Item 1.01. Entry into a Material Definitive Agreement.
Entry into Sixth Amendment to Letter of Credit and Reimbursement Agreement
On April 20, 2018, Sears Holdings Corporation (the Company), through Sears Roebuck Acceptance Corp. and Kmart Corporation (collectively, the
Borrowers), entities wholly-owned and controlled, directly or indirectly by the Company, entered into a Sixth Amendment (the LC Amendment) to the Letter of Credit and Reimbursement Agreement dated December 28, 2016
providing for a secured standby letter of credit facility (the LC Facility) from JPP, LLC and JPP II, LLC and certain other lenders (collectively, the LC Lenders), with Citibank, N.A., serving as administrative agent and
issuing bank (the Issuing Bank). Mr. Edward S. Lampert, the Companys Chief Executive Officer and Chairman, is the sole stockholder, chief executive officer and director of ESL Investments, Inc., which controls JPP, LLC
and JPP II, LLC.
The LC Amendment extends the maturity of the $271 million commitment under the existing LC Facility from its existing maturity date
of December 28, 2018 through December 28, 2019. To secure their obligation to participate in letters of credit issued under the LC Facility, the LC Lenders are required to maintain cash collateral on deposit with the Issuing Bank
in an amount equal to 102% of the commitments under the LC Facility (the Lender Deposit), and in connection with the maturity extension, the Borrowers paid the LC Lenders an upfront fee equal to 0.50% of the aggregate amount of
the Lender Deposit. The LC Amendment also requires the Borrowers to pay a fee equal to 0.50% of the aggregate amount of the Lender Deposit in connection with the termination of the LC Facility, whether at maturity or otherwise, or of any
reduction in the amount of the LC Lenders commitments under the LC Facility.
Entry into First Amendment to Credit Agreement
On April 20, 2018, the Company, through SRC O.P. LLC, SRC Facilities LLC and SRC Real Estate (TX), LLC (collectively, the Secured Loan
Borrowers), entities wholly-owned and controlled indirectly by the Company, entered into a First Amendment (the Credit Agreement Amendment) to the Credit Agreement, dated as of March 14, 2018 (the Credit
Agreement), among the Secured Loan Borrowers, the lenders party thereto, UBS AG, Stamford Branch, LLC, as administrative agent, and UBS Securities LLC, as lead arranger and bookrunner. The Credit Agreement provides for a term loan (the
Secured Loan) that is secured by the Secured Loan Borrowers interests in certain real properties that were released from a ring-fence arrangement with the Pension Benefit Guaranty Corporation. As of April 20, 2018, the
aggregate principal amount of the Secured Loan was $118.7 million.
The Credit Agreement Amendment amends certain provisions of the Credit Agreement
governing the incurrence of Additional Mezzanine Loans (as defined below) pursuant to the Mezzanine Loan Agreement (as defined below), including by increasing the loan-to-value cap applicable to the aggregate principal amount of the Secured Loan,
the Mezzanine Loan and the Additional Mezzanine Loans from 50% to 55% and removing a requirement that the Additional Mezzanine Loans not exceed an amount equal to the principal amount of the Secured Loan repaid by the Secured Loan Borrowers. No
upfront or other fees were paid by the Secured Loan Borrowers in connection with the Credit Agreement Amendment.
Entry into Second Amendment to
Mezzanine Loan Agreement
On April 20, 2018, the Company, through SRC Sparrow 2 LLC (the Mezzanine Loan Borrower), an
entity wholly-owned and controlled indirectly by the Company, entered into a Second Amendment (the Mezzanine Amendment) to the Mezzanine Loan Agreement, dated as of March 14, 2018 (the Mezzanine Loan Agreement), among
the Mezzanine Loan Borrower, JPP, LLC and JPP II, LLC, as lenders, and JPP, LLC, as administrative agent. Mr. Edward S. Lampert, the Companys Chief Executive Officer and Chairman, is the sole stockholder, chief executive officer and
director of ESL Investments, Inc., which controls JPP, LLC and JPP II, LLC. The Mezzanine Loan Agreement provides for a term loan (the Mezzanine Loan) that is secured by a pledge of the equity interests in SRC O.P. LLC, the direct
parent company of the entities that own the real properties that secure the obligations of the Secured Loan Borrowers under the Credit Agreement.
The
Mezzanine Loan Agreement contains an uncommitted accordion feature pursuant to which the Mezzanine Loan Borrower may incur additional loans (Additional Mezzanine Loans), subject to certain conditions set forth in the Mezzanine Loan
Agreement and the Credit Agreement. The Mezzanine Amendment makes conforming changes to certain provisions of the Mezzanine Loan Agreement governing the incurrence of Additional Mezzanine Loans to conform such provisions to the corresponding
provisions in the Credit Agreement, as amended by the Credit Agreement Amendment. No upfront or other fees were paid by the Mezzanine Loan Borrower in connection with the Mezzanine Amendment.
In connection with the entry into the Mezzanine Amendment, the Mezzanine Borrower borrowed $72.2 million as an
Additional Mezzanine Loan under the Mezzanine Loan Agreement. As of April 20, 2018, after giving effect to such borrowing, the aggregate principal amount of the Mezzanine Loan and Additional Mezzanine Loans outstanding under the Mezzanine Loan
Agreement was $378.9 million.