SEARS HOLDINGS CORPORATION (NASDAQ:SHLD) Files An 8-K Entry into a Material Definitive Agreement
Item 1.01 Entry Into a Material Definitive Agreement

Entry into Term Loan Credit Agreement

On January4, 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 Term Loan Credit Agreement (the “Term Loan Credit Agreement”) providing for a secured term loan facility (the “Term Loan Facility”) from JPP, LLC and JPP II, LLC, as lenders (collectively, the “Lenders”), with JPP, LLC, serving as administrative and collateral agent (the “Agent”). Mr.EdwardS. Lampert, the Company’s 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 Term Loan Facility is guaranteed by the Company and certain of its subsidiaries that guarantee the Company’s other material debt or own material intellectual property. The Term Loan Facility is secured by substantially all of the unencumbered intellectual property of the Company and its subsidiaries, other than intellectual property relating to the Kenmore and DieHard brands, as well as by certain real property interests, in each case subject to certain exclusions.

$100 million was borrowed under the Term Loan Facility on January4, 2018. The Term Loan Facility also contains an uncommitted incremental loan feature that, subject to the satisfaction of certain conditions, including the consent of the Agent, would permit up to an additional $200 million to be borrowed from other counterparties and secured by the same collateral as the initial loan under the Term Loan Facility.

The loans under the Term Loan Facility bear interest at an annual interest rate of LIBOR plus 12.5%, which during the first year can be paid in kind by capitalizing interest. The loans under the Term Loan Facility mature on July20, 2020. The Company expects to use the proceeds of the Term Loan Facility for general corporate purposes.

No upfront or arrangement fees were paid in connection with the Term Loan Facility. The loans under the Term Loan Facility are prepayable without premium or penalty.

The Term Loan Facility includes certain representations and warranties, indemnities and covenants, including with respect to the condition and maintenance of the intellectual property and real property collateral. The Term Loan Facility has certain events of default, including (subject to certain materiality thresholds and grace periods) payment default, failure to comply with covenants, material inaccuracy of representation or warranty, and bankruptcy or insolvency proceedings. If there is an event of default, the Lenders may declare all or any portion of the outstanding indebtedness to be immediately due and payable, exercise any rights they might have (including against the collateral), and require the Borrowers to pay a default interest rate.

The foregoing description does not purport to be complete and is qualified in its entirety by reference to the Term Loan Credit Agreement, a copy of which is filed herewith as Exhibit 10.1 and is incorporated by reference herein.

Amendment to Second Lien Notes

On January9, 2018, the Company and certain of its subsidiaries entered into a Fourth Supplemental Indenture (the “Supplemental Indenture”) with Wilmington Trust, National Association, as successor trustee and collateral agent, amending the Indenture, dated as of October12, 2010 (the “Indenture”), among the Company, the subsidiaries of the Company party thereto as guarantors from time to time and Wells Fargo Bank, National Association, as trustee and collateral agent, governing the Company’s 6 5/8% Senior Secured Notes due 2018.

The Supplemental Indenture amended the borrowing base definition in the Indenture to increase the advance rate for inventory to 75% from 65%. The Supplemental Indenture also defers the collateral coverage test for purposes of the repurchase offer covenant in the Indenture and restarts it with the second quarter of 2018 (such that no collateral coverage event can occur until the end of the third quarter of 2018).

The foregoing description does not purport to be complete and is qualified in its entirety by reference to (i)the Supplemental Indenture, a copy of which is filed herewith as Exhibit 4.1 and is incorporated by reference herein, and (ii)the Indenture, which was previously filed as Exhibit 4.1 to the Current Report on Form 8-K filed by the Company on October15, 2010.

Amendment to Second Lien Credit Agreement

On January9, 2018, the Company, the Borrowers, and certain other subsidiaries of the Company entered into a Second Amendment to Second Lien Credit Agreement (the “Second Amendment”) with the lenders party thereto and JPP, LLC, as administrative agent and collateral administrator (the “Second Lien Agent”), amending the Second Lien Credit Agreement, dated as of September1, 2016 (the “Second Lien Credit Agreement”), among the Company, the Borrowers, the other subsidiaries of the Company party thereto as guarantors from time to time, the lenders party thereto from time to time, and the Second Lien Agent, as previously amended by the First Amendment to Second Lien Credit Agreement, dated as of July7, 2017 (the “First Amendment”), among the Company, the Borrowers, the other subsidiaries of the Company party thereto, the lenders party thereto and the Second Lien Agent.

The Second Amendment amended the borrowing base definition in the Second Lien Credit Agreement to increase the advance rate for inventory to 75% from 65%. The Second Amendment also defers the collateral coverage test for purposes of the mandatory repayment covenant in the Second Lien Credit Agreement such that no such mandatory repayment can be required until the end of the third quarter of 2018.

The foregoing description does not purport to be complete and is qualified in its entirety by reference to (i)the Second Amendment, a copy of which is filed herewith as Exhibit 10.2 and is incorporated by reference herein, (ii)the Second Lien Credit Agreement, which was previously filed as Exhibit 10.1 to the Current Report on Form 8-K filed by the Company on September2, 2016 and (iii)the First Amendment, which was previously filed as Exhibit 10.1 to the Current Report on Form 8-K filed by the Company on July7, 2017.

Item 1.01 Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.

The disclosure required by this item is included in Item 1.01, “Entry into Term Loan Credit Agreement,” and is incorporated herein by reference.

Item 1.01 Material Modification to Rights of Security Holders

The disclosure required by this item is included in Item 1.01, “Amendment to Second Lien Notes,” and is incorporated herein by reference.

Item 1.01 Regulation FD Disclosure

On January10, 2018, the Company issued a press release announcing the Term Loan Facility, the Supplemental Indenture, the Second Amendment and certain other matters. The press release is attached hereto as Exhibit 99.1 and is incorporated herein by reference.

The information in this Item 1.01 of this Current Report on Form 8-K, included the press release incorporated in this Item 1.01, shall not be deemed “filed” for purposes of Section18 of the Securities Exchange Act of 1934, as amended, nor shall it be incorporated by reference in any filing under the Securities Act of 1933, as amended, except as expressly set forth by specific reference in such filing.

Private Securities Litigation Reform Act of 1995 –

A Caution Concerning Forward-Looking Statements

This Form 8-K contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. The Company cautions that these forward-looking statements are subject to risks, uncertainties and assumptions, many of which are beyond its control, that may cause actual results to differ materially from those indicated in the forward-looking statements for a number of reasons, including, without limitation, risks and uncertainties relating to the Credit Agreement. Additional information concerning other factors is contained in the Company’s most recent annual report on Form 10-K and subsequent filings with the SEC. The Company intends these forward-looking statements to speak only as of the time made and, except as required by law, does not undertake to update or revise them as more information becomes available.

Item 1.01 Financial Statements and Exhibits

(d) Exhibits

Exhibit 4.1 Fourth Supplemental Indenture, dated as of January9, 2018, among Sears Holdings Corporation, the guarantors party thereto and Wilmington Trust, National Association, as successor trustee and collateral agent

Exhibit 10.1Term Loan Credit Agreement, dated as of January 4, 2018, among the Company, Sears Roebuck Acceptance Corp. and Kmart Corporation, as borrowers, the subsidiaries of the Company party thereto, the lenders party thereto from time to time, and JPP, LLC, as administrative and collateral agent.

Exhibit 10.2Second Amendment to Second Lien Credit Agreement, dated as of January 9, 2018, among Sears Holdings Corporation, Sears Roebuck Acceptance Corp. and Kmart Corporation, the guarantors party thereto, the lenders party thereto, and JPP, LLC, as administrative agent and collateral administrator

Exhibit 99.1Press release, dated January10, 2018.

SEARS HOLDINGS CORP Exhibit
EX-4.1 2 d519736dex41.htm EX-4.1 EX-4.1 Exhibit 4.1 FOURTH SUPPLEMENTAL INDENTURE This FOURTH SUPPLEMENTAL INDENTURE,…
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About SEARS HOLDINGS CORPORATION (NASDAQ:SHLD)

Sears Holdings Corporation is an integrated retailer. The Company is the parent company of Kmart Holding Corporation (Kmart) and Sears, Roebuck and Co. (Sears). It operates through two segments: Kmart and Sears Domestic. It operates approximately 940 Kmart stores across over 50 states, Guam, Puerto Rico and the United States Virgin Islands. Kmart stores carry an array of products across various merchandise categories, including seasonal merchandise, toys, lawn and garden equipment, food and consumables and apparel, including products sold under labels, such as Jaclyn Smith, Joe Boxer and Alphaline and certain Sears brand products (such as Kenmore, Craftsman and DieHard) and services. Its Sears Domestic segment’s operations consist of full-line stores, specialty stores, commercial sales and home services. Full-line stores offer an array of products and service offerings across various merchandise categories, including appliances, consumer electronics/connected solutions and tools.