On January3, 2017,
Sears Holdings Corporation (the Company), through Sears, Roebuck
and Co., Kmart Stores of Illinois LLC, Kmart of Washington LLC
and Kmart Corporation (collectively, Borrowers), entities
wholly-owned and controlled, directly or indirectly by the
Company, obtained a $500million secured loan facility (the Loan
Facility) from JPP, LLC and JPP II, LLC (collectively, the
Lenders). Mr.EdwardS. 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. $321million was funded under the Loan
Facility on January3, 2017, and, subject to the satisfaction of
certain conditions, including pledging additional properties as
collateral, up to an additional $179million may be drawn by the
Company prior to July3, 2017. The Loan Facility matures on
July20, 2020. The Company expects to use the proceeds of the Loan
Facility for general corporate purposes.

The Loan Facility
will have an annual base interest rate of 8%, with accrued
interest payable monthly during the term of the Loan Facility.
The Borrowers paid an upfront commitment fee equal to 1.0% of the
full principal amount of the Loan Facility and also are required
to pay a funding fee equal to 1.0% of the amounts drawn under the
Loan Facility at the time such amounts are drawn.

The Loan Facility
is guaranteed by the Company, is currently secured by a first
priority lien on 46 real properties owned by the Borrowers, and
is required to be secured by additional real properties if the
remaining $179million loan commitment is drawn. In certain
circumstances, the Lenders and the Borrowers may elect to
substitute one or more properties as collateral. To the extent
permitted under other debt of the Company or its affiliates, the
Loan Facility may be prepaid at any time in whole or in part,
without penalty or premium. The Borrowers are required to apply
the net proceeds of the sale of any real property collateral for
the Loan Facility to repay the loan.

The Loan Facility
includes certain representations and warranties, indemnities and
covenants, including with respect to the condition and
maintenance of the real property collateral. The 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
under any of the Loan Facility documents (including against the
collateral), and require the Borrowers to pay a default interest
rate equal to the greater of (i) 2.5% in excess of the base
interest rate and (ii)the prime rate plus 1%.

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

On January4, 2017,
the Company issued a press release announcing the entry into the
Loan Facility. The press release is attached hereto as Exhibit
99.1 and is incorporated herein by reference.

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Private
Securities Litigation Reform Act of 1995

Cautionary
Statement Concerning Forward-Looking Statements

This Form 8-K
contains forward-looking statements intended to qualify for the
safe harbor from liability established by the Private Securities
Litigation Reform Act of 1995, including, but not limited to,
statements about the Companys ability to draw the remaining
$179million of commitments contemplated by the Loan Facility.
Forward-looking statements are subject to risks and uncertainties
that may cause the Companys actual results, performance or
achievements to be materially different from any future results,
performance or achievements expressed or implied by these
forward-looking statements. Such statements are based upon the
current beliefs and expectations of the Companys management and
are subject to significant risks and uncertainties. Factors that
could cause actual results to differ from those set forth in the
forward-looking statements include, but are not limited to, those
discussed in this Form 8-K and those discussed in the Companys
most recent Annual Report on Form 10-K and other filings with the
Securities and Exchange Commission. The Company intends the
forward-looking statements to speak only as of the time made and
does not undertake to update or revise them as more information
becomes available, except as required by law.

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