursuant to Section 6.1. Outstanding The term "outstanding" or "principal amount outstanding", when used with respect to the Securities, shall not, except as otherwise provided herein, include (i) Securities held by the Company in its treasury, or (ii) Securities for the payment or redemption of which moneys in the necessary amount shall have been deposited in trust with the Trustee, provided that if such Securities are to be redeemed prior to the Maturity thereof, notice of such redemption shall have been duly given or provision satisfactory to the Trustee shall have been made for giving such notice, or (iii) Securities in lieu of or in substitution for which other Securities shall have been authenticated and delivered pursuant to the terms of Section 2.3, or (iv) Securities theretofore cancelled by the Trustee or delivered to the Trustee for cancellation. The term "outstanding" or "principal amount outstanding", when used with respect to indebtedness other than the Securities, shall not include any such indebtedness held by the Company in its treasury or for the payment or redemption of which moneys in the necessary amount shall have been deposited in trust or set aside and segregated in trust by the Company, provided that, if such other indebtedness is to be redeemed prior to the maturity thereof, any notice of such redemption required by the terms thereof shall have been duly given or provision satisfactory to the trustee shall have been made for giving such notice. Person The term "Person" shall mean an individual, corporation, partnership, joint venture, association, joint stock company, trust, unincorporated organization or government or any agency or political subdivision thereof. Redemption Date The term "Redemption Date", when used with respect to any Security to be redeemed, shall mean the date fixed for such redemption by or pursuant to this Indenture. Redemption Price The term "Redemption Price" shall mean the amount payable for the redemption of any Security on the Redemption Date, and shall always include interest accrued and unpaid to the Redemption Date, unless otherwise specifically provided. Regular Record Date The term "Regular Record Date" for the interest payable on any Interest Payment Date on the Securities of any series shall mean the date specified for that purpose as contemplated by Section 2.1. Responsible Officer The term "Responsible Officer", when used with respect to the Trustee, shall mean the chairman of the board of directors, the president, every vice president (whether or not I-4 designated by a number or a word or words added before or after the title "vice president"), the secretary, every trust officer, every assistant secretary or any other officer or assistant officer of the Trustee customarily performing functions similar to those performed by the persons who at the time shall be such officers, or to whom any corporate trust matter is referred because of his knowledge of and familiarity with the particular subject. Sears The term "Sears" shall mean Sears, Roebuck and Co. Securities The term "Securities" shall mean any Securities authenticated and delivered under this Indenture. Security Register The term "Security Register" shall have the meaning specified in Section 2.5. Special Record Date The term "Special Record Date" for the payment of any Defaulted Interest shall mean a date fixed by the Trustee pursuant to Section 2.7. Stated Maturity The term "Stated Maturity", when used with respect to any Security or any installment of interest thereon, shall mean the date specified in such Security as the fixed date on which the principal of such Security or such installment of interest is due and payable. Subsidiary; Voting Stock The term "Subsidiary" shall mean any corporation of which shares of Voting Stock entitled to elect a majority of the directors are at the time owned directly or indirectly by the Company and its other Subsidiaries. The term "Voting Stock" shall mean outstanding shares of stock having voting power for the election of directors, whether at all times or only so long as no senior class of stock has such voting power because of default in dividends or some other default. Trustee The term "Trustee" shall mean the party named as such above until a successor becomes such pursuant hereto and thereafter shall mean or include each party who is then a trustee hereunder, and if at any time there is more than one such party, "Trustee" as used with respect to the Securities of any series shall mean the Trustee with respect to Securities of that series. If Trustees with respect to different series of Securities are trustees hereunder, nothing herein shall constitute the Trustees as co-trustees of the same trust, and each Trustee shall be the trustee of a trust separate and apart from any trust administered by any other Trustee with respect to a different series of Securities. U.S. Government Obligations The term "U.S. Government Obligations" shall mean securities which are (i) direct obligations of the United States of America for the payment of which its full faith and credit is pledged or (ii) obligations of a Person controlled or supervised by and acting as an agency or instrumentality of the United States of America the payment of which is unconditionally guaranteed as a full faith and credit obligation by the United States of America, which, in I-5 either case, are not callable or redeemable at the option of the issuer thereof, and shall also include a depository receipt issued by a bank or trust company as custodian with respect to any such U.S. Government Obligations or a specific payment of interest on or principal of any such U.S. Government Obligations held by such custodian for the account of the holder of a depository receipt; provided that (except as required by law) such custodian is not authorized to make any deduction from the amount payable to the holder of such depository receipt from any amount received by the custodian in respect of the U.S. Government Obligations or the specific payment of interest on or principal of the U.S. Government Obligations evidenced by such depository receipt. Section 1.2. All terms used in this Indenture which are defined in the Trust Indenture Act of 1939, as amended, or which are by reference therein defined in the Securities Act of 1933, as amended (except as herein otherwise expressly provided or unless the context otherwise requires), shall have the meanings assigned to such terms in the Trust Indenture Act of 1939, as amended, and the Securities Act of 1933, as amended, as they were respectively in force at the date of this Indenture. I-6 ARTICLE II The Securities Section 2.1. (a) The aggregate principal amount of Securities which may be authenticated and delivered under this Indenture is unlimited. The Securities may be issued in one or more series. There shall be established in or pursuant to a resolution of the Board and set forth in an Officers' Certificate, or established in one or more indentures supplemental hereto, prior to the issuance of Securities of any series, (1) the title of the Securities of the series (which shall distinguish the Securities of the series from all other Securities); (2) any limit upon the aggregate principal amount of the Securities of the series which may be authenticated and delivered under this Indenture (except for Securities authenticated and delivered upon registration of transfer of, or in exchange for, or in lieu of, other Securities of the series pursuant to Section 2.4, 2.5, 2.6, 4.7 or 11.4); (3) the date or dates on which the principal of the Securities of the series is payable; (4) the rate or rates (which may be fixed or variable) per annum at which the Securities of the series shall bear interest, if any, the date or dates from which such interest shall accrue, the date or dates on which payment of such interest shall commence, the Interest Payment Dates on which such interest shall be payable and the Regular Record Date for the interest payable on any Interest Payment Date; (5) if other than as set forth in Section 3.2, the place or places where the principal of (and premium, if any, on) and interest, if any, on Securities of the series shall be payable; (6) the period or periods within which, the price or prices at which and the terms and conditions upon which Securities of the series may be redeemed, in whole or in part, at the option, or as an obligation, of the Company; (7) the obligation or right, if any, of the Company to redeem or purchase Securities of the series pursuant to any sinking fund or analogous provisions or at the option of a Holder thereof and the period or periods within which, the price or prices at which and the terms and conditions upon which Securities of the series shall be redeemed or purchased, in whole or in part, pursuant to such obligation or right; (8) the terms, if applicable, of conversion or exchange for other securities, at the option of the Company or the Holder, of Securities of the series; (9) any subordination provisions; (10) if other than denominations of $1,000 and any integral multiple thereof, the denominations in which Securities of the series shall be issuable; (11) if other than the principal amount thereof, the portion of the principal amount of Securities of the series which shall be payable upon declaration of acceleration of the Maturity thereof pursuant to Section 6.1; (12) the terms of any warrants attached to the Securities of the series; (13) the currency or currencies, including ECU or other composite currencies, in which the Securities may be purchased and in which principal of (and premium, if any) and interest, if any, on the Securities of the series shall be payable (if other than Dollars); II-1 (14) if the amount of payments of principal of (and premium, if any) or interest, if any, on the Securities of the series may be determined with reference to an index, the manner in which such amounts shall be determined; (15) provisions, if any, for the defeasance of Securities of a particular series (including provisions permitting defeasance of less than all Securities of a particular series), which provisions may be in addition to, in substitution for, in subtraction from, or in modification of (or any combination of the foregoing) the provisions of Article Thirteen; (16) whether the Securities of the series are issuable in whole or in part as one or more Global Securities and, in such case, the identity of the Depository for such Global Security or Securities; and (17) any other terms of the series (which terms shall not be inconsistent with the provisions of this Indenture but which may modify or delete any such provision of this Indenture insofar as it applies to such series; provided that no term thereof shall be modified or deleted if imposed by operation of subsection (c) of Section 318 of the Trust Indenture Act of 1939, as amended, and provided further that any modification or deletion of the rights, duties or immunities of the Trustee shall have been consented to in writing by the Trustee). If any of the foregoing terms are not available at the time such resolutions are adopted, or such Officers' Certificate or any supplemental indenture is executed, such resolutions, Officers' Certificate or supplemental indenture may reference the document or documents to be created in which such terms will be set forth prior to the issuance of such Securities. All Securities of any one series shall be substantially identical except as to denomination and except as may otherwise be provided in or pursuant to such resolution of the Board and set forth in such Officers' Certificate or in any such indenture supplemental hereto. If any of the terms of the series are established by action taken pursuant to a resolution of the Board, a copy of an appropriate record of such action shall be included in the Officers' Certificate setting forth the terms of the series. (b) The Securities of each series shall be in substantially the form as shall be established by or pursuant to a resolution of the Board or in one or more indentures supplemental hereto, in each case with such appropriate insertions, omissions, substitutions and other variations as are required or permitted by this Indenture, and may have such letters, numbers or other marks of identification and such legends or endorsements placed thereon as may be required to comply with any law or with any rules made pursuant thereto or with any rules of any securities exchange or as may, consistently herewith, be determined by the officers executing such Securities, as evidenced by their execution of the Securities. The definitive Securities shall be printed, lithographed or engraved on steel engraved borders or may be produced in any other manner, all as determined by the officers executing such Securities, as evidenced by their execution of such Securities. (c) The Trustee's certificate of authentication on all Securities shall be in substantially the following form: This is one of the Securities of the series referred to in the within- mentioned Indenture. , as Trustee By ____________________________________ Authorized Officer II-2 Section 2.2. The Securities of each series shall be issuable in registered form without coupons in such denominations as shall be specified as contemplated by Section 2.1. In the absence of any contrary provisions with respect to the Securities of any series, the Securities of such series shall be issuable in denominations of $1,000 and any integral multiple thereof and shall be payable only in Dollars. Section 2.3. The Securities shall be executed on behalf of the Company by any two of its Chairman of the Board, its Chief Executive Officer, its President or one of its Vice Presidents, under its corporate seal reproduced thereon. The signature of any of these officers on the Securities may be manual or facsimile. Securities bearing the manual or facsimile signatures of individuals who were at any time the proper officers of the Company shall bind the Company, notwithstanding that such individuals or any of them have ceased to hold such offices prior to the authentication and delivery of such Securities or did not hold such offices at the date of such Securities. At any time and from time to time after the execution and delivery of this Indenture, the Company may deliver Securities of any series executed by the Company to the Trustee for authentication, together with a written order of the Company signed by its Chairman of the Board, its Chief Executive Officer, its President or one of its Vice Presidents for the authentication and delivery of such Securities, and the Trustee in accordance with such order shall authenticate and deliver such Securities. If the form or terms of the Securities of the series have been established in or pursuant to one or more resolutions of the Board as permitted by Section 2.1, in authenticating such Securities, and accepting the additional responsibilities under this Indenture in relation to such Securities, the Trustee shall be entitled to receive, and (subject to Section 10.1) shall be fully protected in relying upon, an Opinion of Counsel stating, (a) if the form and terms of such Securities have been established by or pursuant to a resolution of the Board as permitted by Section 2.1, that such form and terms have been established in conformity with the provisions of this Indenture; and (b) that such Securities, when authenticated and delivered by the Trustee and issued by the Company in the manner and subject to any conditions specified in such Opinion of Counsel, will constitute valid and binding obligations of the Company in accordance with their terms, subject to insolvency, bankruptcy, reorganization and other laws relating to or affecting the enforcement of creditors' rights or by general equity principles. The Trustee shall have the right to decline to authenticate and deliver any Securities under this Section if the Trustee, being advised by counsel, determines that such action may not lawfully be taken or if the Trustee in good faith by its board of directors or trustees, executive committee, or a trust committee of directors or trustees and/or responsible officers shall determine (i) that such action would expose the Trustee to liability to existing Holders, or (ii) in the case of Securities designated pursuant to one or more resolutions of the Board as permitted by Section 2.1, that such action would affect the Trustees' own rights, duties or immunities under this Indenture or otherwise. Each Security shall be dated the date of its authentication. No Security shall be entitled to any benefit under this Indenture or be valid or obligatory for any purpose unless there appears on such Security a certificate of authentication substantially in the form provided for herein executed by the Trustee by manual signature, and such certificate upon any Security shall be conclusive evidence, and the only evidence, that such Security has been duly authenticated and delivered hereunder and is entitled to the benefits of this Indenture. II-3 Section 2.4. Pending the preparation of definitive Securities of any series, the Company may execute, and upon a written order of the Company signed by its Chairman of the Board, its Chief Executive Officer, its President or one of its Vice Presidents, the Trustee shall authenticate and deliver, temporary Securities which are printed, lithographed, typewritten, mimeographed or otherwise produced, in any authorized denomination, substantially of the tenor of the definitive Securities in lieu of which they are issued and with such appropriate insertions, omissions, substitutions and other variations as the officers executing such Securities may determine, as evidenced by their execution of such Securities. If temporary Securities of any series are issued, the Company will cause definitive Securities of that series to be prepared without unreasonable delay. After the preparation of definitive Securities of such series, the temporary Securities of such series shall be exchangeable for definitive Securities of such series, without charge to the Holder, upon surrender of the temporary Securities of such series at the office or agency of the Company for that series to be maintained in accordance with the provisions of Section 3.2. Upon surrender for cancellation of any one or more temporary Securities of any series the Company shall execute and the Trustee shall authenticate and deliver in exchange therefor a like principal amount of definitive Securities of the same series of authorized denominations. Until so exchanged the temporary Securities of any series shall in all respects be entitled to the same benefits under this Indenture as definitive Securities of such series. Section 2.5. The Company shall keep or cause to be kept a register for each series of Securities issued hereunder (herein called a "Security Register") at any office or agency of the Company to be maintained in accordance with the provisions of Section 3.2 in which, subject to such reasonable regulations as it may prescribe, the Company shall provide for the registration of Securities and of transfers of Securities. The Security Register shall be in written form or capable of being converted into written form within a reasonable time. Unless otherwise specifically designated by the Company in a written notice to the Trustee, the Security Register shall be maintained at the principal corporate trust office of the Trustee. Upon surrender for registration of transfer of any Security of any series at the office or agency for that series to be maintained in accordance with the provisions of Section 3.2, the Company shall execute, and the Trustee shall authenticate and deliver, in the name of the designated transferee or transferees, one or more Securities of the same series, of any authorized denominations and of a like aggregate principal amount and Stated Maturity and bearing a number not contemporaneously outstanding. At the option of the Holder, Securities of any series may be exchanged for other Securities of the same series, of any authorized denominations and of a like aggregate principal amount and Stated Maturity and bearing a number not contemporaneously outstanding upon surrender of the Securities to be exchanged at such office or agency. Whenever any Securities are so surrendered for exchange, the Company shall execute, and the Trustee shall authenticate and deliver, the Securities which the Holder making the exchange is entitled to receive. All Securities issued upon any registration of transfer or exchange of Securities shall be the valid obligations of the Company, evidencing the same debt, and entitled to the same benefits under this Indenture, as the Securities surrendered upon such registration of transfer or exchange. Every Security presented or surrendered for registration of transfer or for exchange shall be duly endorsed, or be accompanied by a written instrument of transfer in form satisfactory to the Company duly executed, by the Holder thereof or his attorney duly authorized in writing. II-4 No service charge shall be made for any registration of transfer or exchange of Securities, but the Company may require payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in connection with any registration of transfer or exchange of Securities, other than exchanges pursuant to Sections 2.4, 4.7 or 11.4, not involving any transfer. The Company shall not be required (i) to issue, register the transfer of or exchange Securities of any series during a period beginning at the opening of business 15 days before the day of the mailing of a notice of redemption of Securities of that series selected for redemption under Section 4.3 and ending at the close of business on the day of such mailing, or (ii) to register the transfer of or exchange any Security theretofore designated for redemption in whole or in part, except the unredeemed portion of any Security being redeemed in part. Section 2.6. If any mutilated Security is surrendered to the Trustee, the Company shall execute and the Trustee shall authenticate and deliver in exchange therefor a Security of the same series and principal amount and Stated Maturity and bearing a number not contemporaneously outstanding. If there shall be delivered to the Company and the Trustee (i) evidence to their satisfaction of the destruction, loss or theft of any Security and (ii) such security or indemnity as may be required by them to save each of them and any agent of either of them harmless, then, in the absence of notice to the Company or the Trustee that such Security has been acquired by a bona fide purchaser, the Company shall execute and upon its request the Trustee shall authenticate and deliver, in lieu of any such destroyed, lost or stolen Security, a Security of the same series and principal amount and Stated Maturity and bearing a number not contemporaneously outstanding. In case any such mutilated, destroyed, lost or stolen Security has become or is about to become due and payable, the Company in its discretion may, instead of issuing a Security in substitution of such Security, pay such Security, provided the conditions set forth in the next preceding paragraph are satisfied. Upon the issuance of any Security pursuant to this Section, the Company may require the payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in relation thereto and any other expenses, including counsel fees, of the Company and the Trustee, any Authenticating Agent, and any paying agent or Security registrar connected therewith and in addition a further sum not exceeding two dollars for each Security so issued in substitution. Every Security of any series issued pursuant to this Section in lieu of any destroyed, lost or stolen Security shall constitute an original additional contractual obligation of the Company, whether or not the destroyed, lost or stolen Security shall be at any time enforceable by anyone, and shall be entitled to all the benefits of this Indenture equally and proportionately with any and all other Securities of that series duly issued hereunder. The provisions of this Section are exclusive and shall preclude (to the extent lawful) all other rights and remedies with respect to the replacement or payment of mutilated, destroyed, lost or stolen securities. Section 2.7. Each installment of interest on any Security which is payable, and is punctually paid or duly provided for, on any Interest Payment Date shall be paid only to or upon the written order of the Person in whose name that Security is registered at the close of business on the Regular Record Date for such interest. II-5 Any interest on any Security of any series which is payable, but is not punctually paid or duly provided for, on any Interest Payment Date (herein called "Defaulted Interest") shall forthwith cease to be payable to the Holder on the relevant Regular Record Date by virtue of having been such Holder, and such Defaulted Interest may be paid by the Company, at its election in each case, as provided in Clause (1) or (2) below: (1) the Company may elect to make payment of any Defaulted Interest to the Persons in whose names the Securities of such series are registered at the close of business on a Special Record Date for the payment of such Defaulted Interest, which shall be fixed in the following manner: (a) the Company shall notify the Trustee in writing of the amount of Defaulted Interest proposed to be paid on each Security of such series and the date of the proposed payment which shall be at least 20 days from the date of such notice, and at the same time the Company shall deposit with the Trustee an amount of money equal to the aggregate amount proposed to be paid in respect of such Defaulted Interest or shall make arrangements satisfactory to the Trustee for such deposit prior to the date of the proposed payment, such money when deposited to be held in trust for the benefit of the Persons entitled to such Defaulted Interest as in this Clause provided; (b) thereupon the Trustee shall fix a Special Record Date for the payment of such Defaulted Interest which shall be not more than 15 days and not less than 10 days prior to the date of the proposed payment and not less than 10 days after the receipt by the Trustee of the notice of the proposed payment; and (c) the Trustee shall promptly notify the Company of such Special Record Date and, in the name and at the expense of the Company, shall cause notice of the proposed payment of such Defaulted Interest and the Special Record Date therefor to be mailed, first-class postage prepaid, to each Holder of Securities of such series at his address as it appears in the Security Register, not less than 10 days prior to such Special Record Date. Notice of the proposed payment of such Defaulted Interest and the Special Record Date therefor having been so mailed, such Defaulted Interest shall be paid to the Persons in whose names the Securities of such series are registered at the close of business on such Special Record Date; or (2) the Company may make payment of any Defaulted Interest on the Securities of any series in any other lawful manner not inconsistent with the requirements of any securities exchange on which such Securities may be listed, and upon such notice as may be required by such exchange, if, after notice given by the Company to the Trustee of the proposed payment pursuant to this Clause, such manner of payment shall be deemed practicable by the Trustee. Subject to the foregoing provisions of this Section, each Security delivered under this Indenture upon registration of transfer of or in exchange for or in lieu of any other Security shall carry the rights to interest accrued and unpaid, and to accrue, which were carried by such other Security. Section 2.8. Prior to due presentment of a Security for registration of transfer, the Company, the Trustee and any agent of the Company or the Trustee may treat the Person in whose name such Security is registered upon the Security Register as the owner of such Security for the purpose of receiving payment of principal of (and premium, if any, on) and (subject to Section 2.7) interest on such Security and for all other purposes whatsoever, whether or not such Security be overdue, and neither the Company, the Trustee nor any agent of the Company or the Trustee shall be affected by notice to the contrary. Notwithstanding the foregoing, nothing herein shall prevent the Company, the Trustee, or any agent of the Company or the Trustee from giving effect to any written certification, proxy or other authorization furnished by the Depository or its nominee, or impair, as II-6 between the Depository and holders of beneficial interests in any Global Security, the operation of customary practices governing the exercise of the rights of the Depository as holder of such Global Security, including without limitation the granting of proxies or other authorization, direction, notice, consent, waiver or other action which a Holder is entitled to give or take under this Indenture. Section 2.9. All Securities surrendered for payment, redemption, registration of transfer or exchange or for credit against any sinking fund payment shall be delivered to the Trustee and shall be promptly cancelled by it. The Company may at any time deliver to the Trustee for cancellation any Securities previously authenticated and delivered hereunder which the Company may have acquired in any manner whatsoever, and all Securities so delivered shall be promptly cancelled by the Trustee. No Securities shall be authenticated in lieu of or in exchange for any Securities cancelled as provided in this Section, except as expressly permitted by this Indenture. All cancelled Securities held by the Trustee shall be disposed of as directed by a written order of the Company signed by its Chairman of the Board, its President or one of its Vice Presidents. Section 2.10. (a) If the Company shall establish pursuant to Section 2.1 that the Securities of a particular series are to be issued in whole or in part as one or more Global Securities, then the Company shall execute and the Trustee shall, in accordance with Section 2.3 and the order of the Company delivered to the Trustee thereunder, authenticate and deliver, one or more Global Securities which (i) shall constitute, and shall be denominated in an amount equal to the aggregate principal amount of, all or part of the outstanding Securities of such series, (ii) shall be registered in the name of the Depository or its nominee, (iii) shall be held by the Trustee as agent for the Depository or delivered pursuant to the Depository's instruction and (iv) shall bear a legend substantially to the following effect: "Except as otherwise provided in Section 2.10 of the Indenture, this Security 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." (b) Notwithstanding any other provision (other than Section 2.10(c)) of this Section 2.10 or of Section 2.5, the Global Securities of a series may be transferred, in whole but not in part and in the manner provided in Section 2.5, only to another nominee of the Depository for such series, or to a successor Depository for such series selected or approved by the Company or to a nominee of such successor Depository. (c) If (i) the Company advises the Trustee in writing that the Depository is no longer willing or able to discharge properly its responsibilities with respect to any Securities of any series represented by one or more Global Securities, and the Trustee or the Company is unable to locate a qualified successor, or (ii) the Company, at its option, advises the Trustee in writing that it has determined that any Securities of any series represented by one or more Global Securities shall no longer be represented by one or more Global Securities, then in either event the Company will execute, and the Trustee, upon receipt of an Officers' Certificate evidencing such determination by the Company, will authenticate and deliver, Securities of such series in definitive registered form without coupons, in authorized denominations, and in an aggregate principal amount equal to the principal amount of such Global Securities in exchange for such Global Securities. Upon the exchange of Global Securities for such Securities in definitive registered form without coupons, in authorized denominations, the Global Securities shall be cancelled by the Trustee and the provisions of this Section 2.10 shall no longer be applicable to such Securities. Such Securities in definitive registered form issued in exchange for Global Securities pursuant to this Section 2.10(c) shall be registered in such names and in such authorized denominations as the Depository, pursuant to instructions from its direct or indirect participants or otherwise, shall instruct the Trustee. The Trustee shall deliver such Securities to the Persons in whose names such Securities are so registered. II-7 SECTION 2.11. (a) Except as otherwise specified pursuant to Section 2.1, payment of the principal of (and premium, if any) and interest on Securities of any series will be made in Dollars. (b) For purposes of any provision of this Indenture where the Holders of outstanding Securities of a series may perform an act which requires that a specified percentage of the outstanding Securities of such series perform such act and for purposes of any decision or determination by the Trustee of amounts due and unpaid for the principal (and premium, if any) and interest on the outstanding Securities of such series in respect of which moneys are to be disbursed ratably, the principal of (and premium, if any) and interest on the outstanding Securities of such series denominated in a Foreign Currency will be the amount in Dollars based upon the Market Exchange Rate for such Foreign Currency on the latest date for which such rate was established on or before the date for determining the Holders entitled to perform such act, or the date of such decision or determination by the Trustee, as the case may be. Section 2.12. If the principal of (and premium, if any) and interest on any Securities is payable in a Foreign Currency and such Foreign Currency is not available for payment due to the imposition of exchange controls or other circumstances beyond the control of the Company, then the Company shall be entitled to satisfy its obligations to Holders under this Indenture by making such payment in Dollars on the basis of the Market Exchange Rate for such Foreign Currency on the latest date for which such rate was established on or before the date on which payment is due. Any payment made pursuant to this Section 2.12 in Dollars where the required payment is in a Foreign Currency shall not constitute a default under this Indenture. II-8 ARTICLE III Covenants of the Company Subject to the provisions of Section 13.4, so long as Securities are outstanding hereunder, the Company covenants for the benefit of each series of Securities that: Section 3.1. The Company will punctually pay the principal (premium, if any) and interest, if any, to become due in respect of all the Securities of that series according to the terms of the Securities of that series and this Indenture. Such interest on Securities shall be payable without presentation of such Securities and (subject to the provisions of Section 2.7) only to or upon the written order of the Holders of such Securities. Except as otherwise specified as contemplated by Section 2.1 for Securities of any series, payments of interest shall be made 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 for that series, or at any one or more of the offices or agencies of the Company maintained in accordance with Section 3.2. Section 3.2. The Company will maintain in the Borough of Manhattan of The City of New York, and may maintain 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, an office or agency where, except as otherwise provided herein, the Securities of that series may be presented for payment, an office or agency where the Securities of that series may be presented for registration of transfer and for exchange as provided in this Indenture and an office or agency where notices and demands to or upon the Company in respect of such Securities or of this Indenture may be served. Until otherwise designated by the Company in a written notice to the Trustee, such office or agency in the Borough of Manhattan of The City of New York for all of the above purposes shall be . Section 3.3. The Company will: (a) file with the Trustee, within 15 days after the Company is required to file the same with the Commission, copies of the annual reports and of the information, documents and other reports which the Company may be required to file with the Commission pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of 1934, as amended (or copies of such portions thereof as may be prescribed by the Commission under the provisions of the Trust Indenture Act of 1939, as amended); or, if the Company is not required to file with the Commission information, documents or reports pursuant to either Section 13 or Section 15(d) of the Securities Exchange Act of 1934, as amended, then the Company will file with the Trustee and will file with the Commission, in accordance with rules and regulations prescribed by the Commission, such of the supplementary and periodic information, documents and reports required pursuant to Section 13 of the Securities Exchange Act of 1934, as amended, in respect of a security listed and registered on a national securities exchange as may be prescribed in such rules and regulations; (b) file with the Trustee and the Commission, in accordance with the rules and regulations prescribed from time to time by the Commission, such additional information, documents and reports with respect to compliance by the Company with the conditions and covenants provided for in this Indenture as may be required by such rules and regulations, including, in the case of annual reports, if required by such rules and regulations, certificates or opinions of independent public accountants, conforming to the III-1 requirements of Section 14.6, as to compliance with conditions or covenants, compliance with which is subject to verification by accountants; (c) transmit to the Holders of that series of Securities, in the manner and to the extent provided in Subdivision (c) of Section 10.10 hereof, such summaries of any information, documents and reports required to be filed with the Trustee pursuant to the provisions of Subdivisions (a) and (b) of this Section 3.3 as may be required by the rules and regulations of the Commission under the provisions of the Trust Indenture Act of 1939, as amended; and (d) furnish or cause to be furnished to the Trustee semi-annually not later than each Interest Payment Date for each series of Securities, provided that interest on such Securities is payable at least semi- annually, and at such other times as the Trustee may request in writing, within 30 days after receipt by the Company of any such request, a list in such form as the Trustee may reasonably require containing all information in the possession or control of the Company or of any paying agent, other than the Trustee, as to the names and addresses of the Holders of such series of Securities obtained since the date as of which the next previous list, if any, was furnished. Any such list may be dated as of a date not more than 15 days prior to the time such information is furnished or caused to be furnished, and need not include information received after such date. Section 3.4. Within 120 days after the close of each fiscal year of the Company ending after the date hereof, the Company will file with the Trustee a statement signed by the Chairman of the Board, the Chief Executive Officer or its President or any Vice President and by the Treasurer or any Assistant Treasurer or the Secretary or any Assistant Secretary of the Company (provided, that one of such signatories shall be the Company's principal executive officer, principal financial officer or principal accounting officer), stating that in the course of the performance by the signers of their duties as officers of the Company they would normally obtain knowledge of any default by the Company in the performance or fulfillment of any covenant, agreement or condition contained in this Indenture, and stating whether or not they have obtained knowledge of any such default, and, if so, specifying each such default of which the signers have knowledge and the nature thereof. For purposes of this Section 3.4, "default" shall mean any default defined in Section 6.1 hereof, irrespective of the giving of any specified notice and excluding any periods of grace provided for therein. Section 3.5. The Company will cause any paying agent which it may appoint, other than the Trustee, to execute and deliver to the Trustee an instrument in which such agent shall agree with the Trustee, (a) that it will hold all sums held by it as such agent for the payment of the principal of and premium, if any, or interest on the Securities of that series (whether such sums have been paid to it by the Company or by any other obligor on such Securities) in trust for the benefit of the Holders of such Securities or of the Trustee, as the case may be, (b) that it will give the Trustee notice of any failure by the Company (or by any other obligor on such Securities) to make any payment of the principal (and premium, if any, on) or interest on such Securities when the same shall be due and payable, and (c) that in the case of a default by the Company hereunder, that it will deliver to the Trustee any sums then held by it in respect of the Securities. If the Company acts as its own paying agent, it will, on or before each due date of principal (and premium, if any) or of any installment of interest on such Securities, set aside and segregate and hold in trust for the benefit of the Holders of such Securities or the Trustee a sum sufficient to pay such principal (and premium, if any) or interest and will notify the Trustee of such action. III-2 Section 3.6. The Company will: (a) maintain a Fixed Charge Coverage Ratio for any fiscal quarter of not less than 1.10; (b) cause Sears to continue to own and to hold all legal title to and beneficial interest in all of the outstanding voting stock of the Company; (c) cause Sears to observe and perform in all material respects all covenants or agreements of Sears contained in the Fixed Charge Coverage and Ownership Agreement; and (d) not amend, waive, terminate or otherwise modify any provision of the Fixed Charge Coverage and Ownership Agreement. III-3 ARTICLE IV Redemption of Securities Section 4.1. Securities of any series which are redeemable before their Stated Maturity shall be redeemable in accordance with their terms and (except as otherwise specified as contemplated by Section 2.1 for Securities of any series) in accordance with this Article. Section 4.2. The election of the Company to redeem any Securities shall be evidenced by an Officers' Certificate. In case of any redemption at the election of the Company of less than all the Securities of any series, the Company shall, at least 45 days prior to the Redemption Date fixed by the Company (unless a shorter notice shall be satisfactory to the Trustee), notify the Trustee of such Redemption Date and of the principal amount of Securities of such series to be redeemed. In the case of any redemption of Securities which is subject to any restriction on such redemption provided in the terms of such Securities or elsewhere in this Indenture, the Company shall furnish the Trustee with an Officers' Certificate evidencing compliance with such restriction. Section 4.3. If less than all the Securities of any series are to be redeemed, the particular Securities to be redeemed shall be selected from the outstanding Securities of such series not previously called for redemption, by such method as the Trustee shall deem fair and appropriate and which may provide for the selection for redemption of portions (equal to the minimum authorized denomination for Securities of that series or any integral multiple thereof, if less than all the Securities of that series are to be redeemed on the applicable Redemption Date) of the principal amount of Securities of such series of a denomination larger than the minimum authorized denomination for Securities of that series. The Trustee shall promptly notify the Company in writing of the Securities selected for redemption and, in the case of the Securities selected for partial redemption, the principal amount thereof to be redeemed. For all purposes of this Indenture, unless the context otherwise requires, all provisions relating to the redemption of Securities shall relate, in the case of any Securities redeemed or to be redeemed only in part, to the portion of the principal amount of such Securities which has been or is to be redeemed. Section 4.4. Notice of redemption shall be given by first-class mail, postage prepaid, mailed not less than 30 nor more than 60 days prior to the Redemption Date, to each Holder of Securities to be redeemed, at his address appearing in the Security Register. All notices of redemption shall state: (1) the Redemption Date; (2) the Redemption Price; (3) if less than all the outstanding Securities of any series are to be redeemed, the identification (and, in the case of partial redemption, the principal amount) of the particular Securities to be redeemed; (4) that on the Redemption Date the Redemption Price will become due and payable upon each such Security to be redeemed and, if applicable, that interest thereon will cease to accrue on and after said date; (5) the place or places where such Securities are to be surrendered for payment of the Redemption Price; and (6) that the redemption is for a sinking fund, if such is the case. IV-1 Notice of redemption of Securities to be redeemed at the election of the Company shall be given by the Company or, at the Company's request, by the Trustee in the name and at the expense of the Company. Any notice which is mailed in the manner herein provided shall be conclusively presumed to be duly given, whether or not the Holder receives such notice; any failure to give such notice by mail or any defect in such notice to the Holder of a particular Security designated for redemption as a whole or in part shall not affect the validity of the proceedings for the redemption of any other Security. Section 4.5. On or prior to any Redemption Date, the Company shall deposit with the Trustee or with a paying agent (or, if the Company is acting as its own paying agent, segregate and hold in trust as provided in Section 3.5) an amount of money sufficient to pay the Redemption Price of, and (except if the Redemption Date shall be an Interest Payment Date) accrued interest on, all the Securities which are to be redeemed on that date. Section 4.6. Notice of redemption having been given as aforesaid, the Securities so to be redeemed shall, on the Redemption Date, become due and payable at the Redemption Price therein specified, and from and after such date (unless the Company shall default on the payment of the Redemption Price and accrued interest) such Securities shall cease to bear interest. Upon surrender of any such Security for redemption in accordance with said notice, such Security shall be paid by the Company at the Redemption Price, together with accrued interest to the Redemption Date; provided, however, that installments of interest whose Stated Maturity is on or prior to the Redemption Date shall be payable to the Holders of such Securities, registered as such at the close of business on the relevant Regular or Special Record Dates according to their terms and the provisions of Section 2.7. If any Security called for redemption shall not be so paid upon surrender thereof for redemption, the principal (and premium, if any) shall, until paid, bear interest from the Redemption Date at the rate prescribed therefor in the Security. Section 4.7. Any Security which is to be redeemed only in part shall be surrendered at the office or agency of the Company to be maintained pursuant to Section 3.2 (with, if the Company or the Trustee so requires, due endorsement by, or a written instrument of transfer in form satisfactory to the Company and to the Trustee duly executed by, the Holder thereof or his attorney duly authorized in writing), and the Company shall execute, and the Trustee shall authenticate and deliver to the Holder of such Security without service charge, a Security or Securities of the same series and Stated Maturity of any authorized denomination as requested by such Holder, in aggregate principal amount equal to and in exchange for the unredeemed portion of the principal of the Security so surrendered and bearing a number not contemporaneously outstanding. If a Global Security is so surrendered such new Security or Securities so issued shall be a Global Security or Global Securities. IV-2 ARTICLE V Sinking Funds Section 5.1. The provisions of this Article shall be applicable to any sinking fund for the retirement of Securities of a series except as otherwise specified as contemplated by Section 2.1 for Securities of such series. The minimum amount of any sinking fund payment provided for by the terms of Securities of any series is herein referred to as a "mandatory sinking fund payment", and any payment in excess of such minimum amount provided for by the terms of Securities of any series is herein referred to as an "optional sinking fund payment". Unless otherwise provided for by the terms of Securities of any series, the cash amount of any sinking fund payment may be subject to reduction as provided in Section 5.2. Each sinking fund payment shall be applied to the redemption of Securities of any series as provided for by the terms of Securities of such series. Section 5.2. The Company (1) may deliver outstanding Securities (including for purposes of this Clause (1) any Securities held by the Company in its treasury) of a series (other than any previously called for redemption) and (2) may, by written notice to the Trustee, apply as a credit Securities of a series which have been redeemed either at the election of the Company pursuant to the terms of such Securities or through the application of permitted optional sinking fund payments pursuant to the terms of such Securities, in each case in satisfaction of all or any part of any sinking fund payment with respect to the Securities of such series required to be made pursuant to the terms of such Securities; provided, however, that such Securities have not been previously so credited. Such Securities shall be credited for such purpose by the Trustee at the Redemption Price specified in such Securities for redemption through operation of the sinking fund and the amount of such sinking fund payment shall be reduced accordingly. Section 5.3. Not less than 45 days prior to each sinking fund payment date for any series of Securities, the Company will deliver to the Trustee an Officers' Certificate specifying the amount of the next ensuing sinking fund payment for that series pursuant to the terms of that series, the portion thereof, if any, which is to be satisfied by payment of cash and the portion thereof, if any, which is to be satisfied by crediting Securities of that series pursuant to Section 5.2 and will also deliver to the Trustee any Securities to be delivered pursuant to Clause (1) of Section 5.2. Not less than 30 days before each such sinking fund payment date the Trustee shall select or cause to be selected the Securities to be redeemed upon such sinking fund payment date in the manner specified in Section 4.3 and cause notice of the redemption thereof to be given in the name of and at the expense of the Company in the manner provided in Section 4.4. Such notice having been duly given, the redemption of such Securities shall be made upon the terms and in the manner stated in Sections 4.6 and 4.7. V-1 ARTICLE VI Remedies Upon Default Section 6.1. Subject to the provisions of Section 2.12, the following events are hereby defined for all purposes of this Indenture with respect to Securities of any series (except where the term is otherwise defined for specific purposes) as "defaults": (a) Failure to pay the principal of (and premium, if any, on) any of the Securities of that series, when and as the same shall become due and payable, whether at Stated Maturity thereof, by call for redemption or otherwise; or (b) Failure to pay any installment of interest on any of the Securities of that series, when and as the same shall become payable as therein expressed, and such failure shall continue for a period of 30 days (it being understood that if the entire amount of such payment of interest is deposited by the Company with the Trustee, or with another paying agent duly appointed hereunder, before the expiration of such period of 30 days, such default shall no longer be considered to be continuing under this Indenture); or (c) Failure to perform or observe any other of the covenants, conditions or agreements on the part of the Company in this Indenture (other than a covenant, condition or agreement a default in whose performance or whose breach is elsewhere in this Section specifically dealt with or which has expressly been included in this Indenture solely for the benefit of series of Securities other than that series) or in the Securities of that series contained, and such failure shall continue for a period of 60 days after written notice to the Company from the Trustee or to the Company and to the Trustee from the Holders of not less than a majority of the Securities of that series then outstanding under this Indenture; or (d) Except as a result of compliance with any court order to which the Company or Sears is subject or any applicable law or any government decree, if an event of default as defined in any mortgage, indenture or instrument, under which there may be issued, or by which there may be secured or evidenced, any indebtedness for borrowed money of the Company or of Sears (including this Indenture), whether such indebtedness now exists or shall hereafter be created, shall happen and shall result in such indebtedness becoming or being declared due and payable prior to the date on which it would otherwise become due and payable, and such acceleration shall not be rescinded or annulled within 30 days after written notice to the Company from the Trustee or to the Company and to the Trustee from the Holders of not less than a majority of the Securities of that series then outstanding under this Indenture; provided, however, that it shall not be a default hereunder if the principal amount of indebtedness the maturity of which is so accelerated is less than $100,000,000; provided, further, that if, prior to a declaration of acceleration of the maturity of the Securities then outstanding or the entry of judgment in favor of the Trustee in a suit pursuant to Section 6.2, such default shall be remedied or cured by the Company or Sears or waived by the holders of such indebtedness, or such indebtedness shall be discharged, then the default hereunder by reason thereof shall be deemed likewise to have been thereupon remedied, cured or waived without further action upon the part of either the Trustee or any of the Holders of the Securities; or (e) If the Company shall file a petition commencing a voluntary case under any chapter of the Federal bankruptcy laws; or the Company shall file a petition or answer or consent seeking reorganization, arrangement, adjustment, or composition under any other similar applicable Federal law, or shall consent to the filing of any such petition, answer, or consent; or the Company shall appoint, or consent to the appointment of a VI-1 custodian, receiver, liquidator, trustee, assignee, sequestrator or other similar official in bankruptcy or insolvency of it or of any substantial part of its property; or shall make an assignment for the benefit of creditors, or shall admit in writing its inability to pay its debts generally as they become due; or (f) If any order for relief against the Company shall have been entered by a court having jurisdiction in the premises under any chapter of the Federal bankruptcy laws, and such order shall have continued undischarged or unstayed for a period of 120 days; or a decree or order by a court having jurisdiction in the premises shall have been entered approving as properly filed a petition seeking reorganization, arrangement, adjustment, or composition of the Company under any other similar applicable Federal law, and such decree or order shall have continued undischarged or unstayed for a period of 120 days; or a decree or order of a court having jurisdiction in the premises for the appointment of a custodian, receiver, liquidator, trustee, assignee, sequestrator, or other similar official in bankruptcy or insolvency of the Company or of any substantial part of its property, or for the winding up or liquidation of its affairs, shall have been entered, and such decree or order shall have remained in force undischarged or unstayed for a period of 120 days; or (g) Any other default provided with respect to Securities of that series. If one or more defaults with respect to Securities of any series shall happen and be continuing, then, and in each and every such case, either the Trustee, by notice in writing to the Company, or the Holders of not less than a majority in principal amount of the Securities of that series then outstanding, by notice in writing to the Company and to the Trustee, may declare due and payable, if not already due and payable, the principal amount (or, if the Securities of that series are Original Issue Discount Securities, such portion of the principal amount as may be specified in the terms of that series) of all of the Securities of that series; and upon any such declaration all Securities of that series shall become and be immediately due and payable, anything in this Indenture or in any of such Securities contained to the contrary notwithstanding. This provision, however, is subject to the condition that if, at any time after the principal (or portion thereof) of the Securities of that series shall have been declared due and payable, and prior to the Stated Maturity of the principal thereof, all arrears of interest upon all such Securities (with interest so far as may be lawful on any overdue installments of interest at the rate specified in such Securities) and the expenses of the Trustee, its agents or attorneys shall be paid by or for the account of the Company, and all defaults as aforesaid (other than the payment of principal which has been so declared due and payable) shall have been made good or secured to the satisfaction of the Trustee and provision deemed by the Trustee to be adequate shall be made therefor, then and in every such case the Trustee shall, upon the written request of the Holders of a majority in principal amount of the Securities of that series then outstanding, delivered to the Company and to the Trustee, waive such default and its consequences and rescind or annul such declaration; but no such waiver shall extend to or affect any subsequent default, or impair any right consequent thereon. Notwithstanding the foregoing, to the extent the Company shall have been relieved of any of its obligations under this Indenture with respect to Securities of any series pursuant to Section 13.4 hereof, the failure of the Company to perform any such obligations as to which it has been relieved shall not constitute a default as contemplated by this Indenture. Section 6.2. In case the Company: (a) shall fail to pay any installment of interest on any Security of any series when and as it shall become payable and such failure shall have continued for a period of 30 days (it being understood that if the entire amount of such payment of interest is VI-2 deposited by the Company with the Trustee, or with another paying agent duly appointed hereunder, before the expiration of such period of 30 days, such default shall no longer be considered to be continuing under this Indenture); or (b) shall fail to pay the principal, or portion thereof, of (or premium, if any, on) any Security of any series when it shall have become due and payable, whether at the Stated Maturity thereof, by call for redemption, by declaration as authorized by this Indenture (unless annulled pursuant to Section 6.1), or otherwise; then, upon demand of the Trustee, the Company shall pay to the Trustee, for the benefit of the Holders of the Securities of that series then outstanding, the whole amount which then shall have become due on all such Securities for principal (or premium, if any) or interest, as the case may be, including interest at the rate specified in the Securities of that series on overdue principal (and premium, if any) and, so far as may be lawful, on overdue installments of interest; and in case the Company shall fail to pay the same forthwith upon such demand, the Trustee in its own name and as trustee of an express trust, shall be entitled to recover judgment for the whole amount so due and unpaid against the Company or any other obligor on the Securities of that series. The right of the Trustee to recover such judgment shall not be affected by the exercise of any other right, power or remedy for the enforcement of the provisions of this Indenture. The Trustee shall be entitled and empowered, either in its own name or as trustee of an express trust, or as attorney-in-fact for the Holders of the Securities of any series, or in any one or more of such capacities, to file such proof of debt, amendment of proof of debt, claim, petition or other document as may be necessary or advisable in order to have the claims of the Trustee and of the Holders of the Securities of that series allowed in any equity receivership, insolvency, bankruptcy, liquidation, readjustment, reorganization or other judicial proceedings relative to the Company or any other obligor on such Securities or their creditors, or affecting their property. The Trustee is hereby irrevocably appointed (and the successive respective Holders of the Securities of that series by taking and holding the same shall be conclusively deemed to have so appointed the Trustee) the true and lawful attorney-in-fact of the respective Holders of the Securities of that series, with authority to make and file in the respective names of the Holders of such Securities, or on behalf of the Holders of the Securities of that series as a class, subject to deduction from any such claims of the amounts of any claims filed by any of the Holders of the Securities of that series themselves, any proof of debt, amendment of proof of debt, claim, petition or other document in any such proceeding and to receive payment of any sums becoming distributable on account thereof, and to execute any such other papers and documents and to do and perform any and all such acts and things including participating as a member of any official or unofficial committee of creditors acting with respect to such proceeding for and on behalf of such holders of the Securities of that series, as may be necessary or advisable in the opinion of the Trustee in order to have the respective claims of the Trustee and of the Holders of the Securities of that series allowed in any such proceedings, and to receive payment of or on account of such claims; provided, however, that nothing contained in this Indenture shall be deemed to give the Trustee any right to accept or consent to any plan of reorganization or otherwise by action of any character in any such proceedings to waive or change in any way any right of any Holder. Any moneys received by the Trustee under this Section 6.2 shall be applied in the order following, at the date or dates fixed by the Trustee for the distribution of such moneys, upon presentation of the several Securities of any series, and stamping thereon the payment, if only partially paid, and upon surrender thereof if fully paid: First: To the payment of costs and expenses of collection, and reasonable compensation to the Trustee, its agents, attorneys and counsel, and of all other expenses VI-3 incurred, and all advances made, by the Trustee except as a result of its negligence or willful misconduct; Second: In case the principal of (and premium, if any, on) the outstanding Securities of that series shall not have become due and be unpaid, to the payment of interest on the Securities of that series, in the order of the maturity of the installments of such interest, with interest, so far as may be lawful, upon the overdue installments of interest at the rate specified in the Securities of that series, such payments to be made ratably to the persons entitled thereto, without discrimination or preferences; Third: In case the principal of (or premium, if any, on) the outstanding Securities of that series shall have become due, by declaration or otherwise, to the payment of the whole amount then owing and unpaid upon such Securities of that series for principal (and premium, if any) and interest, with interest at the rate specified in the Securities of that series on the overdue principal (and premium, if any) and, so far as may be lawful, on the overdue installments of interest; and in case such moneys shall be insufficient to pay in full the whole amount so due and unpaid upon such Securities, then to the payment of such principal (and premium, if any) and interest, without preference or priority of principal over interest, or of interest over principal or of any installment of interest over any other installment of interest, ratably to the aggregate of such principal and accrued and unpaid interest; Fourth: In case the Trustee shall retain possession of any funds after all obligations of the Company hereunder have been fully paid and satisfied, such funds shall be paid to the Company, its successors or assigns; provided, however, that when interest alone is to be paid, the Trustee at its election may waive presentation of the Securities of that series. Section 6.3. All rights of action under this Indenture or any of the Securities outstanding hereunder, enforceable by the Trustee, may be enforced by the Trustee without possession of any of the Securities or the production thereof at the trial or other proceeding relative thereto, and any such suit or proceedings instituted by the Trustee shall be brought for the ratable benefit of the Holders of the Securities in respect of which any judgment has been recovered, subject to the provisions of this Indenture. Section 6.4. No delay or omission of the Trustee or of the Holders of any Securities to exercise any rights or powers accruing upon any default shall impair any such right or power, or shall be construed to be a waiver of any such default or acquiescence therein; and every power and remedy given by this Article to the Trustee or the Holders may be exercised from time to time and as often as may be deemed expedient by the Trustee or by the Holders. Section 6.5. If any one or more defaults shall happen and be continuing, the Trustee may, in its discretion, proceed to protect and enforce the rights vested in it by this Indenture by such appropriate judicial proceedings as the Trustee, being advised by its counsel, shall deem most effectual to protect and enforce any of said rights, either by suit in equity or by action at law or by proceeding in bankruptcy or otherwise, whether for the specific performance of any covenant or agreement contained in the Indenture or in aid of the exercise of any power granted in the Indenture, or to enforce any other legal or equitable right vested in the Trustee by this Indenture or by law. Provided the Securities of any series shall not then be due and payable by reason of a declaration pursuant to Section 6.1 hereof, the Holders of a majority in principal amount of the Securities of that series at the time outstanding may on behalf of the Holders of all of such Securities waive any past default hereunder and its consequences, except a default in VI-4 the payment of interest on or the principal of (or premium, if any, on) any of such Securities. In the case of any such waiver, the Company, the Trustee and the Holders of such Securities shall be restored to their former positions and rights hereunder, respectively; but no such waiver shall extend to any subsequent or other default or impair any right consequent thereon. Section 6.6. The Holders of a majority in principal amount of the Securities of any series then outstanding shall have the right, by an instrument in writing executed and delivered to the Trustee, to direct the time, method and place of conducting any proceeding for any remedy available to the Trustee, or of exercising any power or trust conferred upon the Trustee under this Indenture; provided, however, that subject to the provisions of Section 10.1 of this Indenture, the Trustee shall have the right to decline to follow any such direction if the Trustee being advised by counsel determines that the action or proceeding so directed may not lawfully be taken or if the Trustee in good faith shall by responsible officers determine that the action or proceeding so directed would involve the Trustee in liability. Section 6.7. No Holder of any Security of any series shall have the right to institute any suit, action or proceeding, in equity or at law, for the execution of any trust or power hereof, or for the enforcement of any other remedy under or upon this Indenture, unless such Holder previously shall have given to the Trustee written notice of default with respect to the Securities of that series, and unless also the Holders of a majority in principal amount of the Securities of that series then outstanding shall have made written request upon the Trustee and shall have afforded to it a reasonable opportunity either to proceed to exercise the powers hereinbefore granted or to institute such action, suit or proceeding in its own name, and shall have offered to the Trustee security and indemnity satisfactory to it against the costs, expenses and liabilities to be incurred therein or thereby, and the Trustee shall have refused or neglected to comply with such request within a reasonable time; it being understood and intended that no one or more Holders of Securities of that series shall have any right in any manner whatever hereunder or under the Securities of that series by his or their action to enforce any right hereunder except in the manner herein provided, and that all proceedings hereunder, at law or in equity, shall be instituted, had and maintained in the manner herein provided and for the ratable benefit of all Holders of such Securities. Nothing herein contained shall, however, affect or impair the right which is absolute and unconditional, of any Holder of any Security to institute suit to enforce the payment of the principal of (or premium, if any, on) and interest on his Security at and after the respective due dates expressed in such Security (including Maturity by call for redemption, declaration (unless annulled pursuant to Section 6.1 hereof) of the acceleration of the Maturity of such principal (or premium if any, on) or interest, or otherwise), or the obligation of the Company, which is also absolute and unconditional, to pay the principal of (or premium, if any, on) and interest on each of the Securities of that series to the respective Holders thereof at the times and places in the Securities expressed. Anything to the contrary notwithstanding contained in this Section 6.7, the parties to this Indenture agree and each Holder of any Security of any series by his acceptance thereof shall be deemed to have agreed that any court may in its discretion require, in any suit for the enforcement of any right or remedy under this Indenture, or in any suit against the Trustee for any action taken or omitted by it as Trustee, the filing by any party litigant in such suit of an undertaking to pay the costs of such suit, and such court may in its discretion assess reasonable costs, including reasonable attorneys' fees, against any party litigant in such suit, having due regard to the merit and good faith of the claims or defenses made by such party litigant; provided, however, that the provisions of this paragraph shall not apply to any suit instituted, directly or through an agent or agents, by the Trustee, to any suit instituted by any Holder, or group of Holders, holding in the aggregate more than 10% in principal amount of the Securities of any series outstanding or to any suit instituted by any VI-5 Holder for the enforcement of the payment of the principal of (or premium, if any, on) or interest on his Securities of that series at and after the respective due dates of such principal (premium, if any) or interest expressed in his Securities of that series. Section 6.8. No Securities of any series which are known by the Trustee to be owned or held by, for the account of or for the benefit of, the Company or any other obligor under this Indenture or any Affiliate of the Company or of such other obligor (other than Securities of that series pledged in good faith which would be deemed outstanding under the provisions of Section 7.4) shall be deemed outstanding for the purpose of any payment or distribution provided for in this Article. Section 6.9. If the Trustee or any Holder shall have proceeded to enforce any right under this Indenture, and such proceedings shall have been discontinued or abandoned because of waiver, or for any other reason, or shall have been determined adversely to the Trustee or such Holder, then, and in any such case, the Company and the Trustee and such Holder or Holders shall each be restored to its former position and rights hereunder, and all rights, remedies and powers of the Trustee and the Holders shall continue as though no such proceedings had been taken. VI-6 ARTICLE VII Concerning the Holders Section 7.1. Whenever in this Indenture it is provided that the Holders of a specified percentage or a majority in aggregate principal amount of the Securities of any series may take any action (including the making of any demand or request, the giving of any notice, consent or waiver or the taking of any other action) the fact that at the time of taking any such action the Holders of such specified percentages have joined therein may be evidenced (a) by any instrument or any number of instruments of similar tenor executed by Holders of Securities of that series in person or by attorney or proxy appointed in writing, or (b) by the record of the Holders of Securities of that series voting in favor thereof at any meeting of such Holders duly called and held in accordance with the provisions of Article XII, or (c) by a combination of such instrument or instruments and any such record of such a meeting of such Holders. The Company or the Trustee may (and in case of any action taken by Holders of a specified percentage or majority in aggregate principal amount of the Securities of any series pursuant to Section 6.1 or 6.6 hereof, the Trustee shall) set a record date and time for purposes of determining the identity of Holders of any series entitled to vote or consent to any action, which record date shall be the later of 30 days prior to the first solicitation of such consent or the date of the most recent list of Holders of such series of Securities furnished to the Trustee prior to such solicitation pursuant to Section 3.3 (d) hereof. If the Company or the Trustee sets such a record date, only those persons who are registered Holders of such Securities at the record date and time so fixed shall be entitled to vote or consent with respect to such action whether or not they are Holders at the time of such vote or consent. Section 7.2. Subject to the provisions of Section 10.1, proof of the execution of any instrument by a Holder of Securities of any series or his attorney or proxy and proof of the holding by any person of any of the Securities of that series shall be sufficient for any purpose of this Indenture if made in the following manner: (a) The fact and date of the execution by any such person of any instrument may be proved by the certificate of any notary public, or other officer of any jurisdiction of or within the United States of America authorized to take acknowledgments of deeds to be recorded in such jurisdiction, that the person executing such instrument acknowledged to him the execution thereof, or by an affidavit of a witness to such execution sworn to before any such notary or other such officer. Where such execution is by an officer of a corporation or association or a member of a partnership on behalf of such corporation, association or partnership, such certificate or affidavit shall also constitute sufficient proof of his authority. (b) The ownership of Securities of that series shall be proved by the Security Register with respect to such Securities or by a certificate of any duly appointed registrar thereof. The Trustee shall not be bound to recognize any person as a Holder of Securities of any series unless and until his authority to vote the Securities held by him is proved in the manner in this Article VII provided. The record of any Holders' meeting shall be proved in the manner provided in Section 12.6. The Trustee may require such additional proof of any matter referred to in this Section 7.2 as it shall deem necessary. Section 7.3. The Company, the Trustee, any Authenticating Agent, any paying agent and any Security registrar may deem and treat the person in whose name any Security shall be registered upon the Security Register as the absolute owner of such Security (whether or VII-1 not such Security shall be overdue and notwithstanding any notice of ownership or writing thereon made by anyone other than the Company or any Security registrar) for the purpose of receiving payment of or on account of the principal of (premium, if any, on) and interest on such Security and for all other purposes; and neither the Company nor the Trustee nor any Authenticating Agent nor any paying agent nor any Security registrar shall be affected by any notice to the contrary. All such payments so made to any such registered Holder for the time being or upon his order shall be valid and, to the extent of the sum or sums so paid, effectual to satisfy and discharge the liability for moneys payable upon any such Security. Section 7.4. In determining whether the Holders of the requisite aggregate principal amount of Securities of any series have concurred in any direction, consent or waiver under this Indenture, Securities of that series which are owned by or held by or for the account of or interest of the Company or any other obligor upon the Securities of that series, or any Affiliate of the Company or of any other obligor upon the Securities of that series, shall be disregarded and deemed not to be outstanding for the purpose of any such determination, except that for the purpose of determining whether the Trustee shall be protected in relying on any such direction, consent or waiver only Securities of that series which the Trustee knows are so owned or held shall be so disregarded. The Securities of that series so owned or held which have been pledged in good faith may be regarded as outstanding for the purposes of this Section 7.4 if the pledgee shall establish to the satisfaction of the Trustee the pledgee's right to vote such Securities and that the pledgee is not an Affiliate of the Company or of any such other obligor. In case of a dispute as to such right, any decision by the Trustee taken upon the advice of counsel shall be full protection to the Trustee. Section 7.5. Any demand, request, waiver, consent or vote of the Holder of any Security of any series shall be conclusive and binding upon such Holder and upon all future Holders and owners of such Security, and of any Security issued in exchange therefor or in place thereof, irrespective of whether or not any notation in regard thereto is made upon such Security. Any action taken by the Holders of the majority or percentage in aggregate principal amount of the Securities of that series specified in this Indenture in connection with such action shall be conclusively binding upon the Company, the Trustee and the Holders of all the Securities of that series. VII-2 ARTICLE VIII Immunity of Incorporators, Stockholders, Officers and Directors Section 8.1. No recourse under or upon any obligation, covenant or agreement of this Indenture, or of any Security of any series, 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 this Indenture and the obligations issued hereunder 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 hereby authorized, or under or by reason of the obligations, covenants or agreements contained in this Indenture or in any of the Securities of any series or implied therefrom; and that any and all such personal liability, either at common law or in equity or by constitution or statute, of, and any and all such rights and claims against, every such incorporator, stockholder, officer or director, as such, because of the creation of the indebtedness hereby authorized, or under or by reason of the obligations, covenants or agreements contained in this Indenture or in any Security of any series or implied therefrom, are hereby expressly waived and released as a condition of, and as a consideration for, the execution of this Indenture and the issue of such Securities. VIII-1 ARTICLE IX Merger, Consolidation or Sale Section 9.1. Nothing in this Indenture shall prevent any consolidation or merger of the Company with or into any other corporation, or any consolidation or merger of any other corporation with or into the Company, or any sale or transfer of its assets and liabilities substantially as an entirety to any other corporation lawfully entitled to acquire the same; provided, however, that, so long as Securities are outstanding hereunder, the Company covenants and agrees, that any such consolidation, merger, sale or transfer shall be upon the condition that the due and punctual payment of the principal of (or premium, if any, on) and interest on, all the Securities according to their tenor, and the due and punctual performance and observance of all the terms, covenants and conditions of this Indenture to be kept or performed by the Company shall, by an indenture supplemental hereto, executed and delivered to the Trustee, be assumed by the corporation (if other than the Company) formed by or resulting from any such consolidation or merger, or which shall have received the transfer of the assets and liabilities of the Company substantially as an entirety, just as fully and effectually as if such successor corporation had been the original party of the first part hereto; and in the event of any such sale or transfer the predecessor Company may be dissolved, wound up and liquidated at any time thereafter. Section 9.2. Every such successor corporation upon executing an indenture supplemental hereto, as provided in Section 9.1, in form satisfactory to the Trustee, shall succeed to and be substituted for the Company with the same effect as if it had been named herein as the Company; and any order, certificate or resolution of officers of the Company or the Board provided for in this Indenture may be made by like officials of such successor corporation. Such successor corporation may thereupon cause to be signed, either in its own name or in the name of the Company, with such suitable reference, if any, to such consolidation, merger, sale or transfer as may be required by the Trustee, any or all of the Securities of any series which shall not theretofore have been signed by the Company and authenticated by the Trustee or an Authenticating Agent on its behalf; and upon the written order of such successor corporation in lieu of the Company, and subject to all the terms, conditions and restrictions herein prescribed with respect to the authentication and delivery of the Securities of any series, the Trustee or an Authenticating Agent on its behalf shall authenticate and deliver any and all Securities of that series which shall have been previously signed by the proper officers of the Company and delivered to the Trustee or an Authenticating Agent on its behalf for authentication, and any of such Securities which such successor corporation shall thereafter, in accordance with the provisions of this Indenture, cause to be signed and delivered to the Trustee or an Authenticating Agent on its behalf for such purpose. All Securities of that series so authenticated and delivered shall in all respects have the same rank as the Securities of that series theretofore or thereafter authenticated and delivered in accordance with the terms of this Indenture. In case of any such consolidation, merger, sale or transfer, such changes in phraseology and form (but not in substance) may be made in the Securities of any series thereafter to be issued as may be appropriate. Section 9.3. The Trustee may receive and shall, subject to the provisions of Section 10.1 of this Indenture, be fully protected in relying upon an Opinion of Counsel or an Officers' Certificate as conclusive evidence that any supplemental indenture executed under the foregoing Section 9.1 complies with the foregoing conditions and provisions of this Article. IX-1 ARTICLE X Concerning the Trustee Section 10.1. (a) The Trustee undertakes, prior to default and after the curing of all defaults which may have occurred, to perform such duties and only such duties as are specifically set forth in this Indenture, and in case of default (but only during the continuance thereof) to exercise such of the rights and powers vested in it by this Indenture, and to use the same degree of care and skill in their exercise, as a prudent man would exercise or use under the circumstances in the conduct of his own affairs. The Trustee, upon receipt of any resolution, certificate, statement, opinion, report, document, order or other instrument furnished to the Trustee pursuant to any provision of this Indenture, shall examine them to determine whether they conform to the requirements of this Indenture. (b) No provision of this Indenture shall be construed to relieve the Trustee from liability for its own negligent action, its own negligent failure to act, or its own wilful misconduct, except that: (i) prior to default hereunder and after the curing of all defaults which may have occurred, the Trustee shall not be liable except for the performance of such duties as are specifically set forth in this Indenture, and no implied covenants or obligations shall be read into this Indenture against the Trustee but the duties and obligations of the Trustee, prior to default and after the curing of all defaults which may have occurred, shall be determined solely by the express provisions of this Indenture; (ii) prior to default hereunder and after the curing of all defaults which may have occurred, and in the absence of bad faith on the part of the Trustee, the Trustee may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon certificates or opinions conforming to the requirements of this Indenture; (iii) the Trustee shall not be liable for any error of judgment made in good faith by the Trustee unless it shall be proved that the Trustee was negligent in ascertaining the pertinent facts; and (iv) the Trustee shall not be liable with respect to any action taken or omitted to be taken by it in good faith in accordance with the direction of the Holders of not less than a majority in principal amount of the Securities of any series then outstanding relating to the time, method and place of conducting any proceeding for any remedy available to the Trustee or exercising any trust or power conferred upon the Trustee, under this Indenture. None of the provisions of this Indenture shall require the Trustee to expend or risk its own funds or otherwise incur any personal financial liability in the performance of any of its duties hereunder, or in the exercise of any of its rights or powers, if there shall be reasonable grounds for believing that repayment of such funds or adequate indemnity against such risk or liability is not reasonably assured to it. (c) The Trustee shall not be responsible for the validity, sufficiency or the execution by the Company of this Indenture, or of any indentures supplemental hereto, or of the Securities of any series, or for the recitals herein or in the Securities contained (such recitals being made solely by the Company). X-1 (d) Subject to the limitations contained in subdivisions (a) and (b) of this Section 10.1: (i) the Trustee may rely and shall be protected in acting or refraining from acting upon any resolution, certificate, opinion, notice, consent, request, order, appraisal, report, bond or other paper or document believed by it to be genuine and to have been signed or presented by the proper party or parties; (ii) the Trustee may consult with counsel (who may be counsel to the Company) and any advice or opinion of such counsel shall be full and complete authorization and protection in respect of any action taken, omitted or suffered by it hereunder in good faith and in accordance with the advice or opinion of such counsel; (iii) whenever in the administration of this Indenture, prior to a default hereunder and after the curing of all defaults which may have occurred, the Trustee shall deem it necessary or desirable that a matter be proved or established prior to taking or suffering any action hereunder, such matter (unless other evidence in respect thereof be herein specifically prescribed) may be deemed to be conclusively proved and established by an Officers' Certificate delivered to the Trustee, and such certificate shall be full warrant to the Trustee for any action taken or suffered by it under the provisions of this Indenture upon the faith thereof; (iv) the Trustee shall be under no obligation to exercise any of the trusts or powers hereof at the request, order or direction of any of the Holders of Securities of any series, pursuant to the provisions of this Indenture, unless such Holders shall have offered to the Trustee security or indemnity satisfactory to it against the costs, expenses and liabilities to be incurred therein or thereby; and (v) the Trustee shall not be liable for any action taken by it in good faith and believed by it to be authorized or within the discretion or power conferred upon it by this Indenture. (e) Subject to the provisions of subdivision (b) of this Section 10.1, prior to a default hereunder and after the curing of all defaults which may have occurred, the Trustee shall not be bound to make any investigation into the facts or matters stated in any resolution, certificate, opinion, notice, consent, request, order, appraisal, report, bond or other document or instrument unless requested in writing so to do by the Holders of not less than a majority in principal amount of the Securities of any series then outstanding; provided, however, that if the payment within a reasonable time to the Trustee of the costs, expenses or liabilities likely to be incurred by it without negligence or bad faith in the making of such investigation is, in the opinion of the Trustee (subject to the provisions of subdivisions (a) and (b) of this Section 10.1), not reasonably assured to the Trustee by the security afforded to it by the terms of this Indenture, the Trustee may require reasonable indemnity against such costs, expenses or liabilities as a condition to so proceeding; and provided further, that nothing in this subdivision (e) shall require the Trustee to give the Holders of such Securities any notice other than that required by Section 10.3 hereof. The reasonable expense of every such examination shall be paid by the Company or, if paid by the Trustee, shall be repaid by the Company upon demand. (f) The Trustee may execute any of the trusts or powers hereunder or perform any duties hereunder either directly or by or through agents or attorneys and the Trustee shall not be responsible for any misconduct or negligence on the part of any agent or attorney appointed with due care by it hereunder. Section 10.2. The Trustee shall be entitled to reasonable compensation (which shall not be limited by any provision of law in regard to the compensation of a trustee of an express trust) for services rendered by it in the execution of the trusts hereby created. The Company X-2 also agrees to indemnify the Trustee for and hold it harmless against loss, liability or expense incurred without negligence or bad faith on the part of the Trustee arising out of or in connection with the acceptance or administration of this trust, including the costs and expenses of defending against any claim of liability in the premises. The Trustee shall have a first lien on all moneys coming into its possession hereunder, for the payment to it of its compensation and for the repayment to it of all expenses and disbursements payable by the Company hereunder. The Trustee shall not be accountable for the use or application by the Company of any Securities of any series authenticated and delivered hereunder or of the proceeds of such Securities, or for the use or application of any moneys paid over by the Trustee in accordance with any provision of this Indenture, or for the use or application of any moneys received by any paying agent. All moneys received by the Trustee under or pursuant to any provision of this Indenture shall constitute trust funds for the purposes for which they were paid or are held, but need not be segregated in any manner from any other moneys and may be deposited by the Trustee, under such conditions as may be prescribed by law, in its general banking department, and the Trustee shall not be liable for any interest thereon, except that, so long as the Company is not in default hereunder, the Trustee will allow and credit to the Company interest, if any, upon such moneys at such rate as may then be customary for similar deposits. Section 10.3. The Trustee shall give to the Holders of Securities of any series notice, in the manner and to the extent provided in subdivision (c) of Section 10.10, of the happening of all defaults known to it with respect to Securities of such series, within 90 days after the occurrence thereof unless such defaults shall have been cured before the giving of such notice; but, except in the case of a default resulting from the failure to make any payment of principal of, premium, if any, on or interest on the Securities of such series the Trustee may withhold the giving of such notice if and so long as the board of directors, the executive committee or a trust committee of directors and/or Responsible Officers, of the Trustee in good faith determines that the withholding of such notice is in the interest of the Holders of Securities of such series. For the purposes of this Section 10.3, the term "default" shall mean any default defined in Section 6.1, irrespective of the giving of any specified notice and excluding any periods of grace provided for therein. Section 10.4. If the Trustee has or shall acquire any conflicting interest as defined in this Section 10.4, with respect to the Securities of any series it shall, within 90 days after ascertaining that it has such conflicting interest if the default (as defined in Section 10.3) to which such conflicting interest relates has not been cured or duly waived or otherwise eliminated before the end of such 90-day period, either eliminate such conflicting interest or, except as otherwise provided below, resign with respect to the Securities of that series, such resignation to become effective upon the appointment of a successor trustee and such successor's acceptance of such appointment, and the Company shall take prompt steps to have a successor appointed in the manner provided in Section 10.6. Except in the case of a default (as defined in Section 10.3) in the payment of the principal of (or premium, if any) or interest on any such Security, or in the payment of any sinking or purchase fund installment, the Trustee shall not be required to resign as otherwise provided by this Section if the Trustee shall have sustained the burden of proving, on application to the Commission and after opportunity for hearing thereon, that: (i) the default (as defined in Section 10.3) may be cured or waived during a reasonable period and under the procedures described in such application; and (ii) a stay of the Trustee's duty to resign will not be inconsistent with the interests of Holders of such Securities. The filing of such an application shall automatically stay the performance of the duty to resign until the Commission orders otherwise. For the purposes of this Section 10.4 the Trustee shall be deemed to have a conflicting interest with X-3 respect to the Securities of any series if such Securities are in default (as defined in Section 10.3) and: (1) the Trustee is trustee under another indenture under which any other securities, or certificates of interest or participation in any other securities, of the Company are outstanding, unless such other indenture is a collateral trust indenture under which the only collateral consists of Securities issued and outstanding under this Indenture, provided that there shall be excluded from the operation of this paragraph any indenture or indentures under which other securities or certificates of interest or participation in other securities of the Company are outstanding if (i) such other indenture or indentures (and all series of securities issuable thereunder) are at the time wholly unsecured and rank equally and such other indenture or indentures (and such series) are hereafter qualified under the Trust Indenture Act of 1939, as amended, unless the Commission shall have found and declared by order pursuant to Subsection (b) of Section 305 or Subsection (c) of Section 307 of the Trust Indenture Act of 1939, as amended, that differences exist between the provisions of this Indenture and the provisions of such other indenture or indentures (or such series) which are so likely to involve a material conflict of interest as to make it necessary in the public interest or for the protection of investors to disqualify the Trustee from acting as such under this Indenture and under such other indenture or indentures, or (ii) the Company shall have sustained the burden of proving, on application to the Commission and after opportunity for hearing thereon, that the trusteeship under this Indenture and such other indenture is not so likely to involve a material conflict of interest as to make it necessary in the public interest or for the protection of investors to disqualify the Trustee from acting as such under this Indenture and under such other indenture or indentures; (2) the Trustee or any of its directors or executive officers is an underwriter for the Company; (3) the Trustee directly or indirectly controls or is directly or indirectly controlled by or is under direct or indirect common control with an underwriter for the Company; (4) the Trustee or any of its directors or executive officers is a director, officer, partner, employee, appointee or representative of the Company or of an underwriter (other than the Trustee itself) for the Company who is currently engaged in the business of underwriting, except that (A) one individual may be a director and/or an executive officer of the Trustee and a director and/or an executive officer of the Company, but may not be at the same time an executive officer of both the Trustee and of the Company, and (B) if and so long as the number of directors of the Trustee in office is more than nine, one additional individual may be a director and/or an executive officer of the Trustee and a director of the Company, and (C) the Trustee may be designated by the Company or by any underwriter for the Company to act in the capacity of transfer agent, registrar, custodian, paying agent, fiscal agent, escrow agent, or depositary, or in any other similar capacity, or, subject to the provisions of subdivision (1) of this Section 10.4, to act as trustee, whether under an indenture or otherwise; (5) 10% or more of the voting securities of the Trustee is beneficially owned either by the Company or by any director, partner or executive officer of the Company or 20% or more of such voting securities is beneficially owned, collectively, by any two or more of such persons; or 10% or more of the voting securities of the Trustee is beneficially owned either by an underwriter for the Company or by any director, partner or executive officer of any such underwriter, or is beneficially owned, collectively, by any two or more such persons; (6) the Trustee is the beneficial owner of, or holds as collateral security for an obligation which is in default as hereinafter in this Section 10.4 defined, (A) 5% or more X-4 of the voting securities or 10% or more of any other class of security of the Company, not including the Securities issued under this Indenture and the securities issued under any other indenture of the Company under which the Trustee is also trustee, or (B) 10% or more of any class of security of any underwriter for the Company; (7) the Trustee is the beneficial owner of, or holds as collateral security for an obligation which is in default as hereinafter in this Section 10.4 defined, 5% or more of any voting securities of any person who, to the knowledge of the Trustee, owns 10% or more of the voting securities of, or controls directly or indirectly or is under direct or indirect common control with, the Company; (8) the Trustee is the beneficial owner of, or holds as collateral security for an obligation which is in default as hereinafter in this Section 10.4 defined, 10% or more of any class of security of any person who, to the knowledge of the Trustee, owns 50% or more of the voting securities of the Company; (9) the Trustee owns, on the date of such default (as defined in Section 10.3) or any anniversary of such default while such default remains outstanding, in the capacity of executor, administrator, testamentary or inter vivos trustee, guardian, committee or conservator, or in any other similar capacity, an aggregate of 25% or more of the voting securities, or of any class of security, of any person, the beneficial ownership of a specified percentage of which would have constituted a conflicting interest under subdivisions (6), (7), or (8) of this Section 10.4. As to any such securities of which the Trustee acquired ownership through becoming executor, administrator or testamentary trustee of an estate which included them, the provisions of the preceding sentence shall not apply, for a period of not more than two years from the date of such acquisition, to the extent that such securities included in such estate do not exceed 25% of such voting securities or 25% of any such class of security. Promptly after the date of any such default and annually in each succeeding year that the Securities of any series remain in default, the Trustee shall make a check of its holdings of such securities in any of the abovementioned capacities as of such dates. If the Company fails to make payment in full of principal of, or premium, if any, on and interest on any of the Securities issued under this Indenture when and as the same becomes due and payable, and such failure continues for 30 days thereafter, the Trustee shall make a prompt check of its holdings of such securities in any of the abovementioned capacities as of the date of the expiration of such 30-day period, and after such date, notwithstanding the foregoing provisions of this subdivision (9), all such securities so held by the Trustee, with sole or joint control over such securities vested in it, shall, but only so long as such failure shall continue, be considered as though beneficially owned by the Trustee, for the purposes of subdivisions (6), (7), and (8) of this Section 10.4; or (10) except under the circumstances described in paragraphs (1), (3), (4), (5) or (6) of Section 10.9(b), the Trustee shall be or become a creditor of the Company. In determining whether the Trustee has a conflicting interest with respect to any series of Securities under this Section 10.4, each other series of Securities will be treated as having been issued under an indenture other than this Indenture unless such series of Securities rank equally and are wholly unsecured. The specification of percentages in subdivisions (5) to (9), inclusive, of this Section 10.4 shall not be construed as indicating that the ownership of such percentages of the securities of a person is or is not necessary or sufficient to constitute direct or indirect control for the purposes of subdivision (3) or (7) of this Section 10.4. For the purposes of subdivisions (6), (7), (8), and (9) of this Section 10.4, (A) the term "security" and "securities" shall include only such securities as are generally known as X-5 corporate securities, but shall not include any note or other evidence of indebtedness issued to evidence an obligation to repay moneys lent to a person by one or more banks, trust companies, or banking firms, or any certificate of interest or participation in any such note or evidence of indebtedness; (B) an obligation shall be deemed to be in default when a default in payment of principal shall have continued for 30 days or more, and shall not have been cured; and (C) the Trustee shall not be deemed the owner or holder of (i) any security which it holds as collateral security (as trustee or otherwise) for an obligation which is not in default as defined in clause (B) above, or (ii) any security which it holds as collateral security under this Indenture, irrespective of any default hereunder, or (iii) any security which it holds as agent for collection, or as a custodian, escrow agent or depositary, or in any similar representative capacity. Except as provided in the next preceding paragraph, the word "security" or "securities" as used in this Section 10.4 shall mean any note, stock, treasury stock, bond, debenture, evidence of indebtedness, certificate of interest or participation in any profit-sharing agreement, collateral trust certificate, pre-organization certificate or subscription, transferable share, investment contract, voting-trust certificate, certificate of deposit for a security, fractional undivided interest in oil, gas, or other mineral rights, or, in general, any interest or instrument commonly known as a "security", or any certificate of interest or participation in, temporary or interim certificate for, receipt for, guarantee of, or warrant or right to subscribe to or purchase, any of the foregoing. For the purposes of this Section 10.4: (I) The term "underwriter" when used with reference to the Company shall mean every person who, within one year prior to the time as of which the determination is made, has purchased from the Company with a view to, or has offered or sold for the Company in connection with, the distribution of any security of the Company outstanding at such time, or has participated or has had a direct or indirect participation in any such undertaking, or has participated or has had a participation in the direct or indirect underwriting of any such undertaking, but such term shall not include a person whose interest was limited to a commission from an underwriter or dealer not in excess of the usual and customary distributors' or sellers' commission. (II) The term "director" shall mean any director of a corporation or any individual performing similar functions with respect to any organization whether incorporated or unincorporated. (III) The term "person" shall mean an individual, a corporation, a partnership, an association, a joint-stock company, a trust, an unincorporated organization, or a government or political subdivision thereof. As used in this paragraph, the term "trust" shall include only a trust where the interest or interests of the beneficiary or beneficiaries are evidenced by a security. (IV) The term "voting security" shall mean any security presently entitling the owner or holder thereof to vote in the direction or management of the affairs of a person, or any security issued under or pursuant to any trust, agreement, or arrangement whereby a trustee or trustees or agent or agents for the owner or holder of such security are presently entitled to vote in the direction or management of the affairs of a person. (V) The term "Company" shall mean any obligor upon the Securities. (VI) The term "executive officer" shall mean the president, every vice president, every trust officer, the cashier, the secretary, and the treasurer of a corporation, and any individual customarily performing similar functions with respect to any organization whether incorporated or unincorporated but shall not include the chairman of the board of directors. X-6 The percentages of voting securities and other securities specified in this Section 10.4 shall be calculated in accordance with the following provisions: (a) A specified percentage of the voting securities of a person means such amount of the outstanding voting securities of such person as entitles the holder or holders thereof to cast such specified percentage of the aggregate votes which the holders of all the outstanding voting securities of such person are entitled to cast in the direction or management of the affairs of such person. (b) A specified percentage of a class of securities of a person means such percentage of the aggregate amount of securities of the class outstanding. (c) The term "amount", when used in regard to securities, means the principal amount if relating to evidences of indebtedness, the number of shares if relating to capital shares, and the number of units if relating to any other kind of security. (d) The term "outstanding" means issued and not held by or for the account of the issuer. The following securities shall not be deemed outstanding within the meaning of this definition: (1) securities of an issuer held in a sinking fund relating to securities of the issuer of the same class; (2) securities of an issuer held in a sinking fund relating to another class of securities of the issuer, if the obligation evidenced by such other class of securities is not in default as to principal or interest or otherwise; (3) securities pledged by the issuer thereof as security for an obligation of the issuer not in default as to principal or interest or otherwise; (4) securities held in escrow if placed in escrow by the issuer thereof; provided, however, that any voting securities of an issuer shall be deemed outstanding if any person other than the issuer is entitled to exercise the voting rights thereof. (e) A security shall be deemed to be of the same class as another security if both securities confer upon the holder or holders thereof substantially the same rights and privileges, provided, however, that, in the case of secured evidences of indebtedness, all of which are issued under a single indenture, differences in the interest rates or maturity dates of various series thereof shall not be deemed sufficient to constitute such series different classes, and provided, further, that, in the case of unsecured evidences of indebtedness, differences in the interest rates or maturity dates thereof shall not be deemed sufficient to constitute them securities of different classes, whether or not they are issued under a single indenture. Section 10.5. There shall at all times be at least one corporate Trustee under this Indenture which shall be a bank or trust company in good standing, organized and doing business under the laws of the United States, the State of Delaware or the State of New York or a corporation or other person permitted to act as trustee by the Commission, and having a combined capital and surplus of not less than $20,000,000, which is authorized under the laws of the jurisdiction of incorporation to exercise corporate trust powers and is subject to supervision or examination by Federal or state authority. No obligor upon the Securities or Affiliate of such obligor shall serve as Trustee. If the Trustee or any successor publishes reports of condition at least annually, pursuant to law or to the requirements of the aforesaid supervising or examining authority, the combined capital and surplus of the Trustee or of such successor Trustee shall be deemed to be its combined capital and surplus as set forth in X-7 its most recent report of condition so published. If the Trustee shall at any time cease to satisfy the foregoing qualifications, then the Trustee shall resign within 30 days thereafter, such resignation to become effective upon the appointment of a successor Trustee and such successor's acceptance of such appointment. If the Trustee shall fail or refuse to resign within such 30-day period, or if the Trustee has or shall acquire any conflicting interest of the character specified in Section 10.4 with respect to the Securities of one or more series and shall fail or refuse either to eliminate such conflicting interest or to resign within the period in Section 10.4 provided in respect of such resignation, then (i) the Trustee shall, within 10 days after the expiration of such period, transmit notice of such failure or refusal to the Holders of Securities of any such series in the manner and to the extent provided in subdivision (c) of Section 10.10; and (ii) any Holder of Securities of such series, who has been the bona fide Holder of a Security of such series for at least six months, may, subject to the provisions of the last paragraph of Section 6.7 hereof, on behalf of himself and all others similarly situated, petition any court of competent jurisdiction for the removal of the Trustee, and the appointment of a successor, if the Trustee fails, after written request therefor by such Holder of Securities of such series, to comply with the provisions of Section 10.4. Section 10.6. The Trustee may resign and be discharged from the trust hereby created with respect to the Securities of one or more series by giving notice thereof to the Company specifying the date when such resignation shall take effect, and by giving notice thereof to the Holders of Securities of such series, in the manner and to the extent provided in subdivision (c) of Section 10.10. Except as otherwise provided in Sections 10.4 and 10.5, such resignation shall take effect on the date specified in such notice unless previously a successor Trustee shall have been appointed as hereinafter provided, in which event such resignation shall take effect upon the appointment of such successor Trustee. The Trustee may be removed at any time with respect to the Securities of any series by an instrument or instruments in writing delivered to the Trustee and to the Company signed by the Holders of a majority in principal amount of the Securities of that series then outstanding or by their duly authorized attorneys-in-fact. In case the Trustee shall resign or be removed or otherwise shall become incapable of acting as Trustee, with respect to the Securities of one or more series, a successor Trustee may be appointed by the Holders of a majority in principal amount of the Securities of any series then outstanding by an instrument or instruments in writing filed with the Company and with the Trustee and signed by such Holders or by their duly authorized attorneys-in- fact, or, in the case of the removal of the Trustee pursuant to the provisions of Section 10.5, by any court of competent jurisdiction acting pursuant to the provisions of Section 10.5; but until a new trustee shall be appointed by the Holders of Securities of that series or a court of competent jurisdiction as herein authorized, the Company, by an instrument executed by order of its Board, shall appoint a Trustee to fill the vacancy. Every such successor Trustee so appointed by the Holders of Securities of that series, by a court of competent jurisdiction or by the Company, shall be a bank or trust company meeting the requirements provided in Section 10.5. If in a proper case no appointment of a successor Trustee with respect to the Securities of any series shall be made pursuant to the foregoing provisions of this Article within six months after a vacancy shall have occurred in the office of Trustee, the Holder of any Security of that series or any retiring Trustee may apply to any court of competent jurisdiction to appoint a successor Trustee. The court may thereupon, after such notice, if any, as it may deem proper and prescribe, appoint a successor Trustee. Section 10.7. (a) Any successor Trustee appointed under any of the methods herein provided with respect to all Securities shall execute, acknowledge and deliver to its predecessor Trustee and to the Company an instrument in writing accepting such X-8 appointment hereunder and thereupon such successor Trustee, without any further act, deed or conveyance, shall become fully vested with the rights, powers, trusts, duties and obligations of its predecessor in the trust hereunder with like effect as if originally named as Trustee hereunder. The predecessor Trustee shall, nevertheless, at the written request of the successor Trustee, pay over to the successor Trustee all moneys at the time held by it hereunder; and the Company and the predecessor Trustee, upon payment or provision therefor of any amounts then due the predecessor Trustee pursuant to the provisions of Section 10.2, shall execute and deliver such instruments and do such other things as may reasonably be required for more fully and certainly vesting and confirming in the successor Trustee all such rights, powers, trusts, duties and obligations. The Company shall promptly give notice of the appointment of such successor Trustee to the Holders of all Securities in the manner and to the extent provided in subdivision (c) of Section 10.10. (b) In case of the appointment hereunder of a successor Trustee with respect to the Securities of one or more (but not all) series under any of the methods herein provided, the Company, the predecessor Trustee and each successor Trustee with respect to the Securities of one or more series shall execute and deliver an indenture supplemental hereto wherein each successor Trustee shall accept such appointment and which (1) shall contain such provisions as shall be necessary or desirable to transfer and confirm to, and to vest in, each successor Trustee all the rights, powers, trusts and duties of the predecessor Trustee with respect to the Securities of that or those series to which the appointment of such successor Trustee relates, (2) if the predecessor Trustee is not retiring with respect to all Securities, shall contain such provisions as shall be deemed necessary or desirable to confirm that all the rights, powers, trusts and duties of the predecessor Trustee with respect to the Securities of that or those series as to which the predecessor Trustee is not retiring shall continue to be vested in the predecessor Trustee, and (3) shall add to or change any of the provisions of this Indenture as shall be necessary to provide for or facilitate the administration of the trusts hereunder by more than one Trustee, it being understood that nothing herein or in such supplemental indenture shall constitute such Trustees co-trustees of the same trust and that each such Trustee shall be trustee of a trust or trusts hereunder separate and apart from any trust or trusts hereunder administered by any other such Trustee; and upon the execution and delivery of such supplemental indenture the resignation or removal of the predecessor Trustee shall become effective to the extent provided therein and each such successor Trustee, without any further act, deed or conveyance, shall become vested with all the rights, powers, trusts and duties of the predecessor Trustee with respect to the Securities of that or those series to which the appointment of such successor Trustee relates; but, on request of the Company or any successor Trustee, such predecessor Trustee shall duly assign, transfer and deliver to such successor Trustee all property and money held by such predecessor Trustee hereunder with respect to the Securities of that or those series to which the appointment of such successor Trustee relates. The Company shall promptly give notice of the appointment of such successor Trustee with respect to one or more (but not all) series of Securities to the Holders of such series in the manner and to the extent provided in subdivision (c) of Section 10.10. Section 10.8. Any corporation into which the Trustee or any successor to it in the trust created by this Indenture may be merged or converted, or with which it or any successor to it may be consolidated, or any corporation resulting from any merger, conversion or consolidation to which the Trustee or any successor to it shall be a party, shall be the successor Trustee under this Indenture without the execution or filing of any instruments or any further act on the part of any of the parties hereto. Section 10.9. (a) Subject to the provisions of subdivision (b) of this Section 10.9, if the Trustee, in its individual capacity, shall be or shall become a creditor, directly or indirectly, secured or unsecured, of the Company or of any other obligor upon the Securities of any X-9 series (other than a relationship of the nature specified in subdivision (b) of this Section 10.9) within three months prior to a default (as defined in subdivision (c) of this Section 10.9) or subsequent to such a default, then, unless and until such default shall be cured, the Trustee shall set apart and hold in a special account for the benefit of the Trustee individually, the Holders of the Securities and the holders of other indenture securities (as defined in subdivision (c) of this Section 10.9): (1) an amount equal to any and all reductions in the amount due and owing upon any claim as such creditor in respect of principal or interest, effected after the beginning of such three months' period and valid as against the Company and its other creditors, except any such reduction resulting from the receipt or disposition of any property described in paragraph (2) of this subdivision, or from the exercise of any right of set-off which the Trustee could have exercised if a petition in bankruptcy had been filed by or against the Company upon the date of such default; and (2) all property received by the Trustee in respect of any claim as such creditor, either as security therefor, or in satisfaction or composition thereof, or otherwise, after the beginning of such three months' period, or an amount equal to the proceeds of any such property, if disposed of, subject, however, to the rights, if any, of the Company and its other creditors in such property or such proceeds. Nothing herein contained, however, shall affect the right of the Trustee: (A) to retain for its own account (i) payments made on account of any such claim by any person (other than the Company) who is liable thereon, and (ii) the proceeds of the bona fide sale of any such claim by the Trustee to a third person, and (iii) distributions made in cash, securities or other property in respect of claims filed against the Company in bankruptcy or receivership or in proceedings for reorganization pursuant to the Federal bankruptcy laws or applicable state law; (B) to realize, for its own account, upon any property held by it as security for any such claim, if such property was so held prior to the beginning of such three months' period; (C) to realize, for its own account, but only to the extent of the claim hereinafter mentioned, upon any property held by it as security for any such claim, if such claim was created after the beginning of such three months' period and such property was received as security therefor simultaneously with the creation thereof, and if the Trustee shall sustain the burden of proving that at the time such property was so received the Trustee had no reasonable cause to believe that a default as defined in subdivision (c) of this Section 10.9 would occur within three months; or (D) to receive payment on any claim referred to in paragraph (B) or (C), against the release of any property held as security for such claim as provided in paragraph (B) or (C), as the case may be, to the extent of the fair value of such property. For the purposes of paragraphs (B), (C) and (D), property substituted after the beginning of such three months' period for property held as security at the time of such substitution shall, to the extent of fair value of the property released, have the same status as the property released, and, to the extent that any claim referred to in any of such paragraphs is created in renewal of or in substitution for or for the purpose of repaying or refunding any pre-existing claim of the Trustee as such creditor, such claim shall have the same status as such pre-existing claim. If the Trustee shall be required to account, the funds and property held in such special account and the proceeds thereof shall be apportioned between the Trustee, the Holders of X-10 Securities of any series and the holders of other indenture securities in such manner that the Trustee, the Holders of Securities of any series and the holders of other indenture securities realize, as a result of payments from such special account and payments of dividends on claims filed against the Company in bankruptcy or receivership or in proceedings for reorganization pursuant to the Federal bankruptcy laws or applicable state law, the same percentage of their respective claims, figured before crediting to the claim of the Trustee anything on account of the receipt by it from the Company of the funds and property in such special account and before crediting to the respective claims of the Trustee, the Holders of Securities of any series and the holders of other indenture securities dividends on claims filed against the Company in bankruptcy or receivership or in proceedings for reorganization pursuant to the Federal bankruptcy laws or applicable state law, but after crediting thereon receipts on account of the indebtedness represented by their respective claims from all sources other than from such dividends and from the funds and property so held in such special account. As used in this paragraph, with respect to any claim, the term "dividends" shall include any distribution with respect to such claim, in bankruptcy or receivership or in proceedings for reorganization pursuant to the Federal bankruptcy laws or applicable state law, whether such distribution is made in cash, securities, or other property, but shall not include any such distribution with respect to the secured portion, if any, of such claim. The court in which such bankruptcy, receivership or proceeding for reorganization is pending shall have jurisdiction (i) to apportion between the Trustee, the Holders of Securities of any series, and the holders of other indenture securities, in accordance with the provisions of this paragraph, the funds and property held in such special account and the proceeds thereof, or (ii) in lieu of such apportionment, in whole or in part, to give to the provisions of this paragraph due consideration in determining the fairness of the distributions to be made to the Trustee, the Holders of Securities of any series, and the holders of other indenture securities, with respect to their respective claims, in which event it shall not be necessary to liquidate or to appraise the value of any securities or other property held in such special account or as security for any such claim, or to make a specific allocation of such distributions as between the secured and unsecured portions of such claims, or otherwise to apply the provisions of this paragraph as a mathematical formula. Any trustee who has resigned or been removed after the beginning of such three months' period shall be subject to the provisions of this subsection as though such resignation or removal had not occurred. If any trustee has resigned or been removed prior to the beginning of such three months' period, it shall be subject to the provisions of this subdivision if and only if the following conditions exist-- (i) the receipt of property or reduction of claim which would have given rise to the obligation to account, if such trustee had continued as Trustee, occurred after the beginning of such three months' period; and (ii) such receipt of property or reduction of claim occurred within three months after such resignation or removal. (b) There shall be excluded from the operation of subdivision (a) of this Section 10.9 a creditor relationship arising from-- (1) the ownership or acquisition of securities issued under any indenture, or any security or securities having a maturity of one year or more at the time of acquisition by the Trustee; and for the purposes of this clause the term "security" shall mean any note, bond, debenture, evidence of indebtedness, certificate of interest or participation in any profit-sharing agreement, collateral-trust certificate, investment contract, certificate of deposit for a security, or, in general, any interest or instrument commonly known as a "security" or any certificate of interest or participation in, temporary or interim certificate for, receipt for, or guaranty of, any of the foregoing; X-11 (2) advances authorized by a receivership or bankruptcy court of competent jurisdiction, or by this Indenture, for the purpose of preserving any property which shall at any time be subject to the lien of this Indenture or discharging tax liens or other prior liens or encumbrances thereon, if notice of such advance and of the circumstances surrounding the making thereof is given to the Holders of Securities of any series as provided in Section 10.10 with respect to advances by the Trustee as such; (3) disbursements made in the ordinary course of business in the capacity of trustee under an indenture, transfer agent, registrar, custodian, paying agent, fiscal agent or depositary, or other similar capacity; (4) an indebtedness created as a result of services rendered or premises rented; or an indebtedness created as a result of goods or securities sold in a cash transaction as defined in subdivision (c) of this Section 10.9; (5) the ownership of stock or of other securities of a corporation organized under the provisions of Section 25(a) of the Federal Reserve Act, as amended, which is directly or indirectly a creditor of the Company; or (6) the acquisition, ownership, acceptance or negotiation of any drafts, bills of exchange, acceptances or obligations which fall within the classification of self-liquidating paper as defined in subdivision (c) of this Section 10.9. (c) As used in this Section 10.9: (1) the term "default" shall mean any failure to make payment in full of the principal of (or premium, if any, on) or interest on any of the Securities or upon the other indenture securities when and as such principal, premium, if any, or interest becomes due and payable; (2) the term "other indenture securities" shall mean securities upon which the Company is an obligor (as defined in the Trust Indenture Act of 1939, as amended) outstanding under any other indenture (A) under which the Trustee is also trustee, (B) which contains provisions substantially similar to the provisions of subdivision (a) of this Section 10.9, and (C) under which a default exists at the time of the apportionment of the funds and property held in said special account; (3) the term "cash transaction" shall mean any transaction in which full payment for goods or securities sold is made within seven days after delivery of the goods or securities in currency or in checks or other orders drawn upon banks or bankers and payable upon demand; (4) the term "self-liquidating paper" shall mean any draft, bill of exchange, acceptance or obligation which is made, drawn, negotiated or incurred by the Company for the purpose of financing the purchase, processing, manufacture, shipment, storage or sale of goods, wares or merchandise and which is secured by documents evidencing title to, possession of, or a lien upon the goods, wares or merchandise or the receivables or proceeds arising from the sale of the goods, wares or merchandise previously constituting the security, provided the security is received by the Trustee simultaneously with the creation of the creditor relationship with the Company arising from the making, drawing, negotiating or incurring of the draft, bill of exchange, acceptance or obligation; and (5) the term "Company" shall mean any obligor upon the Securities at the time in question. X-12 Section 10.10. (a) The Trustee shall, so long as any Securities of any series are outstanding hereunder, transmit to the Holders, as hereinafter provided, within 60 days after May 15 of each year, beginning with the year , a brief report as of such May 15 with respect to any of the following events which may have occurred within the previous twelve months (but if no such event has occurred within such period no report need be transmitted)-- (1) any change to the eligibility under Section 10.5 and qualification under Section 10.4 of the Trustee to serve as Trustee under this Indenture; (2) the creation of or any material change to a relationship specified in subsections (1) through (10) of the first paragraph of Section 10.4 hereof. (3) the character and amount of any advances (and if the Trustee elects so to state the circumstances surrounding the making thereof) made by it as Trustee which remain unpaid on the date of such report, and for the reimbursement of which it claims or may claim a lien or charge, prior to that of the Securities, on property or funds held or collected by it as a Trustee, except that the Trustee shall not be required (but may elect) to state such advances if such advances so remaining unpaid aggregate not more than 1/2 of 1% of the principal amount of the Securities outstanding on such date; (4) the amount, interest rate and maturity date of all other indebtedness owing to it in its individual capacity, on the date of such report, by the Company or any other obligor under this Indenture, with a brief description of any property held as collateral security therefor, except an indebtedness based upon a creditor relationship arising in any manner described in paragraph (2), (3), (4) or (6) of subdivision (b) of Section 10.9; (5) any change to the property and funds physically in the possession of the Trustee in such capacity on the date of such report; (6) any additional issue of Securities which it has not previously reported; and (7) any action taken by the Trustee in the performance of its duties under this Indenture which it has not previously reported and which in the opinion of the Trustee materially affects the Securities, except action in respect of a default, notice of which has been or is to be withheld by the Trustee in accordance with Section 10.3. (b) The Trustee shall, so long as any Securities of any series shall be outstanding hereunder, also transmit to the Holders, as hereinafter provided, within the times hereinafter specified, a brief report with respect to the character and amount of any advances (and if the Trustee so elects to state the circumstances surrounding the making thereof) made by the Trustee, as such, since the date of the last report transmitted pursuant to the provisions of subdivision (a) of this Section 10.10 (or if no such report has been so transmitted, since the date of the execution of this Indenture), for the reimbursement of which it claims or may claim a lien or charge prior to that of the Securities, on property or funds held or collected by the Trustee, as such, and which it has not previously reported pursuant to this paragraph, if such advances remaining unpaid at any time aggregate more than 10% of the principal amount of Securities outstanding at such time, such report to be so transmitted within 90 days after such time. (c) All reports required by this Section 10.10, and all other reports or notices which are required by any other provision of this Indenture to be transmitted in accordance with the provisions of this Section, shall be transmitted by mail, first class postage pre-paid to all Holders, as the names and addresses of such Holders appear upon the Security Register. The Trustee shall, at the time of the transmission to the Holders of any report or notice pursuant to this Section 10.10, file a copy thereof with each stock exchange, if any, upon which the Securities are listed and with the Commission. The Company will notify the Trustee when Securities are listed on a stock exchange. X-13 Section 10.11. The Trustee shall preserve, in as current a form as is reasonably practicable, all information furnished it pursuant to subdivision (d) of Section 3.3 hereof, or received by it as paying agent hereunder. The Trustee may destroy (1) any information so furnished to it by the Company upon receipt of new information from the Company, (2) any information received by it as a paying agent, by delivering to itself, as Trustee, not earlier than 45 days after an interest payment date on the Securities, a list containing the names and addresses of the Holders of Securities obtained from such information since the delivery of the last previous list, if any, and (3) any list delivered to itself, as Trustee, which was compiled from information received by it as paying agent upon the receipt of a new list so delivered. Within five business days after receipt by the Trustee of a written application by any three or more Holders of Securities stating that the applicants desire to communicate with other Holders with respect to their rights under this Indenture or under the Securities, and accompanied by a copy of the form of proxy or other communication which such applicants proposed to transmit, and by reasonable proof that each such applicant has owned a Security or Securities for a period of at least six months preceding such application, the Trustee shall, at its election, either (1) afford to such applicants access to all information so furnished to or received by the Trustee and not destroyed pursuant to the provisions of this Section 10.11, or (2) inform such applicants as to the approximate number of Holders according to the most recent information so furnished to or received by the Trustee, and as to the approximate cost of mailing to the Holders the form of proxy or other communication, if any, specified in such application. If the Trustee shall elect not to afford to such applicants access to such information, the Trustee shall, upon the written request of such applicants, mail to all Holders whose names and addresses are contained in the then current information filed with the Trustee as aforesaid, copies of the form of proxy or other communication which is specified in such request, with reasonable promptness after a tender to the Trustee of the material to be mailed and the payment, or provision for the payment, of the reasonable expenses of such mailing, unless within five days after such tender, the Trustee shall mail to such applicants, and file with the Commission, together with a copy of the material to be mailed, a written statement to the effect that, in the opinion of the Trustee, such mailing would be contrary to the best interest of the Holders or would be in violation of applicable law. Such written statement shall specify the basis of such opinion. If the Commission, after granting opportunity for a hearing upon the objections specified in said written statement and on notice to the Trustee, shall enter an order refusing to sustain any of such objections, or if, after the entry of an order sustaining one or more of such objections, the Commission shall find, after notice and opportunity for a hearing, that all objections sustained have been met and shall enter an order so declaring, the Trustee shall comply with such determination with reasonable promptness after such determination and the renewal of the aforesaid tender; otherwise the Trustee shall be relieved of any obligation or duty to such applicants respecting their application. Neither the Company nor the Trustee nor any Authenticating Agent nor any paying agent nor any Security registrar shall be liable or accountable to the Company or to any Holder by reason of disclosure of any such information as to the names and addresses of Holders in accordance with the provisions of this Section 10.11, regardless of the source from which such information was derived, nor by reason of the mailing of any material pursuant to a request made under this Section 10.11. Section 10.12. The Trustee or any Authenticating Agent or any paying agent or Security registrar in its individual or any other capacity may buy, own, hold and sell any of the Securities or any other evidences of indebtedness or other securities, whether heretofore or hereafter created or issued, of the Company or any Subsidiary or Affiliate of the Company with the same rights it would have if it were not Trustee, Authenticating Agent, paying X-14 agent or Security registrar; and any Authenticating Agent and, subject to the provisions of this Article X, the Trustee may engage or be interested in any financial or other transaction with the Company or any Subsidiary or Affiliate, including, without limitation, secured and unsecured loans to the Company or any Subsidiary or Affiliate, and may maintain any and all other general banking and business relations with the Company and any Subsidiary or Affiliate, and may act as trustee under an indenture with respect to indebtedness thereof, with like effect and in the same manner and to the same extent as if the Trustee were not a party to this Indenture; and no implied covenant shall be read into this Indenture against the Trustee in respect of any such matters. Section 10.13. The Trustee may comply in good faith with any rule, regulation or order of the Commission made pursuant to the terms and provisions of the Trust Indenture Act of 1939, as amended, and shall be fully protected in so doing notwithstanding that such rule, regulation or order may thereafter be amended or rescinded or determined by judicial or other authority to be invalid for any reason, but nothing herein contained shall require the Trustee to take any action or omit to take any action in accordance with such rule, regulation or order, except as otherwise required by subdivisions (a) and (b) of Section 10.1. Section 10.14. At any time when any of the Securities remain outstanding there may be an Authenticating Agent with respect to one or more series of Securities appointed by the Trustee to act on its behalf and subject to its direction in connection with the authentication of the Securities of such series as set forth in Articles III, IV, V, IX and XI. Such Authenticating Agent shall be acceptable to the Company and shall at all times be a corporation organized and doing business under the laws of the United States or of any State or Territory or of the District of Columbia, authorized under such laws to act as Authenticating Agent, having a combined capital and surplus of not less than $20,000,000, and being subject to supervision or examination by Federal, State, Territorial, or District of Columbia authority and (if there be such a corporation willing and able to act as Authenticating Agent on reasonable and customary terms) having its principal office and place of business in the State of Delaware or in the Borough of Manhattan of The City of New York. If such corporation publishes reports of conditions at least annually, pursuant to law or to the requirements of the aforesaid supervising or examining authority, then for the purposes of this Section 10.14 the combined capital and surplus of such corporation shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published. Any corporation into which any Authenticating Agent may be merged or converted or with which it may be consolidated, or any corporation resulting from any merger, conversion or consolidation to which any Authenticating Agent shall be a party, or any corporation succeeding to the corporate agency business of any Authenticating Agent, shall continue to be the Authenticating Agent without the execution or filing of any paper or any further act on the part of the Trustee or such Authenticating Agent. Any Authenticating Agent with respect to one or more series of Securities may at any time resign by giving written notice of resignation to the Trustee and to the Company. The Trustee may at any time terminate the agency of any Authenticating Agent by giving written notice of termination to such Authenticating Agent and to the Company. Upon receiving such a notice of resignation or upon such a termination, or in case at any time any Authenticating Agent shall cease to be eligible in accordance with the provisions of this Section 10.14, the Trustee may appoint a successor Authenticating Agent with respect to any series of Securities which shall be acceptable to the Company, shall give written notice of such appointment to the Company, and the Company shall mail notice of such appointment to all Holders of Securities of the series with respect to which such Authenticating Agent will serve, as the names and addresses of such Holders appear upon the Security Register. X-15 Any successor Authenticating Agent upon acceptance of its appointment hereunder shall become vested with all the rights, powers, duties and responsibilities of its predecessor hereunder, with like effect as if originally named as Authenticating Agent herein. No successor Authenticating Agent shall be appointed unless eligible under the provisions of this Section 10.14. The Trustee agrees to pay to each Authenticating Agent from time to time reasonable compensation for its services, and the Trustee shall be entitled to be reimbursed for such payments subject to the provisions of Section 10.2. An Authenticating Agent shall have no responsibility or liability for any action taken by it as such at the direction of the Trustee. If an appointment is made pursuant to this Section, the Securities shall have endorsed thereon, in addition to the Trustee's Certificate, an Authenticating Agent's Certificate in the following form: This is one of the Securities of the series designated and referred to in the within-mentioned Indenture. --------------------------------------- As Authenticating Agent By ____________________________________ Authorized Officer X-16 ARTICLE XI Supplemental Indentures Section 11.1. The Company, when authorized by resolution of its Board, and the Trustee, subject to the conditions and restrictions in this Indenture contained, may from time to time and at any time enter into an indenture or indentures supplemental hereto (which shall conform to the provisions of the Trust Indenture Act of 1939 as then in effect) for one or more of the following purposes: (a) to evidence the succession of another corporation to the Company, or successive successions, and the assumption by the successor corporation of the covenants, agreements and obligations of the Company pursuant to Article IX; (b) to add to the covenants and agreements of the Company for the benefit of the Holders of all or any series of Securities (and if such covenants and agreements are for the benefit of less than all series of Securities, stating that such covenants and agreements are expressly being included solely for the benefit of such series), and to surrender any right or power herein reserved to or conferred upon the Company; (c) to add to or change any of the provisions of this Indenture to such extent as shall be necessary to permit or facilitate the issuance of Securities in bearer form, registrable or not registrable as to principal, and with or without interest coupons; (d) to change or eliminate any of the provisions of this Indenture, provided that any such change or elimination (i) shall become effective only when there is no Security outstanding of any series created prior to the execution of such supplemental indenture which is entitled to the benefit of such provision or (ii) shall not apply to any such outstanding Security; (e) to establish the form or terms of Securities of any series as permitted by Section 2.1; (f) to evidence and provide for the acceptance of appointment hereunder by a successor Trustee with respect to the Securities of one or more series and to add to or change any of the provisions of this Indenture as shall be necessary to provide for or facilitate the administration of the trusts hereunder by more than one Trustee, pursuant to the requirements of Section 10.7(b); (g) to cure any ambiguity or to correct or supplement any defective or inconsistent provision contained in this Indenture or in any supplemental indenture; or (h) to make such provisions with respect to matters or questions arising under this Indenture as may be necessary or desirable and not inconsistent with this Indenture. The Trustee is hereby authorized to join with the Company in the execution of any supplemental indenture authorized or permitted by the terms of this Indenture, to make any further appropriate agreements and stipulations which may be therein contained, but the Trustee shall not be obligated to enter into any such supplemental indenture which affects the Trustee's own rights, duties or immunities under this Indenture or otherwise. Any supplemental indenture authorized by the provisions of this Section 11.1 may be executed by the Company and the Trustee without the consent of the Holders of any of the Securities at the time outstanding, notwithstanding any of the provisions of Section 11.2. Section 11.2. With the consent (evidenced as provided in Section 7.1) of the Holders (or persons entitled to vote, or to give consents respecting the same) of not less than a majority in principal amount of the outstanding Securities of each series affected by such supplemental indenture, the Company, when authorized by a resolution of its Board, and the Trustee may from time to time and at any time enter into an indenture or indentures supplemental hereto XI-1 (which shall conform to the provisions of the Trust Indenture Act of 1939 as then in effect) for the purpose of adding any provisions to or modifying or altering in any manner or eliminating any of the provisions of this Indenture or of any supplemental indenture or of modifying or altering in any manner the rights and obligations of the Holders of such Securities and of the Company; provided, however, that no such supplemental indenture shall (i) change the Stated Maturity of the principal of (premium, if any, on), or the interest on, any Security, or reduce the principal amount of (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 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. A supplemental indenture which changes or eliminates any covenant or other provision of this Indenture which has expressly been included solely for the benefit of one or more particular series of Securities, or which modifies the rights of the Holders of Securities of such series with respect to such covenant or other provision, shall be deemed not to affect the rights under this Indenture of the Holders of Securities of any other series. Upon the request of the Company accompanied by a Certified Resolution authorizing the execution of any such supplemental indenture and upon the filing with the Trustee of evidence of the consent of Holders of Securities affected thereby as aforesaid, the Trustee shall join with the Company in the execution of such supplemental indenture unless such supplemental indenture affects the Trustee's own rights, duties or immunities under this Indenture or otherwise, in which case the Trustee may in its discretion, but shall not be obligated to, enter into such supplemental indenture. It shall not be necessary for the consent of the Holders under this Section 11.2 to approve the particular form of any proposed supplemental indenture, but it shall be sufficient if such consent shall approve the substance thereof. Promptly after the execution by the Company and the Trustee of any supplemental indenture pursuant to the provisions of this Section 11.2 the Company shall mail, first class postage prepaid, to the Holders of the Securities affected thereby at their last addresses as they shall appear upon the Security Register, a notice, setting forth in general terms the substance of such supplemental indenture. Any failure of the Company to mail such notice, or any defect therein, shall not, however, in any way impair or affect the validity of any such supplemental indenture. Section 11.3. Upon the execution of any supplemental indenture pursuant to the provisions of this Article XI, or of Section 9.1, this Indenture shall be and be deemed to be modified and amended in accordance therewith and the respective rights, limitations of rights, obligations, duties and immunities under this Indenture of the Trustee, the Company and the Holders of Securities affected thereby shall thereafter be determined, exercised and enforced hereunder subject in all respects to such modifications and amendments, and all the terms and conditions of any such supplemental indenture shall be and be deemed to be part of the terms and conditions of this Indenture for any and all purposes. Section 11.4. Securities of any series authenticated and delivered after the execution of any supplemental indenture pursuant to the provisions of this Article XI, or after any action taken at a Holders' meeting pursuant to Article XII, may bear a notation in form approved by the Trustee as to any matter provided for in such supplemental indenture or as to any XI-2 action taken at any such meeting; and in such case, suitable notation may be made upon outstanding Securities affected thereby after proper presentation and demand. If the Company shall so determine, Securities of any series so modified as to conform, in the opinion of the Trustee and the Board, to any modification or alteration of this Indenture contained in any such supplemental indenture, or to any action taken at any such meeting, may be prepared by the Company, authenticated by the Trustee or an Authenticating Agent on its behalf and delivered in exchange for outstanding Securities of such series upon demand of and without cost to, the Holders thereof, upon surrender of such Securities. Section 11.5. The Trustee may receive and shall, subject to the provisions of Section 10.1, be fully protected in relying upon an Opinion of Counsel as conclusive evidence that any supplemental indenture executed pursuant to this Article XI is authorized or permitted by the terms of this Indenture and that it is not inconsistent therewith. Section 11.6. Nothing in this Article contained shall affect or limit the right or obligation of the Company to execute and deliver to the Trustee any instrument of further assurance or other instrument which elsewhere in this Indenture it is provided shall be delivered to the Trustee. XI-3 ARTICLE XII Meetings of Holders Section 12.1. A meeting of Holders of any series of Securities may be called at any time and from time to time pursuant to the provisions of this Article XII for any of the following purposes: (1) to give any notice to the Company or to the Trustee, or to give any direction to the Trustee or to waive or consent to the waiving of any default hereunder and its consequences, or to take any other action authorized to be taken by such Holders pursuant to any of the provisions of Article VI; (2) to remove the Trustee or appoint a successor trustee pursuant to the provisions of Article X; (3) to consent to the execution of an indenture or indentures supplemental hereto pursuant to the provisions of Section 11.2; or (4) to take any other action authorized to be taken by or on behalf of the Holders of any specified aggregate principal amount of the Securities of that series under any other provision of this Indenture, or authorized or permitted by law. Section 12.2. The Trustee may at any time call a meeting of Holders of Securities of any series to take any action specified in Section 12.1, to be held at such time and at such place in any of the city in which the principal executive offices of the Company are located, the City of Wilmington, Delaware, the city in which the principal corporate trust office of the Trustee is located, the City of Chicago or in the Borough of Manhattan of The City of New York, as the Trustee shall determine. Notice of every meeting of such Holders, setting forth the time and place of such meeting and in general terms the action proposed to be taken at such meeting, shall be mailed by the Trustee, first class postage prepaid, to the Company, and to the Holders of Securities of that series at their last addresses as they shall appear upon the Security Register, not less than 20 nor more than 60 days prior to the date fixed for the meeting. Any meeting of the Holders of Securities of any series shall be valid without notice if the Holders of all Securities of that series then outstanding are present in person or by proxy, or if notice is waived before or after the meeting by the Holders of all outstanding Securities of that series, and if the Company and the Trustee are either present by duly authorized representatives or have, before or after the meeting, waived notice. Section 12.3. In case at any time the Company, pursuant to resolution of its Board, or Holders of not less than a majority in aggregate principal amount of the Securities of any series then outstanding, shall have requested the Trustee to call a meeting of Holders of Securities of that series to take any action specified in Section 12.1, by written request setting forth in reasonable detail the action proposed to be taken at the meeting, and the Trustee shall not have mailed the notice of such meeting within 20 days after receipt of such request, then the Company or such Holders in the amount above specified may determine the time and the place in any of the city in which the principal executive offices of the Company are located, the City of Wilmington, Delaware, the city in which the principal corporate trust office of the Trustee is located, the City of Chicago or in the Borough of Manhattan of The City of New York, for such meeting and may call such meeting for the purpose of taking such action, by mailing or causing to be mailed notice thereof as provided in Section 12.2. Section 12.4. To be entitled to vote at any meeting of Holders of Securities of any series a person shall (a) be a registered Holder of one or more Securities of that series, or (b) be a person appointed by an instrument in writing as proxy for the registered Holder or Holders XII-1 of Securities of that series. The only persons who shall be entitled to be present or to speak at any meeting of Holders shall be the persons entitled to vote at such meeting and their counsel and any representatives of the Trustee and its counsel and any representatives of the Company and its counsel. Section 12.5. Notwithstanding any other provisions of this Indenture, the Trustee may make such reasonable regulations as it may deem advisable for any meeting of Holders of Securities of any series, in regard to proof of the holding of Securities of that series and of the appointment of proxies, and in regard to the appointment and duties of inspectors of votes, and submission and examination of proxies, certificates and other evidence of the right to vote, and such other matters concerning the conduct of the meeting as it shall think fit. Unless otherwise determined by the Company pursuant to Section 7.1, such regulations may fix a record date and time for purposes of determining the registered Holders of any series of Securities entitled to vote at such meeting, which record date shall be (i) the later of 30 days prior to the first solicitation of the vote at such meeting or the date of the most recent list of Holders furnished to the Trustee prior to such solicitation pursuant to Section 3.3 (d) hereof or (ii) such other date determined by the Trustee. If the Trustee sets such a record date only those persons who are registered Holders of such Securities at the record date and time so fixed shall be entitled to vote at such meeting whether or not they shall be such Holders at the time of the meeting. Such regulations may further provide that written instruments appointing proxies, regular on their face, may be presumed valid and genuine without the proof specified in Section 7.2 or other proof. Except as otherwise permitted or required by any such regulations, the holding of such Securities shall be proved in the manner specified in Section 7.2 and the appointment of any proxy shall be proved in the manner specified in Section 7.2 or by having the signature of the person executing the proxy witnessed or guaranteed by any bank, banker or trust company satisfactory to the Trustee. The Trustee shall, by an instrument in writing, appoint a temporary chairman of the meeting, unless the meeting shall have been called by the Company or by Holders of Securities of any series as provided in Section 12.3, in which case the Company or such Holders calling the meeting, as the case may be, shall in like manner appoint a temporary chairman. A permanent chairman and a permanent secretary of the meeting shall be elected by vote of the Holders of a majority in principal amount of the Securities of that series represented at the meeting and entitled to vote. Subject to the provisions of Section 7.4, at any meeting each Holder of Securities of any series or proxy shall be entitled to one vote for each $1,000 principal amount at Stated Maturity (or the Dollar equivalent thereof based upon the Market Exchange Rate on the latest date for which such rate was established on or before the date for determining the Holders entitled to perform such act, if the principal amount of any Securities of any series is denominated in any Foreign Currency) of Securities of that series, provided, however, that no vote shall be cast or counted at any meeting in respect of any Securities of that series challenged as not outstanding and ruled by the chairman of the meeting to be not outstanding. The chairman of the meeting shall have no right to vote other than by virtue of Securities of that series held by him or instruments in writing as aforesaid duly designating him as the person to vote on behalf of other such Holders. At any meeting of Holders of Securities of that series, the presence of persons holding or representing any number of such Securities shall be sufficient for a quorum. Any meeting of such Holders duly called pursuant to the provisions of Section 12.2 or 12.3 may be adjourned from time to time by vote of the Holders of a majority in principal amount of the Securities of that series represented at the meeting and entitled to vote, and the meeting may be held as so adjourned without further notice. Section 12.6. The vote upon any resolution submitted to any meeting of Holders of Securities of any series shall be by written ballots on which shall be subscribed the signatures XII-2 of the Holders of Securities of that series or of their representatives by proxy and the principal amount of the Securities of that series voted by the ballot. The permanent chairman of the meeting shall appoint two inspectors of votes, who shall count all votes cast at the meeting for or against any resolution and who shall make and file with the secretary of the meeting their verified written reports in duplicate of all votes cast at the meeting. A record in duplicate of the proceedings of each meeting of Holders shall be prepared by the secretary of the meeting and there shall be attached to said record the original reports of the inspectors of votes on any vote by ballot taken thereat and affidavits by one or more persons having knowledge of the facts, setting forth a copy of the notice of the meeting and showing that said notice was mailed as provided in Section 12.2. The record shall be signed and verified by the affidavits of the permanent chairman and secretary of the meeting and one of the duplicates shall be delivered to the Company and the other to the Trustee to be preserved by the Trustee, the latter to have attached thereto the ballots voted at the meeting. Any record so signed and verified shall be conclusive evidence of the matters therein stated. Section 12.7. Nothing in this Article XII contained shall be deemed or construed to authorize or permit, by reason of any call of a meeting of Holders of Securities of any series or any rights expressly or impliedly conferred hereunder to make such call, any hindrance or delay in the exercise of any right or rights conferred upon or reserved to the Trustee or to the Holders of Securities of that series under any of the provisions of this Indenture or of such Securities. XII-3 ARTICLE XIII Satisfaction and Discharge of Indenture or Certain Obligations Section 13.1. If (a) the Company shall deliver to the Trustee for cancellation all Securities theretofore authenticated (other than any Securities which shall have been destroyed, lost or stolen and in lieu of or in substitution for which other Securities shall have been authenticated and delivered) and not theretofore cancelled, or (b) all the Securities not theretofore cancelled or delivered to the Trustee for cancellation shall have become due and payable, or are by their terms to become due and payable at their Stated Maturity within one year or are to be called for redemption within one year under arrangements satisfactory to the Trustee for the giving of notice of redemption, and the Company shall deposit with the Trustee as trust funds the entire amount sufficient to pay at Stated Maturity or upon redemption all of the Securities (other than any Securities which shall have been destroyed, lost or stolen and in lieu of or in substitution for which other Securities shall have been authenticated and delivered) not theretofore cancelled or delivered to the Trustee for cancellation, including principal (and premium, if any) and interest due or to become due to such date of Stated Maturity or Redemption Date, as the case may be, but, excluding, however, the amount of any moneys for the payment of principal of (and premium, if any, on) or interest on the Securities theretofore deposited with the Trustee and (1) repaid by the Trustee to the Company in accordance with the provisions of Section 13.3, or (2) paid by the Trustee to any State pursuant to its unclaimed property or similar laws, and if in either case the Company shall also pay or cause to be paid all other sums payable hereunder by the Company, then this Indenture shall cease to be of further effect, and the Trustee, on demand of the Company accompanied by an Officers' Certificate and an Opinion of Counsel, each stating that in the opinion of the signers all conditions precedent to the satisfaction and discharge of this Indenture have been complied with, and at the cost and expense of the Company, shall execute proper instruments acknowledging satisfaction of and discharging this Indenture. The Company agrees to reimburse the Trustee for any costs or expenses thereafter reasonably and properly incurred by the Trustee in connection with the Indenture or the Securities, and any such obligation for reimbursement shall survive this Indenture. Section 13.2. Any moneys, U.S. Government Obligations, and Eligible Obligations which at any time shall be deposited by the Company or on its behalf with the Trustee or any paying agent (other than the Company) for the purpose of paying or redeeming any of the Securities shall be held in trust and applied by the Trustee to the payment, to the Holders of the particular Securities for the payment or redemption of which such moneys have been deposited, of all sums due and to become due thereon for principal (and premium, if any) and interest, or analogous payments as contemplated by Section 13.4, upon presentation and surrender of such Securities at the office of the Trustee or any paying agent, all subject, however, to the provisions hereinafter contained in this Article XIII. Neither the Company nor the Trustee (except as provided in Section 10.2) nor any paying agent shall be required to pay interest on any moneys so deposited. The Company shall pay and shall indemnify the Trustee against any tax, fee or other charge imposed on or assessed against U.S. Government Obligations or Eligible Obligations deposited pursuant to Section 13.4 or the interest and principal received in respect of such obligations other than any payable by or on behalf of Holders. The Trustee shall deliver or pay to the Company from time to time upon the request of the Company any money, U.S. Government Obligations, or Eligible Obligations held by it as provided in Section 13.4 which, in the opinion of any independent firm of public accountants of recognized standing selected by the Board expressed in a written certification thereof XIII-1 delivered to the Trustee, are then in excess of the amount thereof which then would have been required to be deposited for the purpose for which such money, U.S. Government Obligations, or Eligible Obligations were deposited or received. Section 13.3. Any moneys deposited with the Trustee or any paying agent remaining unclaimed by the Holders of Securities for three years after the date upon which the principal of (premium if any, on) or interest on such Securities shall have become due and payable, shall be repaid to the Company by the Trustee or such paying agent, upon demand, and such Holders shall thereafter be entitled to look only to the Company for payment thereof; provided, however, that, before being required to make any such payment to the Company, the Trustee may, at the expense of the Company, cause to be mailed to the Holders of such Securities, at their last addresses as they appear on the Security Register, notice that such moneys remain unclaimed and that, after a date named in said notice, the balance of such moneys then unclaimed will be returned to the Company. Upon the satisfaction and discharge of this Indenture as to the Securities of any series, all moneys then held by any paying agent other than the Trustee hereunder shall, upon demand of the Company, be repaid to it and thereupon such paying agent shall be released from all further liability with respect to such moneys. Section 13.4. Except as otherwise provided in this Section 13.4 or pursuant to Section 2.1, the Company may terminate its obligations as to the Securities of any series if: (a) all Securities of such series previously authenticated and delivered (other than destroyed, lost or stolen Securities which have been replaced or Securities which are paid pursuant to Section 3.1 or Securities for whose payment money or securities have theretofore been held in trust and thereafter repaid to the Company, as provided in Sections 13.2 and 13.3) have been delivered to the Trustee for cancellation and the Company has paid all sums payable by it hereunder; or (b)(1) the Company has irrevocably deposited or caused to be deposited with the Trustee or a paying agent (and conveyed all right, title and interest for the benefit of the Holders, under the terms of an irrevocable trust agreement in form and substance satisfactory to the Trustee, as trust funds in trust solely for the benefit of the Holders for that purpose), (A) money in an amount sufficient, or (B) U.S. Government Obligations (if the Securities of the series are denominated in Dollars) or Eligible Obligations (if the Securities of the series are denominated in a Foreign Currency) maturing as to principal and interest in such amounts and at such times as are sufficient in the opinion of a nationally recognized firm of independent public accountants expressed in a written certification thereof delivered to the Trustee (without consideration of any reinvestment of such interest), or (C) a combination thereof in an amount sufficient, to pay principal (and premium, if any) and interest on the outstanding Securities of such series on the dates such installments are due to redemption or maturity, and any mandatory sinking fund payments or analogous payments applicable to such outstanding Securities; (2) such deposit as described in this Section 13.4 will not result in a breach or violation of, or constitute a default under, any other agreement or instrument to which the Company is a party or by which it is bound; (3) no defaults as defined in Section 6.1 shall have occurred and be continuing on the date of such deposit, and no default under Section 6.1(e) or 6.1(f) shall have occurred and be continuing on the 91st day after such date; (4) the Company shall have delivered to the Trustee (i) either (A) a ruling received from the Internal Revenue Service to the effect that the Holders of the Securities of such series will not recognize income, gain or loss for Federal income tax purposes as a result of the Company's exercise of its option under this Section 13.4 and will be subject XIII-2 to Federal income tax on the same amount and in the same manner and at the same times as would have been the case if such option had not been exercised, or (B) an Opinion of Counsel by recognized counsel who is not an employee of the Company to the same effect as the ruling described in Clause (A) and (ii) an Opinion of Counsel to the effect that, after the passage of 90 days following the deposit, (x) the trust funds will not be subject to the effect of any applicable bankruptcy, insolvency, reorganization or similar laws affecting creditors' rights generally, or (y) if a court was to rule under any such law in any case or proceeding that the trust funds remained property of the Company (AA) assuming such trust funds remained in the Trustee's possession prior to such court ruling to the extent not paid to Holders of Securities of such series, the Trustee will hold, for the benefit of the Holders of such Securities, a valid and perfected security interest in such trust funds that is not avoidable in bankruptcy or otherwise, and (BB) the Holders of Securities will be entitled to receive adequate protection of their interests in such trust funds if such trust funds are used; (5) the Company has paid or caused to be paid all sums then payable by the Company hereunder and under such Securities; and (6) the Company has delivered to the Trustee an Officers' Certificate and an Opinion of Counsel, each stating that all conditions precedent provided for herein relating to the satisfaction and discharge of this Indenture with respect to Securities of such series have been complied with. Notwithstanding the foregoing Clause (b) prior to the end of the 90-day period referred to in subclause (b)(4)(ii) above, none of the Company's obligations under this Indenture shall be discharged, and subsequent to the end of such 90-day period only the Company's obligations in Sections 2.5, 2.6, 3.1, 3.2, 10.2 and 13.2 shall survive until the Securities of such series are no longer outstanding. If and when a ruling from the Internal Revenue Service or Opinion of Counsel referred to in subclause (b)(4)(i) above is able to be provided specifically without regard to, and not in reliance upon, the continuance of the Company's obligations under Section 3.1, then the Company's obligations under such Section 3.1 shall cease upon delivery to the Trustee of such ruling or Opinion of Counsel and compliance with the other conditions precedent provided for herein relating to the satisfaction and discharge of this Indenture with respect to Securities of such series. After any such irrevocable deposit the Trustee upon request shall acknowledge in writing the discharge of the Company's obligations under the Securities of such series and this Indenture with respect to such Securities except for those surviving obligations specified above. Section 13.5. The Trustee or a paying agent (other than the Company) shall hold, in trust, the money, U.S. Government Obligations or Eligible Obligations deposited with it pursuant to Section 13.4 hereof. The Trustee or paying agent shall have been irrevocably instructed to apply the deposited money and the proceeds from the U.S. Government Obligations or Eligible Obligations in accordance with the terms of this Indenture and the terms of the Securities of the series to the payment of principal (and premium, if any) and interest on such Securities. XIII-3 ARTICLE XIV Miscellaneous Provisions Section 14.1. Nothing in this Indenture, expressed or implied, is intended or shall be construed to confer upon, or to give to, any person or corporation, other than the parties hereto, their successors and assigns, and the Holders of the Securities of any series, any right, remedy or claim under or by reason of this Indenture or any provisions hereof; and the provisions of this Indenture are for the exclusive benefit of the parties hereto, their successors and assigns, any Authenticating Agent or paying agent and the Holders of the Securities of any series. Section 14.2. Unless otherwise specifically provided, the certificate or opinion of any independent firm of public accountants of recognized standing selected by the Board shall be conclusive evidence of the correctness of any computation made under the provisions of this Indenture. The Company shall furnish to the Trustee upon its request a copy of any such certificate or opinion. Section 14.3. In case any one or more of the provisions contained in this Indenture or in the Securities of any series shall for any reason be held to be invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability shall not affect any other provisions of this Indenture, but this Indenture shall be construed as if such invalid or illegal or unenforceable provisions had never been contained herein. If any provision of this Indenture limits, qualifies or conflicts with the duties imposed by operation of subsection (c) of Section 318 of the Trust Indenture Act of 1939, as amended, the imposed duties shall control. Section 14.4. Whenever in this Indenture the Company shall be required to do or not to do anything so long as any of the Securities of any series shall be outstanding, the Company shall, notwithstanding any such provision, not be required to comply with such provisions if it shall be entitled to have this Indenture satisfied and discharged pursuant to the provisions hereof, even though in either case the Holders of any of the Securities of that series shall have failed to present and surrender them for payment pursuant to the terms of this Indenture. Section 14.5. Although this Indenture, for convenience and for the purpose of reference, is dated as of , the actual date of execution by the Company and by the Trustee is as indicated by their respective acknowledgments hereto annexed. Section 14.6. Unless otherwise expressly provided, any order, notice, request, demand, certificate or statement of the Company required or permitted to be made or given under any provision hereof shall be sufficiently executed if signed by its Chairman of the Board, its Chief Executive Officer, its President or one of its Vice Presidents and by its Vice President, Finance, its Treasurer or one of its Assistant Treasurers or its Secretary or one of its Assistant Secretaries. Upon any application, demand or request by the Company to the Trustee to take any action under any of the provisions of this Indenture, the Company shall furnish to the Trustee an Officers' Certificate stating that all conditions precedent, if any, provided for in this Indenture relating to the proposed action, have been complied with, and an Opinion of Counsel stating that in the opinion of such counsel all such conditions precedent have been complied with. Each certificate or opinion by or on behalf of the Company with respect to compliance with a condition or covenant provided for in this Indenture (other than certificates provided pursuant to Section 3.4 of this Indenture) shall include (1) a statement that the person XIV-1 making such certificate or opinion has read such covenant or condition; (2) a brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions contained in such certificate or opinion are based; (3) a statement that, in the opinion of such person, he has made such examination or investigation as is necessary to enable him to express an informed opinion as to whether or not such covenant or condition has been complied with; and (4) a statement as to whether or not, in the opinion of such person, such condition or covenant has been complied with. Any certificate, statement or opinion of an officer of the Company may be based, insofar as it relates to legal matters, upon a certificate or opinion of or representations by counsel, unless such officer knows that the certificate or opinion or representations with respect to the matters upon which his certificate, statement or opinion may be based as aforesaid are erroneous, or in the exercise of reasonable care should know that the same are erroneous. Any certificate, statement or Opinion of Counsel may be based, insofar as it relates to factual matters, upon information which is in the possession of the Company, upon the certificate, statement or opinion of or representations by an officer or officers of the Company, unless such counsel knows that the certificate, statement or opinion or representations with respect to the matters upon which his certificate, statement, or opinion may be based as aforesaid are erroneous, or in the exercise of reasonable care should know that the same are erroneous. Any certificate, statement or opinion of an officer of the Company or of counsel may be based, insofar as it relates to accounting matters, upon a certificate or opinion of or representations by an accountant or firm of accountants in the employ of the Company, unless such officer or counsel, as the case may be, knows that the certificate or opinion or representations with respect to the accounting matters upon which his certificate, statement or opinion may be based as aforesaid are erroneous, or in the exercise of reasonable care should know that the same are erroneous. Any certificate or opinion of any independent firm of public accountants filed with the Trustee shall contain a statement that such firm is independent. Section 14.7. If any Interest Payment Date or other payment date shall fall on a day other than a Business Day, then any payment or deposit by or on behalf of the Company required under the terms hereof to be made on such date may be made instead on the next succeeding Business Day with the same force and effect as if made on such date. Section 14.8. All notices to or demands upon the Trustee shall be in writing and may be served or presented, and such demands may be made, at the principal office of the Trustee, , attention: . Any notice to or demand upon the Company shall be deemed to have been sufficiently given or served by the Trustee or any Holder for all purposes, by being mailed by registered mail addressed to the Company, attention of the President, at 3711 Kennett Pike, Greenville, DE 19807, or at such other address as may be filed in writing by the Company with the Trustee. Section 14.9. All the covenants, promises and agreements in this Indenture contained by or on behalf of the Company, or by or on behalf of the Trustee, shall bind and inure to the benefit of their respective successors and assigns, whether so expressed or not. Section 14.10. The descriptive headings of the several Articles of this Indenture are inserted for convenience only and shall not control or affect the meaning or construction of any of the provisions hereof. Section 14.11. This Indenture may be simultaneously executed in any number of counterparts, each of which when so executed and delivered shall be an original; but such counterparts shall together constitute but one and the same instrument. Section 14.12. This Indenture shall be governed in accordance with the internal laws of the State of . XIV-2 In Witness Whereof, Sears Roebuck Acceptance Corp. has caused this Indenture to be signed in its corporate name by its , and its corporate seal to be affixed hereto and attested to by one of its and has caused this Indenture to be signed in its corporate name by one of its and impressed with its corporate seal, attested to by one of its , all as of the day and year first above written. Sears Roebuck Acceptance Corp. By ____________________________________ (Corporate Seal) Attest: - --------------------------------------- By ____________________________________ (Corporate Seal) Attest: - --------------------------------------- State of Delaware ) ) ss: County of New Castle ) I, , a Notary Public in and for the County and State aforesaid, do hereby certify that , the , and , , of Sears Roebuck Acceptance Corp., who are personally known to me to be the same persons whose names are subscribed to the foregoing Indenture as such and , appeared before me this day in person, and acknowledged that they signed, sealed and delivered the said Indenture as their free and voluntary act, and as the free and voluntary act of said Company for the uses and purposes therein set forth, and caused the corporate seal of said Company to be thereto affixed. Given under my hand and notarial seal, this day of . --------------------------------------- Notary Public My Commission Expires: [seal] State of ) ) ss: County of ) I, , a Notary Public in and for the County and State aforesaid, do hereby certify that , , and , , of , Trustee under the foregoing Indenture, who are personally known to me to be the same persons whose names are subscribed to the foregoing instrument as such and appeared before me this day in person, and acknowledged that they signed, sealed and delivered the said Indenture as their free and voluntary act, and as the free and voluntary act of said Corporation for the uses and purposes therein set forth, and caused the corporate seal of said Corporation to be thereto affixed. Given under my hand and notarial seal, this day of . --------------------------------------- Notary Public My Commission Expires: [seal] EX-4.B 3 CHASE INDENTURE Exhibit 4(b) CONFORMED COPY - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- SEARS ROEBUCK ACCEPTANCE CORP. AND THE CHASE MANHATTAN BANK, N.A., TRUSTEE ---------------- INDENTURE DATED AS OF MAY 15, 1995 ---------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- SEARS ROEBUCK ACCEPTANCE CORP. INDENTURE DATED AS OF MAY 15, 1995 ---------------- TABLE OF CONTENTS*
PAGE ---- Parties................................................................... 1 Recitals.................................................................. 1 ARTICLE I Definitions of Certain Terms Section 1.1. Definitions................................................. I-1 Affiliate................................................... I-1 Authenticating Agent........................................ I-1 Board....................................................... I-1 Business Day................................................ I-1 Certified Resolution........................................ I-1 Commission.................................................. I-1 Company..................................................... I-1 Currency.................................................... I-1 Defaulted Interest.......................................... I-1 Depository.................................................. I-1 Dollar...................................................... I-2 ECU......................................................... I-2 Eligible Obligations........................................ I-2 European Communities........................................ I-2 Fixed Charge Coverage and Ownership Agreement............... I-2 Fixed Charge Coverage Ratio................................. I-2 Foreign Currency............................................ I-2 Global Security............................................. I-2 Holder...................................................... I-3 Indenture................................................... I-3 Interest.................................................... I-3 Market Exchange Rate........................................ I-3 Maturity.................................................... I-3 Officers' Certificate....................................... I-3 Opinion of Counsel.......................................... I-3 Original Issue Discount Security............................ I-4 Outstanding................................................. I-4 Person...................................................... I-4 Redemption Date............................................. I-4 Redemption Price............................................ I-4 Regular Record Date......................................... I-4 Responsible Officer......................................... I-4 Sears....................................................... I-5 Securities.................................................. I-5 Security Register........................................... I-5 Special Record Date......................................... I-5
- -------- *This table of contents shall not, for any purpose, be deemed to be a part of the Indenture. i
PAGE ----- Stated Maturity.......................................... I-5 Subsidiary; Voting Stock................................. I-5 Trustee.................................................. I-5 U.S. Government Obligations.............................. I-6 Section 1.2. Trust Indenture Act definitions controlling.............. I-6 ARTICLE II The Securities Section 2.1. Amount Unlimited; Issuable in Series; Forms Generally; Form of Trustee's Certificate of Authentication......... II-1 Section 2.2. Denominations............................................ II-3 Section 2.3. Execution, Authentication, Delivery and Dating........... II-3 Section 2.4. Temporary Securities..................................... II-4 Section 2.5. Registration, Registration of Transfer and Exchange...... II-4 Section 2.6. Mutilated, Destroyed, Lost and Stolen Securities......... II-5 Section 2.7. Payment of Interest; Interest Rights Preserved........... II-5 Section 2.8. Persons Deemed Owners.................................... II-6 Section 2.9. Cancellation............................................. II-7 Section 2.10. Securities Issuable as a Global Security................. II-7 Section 2.11. Currency of Payments in Respect of Securities............ II-7 Section 2.12. Availability of Currency of Payment in Respect of Securities.............................................. II-8 ARTICLE III Covenants of the Company Section 3.1. Payment of principal and interest........................ III-1 Section 3.2. Maintenance of office or agency for notices and demands.. III-1 Section 3.3. File certain reports and information with the Trustee and the Securities and Exchange Commission.................. III-1 Transmit to Holders summaries of certain documents filed with the Trustee........................................ III-2 Furnish list of Holders to the Trustee................... III-2 Section 3.4. File statement by officers annually with the Trustee..... III-2 Section 3.5. Duties of paying agent................................... III-2 Section 3.6. Certain restrictions..................................... III-3 ARTICLE IV Redemption of Securities Section 4.1. Applicability of Article................................. IV-1 Section 4.2. Election to Redeem; Notice to Trustee.................... IV-1 Section 4.3. Selection by Trustee of Securities to Be Redeemed........ IV-1 Section 4.4. Notice of Redemption..................................... IV-1 Section 4.5. Deposit of Redemption Price.............................. IV-2 Section 4.6. Securities Payable on Redemption Date.................... IV-2 Section 4.7. Securities Redeemed in Part.............................. IV-2 ARTICLE V Sinking Funds Section 5.1. Applicability of Article................................. V-1 Section 5.2. Satisfaction of Sinking Fund Payments with Securities.... V-1 Section 5.3. Redemption of Securities for Sinking Fund................ V-1
ii
PAGE ------ ARTICLE VI Remedies Upon Default Section 6.1. Defaults defined--acceleration of maturity upon default--waiver of default............................ VI-1 Section 6.2. Covenant of Company to pay to Trustee whole amount due on default in payment of principal or interest-- Trustee may recover judgment for whole amount due-- application of moneys received by the Trustee......... VI-2 Section 6.3. Trustee may enforce rights of action without possession of Securities......................................... VI-4 Section 6.4. Delays or omissions not to impair any rights or powers accruing upon default................................. VI-4 Section 6.5. In event of default Trustee may protect and enforce its rights by appropriate proceedings--holders of a majority in principal amount of Securities of a particular series may waive default................... VI-4 Section 6.6. Holders of a majority in principal amount of Securities of a particular series may direct exercise of remedies.............................................. VI-5 Section 6.7. Limitation on suits by Holders......................... VI-5 Section 6.8. No Securities owned or held by or for the account of the Company to be deemed outstanding for purpose of payment or distribution............................... VI-5 Section 6.9. Company and Trustee restored to former position on discontinuance or abandonment of proceedings.......... VI-6 ARTICLE VII Concerning the Holders Section 7.1. Evidence of action by Holders.......................... VII-1 Section 7.2. Proof of execution of instruments and holding of Securities............................................ VII-1 Section 7.3. Who may be deemed owners of Securities................. VII-1 Section 7.4. Securities owned by Company or its affiliates disregarded for certain purposes...................... VII-2 Section 7.5. Action by Holders binds future Holders................. VII-2 ARTICLE VIII Immunity of Incorporators, Shareholders, Officers and Directors Section 8.1. No recourse against incorporators or others............ VIII-1 ARTICLE IX Merger, Consolidation or Sale Section 9.1. Merger, consolidation, sale or conveyance of property not prohibited except under certain conditions-- execution of supplemental indenture................... IX-1 Section 9.2. Rights and duties of successor corporation............. IX-1 Issuance of Securities by successor corporation........ IX-1 Section 9.3. Opinion of Counsel to Trustee.......................... IX-1 ARTICLE X Concerning the Trustee Section 10.1. Acceptance of Trust.................................... X-1 Trustee not relieved from liability for negligence or misconduct............................................ X-1 Trustee not responsible for validity or execution of Indenture or of Securities or for recitals in Indenture or Securities............................... X-1
iii
PAGE ----- Trustee may rely upon documents believed genuine--may consult with counsel--may accept officers' certificates--may require indemnity--not to be liable for action taken in good faith........................ X-2 Prior to default and after curing of defaults Trustee not bound to investigate unless requested by Holders of majority in principal amount of Securities of a series--may require indemnification................... X-2 Trustee may execute trusts or powers directly or by attorneys............................................. X-2 Section 10.2. Trustee to be entitled to compensation--Trustee not to be accountable for application of proceeds--moneys held by Trustee to be trust funds..................... X-2 Section 10.3. Trustee to give Holders notice of default.............. X-3 Section 10.4. Trustee acquiring conflicting interest must eliminate it or resign; Definition of conflicting interest; Definition of certain terms........................... X-3 Calculation of percentages of securities............... X-7 Section 10.5. Eligibility of Trustee................................. X-7 Section 10.6. Resignation or removal of Trustee...................... X-8 Section 10.7. Acceptance by successor Trustee........................ X-9 Section 10.8. Successor to Trustee by merger or consolidation........ X-9 Section 10.9. Limitations on right of Trustee as a creditor to obtain payment of certain claims............................. X-10 Section 10.10. Trustee to make annual report to Holders............... X-13 Trustee to make other reports to Holders............... X-13 Holders to whom reports to be transmitted.............. X-13 Section 10.11. Preservation of information by Trustee................. X-14 Trustee to give certain information to Holders upon application........................................... X-14 Section 10.12. Trustee or an Authenticating Agent may hold Securities and otherwise deal with Company....................... X-15 Section 10.13. Trustee may comply with any rule, regulation or order of the Securities and Exchange Commission............. X-15 Section 10.14. Authenticating Agent................................... X-15 ARTICLE XI Supplemental Indentures Section 11.1. Purposes for which supplemental indentures may be entered into without consent of Holders............... XI-1 Section 11.2. Modification of Indenture with consent of Holders of a majority in principal amount of Securities of any series................................................ XI-1 Section 11.3. Effect of supplemental indentures...................... XI-2 Section 11.4. Securities may bear notation of changes................ XI-2 Section 11.5. Trustee may rely upon Opinion of Counsel............... XI-3 Section 11.6. Instruments of further assurance....................... XI-3 ARTICLE XII Meetings of Holders Section 12.1. Purposes for which meetings may be called.............. XII-1 Section 12.2. Manner of calling meetings............................. XII-1 Section 12.3. Call of meetings by Company or Holders................. XII-1 Section 12.4. Who may attend and vote at meetings.................... XII-1 Section 12.5. Regulations may be made by Trustee--conduct of the meeting--voting rights--adjournment................... XII-2 Section 12.6. Manner of voting at meetings and record to be kept..... XII-2 Section 12.7. Exercise of rights of Trustee or Holders may not be hindered or delayed by call of meeting of Holders..... XII-3
iv
PAGE ------ ARTICLE XIII Satisfaction and Discharge of Indenture or Certain Obligations Section 13.1. Satisfaction and discharge of Indenture................ XIII-1 Section 13.2. Deposits for payment or redemption of Securities to be held in trust......................................... XIII-1 Section 13.3. Repayment of moneys held by Trustee; Repayment of moneys held by paying agent........................... XIII-2 Section 13.4. Defeasance of Securities of any series................. XIII-2 Section 13.5. Application of Trust Money............................. XIII-3 ARTICLE XIV Miscellaneous Provisions Section 14.1. Rights under Indenture limited to the parties and Holders of Securities................................. XIV-1 Section 14.2. Certificate of independent accountants conclusive...... XIV-1 Section 14.3. Remaining provisions not affected by invalidity of any other provisions--required provisions of Trust Indenture Act of 1939, as amended, to control......... XIV-1 Section 14.4. Company released from Indenture requirements if entitled to have Indenture cancelled.................. XIV-1 Section 14.5. Date of execution...................................... XIV-1 Section 14.6. Officers' certificates and Opinions of Counsel to be furnished Trustee..................................... XIV-1 Section 14.7. Payments and deposits due other than on a Business Day. XIV-2 Section 14.8. Presentation of notices and demands.................... XIV-2 Section 14.9. Successors and assigns bound by Indenture.............. XIV-2 Section 14.10. Descriptive headings for convenience only.............. XIV-2 Section 14.11. Indenture may be executed in counterparts.............. XIV-2 Section 14.12. Controlling law........................................ XIV-2 Testimonium............................................................ XIV-3 Signatures and Seals................................................... XIV-3 Acknowledgments........................................................ XIV-4
v SEARS ROEBUCK ACCEPTANCE CORP. RECONCILIATION AND TIE BETWEEN INDENTURE DATED AS OF MAY 15, 1995 AND TRUST INDENTURE ACT OF 1939, AS AMENDED
TRUST INDENTURE ACT SECTION INDENTURE SECTION 310(a)(1) 10.5 (a)(2) 10.5 (a)(3) Not applicable (a)(4) Not applicable (a)(5) 10.5 (b) 10.4, 10.5 (c) Not applicable 311(a) 10.9 (a), (c) (b) 10.9 (b) (c) Not applicable 312(a) 3.3 (d), 10.11 (b) 10.11 (c) 10.11 313(a) 10.10 (a) (b)(1) Not applicable (b)(2) 10.10 (b) (c) 10.10 (c) (d) 10.10 (c) 314(a)(1) 3.3 (a) (a)(2) 3.3 (b) (a)(3) 3.3 (c) (a)(4) 3.4 (b) Not applicable (c) 14.6 (d) Not applicable (e) 14.6 (f) Not required 315(a)(1) 10.1 (a), (b) (a)(2) 10.1 (a), (b), (d) (b) 10.3 (c) 10.1 (a) (d) 10.1 (a), (b) (e) 6.7 316(a)(1A) 6.6 (a)(1B) 6.5 (a)(2) Not required (b) 6.7 (c) 7.1 317(a)(1) 6.2 (a)(2) 6.2 (b) 3.5 318(a) 14.3
Note: This reconciliation and tie shall not, for any purpose, be deemed to be a part of the Indenture. vi INDENTURE, dated as of the 15th day of May, 1995, between Sears Roebuck Acceptance Corp. (hereinafter called the "Company"), a corporation organized and existing under the laws of the State of Delaware, and The Chase Manhattan Bank, N.A. (hereinafter called the "Trustee"), a national banking association organized and existing under the laws of the United States, as Trustee: Recitals of the Company The Company has duly authorized the execution and delivery of this Indenture to provide for the issuance from time to time of its unsecured debentures, notes or other evidences of indebtedness (herein called the "Securities"), to be issued in one or more series as in this Indenture provided. All things necessary to make this Indenture a valid agreement of the Company, in accordance with its terms, have been done. Now, Therefore, This Indenture Witnesseth: For and in consideration of the premises and the purchase of the Securities by the Holders thereof, it is mutually covenanted and agreed, for the equal and proportionate benefit of all Holders of the Securities or of series thereof, as follows: 1 ARTICLE I Definitions of Certain Terms Section 1.1. Unless the context otherwise requires, the terms defined in this Article I shall for all purposes of this Indenture and of any indenture supplemental hereto have the meaning herein specified, the following definitions to be equally applicable to both the singular and plural forms of any of the terms herein defined: Affiliate An "Affiliate" of a specified Person shall mean another Person directly or indirectly controlling or controlled by or under direct or indirect common control with such first Person. Authenticating Agent The term "Authenticating Agent" shall mean any Authenticating Agent appointed by the Trustee pursuant to Section 10.14. Board The term "Board" or "Board of Directors" shall mean the Board of Directors of the Company or the Executive Committee of such Board. Business Day The term "Business Day" shall mean each Monday, Tuesday, Wednesday, Thursday and Friday which is not a legal holiday for banking institutions in any of the City of Wilmington, the City of Chicago, The City of New York or the city in which the principal corporate trust office of the Trustee is located. Certified Resolution The term "Certified Resolution" shall mean a copy of a resolution certified by the Secretary or an Assistant Secretary of the Company to have been duly adopted by the Board of Directors and to be in full force and effect on the date of such certification. Commission The term "Commission" shall mean the Securities and Exchange Commission. Company The term "Company" shall mean Sears Roebuck Acceptance Corp. and, subject to the provisions of Article IX, shall also include its successors and assigns. Currency The term "Currency" shall mean Dollars or Foreign Currency. Defaulted Interest The term "Defaulted Interest" shall have the meaning specified in Section 2.7. Depository The term "Depository" shall mean, with respect to Securities of any series for which the Company shall determine that such Securities will be issued in whole or in part as one or more Global Securities, The Depository Trust Company, New York, New York, another I-1 clearing agency or any successor registered under the Securities Exchange Act of 1934, as amended, or other applicable statute or regulation, which, in each case, shall be designated by the Company pursuant to either Section 2.1 or 2.10. Dollar The term "Dollar" shall mean the currency issued by the government of the United States. ECU The term "ECU" shall mean the European Currency Unit as defined and revised from time to time by the Council of the European Communities. Eligible Obligations The term "Eligible Obligations" shall mean obligations as a result of the deposit of which (along with the simultaneous deposit, if any, of money or U.S. Government Obligations or both) the relevant series of Securities will be rated in the highest generic long term debt rating category assigned by one or more nationally recognized rating agencies to debt with respect to which the issuer thereof has been released from its obligations to the same extent that the Company has been released from its obligations under this Indenture pursuant to Section 13.4 hereof. European Communities The term "European Communities" shall mean the European Economic Community, the European Coal and Steel Community and the European Atomic Energy Community. Fixed Charge Coverage and Ownership Agreement The term "Fixed Charge Coverage and Ownership Agreement" shall mean the letter agreement between the Company and Sears dated May 15, 1995. Fixed Charge Coverage Ratio The term "Fixed Charge Coverage Ratio" shall mean, for any period, the Company's ratio of earnings to fixed charges, determined for such period in accordance with Item 503(d) of Regulation S-K promulgated by the Commission, as in effect on the date hereof. Foreign Currency The term "Foreign Currency" shall mean either (i) a currency issued by the government of any country other than the United States or (ii) ECU's or another composite currency the value of which is determined by reference to the values of the currencies of any group of countries. Global Security The term "Global Security" shall mean, with respect to any series of Securities, a Security executed by the Company and authenticated and held by the Trustee as agent for the Depository or delivered pursuant to the Depository's instruction, all in accordance with this Indenture and pursuant to a Company order, which (i) shall be registered in the name of the Depository or its nominee and (ii) shall constitute, and shall be denominated in an amount equal to the aggregate principal amount of, all or part of the Outstanding Securities of such series. I-2 Holder The terms "Holder", "Holder of Securities" or other similar terms, shall mean the person in whose name a particular Security shall be registered on the books of the Company kept for that purpose in accordance with the terms hereof, and the word "majority", used in connection with the terms "Holder", "Holder of Securities", or other similar terms, shall signify the "majority in principal amount" whether or not so expressed. Indenture The term "Indenture" shall mean this instrument as originally executed or, if amended or supplemented as herein provided, as so amended or supplemented, and shall include the terms of particular series of Securities established as contemplated by Section 2.1. Interest The term "Interest", when used with respect to an Original Issue Discount Security which by its terms bears interest only after Maturity, shall mean interest payable after Maturity. Interest Payment Date The term "Interest Payment Date", when used with respect to any Security, shall mean the Stated Maturity of any installment of interest on the Security. Market Exchange Rate The "Market Exchange Rate" on a given date for a given foreign currency shall mean 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 shall mean 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). Maturity The term "Maturity", when used with respect to any Security, shall mean the date on which the principal of such Security or an installment of principal becomes due and payable as therein or herein provided, whether at Stated Maturity or by declaration of acceleration, call for redemption or otherwise. Officers' Certificate The term "Officers' Certificate" shall mean a certificate signed by the Chairman of the Board, the Chief Executive Officer, the President or any Vice President and by the Vice President, Finance, Treasurer or any Assistant Treasurer or the Secretary or any Assistant Secretary of the Company. Opinion of Counsel The term "Opinion of Counsel" shall mean an opinion in writing signed by legal counsel (who may be counsel to the Company) acceptable to the Trustee. Original Issue Discount Security The term "Original Issue Discount Security" shall mean any Security which provides for an amount less than the principal amount thereof to be due and payable upon a declaration of acceleration of the Maturity thereof pursuant to Section 6.1. I-3 Outstanding The term "outstanding" or "principal amount outstanding", when used with respect to the Securities, shall not, except as otherwise provided herein, include (i) Securities held by the Company in its treasury, or (ii) Securities for the payment or redemption of which moneys in the necessary amount shall have been deposited in trust with the Trustee, provided that if such Securities are to be redeemed prior to the Maturity thereof, notice of such redemption shall have been duly given or provision satisfactory to the Trustee shall have been made for giving such notice, or (iii) Securities in lieu of or in substitution for which other Securities shall have been authenticated and delivered pursuant to the terms of Section 2.3, or (iv) Securities theretofore cancelled by the Trustee or delivered to the Trustee for cancellation. The term "outstanding" or "principal amount outstanding", when used with respect to indebtedness other than the Securities, shall not include any such indebtedness held by the Company in its treasury or for the payment or redemption of which moneys in the necessary amount shall have been deposited in trust or set aside and segregated in trust by the Company, provided that, if such other indebtedness is to be redeemed prior to the maturity thereof, any notice of such redemption required by the terms thereof shall have been duly given or provision satisfactory to the trustee shall have been made for giving such notice. Person The term "Person" shall mean an individual, corporation, partnership, joint venture, association, joint stock company, trust, unincorporated organization or government or any agency or political subdivision thereof. Redemption Date The term "Redemption Date", when used with respect to any Security to be redeemed, shall mean the date fixed for such redemption by or pursuant to this Indenture. Redemption Price The term "Redemption Price" shall mean the amount payable for the redemption of any Security on the Redemption Date, and shall always include interest accrued and unpaid to the Redemption Date, unless otherwise specifically provided. Regular Record Date The term "Regular Record Date" for the interest payable on any Interest Payment Date on the Securities of any series shall mean the date specified for that purpose as contemplated by Section 2.1. Responsible Officer The term "Responsible Officer", when used with respect to the Trustee, shall mean the chairman of the board of directors, the president, every vice president (whether or not designated by a number or a word or words added before or after the title "vice president"), the secretary, every trust officer, every assistant secretary or any other officer or assistant officer of the Trustee customarily performing functions similar to those performed by the persons who at the time shall be such officers, or to whom any corporate trust matter is referred because of his knowledge of and familiarity with the particular subject. Sears The term "Sears" shall mean Sears, Roebuck and Co. I-4 Securities The term "Securities" shall mean any Securities authenticated and delivered under this Indenture. Security Register The term "Security Register" shall have the meaning specified in Section 2.5. Special Record Date The term "Special Record Date" for the payment of any Defaulted Interest shall mean a date fixed by the Trustee pursuant to Section 2.7. Stated Maturity The term "Stated Maturity", when used with respect to any Security or any installment of interest thereon, shall mean the date specified in such Security as the fixed date on which the principal of such Security or such installment of interest is due and payable. Subsidiary; Voting Stock The term "Subsidiary" shall mean any corporation of which shares of Voting Stock entitled to elect a majority of the directors are at the time owned directly or indirectly by the Company and its other Subsidiaries. The term "Voting Stock" shall mean outstanding shares of stock having voting power for the election of directors, whether at all times or only so long as no senior class of stock has such voting power because of default in dividends or some other default. Trustee The term "Trustee" shall mean the party named as such above until a successor becomes such pursuant hereto and thereafter shall mean or include each party who is then a trustee hereunder, and if at any time there is more than one such party, "Trustee" as used with respect to the Securities of any series shall mean the Trustee with respect to Securities of that series. If Trustees with respect to different series of Securities are trustees hereunder, nothing herein shall constitute the Trustees as co-trustees of the same trust, and each Trustee shall be the trustee of a trust separate and apart from any trust administered by any other Trustee with respect to a different series of Securities. U.S. Government Obligations The term "U.S. Government Obligations" shall mean securities which are (i) direct obligations of the United States of America for the payment of which its full faith and credit is pledged or (ii) obligations of a Person controlled or supervised by and acting as an agency or instrumentality of the United States of America the payment of which is unconditionally guaranteed as a full faith and credit obligation by the United States of America, which, in either case, are not callable or redeemable at the option of the issuer thereof, and shall also include a depository receipt issued by a bank or trust company as custodian with respect to any such U.S. Government Obligations or a specific payment of interest on or principal of any such U.S. Government Obligations held by such custodian for the account of the holder of a depository receipt; provided that (except as required by law) such custodian is not authorized to make any deduction from the amount payable to the holder of such depository receipt from any amount received by the custodian in respect of the U.S. Government Obligations or the specific payment of interest on or principal of the U.S. Government Obligations evidenced by such depository receipt. I-5 Section 1.2. All terms used in this Indenture which are defined in the Trust Indenture Act of 1939, as amended, or which are by reference therein defined in the Securities Act of 1933, as amended (except as herein otherwise expressly provided or unless the context otherwise requires), shall have the meanings assigned to such terms in the Trust Indenture Act of 1939, as amended, and the Securities Act of 1933, as amended, as they were respectively in force at the date of this Indenture. I-6 ARTICLE II The Securities Section 2.1. (a) The aggregate principal amount of Securities which may be authenticated and delivered under this Indenture is unlimited. The Securities may be issued in one or more series. There shall be established in or pursuant to a resolution of the Board and set forth in an Officers' Certificate, or established in one or more indentures supplemental hereto, prior to the issuance of Securities of any series, (1) the title of the Securities of the series (which shall distinguish the Securities of the series from all other Securities); (2) any limit upon the aggregate principal amount of the Securities of the series which may be authenticated and delivered under this Indenture (except for Securities authenticated and delivered upon registration of transfer of, or in exchange for, or in lieu of, other Securities of the series pursuant to Section 2.4, 2.5, 2.6, 4.7 or 11.4); (3) the date or dates on which the principal of the Securities of the series is payable; (4) the rate or rates (which may be fixed or variable) per annum at which the Securities of the series shall bear interest, if any, the date or dates from which such interest shall accrue, the date or dates on which payment of such interest shall commence, the Interest Payment Dates on which such interest shall be payable and the Regular Record Date for the interest payable on any Interest Payment Date; (5) if other than as set forth in Section 3.2, the place or places where the principal of (and premium, if any, on) and interest, if any, on Securities of the series shall be payable; (6) the period or periods within which, the price or prices at which and the terms and conditions upon which Securities of the series may be redeemed, in whole or in part, at the option, or as an obligation, of the Company; (7) the obligation or right, if any, of the Company to redeem or purchase Securities of the series pursuant to any sinking fund or analogous provisions or at the option of a Holder thereof and the period or periods within which, the price or prices at which and the terms and conditions upon which Securities of the series shall be redeemed or purchased, in whole or in part, pursuant to such obligation or right; (8) the terms, if applicable, of conversion or exchange for other securities, at the option of the Company or the Holder, of Securities of the series; (9) any subordination provisions; (10) if other than denominations of $1,000 and any integral multiple thereof, the denominations in which Securities of the series shall be issuable; (11) if other than the principal amount thereof, the portion of the principal amount of Securities of the series which shall be payable upon declaration of acceleration of the Maturity thereof pursuant to Section 6.1; (12) the terms of any warrants attached to the Securities of the series; (13) the currency or currencies, including ECU or other composite currencies, in which the Securities may be purchased and in which principal of (and premium, if any) and interest, if any, on the Securities of the series shall be payable (if other than Dollars); II-1 (14) if the amount of payments of principal of (and premium, if any) or interest, if any, on the Securities of the series may be determined with reference to an index, the manner in which such amounts shall be determined; (15) provisions, if any, for the defeasance of Securities of a particular series (including provisions permitting defeasance of less than all Securities of a particular series), which provisions may be in addition to, in substitution for, in subtraction from, or in modification of (or any combination of the foregoing) the provisions of Article Thirteen; (16) whether the Securities of the series are issuable in whole or in part as one or more Global Securities and, in such case, the identity of the Depository for such Global Security or Securities; and (17) any other terms of the series (which terms shall not be inconsistent with the provisions of this Indenture but which may modify or delete any such provision of this Indenture insofar as it applies to such series; provided that no term thereof shall be modified or deleted if imposed by operation of subsection (c) of Section 318 of the Trust Indenture Act of 1939, as amended, and provided further that any modification or deletion of the rights, duties or immunities of the Trustee shall have been consented to in writing by the Trustee). If any of the foregoing terms are not available at the time such resolutions are adopted, or such Officers' Certificate or any supplemental indenture is executed, such resolutions, Officers' Certificate or supplemental indenture may reference the document or documents to be created in which such terms will be set forth prior to the issuance of such Securities. All Securities of any one series shall be substantially identical except as to denomination and except as may otherwise be provided in or pursuant to such resolution of the Board and set forth in such Officers' Certificate or in any such indenture supplemental hereto. If any of the terms of the series are established by action taken pursuant to a resolution of the Board, a copy of an appropriate record of such action shall be included in the Officers' Certificate setting forth the terms of the series. (b) The Securities of each series shall be in substantially the form as shall be established by or pursuant to a resolution of the Board or in one or more indentures supplemental hereto, in each case with such appropriate insertions, omissions, substitutions and other variations as are required or permitted by this Indenture, and may have such letters, numbers or other marks of identification and such legends or endorsements placed thereon as may be required to comply with any law or with any rules made pursuant thereto or with any rules of any securities exchange or as may, consistently herewith, be determined by the officers executing such Securities, as evidenced by their execution of the Securities. The definitive Securities shall be printed, lithographed or engraved on steel engraved borders or may be produced in any other manner, all as determined by the officers executing such Securities, as evidenced by their execution of such Securities. (c) The Trustee's certificate of authentication on all Securities shall be in substantially the following form: This is one of the Securities of the series referred to in the within- mentioned Indenture. , as Trustee By __________________________________ Authorized Officer II-2 Section 2.2. The Securities of each series shall be issuable in registered form without coupons in such denominations as shall be specified as contemplated by Section 2.1. In the absence of any contrary provisions with respect to the Securities of any series, the Securities of such series shall be issuable in denominations of $1,000 and any integral multiple thereof and shall be payable only in Dollars. Section 2.3. The Securities shall be executed on behalf of the Company by any two of its Chairman of the Board, its Chief Executive Officer, its President or one of its Vice Presidents, under its corporate seal reproduced thereon. The signature of any of these officers on the Securities may be manual or facsimile. Securities bearing the manual or facsimile signatures of individuals who were at any time the proper officers of the Company shall bind the Company, notwithstanding that such individuals or any of them have ceased to hold such offices prior to the authentication and delivery of such Securities or did not hold such offices at the date of such Securities. At any time and from time to time after the execution and delivery of this Indenture, the Company may deliver Securities of any series executed by the Company to the Trustee for authentication, together with a written order of the Company signed by its Chairman of the Board, its Chief Executive Officer, its President or one of its Vice Presidents for the authentication and delivery of such Securities, and the Trustee in accordance with such order shall authenticate and deliver such Securities. If the form or terms of the Securities of the series have been established in or pursuant to one or more resolutions of the Board as permitted by Section 2.1, in authenticating such Securities, and accepting the additional responsibilities under this Indenture in relation to such Securities, the Trustee shall be entitled to receive, and (subject to Section 10.1) shall be fully protected in relying upon, an Opinion of Counsel stating, (a) if the form and terms of such Securities have been established by or pursuant to a resolution of the Board as permitted by Section 2.1, that such form and terms have been established in conformity with the provisions of this Indenture; and (b) that such Securities, when authenticated and delivered by the Trustee and issued by the Company in the manner and subject to any conditions specified in such Opinion of Counsel, will constitute valid and binding obligations of the Company in accordance with their terms, subject to insolvency, bankruptcy, reorganization and other laws relating to or affecting the enforcement of creditors' rights or by general equity principles. The Trustee shall have the right to decline to authenticate and deliver any Securities under this Section if the Trustee, being advised by counsel, determines that such action may not lawfully be taken or if the Trustee in good faith by its board of directors or trustees, executive committee, or a trust committee of directors or trustees and/or responsible officers shall determine (i) that such action would expose the Trustee to liability to existing Holders, or (ii) in the case of Securities designated pursuant to one or more resolutions of the Board as permitted by Section 2.1, that such action would affect the Trustees' own rights, duties or immunities under this Indenture or otherwise. Each Security shall be dated the date of its authentication. No Security shall be entitled to any benefit under this Indenture or be valid or obligatory for any purpose unless there appears on such Security a certificate of authentication substantially in the form provided for herein executed by the Trustee by manual signature, and such certificate upon any Security shall be conclusive evidence, and the only evidence, that such Security has been duly authenticated and delivered hereunder and is entitled to the benefits of this Indenture. II-3 Section 2.4. Pending the preparation of definitive Securities of any series, the Company may execute, and upon a written order of the Company signed by its Chairman of the Board, its Chief Executive Officer, its President or one of its Vice Presidents, the Trustee shall authenticate and deliver, temporary Securities which are printed, lithographed, typewritten, mimeographed or otherwise produced, in any authorized denomination, substantially of the tenor of the definitive Securities in lieu of which they are issued and with such appropriate insertions, omissions, substitutions and other variations as the officers executing such Securities may determine, as evidenced by their execution of such Securities. If temporary Securities of any series are issued, the Company will cause definitive Securities of that series to be prepared without unreasonable delay. After the preparation of definitive Securities of such series, the temporary Securities of such series shall be exchangeable for definitive Securities of such series, without charge to the Holder, upon surrender of the temporary Securities of such series at the office or agency of the Company for that series to be maintained in accordance with the provisions of Section 3.2. Upon surrender for cancellation of any one or more temporary Securities of any series the Company shall execute and the Trustee shall authenticate and deliver in exchange therefor a like principal amount of definitive Securities of the same series of authorized denominations. Until so exchanged the temporary Securities of any series shall in all respects be entitled to the same benefits under this Indenture as definitive Securities of such series. Section 2.5. The Company shall keep or cause to be kept a register for each series of Securities issued hereunder (herein called a "Security Register") at any office or agency of the Company to be maintained in accordance with the provisions of Section 3.2 in which, subject to such reasonable regulations as it may prescribe, the Company shall provide for the registration of Securities and of transfers of Securities. The Security Register shall be in written form or capable of being converted into written form within a reasonable time. Unless otherwise specifically designated by the Company in a written notice to the Trustee, the Security Register shall be maintained at the principal corporate trust office of the Trustee. Upon surrender for registration of transfer of any Security of any series at the office or agency for that series to be maintained in accordance with the provisions of Section 3.2, the Company shall execute, and the Trustee shall authenticate and deliver, in the name of the designated transferee or transferees, one or more Securities of the same series, of any authorized denominations and of a like aggregate principal amount and Stated Maturity and bearing a number not contemporaneously outstanding. At the option of the Holder, Securities of any series may be exchanged for other Securities of the same series, of any authorized denominations and of a like aggregate principal amount and Stated Maturity and bearing a number not contemporaneously outstanding upon surrender of the Securities to be exchanged at such office or agency. Whenever any Securities are so surrendered for exchange, the Company shall execute, and the Trustee shall authenticate and deliver, the Securities which the Holder making the exchange is entitled to receive. All Securities issued upon any registration of transfer or exchange of Securities shall be the valid obligations of the Company, evidencing the same debt, and entitled to the same benefits under this Indenture, as the Securities surrendered upon such registration of transfer or exchange. Every Security presented or surrendered for registration of transfer or for exchange shall be duly endorsed, or be accompanied by a written instrument of transfer in form satisfactory to the Company duly executed, by the Holder thereof or his attorney duly authorized in writing. II-4 No service charge shall be made for any registration of transfer or exchange of Securities, but the Company may require payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in connection with any registration of transfer or exchange of Securities, other than exchanges pursuant to Sections 2.4, 4.7 or 11.4, not involving any transfer. The Company shall not be required (i) to issue, register the transfer of or exchange Securities of any series during a period beginning at the opening of business 15 days before the day of the mailing of a notice of redemption of Securities of that series selected for redemption under Section 4.3 and ending at the close of business on the day of such mailing, or (ii) to register the transfer of or exchange any Security theretofore designated for redemption in whole or in part, except the unredeemed portion of any Security being redeemed in part. Section 2.6. If any mutilated Security is surrendered to the Trustee, the Company shall execute and the Trustee shall authenticate and deliver in exchange therefor a Security of the same series and principal amount and Stated Maturity and bearing a number not contemporaneously outstanding. If there shall be delivered to the Company and the Trustee (i) evidence to their satisfaction of the destruction, loss or theft of any Security and (ii) such security or indemnity as may be required by them to save each of them and any agent of either of them harmless, then, in the absence of notice to the Company or the Trustee that such Security has been acquired by a bona fide purchaser, the Company shall execute and upon its request the Trustee shall authenticate and deliver, in lieu of any such destroyed, lost or stolen Security, a Security of the same series and principal amount and Stated Maturity and bearing a number not contemporaneously outstanding. In case any such mutilated, destroyed, lost or stolen Security has become or is about to become due and payable, the Company in its discretion may, instead of issuing a Security in substitution of such Security, pay such Security, provided the conditions set forth in the next preceding paragraph are satisfied. Upon the issuance of any Security pursuant to this Section, the Company may require the payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in relation thereto and any other expenses, including counsel fees, of the Company and the Trustee, any Authenticating Agent, and any paying agent or Security registrar connected therewith and in addition a further sum not exceeding two dollars for each Security so issued in substitution. Every Security of any series issued pursuant to this Section in lieu of any destroyed, lost or stolen Security shall constitute an original additional contractual obligation of the Company, whether or not the destroyed, lost or stolen Security shall be at any time enforceable by anyone, and shall be entitled to all the benefits of this Indenture equally and proportionately with any and all other Securities of that series duly issued hereunder. The provisions of this Section are exclusive and shall preclude (to the extent lawful) all other rights and remedies with respect to the replacement or payment of mutilated, destroyed, lost or stolen securities. Section 2.7. Each installment of interest on any Security which is payable, and is punctually paid or duly provided for, on any Interest Payment Date shall be paid only to or upon the written order of the Person in whose name that Security is registered at the close of business on the Regular Record Date for such interest. II-5 Any interest on any Security of any series which is payable, but is not punctually paid or duly provided for, on any Interest Payment Date (herein called "Defaulted Interest") shall forthwith cease to be payable to the Holder on the relevant Regular Record Date by virtue of having been such Holder, and such Defaulted Interest may be paid by the Company, at its election in each case, as provided in Clause (1) or (2) below: (1) the Company may elect to make payment of any Defaulted Interest to the Persons in whose names the Securities of such series are registered at the close of business on a Special Record Date for the payment of such Defaulted Interest, which shall be fixed in the following manner: (a) the Company shall notify the Trustee in writing of the amount of Defaulted Interest proposed to be paid on each Security of such series and the date of the proposed payment which shall be at least 20 days from the date of such notice, and at the same time the Company shall deposit with the Trustee an amount of money equal to the aggregate amount proposed to be paid in respect of such Defaulted Interest or shall make arrangements satisfactory to the Trustee for such deposit prior to the date of the proposed payment, such money when deposited to be held in trust for the benefit of the Persons entitled to such Defaulted Interest as in this Clause provided; (b) thereupon the Trustee shall fix a Special Record Date for the payment of such Defaulted Interest which shall be not more than 15 days and not less than 10 days prior to the date of the proposed payment and not less than 10 days after the receipt by the Trustee of the notice of the proposed payment; and (c) the Trustee shall promptly notify the Company of such Special Record Date and, in the name and at the expense of the Company, shall cause notice of the proposed payment of such Defaulted Interest and the Special Record Date therefor to be mailed, first-class postage prepaid, to each Holder of Securities of such series at his address as it appears in the Security Register, not less than 10 days prior to such Special Record Date. Notice of the proposed payment of such Defaulted Interest and the Special Record Date therefor having been so mailed, such Defaulted Interest shall be paid to the Persons in whose names the Securities of such series are registered at the close of business on such Special Record Date; or (2) the Company may make payment of any Defaulted Interest on the Securities of any series in any other lawful manner not inconsistent with the requirements of any securities exchange on which such Securities may be listed, and upon such notice as may be required by such exchange, if, after notice given by the Company to the Trustee of the proposed payment pursuant to this Clause, such manner of payment shall be deemed practicable by the Trustee. Subject to the foregoing provisions of this Section, each Security delivered under this Indenture upon registration of transfer of or in exchange for or in lieu of any other Security shall carry the rights to interest accrued and unpaid, and to accrue, which were carried by such other Security. Section 2.8. Prior to due presentment of a Security for registration of transfer, the Company, the Trustee and any agent of the Company or the Trustee may treat the Person in whose name such Security is registered upon the Security Register as the owner of such Security for the purpose of receiving payment of principal of (and premium, if any, on) and (subject to Section 2.7) interest on such Security and for all other purposes whatsoever, whether or not such Security be overdue, and neither the Company, the Trustee nor any agent of the Company or the Trustee shall be affected by notice to the contrary. Notwithstanding the foregoing, nothing herein shall prevent the Company, the Trustee, or any agent of the Company or the Trustee from giving effect to any written certification, proxy or other authorization furnished by the Depository or its nominee, or impair, as between the Depository and holders of beneficial interests in any Global Security, the II-6 operation of customary practices governing the exercise of the rights of the Depository as holder of such Global Security, including without limitation the granting of proxies or other authorization, direction, notice, consent, waiver or other action which a Holder is entitled to give or take under this Indenture. Section 2.9. All Securities surrendered for payment, redemption, registration of transfer or exchange or for credit against any sinking fund payment shall be delivered to the Trustee and shall be promptly cancelled by it. The Company may at any time deliver to the Trustee for cancellation any Securities previously authenticated and delivered hereunder which the Company may have acquired in any manner whatsoever, and all Securities so delivered shall be promptly cancelled by the Trustee. No Securities shall be authenticated in lieu of or in exchange for any Securities cancelled as provided in this Section, except as expressly permitted by this Indenture. All cancelled Securities held by the Trustee shall be disposed of as directed by a written order of the Company signed by its Chairman of the Board, its President or one of its Vice Presidents. Section 2.10. (a) If the Company shall establish pursuant to Section 2.1 that the Securities of a particular series are to be issued in whole or in part as one or more Global Securities, then the Company shall execute and the Trustee shall, in accordance with Section 2.3 and the order of the Company delivered to the Trustee thereunder, authenticate and deliver, one or more Global Securities which (i) shall constitute, and shall be denominated in an amount equal to the aggregate principal amount of, all or part of the outstanding Securities of such series, (ii) shall be registered in the name of the Depository or its nominee, (iii) shall be held by the Trustee as agent for the Depository or delivered pursuant to the Depository's instruction and (iv) shall bear a legend substantially to the following effect: "Except as otherwise provided in Section 2.10 of the Indenture, this Security 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." (b) Notwithstanding any other provision (other than Section 2.10(c)) of this Section 2.10 or of Section 2.5, the Global Securities of a series may be transferred, in whole but not in part and in the manner provided in Section 2.5, only to another nominee of the Depository for such series, or to a successor Depository for such series selected or approved by the Company or to a nominee of such successor Depository. (c) If (i) the Company advises the Trustee in writing that the Depository is no longer willing or able to discharge properly its responsibilities with respect to any Securities of any series represented by one or more Global Securities, and the Trustee or the Company is unable to locate a qualified successor, or (ii) the Company, at its option, advises the Trustee in writing that it has determined that any Securities of any series represented by one or more Global Securities shall no longer be represented by one or more Global Securities, then in either event the Company will execute, and the Trustee, upon receipt of an Officers' Certificate evidencing such determination by the Company, will authenticate and deliver, Securities of such series in definitive registered form without coupons, in authorized denominations, and in an aggregate principal amount equal to the principal amount of such Global Securities in exchange for such Global Securities. Upon the exchange of Global Securities for such Securities in definitive registered form without coupons, in authorized denominations, the Global Securities shall be cancelled by the Trustee and the provisions of this Section 2.10 shall no longer be applicable to such Securities. Such Securities in definitive registered form issued in exchange for Global Securities pursuant to this Section 2.10(c) shall be registered in such names and in such authorized denominations as the Depository, pursuant to instructions from its direct or indirect participants or otherwise, shall instruct the Trustee. The Trustee shall deliver such Securities to the Persons in whose names such Securities are so registered. II-7 Section 2.11. (a) Except as otherwise specified pursuant to Section 2.1, payment of the principal of (and premium, if any) and interest on Securities of any series will be made in Dollars. (b) For purposes of any provision of this Indenture where the Holders of outstanding Securities of a series may perform an act which requires that a specified percentage of the outstanding Securities of such series perform such act and for purposes of any decision or determination by the Trustee of amounts due and unpaid for the principal (and premium, if any) and interest on the outstanding Securities of such series in respect of which moneys are to be disbursed ratably, the principal of (and premium, if any) and interest on the outstanding Securities of such series denominated in a Foreign Currency will be the amount in Dollars based upon the Market Exchange Rate for such Foreign Currency on the latest date for which such rate was established on or before the date for determining the Holders entitled to perform such act, or the date of such decision or determination by the Trustee, as the case may be. Section 2.12. If the principal of (and premium, if any) and interest on any Securities is payable in a Foreign Currency and such Foreign Currency is not available for payment due to the imposition of exchange controls or other circumstances beyond the control of the Company, then the Company shall be entitled to satisfy its obligations to Holders under this Indenture by making such payment in Dollars on the basis of the Market Exchange Rate for such Foreign Currency on the latest date for which such rate was established on or before the date on which payment is due. Any payment made pursuant to this Section 2.12 in Dollars where the required payment is in a Foreign Currency shall not constitute a default under this Indenture. II-8 ARTICLE III Covenants of the Company Subject to the provisions of Section 13.4, so long as Securities are outstanding hereunder, the Company covenants for the benefit of each series of Securities that: Section 3.1. The Company will punctually pay the principal (premium, if any) and interest, if any, to become due in respect of all the Securities of that series according to the terms of the Securities of that series and this Indenture. Such interest on Securities shall be payable without presentation of such Securities and (subject to the provisions of Section 2.7) only to or upon the written order of the Holders of such Securities. Except as otherwise specified as contemplated by Section 2.1 for Securities of any series, payments of interest shall be made 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 for that series, or at any one or more of the offices or agencies of the Company maintained in accordance with Section 3.2. Section 3.2. The Company will maintain in the Borough of Manhattan of The City of New York, and may maintain 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, an office or agency where, except as otherwise provided herein, the Securities of that series may be presented for payment, an office or agency where the Securities of that series may be presented for registration of transfer and for exchange as provided in this Indenture and an office or agency where notices and demands to or upon the Company in respect of such Securities or of this Indenture may be served. Until otherwise designated by the Company in a written notice to the Trustee, such office or agency in the Borough of Manhattan of The City of New York for all of the above purposes shall be 1 Chase Plaza, New York, New York 10081, Attention: Institutional Trust Window. Section 3.3. The Company will: (a) file with the Trustee, within 15 days after the Company is required to file the same with the Commission, copies of the annual reports and of the information, documents and other reports which the Company may be required to file with the Commission pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of 1934, as amended (or copies of such portions thereof as may be prescribed by the Commission under the provisions of the Trust Indenture Act of 1939, as amended); or, if the Company is not required to file with the Commission information, documents or reports pursuant to either Section 13 or Section 15(d) of the Securities Exchange Act of 1934, as amended, then the Company will file with the Trustee and will file with the Commission, in accordance with rules and regulations prescribed by the Commission, such of the supplementary and periodic information, documents and reports required pursuant to Section 13 of the Securities Exchange Act of 1934, as amended, in respect of a security listed and registered on a national securities exchange as may be prescribed in such rules and regulations; (b) file with the Trustee and the Commission, in accordance with the rules and regulations prescribed from time to time by the Commission, such additional information, documents and reports with respect to compliance by the Company with the conditions and covenants provided for in this Indenture as may be required by such rules and regulations, including, in the case of annual reports, if required by such rules and regulations, certificates or opinions of independent public accountants, conforming to the requirements of Section 14.6, as to compliance with conditions or covenants, compliance with which is subject to verification by accountants; III-1 (c) transmit to the Holders of that series of Securities, in the manner and to the extent provided in Subdivision (c) of Section 10.10 hereof, such summaries of any information, documents and reports required to be filed with the Trustee pursuant to the provisions of Subdivisions (a) and (b) of this Section 3.3 as may be required by the rules and regulations of the Commission under the provisions of the Trust Indenture Act of 1939, as amended; and (d) furnish or cause to be furnished to the Trustee semi-annually not later than each Interest Payment Date for each series of Securities, provided that interest on such Securities is payable at least semi- annually, and at such other times as the Trustee may request in writing, within 30 days after receipt by the Company of any such request, a list in such form as the Trustee may reasonably require containing all information in the possession or control of the Company or of any paying agent, other than the Trustee, as to the names and addresses of the Holders of such series of Securities obtained since the date as of which the next previous list, if any, was furnished. Any such list may be dated as of a date not more than 15 days prior to the time such information is furnished or caused to be furnished, and need not include information received after such date. Section 3.4. Within 120 days after the close of each fiscal year of the Company ending after the date hereof, the Company will file with the Trustee a statement signed by the Chairman of the Board, the Chief Executive Officer or its President or any Vice President and by the Treasurer or any Assistant Treasurer or the Secretary or any Assistant Secretary of the Company (provided, that one of such signatories shall be the Company's principal executive officer, principal financial officer or principal accounting officer), stating that in the course of the performance by the signers of their duties as officers of the Company they would normally obtain knowledge of any default by the Company in the performance or fulfillment of any covenant, agreement or condition contained in this Indenture, and stating whether or not they have obtained knowledge of any such default, and, if so, specifying each such default of which the signers have knowledge and the nature thereof. For purposes of this Section 3.4, "default" shall mean any default defined in Section 6.1 hereof, irrespective of the giving of any specified notice and excluding any periods of grace provided for therein. Section 3.5. The Company will cause any paying agent which it may appoint, other than the Trustee, to execute and deliver to the Trustee an instrument in which such agent shall agree with the Trustee, (a) that it will hold all sums held by it as such agent for the payment of the principal of and premium, if any, or interest on the Securities of that series (whether such sums have been paid to it by the Company or by any other obligor on such Securities) in trust for the benefit of the Holders of such Securities or of the Trustee, as the case may be, (b) that it will give the Trustee notice of any failure by the Company (or by any other obligor on such Securities) to make any payment of the principal (and premium, if any, on) or interest on such Securities when the same shall be due and payable, and (c) that in the case of a default by the Company hereunder, that it will deliver to the Trustee any sums then held by it in respect of the Securities. If the Company acts as its own paying agent, it will, on or before each due date of principal (and premium, if any) or of any installment of interest on such Securities, set aside and segregate and hold in trust for the benefit of the Holders of such Securities or the Trustee a sum sufficient to pay such principal (and premium, if any) or interest and will notify the Trustee of such action. III-2 Section 3.6. The Company will: (a) maintain a Fixed Charge Coverage Ratio for any fiscal quarter of not less than 1.10; (b) cause Sears to continue to own and to hold all legal title to and beneficial interest in all of the outstanding voting stock of the Company; (c) cause Sears to observe and perform in all material respects all covenants or agreements of Sears contained in the Fixed Charge Coverage and Ownership Agreement; and (d) not amend, waive, terminate or otherwise modify any provision of the Fixed Charge Coverage and Ownership Agreement. III-3 ARTICLE IV Redemption of Securities Section 4.1. Securities of any series which are redeemable before their Stated Maturity shall be redeemable in accordance with their terms and (except as otherwise specified as contemplated by Section 2.1 for Securities of any series) in accordance with this Article. Section 4.2. The election of the Company to redeem any Securities shall be evidenced by an Officers' Certificate. In case of any redemption at the election of the Company of less than all the Securities of any series, the Company shall, at least 45 days prior to the Redemption Date fixed by the Company (unless a shorter notice shall be satisfactory to the Trustee), notify the Trustee of such Redemption Date and of the principal amount of Securities of such series to be redeemed. In the case of any redemption of Securities which is subject to any restriction on such redemption provided in the terms of such Securities or elsewhere in this Indenture, the Company shall furnish the Trustee with an Officers' Certificate evidencing compliance with such restriction. Section 4.3. If less than all the Securities of any series are to be redeemed, the particular Securities to be redeemed shall be selected from the outstanding Securities of such series not previously called for redemption, by such method as the Trustee shall deem fair and appropriate and which may provide for the selection for redemption of portions (equal to the minimum authorized denomination for Securities of that series or any integral multiple thereof, if less than all the Securities of that series are to be redeemed on the applicable Redemption Date) of the principal amount of Securities of such series of a denomination larger than the minimum authorized denomination for Securities of that series. The Trustee shall promptly notify the Company in writing of the Securities selected for redemption and, in the case of the Securities selected for partial redemption, the principal amount thereof to be redeemed. For all purposes of this Indenture, unless the context otherwise requires, all provisions relating to the redemption of Securities shall relate, in the case of any Securities redeemed or to be redeemed only in part, to the portion of the principal amount of such Securities which has been or is to be redeemed. Section 4.4. Notice of redemption shall be given by first-class mail, postage prepaid, mailed not less than 30 nor more than 60 days prior to the Redemption Date, to each Holder of Securities to be redeemed, at his address appearing in the Security Register. All notices of redemption shall state: (1) the Redemption Date; (2) the Redemption Price; (3) if less than all the outstanding Securities of any series are to be redeemed, the identification (and, in the case of partial redemption, the principal amount) of the particular Securities to be redeemed; (4) that on the Redemption Date the Redemption Price will become due and payable upon each such Security to be redeemed and, if applicable, that interest thereon will cease to accrue on and after said date; (5) the place or places where such Securities are to be surrendered for payment of the Redemption Price; and (6) that the redemption is for a sinking fund, if such is the case. IV-1 Notice of redemption of Securities to be redeemed at the election of the Company shall be given by the Company or, at the Company's request, by the Trustee in the name and at the expense of the Company. Any notice which is mailed in the manner herein provided shall be conclusively presumed to be duly given, whether or not the Holder receives such notice; any failure to give such notice by mail or any defect in such notice to the Holder of a particular Security designated for redemption as a whole or in part shall not affect the validity of the proceedings for the redemption of any other Security. Section 4.5. On or prior to any Redemption Date, the Company shall deposit with the Trustee or with a paying agent (or, if the Company is acting as its own paying agent, segregate and hold in trust as provided in Section 3.5) an amount of money sufficient to pay the Redemption Price of, and (except if the Redemption Date shall be an Interest Payment Date) accrued interest on, all the Securities which are to be redeemed on that date. Section 4.6. Notice of redemption having been given as aforesaid, the Securities so to be redeemed shall, on the Redemption Date, become due and payable at the Redemption Price therein specified, and from and after such date (unless the Company shall default on the payment of the Redemption Price and accrued interest) such Securities shall cease to bear interest. Upon surrender of any such Security for redemption in accordance with said notice, such Security shall be paid by the Company at the Redemption Price, together with accrued interest to the Redemption Date; provided, however, that installments of interest whose Stated Maturity is on or prior to the Redemption Date shall be payable to the Holders of such Securities, registered as such at the close of business on the relevant Regular or Special Record Dates according to their terms and the provisions of Section 2.7. If any Security called for redemption shall not be so paid upon surrender thereof for redemption, the principal (and premium, if any) shall, until paid, bear interest from the Redemption Date at the rate prescribed therefor in the Security. Section 4.7. Any Security which is to be redeemed only in part shall be surrendered at the office or agency of the Company to be maintained pursuant to Section 3.2 (with, if the Company or the Trustee so requires, due endorsement by, or a written instrument of transfer in form satisfactory to the Company and to the Trustee duly executed by, the Holder thereof or his attorney duly authorized in writing), and the Company shall execute, and the Trustee shall authenticate and deliver to the Holder of such Security without service charge, a Security or Securities of the same series and Stated Maturity of any authorized denomination as requested by such Holder, in aggregate principal amount equal to and in exchange for the unredeemed portion of the principal of the Security so surrendered and bearing a number not contemporaneously outstanding. If a Global Security is so surrendered such new Security or Securities so issued shall be a Global Security or Global Securities. IV-2 ARTICLE V Sinking Funds Section 5.1. The provisions of this Article shall be applicable to any sinking fund for the retirement of Securities of a series except as otherwise specified as contemplated by Section 2.1 for Securities of such series. The minimum amount of any sinking fund payment provided for by the terms of Securities of any series is herein referred to as a "mandatory sinking fund payment", and any payment in excess of such minimum amount provided for by the terms of Securities of any series is herein referred to as an "optional sinking fund payment". Unless otherwise provided for by the terms of Securities of any series, the cash amount of any sinking fund payment may be subject to reduction as provided in Section 5.2. Each sinking fund payment shall be applied to the redemption of Securities of any series as provided for by the terms of Securities of such series. Section 5.2. The Company (1) may deliver outstanding Securities (including for purposes of this Clause (1) any Securities held by the Company in its treasury) of a series (other than any previously called for redemption) and (2) may, by written notice to the Trustee, apply as a credit Securities of a series which have been redeemed either at the election of the Company pursuant to the terms of such Securities or through the application of permitted optional sinking fund payments pursuant to the terms of such Securities, in each case in satisfaction of all or any part of any sinking fund payment with respect to the Securities of such series required to be made pursuant to the terms of such Securities; provided, however, that such Securities have not been previously so credited. Such Securities shall be credited for such purpose by the Trustee at the Redemption Price specified in such Securities for redemption through operation of the sinking fund and the amount of such sinking fund payment shall be reduced accordingly. Section 5.3. Not less than 45 days prior to each sinking fund payment date for any series of Securities, the Company will deliver to the Trustee an Officers' Certificate specifying the amount of the next ensuing sinking fund payment for that series pursuant to the terms of that series, the portion thereof, if any, which is to be satisfied by payment of cash and the portion thereof, if any, which is to be satisfied by crediting Securities of that series pursuant to Section 5.2 and will also deliver to the Trustee any Securities to be delivered pursuant to Clause (1) of Section 5.2. Not less than 30 days before each such sinking fund payment date the Trustee shall select or cause to be selected the Securities to be redeemed upon such sinking fund payment date in the manner specified in Section 4.3 and cause notice of the redemption thereof to be given in the name of and at the expense of the Company in the manner provided in Section 4.4. Such notice having been duly given, the redemption of such Securities shall be made upon the terms and in the manner stated in Sections 4.6 and 4.7. V-1 ARTICLE VI Remedies Upon Default Section 6.1. Subject to the provisions of Section 2.12, the following events are hereby defined for all purposes of this Indenture with respect to Securities of any series (except where the term is otherwise defined for specific purposes) as "defaults": (a) Failure to pay the principal of (and premium, if any, on) any of the Securities of that series, when and as the same shall become due and payable, whether at Stated Maturity thereof, by call for redemption or otherwise; or (b) Failure to pay any installment of interest on any of the Securities of that series, when and as the same shall become payable as therein expressed, and such failure shall continue for a period of 30 days (it being understood that if the entire amount of such payment of interest is deposited by the Company with the Trustee, or with another paying agent duly appointed hereunder, before the expiration of such period of 30 days, such default shall no longer be considered to be continuing under this Indenture); or (c) Failure to perform or observe any other of the covenants, conditions or agreements on the part of the Company in this Indenture (other than a covenant, condition or agreement a default in whose performance or whose breach is elsewhere in this Section specifically dealt with or which has expressly been included in this Indenture solely for the benefit of series of Securities other than that series) or in the Securities of that series contained, and such failure shall continue for a period of 60 days after written notice to the Company from the Trustee or to the Company and to the Trustee from the Holders of not less than a majority of the Securities of that series then outstanding under this Indenture; or (d) Except as a result of compliance with any court order to which the Company or Sears is subject or any applicable law or any government decree, if an event of default as defined in any mortgage, indenture or instrument, under which there may be issued, or by which there may be secured or evidenced, any indebtedness for borrowed money of the Company or of Sears (including this Indenture), whether such indebtedness now exists or shall hereafter be created, shall happen and shall result in such indebtedness becoming or being declared due and payable prior to the date on which it would otherwise become due and payable, and such acceleration shall not be rescinded or annulled within 30 days after written notice to the Company from the Trustee or to the Company and to the Trustee from the Holders of not less than a majority of the Securities of that series then outstanding under this Indenture; provided, however, that it shall not be a default hereunder if the principal amount of indebtedness the maturity of which is so accelerated is less than $100,000,000; provided, further, that if, prior to a declaration of acceleration of the maturity of the Securities then outstanding or the entry of judgment in favor of the Trustee in a suit pursuant to Section 6.2, such default shall be remedied or cured by the Company or Sears or waived by the holders of such indebtedness, or such indebtedness shall be discharged, then the default hereunder by reason thereof shall be deemed likewise to have been thereupon remedied, cured or waived without further action upon the part of either the Trustee or any of the Holders of the Securities; or (e) If the Company shall file a petition commencing a voluntary case under any chapter of the Federal bankruptcy laws; or the Company shall file a petition or answer or consent seeking reorganization, arrangement, adjustment, or composition under any other similar applicable Federal law, or shall consent to the filing of any such petition, answer, or consent; or the Company shall appoint, or consent to the appointment of a VI-1 custodian, receiver, liquidator, trustee, assignee, sequestrator or other similar official in bankruptcy or insolvency of it or of any substantial part of its property; or shall make an assignment for the benefit of creditors, or shall admit in writing its inability to pay its debts generally as they become due; or (f) If any order for relief against the Company shall have been entered by a court having jurisdiction in the premises under any chapter of the Federal bankruptcy laws, and such order shall have continued undischarged or unstayed for a period of 120 days; or a decree or order by a court having jurisdiction in the premises shall have been entered approving as properly filed a petition seeking reorganization, arrangement, adjustment, or composition of the Company under any other similar applicable Federal law, and such decree or order shall have continued undischarged or unstayed for a period of 120 days; or a decree or order of a court having jurisdiction in the premises for the appointment of a custodian, receiver, liquidator, trustee, assignee, sequestrator, or other similar official in bankruptcy or insolvency of the Company or of any substantial part of its property, or for the winding up or liquidation of its affairs, shall have been entered, and such decree or order shall have remained in force undischarged or unstayed for a period of 120 days; or (g) Any other default provided with respect to Securities of that series. If one or more defaults with respect to Securities of any series shall happen and be continuing, then, and in each and every such case, either the Trustee, by notice in writing to the Company, or the Holders of not less than a majority in principal amount of the Securities of that series then outstanding, by notice in writing to the Company and to the Trustee, may declare due and payable, if not already due and payable, the principal amount (or, if the Securities of that series are Original Issue Discount Securities, such portion of the principal amount as may be specified in the terms of that series) of all of the Securities of that series; and upon any such declaration all Securities of that series shall become and be immediately due and payable, anything in this Indenture or in any of such Securities contained to the contrary notwithstanding. This provision, however, is subject to the condition that if, at any time after the principal (or portion thereof) of the Securities of that series shall have been declared due and payable, and prior to the Stated Maturity of the principal thereof, all arrears of interest upon all such Securities (with interest so far as may be lawful on any overdue installments of interest at the rate specified in such Securities) and the expenses of the Trustee, its agents or attorneys shall be paid by or for the account of the Company, and all defaults as aforesaid (other than the payment of principal which has been so declared due and payable) shall have been made good or secured to the satisfaction of the Trustee and provision deemed by the Trustee to be adequate shall be made therefor, then and in every such case the Trustee shall, upon the written request of the Holders of a majority in principal amount of the Securities of that series then outstanding, delivered to the Company and to the Trustee, waive such default and its consequences and rescind or annul such declaration; but no such waiver shall extend to or affect any subsequent default, or impair any right consequent thereon. Notwithstanding the foregoing, to the extent the Company shall have been relieved of any of its obligations under this Indenture with respect to Securities of any series pursuant to Section 13.4 hereof, the failure of the Company to perform any such obligations as to which it has been relieved shall not constitute a default as contemplated by this Indenture. Section 6.2. In case the Company: (a) shall fail to pay any installment of interest on any Security of any series when and as it shall become payable and such failure shall have continued for a period of 30 VI-2 days (it being understood that if the entire amount of such payment of interest is deposited by the Company with the Trustee, or with another paying agent duly appointed hereunder, before the expiration of such period of 30 days, such default shall no longer be considered to be continuing under this Indenture); or (b) shall fail to pay the principal, or portion thereof, of (or premium, if any, on) any Security of any series when it shall have become due and payable, whether at the Stated Maturity thereof, by call for redemption, by declaration as authorized by this Indenture (unless annulled pursuant to Section 6.1), or otherwise; then, upon demand of the Trustee, the Company shall pay to the Trustee, for the benefit of the Holders of the Securities of that series then outstanding, the whole amount which then shall have become due on all such Securities for principal (or premium, if any) or interest, as the case may be, including interest at the rate specified in the Securities of that series on overdue principal (and premium, if any) and, so far as may be lawful, on overdue installments of interest; and in case the Company shall fail to pay the same forthwith upon such demand, the Trustee in its own name and as trustee of an express trust, shall be entitled to recover judgment for the whole amount so due and unpaid against the Company or any other obligor on the Securities of that series. The right of the Trustee to recover such judgment shall not be affected by the exercise of any other right, power or remedy for the enforcement of the provisions of this Indenture. The Trustee shall be entitled and empowered, either in its own name or as trustee of an express trust, or as attorney-in-fact for the Holders of the Securities of any series, or in any one or more of such capacities, to file such proof of debt, amendment of proof of debt, claim, petition or other document as may be necessary or advisable in order to have the claims of the Trustee and of the Holders of the Securities of that series allowed in any equity receivership, insolvency, bankruptcy, liquidation, readjustment, reorganization or other judicial proceedings relative to the Company or any other obligor on such Securities or their creditors, or affecting their property. The Trustee is hereby irrevocably appointed (and the successive respective Holders of the Securities of that series by taking and holding the same shall be conclusively deemed to have so appointed the Trustee) the true and lawful attorney-in-fact of the respective Holders of the Securities of that series, with authority to make and file in the respective names of the Holders of such Securities, or on behalf of the Holders of the Securities of that series as a class, subject to deduction from any such claims of the amounts of any claims filed by any of the Holders of the Securities of that series themselves, any proof of debt, amendment of proof of debt, claim, petition or other document in any such proceeding and to receive payment of any sums becoming distributable on account thereof, and to execute any such other papers and documents and to do and perform any and all such acts and things including participating as a member of any official or unofficial committee of creditors acting with respect to such proceeding for and on behalf of such holders of the Securities of that series, as may be necessary or advisable in the opinion of the Trustee in order to have the respective claims of the Trustee and of the Holders of the Securities of that series allowed in any such proceedings, and to receive payment of or on account of such claims; provided, however, that nothing contained in this Indenture shall be deemed to give the Trustee any right to accept or consent to any plan of reorganization or otherwise by action of any character in any such proceedings to waive or change in any way any right of any Holder. Any moneys received by the Trustee under this Section 6.2 shall be applied in the order following, at the date or dates fixed by the Trustee for the distribution of such moneys, upon presentation of the several Securities of any series, and stamping thereon the payment, if only partially paid, and upon surrender thereof if fully paid: VI-3 First: To the payment of costs and expenses of collection, and reasonable compensation to the Trustee, its agents, attorneys and counsel, and of all other expenses incurred, and all advances made, by the Trustee except as a result of its negligence or willful misconduct; Second: In case the principal of (and premium, if any, on) the outstanding Securities of that series shall not have become due and be unpaid, to the payment of interest on the Securities of that series, in the order of the maturity of the installments of such interest, with interest, so far as may be lawful, upon the overdue installments of interest at the rate specified in the Securities of that series, such payments to be made ratably to the persons entitled thereto, without discrimination or preferences; Third: In case the principal of (or premium, if any, on) the outstanding Securities of that series shall have become due, by declaration or otherwise, to the payment of the whole amount then owing and unpaid upon such Securities of that series for principal (and premium, if any) and interest, with interest at the rate specified in the Securities of that series on the overdue principal (and premium, if any) and, so far as may be lawful, on the overdue installments of interest; and in case such moneys shall be insufficient to pay in full the whole amount so due and unpaid upon such Securities, then to the payment of such principal (and premium, if any) and interest, without preference or priority of principal over interest, or of interest over principal or of any installment of interest over any other installment of interest, ratably to the aggregate of such principal and accrued and unpaid interest; Fourth: In case the Trustee shall retain possession of any funds after all obligations of the Company hereunder have been fully paid and satisfied, such funds shall be paid to the Company, its successors or assigns; provided, however, that when interest alone is to be paid, the Trustee at its election may waive presentation of the Securities of that series. Section 6.3. All rights of action under this Indenture or any of the Securities outstanding hereunder, enforceable by the Trustee, may be enforced by the Trustee without possession of any of the Securities or the production thereof at the trial or other proceeding relative thereto, and any such suit or proceedings instituted by the Trustee shall be brought for the ratable benefit of the Holders of the Securities in respect of which any judgment has been recovered, subject to the provisions of this Indenture. Section 6.4. No delay or omission of the Trustee or of the Holders of any Securities to exercise any rights or powers accruing upon any default shall impair any such right or power, or shall be construed to be a waiver of any such default or acquiescence therein; and every power and remedy given by this Article to the Trustee or the Holders may be exercised from time to time and as often as may be deemed expedient by the Trustee or by the Holders. Section 6.5. If any one or more defaults shall happen and be continuing, the Trustee may, in its discretion, proceed to protect and enforce the rights vested in it by this Indenture by such appropriate judicial proceedings as the Trustee, being advised by its counsel, shall deem most effectual to protect and enforce any of said rights, either by suit in equity or by action at law or by proceeding in bankruptcy or otherwise, whether for the specific performance of any covenant or agreement contained in the Indenture or in aid of the exercise of any power granted in the Indenture, or to enforce any other legal or equitable right vested in the Trustee by this Indenture or by law. Provided the Securities of any series shall not then be due and payable by reason of a declaration pursuant to Section 6.1 hereof, the Holders of a majority in principal amount of VI-4 the Securities of that series at the time outstanding may on behalf of the Holders of all of such Securities waive any past default hereunder and its consequences, except a default in the payment of interest on or the principal of (or premium, if any, on) any of such Securities. In the case of any such waiver, the Company, the Trustee and the Holders of such Securities shall be restored to their former positions and rights hereunder, respectively; but no such waiver shall extend to any subsequent or other default or impair any right consequent thereon. Section 6.6. The Holders of a majority in principal amount of the Securities of any series then outstanding shall have the right, by an instrument in writing executed and delivered to the Trustee, to direct the time, method and place of conducting any proceeding for any remedy available to the Trustee, or of exercising any power or trust conferred upon the Trustee under this Indenture; provided, however, that subject to the provisions of Section 10.1 of this Indenture, the Trustee shall have the right to decline to follow any such direction if the Trustee being advised by counsel determines that the action or proceeding so directed may not lawfully be taken or if the Trustee in good faith shall by responsible officers determine that the action or proceeding so directed would involve the Trustee in liability. Section 6.7. No Holder of any Security of any series shall have the right to institute any suit, action or proceeding, in equity or at law, for the execution of any trust or power hereof, or for the enforcement of any other remedy under or upon this Indenture, unless such Holder previously shall have given to the Trustee written notice of default with respect to the Securities of that series, and unless also the Holders of a majority in principal amount of the Securities of that series then outstanding shall have made written request upon the Trustee and shall have afforded to it a reasonable opportunity either to proceed to exercise the powers hereinbefore granted or to institute such action, suit or proceeding in its own name, and shall have offered to the Trustee security and indemnity satisfactory to it against the costs, expenses and liabilities to be incurred therein or thereby, and the Trustee shall have refused or neglected to comply with such request within a reasonable time; it being understood and intended that no one or more Holders of Securities of that series shall have any right in any manner whatever hereunder or under the Securities of that series by his or their action to enforce any right hereunder except in the manner herein provided, and that all proceedings hereunder, at law or in equity, shall be instituted, had and maintained in the manner herein provided and for the ratable benefit of all Holders of such Securities. Nothing herein contained shall, however, affect or impair the right which is absolute and unconditional, of any Holder of any Security to institute suit to enforce the payment of the principal of (or premium, if any, on) and interest on his Security at and after the respective due dates expressed in such Security (including Maturity by call for redemption, declaration (unless annulled pursuant to Section 6.1 hereof) of the acceleration of the Maturity of such principal (or premium if any, on) or interest, or otherwise), or the obligation of the Company, which is also absolute and unconditional, to pay the principal of (or premium, if any, on) and interest on each of the Securities of that series to the respective Holders thereof at the times and places in the Securities expressed. Anything to the contrary notwithstanding contained in this Section 6.7, the parties to this Indenture agree and each Holder of any Security of any series by his acceptance thereof shall be deemed to have agreed that any court may in its discretion require, in any suit for the enforcement of any right or remedy under this Indenture, or in any suit against the Trustee for any action taken or omitted by it as Trustee, the filing by any party litigant in such suit of an undertaking to pay the costs of such suit, and such court may in its discretion assess reasonable costs, including reasonable attorneys' fees, against any party litigant in such suit, having due regard to the merit and good faith of the claims or defenses made by such party litigant; provided, however, that the provisions of this paragraph shall not apply to any suit instituted, directly or through an agent or agents, by the Trustee, to any suit VI-5 instituted by any Holder, or group of Holders, holding in the aggregate more than 10% in principal amount of the Securities of any series outstanding or to any suit instituted by any Holder for the enforcement of the payment of the principal of (or premium, if any, on) or interest on his Securities of that series at and after the respective due dates of such principal (premium, if any) or interest expressed in his Securities of that series. Section 6.8. No Securities of any series which are known by the Trustee to be owned or held by, for the account of or for the benefit of, the Company or any other obligor under this Indenture or any Affiliate of the Company or of such other obligor (other than Securities of that series pledged in good faith which would be deemed outstanding under the provisions of Section 7.4) shall be deemed outstanding for the purpose of any payment or distribution provided for in this Article. Section 6.9. If the Trustee or any Holder shall have proceeded to enforce any right under this Indenture, and such proceedings shall have been discontinued or abandoned because of waiver, or for any other reason, or shall have been determined adversely to the Trustee or such Holder, then, and in any such case, the Company and the Trustee and such Holder or Holders shall each be restored to its former position and rights hereunder, and all rights, remedies and powers of the Trustee and the Holders shall continue as though no such proceedings had been taken. VI-6 ARTICLE VII Concerning the Holders Section 7.1. Whenever in this Indenture it is provided that the Holders of a specified percentage or a majority in aggregate principal amount of the Securities of any series may take any action (including the making of any demand or request, the giving of any notice, consent or waiver or the taking of any other action) the fact that at the time of taking any such action the Holders of such specified percentages have joined therein may be evidenced (a) by any instrument or any number of instruments of similar tenor executed by Holders of Securities of that series in person or by attorney or proxy appointed in writing, or (b) by the record of the Holders of Securities of that series voting in favor thereof at any meeting of such Holders duly called and held in accordance with the provisions of Article XII, or (c) by a combination of such instrument or instruments and any such record of such a meeting of such Holders. The Company or the Trustee may (and in case of any action taken by Holders of a specified percentage or majority in aggregate principal amount of the Securities of any series pursuant to Section 6.1 or 6.6 hereof, the Trustee shall) set a record date and time for purposes of determining the identity of Holders of any series entitled to vote or consent to any action, which record date shall be the later of 30 days prior to the first solicitation of such consent or the date of the most recent list of Holders of such series of Securities furnished to the Trustee prior to such solicitation pursuant to Section 3.3 (d) hereof. If the Company or the Trustee sets such a record date, only those persons who are registered Holders of such Securities at the record date and time so fixed shall be entitled to vote or consent with respect to such action whether or not they are Holders at the time of such vote or consent. Section 7.2. Subject to the provisions of Section 10.1, proof of the execution of any instrument by a Holder of Securities of any series or his attorney or proxy and proof of the holding by any person of any of the Securities of that series shall be sufficient for any purpose of this Indenture if made in the following manner: (a) The fact and date of the execution by any such person of any instrument may be proved by the certificate of any notary public, or other officer of any jurisdiction of or within the United States of America authorized to take acknowledgments of deeds to be recorded in such jurisdiction, that the person executing such instrument acknowledged to him the execution thereof, or by an affidavit of a witness to such execution sworn to before any such notary or other such officer. Where such execution is by an officer of a corporation or association or a member of a partnership on behalf of such corporation, associationor partnership, such certificate or affidavit shall also constitute sufficient proof of hisauthority. (b) The ownership of Securities of that series shall be proved by the Security Register with respect to such Securities or by a certificate of any duly appointed registrar thereof. The Trustee shall not be bound to recognize any person as a Holder of Securities of any series unless and until his authority to vote the Securities held by him is proved in the manner in this Article VII provided. The record of any Holders' meeting shall be proved in the manner provided in Section 12.6. The Trustee may require such additional proof of any matter referred to in this Section 7.2 as it shall deem necessary. Section 7.3. The Company, the Trustee, any Authenticating Agent, any paying agent and any Security registrar may deem and treat the person in whose name any Security shall be registered upon the Security Register as the absolute owner of such Security (whether or not such Security shall be overdue and notwithstanding any notice of ownership or writing VII-1 thereon made by anyone other than the Company or any Security registrar) for the purpose of receiving payment of or on account of the principal of (premium, if any, on) and interest on such Security and for all other purposes; and neither the Company nor the Trustee nor any Authenticating Agent nor any paying agent nor any Security registrar shall be affected by any notice to the contrary. All such payments so made to any such registered Holder for the time being or upon his order shall be valid and, to the extent of the sum or sums so paid, effectual to satisfy and discharge the liability for moneys payable upon any such Security. Section 7.4. In determining whether the Holders of the requisite aggregate principal amount of Securities of any series have concurred in any direction, consent or waiver under this Indenture, Securities of that series which are owned by or held by or for the account of or interest of the Company or any other obligor upon the Securities of that series, or any Affiliate of the Company or of any other obligor upon the Securities of that series, shall be disregarded and deemed not to be outstanding for the purpose of any such determination, except that for the purpose of determining whether the Trustee shall be protected in relying on any such direction, consent or waiver only Securities of that series which the Trustee knows are so owned or held shall be so disregarded. The Securities of that series so owned or held which have been pledged in good faith may be regarded as outstanding for the purposes of this Section 7.4 if the pledgee shall establish to the satisfaction of the Trustee the pledgee's right to vote such Securities and that the pledgee is not an Affiliate of the Company or of any such other obligor. In case of a dispute as to such right, any decision by the Trustee taken upon the advice of counsel shall be full protection to the Trustee. Section 7.5. Any demand, request, waiver, consent or vote of the Holder of any Security of any series shall be conclusive and binding upon such Holder and upon all future Holders and owners of such Security, and of any Security issued in exchange therefor or in place thereof, irrespective of whether or not any notation in regard thereto is made upon such Security. Any action taken by the Holders of the majority or percentage in aggregate principal amount of the Securities of that series specified in this Indenture in connection with such action shall be conclusively binding upon the Company, the Trustee and the Holders of all the Securities of that series. VII-2 ARTICLE VIII Immunity of Incorporators, Stockholders, Officers and Directors Section 8.1. No recourse under or upon any obligation, covenant or agreement of this Indenture, or of any Security of any series, 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 this Indenture and the obligations issued hereunder 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 hereby authorized, or under or by reason of the obligations, covenants or agreements contained in this Indenture or in any of the Securities of any series or implied therefrom; and that any and all such personal liability, either at common law or in equity or by constitution or statute, of, and any and all such rights and claims against, every such incorporator, stockholder, officer or director, as such, because of the creation of the indebtedness hereby authorized, or under or by reason of the obligations, covenants or agreements contained in this Indenture or in any Security of any series or implied therefrom, are hereby expressly waived and released as a condition of, and as a consideration for, the execution of this Indenture and the issue of such Securities. VIII-1 ARTICLE IX Merger, Consolidation or Sale Section 9.1. Nothing in this Indenture shall prevent any consolidation or merger of the Company with or into any other corporation, or any consolidation or merger of any other corporation with or into the Company, or any sale or transfer of its assets and liabilities substantially as an entirety to any other corporation lawfully entitled to acquire the same; provided, however, that, so long as Securities are outstanding hereunder, the Company covenants and agrees, that any such consolidation, merger, sale or transfer shall be upon the condition that the due and punctual payment of the principal of (or premium, if any, on) and interest on, all the Securities according to their tenor, and the due and punctual performance and observance of all the terms, covenants and conditions of this Indenture to be kept or performed by the Company shall, by an indenture supplemental hereto, executed and delivered to the Trustee, be assumed by the corporation (if other than the Company) formed by or resulting from any such consolidation or merger, or which shall have received the transfer of the assets and liabilities of the Company substantially as an entirety, just as fully and effectually as if such successor corporation had been the original party of the first part hereto; and in the event of any such sale or transfer the predecessor Company may be dissolved, wound up and liquidated at any time thereafter. Section 9.2. Every such successor corporation upon executing an indenture supplemental hereto, as provided in Section 9.1, in form satisfactory to the Trustee, shall succeed to and be substituted for the Company with the same effect as if it had been named herein as the Company; and any order, certificate or resolution of officers of the Company or the Board provided for in this Indenture may be made by like officials of such successor corporation. Such successor corporation may thereupon cause to be signed, either in its own name or in the name of the Company, with such suitable reference, if any, to such consolidation, merger, sale or transfer as may be required by the Trustee, any or all of the Securities of any series which shall not theretofore have been signed by the Company and authenticated by the Trustee or an Authenticating Agent on its behalf; and upon the written order of such successor corporation in lieu of the Company, and subject to all the terms, conditions and restrictions herein prescribed with respect to the authentication and delivery of the Securities of any series, the Trustee or an Authenticating Agent on its behalf shall authenticate and deliver any and all Securities of that series which shall have been previously signed by the proper officers of the Company and delivered to the Trustee or an Authenticating Agent on its behalf for authentication, and any of such Securities which such successor corporation shall thereafter, in accordance with the provisions of this Indenture, cause to be signed and delivered to the Trustee or an Authenticating Agent on its behalf for such purpose. All Securities of that series so authenticated and delivered shall in all respects have the same rank as the Securities of that series theretofore or thereafter authenticated and delivered in accordance with the terms of this Indenture. In case of any such consolidation, merger, sale or transfer, such changes in phraseology and form (but not in substance) may be made in the Securities of any series thereafter to be issued as may be appropriate. Section 9.3. The Trustee may receive and shall, subject to the provisions of Section 10.1 of this Indenture, be fully protected in relying upon an Opinion of Counsel or an Officers' Certificate as conclusive evidence that any supplemental indenture executed under the foregoing Section 9.1 complies with the foregoing conditions and provisions of this Article. IX-1 ARTICLE X Concerning the Trustee Section 10.1. (a) The Trustee undertakes, prior to default and after the curing of all defaults which may have occurred, to perform such duties and only such duties as are specifically set forth in this Indenture, and in case of default (but only during the continuance thereof) to exercise such of the rights and powers vested in it by this Indenture, and to use the same degree of care and skill in their exercise, as a prudent man would exercise or use under the circumstances in the conduct of his own affairs. The Trustee, upon receipt of any resolution, certificate, statement, opinion, report, document, order or other instrument furnished to the Trustee pursuant to any provision of this Indenture, shall examine them to determine whether they conform to the requirements of this Indenture. (b) No provision of this Indenture shall be construed to relieve the Trustee from liability for its own negligent action, its own negligent failure to act, or its own wilful misconduct, except that: (i) prior to default hereunder and after the curing of all defaults which may have occurred, the Trustee shall not be liable except for the performance of such duties as are specifically set forth in this Indenture, and no implied covenants or obligations shall be read into this Indenture against the Trustee but the duties and obligations of the Trustee, prior to default and after the curing of all defaults which may have occurred, shall be determined solely by the express provisions of this Indenture; (ii) prior to default hereunder and after the curing of all defaults which may have occurred, and in the absence of bad faith on the part of the Trustee, the Trustee may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon certificates or opinions conforming to the requirements of this Indenture; (iii) the Trustee shall not be liable for any error of judgment made in good faith by the Trustee unless it shall be proved that the Trustee was negligent in ascertaining the pertinent facts; and (iv) the Trustee shall not be liable with respect to any action taken or omitted to be taken by it in good faith in accordance with the direction of the Holders of not less than a majority in principal amount of the Securities of any series then outstanding relating to the time, method and place of conducting any proceeding for any remedy available to the Trustee or exercising any trust or power conferred upon the Trustee, under this Indenture. None of the provisions of this Indenture shall require the Trustee to expend or risk its own funds or otherwise incur any personal financial liability in the performance of any of its duties hereunder, or in the exercise of any of its rights or powers, if there shall be reasonable grounds for believing that repayment of such funds or adequate indemnity against such risk or liability is not reasonably assured to it. (c) The Trustee shall not be responsible for the validity, sufficiency or the execution by the Company of this Indenture, or of any indentures supplemental hereto, or of the Securities of any series, or for the recitals herein or in the Securities contained (such recitals being made solely by the Company). X-1 (d) Subject to the limitations contained in subdivisions (a) and (b) of this Section 10.1: (i) the Trustee may rely and shall be protected in acting or refraining from acting upon any resolution, certificate, opinion, notice, consent, request, order, appraisal, report, bond or other paper or document believed by it to be genuine and to have been signed or presented by the proper party or parties; (ii) the Trustee may consult with counsel (who may be counsel to the Company) and any advice or opinion of such counsel shall be full and complete authorization and protection in respect of any action taken, omitted or suffered by it hereunder in good faith and in accordance with the advice or opinion of such counsel; (iii) whenever in the administration of this Indenture, prior to a default hereunder and after the curing of all defaults which may have occurred, the Trustee shall deem it necessary or desirable that a matter be proved or established prior to taking or suffering any action hereunder, such matter (unless other evidence in respect thereof be herein specifically prescribed) may be deemed to be conclusively proved and established by an Officers' Certificate delivered to the Trustee, and such certificate shall be full warrant to the Trustee for any action taken or suffered by it under the provisions of this Indenture upon the faith thereof; (iv) the Trustee shall be under no obligation to exercise any of the trusts or powers hereof at the request, order or direction of any of the Holders of Securities of any series, pursuant to the provisions of this Indenture, unless such Holders shall have offered to the Trustee security or indemnity satisfactory to it against the costs, expenses and liabilities to be incurred therein or thereby; and (v) the Trustee shall not be liable for any action taken by it in good faith and believed by it to be authorized or within the discretion or power conferred upon it by this Indenture. (e) Subject to the provisions of subdivision (b) of this Section 10.1, prior to a default hereunder and after the curing of all defaults which may have occurred, the Trustee shall not be bound to make any investigation into the facts or matters stated in any resolution, certificate, opinion, notice, consent, request, order, appraisal, report, bond or other document or instrument unless requested in writing so to do by the Holders of not less than a majority in principal amount of the Securities of any series then outstanding; provided, however, that if the payment within a reasonable time to the Trustee of the costs, expenses or liabilities likely to be incurred by it without negligence or bad faith in the making of such investigation is, in the opinion of the Trustee (subject to the provisions of subdivisions (a) and (b) of this Section 10.1), not reasonably assured to the Trustee by the security afforded to it by the terms of this Indenture, the Trustee may require reasonable indemnity against such costs, expenses or liabilities as a condition to so proceeding; and provided further, that nothing in this subdivision (e) shall require the Trustee to give the Holders of such Securities any notice other than that required by Section 10.3 hereof. The reasonable expense of every such examination shall be paid by the Company or, if paid by the Trustee, shall be repaid by the Company upon demand. (f) The Trustee may execute any of the trusts or powers hereunder or perform any duties hereunder either directly or by or through agents or attorneys and the Trustee shall not be responsible for any misconduct or negligence on the part of any agent or attorney appointed with due care by it hereunder. Section 10.2. The Trustee shall be entitled to reasonable compensation (which shall not be limited by any provision of law in regard to the compensation of a trustee of an express X-2 trust) for services rendered by it in the execution of the trusts hereby created. The Company also agrees to indemnify the Trustee for and hold it harmless against loss, liability or expense incurred without negligence or bad faith on the part of the Trustee arising out of or in connection with the acceptance or administration of this trust, including the costs and expenses of defending against any claim of liability in the premises. The Trustee shall have a first lien on all moneys coming into its possession hereunder, for the payment to it of its compensation and for the repayment to it of all expenses and disbursements payable by the Company hereunder. The Trustee shall not be accountable for the use or application by the Company of any Securities of any series authenticated and delivered hereunder or of the proceeds of such Securities, or for the use or application of any moneys paid over by the Trustee in accordance with any provision of this Indenture, or for the use or application of any moneys received by any paying agent. All moneys received by the Trustee under or pursuant to any provision of this Indenture shall constitute trust funds for the purposes for which they were paid or are held, but need not be segregated in any manner from any other moneys and may be deposited by the Trustee, under such conditions as may be prescribed by law, in its general banking department, and the Trustee shall not be liable for any interest thereon, except that, so long as the Company is not in default hereunder, the Trustee will allow and credit to the Company interest, if any, upon such moneys at such rate as may then be customary for similar deposits. Section 10.3. The Trustee shall give to the Holders of Securities of any series notice, in the manner and to the extent provided in subdivision (c) of Section 10.10, of the happening of all defaults known to it with respect to Securities of such series, within 90 days after the occurrence thereof unless such defaults shall have been cured before the giving of such notice; but, except in the case of a default resulting from the failure to make any payment of principal of, premium, if any, on or interest on the Securities of such series the Trustee may withhold the giving of such notice if and so long as the board of directors, the executive committee or a trust committee of directors and/or Responsible Officers, of the Trustee in good faith determines that the withholding of such notice is in the interest of the Holders of Securities of such series. For the purposes of this Section 10.3, the term "default" shall mean any default defined in Section 6.1, irrespective of the giving of any specified notice and excluding any periods of grace provided for therein. Notwithstanding anything to the contrary herein, the Trustee shall only be deemed to have notice of an Event of Default (other the pursuant to Sections 6.1(a) and (b)) when a Vice President, Assistant Vice President or the officer specifically assigned to administer the Trustee's duties under this Indenture has actual notice of such Event of Default. Section 10.4. If the Trustee has or shall acquire any conflicting interest as defined in this Section 10.4, with respect to the Securities of any series it shall, within 90 days after ascertaining that it has such conflicting interest if the default (as defined in Section 10.3) to which such conflicting interest relates has not been cured or duly waived or otherwise eliminated before the end of such 90-day period, either eliminate such conflicting interest or, except as otherwise provided below, resign with respect to the Securities of that series, such resignation to become effective upon the appointment of a successor trustee and such successor's acceptance of such appointment, and the Company shall take prompt steps to have a successor appointed in the manner provided in Section 10.6. Except in the case of a default (as defined in Section 10.3) in the payment of the principal of (or premium, if any) or interest on any such Security, or in the payment of any sinking or purchase fund installment, the Trustee shall not be required to resign as otherwise provided by this Section if the Trustee shall have sustained the burden of proving, on application to the Commission and after opportunity for hearing thereon, that: (i) the default (as defined in Section 10.3) may be X-3 cured or waived during a reasonable period and under the procedures described in such application; and (ii) a stay of the Trustee's duty to resign will not be inconsistent with the interests of Holders of such Securities. The filing of such an application shall automatically stay the performance of the duty to resign until the Commission orders otherwise. For the purposes of this Section 10.4 the Trustee shall be deemed to have a conflicting interest with respect to the Securities of any series if such Securities are in default (as defined in Section 10.3) and: (1) the Trustee is trustee under another indenture under which any other securities, or certificates of interest or participation in any other securities, of the Company are outstanding, unless such other indenture is a collateral trust indenture under which the only collateral consists of Securities issued and outstanding under this Indenture, provided that there shall be excluded from the operation of this paragraph any indenture or indentures under which other securities or certificates of interest or participation in other securities of the Company are outstanding if (i) such other indenture or indentures (and all series of securities issuable thereunder) are at the time wholly unsecured and rank equally and such other indenture or indentures (and such series) are hereafter qualified under the Trust Indenture Act of 1939, as amended, unless the Commission shall have found and declared by order pursuant to Subsection (b) of Section 305 or Subsection (c) of Section 307 of the Trust Indenture Act of 1939, as amended, that differences exist between the provisions of this Indenture and the provisions of such other indenture or indentures (or such series) which are so likely to involve a material conflict of interest as to make it necessary in the public interest or for the protection of investors to disqualify the Trustee from acting as such under this Indenture and under such other indenture or indentures, or (ii) the Company shall have sustained the burden of proving, on application to the Commission and after opportunity for hearing thereon, that the trusteeship under this Indenture and such other indenture is not so likely to involve a material conflict of interest as to make it necessary in the public interest or for the protection of investors to disqualify the Trustee from acting as such under this Indenture and under such other indenture or indentures; (2) the Trustee or any of its directors or executive officers is an underwriter for the Company; (3) the Trustee directly or indirectly controls or is directly or indirectly controlled by or is under direct or indirect common control with an underwriter for the Company; (4) the Trustee or any of its directors or executive officers is a director, officer, partner, employee, appointee or representative of the Company or of an underwriter (other than the Trustee itself) for the Company who is currently engaged in the business of underwriting, except that (A) one individual may be a director and/or an executive officer of the Trustee and a director and/or an executive officer of the Company, but may not be at the same time an executive officer of both the Trustee and of the Company, and (B) if and so long as the number of directors of the Trustee in office is more than nine, one additional individual may be a director and/or an executive officer of the Trustee and a director of the Company, and (C) the Trustee may be designated by the Company or by any underwriter for the Company to act in the capacity of transfer agent, registrar, custodian, paying agent, fiscal agent, escrow agent, or depositary, or in any other similar capacity, or, subject to the provisions of subdivision (1) of this Section 10.4, to act as trustee, whether under an indenture or otherwise; (5) 10% or more of the voting securities of the Trustee is beneficially owned either by the Company or by any director, partner or executive officer of the Company or 20% or more of such voting securities is beneficially owned, collectively, by any two or more X-4 of such persons; or 10% or more of the voting securities of the Trustee is beneficially owned either by an underwriter for the Company or by any director, partner or executive officer of any such underwriter, or is beneficially owned, collectively, by any two or more such persons; (6) the Trustee is the beneficial owner of, or holds as collateral security for an obligation which is in default as hereinafter in this Section 10.4 defined, (A) 5% or more of the voting securities or 10% or more of any other class of security of the Company, not including the Securities issued under this Indenture and the securities issued under any other indenture of the Company under which the Trustee is also trustee, or (B) 10% or more of any class of security of any underwriter for the Company; (7) the Trustee is the beneficial owner of, or holds as collateral security for an obligation which is in default as hereinafter in this Section 10.4 defined, 5% or more of any voting securities of any person who, to the knowledge of the Trustee, owns 10% or more of the voting securities of, or controls directly or indirectly or is under direct or indirect common control with, the Company; (8) the Trustee is the beneficial owner of, or holds as collateral security for an obligation which is in default as hereinafter in this Section 10.4 defined, 10% or more of any class of security of any person who, to the knowledge of the Trustee, owns 50% or more of the voting securities of the Company; (9) the Trustee owns, on the date of such default (as defined in Section 10.3) or any anniversary of such default while such default remains outstanding, in the capacity of executor, administrator, testamentary or inter vivos trustee, guardian, committee or conservator, or in any other similar capacity, an aggregate of 25% or more of the voting securities, or of any class of security, of any person, the beneficial ownership of a specified percentage of which would have constituted a conflicting interest under subdivisions (6), (7), or (8) of this Section 10.4. As to any such securities of which the Trustee acquired ownership through becoming executor, administrator or testamentary trustee of an estate which included them, the provisions of the preceding sentence shall not apply, for a period of not more than two years from the date of such acquisition, to the extent that such securities included in such estate do not exceed 25% of such voting securities or 25% of any such class of security. Promptly after the date of any such default and annually in each succeeding year that the Securities of any series remain in default, the Trustee shall make a check of its holdings of such securities in any of the abovementioned capacities as of such dates. If the Company fails to make payment in full of principal of, or premium, if any, on and interest on any of the Securities issued under this Indenture when and as the same becomes due and payable, and such failure continues for 30 days thereafter, the Trustee shall make a prompt check of its holdings of such securities in any of the abovementioned capacities as of the date of the expiration of such 30-day period, and after such date, notwithstanding the foregoing provisions of this subdivision (9), all such securities so held by the Trustee, with sole or joint control over such securities vested in it, shall, but only so long as such failure shall continue, be considered as though beneficially owned by the Trustee, for the purposes of subdivisions (6), (7), and (8) of this Section 10.4; or (10) except under the circumstances described in paragraphs (1), (3), (4), (5) or (6) of Section 10.9(b), the Trustee shall be or become a creditor of the Company. In determining whether the Trustee has a conflicting interest with respect to any series of Securities under this Section 10.4, each other series of Securities will be treated as having been issued under an indenture other than this Indenture unless such series of Securities rank equally and are wholly unsecured. X-5 The specification of percentages in subdivisions (5) to (9), inclusive, of this Section 10.4 shall not be construed as indicating that the ownership of such percentages of the securities of a person is or is not necessary or sufficient to constitute direct or indirect control for the purposes of subdivision (3) or (7) of this Section 10.4. For the purposes of subdivisions (6), (7), (8), and (9) of this Section 10.4, (A) the term "security" and "securities" shall include only such securities as are generally known as corporate securities, but shall not include any note or other evidence of indebtedness issued to evidence an obligation to repay moneys lent to a person by one or more banks, trust companies, or banking firms, or any certificate of interest or participation in any such note or evidence of indebtedness; (B) an obligation shall be deemed to be in default when a default in payment of principal shall have continued for 30 days or more, and shall not have been cured; and (C) the Trustee shall not be deemed the owner or holder of (i) any security which it holds as collateral security (as trustee or otherwise) for an obligation which is not in default as defined in clause (B) above, or (ii) any security which it holds as collateral security under this Indenture, irrespective of any default hereunder, or (iii) any security which it holds as agent for collection, or as a custodian, escrow agent or depositary, or in any similar representative capacity. Except as provided in the next preceding paragraph, the word "security" or "securities" as used in this Section 10.4 shall mean any note, stock, treasury stock, bond, debenture, evidence of indebtedness, certificate of interest or participation in any profit-sharing agreement, collateral trust certificate, pre-organization certificate or subscription, transferable share, investment contract, voting-trust certificate, certificate of deposit for a security, fractional undivided interest in oil, gas, or other mineral rights, or, in general, any interest or instrument commonly known as a "security", or any certificate of interest or participation in, temporary or interim certificate for, receipt for, guarantee of, or warrant or right to subscribe to or purchase, any of the foregoing. For the purposes of this Section 10.4: (I) The term "underwriter" when used with reference to the Company shall mean every person who, within one year prior to the time as of which the determination is made, has purchased from the Company with a view to, or has offered or sold for the Company in connection with, the distribution of any security of the Company outstanding at such time, or has participated or has had a direct or indirect participation in any such undertaking, or has participated or has had a participation in the direct or indirect underwriting of any such undertaking, but such term shall not include a person whose interest was limited to a commission from an underwriter or dealer not in excess of the usual and customary distributors' or sellers' commission. (II) The term "director" shall mean any director of a corporation or any individual performing similar functions with respect to any organization whether incorporated or unincorporated. (III) The term "person" shall mean an individual, a corporation, a partnership, an association, a joint-stock company, a trust, an unincorporated organization, or a government or political subdivision thereof. As used in this paragraph, the term "trust" shall include only a trust where the interest or interests of the beneficiary or beneficiaries are evidenced by a security. (IV) The term "voting security" shall mean any security presently entitling the owner or holder thereof to vote in the direction or management of the affairs of a person, or any security issued under or pursuant to any trust, agreement, or arrangement whereby a trustee or trustees or agent or agents for the owner or holder of such security are presently entitled to vote in the direction or management of the affairs of a person. X-6 (V) The term "Company" shall mean any obligor upon the Securities. (VI) The term "executive officer" shall mean the president, every vice president, every trust officer, the cashier, the secretary, and the treasurer of a corporation, and any individual customarily performing similar functions with respect to any organization whether incorporated or unincorporated but shall not include the chairman of the board of directors. The percentages of voting securities and other securities specified in this Section 10.4 shall be calculated in accordance with the following provisions: (a) A specified percentage of the voting securities of a person means such amount of the outstanding voting securities of such person as entitles the holder or holders thereof to cast such specified percentage of the aggregate votes which the holders of all the outstanding voting securities of such person are entitled to cast in the direction or management of the affairs of such person. (b) A specified percentage of a class of securities of a person means such percentage of the aggregate amount of securities of the class outstanding. (c) The term "amount", when used in regard to securities, means the principal amount if relating to evidences of indebtedness, the number of shares if relating to capital shares, and the number of units if relating to any other kind of security. (d) The term "outstanding" means issued and not held by or for the account of the issuer. The following securities shall not be deemed outstanding within the meaning of this definition: (1) securities of an issuer held in a sinking fund relating to securities of the issuer of the same class; (2) securities of an issuer held in a sinking fund relating to another class of securities of the issuer, if the obligation evidenced by such other class of securities is not in default as to principal or interest or otherwise; (3) securities pledged by the issuer thereof as security for an obligation of the issuer not in default as to principal or interest or otherwise; (4) securities held in escrow if placed in escrow by the issuer thereof; provided, however, that any voting securities of an issuer shall be deemed outstanding if any person other than the issuer is entitled to exercise the voting rights thereof. (e) A security shall be deemed to be of the same class as another security if both securities confer upon the holder or holders thereof substantially the same rights and privileges, provided, however, that, in the case of secured evidences of indebtedness, all of which are issued under a single indenture, differences in the interest rates or maturity dates of various series thereof shall not be deemed sufficient to constitute such series different classes, and provided, further, that, in the case of unsecured evidences of indebtedness, differences in the interest rates or maturity dates thereof shall not be deemed sufficient to constitute them securities of different classes, whether or not they are issued under a single indenture. Section 10.5. There shall at all times be at least one corporate Trustee under this Indenture which shall be a bank or trust company in good standing, organized and doing X-7 business under the laws of the United States, the State of Delaware or the State of New York or a corporation or other person permitted to act as trustee by the Commission, and having a combined capital and surplus of not less than $20,000,000, which is authorized under the laws of the jurisdiction of incorporation to exercise corporate trust powers and is subject to supervision or examination by Federal or state authority. No obligor upon the Securities or Affiliate of such obligor shall serve as Trustee. If the Trustee or any successor publishes reports of condition at least annually, pursuant to law or to the requirements of the aforesaid supervising or examining authority, the combined capital and surplus of the Trustee or of such successor Trustee shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published. If the Trustee shall at any time cease to satisfy the foregoing qualifications, then the Trustee shall resign within 30 days thereafter, such resignation to become effective upon the appointment of a successor Trustee and such successor's acceptance of such appointment. If the Trustee shall fail or refuse to resign within such 30-day period, or if the Trustee has or shall acquire any conflicting interest of the character specified in Section 10.4 with respect to the Securities of one or more series and shall fail or refuse either to eliminate such conflicting interest or to resign within the period in Section 10.4 provided in respect of such resignation, then (i) the Trustee shall, within 10 days after the expiration of such period, transmit notice of such failure or refusal to the Holders of Securities of any such series in the manner and to the extent provided in subdivision (c) of Section 10.10; and (ii) any Holder of Securities of such series, who has been the bona fide Holder of a Security of such series for at least six months, may, subject to the provisions of the last paragraph of Section 6.7 hereof, on behalf of himself and all others similarly situated, petition any court of competent jurisdiction for the removal of the Trustee, and the appointment of a successor, if the Trustee fails, after written request therefor by such Holder of Securities of such series, to comply with the provisions of Section 10.4. Section 10.6. The Trustee may resign and be discharged from the trust hereby created with respect to the Securities of one or more series by giving notice thereof to the Company specifying the date when such resignation shall take effect, and by giving notice thereof to the Holders of Securities of such series, in the manner and to the extent provided in subdivision (c) of Section 10.10. Except as otherwise provided in Sections 10.4 and 10.5, such resignation shall take effect on the date specified in such notice unless previously a successor Trustee shall have been appointed as hereinafter provided, in which event such resignation shall take effect upon the appointment of such successor Trustee. The Trustee may be removed at any time with respect to the Securities of any series by an instrument or instruments in writing delivered to the Trustee and to the Company signed by the Holders of a majority in principal amount of the Securities of that series then outstanding or by their duly authorized attorneys-in-fact. In case the Trustee shall resign or be removed or otherwise shall become incapable of acting as Trustee, with respect to the Securities of one or more series, a successor Trustee may be appointed by the Holders of a majority in principal amount of the Securities of any series then outstanding by an instrument or instruments in writing filed with the Company and with the Trustee and signed by such Holders or by their duly authorized attorneys-in- fact, or, in the case of the removal of the Trustee pursuant to the provisions of Section 10.5, by any court of competent jurisdiction acting pursuant to the provisions of Section 10.5; but until a new trustee shall be appointed by the Holders of Securities of that series or a court of competent jurisdiction as herein authorized, the Company, by an instrument executed by order of its Board, shall appoint a Trustee to fill the vacancy. Every such successor Trustee so appointed by the Holders of Securities of that series, by a court of competent jurisdiction or by the Company, shall be a bank or trust company meeting the requirements provided in Section 10.5. X-8 If in a proper case no appointment of a successor Trustee with respect to the Securities of any series shall be made pursuant to the foregoing provisions of this Article within six months after a vacancy shall have occurred in the office of Trustee, the Holder of any Security of that series or any retiring Trustee may apply to any court of competent jurisdiction to appoint a successor Trustee. The court may thereupon, after such notice, if any, as it may deem proper and prescribe, appoint a successor Trustee. Section 10.7. (a) Any successor Trustee appointed under any of the methods herein provided with respect to all Securities shall execute, acknowledge and deliver to its predecessor Trustee and to the Company an instrument in writing accepting such appointment hereunder and thereupon such successor Trustee, without any further act, deed or conveyance, shall become fully vested with the rights, powers, trusts, duties and obligations of its predecessor in the trust hereunder with like effect as if originally named as Trustee hereunder. The predecessor Trustee shall, nevertheless, at the written request of the successor Trustee, pay over to the successor Trustee all moneys at the time held by it hereunder; and the Company and the predecessor Trustee, upon payment or provision therefor of any amounts then due the predecessor Trustee pursuant to the provisions of Section 10.2, shall execute and deliver such instruments and do such other things as may reasonably be required for more fully and certainly vesting and confirming in the successor Trustee all such rights, powers, trusts, duties and obligations. The Company shall promptly give notice of the appointment of such successor Trustee to the Holders of all Securities in the manner and to the extent provided in subdivision (c) of Section 10.10. (b) In case of the appointment hereunder of a successor Trustee with respect to the Securities of one or more (but not all) series under any of the methods herein provided, the Company, the predecessor Trustee and each successor Trustee with respect to the Securities of one or more series shall execute and deliver an indenture supplemental hereto wherein each successor Trustee shall accept such appointment and which (1) shall contain such provisions as shall be necessary or desirable to transfer and confirm to, and to vest in, each successor Trustee all the rights, powers, trusts and duties of the predecessor Trustee with respect to the Securities of that or those series to which the appointment of such successor Trustee relates, (2) if the predecessor Trustee is not retiring with respect to all Securities, shall contain such provisions as shall be deemed necessary or desirable to confirm that all the rights, powers, trusts and duties of the predecessor Trustee with respect to the Securities of that or those series as to which the predecessor Trustee is not retiring shall continue to be vested in the predecessor Trustee, and (3) shall add to or change any of the provisions of this Indenture as shall be necessary to provide for or facilitate the administration of the trusts hereunder by more than one Trustee, it being understood that nothing herein or in such supplemental indenture shall constitute such Trustees co-trustees of the same trust and that each such Trustee shall be trustee of a trust or trusts hereunder separate and apart from any trust or trusts hereunder administered by any other such Trustee; and upon the execution and delivery of such supplemental indenture the resignation or removal of the predecessor Trustee shall become effective to the extent provided therein and each such successor Trustee, without any further act, deed or conveyance, shall become vested with all the rights, powers, trusts and duties of the predecessor Trustee with respect to the Securities of that or those series to which the appointment of such successor Trustee relates; but, on request of the Company or any successor Trustee, such predecessor Trustee shall duly assign, transfer and deliver to such successor Trustee all property and money held by such predecessor Trustee hereunder with respect to the Securities of that or those series to which the appointment of such successor Trustee relates. The Company shall promptly give notice of the appointment of such successor Trustee with respect to one or more (but not all) series of Securities to the Holders of such series in the manner and to the extent provided in subdivision (c) of Section 10.10 X-9 Section 10.8. Any corporation into which the Trustee or any successor to it in the trust created by this Indenture may be merged or converted, or with which it or any successor to it may be consolidated, or any corporation resulting from any merger, conversion or consolidation to which the Trustee or any successor to it shall be a party, shall be the successor Trustee under this Indenture without the execution or filing of any instruments or any further act on the part of any of the parties hereto. Section 10.9. (a) Subject to the provisions of subdivision (b) of this Section 10.9, if the Trustee, in its individual capacity, shall be or shall become a creditor, directly or indirectly, secured or unsecured, of the Company or of any other obligor upon the Securities of any series (other than a relationship of the nature specified in subdivision (b) of this Section 10.9) within three months prior to a default (as defined in subdivision (c) of this Section 10.9) or subsequent to such a default, then, unless and until such default shall be cured, the Trustee shall set apart and hold in a special account for the benefit of the Trustee individually, the Holders of the Securities and the holders of other indenture securities (as defined in subdivision (c) of this Section 10.9): (1) an amount equal to any and all reductions in the amount due and owing upon any claim as such creditor in respect of principal or interest, effected after the beginning of such three months' period and valid as against the Company and its other creditors, except any such reduction resulting from the receipt or disposition of any property described in paragraph (2) of this subdivision, or from the exercise of any right of set-off which the Trustee could have exercised if a petition in bankruptcy had been filed by or against the Company upon the date of such default; and (2) all property received by the Trustee in respect of any claim as such creditor, either as security therefor, or in satisfaction or composition thereof, or otherwise, after the beginning of such three months' period, or an amount equal to the proceeds of any such property, if disposed of, subject, however, to the rights, if any, of the Company and its other creditors in such property or such proceeds. Nothing herein contained, however, shall affect the right of the Trustee: (A) to retain for its own account (i) payments made on account of any such claim by any person (other than the Company) who is liable thereon, and (ii) the proceeds of the bona fide sale of any such claim by the Trustee to a third person, and (iii) distributions made in cash, securities or other property in respect of claims filed against the Company in bankruptcy or receivership or in proceedings for reorganization pursuant to the Federal bankruptcy laws or applicable state law; (B) to realize, for its own account, upon any property held by it as security for any such claim, if such property was so held prior to the beginning of such three months' period; (C) to realize, for its own account, but only to the extent of the claim hereinafter mentioned, upon any property held by it as security for any such claim, if such claim was created after the beginning of such three months' period and such property was received as security therefor simultaneously with the creation thereof, and if the Trustee shall sustain the burden of proving that at the time such property was so received the Trustee had no reasonable cause to believe that a default as defined in subdivision (c) of this Section 10.9 would occur within three months; or (D) to receive payment on any claim referred to in paragraph (B) or (C), against the release of any property held as security for such claim as provided in paragraph (B) or (C), as the case may be, to the extent of the fair value of such property. X-10 For the purposes of paragraphs (B), (C) and (D), property substituted after the beginning of such three months' period for property held as security at the time of such substitution shall, to the extent of fair value of the property released, have the same status as the property released, and, to the extent that any claim referred to in any of such paragraphs is created in renewal of or in substitution for or for the purpose of repaying or refunding any pre-existing claim of the Trustee as such creditor, such claim shall have the same status as such pre-existing claim. If the Trustee shall be required to account, the funds and property held in such special account and the proceeds thereof shall be apportioned between the Trustee, the Holders of Securities of any series and the holders of other indenture securities in such manner that the Trustee, the Holders of Securities of any series and the holders of other indenture securities realize, as a result of payments from such special account and payments of dividends on claims filed against the Company in bankruptcy or receivership or in proceedings for reorganization pursuant to the Federal bankruptcy laws or applicable state law, the same percentage of their respective claims, figured before crediting to the claim of the Trustee anything on account of the receipt by it from the Company of the funds and property in such special account and before crediting to the respective claims of the Trustee, the Holders of Securities of any series and the holders of other indenture securities dividends on claims filed against the Company in bankruptcy or receivership or in proceedings for reorganization pursuant to the Federal bankruptcy laws or applicable state law, but after crediting thereon receipts on account of the indebtedness represented by their respective claims from all sources other than from such dividends and from the funds and property so held in such special account. As used in this paragraph, with respect to any claim, the term "dividends" shall include any distribution with respect to such claim, in bankruptcy or receivership or in proceedings for reorganization pursuant to the Federal bankruptcy laws or applicable state law, whether such distribution is made in cash, securities, or other property, but shall not include any such distribution with respect to the secured portion, if any, of such claim. The court in which such bankruptcy, receivership or proceeding for reorganization is pending shall have jurisdiction (i) to apportion between the Trustee, the Holders of Securities of any series, and the holders of other indenture securities, in accordance with the provisions of this paragraph, the funds and property held in such special account and the proceeds thereof, or (ii) in lieu of such apportionment, in whole or in part, to give to the provisions of this paragraph due consideration in determining the fairness of the distributions to be made to the Trustee, the Holders of Securities of any series, and the holders of other indenture securities, with respect to their respective claims, in which event it shall not be necessary to liquidate or to appraise the value of any securities or other property held in such special account or as security for any such claim, or to make a specific allocation of such distributions as between the secured and unsecured portions of such claims, or otherwise to apply the provisions of this paragraph as a mathematical formula. Any trustee who has resigned or been removed after the beginning of such three months' period shall be subject to the provisions of this subsection as though such resignation or removal had not occurred. If any trustee has resigned or been removed prior to the beginning of such three months' period, it shall be subject to the provisions of this subdivision if and only if the following conditions exist-- (i) the receipt of property or reduction of claim which would have given rise to the obligation to account, if such trustee had continued as Trustee, occurred after the beginning of such three months' period; and (ii) such receipt of property or reduction of claim occurred within three months after such resignation or removal. X-11 (b) There shall be excluded from the operation of subdivision (a) of this Section 10.9 a creditor relationship arising from-- (1) the ownership or acquisition of securities issued under any indenture, or any security or securities having a maturity of one year or more at the time of acquisition by the Trustee; and for the purposes of this clause the term "security" shall mean any note, bond, debenture, evidence of indebtedness, certificate of interest or participation in any profit-sharing agreement, collateral-trust certificate, investment contract, certificate of deposit for a security, or, in general, any interest or instrument commonly known as a "security" or any certificate of interest or participation in, temporary or interim certificate for, receipt for, or guaranty of, any of the foregoing; (2) advances authorized by a receivership or bankruptcy court of competent jurisdiction, or by this Indenture, for the purpose of preserving any property which shall at any time be subject to the lien of this Indenture or discharging tax liens or other prior liens or encumbrances thereon, if notice of such advance and of the circumstances surrounding the making thereof is given to the Holders of Securities of any series as provided in Section 10.10 with respect to advances by the Trustee as such; (3) disbursements made in the ordinary course of business in the capacity of trustee under an indenture, transfer agent, registrar, custodian, paying agent, fiscal agent or depositary, or other similar capacity; (4) an indebtedness created as a result of services rendered or premises rented; or an indebtedness created as a result of goods or securities sold in a cash transaction as defined in subdivision (c) of this Section 10.9; (5) the ownership of stock or of other securities of a corporation organized under the provisions of Section 25(a) of the Federal Reserve Act, as amended, which is directly or indirectly a creditor of the Company; or (6) the acquisition, ownership, acceptance or negotiation of any drafts, bills of exchange, acceptances or obligations which fall within the classification of self-liquidating paper as defined in subdivision (c) of this Section 10.9. (c) As used in this Section 10.9: (1) the term "default" shall mean any failure to make payment in full of the principal of (or premium, if any, on) or interest on any of the Securities or upon the other indenture securities when and as such principal, premium, if any, or interest becomes due and payable; (2) the term "other indenture securities" shall mean securities upon which the Company is an obligor (as defined in the Trust Indenture Act of 1939, as amended) outstanding under any other indenture (A) under which the Trustee is also trustee, (B) which contains provisions substantially similar to the provisions of subdivision (a) of this Section 10.9, and (C) under which a default exists at the time of the apportionment of the funds and property held in said special account; (3) the term "cash transaction" shall mean any transaction in which full payment for goods or securities sold is made within seven days after delivery of the goods or securities in currency or in checks or other orders drawn upon banks or bankers and payable upon demand; (4) the term "self-liquidating paper" shall mean any draft, bill of exchange, acceptance or obligation which is made, drawn, negotiated or incurred by the Company for the purpose of financing the purchase, processing, manufacture, shipment, storage or X-12 sale of goods, wares or merchandise and which is secured by documents evidencing title to, possession of, or a lien upon the goods, wares or merchandise or the receivables or proceeds arising from the sale of the goods, wares or merchandise previously constituting the security, provided the security is received by the Trustee simultaneously with the creation of the creditor relationship with the Company arising from the making, drawing, negotiating or incurring of the draft, bill of exchange, acceptance or obligation; and (5) the term "Company" shall mean any obligor upon the Securities at the time in question. Section 10.10. (a) The Trustee shall, so long as any Securities of any series are outstanding hereunder, transmit to the Holders, as hereinafter provided, within 60 days after May 15 of each year, beginning with the year 1996, a brief report as of such May 15 with respect to any of the following events which may have occurred within the previous twelve months (but if no such event has occurred within such period no report need be transmitted)-- (1) any change to the eligibility under Section 10.5 and qualification under Section 10.4 of the Trustee to serve as Trustee under this Indenture; (2) the creation of or any material change to a relationship specified in subsections (1) through (10) of the first paragraph of Section 10.4 hereof. (3) the character and amount of any advances (and if the Trustee elects so to state the circumstances surrounding the making thereof) made by it as Trustee which remain unpaid on the date of such report, and for the reimbursement of which it claims or may claim a lien or charge, prior to that of the Securities, on property or funds held or collected by it as a Trustee, except that the Trustee shall not be required (but may elect) to state such advances if such advances so remaining unpaid aggregate not more than 1/2 of 1% of the principal amount of the Securities outstanding on such date; (4) the amount, interest rate and maturity date of all other indebtedness owing to it in its individual capacity, on the date of such report, by the Company or any other obligor under this Indenture, with a brief description of any property held as collateral security therefor, except an indebtedness based upon a creditor relationship arising in any manner described in paragraph (2), (3), (4) or (6) of subdivision (b) of Section 10.9; (5) any change to the property and funds physically in the possession of the Trustee in such capacity on the date of such report; (6) any additional issue of Securities which it has not previously reported; and (7) any action taken by the Trustee in the performance of its duties under this Indenture which it has not previously reported and which in the opinion of the Trustee materially affects the Securities, except action in respect of a default, notice of which has been or is to be withheld by the Trustee in accordance with Section 10.3. (b) The Trustee shall, so long as any Securities of any series shall be outstanding hereunder, also transmit to the Holders, as hereinafter provided, within the times hereinafter specified, a brief report with respect to the character and amount of any advances (and if the Trustee so elects to state the circumstances surrounding the making thereof) made by the Trustee, as such, since the date of the last report transmitted pursuant to the provisions of subdivision (a) of this Section 10.10 (or if no such report has been so transmitted, since the date of the execution of this Indenture), for the reimbursement of which it claims or may X-13 claim a lien or charge prior to that of the Securities, on property or funds held or collected by the Trustee, as such, and which it has not previously reported pursuant to this paragraph, if such advances remaining unpaid at any time aggregate more than 10% of the principal amount of Securities outstanding at such time, such report to be so transmitted within 90 days after such time. (c) All reports required by this Section 10.10, and all other reports or notices which are required by any other provision of this Indenture to be transmitted in accordance with the provisions of this Section, shall be transmitted by mail, first class postage pre-paid to all Holders, as the names and addresses of such Holders appear upon the Security Register. The Trustee shall, at the time of the transmission to the Holders of any report or notice pursuant to this Section 10.10, file a copy thereof with each stock exchange, if any, upon which the Securities are listed and with the Commission. The Company will notify the Trustee when Securities are listed on a stock exchange. Section 10.11. The Trustee shall preserve, in as current a form as is reasonably practicable, all information furnished it pursuant to subdivision (d) of Section 3.3 hereof, or received by it as paying agent hereunder. The Trustee may destroy (1) any information so furnished to it by the Company upon receipt of new information from the Company, (2) any information received by it as a paying agent, by delivering to itself, as Trustee, not earlier than 45 days after an interest payment date on the Securities, a list containing the names and addresses of the Holders of Securities obtained from such information since the delivery of the last previous list, if any, and (3) any list delivered to itself, as Trustee, which was compiled from information received by it as paying agent upon the receipt of a new list so delivered. Within five business days after receipt by the Trustee of a written application by any three or more Holders of Securities stating that the applicants desire to communicate with other Holders with respect to their rights under this Indenture or under the Securities, and accompanied by a copy of the form of proxy or other communication which such applicants proposed to transmit, and by reasonable proof that each such applicant has owned a Security or Securities for a period of at least six months preceding such application, the Trustee shall, at its election, either (1) afford to such applicants access to all information so furnished to or received by the Trustee and not destroyed pursuant to the provisions of this Section 10.11, or (2) inform such applicants as to the approximate number of Holders according to the most recent information so furnished to or received by the Trustee, and as to the approximate cost of mailing to the Holders the form of proxy or other communication, if any, specified in such application. If the Trustee shall elect not to afford to such applicants access to such information, the Trustee shall, upon the written request of such applicants, mail to all Holders whose names and addresses are contained in the then current information filed with the Trustee as aforesaid, copies of the form of proxy or other communication which is specified in such request, with reasonable promptness after a tender to the Trustee of the material to be mailed and the payment, or provision for the payment, of the reasonable expenses of such mailing, unless within five days after such tender, the Trustee shall mail to such applicants, and file with the Commission, together with a copy of the material to be mailed, a written statement to the effect that, in the opinion of the Trustee, such mailing would be contrary to the best interest of the Holders or would be in violation of applicable law. Such written statement shall specify the basis of such opinion. If the Commission, after granting opportunity for a hearing upon the objections specified in said written statement and on notice to the Trustee, shall enter an order refusing to sustain any of such objections, or if, after the entry of an order sustaining one or more of such objections, the Commission shall find, after notice and opportunity for a hearing, that all objections sustained have been met and shall enter an order so declaring, the Trustee shall comply with such determination X-14 with reasonable promptness after such determination and the renewal of the aforesaid tender; otherwise the Trustee shall be relieved of any obligation or duty to such applicants respecting their application. Neither the Company nor the Trustee nor any Authenticating Agent nor any paying agent nor any Security registrar shall be liable or accountable to the Company or to any Holder by reason of disclosure of any such information as to the names and addresses of Holders in accordance with the provisions of this Section 10.11, regardless of the source from which such information was derived, nor by reason of the mailing of any material pursuant to a request made under this Section 10.11. Section 10.12. The Trustee or any Authenticating Agent or any paying agent or Security registrar in its individual or any other capacity may buy, own, hold and sell any of the Securities or any other evidences of indebtedness or other securities, whether heretofore or hereafter created or issued, of the Company or any Subsidiary or Affiliate of the Company with the same rights it would have if it were not Trustee, Authenticating Agent, paying agent or Security registrar; and any Authenticating Agent and, subject to the provisions of this Article X, the Trustee may engage or be interested in any financial or other transaction with the Company or any Subsidiary or Affiliate, including, without limitation, secured and unsecured loans to the Company or any Subsidiary or Affiliate, and may maintain any and all other general banking and business relations with the Company and any Subsidiary or Affiliate, and may act as trustee under an indenture with respect to indebtedness thereof, with like effect and in the same manner and to the same extent as if the Trustee were not a party to this Indenture; and no implied covenant shall be read into this Indenture against the Trustee in respect of any such matters. Section 10.13. The Trustee may comply in good faith with any rule, regulation or order of the Commission made pursuant to the terms and provisions of the Trust Indenture Act of 1939, as amended, and shall be fully protected in so doing notwithstanding that such rule, regulation or order may thereafter be amended or rescinded or determined by judicial or other authority to be invalid for any reason, but nothing herein contained shall require the Trustee to take any action or omit to take any action in accordance with such rule, regulation or order, except as otherwise required by subdivisions (a) and (b) of Section 10.1. Section 10.14. At any time when any of the Securities remain outstanding there may be an Authenticating Agent with respect to one or more series of Securities appointed by the Trustee to act on its behalf and subject to its direction in connection with the authentication of the Securities of such series as set forth in Articles III, IV, V, IX and XI. Such Authenticating Agent shall be acceptable to the Company and shall at all times be a corporation organized and doing business under the laws of the United States or of any State or Territory or of the District of Columbia, authorized under such laws to act as Authenticating Agent, having a combined capital and surplus of not less than $20,000,000, and being subject to supervision or examination by Federal, State, Territorial, or District of Columbia authority and (if there be such a corporation willing and able to act as Authenticating Agent on reasonable and customary terms) having its principal office and place of business in the State of Delaware or in the Borough of Manhattan of The City of New York. If such corporation publishes reports of conditions at least annually, pursuant to law or to the requirements of the aforesaid supervising or examining authority, then for the purposes of this Section 10.14 the combined capital and surplus of such corporation shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published. Any corporation into which any Authenticating Agent may be merged or converted or with which it may be consolidated, or any corporation resulting from any merger, conversion X-15 or consolidation to which any Authenticating Agent shall be a party, or any corporation succeeding to the corporate agency business of any Authenticating Agent, shall continue to be the Authenticating Agent without the execution or filing of any paper or any further act on the part of the Trustee or such Authenticating Agent. Any Authenticating Agent with respect to one or more series of Securities may at any time resign by giving written notice of resignation to the Trustee and to the Company. The Trustee may at any time terminate the agency of any Authenticating Agent by giving written notice of termination to such Authenticating Agent and to the Company. Upon receiving such a notice of resignation or upon such a termination, or in case at any time any Authenticating Agent shall cease to be eligible in accordance with the provisions of this Section 10.14, the Trustee may appoint a successor Authenticating Agent with respect to any series of Securities which shall be acceptable to the Company, shall give written notice of such appointment to the Company, and the Company shall mail notice of such appointment to all Holders of Securities of the series with respect to which such Authenticating Agent will serve, as the names and addresses of such Holders appear upon the Security Register. Any successor Authenticating Agent upon acceptance of its appointment hereunder shall become vested with all the rights, powers, duties and responsibilities of its predecessor hereunder, with like effect as if originally named as Authenticating Agent herein. No successor Authenticating Agent shall be appointed unless eligible under the provisions of this Section 10.14. The Trustee agrees to pay to each Authenticating Agent from time to time reasonable compensation for its services, and the Trustee shall be entitled to be reimbursed for such payments subject to the provisions of Section 10.2. An Authenticating Agent shall have no responsibility or liability for any action taken by it as such at the direction of the Trustee. If an appointment is made pursuant to this Section, the Securities shall have endorsed thereon, in addition to the Trustee's Certificate, an Authenticating Agent's Certificate in the following form: This is one of the Securities of the series designated and referred to in the within-mentioned Indenture. ------------------------------------- As Authenticating Agent By __________________________________ Authorized Officer X-16 ARTICLE XI Supplemental Indentures Section 11.1. The Company, when authorized by resolution of its Board, and the Trustee, subject to the conditions and restrictions in this Indenture contained, may from time to time and at any time enter into an indenture or indentures supplemental hereto (which shall conform to the provisions of the Trust Indenture Act of 1939 as then in effect) for one or more of the following purposes: (a) to evidence the succession of another corporation to the Company, or successive successions, and the assumption by the successor corporation of the covenants, agreements and obligations of the Company pursuant to Article IX; (b) to add to the covenants and agreements of the Company for the benefit of the Holders of all or any series of Securities (and if such covenants and agreements are for the benefit of less than all series of Securities, stating that such covenants and agreements are expressly being included solely for the benefit of such series), and to surrender any right or power herein reserved to or conferred upon the Company; (c) to add to or change any of the provisions of this Indenture to such extent as shall be necessary to permit or facilitate the issuance of Securities in bearer form, registrable or not registrable as to principal, and with or without interest coupons; (d) to change or eliminate any of the provisions of this Indenture, provided that any such change or elimination (i) shall become effective only when there is no Security outstanding of any series created prior to the execution of such supplemental indenture which is entitled to the benefit of such provision or (ii) shall not apply to any such outstanding Security; (e) to establish the form or terms of Securities of any series as permitted by Section 2.1; (f) to evidence and provide for the acceptance of appointment hereunder by a successor Trustee with respect to the Securities of one or more series and to add to or change any of the provisions of this Indenture as shall be necessary to provide for or facilitate the administration of the trusts hereunder by more than one Trustee, pursuant to the requirements of Section 10.7(b); (g) to cure any ambiguity or to correct or supplement any defective or inconsistent provision contained in this Indenture or in any supplemental indenture; or (h) to make such provisions with respect to matters or questions arising under this Indenture as may be necessary or desirable and not inconsistent with this Indenture. The Trustee is hereby authorized to join with the Company in the execution of any supplemental indenture authorized or permitted by the terms of this Indenture, to make any further appropriate agreements and stipulations which may be therein contained, but the Trustee shall not be obligated to enter into any such supplemental indenture which affects the Trustee's own rights, duties or immunities under this Indenture or otherwise. Any supplemental indenture authorized by the provisions of this Section 11.1 may be executed by the Company and the Trustee without the consent of the Holders of any of the Securities at the time outstanding, notwithstanding any of the provisions of Section 11.2. XI-1 Section 11.2. With the consent (evidenced as provided in Section 7.1) of the Holders (or persons entitled to vote, or to give consents respecting the same) of not less than a majority in principal amount of the outstanding Securities of each series affected by such supplemental indenture, the Company, when authorized by a resolution of its Board, and the Trustee may from time to time and at any time enter into an indenture or indentures supplemental hereto (which shall conform to the provisions of the Trust Indenture Act of 1939 as then in effect) for the purpose of adding any provisions to or modifying or altering in any manner or eliminating any of the provisions of this Indenture or of any supplemental indenture or of modifying or altering in any manner the rights and obligations of the Holders of such Securities and of the Company; provided, however, that no such supplemental indenture shall (i) change the Stated Maturity of the principal of (premium, if any, on), or the interest on, any Security, or reduce the principal amount of (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 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. A supplemental indenture which changes or eliminates any covenant or other provision of this Indenture which has expressly been included solely for the benefit of one or more particular series of Securities, or which modifies the rights of the Holders of Securities of such series with respect to such covenant or other provision, shall be deemed not to affect the rights under this Indenture of the Holders of Securities of any other series. Upon the request of the Company accompanied by a Certified Resolution authorizing the execution of any such supplemental indenture and upon the filing with the Trustee of evidence of the consent of Holders of Securities affected thereby as aforesaid, the Trustee shall join with the Company in the execution of such supplemental indenture unless such supplemental indenture affects the Trustee's own rights, duties or immunities under this Indenture or otherwise, in which case the Trustee may in its discretion, but shall not be obligated to, enter into such supplemental indenture. It shall not be necessary for the consent of the Holders under this Section 11.2 to approve the particular form of any proposed supplemental indenture, but it shall be sufficient if such consent shall approve the substance thereof. Promptly after the execution by the Company and the Trustee of any supplemental indenture pursuant to the provisions of this Section 11.2 the Company shall mail, first class postage prepaid, to the Holders of the Securities affected thereby at their last addresses as they shall appear upon the Security Register, a notice, setting forth in general terms the substance of such supplemental indenture. Any failure of the Company to mail such notice, or any defect therein, shall not, however, in any way impair or affect the validity of any such supplemental indenture. Section 11.3. Upon the execution of any supplemental indenture pursuant to the provisions of this Article XI, or of Section 9.1, this Indenture shall be and be deemed to be modified and amended in accordance therewith and the respective rights, limitations of rights, obligations, duties and immunities under this Indenture of the Trustee, the Company and the Holders of Securities affected thereby shall thereafter be determined, exercised and enforced hereunder subject in all respects to such modifications and amendments, and all the terms and conditions of any such supplemental indenture shall be and be deemed to be part of the terms and conditions of this Indenture for any and all purposes. XI-2 Section 11.4. Securities of any series authenticated and delivered after the execution of any supplemental indenture pursuant to the provisions of this Article XI, or after any action taken at a Holders' meeting pursuant to Article XII, may bear a notation in form approved by the Trustee as to any matter provided for in such supplemental indenture or as to any action taken at any such meeting; and in such case, suitable notation may be made upon outstanding Securities affected thereby after proper presentation and demand. If the Company shall so determine, Securities of any series so modified as to conform, in the opinion of the Trustee and the Board, to any modification or alteration of this Indenture contained in any such supplemental indenture, or to any action taken at any such meeting, may be prepared by the Company, authenticated by the Trustee or an Authenticating Agent on its behalf and delivered in exchange for outstanding Securities of such series upon demand of and without cost to, the Holders thereof, upon surrender of such Securities. Section 11.5. The Trustee may receive and shall, subject to the provisions of Section 10.1, be fully protected in relying upon an Opinion of Counsel as conclusive evidence that any supplemental indenture executed pursuant to this Article XI is authorized or permitted by the terms of this Indenture and that it is not inconsistent therewith. Section 11.6. Nothing in this Article contained shall affect or limit the right or obligation of the Company to execute and deliver to the Trustee any instrument of further assurance or other instrument which elsewhere in this Indenture it is provided shall be delivered to the Trustee. XI-3 ARTICLE XII Meetings of Holders Section 12.1. A meeting of Holders of any series of Securities may be called at any time and from time to time pursuant to the provisions of this Article XII for any of the following purposes: (1) to give any notice to the Company or to the Trustee, or to give any direction to the Trustee or to waive or consent to the waiving of any default hereunder and its consequences, or to take any other action authorized to be taken by such Holders pursuant to any of the provisions of Article VI; (2) to remove the Trustee or appoint a successor trustee pursuant to the provisions of Article X; (3) to consent to the execution of an indenture or indentures supplemental hereto pursuant to the provisions of Section 11.2; or (4) to take any other action authorized to be taken by or on behalf of the Holders of any specified aggregate principal amount of the Securities of that series under any other provision of this Indenture, or authorized or permitted by law. Section 12.2. The Trustee may at any time call a meeting of Holders of Securities of any series to take any action specified in Section 12.1, to be held at such time and at such place in any of the city in which the principal executive offices of the Company are located, the City of Wilmington, Delaware, the city in which the principal corporate trust office of the Trustee is located, the City of Chicago or in the Borough of Manhattan of The City of New York, as the Trustee shall determine. Notice of every meeting of such Holders, setting forth the time and place of such meeting and in general terms the action proposed to be taken at such meeting, shall be mailed by the Trustee, first class postage prepaid, to the Company, and to the Holders of Securities of that series at their last addresses as they shall appear upon the Security Register, not less than 20 nor more than 60 days prior to the date fixed for the meeting. Any meeting of the Holders of Securities of any series shall be valid without notice if the Holders of all Securities of that series then outstanding are present in person or by proxy, or if notice is waived before or after the meeting by the Holders of all outstanding Securities of that series, and if the Company and the Trustee are either present by duly authorized representatives or have, before or after the meeting, waived notice. Section 12.3. In case at any time the Company, pursuant to resolution of its Board, or Holders of not less than a majority in aggregate principal amount of the Securities of any series then outstanding, shall have requested the Trustee to call a meeting of Holders of Securities of that series to take any action specified in Section 12.1, by written request setting forth in reasonable detail the action proposed to be taken at the meeting, and the Trustee shall not have mailed the notice of such meeting within 20 days after receipt of such request, then the Company or such Holders in the amount above specified may determine the time and the place in any of the city in which the principal executive offices of the Company are located, the City of Wilmington, Delaware, the city in which the principal corporate trust office of the Trustee is located, the City of Chicago or in the Borough of Manhattan of The City of New York, for such meeting and may call such meeting for the purpose of taking such action, by mailing or causing to be mailed notice thereof as provided in Section 12.2. XII-1 Section 12.4. To be entitled to vote at any meeting of Holders of Securities of any series a person shall (a) be a registered Holder of one or more Securities of that series, or (b) be a person appointed by an instrument in writing as proxy for the registered Holder or Holders of Securities of that series. The only persons who shall be entitled to be present or to speak at any meeting of Holders shall be the persons entitled to vote at such meeting and their counsel and any representatives of the Trustee and its counsel and any representatives of the Company and its counsel. Section 12.5. Notwithstanding any other provisions of this Indenture, the Trustee may make such reasonable regulations as it may deem advisable for any meeting of Holders of Securities of any series, in regard to proof of the holding of Securities of that series and of the appointment of proxies, and in regard to the appointment and duties of inspectors of votes, and submission and examination of proxies, certificates and other evidence of the right to vote, and such other matters concerning the conduct of the meeting as it shall think fit. Unless otherwise determined by the Company pursuant to Section 7.1, such regulations may fix a record date and time for purposes of determining the registered Holders of any series of Securities entitled to vote at such meeting, which record date shall be (i) the later of 30 days prior to the first solicitation of the vote at such meeting or the date of the most recent list of Holders furnished to the Trustee prior to such solicitation pursuant to Section 3.3 (d) hereof or (ii) such other date determined by the Trustee. If the Trustee sets such a record date only those persons who are registered Holders of such Securities at the record date and time so fixed shall be entitled to vote at such meeting whether or not they shall be such Holders at the time of the meeting. Such regulations may further provide that written instruments appointing proxies, regular on their face, may be presumed valid and genuine without the proof specified in Section 7.2 or other proof. Except as otherwise permitted or required by any such regulations, the holding of such Securities shall be proved in the manner specified in Section 7.2 and the appointment of any proxy shall be proved in the manner specified in Section 7.2 or by having the signature of the person executing the proxy witnessed or guaranteed by any bank, banker or trust company satisfactory to the Trustee. The Trustee shall, by an instrument in writing, appoint a temporary chairman of the meeting, unless the meeting shall have been called by the Company or by Holders of Securities of any series as provided in Section 12.3, in which case the Company or such Holders calling the meeting, as the case may be, shall in like manner appoint a temporary chairman. A permanent chairman and a permanent secretary of the meeting shall be elected by vote of the Holders of a majority in principal amount of the Securities of that series represented at the meeting and entitled to vote. Subject to the provisions of Section 7.4, at any meeting each Holder of Securities of any series or proxy shall be entitled to one vote for each $1,000 principal amount at Stated Maturity (or the Dollar equivalent thereof based upon the Market Exchange Rate on the latest date for which such rate was established on or before the date for determining the Holders entitled to perform such act, if the principal amount of any Securities of any series is denominated in any Foreign Currency) of Securities of that series, provided, however, that no vote shall be cast or counted at any meeting in respect of any Securities of that series challenged as not outstanding and ruled by the chairman of the meeting to be not outstanding. The chairman of the meeting shall have no right to vote other than by virtue of Securities of that series held by him or instruments in writing as aforesaid duly designating him as the person to vote on behalf of other such Holders. At any meeting of Holders of Securities of that series, the presence of persons holding or representing any number of such Securities shall be sufficient for a quorum. Any meeting of such Holders duly called pursuant to the provisions of Section 12.2 or 12.3 may be adjourned from time to time by vote of the Holders of a majority in principal amount of the Securities of that series represented at the meeting and entitled to vote, and the meeting may be held as so adjourned without further notice. XII-2 Section 12.6. The vote upon any resolution submitted to any meeting of Holders of Securities of any series shall be by written ballots on which shall be subscribed the signatures of the Holders of Securities of that series or of their representatives by proxy and the principal amount of the Securities of that series voted by the ballot. The permanent chairman of the meeting shall appoint two inspectors of votes, who shall count all votes cast at the meeting for or against any resolution and who shall make and file with the secretary of the meeting their verified written reports in duplicate of all votes cast at the meeting. A record in duplicate of the proceedings of each meeting of Holders shall be prepared by the secretary of the meeting and there shall be attached to said record the original reports of the inspectors of votes on any vote by ballot taken thereat and affidavits by one or more persons having knowledge of the facts, setting forth a copy of the notice of the meeting and showing that said notice was mailed as provided in Section 12.2. The record shall be signed and verified by the affidavits of the permanent chairman and secretary of the meeting and one of the duplicates shall be delivered to the Company and the other to the Trustee to be preserved by the Trustee, the latter to have attached thereto the ballots voted at the meeting. Any record so signed and verified shall be conclusive evidence of the matters therein stated. Section 12.7. Nothing in this Article XII contained shall be deemed or construed to authorize or permit, by reason of any call of a meeting of Holders of Securities of any series or any rights expressly or impliedly conferred hereunder to make such call, any hindrance or delay in the exercise of any right or rights conferred upon or reserved to the Trustee or to the Holders of Securities of that series under any of the provisions of this Indenture or of such Securities. XII-3 ARTICLE XIII Satisfaction and Discharge of Indenture or Certain Obligations Section 13.1. If (a) the Company shall deliver to the Trustee for cancellation all Securities theretofore authenticated (other than any Securities which shall have been destroyed, lost or stolen and in lieu of or in substitution for which other Securities shall have been authenticated and delivered) and not theretofore cancelled, or (b) all the Securities not theretofore cancelled or delivered to the Trustee for cancellation shall have become due and payable, or are by their terms to become due and payable at their Stated Maturity within one year or are to be called for redemption within one year under arrangements satisfactory to the Trustee for the giving of notice of redemption, and the Company shall deposit with the Trustee as trust funds the entire amount sufficient to pay at Stated Maturity or upon redemption all of the Securities (other than any Securities which shall have been destroyed, lost or stolen and in lieu of or in substitution for which other Securities shall have been authenticated and delivered) not theretofore cancelled or delivered to the Trustee for cancellation, including principal (and premium, if any) and interest due or to become due to such date of Stated Maturity or Redemption Date, as the case may be, but, excluding, however, the amount of any moneys for the payment of principal of (and premium, if any, on) or interest on the Securities theretofore deposited with the Trustee and (1) repaid by the Trustee to the Company in accordance with the provisions of Section 13.3, or (2) paid by the Trustee to any State pursuant to its unclaimed property or similar laws, and if in either case the Company shall also pay or cause to be paid all other sums payable hereunder by the Company, then this Indenture shall cease to be of further effect, and the Trustee, on demand of the Company accompanied by an Officers' Certificate and an Opinion of Counsel, each stating that in the opinion of the signers all conditions precedent to the satisfaction and discharge of this Indenture have been complied with, and at the cost and expense of the Company, shall execute proper instruments acknowledging satisfaction of and discharging this Indenture. The Company agrees to reimburse the Trustee for any costs or expenses thereafter reasonably and properly incurred by the Trustee in connection with the Indenture or the Securities, and any such obligation for reimbursement shall survive this Indenture. Section 13.2. Any moneys, U.S. Government Obligations, and Eligible Obligations which at any time shall be deposited by the Company or on its behalf with the Trustee or any paying agent (other than the Company) for the purpose of paying or redeeming any of the Securities shall be held in trust and applied by the Trustee to the payment, to the Holders of the particular Securities for the payment or redemption of which such moneys have been deposited, of all sums due and to become due thereon for principal (and premium, if any) and interest, or analogous payments as contemplated by Section 13.4, upon presentation and surrender of such Securities at the office of the Trustee or any paying agent, all subject, however, to the provisions hereinafter contained in this Article XIII. Neither the Company nor the Trustee (except as provided in Section 10.2) nor any paying agent shall be required to pay interest on any moneys so deposited. The Company shall pay and shall indemnify the Trustee against any tax, fee or other charge imposed on or assessed against U.S. Government Obligations or Eligible Obligations deposited pursuant to Section 13.4 or the interest and principal received in respect of such obligations other than any payable by or on behalf of Holders. The Trustee shall deliver or pay to the Company from time to time upon the request of the Company any money, U.S. Government Obligations, or Eligible Obligations held by it as provided in Section 13.4 which, in the opinion of any independent firm of public accountants of recognized standing selected by the Board expressed in a written certification thereof delivered to the Trustee, are then in excess of the amount thereof which then would have XIII-1 been required to be deposited for the purpose for which such money, U.S. Government Obligations, or Eligible Obligations were deposited or received. Section 13.3. Any moneys deposited with the Trustee or any paying agent remaining unclaimed by the Holders of Securities for three years after the date upon which the principal of (premium if any, on) or interest on such Securities shall have become due and payable, shall be repaid to the Company by the Trustee or such paying agent, upon demand, and such Holders shall thereafter be entitled to look only to the Company for payment thereof; provided, however, that, before being required to make any such payment to the Company, the Trustee may, at the expense of the Company, cause to be mailed to the Holders of such Securities, at their last addresses as they appear on the Security Register, notice that such moneys remain unclaimed and that, after a date named in said notice, the balance of such moneys then unclaimed will be returned to the Company. Upon the satisfaction and discharge of this Indenture as to the Securities of any series, all moneys then held by any paying agent other than the Trustee hereunder shall, upon demand of the Company, be repaid to it and thereupon such paying agent shall be released from all further liability with respect to such moneys. Section 13.4. Except as otherwise provided in this Section 13.4 or pursuant to Section 2.1, the Company may terminate its obligations as to the Securities of any series if: (a) all Securities of such series previously authenticated and delivered (other than destroyed, lost or stolen Securities which have been replaced or Securities which are paid pursuant to Section 3.1 or Securities for whose payment money or securities have theretofore been held in trust and thereafter repaid to the Company, as provided in Sections 13.2 and 13.3) have been delivered to the Trustee for cancellation and the Company has paid all sums payable by it hereunder; or (b)(1) the Company has irrevocably deposited or caused to be deposited with the Trustee or a paying agent (and conveyed all right, title and interest for the benefit of the Holders, under the terms of an irrevocable trust agreement in form and substance satisfactory to the Trustee, as trust funds in trust solely for the benefit of the Holders for that purpose), (A) money in an amount sufficient, or (B) U.S. Government Obligations (if the Securities of the series are denominated in Dollars) or Eligible Obligations (if the Securities of the series are denominated in a Foreign Currency) maturing as to principal and interest in such amounts and at such times as are sufficient in the opinion of a nationally recognized firm of independent public accountants expressed in a written certification thereof delivered to the Trustee (without consideration of any reinvestment of such interest), or (C) a combination thereof in an amount sufficient, to pay principal (and premium, if any) and interest on the outstanding Securities of such series on the dates such installments are due to redemption or maturity, and any mandatory sinking fund payments or analogous payments applicable to such outstanding Securities; (2) such deposit as described in this Section 13.4 will not result in a breach or violation of, or constitute a default under, any other agreement or instrument to which the Company is a party or by which it is bound; (3) no defaults as defined in Section 6.1 shall have occurred and be continuing on the date of such deposit, and no default under Section 6.1(e) or 6.1(f) shall have occurred and be continuing on the 91st day after such date; (4) the Company shall have delivered to the Trustee (i) either (A) a ruling received from the Internal Revenue Service to the effect that the Holders of the Securities of such series will not recognize income, gain or loss for Federal income tax purposes as a XIII-2 result of the Company's exercise of its option under this Section 13.4 and will be subject to Federal income tax on the same amount and in the same manner and at the same times as would have been the case if such option had not been exercised, or (B) an Opinion of Counsel by recognized counsel who is not an employee of the Company to the same effect as the ruling described in Clause (A) and (ii) an Opinion of Counsel to the effect that, after the passage of 90 days following the deposit, (x) the trust funds will not be subject to the effect of any applicable bankruptcy, insolvency, reorganization or similar laws affecting creditors' rights generally, or (y) if a court was to rule under any such law in any case or proceeding that the trust funds remained property of the Company (AA) assuming such trust funds remained in the Trustee's possession prior to such court ruling to the extent not paid to Holders of Securities of such series, the Trustee will hold, for the benefit of the Holders of such Securities, a valid and perfected security interest in such trust funds that is not avoidable in bankruptcy or otherwise, and (BB) the Holders of Securities will be entitled to receive adequate protection of their interests in such trust funds if such trust funds are used; (5) the Company has paid or caused to be paid all sums then payable by the Company hereunder and under such Securities; and (6) the Company has delivered to the Trustee an Officers' Certificate and an Opinion of Counsel, each stating that all conditions precedent provided for herein relating to the satisfaction and discharge of this Indenture with respect to Securities of such series have been complied with. Notwithstanding the foregoing Clause (b) prior to the end of the 90-day period referred to in subclause (b)(4)(ii) above, none of the Company's obligations under this Indenture shall be discharged, and subsequent to the end of such 90-day period only the Company's obligations in Sections 2.5, 2.6, 3.1, 3.2, 10.2 and 13.2 shall survive until the Securities of such series are no longer outstanding. If and when a ruling from the Internal Revenue Service or Opinion of Counsel referred to in subclause (b)(4)(i) above is able to be provided specifically without regard to, and not in reliance upon, the continuance of the Company's obligations under Section 3.1, then the Company's obligations under such Section 3.1 shall cease upon delivery to the Trustee of such ruling or Opinion of Counsel and compliance with the other conditions precedent provided for herein relating to the satisfaction and discharge of this Indenture with respect to Securities of such series. After any such irrevocable deposit the Trustee upon request shall acknowledge in writing the discharge of the Company's obligations under the Securities of such series and this Indenture with respect to such Securities except for those surviving obligations specified above. Section 13.5. The Trustee or a paying agent (other than the Company) shall hold, in trust, the money, U.S. Government Obligations or Eligible Obligations deposited with it pursuant to Section 13.4 hereof. The Trustee or paying agent shall have been irrevocably instructed to apply the deposited money and the proceeds from the U.S. Government Obligations or Eligible Obligations in accordance with the terms of this Indenture and the terms of the Securities of the series to the payment of principal (and premium, if any) and interest on such Securities. XIII-3 ARTICLE XIV Miscellaneous Provisions Section 14.1. Nothing in this Indenture, expressed or implied, is intended or shall be construed to confer upon, or to give to, any person or corporation, other than the parties hereto, their successors and assigns, and the Holders of the Securities of any series, any right, remedy or claim under or by reason of this Indenture or any provisions hereof; and the provisions of this Indenture are for the exclusive benefit of the parties hereto, their successors and assigns, any Authenticating Agent or paying agent and the Holders of the Securities of any series. Section 14.2. Unless otherwise specifically provided, the certificate or opinion of any independent firm of public accountants of recognized standing selected by the Board shall be conclusive evidence of the correctness of any computation made under the provisions of this Indenture. The Company shall furnish to the Trustee upon its request a copy of any such certificate or opinion. Section 14.3. In case any one or more of the provisions contained in this Indenture or in the Securities of any series shall for any reason be held to be invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability shall not affect any other provisions of this Indenture, but this Indenture shall be construed as if such invalid or illegal or unenforceable provisions had never been contained herein. If any provision of this Indenture limits, qualifies or conflicts with the duties imposed by operation of subsection (c) of Section 318 of the Trust Indenture Act of 1939, as amended, the imposed duties shall control. Section 14.4. Whenever in this Indenture the Company shall be required to do or not to do anything so long as any of the Securities of any series shall be outstanding, the Company shall, notwithstanding any such provision, not be required to comply with such provisions if it shall be entitled to have this Indenture satisfied and discharged pursuant to the provisions hereof, even though in either case the Holders of any of the Securities of that series shall have failed to present and surrender them for payment pursuant to the terms of this Indenture. Section 14.5. Although this Indenture, for convenience and for the purpose of reference, is dated as of May 15, 1995, the actual date of execution by the Company and by the Trustee is as indicated by their respective acknowledgments hereto annexed. Section 14.6. Unless otherwise expressly provided, any order, notice, request, demand, certificate or statement of the Company required or permitted to be made or given under any provision hereof shall be sufficiently executed if signed by its Chairman of the Board, its Chief Executive Officer, its President or one of its Vice Presidents and by its Vice President, Finance, its Treasurer or one of its Assistant Treasurers or its Secretary or one of its Assistant Secretaries. Upon any application, demand or request by the Company to the Trustee to take any action under any of the provisions of this Indenture, the Company shall furnish to the Trustee an Officers' Certificate stating that all conditions precedent, if any, provided for in this Indenture relating to the proposed action, have been complied with, and an Opinion of Counsel stating that in the opinion of such counsel all such conditions precedent have been complied with. Each certificate or opinion by or on behalf of the Company with respect to compliance with a condition or covenant provided for in this Indenture (other than certificates provided pursuant to Section 3.4 of this Indenture) shall include (1) a statement that the person XIV-1 making such certificate or opinion has read such covenant or condition; (2) a brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions contained in such certificate or opinion are based; (3) a statement that, in the opinion of such person, he has made such examination or investigation as is necessary to enable him to express an informed opinion as to whether or not such covenant or condition has been complied with; and (4) a statement as to whether or not, in the opinion of such person, such condition or covenant has been complied with. Any certificate, statement or opinion of an officer of the Company may be based, insofar as it relates to legal matters, upon a certificate or opinion of or representations by counsel, unless such officer knows that the certificate or opinion or representations with respect to the matters upon which his certificate, statement or opinion may be based as aforesaid are erroneous, or in the exercise of reasonable care should know that the same are erroneous. Any certificate, statement or Opinion of Counsel may be based, insofar as it relates to factual matters, upon information which is in the possession of the Company, upon the certificate, statement or opinion of or representations by an officer or officers of the Company, unless such counsel knows that the certificate, statement or opinion or representations with respect to the matters upon which his certificate, statement, or opinion may be based as aforesaid are erroneous, or in the exercise of reasonable care should know that the same are erroneous. Any certificate, statement or opinion of an officer of the Company or of counsel may be based, insofar as it relates to accounting matters, upon a certificate or opinion of or representations by an accountant or firm of accountants in the employ of the Company, unless such officer or counsel, as the case may be, knows that the certificate or opinion or representations with respect to the accounting matters upon which his certificate, statement or opinion may be based as aforesaid are erroneous, or in the exercise of reasonable care should know that the same are erroneous. Any certificate or opinion of any independent firm of public accountants filed with the Trustee shall contain a statement that such firm is independent. Section 14.7. If any Interest Payment Date or other payment date shall fall on a day other than a Business Day, then any payment or deposit by or on behalf of the Company required under the terms hereof to be made on such date may be made instead on the next succeeding Business Day with the same force and effect as if made on such date. Section 14.8. All notices to or demands upon the Trustee shall be in writing and may be served or presented, and such demands may be made, at the principal office of the Trustee, 4 Chase MetroTech Center, 3rd Floor, Brooklyn, NY 11245, attention: Corporate Trust. Any notice to or demand upon the Company shall be deemed to have been sufficiently given or served by the Trustee or any Holder for all purposes, by being mailed by registered mail addressed to the Company, attention of the President, at 3711 Kennett Pike, Greenville, DE 19807, or at such other address as may be filed in writing by the Company with the Trustee. Section 14.9. All the covenants, promises and agreements in this Indenture contained by or on behalf of the Company, or by or on behalf of the Trustee, shall bind and inure to the benefit of their respective successors and assigns, whether so expressed or not. Section 14.10. The descriptive headings of the several Articles of this Indenture are inserted for convenience only and shall not control or affect the meaning or construction of any of the provisions hereof. Section 14.11. This Indenture may be simultaneously executed in any number of counterparts, each of which when so executed and delivered shall be an original; but such counterparts shall together constitute but one and the same instrument. Section 14.12. This Indenture shall be governed in accordance with the internal laws of the State of Delaware. XIV-2 In Witness Whereof, Sears Roebuck Acceptance Corp. has caused this Indenture to be signed in its corporate name by its President, and its corporate seal to be affixed hereto and attested to by its Secretary and The Chase Manhattan Bank, N.A. has caused this Indenture to be signed in its corporate name by one of its Second Vice Presidents and impressed with its corporate seal, attested to by one of its Assistant Secretaries, all as of the day and year first above written. Sears Roebuck Acceptance Corp. /s/ Keith E. Trost By ____________________________________ (Corporate Seal) Attest: /s/ Richard F. Kotz - --------------------------------------- The Chase Manhattan Bank, N.A. /s/ Edward Morelli By ____________________________________ (Corporate Seal) Attest: /s/ Kathleen E. Perry - --------------------------------------- State of Delaware ) ) ss: County of New Castle ) I, Rose A. Biggs, a Notary Public in and for the County and State aforesaid, do hereby certify that Keith Trost, the President, and Richard F. Kotz, Secretary, of Sears Roebuck Acceptance Corp., who are personally known to me to be the same persons whose names are subscribed to the foregoing Indenture as such President and Secretary, appeared before me this day in person, and acknowledged that they signed, sealed and delivered the said Indenture as their free and voluntary act, and as the free and voluntary act of said Company for the uses and purposes therein set forth, and caused the corporate seal of said Company to be thereto affixed. Given under my hand and notarial seal, this 12th day of June, 1995. /s/ Rose A. Biggs --------------------------------------- Notary Public My Commission Expires: 11/16/95 [seal] State of New York ) ) ss: County of Kings ) I, Joyce Wagner, a Notary Public in and for the County and State aforesaid, do hereby certify that Edward C. Morrelli, Second Vice President, and Kathleen Perry, Assistant Secretary, of The Chase Manhattan Bank, N.A., Trustee under the foregoing Indenture, who are personally known to me to be the same persons whose names are subscribed to the foregoing instrument as such and appeared before me this day in person, and acknowledged that they signed, sealed and delivered the said Indenture as their free and voluntary act, and as the free and voluntary act of said corporation for the uses and purposes therein set forth, and caused the corporate seal of said corporation to be thereto affixed. Given under my hand and notarial seal, this 13th day of June, 1995. /s/ Joyce A. Wagner --------------------------------------- Notary Public My Commission Expires: 5/31/96 [seal] EX-1 4 Exhibit 1(a) UNDERWRITING AGREEMENT , 199 Dear Sirs: Sears Roebuck Acceptance Corp., a Delaware corporation (the "Company") proposes to issue and sell from time to time certain of its debt securities registered under the registration statement referred to in Section 2(a) (the "Securities"). The Company intends to enter into one or more Pricing Agreements (each a "Pricing Agreement") in the form of Annex I hereto, with such additions and deletions as the parties thereto may determine, and, subject to the terms and conditions stated herein and therein, to issue and sell to the firms named in Schedule I to the applicable Pricing Agreement (such firms constituting the "Underwriters" with respect to such Pricing Agreement and the securities specified therein) certain of the Securities specified in Schedule II to such Pricing Agreement (with respect to such Pricing Agreement, the "Designated Securities"). The Designated Securities with respect to each Pricing Agreement shall be issued under an indenture (the "Indenture") identified in such Pricing Agreement. 1. Particular sales of Designated Securities may be made from time to time to the Underwriters of such Securities, for whom you will act as representatives. This Underwriting Agreement shall not be construed as an obligation of the Company to sell any of the Securities or as an obligation of any of the Underwriters to purchase the Securities. The obligation of the Company to issue and sell any of the Securities and the obligation of any of the Underwriters to purchase any of the Securities shall be evidenced by the Pricing Agreement with respect to the Designated Securities specified therein. Each Pricing Agreement shall specify the aggregate principal amount of such Designated Securities, the public offering price of such Designated Securities, the purchase price to the Underwriters of such Designated Securities, the names of the Underwriters of such Designated Securities, the principal amount of such Designated Securities to be purchased by each Underwriter and the commission payable to the Underwriters with respect thereto and shall set forth the date, time and manner of delivery of such Designated Securities and payment therefor. The Pricing Agreement shall also describe, in a manner consistent with the Indenture and the registration statement and prospectus with respect thereto, the principal terms of such Designated Securities. A Pricing Agreement shall be in the form of an executed writing (which may be in counterparts), and may be evidenced by an exchange of telegraphic communications or any other rapid transmission device designed to produce a written record of communications transmitted. The obligations of the Underwriters under this Agreement and each Pricing Agreement shall be several and not joint. 2. Each of the Company and Sears, Roebuck and Co. ("Sears") represents and warrants to, and agrees with, each of the Underwriters that: (a) A registration statement in respect of the Securities has been filed with the Securities and Exchange Commission (the "Commission"); such registration statement and any post-effective amendment thereto, each in the form heretofore delivered or to be delivered to you and, excluding exhibits to such registration statement, but including all documents incorporated by reference in the prospectus included therein, to you for each of the other Underwriters have been declared effective by the Commission in such form (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 except 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 Securities, 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 include the documents, if any, 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 reference to any amendment or supplement to any Preliminary Prospectus or the Prospectus shall be deemed to 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 so incorporated by reference; and any reference to the Prospectus as amended or supplemented shall be deemed to refer to the Prospectus as amended or supplemented in relation to the applicable Designated Securities in the form in which it is first 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 when they 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 a 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 are 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 an Underwriter of Designated Securities through you expressly for use therein; at the Time of Delivery (as defined in Section 4 hereof), the Indenture will be duly qualified under, and will conform 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 as to the Registration Statement and as of the applicable filing date as to the Prospectus, 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 an Underwriter of Designated Securities through you expressly for use in the Prospectus as amended or supplemented relating to such Securities. 3. The Company represents and warrants to, and agrees with each of the Underwriters that: (a) Upon payment therefor as provided herein, the Securities 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; and (b) The issue and sale of the Securities pursuant to any Pricing Agreement and the compliance by the Company with all of the provisions of the Securities, the Indenture, this 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 issue and sale of the Designated Securities 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 Underwriters will offer and sell the Designated Securities. 4. Upon the execution of the Pricing Agreement applicable to any Designated Securities and authorization by you of the release of the Underwriters' Securities, the several Underwriters propose to offer the Underwriters' Securities for sale upon the terms and conditions set forth in the Prospectus as amended or supplemented. The principal amount of Contract Securities to be deducted from the principal amount of Designated Securities to be purchased by each Underwriter as set forth in Schedule I to the Pricing Agreement applicable to such Designated Securities shall be, in each case, the principal amount of Contract Securities which the Company has been advised by you have been attributed to such Underwriter, provided that, if the Company has not been so advised, the amount of Contract Securities to be so deducted shall be, in each case, that proportion of Contract Securities which the principal amount of Designated Securities to be purchased by such Underwriter under such Pricing Agreement bears to the total principal amount of the Designated Securities (rounded as you may determine to the nearest $1,000 principal amount). The total principal amount of Underwriters' Securities to be purchased by all the Underwriters pursuant to such Pricing Agreement shall be the total principal amount of Designated Securities set forth in Schedule I to such Pricing Agreement less the principal amount of the Contract Securities. The Company will deliver to you not later than 3:30 p.m., New York time, on the third business day preceding the Time of Delivery specified in the applicable Pricing Agreement (or such other time and date as you and the Company may agree upon in writing) a written notice setting forth the principal amount of Contract Securities. The Pricing Agreement applicable to any Designated Securities may provide that the Company and any entity acting as an underwriter with respect to such Designated Securities may enter into a deferred pricing agreement in the form set forth in a schedule attached to such Pricing Agreement. 5. Underwriters' Securities to be purchased by each Underwriter pursuant to the Pricing Agreement relating thereto, in definitive form to the extent practicable, and in such authorized denominations and registered in such names as you may request upon at least two business days prior notice to the Company, shall be delivered by or on behalf of the Company to you for the account of such Underwriter, against payment by such Underwriter or on its behalf of the purchase price therefor, by certified or official bank check or checks or wire transfer, as specified in such Pricing Agreement, payable to the order of the Company in the funds specified in such Pricing Agreement, all at the place and time and date specified in such Pricing Agreement or at such other place and time and date as you and the Company may agree upon in writing, such time and date being herein called the "Time of Delivery" for such Securities. 6. Each of the Company and Sears agrees with each of the Underwriters of Designated Securities: (a) To make no further amendment or any supplement to the Registration Statement or the Prospectus as amended or supplemented after the date of the Pricing Agreement relating to such Securities and prior to the Time of Delivery for such Securities without first having furnished you with a copy of the proposed form thereof and given you a reasonable opportunity to review the same; to advise you promptly of any such amendment or supplement after such Time of Delivery and furnish you with copies thereof 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 such Securities, and during such same period to advise you, promptly after the Company or Sears receives notice thereof, of the time when the Registration Statement, or any amendment thereto, or any amended Registration Statement has become effective or any supplement to the Prospectus or any amended Prospectus has been filed, of the issuance by the Commission of any stop order or of any order preventing or suspending the use of any Prospectus, or the suspension of the qualification of such Securities for offering or sale in any jurisdiction, or 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 you may reasonably request to qualify such Securities for offering and sale under the securities laws of such jurisdictions as you may request and to comply with such laws so as to permit the continuance of sales and dealings therein in such jurisdictions for as long as may be necessary to complete the distribution of such Securities, 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 Underwriters with copies of the Prospectus as amended or supplemented in such quantities as you 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 such Securities 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 notify you and to prepare and furnish without charge to each Underwriter and to any dealer in securities as many copies as you may from time to time reasonably request of an amended Prospectus or a supplement to the Prospectus which will correct such statement or omission or effect such compliance; and (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 the filing of the report hereinafter referred to, earnings statements of the Company and Sears and its consolidated subsidiaries (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) next preceding the date of the Pricing Agreement relating to the Designated Securities 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) next preceding the date of the Pricing Agreement relating to the Designated Securities. 7. The Company agrees with each of the Underwriters of Designated Securities: (a) During the period beginning from the date of the Pricing Agreement for such Designated Securities and continuing to and including the earlier of (i) the termination of trading restrictions for such Designated Securities, of which termination you agree to give the Company prompt notice confirmed in writing, and (ii) the Time of Delivery for such Designated Securities, not to offer, sell, contract to sell or otherwise dispose of any debt securities of the Company which mature more than one year after such Time of Delivery and which are substantially similar to such Designated Securities, without your prior written consent, which consent shall not be unreasonably withheld, except pursuant to arrangements of which you have been advised by the Company prior to the time of execution of such Pricing Agreement, which advice is confirmed in writing to you by the end of the business day following the date of such Pricing Agreement; and (b) To pay or cause to be paid all expenses, preapproved by the Company, incident to the performance of its obligations hereunder and under any Pricing Agreement, including the cost of all qualifications of the Securities under state securities laws (including reasonable fees of counsel to the Underwriters in connection with such qualifications and in connection with legal investment surveys) and the cost of printing this Agreement, any Pricing Agreement, and any blue sky and legal investment memoranda. 8. The obligations of the Underwriters of any Designated Securities under the Pricing Agreement relating to such Designated Securities shall be subject, in their discretion, to the condition that all representations and warranties and other statements of the Company or Sears herein are, at and as of the Time of Delivery for such Designated Securities, true and correct, the condition that each of the Company and Sears shall have performed all of its obligations hereunder theretofore to be performed, and the following additional conditions: (a) No stop order suspending the effectiveness of the Registration Statement shall have been issued and no proceeding for that purpose shall have been initiated or threatened by the Commission; and all requests for additional information on the part of the Commission shall have been complied with to your 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 Designated Securities shall have been satisfactory to counsel to the Underwriters, 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 subdivision (b). (c) Counsel to the Company and Sears shall have furnished to you such counsel's written opinion, dated the Time of Delivery for such Designated Securities, in form and substance satisfactory to you in your 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) The authorized capital stock of the Company consists of 500,000 shares of common stock, par value $100.00 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) This Agreement and the Pricing Agreement with respect to the Designated Securities have been duly authorized, executed and delivered on the part of the Company and Sears; (v) The issue and sale of the Designated Securities and the compliance by the Company with all of the provisions of the Designated Securities, the Indenture, this Agreement and the Pricing Agreement with respect to the Designated Securities will not (a) conflict with or result in any breach which would constitute a material default under, or result in the creation or imposition of any lien, charge or encumbrance upon any of the property or assets of the Company material to the Company, pursuant to the terms of, any indenture, loan agreement or other agreement or instrument for borrowed money known to such counsel to which the Company is a party or by which the Company may be bound or to which any of the property or assets of the Company material to the Company is subject, (b) result in any material violation of the provisions of the Certificate of Incorporation, as amended or the By-Laws of the Company or (c) to the best of the knowledge of such counsel, result in any material violation of any statute or any order, rule or regulation applicable to the Company of any court or any Federal, State or other regulatory authority or other governmental body having jurisdiction over the Company, other than the Act, the Exchange Act, the Trust Indenture Act and the rules and regulations pursuant to each such act, and other than the securities laws of the various states or other jurisdictions which are applicable to the issue and sale of the Designated Securities; 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 Designated Securities except as may be required under the Act, the Exchange Act, the Trust Indenture Act and securities laws of the various states or other jurisdictions which are applicable to the issue and sale of the Designated Securities; (vi) The Fixed Charge Coverage and Ownership Agreement has been duly authorized, executed and delivered by the parties thereto and is a valid and binding instrument in accordance with its 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; (vii) The Indenture has been duly authorized, executed and delivered on the part of the Company and, as to the Company, is a valid and binding instrument in accordance with its terms except as the foregoing may be limited by insolvency, bankruptcy, reorganization or other laws relating to or affecting the enforcement of creditors' rights or by general equity principles, and has been qualified under the Trust Indenture Act; the Underwriters' Securities have been duly authorized and (assuming their due authentication by the Trustee) have been duly executed, issued and delivered on the part of the Company and constitute valid and binding obligations of the Company in accordance with their terms, entitled to the benefits of the Indenture, 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; the Contract Securities, if any, when executed, authenticated, issued and delivered pursuant to the Indenture, will constitute valid and binding obligations of the Company in accordance with their terms, entitled to the benefits of the Indenture, except as the foregoing may be limited by insolvency, bankruptcy, reorganization or other laws relating to or affecting the enforcement of creditors' rights or by general equity principles; (viii) Such counsel does not know of any pending legal or governmental proceedings required to be described in the Prospectus as amended or supplemented which are not described as required; (ix) Except for statements in such documents which do not constitute part of the Registration Statement or the Prospectus pursuant to Rule 412 of Regulation C under the Act and after substituting therefor any statements modifying or superseding such excluded statements, the documents incorporated by reference in the Prospectus as amended or supplemented (other than the financial statements and related schedules, the analyses of operations and financial condition and other financial, statistical and accounting data therein, as to which such counsel need express no opinion), when they became effective or were filed with the Commission, as the case may be, complied as to form in all material respects with the requirements of the Act or the Exchange Act, as applicable, and the rules and regulations of the Commission thereunder; (x) Except for statements in such documents which do not constitute part of the Registration Statement or the Prospectus pursuant to Rule 412 of Regulation C under the Act and after substituting therefor any statements modifying or superseding such excluded statements, the Registration Statement and the Prospectus as amended or supplemented (excluding the documents incorporated by reference therein) (other than the financial statements and related schedules, the analyses of operations and financial condition and other financial, statistical and accounting data therein as to which such counsel need express no opinion) comply as to form in all material respects with the requirements of the Act and the rules and regulations thereunder; the answers in the Registration Statement to Items 9 and 10 (insofar as it relates to such counsel) of Form S-3 are to the best of such counsel's knowledge accurate statements or summaries of the matters therein set forth and fairly present the information called for with respect to those matters by the Act and the rules and regulations thereunder; and (xi) Such counsel does not know of any contract or other document to which the Company or Sears or any subsidiary thereof 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. 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 (viii) 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 they became effective or were filed, as the case may be, contained, in the case of documents which became effective under the Act, an untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein not misleading, and, in the case of documents which were filed under the Exchange Act with the Commission, an untrue statement of a material fact or omitted to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading, and (b) nothing has come to such counsel's attention which has caused such counsel to believe that the Registration Statement or the 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) At the Time of Delivery for such Designated Securities, Deloitte & Touche shall have furnished you a letter or letters, dated the date of delivery thereof in form and substance satisfactory to you as to such matters as you may reasonably request. (e) (i) The Company shall not have sustained, since the date of the latest audited financial statements included or incorporated by reference in the Prospectus as amended or supplemented 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 and (ii) since the respective dates as of which information is given in the Prospectus as amended or supplemented 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, the effect of which in any such case described in clause (i) or (ii), in your judgment makes it impracticable or inadvisable to proceed with the public offering or the delivery of the Designated Securities on the terms and in the manner contemplated in the Prospectus as amended or supplemented. (f) Subsequent to the date of the Pricing Agreement relating to the Designated Securities, no downgrading shall have occurred in the rating accorded to the Company's or Sears senior debt securities by Moody's Investors Service, Inc. or Standard & Poor's Corporation; provided, however, that this subdivision (f) shall not apply to any such rating agency which shall have notified you of the rating of the Designated Securities prior to the execution of the Pricing Agreement. (g) Subsequent to the date of the Pricing Agreement relating to the Designated Securities neither (i) the United States shall have become engaged in the outbreak or escalation of hostilities involving the United States or there has been a declaration by the United States of a national emergency or a declaration of war, (ii) a banking moratorium shall have been declared by either Federal or New York State authorities, nor (iii) trading in securities generally on the New York Stock Exchange shall have been suspended nor limited or minimum prices shall have been established by such Exchange, any of which events, in your judgment, renders it inadvisable to proceed with the public offering or the delivery of the Designated Securities. (h) Each of the Company and Sears shall have furnished or caused to be furnished to you at the Time of Delivery for the Designated Securities certificates satisfactory to you as to the accuracy at and as of such Time of Delivery 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 such Time of Delivery and the Company shall have also furnished you similar certificates satisfactory to you as to the matters set forth in subdivision (a) of this Section 8. 9. (a) The Company will indemnify and hold harmless each Underwriter against any losses, claims, damages or liabilities, joint or several, to which such Underwriter 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 an untrue statement or alleged untrue statement of a material fact contained in any Preliminary Prospectus, the Registration Statement, any prospectus relating to the Securities 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 Underwriter for any legal or other expenses reasonably incurred by such Underwriter 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, 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 any Underwriter of Designated Securities through you expressly for use in the Prospectus as amended or supplemented relating to such Securities; and provided, further, that the Company shall not be liable to any Underwriter or any person controlling such Underwriter under the indemnity agreement in this subdivision (a) with respect to the Preliminary Prospectus or the Prospectus or the Prospectus as amended or supplemented, as the case may be, to the extent that any such loss, claim, damage or liability of such Underwriter or controlling person results solely from the fact that such Underwriter sold Designated Securities 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 Underwriter. (b) Each Underwriter 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 an untrue statement or alleged untrue statement of a 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 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, 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 such Underwriter through you 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 Underwriters of the Designated Securities on the other from the offering of the Designated Securities to which such loss, claim, damage or liability (or action in respect thereof) relates and also the relative fault of the Company and Sears on the one hand and the Underwriters of the Designated Securities 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 such Underwriters on the other shall be deemed to be in the same proportion as the total net proceeds from such offering (before deducting expenses) received by the Company bear to the total underwriting discounts and commissions received by such Underwriters, in each case as set forth on the cover page of the Prospectus as amended or supplemented. 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 Underwriters 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 Underwriters, directly or through you, on the other hand. With respect to any Underwriter, 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 Underwriter sold Designated Securities 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 Underwriter. The Company and the Underwriters agree that it would not be just and equitable if contribution pursuant to this subdivision (d) were determined by per capita allocation among the indemnifying parties (even if the Underwriters 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 Underwriter shall be required to contribute any amount in excess of the amount by which the total price at which the applicable Designated Securities underwritten by it and distributed to the public were offered to the public exceeds the amount of any damages which such Underwriter 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 the Underwriters of Designated Securities in this subdivision (d) to contribute are several in proportion to their respective underwriting obligations with respect to such securities and 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 Underwriter within the meaning of the Act; and the obligations of the Underwriters under this Section 9 shall be in addition to any liability which the respective Underwriters 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. (a) If any Underwriter shall default in its obligation to purchase the Underwriters' Securities which it has agreed to purchase under the Pricing Agreement relating to such Securities, you may in your discretion arrange for yourselves or another party or other parties to purchase such Designated Securities on the terms contained herein. If within thirty-six hours after such default by any Underwriter you do not arrange for the purchase of such Designated Securities, then the Company shall be entitled to a further period of thirty-six hours within which to procure another party or other parties to purchase such Designated Securities on such terms. In the event that, within the respective prescribed periods, you notify the Company that you have so arranged for the purchase of such Designated Securities, or the Company notifies you that it has so arranged for the purchase of such Designated Securities, you or the Company shall have the right to postpone the Time of Delivery for such Designated Securities for a period of not more than seven days, in order to effect whatever changes may thereby be made necessary in the Registration Statement or the Prospectus as amended or supplemented, or in any other documents or arrangements, and the Company agrees to file promptly any amendments or supplements to the Registration Statement or the Prospectus which may thereby be made necessary. The term "Underwriter" as used in this Agreement shall include any person substituted under this Section with like effect as if such person had originally been a party to the Pricing Agreement with respect to such Designated Securities. (b) If, after giving effect to any arrangements for the purchase of the Underwriters' Securities of a defaulting Underwriter or Underwriters by you and the Company as provided in subdivision (a) above, the aggregate principal amount of such Underwriters' Securities which remains unpurchased does not exceed one-eleventh of the aggregate principal amount of the Designated Securities, then the Company shall have the right to require each non-defaulting Underwriter to purchase the principal amount of Underwriters' Securities which such Underwriter agreed to purchase under the Pricing Agreement relating to such Designated Securities and, in addition, to require each non-defaulting Underwriter to purchase its pro rata share (based on the principal amount of Designated Securities which such Underwriter agreed to purchase under such Pricing Agreement) of the Underwriters' Securities of such defaulting Underwriter or Underwriters for which such arrangements have not been made; but nothing herein shall relieve a defaulting Underwriter from liability for its default. (c) If, after giving effect to any arrangements for the purchase of the Underwriters' Securities of a defaulting Underwriter or Underwriters by you and the Company as provided in subdivision (a) above, the aggregate principal amount of Underwriters' Securities which remains unpurchased exceeds one-eleventh of the aggregate principal amount of the Designated Securities, as referred to in subdivision (b) above, or if the Company shall not exercise the right described in subdivision (b) above to require non-defaulting Underwriters to purchase Underwriters' Securities of a defaulting Underwriter or Underwriters, then the Pricing Agreement relating to such Designated Securities shall thereupon terminate, without liability on the part of any non-defaulting Underwriter or the Company, except for the expenses to be borne by the Company and the Underwriters as provided in Section 7(b) hereof and the indemnity and contribution agreements in Section 9 hereof; but nothing herein shall relieve a defaulting Underwriter from liability for its default. 11. The respective indemnities, agreements, representations, warranties and other statements of the Company, Sears and the several Underwriters, as set forth in this Agreement or made by or on behalf of them, respectively, 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 Underwriter or any controlling person of any Underwriter, the Company, Sears or any officer or director or controlling person of the Company or Sears, and shall survive delivery of and payment for the Securities. Anything herein to the contrary notwithstanding, the indemnity agreement of the Company in subdivisions (a) and (e) of Section 9 hereof, the representations and warranties in subdivisions (b) and (c) of Section 2 hereof and any representation or warranty as to the accuracy of the Registration Statement or the Prospectus as amended or supplemented contained in any certificate furnished by the Company or Sears pursuant to subdivision (h) of Section 8 hereof, insofar as they may constitute a basis for indemnification for liabilities (other than payment by the Company of expenses incurred or paid in the successful defense of any action, suit or proceeding) arising under the Act, shall not extend to the extent of any interest therein of an Underwriter or a controlling person of an Underwriter if a director, officer or controlling person of the Company or Sears when the Registration Statement becomes effective or a person who, with his consent, is named in the Registration Statement as being about to become a director of the Company or Sears, is a controlling person of such Underwriter, except in each case to the extent that an interest of such character shall have been determined by a court of appropriate jurisdiction as not against public policy as expressed in the Act. Unless in the opinion of counsel for the Company or Sears the matter has been settled by controlling precedent, the Company or Sears will, if a claim for such indemnification is asserted, submit to a court of appropriate jurisdiction the question whether such interest is against public policy as expressed in the Act and will be governed by the final adjudication of such issue. 12. If any Pricing Agreement shall be terminated pursuant to Section 10 hereof, the Company shall not then be under any liability to any Underwriter with respect to the Designated Securities covered by such Pricing Agreement except as provided in Section 7(b) and Section 9 hereof; but, if for any other reason Underwriters' Securities are not delivered by or on behalf of the Company as provided herein, the Company will reimburse the Underwriters through you for all out-of-pocket expenses approved in writing by you, including fees and disbursements of counsel, reasonably incurred by the Underwriters in making preparations for the purchase, sale and delivery of such Designated Securities, but the Company shall then be under no further liability to any Underwriter with respect to such Designated Securities except as provided in Section 7(b) and Section 9 hereof. 13. In all dealings hereunder, you shall act on behalf of each of the Underwriters of Designated Securities, and the parties hereto shall be entitled to act and rely upon any statement, request, notice or agreement on behalf of any Underwriter made or given by you or by , representing you. All statements, requests, notices and agreements hereunder shall be in writing or by telegram if promptly confirmed in writing and if to the Underwriters shall be sufficient in all respects, if delivered or sent by registered mail to you as the Representatives at ; and if to the Company shall be sufficient in all respects if delivered or sent by registered mail to the Company at 3711 Kennett Pike, Greenville, Delaware 19807, Attention: Richard F. Kotz, Secretary; and if to Sears shall be sufficient in all respects if delivered or sent by registered mail to Sears at 3333 Beverly Road, Hoffman Estates, Illinois, Attention: Michael D. Levin, Senior Vice President and General Counsel. 14. This Agreement and each Pricing Agreement shall be binding upon, and inure solely to the benefit of, the Underwriters, the Company, Sears and, to the extent provided in Section 9 and Section 11 hereof, the officers and directors of the Company and Sears and each person who controls the Company or any Underwriter, 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 such Pricing Agreement. No purchaser of any of the Securities from any Underwriter shall be deemed a successor or assign by reason merely of such purchase. 15. Time shall be of the essence of each Pricing Agreement. 16. This Agreement and each Pricing Agreement shall be governed by, and construed in accordance with, the internal laws of the State of New York. 17. This Agreement and each Pricing 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 deemed to be an original, but all such respective counterparts shall together constitute one and the same instrument. If the foregoing is in accordance with your understanding, please sign and return two counterparts hereof. Very truly yours, Sears Roebuck Acceptance Corp. By: Sears, Roebuck and Co. By: Accepted as of the date hereof: On behalf of each of the Underwritiers ANNEX I PRICING AGREEMENT As Representatives of the several Underwriters named in Schedule I hereto ,199 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 , 199 (the "Underwriting Agreement"), executed between the Company and Sears, Roebuck and Co. ("Sears"), on the one hand, and 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. If the foregoing is in accordance with your understanding, please sign and return to us 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: SEARS, ROEBUCK AND CO. By: Accepted as of the date hereof: On behalf of each of the Underwriters SCHEDULE I Principal Amount of Designated Securities to be Underwriter Purchased _____________ Total . . . . . . . . . . . . . $ SCHEDULE II Title of Designated Securities: [ %] [Floating Rate] [Zero Coupon] [Notes] [Debentures] due Aggregate principal amount: $ Price to Public: % of the principal amount of the Designated Securities, plus accrued interest from to the Time of Delivery [and accrued amortization, if any, from to the Time of Delivery] Purchase Price by Underwriters: % of the principal amount of the Designated Securities, plus accrued interest from to the Time of Delivery [and accrued amortization, if any, from to the Time of Delivery] Indenture: Indenture, dated , between the Company and , as Trustee Form of Designated Securities: [Certificated form only][Global form only] Maturity:1 Interest Rate:* [ %] [Zero Coupon] Interest Payment dates:* [months and dates] Redemption Provisions:* [No provision for redemption] [The Designated Securities may be redeemed, otherwise than through the sinking fund, in whole or in part at the option of the Company, in the amount of $ or an integral multiple thereof, [on or after , at the following redemption prices (expressed in percentages of principal amount). If [redeemed on or before , %, and if] redeemed during the 12-month period beginning , Year Redemption Price and thereafter at 100% of their principal amount, together in each case with accrued interest to the redemption date.] [on any interest payment date falling on or after , , at the election of the Company, at a redemption price equal to the principal amount thereof, plus accrued interest to the date of redemption.] [Other possible redemption provisions, such as mandatory redemption upon occurrence of certain events or redemption for changes in tax law] [Restriction of refunding] Sinking Fund Provisions:2 [No sinking fund provisions] [The Designated Securities are entitled to the benefit of a sinking fund to retire $ principal amount of Designated Securities on in each of the years through at 100% of their principal amount plus accrued interest] [, together with (cumulative) (non-cumulative) redemptions at the option of the Company to retire an additional $ principal amount of Designated Securities in the years through at 100% of their principal amount plus accrued interest]. Time of Delivery: [ ] A.M., New York time, [ ] ,19 Funds in which payment by Underwriters to Company to be made: [ ] Clearing House Funds [ ] Same day funds Method of Payment: [Certified or official bank check or checks] [Wire transfer to ] Closing Location: Counsel: To the Company, [ ] To Sears, [ ] To the Underwriters, [ ] [Other Terms]:3 1 The terms of an attached form of security may be incorporated by reference. 2 The terms of an attached form of security may be incorporated by reference. 3 The terms of an attached form of security may be incorporated by reference. EX-1 5 Exhibit 1(b) Sears Roebuck Acceptance Corp. $ Medium-Term Notes Series __ DISTRIBUTION AGREEMENT , 199 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. $ (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 , 199 (the "Indenture"), between the Company and , as Trustee (the "Trustee"). The Notes shall have the currency denomination, maturities, annual interest rates (whether fixed or floating), redemption provisions and other terms set forth in the Prospectus referred to below as it may be amended or supplemented from time to time. The Notes will be issued, and the terms and rights thereof established, from time to time by the Company in accordance with the Indenture and the Administrative Procedure attached hereto as Annex II as it may be amended from time to time by written agreement between the Agents and the Company (the "Procedure") and, if applicable, will be specified in a related Terms Agreement. 1. Each of the Company and Sears, Roebuck and Co. ("Sears") represents and warrants to, and agrees with, each Agent that: (a) A registration statement on Form S-3 (Registration No. 33- ) in respect of U.S. $ aggregate principal amount (or the equivalent in foreign currency or currency units) of debt securities of the Company, including the Notes, has been filed with the Securities and Exchange Commission (the "Commission") in the form heretofore delivered to such Agent, excluding exhibits (whether or not incorporated by reference) to such registration statement but including all documents incorporated by reference in the prospectus included therein, and such registration statement in such form has been declared effective by the Commission and no stop order suspending the effectiveness of such registration statement has been issued and no proceeding for that purpose has been initiated or threatened by the Commission (any preliminary prospectus included in such registration statement being hereinafter called a "Preliminary Prospectus;" the various parts of such registration statement, including all exhibits thereto but excluding Form T-1, each as amended at the time such part became effective, being hereinafter collectively called the "Registration Statement;" the prospectus relating to the Notes, in the form in which it has most recently been filed with the Commission on or prior to the date of this Agreement, being hereinafter called the "Prospectus;" any reference herein to any Preliminary Prospectus or the Prospectus shall be deemed to refer to and include the documents incorporated by reference therein pursuant to the applicable form under the Securities Act of 1933, as amended (the "Act") as of the date of such Preliminary Prospectus or Prospectus, as the case may be; any supplement to the Prospectus that sets forth only the terms of a particular issue of Notes being hereinafter called a "Pricing Supplement;" any reference to any amendment or supplement to any Preliminary Prospectus or the Prospectus shall be deemed to refer to and include any documents filed after the date of such Preliminary Prospectus or Prospectus, as the case may be, under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and incorporated therein by reference; and any reference to the Prospectus as amended or supplemented shall be deemed to refer to the Prospectus as amended or supplemented with respect to Notes sold pursuant to this Agreement, in the form in which it is filed with the Commission pursuant to Rule 424(b) of Regulation C under the Act, including any documents incorporated by reference therein as of the date of such filing); (b) Except for statements in such documents which do not constitute part of the Registration Statement or the Prospectus pursuant to Rule 412 of Regulation C under the Act and after substituting therefor any statements modifying or superseding such excluded statements (i) the documents incorporated by reference in the Prospectus, when they became effective or were filed with the Commission, as the case may be, conformed in all material respects to the requirements of the Act or the Exchange Act, as applicable, and the rules and regulations of the Commission thereunder, and none of such documents, when they became effective or were so filed, as the case may be, contained, in the case of documents which became effective under the Act, an untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein not misleading, and, in the case of documents which were filed under the Exchange Act with the Commission, an untrue statement of a material fact or omitted to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading, and (ii) any further documents so filed and incorporated by reference in the Prospectus, when such documents become effective or are filed with the Commission, as the case may be, will conform in all material respects to the requirements of the Act or the Exchange Act, as applicable, and the rules and regulations of the Commission thereunder and will not contain, in the case of documents which become effective under the Act, an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading, and in the case of documents which are filed under the Exchange Act with the Commission, an untrue statement of material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading; provided, however, that this representation and warranty shall not apply to any statements or omissions made in reliance upon and in conformity with information furnished in writing to the Company by any Agent expressly for use in the Prospectus as amended or supplemented to relate to a particular issuance of Notes; the Indenture has been duly qualified under, and conforms in all material respects to the requirements of, the Trust Indenture Act of 1939, as amended (the "Trust Indenture Act"); and (c) Except for statements in documents incorporated therein by reference which do not constitute part of the Registration Statement or the Prospectus pursuant to Rule 412 of Regulation C under the Act and after substituting therefor any statements modifying or superseding such excluded statements, the Registration Statement and the Prospectus conformed, and any amendments or supplements thereto will, when they become effective or are filed with the Commission, as the case may be, conform, in all material respects to the requirements of the Act and the Trust Indenture Act, and the rules and regulations of the Commission thereunder and do not and will not, as of the applicable effective date in the case of the Registration Statement and any amendment thereto and as of the applicable filing date in the case of the Prospectus and any supplement thereto, contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading; provided, however, that this representation and warranty shall not apply to any statements or omissions made in reliance upon and in conformity with information furnished in writing to the Company by any Agent expressly for use in the Prospectus as amended or supplemented to relate to a particular issuance of Notes. 2. The Company represents and warrants to, and agrees with, each Agent that: (a) Upon payment therefor as provided herein and in any Terms Agreement, the Notes will have been duly and validly authorized, and (assuming their due authentication by the Trustee) will have been duly and validly issued and will be valid outstanding obligations of the Company in accordance with their terms, except as the same may be limited by insolvency, bankruptcy, reorganization, or other laws relating to or affecting the enforcement of creditors' rights or by general equity principles, and will be entitled to the benefits of the Indenture; (b) The issue and sale of the Notes and the compliance by the Company with all of the provisions of the Notes, the Indenture, this Agreement and any Terms Agreement will not conflict with or result in any breach which would constitute a material default under, or result in the creation or imposition of any lien, charge or encumbrance upon any of the property or assets of the Company material to the Company, pursuant to the terms of, any indenture, loan agreement or other agreement or instrument for borrowed money to which the Company is a party or by which the Company may be bound or to which any of the property or assets of the Company material to the Company, is subject, nor will such action result in any material violation of the provisions of the Certificate of Incorporation, as amended, or the By-Laws of the Company or, to the best of its knowledge, any statute or any order, rule or regulation applicable to the Company of any court or any Federal, State or other regulatory authority or other governmental body having jurisdiction over the Company, and no consent, approval, authorization or other order of, or filing with, any court or any such regulatory authority or other governmental body is required for the solicitation of offers to purchase Notes and the issue and sale of the Notes, except as may be required under the Act, the Exchange Act, the Trust Indenture Act and securities laws of the various states and other jurisdictions in which the Agents will solicit offers to purchase Notes from the Company and will purchase Notes as principal, as the case may be; and (c) Immediately after the settlement of any sale of Notes by the Company resulting from solicitation by such Agent hereunder and immediately after any Time of Delivery (as defined below) relating to a sale to an Agent as principal, the aggregate principal amount of Notes which shall have been issued and sold by the Company hereunder or under any Terms Agreement and of any debt securities of the Company (other than such Notes) that shall have been issued and sold pursuant to the Registration Statement will not exceed the amount of debt securities registered under the Registration Statement. 3. (a) On the basis of the representations and warranties herein contained, and subject to the terms and conditions herein set forth, each of the Agents hereby severally and not jointly agrees to act as agent of the Company, to use its reasonable efforts to solicit offers to purchase the Notes from the Company upon the terms and conditions set forth in the Prospectus relating to the Notes as amended or supplemented from time to time and in the Procedure. Subject to the provisions of this Section 3 and to the Procedure, offers for the purchase of Notes may be solicited by each Agent as agent for the Company at such time and in such amounts as such Agent deems advisable; provided, however, that the Company reserves the right to sell Notes directly on its own behalf or through other agents, dealers or underwriters, and to appoint additional persons from time to time to serve as Agents pursuant to this Agreement. Each Agent agrees that it will not solicit an offer to purchase Notes or deliver any of the Notes in any jurisdiction outside the United States of America except under circumstances that will result in compliance with the applicable laws thereof. Each Agent understands that no action has been taken to permit a public offering in any jurisdiction outside the United States of America where action would be required for such purpose. The Agents further undertake that in connection with the distribution of Notes denominated in any foreign currency or currency unit, they will as agent, directly or indirectly, not solicit offers to purchase and as principal under any Terms Agreement or otherwise, directly or indirectly, not offer, sell or deliver, such Notes in or to residents of the country issuing such currency, except as permitted by applicable law. The Company reserves the right, in its sole discretion, to instruct the Agents to suspend at any time, for any period of time or permanently, the solicitation of offers to purchase the Notes. Promptly after receipt of notice from the Company, but in any event not less than one business day thereafter, the Agents will suspend solicitation of offers to purchase Notes from the Company until such time as the Company has advised them that such solicitation may be resumed. The Company agrees to pay each Agent, at the time of settlement of any sale of a Note by the Company, the purchase of which is solicited by such Agent, a commission in United States dollars (which, in the case of Notes denominated in other than United States dollars, shall be based upon the Market Exchange Rate (as defined below) for such currency or currency unit at the time of any acceptance of an offer to purchase a Note) in an amount equal to the following percentage of the principal amount of such Note sold (or at such other amount as may from time to time be negotiated between such Agent and the Company): Maturity Commission (percentage of aggregate principal amount of Notes sold) 9 months to less than 1 year.............. 1 year to less than 18 months............. 18 months to less than 2 years............ 2 years to less than 3 years.............. 3 years to less than 4 years.............. 4 years to less than 5 years.............. 5 years to less than 6 years.............. 6 years to less than 7 years.............. 7 years to less than 11 years............. 11 years to less than 15 years............ 15 years to less than 20 years............ 20 years to 30 years...................... Greater than 30 years..................... to be negotiated Notwithstanding anything herein to the contrary, if, at or prior to the time of settlement, the Company and an Agent have entered into, or such Agent has arranged for the Company to enter into, a contract with respect to the sale of the currency (other than United States dollars) or currency unit in which a Note has been denominated and the purchase of which was solicited by such Agent, the commission in United States dollars payable by the Company to such Agent shall be based upon the same exchange rate set forth in such contract. The authorized denominations of Notes denominated in a currency or currency unit other than United States dollars shall be equivalent, as determined by the Market Exchange Rate for such currency or currency unit on the business day immediately preceding the date on which the offer for such Notes is accepted, of U.S. $1,000 (rounded down to an integral multiple of 10,000 units of such currency or currency unit), and any larger amount. The authorized denominations of Notes denominated in United States dollars shall be U.S. $1,000 and any larger amount in integral multiples of $1,000. The "Market Exchange Rate" on a given date for a given foreign currency means the noon buying rate in New York City for cable transfers in such currency as certified for customs purposes by the Federal Reserve Bank of New York on such date; provided, however, that in the case of European Currency Units, Market Exchange Rate means, unless otherwise agreed by the Company and the Agents, the rate of exchange determined by the Council of European Communities (or any successor thereto) as published on such date or the most recently available date in the Official Journal of the European Communities (or any successor publication). Unless otherwise agreed between the Company and each Agent, each Agent shall communicate to the Company, orally or in writing, each offer to purchase Notes received by it as Agent other than those rejected by such Agent in accordance herewith. The Company shall have the sole right to accept offers to purchase Notes and may reject any proposed purchase of Notes. Each Agent shall have the right, in its discretion reasonably exercised, to reject any proposed purchase of Notes received by it, and any such rejection by it shall not be deemed a breach of its agreements contained herein. (b) Each sale of Notes to any Agent as principal shall be made in accordance with the terms of this Agreement and (unless the Company and such Agent shall otherwise agree) a Terms Agreement which will provide for the sale of such Notes. Terms Agreements, each of which shall be substantially in the form of Annex I hereto, may take the form of an exchange of any standard form of written telecommunication between any Agent, the Company and Sears, including by telecopy or telex. The Company, Sears and any Agent who is a party to a Terms Agreement agree to exchange executed copies of such Terms Agreement as promptly as practicable after they have entered into such Terms Agreement pursuant to the foregoing exchange of written telecommunication. The Agents may utilize a selling or dealer group in connection with the reoffering of the Notes purchased as principal. For each sale of Notes to an Agent as principal that is not made pursuant to a Terms Agreement, the procedural details relating to the issue and delivery of such Notes and payment therefor shall be as set forth in the Procedure. For each such sale of Notes to an Agent as principal that is not made pursuant to a Terms Agreement, the Company agrees to pay such Agent a commission (or grant an equivalent discount) as provided in Section 3(a) and in accordance with the schedule set forth therein or established from time to time pursuant thereto, except as the parties otherwise agree in writing. Each time and date of delivery of and payment for Notes to be purchased by an Agent as principal, whether set forth in a Terms Agreement or in accordance with the Procedure, is referred to herein as a "Time of Delivery." (c) Procedural details relating to the issue and delivery of Notes, the solicitation of offers to purchase Notes, and the payment in each case therefor, shall be as set forth in the Procedure. The provisions of the Procedure shall apply to all transactions contemplated hereunder other than those made pursuant to a Terms Agreement. Each of the Agents and the Company agrees to perform the respective duties and obligations specifically provided to be performed by each of them in the Procedure. The Company will furnish to the Trustee a copy of the Procedure as from time to time in effect. 4. The documents required to be delivered pursuant to Section 8 hereof shall be delivered at the offices of the Company, 3711 Kennett Pike, Greenville, Delaware, at 11:00 a.m., New York time, on the date of this Agreement, or at such other date and time as the Agents and the Company agree (such time and date being referred to herein as the "Closing Date"). 5. Each of the Company and Sears covenants and agrees with each Agent: (a) Prior to the termination of the offering of the Notes, to make no amendment or supplement to the Registration Statement or the Prospectus (except for a Pricing Supplement or a supplement relating to an offering of securities other than the Notes) without first having furnished the Agents with a copy of the proposed form thereof and given the Agents a reasonable opportunity to review the same; to advise the Agents promptly of any such amendment or supplement after such Time of Delivery and furnish the Agents with copies thereof, to prepare, with respect to any Notes to be sold through or to such Agent pursuant to this Agreement, a Pricing Supplement with respect to such Notes in a form previously approved by such Agent and to file such Pricing Supplement pursuant to Rule 424(b)(2) under the Act not later than the close of business of the Commission on the second business day after the date on which such Pricing Supplement is first used or the date of determination of the offering price; and to file promptly all reports and any definitive proxy or information statements required to be filed by the Company or Sears, respectively, with the Commission pursuant to Section 13 or 14 of the Exchange Act for so long as the delivery of a prospectus is required in connection with the offering or sale of the Notes, and during such same period to advise the Agents, promptly after the Company or Sears receives notice thereof, of the time when any amendment to the Registration Statement has been filed or has become effective or any supplement to the Prospectus or any amended Prospectus (other than any Pricing Supplement and any supplement relating to any offering of securities other than the Notes) has been filed with, or mailed for filing to, the Commission, of the issuance by the Commission of any stop order or of any order preventing or suspending the use of any prospectus relating to the Notes, of the suspension of the qualification of the Notes for offering or sale in any jurisdiction, of the initiation or threatening of any proceeding for any such purpose, or of any request by the Commission for the amending or supplementing of the Registration Statement or Prospectus or for additional information; and, in the event of the issuance of any such stop order or of any such order preventing or suspending the use of any such prospectus or suspending any such qualification, to use promptly its best efforts to obtain its withdrawal; (b) Promptly from time to time to take such action as the Agents reasonably may request to qualify the Notes for offering and sale under the securities laws of such jurisdictions as the Agents may request and to comply with such laws so as to permit the continuance of sales and dealings therein for as long as may be necessary to complete the distribution or sale of the Notes provided that in connection therewith neither the Company nor Sears shall be required to qualify as a foreign corporation or to file a general consent to service of process in any jurisdiction; (c) To furnish the Agents with copies of the Registration Statement and each amendment thereto, and with copies of the Prospectus as amended or supplemented, other than any Pricing Supplement (except as provided in the Procedure), in the form in which it is filed with the Commission pursuant to Rule 424 under the Act or in the form first used to confirm sales which was not required to be filed pursuant to Rule 424 under the Act, in such quantities as the Agents may from time to time reasonably request, and, if the delivery of a prospectus is required at any time in connection with the offering or sale of the Notes (including Notes purchased from the Company by such Agent as principal) and if at such time any event shall have occurred as a result of which the Prospectus as then amended or supplemented would include an untrue statement of a material fact or omit to state any material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made when such Prospectus is delivered, not misleading, or, if for any other reason it shall be necessary during such same period to amend or supplement the Prospectus or to file under the Exchange Act any document incorporated by reference in the Prospectus in order to comply with the Act, the Exchange Act or the Trust Indenture Act, to (i) notify the Agents to suspend solicitation of offers to purchase Notes from the Company (and, if so notified, the Agents shall promptly cease such solicitations), (ii) prepare and cause to be filed with the Commission, after having furnished the Agents with a copy of the proposed form and given the Agents a reasonable opportunity to review the same, an amendment or supplement to the Registration Statement or the Prospectus as then amended or supplemented that will correct such statement or omission or effect such compliance and (iii) supply such Prospectus as then amended or supplemented to the Agents in such quantities as the Agents may reasonably request; if such amendment or supplement, and any documents, certificates and opinions furnished to the Agents pursuant to Section 8 in connection with the preparation or filing of such amendment or supplement are reasonably satisfactory in all respects to the Agents, the Agents will, upon the filing of such amendment or supplement with the Commission and upon the effectiveness of an amendment to the Registration Statement if such an amendment is required, resume the Agents obligation to solicit offers to purchase Notes hereunder; if such amendment or supplement, or any documents, certificates and opinions furnished to the Agents pursuant to Section 8 in connection with the preparation or filing of such amendment or supplement, are not satisfactory to the Agents, the Agents will as promptly as reasonably practicable notify the Company and Sears in writing; (d) To make generally available to its security holders, in accordance with the provisions of Rule 158 under the Act or otherwise, as soon as practicable, but in any event not later than forty-five days after the end of the fourth full fiscal quarter (ninety days in the case of the last fiscal quarter in any fiscal year) following the fiscal quarter ending after the latest of (x) the effective date of the Registration Statement, (y) the effective date of the post-effective amendment thereto hereinafter referred to and (z) the date of filing of the report hereinafter referred to, an earning statement of the Company and Sears and its consolidated subsidiaries, respectively, (which need not be audited) complying with Section 11(a) of the Act and covering a period of at least twelve consecutive months beginning after the latest of (i) the effective date of such Registration Statement, (ii) the effective date of the post-effective amendment, if any, to such Registration Statement (within the meaning of Rule 158) and (iii) the date of filing of the last report of the Company or Sears incorporated by reference into the Prospectus (within the meaning of Rule 158); and (e) That each acceptance by the Company of an offer to purchase Notes hereunder shall be deemed to be an affirmation to such Agent that the representations and warranties of the Company and Sears contained in or made pursuant to this Agreement are true and correct as of the date of such acceptance as though made at and as of such date, and an undertaking that, if a settlement occurs with respect to such acceptance, such representations and warranties will be true and correct as of such settlement date as though made at and as of such date (except that such representations and warranties shall be deemed to relate to the Registration Statement and the Prospectus as amended and supplemented relating to such Notes). 6. The Company covenants and agrees with each Agent that, except as may otherwise be specified in any Terms Agreement, during the period beginning from the date of any Terms Agreement and continuing to and including the earlier of (i) the termination of the trading restrictions for the Notes purchased thereunder, of which termination such Agent or Agents party to the Terms Agreement agree to give the Company prompt notice confirmed in writing and (ii) the Time of Delivery for such Notes, not to offer, sell, contract to sell or otherwise dispose of any debt securities of the Company which (i) mature nine months or more after such Time of Delivery, (ii) mature within six months of the maturity of such Notes and (iii) are denominated in the same currency or currency unit specified in the Terms Agreement, without the prior written consent of such Agent or Agents, which consent shall not be unreasonably withheld, except pursuant to arrangements of which such Agent or Agents have been advised by the Company prior to the time of execution of such Terms Agreement, which advice is confirmed in writing (which may be by telecopy or telex, receipt acknowledged) to such Agent or Agents by the end of the business day following the date of such Terms Agreement. 7. The Company covenants and agrees with each Agent that the Company will pay or cause to be paid, whether or not any sale of Notes is consummated, the following: (i) the fees and expenses of the Company's counsel and accountants in connection with the registration of the Notes under the Act and all other expenses in connection with the preparation, printing and filing of the Registration Statement, any Preliminary Prospectus, the Prospectus and amendments and supplements thereto and the mailing and delivering of copies thereof to the Agents; (ii) the fees and expenses of counsel for the Agents, which counsel has been approved by the Company, incurred heretofore or hereafter in connection with the transactions contemplated hereunder; (iii) the cost of printing or reproducing this Agreement, any Terms Agreement, any Indenture, any Blue Sky and Legal Investment Memoranda and any other documents in connection with the offering, purchase, sale and delivery of the Notes; (iv) all expenses in connection with the qualification of the Notes for offering and sale under state securities laws as provided in Section 4(b) hereof, including fees and disbursements of counsel for the Agents in connection with such qualification and in connection with the Blue Sky and legal investment surveys; (v) any fees charged by security rating services for rating the Notes; (vi) any filing fees incident to any required review by the National Association of Securities Dealers, Inc. of the terms of the sale of the Notes; (vii) the cost of preparing the Notes; (viii) the fees and expenses of any Trustee and any transfer or paying agent of the Company and the fees and disbursements of counsel for any Trustee or such agent in connection with any Indenture and the Notes; (ix) on a monthly basis all out-of-pocket expenses (including without limitation advertising expenses) incurred by such Agent connected with the solicitation of offers to purchase and the sale of Notes so long as such expenses have been approved by the Company; and (x) all other costs and expenses incident to the performance of the Company's obligations hereunder (other than costs and expenses incurred by any Agent) which are not otherwise specifically provided for in this Section 7. 8. The obligation of each Agent, as agent of the Company, at any time ("Solicitation Time") to solicit offers to purchase the Notes and the obligation of each Agent to purchase Notes as principal pursuant to any Terms Agreement or otherwise shall in each case be subject, in such Agent's discretion, to the condition that all representations and warranties and other statements of the Company or Sears herein are true and correct at and as of the Closing Date, as of the date of the effectiveness of any amendment to the Registration Statement (including the filing of any document incorporated by reference therein), as of the date any supplement to the Prospectus is filed with the Commission, as of any Time of Delivery, as of each acceptance by the Company of an offer to purchase Notes hereunder and as of each settlement date relating to such sale, the condition that each of the Company and Sears shall have performed all of its obligations hereunder theretofore to be performed, and the following additional conditions: (a) No stop order suspending the effectiveness of the Registration Statement shall have been issued and no proceeding for that purpose shall have been initiated or threatened by the Commission; and all requests for additional information on the part of the Commission shall have been complied with to the Agents reasonable satisfaction; (b) All corporate proceedings and related matters in connection with the organization of the Company, the validity of the Indenture and the registration, authorization, issue, sale and delivery of the Notes shall have been satisfactory to the Agents' counsel, and such counsel shall have been furnished with such papers and information as they may reasonably have requested to enable them to pass upon the matters referred to in this Section 8(b); (c) Counsel to the Company and Sears, who may be an employee of the Company or of Sears, shall have furnished to the Agents such counsel's written opinion, dated the Closing Date, each Time of Delivery and the date of effectiveness of each amendment or the filing of each supplement to the Registration Statement or the Prospectus (including the filing under the Act or the Exchange Act of documents incorporated by reference in the Prospectus as amended or supplemented but excluding amendments or supplements (i) relating to an offering of securities other than the Notes, (ii) constituting a Pricing Supplement, (iii) setting forth or incorporating by reference financial statements or other information as of and for a fiscal quarter or (iv) relating solely to the incorporation by reference of Sears proxy statement for its annual meeting of shareholders or of a filing by the Company or Sears of a Current Report on Form 8-K under the Exchange Act unless in the case of clauses (iii) or (iv) above, in such Agent's reasonable judgment, such financial statements or other information contained in such documents are of such a character that an opinion of counsel should be furnished), as the case may be, in form and substance satisfactory to the Agents in the Agents' reasonable judgement to the effect that: (i) Each of the Company and Sears has been duly incorporated and is validly existing as a corporation in good standing under the laws of its respective state of incorporation; (ii) The authorized capital stock of the Company consists of 500,000 shares of common stock, par value $100 per share, all of the issued and outstanding shares of which are owned by Sears, Roebuck and Co., and the authorized capital stock of Sears is as set forth or incorporated by reference in the Registration Statement; (iii) SRAC is not an "investment company" within the meaning of the Investment Company Act of 1940, as amended; (iv) Each of this Agreement and any applicable Terms Agreement has been duly authorized, executed and delivered on the part of the Company, and this Agreement has been duly authorized, executed and delivered on the part of Sears; (v) The issue and sale of the Notes and the compliance by the Company with all of the provisions of the Notes, the Indenture, this Agreement and any applicable Terms Agreement will not (a) conflict with or result in any breach which would constitute a material default under, or result in the creation or imposition of any lien, charge or encumbrance upon any of the property or assets of the Company, material to the Company, pursuant to the terms of, any indenture, loan agreement or other agreement or instrument for borrowed money known to such counsel to which the Company is a party or by which the Company may be bound or to which any of the property or assets of the Company, material to the Company, is subject, (b) result in any material violation of the provisions of the Certificate of Incorporation, as amended, or the By-Laws of the Company or (c) to the best of the knowledge of such counsel, result in any material violation of any statute or any order, rule or regulation applicable to the Company of any court or any Federal, State or other regulatory authority or other governmental body having jurisdiction over the Company, other than the Act, the Exchange Act, the Trust Indenture Act, and the rules and regulations pursuant to each such act, and other than the securities laws of the various states or other jurisdictions which are applicable to the issue and sale of the Notes; and, to the best knowledge of such counsel, no consent, approval, authorization or other order of, or filing with, any court or any such regulatory authority or other governmental body is required for the issue and sale of the Notes except as may be required under the Act, the Exchange Act, the Trust Indenture Act and securities laws of the various states or other jurisdictions which are applicable to the issue and sale of the Notes; (vi) The Indenture has been duly authorized, executed and delivered on the part of the Company and, as to the Company, is a valid and binding instrument in accordance with its terms except as the foregoing may be limited by insolvency, bankruptcy, reorganization or other laws relating to or affecting the enforcement of creditors' rights or by general equity principles, and has been qualified under the Trust Indenture Act; the Notes have been duly authorized and (assuming due authentication by the Trustee) when duly executed, issued and delivered pursuant to the Indenture and any Terms Agreement, will constitute valid and binding obligations of the Company in accordance with their terms, entitled to the benefits of the Indenture, except as the foregoing may be limited by insolvency, bankruptcy, reorganization or other laws relating to or affecting the enforcement of creditors' rights or by general equity principles; (vii) The Fixed Charge Coverage and Ownership Agreement has been duly authorized, executed and delivered by the parties thereto and is a valid and binding instrument in accordance with its terms except as the same may be limited by insolvency, bankruptcy, reorganization or other laws relating to or affecting the enforcement of creditors' rights or by general equity principles; (viii) Such counsel does not know of any pending legal or governmental proceedings required to be described in the Prospectus as amended or supplemented which are not described as required; (ix) Except for statements in such documents which do not constitute part of the Registration Statement or the Prospectus pursuant to Rule 412 of Regulation C under the Act and after substituting therefor any statements modifying or superseding such excluded statements, the documents incorporated by reference in the Prospectus as amended or supplemented (other than the financial statements and related schedules, the analyses of operations and financial condition and other financial, statistical and accounting data therein, as to which such counsel need express no opinion), when they became effective or were filed with the Commission, as the case may be, complied as to form in all material respects with the requirements of the Act or the Exchange Act, as applicable, and the rules and regulations of the Commission thereunder; (x) Except for statements in such documents which do not constitute part of the Registration Statement or the Prospectus pursuant to Rule 412 of Regulation C under the Act and after substituting therefor any statements modifying or superseding such excluded statements, the Registration Statement and the Prospectus as amended or supplemented (excluding the documents incorporated by reference therein) (other than the financial statements and related schedules, the analyses of operations and financial condition and other financial, statistical and accounting data therein, as to which such counsel need express no opinion) comply as to form in all material respects with the requirements of the Act and the rules and regulations thereunder; the answers in the Registration Statement to Items 9 and 10 (insofar as it relates to such counsel) of Form S-3 are to the best of such counsel's knowledge accurate statements or summaries of the matters therein set forth and fairly present the information called for with respect to those matters by the Act and the rules and regulations thereunder; and (xi) Such counsel does not know of any contract or other document to which the Company or Sears is a party required to be filed as an exhibit to the Registration Statement or required to be incorporated by reference into the Prospectus as amended or supplemented or required to be described in the Prospectus as amended or supplemented which has not been so filed, incorporated by reference or described. In rendering such opinion, such counsel may rely to the extent such counsel deems appropriate upon certificates of officers or other executives of the Company, Sears and its business groups and subsidiaries and of public officials as to factual matters and upon opinions of other counsel. In rendering the opinion referred to in subdivision (v) above, such counsel need not express an opinion as to whether, with respect to any Notes denominated in a currency other than United States dollars, a court located in the United States of America would grant a judgment relating to the Notes in other than United States dollars, nor an opinion as to the date which any such court would utilize for determining the rate of conversion into United States dollars in granting such judgment. Such counsel shall also state that: (a) nothing has come to such counsel's attention which has caused such counsel to believe that any of the documents referred to in subdivision (ix) above (other than the financial statements, the analyses of operations and financial condition and other financial, statistical and accounting data therein, as to which such counsel need express no belief), in each case after excluding any statement in any such document which does not constitute part of the Registration Statement or the Prospectus as amended or supplemented pursuant to Rule 412 of Regulation C under the Act and after substituting therefor any statement modifying or superseding such excluded statement, when such documents became effective or were filed, as the case may be, contained, in the case of documents which became effective under the Act, an untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein not misleading, and, in the case of documents which were filed under the Exchange Act with the Commission, an untrue statement of a material fact or omitted to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading, and (b) nothing has come to such counsel's attention which has caused such counsel to believe that the Registration Statement or Prospectus as amended or supplemented (other than the financial statements, the analyses of operations and financial condition and other financial, statistical and accounting data therein, as to which such counsel need express no belief) contains an untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary to make the statements therein not misleading; (d) On the Closing Date, each Time of Delivery and the date of effectiveness of each amendment or the filing of each supplement to the Registration Statement or the Prospectus setting forth or incorporating by reference amended or supplemental financial information, as the case may be, the independent certified public accountants who have certified the financial statements of the Company and Sears and its subsidiaries included or incorporated by reference in the Registration Statement shall have furnished to the Agents a letter or letters, dated the Closing Date or such applicable date, as the case may be, in form and substance satisfactory to the Agents, to the effect set forth in Annex III hereto (modified in the case of amended or supplemented financial information to reflect such amended and supplemental financial information included or incorporated by reference in the Registration Statement and the Prospectus as amended or supplemented to the date of such letter, provided that if the Registration Statement or the Prospectus is amended or supplemented solely to include or incorporate by reference unaudited quarterly financial information, the scope of such letter, which shall be satisfactory in form and substance to such Agent, may be limited to relate to such unaudited financial information unless any other accounting, financial or statistical information included or incorporated by reference therein is of a character that, in the reasonable judgment of such Agent, such letter should address such other information); (e) (i) The Company and Sears shall not have sustained, after the date of the latest audited financial statements included or incorporated by reference in the Prospectus and (A) prior to the Closing Date, any material loss or interference with its business from fire, explosion, flood or other calamity, whether or not covered by insurance, or from any labor dispute or court or governmental action, order or decree, otherwise than as contemplated in the Prospectus as amended or supplemented through the date of this Agreement and (B) prior to each Time of Delivery, any such loss or interference, otherwise than as set forth or contemplated in the Prospectus as amended or supplemented through the date that the Agent agreed to purchase such Notes as principal; and (ii) since the respective dates as of which information is given in the Prospectus as amended or supplemented and (A) prior to the Closing Date, there shall not have been any material change in the capital stock accounts or long-term debt of the Company or any material adverse change in the general affairs, financial position, stockholders' equity or results of operations of the Company, otherwise than as set forth or contemplated in the Prospectus as amended or supplemented through the date of this Agreement and (B) prior to each Time of Delivery, there shall not have been any such change, otherwise than as set forth or contemplated in the Prospectus as amended or supplemented through the date that the Agent agreed to purchase such Notes as principal, the effect of which, in any such case described in clause (i) or (ii), in the judgment of such Agent makes it impracticable or inadvisable to proceed with the solicitation by such Agent of offers to purchase Notes from the Company or the purchase by such Agent of Notes from the Company as principal, as the case may be; (f) During the period in which the Agents are soliciting offers to purchase Notes, including the period between the date that any Agent agreed to purchase such Notes as principal and the related Time of Delivery, no downgrading shall have occurred in the rating accorded the Company's or Sears debt securities by Moody's Investors Service, Inc. or Standard & Poor's Corporation; provided, however, that this Section 6(f) shall not apply to any such rating agencies which shall have notified the Company of the downgrading in the rating of such debt securities and of which the Company shall have given the Agents written notice prior to the execution of the Terms Agreement; (g) During the period in which the Agents are soliciting offers to purchase Notes, including the period between the date that any Agent agreed to purchase such Notes as principal and the related Time of Delivery, neither (i) the United States shall have become engaged in the outbreak or escalation of hostilities involving the United States or there has been a declaration by the United States of a national emergency or a declaration of war, (ii) a banking moratorium shall have been declared by either Federal or New York State authorities or, in the case of Notes denominated in other than United States dollars, by the authorities of the country of the currency in which such Notes are denominated, (iii) trading in securities generally on the New York Stock Exchange shall have been suspended nor limited or minimum prices shall have been established by such Exchange, nor (iv) in the case of Notes denominated in other than United States dollars, any change involving such currency exchange rates, exchange controls, taxation or similar matters, any of which events, in the Agents' judgment, renders it inadvisable to proceed with the solicitation by the Agents of offers to purchase Notes from the Company or the purchase by the Agents of Notes from the Company as principal, as the case may be; and (h) Each of the Company and Sears shall have furnished or caused to be furnished to the Agents at the Closing Date, each Time of Delivery and the date of effectiveness of each amendment or the filing of each supplement to the Registration Statement or the Prospectus (including the filing under the Act or the Exchange Act of documents which are incorporated by reference in the Prospectus as amended or supplemented but excluding amendments or supplements (i) relating to an offering of securities other than the Notes, (ii) constituting a Pricing Supplement, or (iii) relating solely to the incorporation by reference of Sears proxy statement for its annual meeting of shareholders or of a filing by the Company or Sears of a Current Report on Form 8-K under the Exchange Act, unless in the case of clause (iii) above, in such Agent's reasonable judgment, the information contained in such documents is of such a character that certificates of officers referred to below should be furnished, as the case may be) certificates of officers of the Company and Sears satisfactory to the Agents, as to the accuracy at and as of the Closing Date or such applicable date, as the case may be, of the representations, warranties and agreements of the Company and Sears, respectively, herein and as to the performance by each of the Company and Sears of all its obligations hereunder to be performed at or prior to the Closing Date or such applicable date, as the case may be, and the Company shall have also furnished the Agents similar certificates satisfactory to the Agents as to the matters set forth in subdivision (a) of this Section 8. 9. (a) The Company will indemnify and hold harmless each Agent against any losses, claims, damages or liabilities, joint or several, to which such Agent may become subject, under the Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon any untrue statement or alleged untrue statement of any material fact contained in any Preliminary Prospectus, the Registration Statement, the Prospectus or the Prospectus as amended or supplemented, or any amendment or supplement thereto furnished by the Company or Sears, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or (in the case of the Registration Statement or the Prospectus as amended or supplemented or any amendment or supplement thereto) necessary to make the statements therein not misleading or (in the case of any Preliminary Prospectus) necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; and will reimburse each Agent for any legal or other expenses reasonably incurred by such Agent in connection with investigating or defending any such action or claim; provided, however, that the Company shall not be liable in any such case to the extent that any such loss, claim, damage or liability arises out of or is based upon an untrue statement or alleged untrue statement or omission or alleged omission made in any Preliminary Prospectus, or the Registration Statement, the Prospectus or the Prospectus as amended or supplemented or any such amendment or supplement in reliance upon and in conformity with written information furnished to the Company by the Agents expressly for use therein; and provided, further, that the Company shall not be liable to any Agent or any person controlling such Agent under the indemnity agreement in this subdivision (a) with respect to the Preliminary Prospectus or the Prospectus or the Prospectus as amended or supplemented or any amendment or supplement thereto, as the case may be, to the extent that any such loss, claim, damage or liability of such Agent or controlling person results solely from the fact that such Agent sold Notes to a person to whom there was not sent or given, at or prior to the written confirmation of such sale, a copy of the Prospectus (excluding documents incorporated by reference) or of the Prospectus as then amended or supplemented (excluding documents incorporated by reference), whichever is most recent, if the Company has previously furnished copies thereof to such Agent. (b) Each Agent will indemnify and hold harmless the Company against any losses, claims, damages or liabilities to which the Company may become subject, under the Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon any untrue statement or alleged untrue statement of any material fact contained in any Preliminary Prospectus, the Registration Statement, the Prospectus, or the Prospectus as amended or supplemented, or any amendment or supplement thereto, or arise out of or are based upon the omission or the alleged omission to state therein a material fact required to be stated therein or (in the case of the Registration Statement or the Prospectus or the Prospectus as amended or supplemented or any amendment or supplement thereto) necessary to make the statements therein not misleading or (in the case of any Preliminary Prospectus) necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, in each case to the extent, but only to the extent, that such untrue statement or alleged untrue statement or omission or alleged omission was made in any Preliminary Prospectus or the Registration Statement or the Prospectus or the Prospectus as amended or supplemented or such amendment or supplement in reliance upon and in conformity with written information furnished to the Company by such Agent expressly for use therein; and will reimburse the Company for any legal or other expenses reasonably incurred by the Company in connection with investigating or defending any such action or claim. (c) Within a reasonable period after receipt by an indemnified party under subdivision (a) or (b) above of notice of the commencement of any action with respect to which indemnification is sought under such subdivision or contribution may be sought under subdivision (d) below, such indemnified party shall notify the indemnifying party in writing of the commencement thereof. In case any such action shall be brought against any indemnified party, the indemnifying party shall be entitled to participate in, and, to the extent that it shall wish, jointly with any other indemnifying party similarly notified, to assume the defense thereof, with counsel satisfactory to such indemnified party, and after notice from the indemnifying party to such indemnified party of its election so to assume the defense thereof, the indemnifying party shall not be liable to such indemnified party for any legal or other expenses subsequently incurred by such indemnified party in connection with the defense thereof other than reasonable costs of investigation. (d) If the indemnification provided for in this Section 9 is unavailable to an indemnified party under subdivision (a) or (b) above in respect of any losses, claims, damages or liabilities (or actions in respect thereof) referred to therein, then each indemnifying party shall contribute to the amount paid or payable by such indemnified party as a result of such losses, claims, damages or liabilities (or actions in respect thereof) in such proportion as is appropriate to reflect the relative benefits received by the Company on the one hand and the contributing Agent on the other from the offering of the Notes and also the relative fault of the Company and Sears on the one hand and the contributing Agent on the other in connection with the statements or omissions which resulted in such losses, claims, damages or liabilities (or actions in respect thereof), as well as any other relevant equitable considerations. The relative benefits received by the Company on the one hand and the contributing Agent on the other shall be deemed to be in the same proportion as the total net proceeds from the sale of Notes (before deducting expenses) received by the Company bear to the total commissions or discounts received by the contributing Agent. The relative fault shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the Company or Sears on the one hand or the contributing Agent on the other and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission of the Company or Sears on the one hand and the contributing Agent on the other hand. With respect to any Agent, such relative fault shall also be determined by reference to the extent (if any) to which such losses, claims, damages or liabilities (or actions in respect thereof) with respect to any Preliminary Prospectus result from the fact that such Agent sold Notes to a person to whom there was not sent or given, at or prior to the written confirmation of such sale, a copy of the Prospectus (excluding documents incorporated by reference) or of the Prospectus as then amended or supplemented (excluding documents incorporated by reference) if the Company has previously furnished copies thereof to such Agent. The Company and the contributing Agent agree that it would not be just and equitable if contribution pursuant to this subdivision (d) were determined by per capita allocation (even if all Agents were treated as one entity for such purpose) or by any other method of allocation which does not take account of the equitable considerations referred to above in this subdivision (d). The amount paid or payable by an indemnified party as a result of the losses, claims, damages or liabilities (or actions in respect thereof) referred to above in this subdivision (d) shall be deemed to include any legal or other expenses reasonably incurred by such indemnified party in connection with investigating or defending any such action or claim. Notwithstanding the provisions of this subdivision (d), no Agent shall be required to contribute any amount in excess of the amount by which the total price at which the Notes purchased by or through such Agent were sold exceeds the amount of any damages which such Agent has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. The obligations of each of the Agents under this subdivision (d) to contribute are several in proportion to the respective purchases made by or through it to which such loss, claim, damage or liability (or action in respect thereof) relates and are not joint. (e) The obligations of the Company under this Section 9 shall be in addition to any liability which the Company may otherwise have and shall extend, upon the same terms and conditions, to each person, if any, who controls any Agent within the meaning of the Act; and each Agent's obligations under this Section 9 shall be in addition to any liability which such Agent may otherwise have and shall extend, upon the same terms and conditions, to each officer and director of the Company or Sears and to each person, if any, who controls the Company within the meaning of the Act. 10. In soliciting offers to purchase Notes from the Company and in performing the other obligations of such Agent hereunder (other than in respect of any purchase by an Agent as principal, pursuant to a Terms Agreement or otherwise), each Agent is acting solely as agent for the Company and not as principal. Each Agent will make reasonable efforts to assist the Company in obtaining performance by each purchaser whose offer to purchase Notes from the Company was solicited by such Agent and has been accepted by the Company, but such Agent shall not have any liability to the Company in the event such purchase is not consummated for any reason. If the Company shall default on its obligation to deliver Notes to a purchaser whose offer it has accepted, the Company shall hold each Agent harmless against any loss, claim or damage arising from or as a result of such default by the Company. 11. The respective indemnities, agreements, representations, warranties and other statements by any Agent, the Company and Sears set forth in or made pursuant to this Agreement shall remain in full force and effect regardless of any investigation (or any statement as to the results thereof) made by or on behalf of any Agent, the Company, Sears, or any officer or director or any controlling person of the Company, Sears or any Agent, and shall survive each delivery of and payment for any of the Notes. 12. The provisions of this Agreement relating to the solicitation of offers to purchase Notes from the Company may be suspended or this Agreement may be terminated at any time by the Company as to any or all Agents or by any Agent insofar as this Agreement relates to such Agent upon the giving of written notice of such suspension or termination to such Agent or the Company, as the case may be. Unless otherwise agreed by the respective parties, any such suspension or termination shall be effective immediately with respect to the party giving such notice and, in the case of the party receiving such notice, at the close of business on the first business day following the receipt of such notice. In the event of such suspension or termination with respect to any Agent, (x) this Agreement shall remain in full force and effect with respect to any Agent as to which such suspension or termination has not occurred, and (y) the Company shall not have any liability to such Agent and such Agent shall not have any liability to the Company, except as provided in any Terms Agreements and in the fifth paragraph of Section 3(a), Section 7, Section 9, Section 10 and Section 11. 13. Except as otherwise specifically provided herein or in the Procedure, all statements, requests, notices and advices hereunder shall be in writing, or by telephone if promptly confirmed in writing, and if to an Agent shall be sufficient in all respects when delivered or sent by facsimile transmission or registered mail to such Agent at the address or facsimile transmission number set forth in the Appointment and Acceptance of Agent relating to the appointment of such Agent, and if to the Company shall be sufficient in all respects when delivered or sent by facsimile transmission or registered mail to the Company at 3711 Kennett Pike, Greenville, Delaware 19807, Attention: Richard F. Kotz, Secretary, Facsimile Transmission No. (302) 888-3150, and if to Sears shall be sufficient in all respects when delivered or sent by facsimile transmission or registered mail to Sears at 3333 Beverly Road, Hoffman Estates, Illinois 60179, Attention: Senior Vice President and General Counsel, 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: _______________________ SEARS, ROEBUCK AND CO. By: ________________________ Agents Designated Hereby: Accepted in New York, New York, as of the date set forth on the first page of the Distribution Agreement: Address: Facsimile Transmission No.: [Other terms of Agent's appointment, if any, including the duration of appointment if limited other than pursuant to Section 12] Accepted in New York, New York, as of the date [set forth on the first page of the Distribution Agreement]: By:_________________________________________ 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 I] [ % Notes due ] Aggregate Principal Amount: [$ or units of other Specified Currency] [Currency Swap or Forward Arrangements:] [Price to Public:] Purchase Price by : % of the principal amount of the Purchased Notes [, plus accrued interest from to ] [and accrued amortization, from to ] Specified Funds for Payment of Purchase Price: immediately available funds Indenture: Indenture, dated as of May 15, 1995, as supplemented to the date hereof, between the Company and The Chase Manhattan Bank, N.A., as Trustee Form of Purchased Notes: [Certificated form only][Global form only] Time of Delivery: Closing Location: Maturity: Interest Rate: [ %] [Specify floating rate provisions, if any] Interest Payment Dates: [months and dates] Documents to be Delivered: The following documents referred to in the Distribution Agreement shall be delivered as a condition to the Closing: [(1) The opinion referred to in Section 8(c).] [(2) The accountants' letter referred to in Section 8(d).] [(3) The officers' certificate referred to in Section 8(h).] Lock-Out Provisions: [Describe modifications, if any, to the lock-out provisions set forth in Section 6 of the Distribution Agreement.] Syndicate Provisions: [Set forth any provisions relating to underwriters' default and step-up of amounts to be purchased by underwriters acting with ] PAGE> ANNEX II Sears Roebuck Acceptance Corp. ADMINISTRATIVE PROCEDURE Medium-term notes (the "Notes") in the aggregate initial offering price of up to $ are to offered from time to time by Sears Roebuck Acceptance Corp. (the "Company") through agents of the Company (together, in such capacity, the "Agents"). Each Agent has agreed to use its reasonable efforts to solicit offers to purchase Notes directly from the Company (an Agent, in relation to a purchase of a particular Note by a purchaser solicited by such Agent, being herein referred to as the "Selling Agent") and may also purchase Notes from the Company as principal (an Agent, in relation to a purchase of a Note by such Agent as principal other than pursuant to a Terms Agreement being herein referred to as the "Purchasing Agent"). The Notes are being sold pursuant to a Distribution Agreement, dated , 199 (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 , 199 (the "Indenture"), between the Company and , 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 but not more than thirty years from the date of original issuance by the Company of such Note (the "Settlement Date"). Price to Public: Each Note will be issued at the percentage of principal amount specified in the Prospectus (as defined in Section 1(a) of the Distribution Agreement) relating to the Notes. Currencies: Notes will be denominated in U.S. dollars or in such other currency or currency unit as is specified in the Prospectus (the "Specified Currency"). Denominations: The denomination of any Book-Entry, Global or Certificated Note will be a minimum of U.S. $1,000 or any amount in excess thereof in integral multiples of $1,000 or the equivalent, as determined pursuant to the provisions of the Indenture, of U.S. $1,000 (rounded down to an integral multiple of 1,000 units of such Specified Currency) and any amounts in excess thereof. Interest Payments: As specified in the Indenture and the Form of Note. Acceptance of Offers: Each Agent will promptly advise the Company by telephone or other appropriate means of offers to purchase Notes received by it other than those rejected by such Agent. Each Agent may, in its discretion reasonably exercised, reject any offer received by it. Each Agent also may make offers to the Company to purchase Notes as a Purchasing Agent in accordance with Section 2(b) of the Distribution Agreement. The Company will have the sole right to accept offers to purchase Notes and may reject any such offer. If the Company accepts an offer to purchase Notes, it will confirm such acceptance in writing to the Selling Agent or Purchasing Agent, as the case may be. If the Company rejects an offer, it will promptly notify the Agent involved. Filing and Delivery of Prospectus: If the Company accepts an offer to purchase a Note, the Company will prepare a Pricing Supplement reflecting the terms of such Note and will arrange to have a Pricing Supplement filed with the Securities and Exchange Commission (the "Commission") as soon as practicable after the preparation thereof and will supply at least one such Pricing Supplement to the Selling Agent or the Purchasing Agent, as the case may be, not later than 5:00 p.m., New York City time, on the Business Day following the date of acceptance of such offer. With respect to each Note sold pursuant to the Distribution Agreement, the Selling Agent shall send a copy of the Prospectus as most recently amended or supplemented (together with the Pricing Supplement relating to such Note) to the purchaser or its agent prior to or together with the delivery of (a) the written confirmation of sale (including, in the case of a book-entry security, the confirmation through DTC's Institutional Delivery System) or (b) the delivery of such Note, whichever is earlier. Confirmation: For each offer accepted by the Company, the Selling Agent will issue a written confirmation to each purchaser containing the Sale Information (as defined below), plus delivery and payment instructions. Currency Swaps: Unless otherwise requested by the Company, each time an Agent advises the Company of an offer to purchase Notes denominated in a currency or currency unit other than U.S. dollars, such Agent will provide the Company information with respect to currency swap or forward arrangements that, as of the time the offer is communicated to the Company, such Agent is prepared to enter into or arrange with a third party to enter into in order to exchange amounts to be received from the purchaser of such Note at the Settlement Date and to exchange amounts to be paid by the Company on the interest payment dates and at maturity. Settlement-- Sales as Principal: In the event of a purchase of Notes by an Agent or Agents, as principal or underwriter (other than as Purchasing Agent), appropriate settlement details will be set forth in the applicable Terms Agreement to be entered into between such Agent or Agents and the Company pursuant to the Distribution Agreement. Settlement-- Sales as Agent: All offers solicited by the Agents and accepted by the Company will be settled on the third Business Day (as defined below) after the date of acceptance unless otherwise agreed by the purchaser and the Company and the Settlement Date shall be specified upon acceptance of such offer. The term "Business Day" means a Monday, Tuesday, Wednesday, Thursday or Friday on which commercial banks in any of New York City, the City of Chicago or the City of Wilmington and, (i) if the Note is denominated in a currency other than U.S. dollars, in the capital of the country of the Specified Currency, or (ii) if the Note is denominated in European Currency Units, in Brussels, are not required or authorized to be closed. Communication of Sale Information to the Company by Selling Agent: For each offer accepted by the Company, the Selling Agent or Purchasing Agent, as the case may be, will provide (unless provided by the purchaser directly to the Company) to a Designated Person by facsimile transmission or other acceptable means the following information (the "Sale Information"): (1) If a Certificated Note, exact name of the registered owner, (2) If a Certificated Note, exact address of the registered owner, (3) If a Certificated Note, taxpayer identification number of the registered owner (if available), (4) If a Book-Entry Note, the DTC Participant Number of the institution through which the customer will hold the beneficial interest in the Global Note, (5) Principal amount of the Note, (6) Date of Note, (7) If a Fixed Rate Note, the interest rate, (8) Settlement Date, (9) Maturity date, (10) Currency or currency unit in which the Note is to be denominated and, if other than U.S. dollars, the applicable Exchange Rate for such currency or currency unit, (11) Indexed Currency, the Base Rate and the Exchange Rate Determination Date, if applicable, (12) Issue Price, (13) Selling Agent's commission or Purchasing Agent's discount, as the case may be (to be paid upon settlement as a discount from gross proceeds of sale except as provided below under "Delivery of Notes and Cash Payment"), (14) Net proceeds to the Company, (15) If a redeemable Note with a Redemption Commencement Date, such of the following as are applicable: (i) Redemption Commencement Date, (ii) Initial Redemption Price (% of par), and (iii)Amount (% of par) that the Redemption Price shall decline (but not below par) on each anniversary of the Redemption Commencement Date, (16) If a redeemable or repayable Note with a Redemption Date or Redemption Dates, such of the following as are applicable: (i) the Redemption Date or Redemption Dates, (ii) whether the Note is redeemable or repayable at the option of the Company or the Holder or both, (iii)the Redemption Price (% of par) on each Redemption Date, (iv) the notice period during which the option to redeem may be exercised, and (v) the method by which notice of redemption is to be given, (17) If a Floating Rate Note, such of the following as are applicable: (i) Interest Rate Basis, (ii) Index Maturity, (iii) Spread, (iv) Spread Multiplier, (v) Maximum Rate, (vi) Minimum Rate, (vii) Initial Interest Determination Date, (viii) Interest Reset Dates, (ix) Calculation Dates, (x) Interest Determination Dates, and (xi) Calculation Agent, (18) Interest Payment Dates, (19) Regular Record Dates, (20) Denomination of certificates to be delivered at settlement, and (21) That the Note is a Certificated Note (if applicable), (22) To the extent known to the Agent, any information not otherwise expressly set forth in the Prospectus Supplement which is required pursuant to Item 501(c)(7) or 508 of Regulation S-K promulgated by the Commission, including, but not limited to, the initial public offering price of the Notes, if other than 100% of the principal amount, and (23) If an Agent purchases Notes as a principal, the extent, if any, to which the items specified in Sections 8(c), 8(d) and 8(h) of the Distribution Agreement are required to be furnished as of the Time of Delivery. In addition, the Selling Agent will use its reasonable efforts to provide in writing the following information to the Company and the Trustee: (24) One of the following: a. In the case of a foreign registered owner (other than a Financial Institution (as defined below)), an IRS Form W-8 that has been duly and properly signed by the registered owner. b. In the case of a registered owner which is a Financial Institution, a statement from the Financial Institution signed under penalties of perjury stating that the Financial Institution has received from the beneficial owner an IRS Form W-8 that has been duly and properly signed by the registered owner together with a copy of such Form W-8. c. In the case of a registered owner who is a United States person, an IRS Form W-9 that has been duly and properly signed by the registered owner. A "Financial Institution" is a securities clearing organization, a bank, or another financial institution that holds customers' securities in the ordinary course of its trade or business which holds a Note for a beneficial owner who is a foreign person. After receiving the Sale Information the Company will, after recording the Sale Information and any necessary calculations, provide appropriate documentation to the Trustee necessary for the preparation, authentication and delivery of such Note. Change in Interest Rate, Maturity or Currency Denomination: The Company and the Agents will discuss from time to time the rates of interest per annum to be borne by, and the maturity and currency denomination of, Notes that may be sold as a result of the solicitation of offers by the Agents. Suspension of Solicitation; Amendment or Supplement: The Company may instruct the Agents to suspend solicitation of offers to purchase Notes at any time, whereupon the Agents will as promptly as possible (but in any event not later than one business day after receipt of such instruction) suspend solicitation until such time as the Company has advised the Agents that solicitation of offers to purchase Notes may be resumed. If the Company proposes to amend or supplement the Registration Statement or the Prospectus relating to the Notes (except in the case of a Pricing Supplement), it will promptly advise the Agents and will furnish to the Agents such proposed amendment or supplement and, after the Agents have been afforded a reasonable opportunity to review such amendment or supplement, will cause such amendment or supplement to be filed with the Commission. The Company will promptly provide the Agents with copies of any such amendment or supplement and confirm to the Agents that such amendment or supplement has been filed with the Commission. In the event that at the time the Agents suspend solicitation of offers to purchase Notes there shall be any outstanding offers to purchase Notes that have been accepted by the Company but for which settlement has not occurred, the Company, consistent with its obligations under the Distribution Agreement, promptly will advise the Agents whether such sales may be settled and whether copies of the Prospectus as supplemented at the time of the suspension may be delivered in connection with the settlement of such sales. The Company will have the sole responsibility for such decision and for any arrangements which may be made in the event that the Company determines that such sales may not be settled or that copies of such Prospectus may not be so delivered. Authenticity of Signatures: The Trustee will furnish the Agents from time to time with the specimen signatures of each of the Trustee's officers, employees or agents who have been authorized by the Trustee to authenticate Notes, but the Agents will have no obligation or liability to the Company or the Trustee in respect of the authenticity of the signature of any officer, employee or agent of the Company or the Trustee on any Note. Advertising Cost: The Company will determine with the Agents the amount of advertising that may be appropriate in the solicitation of offers to purchase the Notes. Advertising expenses will be paid by the Company. II. Book-Entry Procedures In connection with the qualification of Book-Entry Notes for eligibility in the book-entry system maintained by DTC, the Trustee will perform the custodial, document control and administrative functions described below, in accordance with its obligations under a Letter of Representations from the Company and the Trustee to DTC, dated , 199 , and a Medium-Term Note Certificate Agreement, dated , 19 between the Trustee and DTC (the "Certificate Agreement"), and the Trustee's obligations as a participant in DTC including DTC's Same-Day Funds Settlement System ("SDFS"). Issuance: All Fixed Rate Notes which have the same original issue date, redemption or repayment provisions, Interest Payment Dates, Regular Record Dates, interest rate, Specified Currency and maturity date (collectively, the "Fixed Rate Terms") will be represented initially by a single Global Note in fully registered form without coupons. All Floating Rate Notes which have the same original issue date, redemption or repayment provisions, Interest Payment Dates, Regular Record Dates, Interest Rate Basis, Interest Determination Dates, Interest Reset Dates, Calculation Dates, Index Maturity, Spread or Spread Multiplier, if any, Minimum Rate, if any, Maximum Rate, if any, Specified Currency and maturity date (collectively, the "Floating Rate Terms") will be represented initially be a single Global Note in fully registered form without coupons. Identification: The Company has received from the CUSIP Service Bureau of Standard & Poor's Corporation (the "CUSIP Service Bureau") a series of approximately 900 CUSIP numbers for future assignment to Global Notes, and the Company has delivered to the Trustee and DTC such list of such CUSIP numbers. The Trustee will assign CUSIP numbers to Global Notes as described below. DTC will notify the CUSIP Service Bureau periodically of the CUSIP numbers that have been assigned to Global Notes. The Trustee will notify the Company at any time when fewer than 100 of the reserved CUSIP numbers remain unassigned to Global Notes, and, if it deems necessary, the Company will reserve additional CUSIP numbers for assignment to Global Notes. Upon obtaining such additional CUSIP numbers, the Company will deliver a list of such additional numbers to the Trustee and DTC. Registration: Each Global Note will be registered in the name of Cede & Co., as nominee for DTC, on the Security Register maintained under the Indenture. The beneficial owner of a Book-Entry Note (or one or more indirect participants in DTC designated by such owner) will designate one or more participants in DTC (the "Participants") to act as agent or agents for such owner in connection with the book-entry system maintained by DTC, and DTC will record in book-entry form, in accordance with instructions provided by such Participants, a credit balance with respect to such Book-Entry Note in the account of such Participants. The ownership interest of such beneficial owner in such Book-Entry Note will be recorded through the records of such Participants or through the separate records of such Participants and one or more indirect participants in DTC. Transfers: Transfers of a Book-Entry Note will be accomplished by book entries made by DTC and, in turn, by Participants (and in certain cases, one or more indirect participants in DTC) acting on behalf of beneficial transferors and transferees of such Book-Entry Note. Exchanges: The Trustee, at the Company's request, may deliver to DTC and the CUSIP Service Bureau at any time a written notice of consolidation specifying (a) the CUSIP numbers of two or more outstanding Global Notes having the same Fixed Rate Terms or Floating Rate Terms, as the case may be (except that original issue dates need not be the same), and for which interest has been paid to the same date; (b) a date, occurring at least 30 days after such written notice is delivered and at least 30 days before the next Interest Payment Date for the related Book-Entry Notes, on which such Global Notes shall be exchanged for a single replacement Global Note; and (c) a new CUSIP number to be assigned to such replacement Global Note. Upon receipt of such a notice, DTC will send to its participants (including the Trustee) a written reorganization notice to the effect that such exchange will occur on such date. Prior to the specified exchange date, the Trustee will deliver to the CUSIP Service Bureau written notice setting forth such exchange date and the new CUSIP number and stating that, as of such exchange date, the CUSIP numbers of the Global Notes to be exchanged will no longer be valid. On the specified exchange date, the Trustee will exchange such Global Notes for a single Global Note bearing the new CUSIP number. The CUSIP numbers of the exchanged Global Notes will, in accordance with CUSIP Service Bureau procedures, be cancelled and not immediately reassigned. Notwithstanding the foregoing, if the Global Notes to be exchanged exceed $200,000,000 in aggregate principal amount, one replacement Global Note will be authenticated and issued to represent each $200,000,000 of principal amount of the exchanged Global Notes and an additional Global Note will be authenticated and issued to represent any remaining principal amount of such Global Notes, subject to the minimum denomination restrictions described in General Procedures - Denominations (see "Denominations" below). Denominations: Global Notes representing Book-Entry Notes will be denominated in principal amounts not in excess of $200,000,000. If one or more Book-Entry Notes having an aggregate principal amount in excess of $200,000,000 would, but for the preceding sentence, be represented by a single Global Note, then one Global Note will be issued to represent each $200,000,000 principal amount of such Book-Entry Note or Book-Entry Notes and an additional Global Note will be issued to represent any remaining principal amount of such Book-Entry Note or Book-Entry Notes, subject to the minimum denomination restrictions described in General Procedures - Denominations. In such a case, each of the Global Notes representing such Book-Entry Note or Notes shall be assigned the same CUSIP number. Interest: DTC will arrange for each pending deposit message described under Settlement Procedure B below to be transmitted to Standard & Poor's Corporation, which will use the message to include certain terms of the related Global Note in the appropriate daily bond report published by Standard & Poor's Corporation. Payments of Principal, Premium, if any, and Interest: Payments of Interest Only. Promptly after each Regular Record Date (or as soon thereafter as such information is determined), the Trustee will deliver to the Company and DTC a written notice specifying by CUSIP number the amount of interest to be paid on each Global Note on the following Interest Payment Date (other than an Interest Payment Date coinciding with the Maturity) and the total of such amounts. DTC will confirm the amount payable on each Global Note on such Interest Payment Date by reference to the daily bond reports published by Standard & Poor's Corporation. On such Interest Payment Date, the Company will pay to the Trustee, and the Trustee in turn will pay to DTC, such total amount of interest due (other than at Maturity), at the times and in the manner set forth below under "Manner of Payment." Payments at Maturity. On or about the first Business Day of each month (or as soon thereafter as such information is determined), the Trustee will deliver to the Company and DTC a written list of principal, premium, if any, and interest to be paid on each Global Note maturing or subject to redemption or repayment in the following month. The Trustee, the Company and DTC will confirm the amounts of such principal, premium (if any) and interest payments with respect to each such Global Note on or about the fifth Business Day preceding the maturity date of such Global Note. At such maturity date, the Company will pay to the Trustee, and the Trustee in turn will pay to DTC, the principal of and premium, if any, on such Global Note, together with interest due at such maturity date, at the times and in the manner set forth below under "Manner of Payment." Promptly after payment to DTC of the principal, premium, if any, and interest due at maturity of all Book-Entry Notes represented by a particular Global Note, the Trustee will cancel such Global Note, make appropriate entries in its records and dispose of such Global Note as provided in the Indenture. Manner of Payment. The total amount of any principal, premium and interest due on Global Notes on any Interest Payment Date or at maturity shall be paid by the Company to the Trustee in funds immediately available for use by the Trustee as of noon, New York City time, on such date. The Company will make such payment on such Global Notes by wire transfer to the Trustee or by instructing the Trustee to withdraw funds from an account maintained by the Company at the Trustee. The Company will confirm any such instructions in writing to the Trustee. For maturity, redemption and other principal payments, prior to 1:00 p.m., New York City time, on each such date or as soon as possible thereafter following receipt of such funds from the Company, the Trustee will pay by separate wire transfer (using Fedwire message entry instructions in a form previously specified by DTC) to an account at the Federal Reserve Bank of New York previously specified by DTC, in funds available for immediate use by DTC, each payment of interest, principal and premium, if any, due on Global Notes on such date; and for interest payments, the Trustee will pay DTC in same day funds on the Interest Payment Date in accordance with existing arrangements between the Trustee and DTC. Thereafter on each such date, DTC will pay, in accordance with its SDFS operating procedures then in effect, such amounts in funds available for immediate use to the respective Participants with payments in amounts proportionate to their respective holdings in principal amount of beneficial interest in such Global Note as are recorded in the book-entry system maintained by DTC. Once payment has been made to DTC, neither the Company nor the Trustee shall have any responsibility or liability for the payment by DTC of the principal of, or premium, if any, or interest on, the Book-Entry Notes to such Participants. Withholding Taxes. The amount of any taxes required under applicable law to be withheld from any interest payment on a Book-Entry Note will be determined and withheld by the Participant, indirect participant in DTC or other Person responsible for forwarding payments and materials directly to the beneficial owner of such Book-Entry Note, or as applicable law may otherwise require. Settlement Procedures: Settlement Procedures with regard to each Book-Entry Note sold by each Agent will be as follows: A. Upon receiving the Sale Information, the Company will, as soon as practicable, advise the Trustee by facsimile transmission of the Sale Information and the name of such Agent. B. The Trustee will assign a CUSIP number to the Global Note representing such Book-Entry Note and will communicate to DTC and the Agent through DTC's Participant Terminal System, a pending deposit message specifying such of the following Settlement information as applicable: 1. The following information: (a) Principal amount of the purchase. (b) In the case of a Fixed Rate Note, the interest rate, or, in the case of a Floating Rate Note, the initial interest rate, the Interest Reset Dates, the Interest Payment Dates, the Interest Rate Basis, Index Maturity, Spread or Spread Multiplier, if any, and the Minimum Rate and Maximum Rate, if any. (c) Settlement date. (d) Maturity date. (e) Price. (f) DTC Participant Number of the institution through which the customer will hold the beneficial interest in the Global Note. 2. The numbers of the participant accounts maintained by DTC on behalf of the Trustee and the Agent. 3. Identification as a Fixed Rate Note or a Floating Rate Note. 4. The initial Interest Payment Date for such Note, number of days by which such date succeeds the related DTC record date (which term means the Regular Record Date, or in the case of Floating Rate Notes which reset weekly, the date five calendar days immediately preceding the applicable Interest Payment Date) and, for Fixed Rate Notes, the amount of interest payable on such Interest Payment Date per $1,000 principal amount of Note. 5. The frequency of interest payments. 6. The frequency of interest rate resets. 7. The CUSIP number of the Global Note representing such Book-Entry Notes. 8. Whether such Global Note represents any other Book-Entry Notes issued or to be issued. The Trustee will also orally notify the Agent of the CUSIP number assigned to the Global Note. C. The Trustee will prepare a Global Note representing such Book-Entry Note in a form that has been approved by the Company. D. The Trustee will authenticate the Global Note representing such Book-Entry Note and maintain possession of such Global Note. E. DTC will credit such Book-Entry Note to the participant account of the Trustee maintained by DTC. F. The Trustee will enter an SDFS deliver order through DTC's Participant Terminal System instructing DTC to (i) debit such Book-Entry Note to the Trustee's participant account and credit such Book-Entry Note to the participant account of the Agent maintained by DTC and (ii) debit the settlement account of the Agent and credit the settlement account of the Trustee maintained by DTC, in an amount equal to the price of such Book-Entry Note less the Agent's commission. The entry of such a deliver order shall be deemed to constitute a representation and warranty by the Trustee to DTC that (a) the Global Note representing such Book-Entry Note has been issued and authenticated and (b) the Trustee is holding such Global Note pursuant to the Certificate Agreement. G. The Agent will enter an SDFS deliver order through DTC's Participant Terminal System instructing DTC to (i) debit such Book-Entry Note to the Agent's participant account and credit such Book-Entry Note to the participant accounts of the Participants to whom such Book-Entry Note is to be credited maintained by DTC and (ii) debit the settlement accounts of such Participants and credit the settlement account of the Agent maintained by DTC, in an amount equal to the initial public offering price of the Book-Entry Note so credited to their accounts. H. Transfers of funds in accordance with SDFS deliver orders described in Settlement Procedures F and G will be settled in accordance with SDFS operating procedures in effect on the Settlement Date. I. The Trustee will credit to an account of the Company maintained at funds available for immediate use in an amount equal to the amount credited to the Trustee's DTC settlement account in accordance with Settlement Procedure F. J. The Agent will confirm the purchase of each Book-Entry Note to the purchaser thereof either by transmitting to the Participant to whose account such Note has been credited a confirmation order through DTC's Participant Terminal System or by mailing a written confirmation to such purchaser. In all cases the Prospectus as most recently amended or supplemented (including the applicable Pricing Supplement) must accompany or precede such confirmation. Settlement Procedures Timetable: For offers accepted by the Company, Settlement Procedures A through J shall occur no later than the respective times (New York City time) listed below: Settlement Procedure Time A 11:00 a.m. on the Business Day following the date of acceptance. B 2:00 p.m. on the Business Day following the date of acceptance. C 5:00 p.m. on the Business Day before the Settlement Date. D 9:00 a.m. on the Settlement Date. E 10:00 a.m. on the Settlement Date. F-G 2:00 p.m. on the Settlement Date. H 4:45 p.m. on the Settlement Date. I-J 5:00 p.m. on the Settlement Date. Settlement Procedure H is subject to extension in accordance with any extension of Fedwire closing deadlines and in the other events specified in the SDFS operating procedures in effect on the Settlement Date. If Settlement of a Book-Entry Note is rescheduled or cancelled, the Trustee will deliver to DTC, through DTC's Participant Terminal System, a cancellation message to such effect by no later than 2:00 p.m., New York City time, on the Business Day immediately preceding the scheduled Settlement Date. Failures: If the Trustee has not entered an SDFS deliver order with respect to a Book-ntry Note pursuant to Settlement Procedure F (which may be evidenced by facsimile transmission), the Trustee, at the Company's direction, shall deliver to DTC, through DTC's Participant Terminal System, as soon as practicable, but no later than 2:00 p.m. on any business day, a withdrawal message instructing DTC to debit such Book-Entry Note to the participant account of the Trustee maintained at DTC. DTC will process the withdrawal message, provided that such participant account contains a principal amount of the Global Note representing such Book-Entry Note that is at least equal to the principal amount of such Book-Entry Note to be debited. If withdrawal messages are processed with respect to all the Book-Entry Notes issued or to be issued represented by a Global Note, the Trustee will void such Global Note, make appropriate entries in its records and, unless otherwise directed by the Company, destroy the Certificate. The CUSIP number assigned to such Global Note shall, in accordance with CUSIP Service Bureau procedures, be cancelled and not immediately reassigned. If withdrawal messages are processed with respect to a portion of the Book-Entry Notes represented by a Global Note, the Trustee will exchange such Global Note for two Global Notes, one of which shall represent such Book-Entry Notes (which shall be cancelled immediately after issuance), and the other of which shall represent the remaining Book-Entry Notes previously represented by the surrendered Global Note and shall bear the CUSIP number of the surrendered Global Note. If the purchase price for any Book-Entry Note is not timely paid to the Participants with respect to such Note by the beneficial purchaser (other than a Purchasing Agent) thereof (or a person, including an indirect participant in DTC, acting on behalf of such purchaser), such Participants and, in turn, the related Agent may enter SDFS deliver orders through DTC's Participant Terminal System debiting such Note free to such Agent's Participant Account and crediting such Note free to the Participant Account of the Trustee and shall notify the Trustee and the Company thereof. Thereafter, the Trustee, (i) will immediately notify the Company, once the Trustee has confirmed that such Note has been credited to its Participant Account, and the Company shall transfer by Fedwire (immediately available funds) to such Agent an amount equal to the price of such Note which was previously sent by wire transfer to the account of the Company maintained at 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 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's 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, 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. EX-4 6 Exhibit 4(d) [date] Sears Roebuck Acceptance Corp. 3711 Kennett Pike Greenville, Delaware 19807 Gentlemen: This is to confirm our agreement ("Extension Agreement") that the term "Debt Securities" as defined in the Fixed Charge Coverage and Ownership Agreement dated as of May 15, 1995 between Sears Roebuck Acceptance Corp. ("SRAC"), and Sears, Roebuck and Co. shall be expanded to include up to $2 billion aggregate initial offering price of debt securities to be issued by SRAC under Registration Statement No. 33-64215. If the foregoing satisfactorily sets forth your understanding of our agreement, please indicate your acceptance by the signature of a duly authorized officer in the space provided below and on the duplicate original of this letter which is enclosed. Very truly yours, SEARS, ROEBUCK AND CO. By: Alice M. Peterson Vice President and Treasurer Accepted: SEARS ROEBUCK ACCEPTANCE CORP. By: Keith E. Trost President EX-5 7 Sears, Roebuck and Co. 3333 Beverly Road Hoffman Estates, Illinois 60179 February 27, 1996 Exhibit 5 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 have examined the Registration Statement on Form S-3, Registration No. 33-64215 and Amendment No. 1 thereto to be filed with the Securities and Exchange Commission on or about February 27, 1996 (the "Registration Statement") by Sears Roebuck Acceptance Corp. (the "Company") and Sears, Roebuck and Co. in connection with the registration under the Securities Act of 1933, as amended (the "Act"), of $2,000,000,000 principal amount of debt securities (the "Debt Securities") for an offering to be made on a continuous or delayed basis pursuant to the provisions of Rule 415 under the Act. I have examined the indenture dated as of May 15, 1995 between the Company and The Chase Manhattan Bank, N.A. and the form of indenture between the Company and the Trustee, to be filed with the Registration Statement, under which the Debt Securities are to be issued. I am familiar with the proceedings heretofore taken, and with the additional proceedings proposed to be taken, by the Company in connection with the authorization, registration, issuance and sale of the Debt Securities. Subject to the proposed additional proceedings being taken as now contemplated prior to the issuance of the Debt Securities and the terms of the Debt Securities being otherwise in compliance with then applicable law, I am of the opinion that the Debt Securities will, upon the issuance and sale thereof in the manner referred to in the Registration Statement, be legally issued and binding obligations of the Company in accordance with their terms, subject to insolvency, bankruptcy, reorganization or other laws relating to or affecting the enforcement of creditors' rights or by general equity principles. I consent to the use of this opinion as an exhibit to the Registration Statement and to the reference to me in the Prospectus which is part of the Registration Statement. Sincerely, /s/ Barbara E. Rohde Barbara E. Rohde Counsel EX-15 8 Exhibit 15(a) Sears Roebuck Acceptance Corp. Greenville, Delaware We have made a review, in accordance with standards established by the American Institute of Certified Public Accountants, of the unaudited interim financial information of Sears Roebuck Acceptance Corp. for the periods ended March 31, 1995 and 1994, June 30, 1995 and 1994, and September 30, 1995 and 1994, as indicated in our reports dated April 12, 1995, July 13, 1995, and October 12, 1995, respectively; because we did not perform an audit, we expressed no opinion on that information. We are aware that our reports referred to above, which were included in your Quarterly Reports on Form 10-Q for the quarters ended March 31, 1995, June 30, 1995, and September 30, 1995, are incorporated by reference in Registration Statement No. 33-64215 on Form S-3. We are also aware that the aforementioned report, pursuant to Rule 436(ac) under the Securities Act, is not considered a part of the Registration Statement prepared or certified by an accountant or a report prepared or certified by an accountant within the meaning of Sections 7 and 11 of that Act. /s/ Deloitte & Touche LLP Deloitte & Touche LLP Philadelphia, Pennsylvania February 27, 1996 EX-15 9 Exhibit 15(b) February 27, 1996 Sears, Roebuck and Co. Hoffman Estates, Illinois We have made a review, in accordance with standards established by the American Institute of Certified Public Accountants, of the unaudited interim financial information of Sears, Roebuck and Co. (the "Company") for the periods ended April 1, 1995 and April 2, 1994, July 1, 1995 and July 2, 1994, and September 30, 1995 and October 1, 1994, as indicated in our reports dated May 15, 1995, August 14, 1995, and November 9, 1995, respectively; because we did not perform an audit, we expressed no opinion on that information. We are aware that our reports referred to above, which were included in your Quarterly Reports on Form 10-Q for the quarters ended April 1, 1995, July 1, 1995, and September 30, 1995, are being used in this Amendment No. 1 to Registration Statement No. 33-64215 on Form S-3 filed by the Company and Sears Roebuck Acceptance Corp. We are also aware that the aforementioned reports, pursuant to Rule 436(c) under the Securities Act of 1933, are not considered a part of the Registration Statement prepared or certified by an accountant or a report prepared or certified by an accountant within the meaning of Sections 7 and 11 of that Act. /s/ Deloitte & Touche LLP Deloitte & Touche LLP Chicago, Illinois EX-23 10 Exhibit 23(a) CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS We consent to the incorporation by reference in this Amendment No. 1 to Registration Statement No. 33-64215 of Sears Roebuck Acceptance Corp. (the "Company") on Form S-3 of our report dated January 26, 1995, appearing in (and incorporated by reference in) the Annual Report on Form 10-K of Sears Roebuck Acceptance Corp. for the year ended December 31, 1994, and to the reference to us under the heading "Experts" in the Prospectus, which is part of this Registration Statement. We also consent to the use in this Registration Statement of our report dated January 26, 1995 on the Company's Summary Financial Information included as Exhibit 99 to this Registration Statement. /s/ Deloitte & Touche LLP Deloitte & Touche LLP Philadelphia, Pennsylvania February 27, 1996 EX-23 11 Exhibit 23(b) CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS We consent to the incorporation by reference in this Amendment No. 1 to Registration Statement No. 33-64215 of Sears, Roebuck and Co. (the "Company") and Sears Roebuck Acceptance Corp. on Form S-3 of our report dated February 24, 1995 (May 10, 1995 as to Note 4), related to the consolidated financial statements of the Company appearing in the Current Report on Form 8-K of the Company dated May 15, 1995. We also consent to the reference to us under the heading "Experts" in the Prospectus, which is part of this Registration Statement. /s/ Deloitte & Touche LLP Deloitte & Touche LLP Chicago, Illinois February 27, 1996 EX-26 12 Securities Act of 1933 File No. _______ (If application to determine eligibility of trustee for delayed offering pursuant to Section 305(b)(2)) SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM T-1 STATEMENT OF ELIGIBILITY UNDER THE TRUST INDENTURE ACT OF 1939 OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A TRUSTEE PURSUANT TO SECTION 305(b)(2) _____________ THE CHASE MANHATTAN BANK (National Association) (Exact name of trustee as specified in its charter) 13-2633612 (I.R.S. Employer Identification Number) 1 Chase Manhattan Plaza, New York, New York (Address of principal executive offices) 10081 (Zip Code) SEARS ROEBUCK ACCEPTANCE CORP. (Exact name of obligor as specified in its charter) Delaware (State or other jurisdiction of incorporation or organization) 51-0080535 (I.R.S. Employer Identification No.) 3711 Kennett Pike Greenville, Delaware (Address of principal executive offices) 19807 (Zip Code) Debt Securities (Title of the indenture securities) Item 1. General Information Furnish the following information as to the trustee: (a) Name and address of each examining or supervising authority to which it is subject. Comptroller of the Currency, Washington, D.C. Board of Governors of The Federal Reserve System, Washington, D.C. (b) Whether it is authorized to exercise corporate trust powers. Yes. Item 2. Affiliations with the Obligor. If the obligor is an affiliate of the trustee, directly or indirectly controlling, controlled by, or under common control with the obligor. (See Note on Page 2.) Item 16. List of Exhibits. List below all exhibits filed as a part of this statement of eligibility. *1.-- A copy of the articles of association of the trustee as now in effect. (See Exhibit T-1 (Item 12), Registration No. 33-55626.) *2.-- Copies of the respective authorizations of The Chase Manhattan Bank (National Association) and The Chase Bank of New York (National Association) to commence business and a copy of approval of merger of said corporations, all of which documents are still in effect. (See Exhibit T-1 (Item 12), Registration No. 2-67437.) *3.-- Copies of authorizations of The Chase Manhattan Bank (National Association) to exercise corporate trust powers, both of which documents are still in effect. (See Exhibit T-1 (Item 12), Registration No. 2-67437.) *4.-- A copy of the existing by-laws of the trustee. (See Exhibit T-1 (Item 16) (25.1), Registration No. 33-60809.) *5.-- A copy of each indenture referred to in Item 4, if the obligor is in default. (Not applicable) *6.-- The consents of United States institutional trustees required by Section 321(b) of the Act. (See Exhibit T-1, (Item 12), Registration No. 22-19019.) 7.-- A copy of the latest report of condition of the trustee published pursuant to law or the requirements of its supervising or examining authority. ______ *The Exhibits thus designated are incorporated herein by reference. Following the description of such Exhibits is a reference to the copy of the Exhibit heretofore filed with the Securities and Exchange Commission, to which there have been no amendments or changes. 1. NOTE Inasmuch as this Form T-1 is filed prior to the ascertainment by the trustee of all facts on which to have a responsive answer to Item 2 the answer to said Item is based on incomplete information. Item 2 may, however, be considered as correct unless amended by an amendment to this Form T-1. SIGNATURE Pursuant to the requirements of the Trust Indenture Act of 1939, the trustee, The Chase Manhattan Bank (National Association), a corporation organized and existing under the laws of the United States of America, has duly caused this statement of eligibility to be signed on its behalf by the undersigned, thereunto duly authorized, all in the City of New York, and the State of New York, on the 26th day of February, 1996. THE CHASE MANHATTAN BANK (NATIONAL ASSOCIATION) /s/ Timothy E. Burke By: Timothy E. Burke, Second Vice President 2. Exhibit 7 REPORT OF CONDITION Consolidating domestic and foreign subsidiaries of the The Chase Manhattan Bank, N.A. of New York in the State of New York, at the close of business on September 30, 1995, published in response to call made by Comptroller of the Currency, under title 12, United States Code, Section 161. Charter Number 2370 Comptroller of the Currency Northeastern District Statement of Resources and Liabilities ASSETS Thousands of Dollars Cash and balances due from depository institutions: Noninterest-bearing balances and currency and coin $ 5,081,000 Interest-bearing balances 5,957,000 Held to maturity securities 1,678,000 Available-for-sale securities 5,303,000 Federal funds sold and securities purchased under agreements to resell in domestic offices of the bank and of its Edge and Agreement subsidiaries, and in IBFs: Federal funds sold 1,806,000 Securities purchased under agreements to resell 23,000 Loans and lease financing receivable: Loans and leases, net of unearned income $55,682,000 LESS: Allowance for loan and lease losses 1,112,000 LESS: Allocated transfer risk reserve 0 Loans and leases, net of unearned income, allowance, and reserve 54,570,000 Assets held in trading accounts 12,551,000 Premises and fixed assets (including capitalized leases) 1,755,000 Other real estate owned 400,000 Investments in unconsolidated subsidiaries and associates companies 30,000 Customers' liability to this bank on acceptances outstanding 1,091,000 Intangible assets 1,344,000 Other assets 6,322,000 TOTAL ASSETS $97,911,000 LIABILITIES Deposits: In domestic offices $31,007,000 Noninterest-bearing $12,166,000 Interest-bearing 18,841,000 In foreign offices, Edge and Agreement subsidiaries, and IBFs 36,015,000 Noninterest-bearing 3,258,000 Interest-bearing 32,757,000 Federal funds purchased and securities sold under agreements to repurchase in domestic offices of the bank and of its Edge and Agreement subsidiaries, and in IBFs: Federal funds purchased 1,673,000 Securities sold under agreements to repurchase 233,000 Demand notes issued to the U.S. Treasury 25,000 Trading liabilities 9,105,000 Other borrowed money: With original maturity of one year or less 2,783,000 With original maturity of more than one year 395,000 Mortgage indebtedness and obligations under capitalized leases 40,000 Bank's liability on acceptances executed and outstanding 1,100,000 Subordinated notes and debentures 1,960,000 Other liabilities 5,747,000 TOTAL LIABILITIES 90,083,000 Limited-lief preferred stock and related surplus 0 EQUITY CAPITAL Perpetual preferred stock and related surplus 0 Common stock 921,000 Surplus 5,244,000 Undivided profits and capital reserves 1,695,000 Net unrealized holding gains (losses) on available-for-sale securities (43,000) Cumulative foreing currency translation adjustments 11,000 TOTAL EQUITY CAPITAL 7,828,000 TOTAL LIABLITIES, LIMITED-LIFE PREFERRED STOCK AND EQUITY CAPITAL $97,911,000 I, Lester J. Stephens, Jr., Senior Vice President and Controller of the above named bank do hereby declare that this Report of Condition is tru and correct to the best of my knowledge and belief. (Signed) Lester J. Stephens, Jr. We the undersigned directors, attest to the correctness of this statement of resources and liabilities. We declare that it has been examined by us, and to the best of our knowledge and belief has been prepared in conformance with the instructions and is true and correct. (Signed) Thomas G. Labrecque (Signed) Donald Trautlein Directors (Signed) Richard J. Boyle EX-99 13 Exhibit 99 REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS To the Stockholder and Board of Directors of Sears Roebuck Acceptance Corp.: We have audited the statement of financial position if Sears Roebuck Acceptance Corp. (a wholly-owned subsidiary of Sears, Roebuck and Co.) as of December 31, 1994 and 1993, and the related statements of income, stockholder's equity, and cash flows for each of the three years in the period ended December 31, 1994 and have issued our report thereon dated January 26, 1995. Such financial statements and our report thereon are incorporated by reference in the Company's Annual Report on Form 10-K for the year ended December 31, 1994 and in this Prospectus. We have also previously audited, in accordance with generally accepted auditing standards, the statements of financial position as of December 31, 1992, 1991, and 1990, and the related statements of income, stockholder's equity, and cash flows for the years ended December 31, 1991 and 1990 (none of which are presented herein); and we expressed unqualified opinions on those financial statements. In our opinion, the information set forth in the Summary Financial Information for each of the five years in the period ended December 31, 1994, appearing on page 5 of this Prospectus, is fairly stated, in all material respects in relation to the financial statements from which it has been derived. /s/ Deloitte & Touche LLP Deloitte & Touche LLP Philadelphia, Pennsylvania January 26, 1995 -----END PRIVACY-ENHANCED MESSAGE-----