Exhibit




Exhibit 10(b)


 


EXECUTION COPY

SEARS, ROEBUCK AND CO.

3333 Beverly Road

Hoffman Estates, Illinois

February 24, 2003

Sears Roebuck Acceptance Corp.

3711 Kennett Pike

Greenville, Delaware 19807



Ladies and Gentlemen:

It is presently proposed that Sears
Roebuck Acceptance Corp. ("SRAC") enter into a 364-Day Credit
Agreement dated the date hereof (the "Credit Agreement") with
the Lenders (as defined in the Credit Agreement) and Citibank, N.A., as
administrative agent. Subject to the provisions contained in the Credit
Agreement, SRAC will be required, among other things, to maintain a Fixed Charge
Coverage Ratio (as defined in the Credit Agreement) for any fiscal quarter of
not less than 1.15 and has, as a condition to the effectiveness of the Credit
Agreement, agreed that Sears, Roebuck and Co. ("Sears") will
continue to own and hold all legal title to and beneficial interest in all of
the outstanding voting stock of SRAC, Sears will maintain a ratio of EBITDA (as
defined below) to Interest (as defined below) of not less than 3.0 and Sears
will not create or suffer to exist, Liens (as defined in the Credit Agreement)
other than as set forth in this letter.

This is to confirm our agreement
("Credit Agreement Support Letter") that, so long as amounts
owing by SRAC under the Credit Agreement have not been paid or any Lender shall
have any commitment to lend under the Credit Agreement, Sears will:


  (a) pay SRAC such amounts which,
  together with any other earnings available to SRAC therefor, are sufficient
  for SRAC to maintain a Fixed Charge Coverage Ratio for any fiscal quarter of
  not less than 1.15 to 1 as long as SRAC is required by the provisions of the
  Credit Agreement to maintain such Fixed Charge Coverage Ratio,

  (b) continue to own and to hold all
  legal title to and beneficial interest in all of the outstanding voting stock
  of SRAC as long as the failure of Sears to own and hold such voting stock
  would constitute an event of default under the Credit Agreement,

  (c) maintain, as of the end of each
  fiscal quarter, a ratio of consolidated EBITDA of Sears and its subsidiaries
  for the four fiscal quarters then ended to Interest of Sears and its
  subsidiaries during such period of not less than 3.0 to 1,

  (d) not create or suffer to exist, or
  permit any of its wholly-owned subsidiaries (other than SRAC) to create or
  suffer to exist, any Lien on or with respect to any of its properties, whether
  now owned or hereafter acquired, or assign, or permit any of its subsidiaries
  to assign, any right to receive income, other than:

  
    (i) Permitted Liens (as defined in
    the Credit Agreement),

    (ii) additional purchase money
    Liens upon or in any real property or equipment acquired or held by Sears or
    any subsidiary in the ordinary course of business to secure the purchase
    price of such property or equipment or to secure Debt (as defined in the
    Credit Agreement) incurred solely for the purpose of financing the
    acquisition of such property or equipment, or Liens existing on such
    property or equipment at the time of its acquisition (other than any such
    Liens created in contemplation of such acquisition that were not incurred to
    finance the acquisition of such property) or extensions, renewals or
    replacements of any of the foregoing for the same or a lesser amount, provided,
    however, that no such Lien shall extend to or cover any properties of
    any character other than the real property or equipment being acquired, and
    no such extension, renewal or replacement shall extend to or cover any
    properties not theretofore subject to the Lien being extended, renewed or
    replaced, provided further that the aggregate principal amount
    of the indebtedness secured by the additional Liens referred to in this
    clause (ii) shall not exceed $50,000,000 at any time outstanding after
    the Effective Date (as defined in the Credit Agreement),

    (iii) the Liens existing on January
    31, 2003 and described on Schedule I hereto (which shall be delivered
    on or prior to April 1, 2003),

    (iv) Liens on property of an entity
    existing at the time such entity is merged into or consolidated with Sears
    or any subsidiary of Sears or becomes a subsidiary of Sears; provided
    that such Liens were not created in contemplation of such merger,
    consolidation or acquisition and do not extend to any assets other than
    those of the entity so merged into or consolidated with Sears or such
    subsidiary or acquired by Sears or such subsidiary,

    (v) Liens on assets securing
    indebtedness and other obligations calculated as the higher of

    
      (A) the book value of assets
      (other than accounts receivable) so encumbered as at December 28, 2002 (or
      if such asset was acquired after such date, the book value of such asset
      as of the date of the acquisition thereof) and, in the case of accounts
      receivable, to the face amount thereof, and

      (B) the principal amount of the
      indebtedness secured thereby,

    

    in the aggregate at any time of not
    more than $2,300,000,000 plus 85% of the face amount of accounts
    receivable in excess of $32,595,000,000 at any time outstanding in addition
    to the Liens permitted by clauses (i) through (iv) and (vi) of this
    subsection (d),

    (vi) Liens on assets securing
    indebtedness and other obligations calculated as the higher of

    
      (A) the book value of assets
      (other than accounts receivable) so encumbered as at December 28, 2002 (or
      if such asset was acquired after such date, the book value of such asset
      as of the date of the acquisition thereof) and, in the case of accounts
      receivable, to the face amount thereof, and

      (B) the principal amount of the
      indebtedness secured thereby,

    

    in the aggregate at any time of not
    more than the amount by which $3,500,000,000 exceeds the aggregate
    commitments of the Lenders under the Credit Agreement at such time in
    addition to the Liens permitted by clauses (i) through (v) of this
    subsection (d), and

    (vii) the replacement, extension or
    renewal of any Lien permitted by clause (iii) or (iv) above upon or in
    the same property theretofore subject thereto or the replacement, extension
    or renewal (without increase in the amount or change in any direct or
    contingent obligor) of the Debt (as defined in the Credit Agreement) secured
    thereby,

  

  (e) deliver to SRAC (i) no later than
  50 days after the end of each of the first three fiscal quarters of Sears'
  fiscal year, and no later than 95 days after the end of each of Sears' fiscal
  years (commencing with the fiscal year ending in 2003), a certificate of an
  Authorized Officer (as defined below) of Sears setting forth in reasonable
  detail the calculations required to establish whether Sears was in compliance
  with the requirements of clauses (c) and (d) on the last day of such fiscal
  quarter or fiscal year, as the case may be, and (ii) promptly and in any event
  within five days after any officer of Sears knows or should have had knowledge
  of the occurrence of each default under this agreement by Sears continuing on
  the date of such statement, a statement of an Authorized Officer of Sears
  setting forth details of such default and the action that Sears has taken and
  proposes to take with respect thereto, and

  (f) not enter into or suffer to
  exist, or permit any of its wholly-owned subsidiaries to enter into or suffer
  to exist, any agreement prohibiting or conditioning the creation or assumption
  of any Lien upon any of its property or assets except (i) in favor of the
  Agent for the benefit of the Lenders or (ii) in connection with (A) purchase
  money debt permitted by clause (d)(ii) above solely to the extent that the
  agreement or instrument governing such debt prohibits a Lien on the property
  acquired with the proceeds of such debt, (B) transactions permitted by clause
  (d) above solely to the extent that the agreement or instrument governing such
  transaction prohibits a Lien on the assets that are the subject thereof, (C)
  any debt existing on the date hereof, (D) any capitalized lease solely to the
  extent that such capitalized lease prohibits a Lien on the property subject
  thereto or (E) any debt outstanding on the date any subsidiary of Sears
  becomes such a subsidiary (so long as such agreement was not entered into
  solely in contemplation of such subsidiary becoming a subsidiary of Sears).



As used in this agreement, "EBITDA"
means, for any period for Sears and its Subsidiaries on a Consolidated basis,
net income (or net loss) plus, to the extent excluded from the calculation of
net income (or net loss), the sum of (a) interest expense, (b) income tax
expense, (c) depreciation expense, (d) amortization expense and (e)
extraordinary non-cash losses and any other non-cash charges (other than
reserves in respect of credit card accounts receivable), (f) minority interest
less, to the extent included in the calculation of net income (or net loss), the
sum of (a) any extraordinary, unusual or non-recurring income or gains
(including gains on the sales of assets outside of the ordinary course of
business) and (b) any other non-cash income, in each case determined in
accordance with GAAP for such period; "Interest" means, for any
period, interest payable on, and amortization of debt discount in respect of,
all Debt during such period, as determined in accordance with GAAP; and "Authorized
Officer" means the chief financial officer, the vice president and
controller, the vice president and treasurer or any other person acceptable to
the Required Lenders (as defined in the Credit Agreement).

This agreement is made for the benefit
of the Lenders. SRAC will cause Sears to observe and perform in all material
respects all covenants or agreements of Sears contained in this agreement. Sears
agrees that any Lender may bring a direct and immediate action against Sears to
enforce Sears' obligations hereunder and under the Demand Notes (as defined in
the Credit Agreement). In furtherance of the foregoing, Sears agrees that any
Lender may exercise the rights of SRAC under this agreement and under the Demand
Notes, including the right to demand payment, upon (A) any failure by Sears to
observe and perform the covenants or agreement of Sears contained in this
agreement or (B) any failure by SRAC to repay amounts borrowed under the Credit
Agreement at maturity or acceleration.

This agreement shall be governed by,
and construed in accordance with, the laws of the State of New York. Delivery of
an executed counterpart of this agreement by telecopier shall be effective as
delivery of a manually executed counterpart of this agreement.


 


If the foregoing satisfactorily sets
forth the terms and conditions of our agreement, please indicate your acceptance
thereof by the signature of a duly authorized officer in the space provided
below and on the duplicate original of this letter which is enclosed.


  
    
      
        
          
            Very truly yours,

            SEARS, ROEBUCK AND CO.

            By /s/ Glenn R. Richter

            Title: Senior Vice President and

                      Chief
            Financial Officer

          

        

      

    

  



Accepted:

SEARS ROEBUCK ACCEPTANCE CORP.

By: /s/ Keith E. Trost

Title:  President