On December28,
2016, 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 Letter of Credit and
Reimbursement Agreement (the LC Facility Agreement) providing for
a $500million secured standby letter of credit facility (the LC
Facility) from JPP, LLC and JPP II, LLC (collectively, the
Lenders), with Citibank, N.A., serving as administrative agent
and issuing bank (the Issuing Bank). 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. On
December28, 2016, $200million of commitments were made available
under the LC Facility, and, subject to approval of the Lenders,
up to an additional $300million in commitments may be obtained by
the Company from the Lenders (or other lenders) prior to
December28, 2017, the maturity date of the LC Facility.

The LC Facility is
guaranteed by the same subsidiaries of the Company that guarantee
the obligations under the Third Amended and Restated Credit
Agreement, dated as of July21, 2015, among the Borrowers, Bank of
America, N.A., as agent, and the lenders and other financial
institutions party thereto (as amended, the Credit Agreement).
The LC Facility is secured by the same collateral as the Credit
Agreement, as well as by certain real estate. The Borrowers are
required to reduce commitments under the LC Facility upon the
occurrence of certain events, including certain asset sales and
other financing transactions. To secure their obligation to
participate in letters of credit issued under the LC Facility,
the 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).

The Borrowers are
required to pay the Lenders an upfront fee equal to 1.50% of the
amount of commitments provided under the LC Facility. In
addition, the Borrowers are required to pay a commitment fee of
5.75% per annum on the amount of the Lender Deposit (as such
amount may be increased from time to time in connection with
establishing additional commitments), as well as certain other
fees.

The LC Facility
Agreement includes certain representations and warranties,
affirmative and negative covenants and other undertakings, which
are subject to important qualifications and limitations set forth
in the LC Facility Agreement. The LC Facility Agreement also
contains 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 an event of default occurs, the Lenders may
terminate all or any portion of the commitments under the LC
Facility, require the Borrowers to cash collateralize the LC
Facility and/or exercise any rights they might have under any of
the related facility documents (including against the
collateral), subject to certain limitations.

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

On December29,
2016, the Company issued a press release announcing the entry
into the LC Facility. The press release is attached hereto as
Exhibit 99.1 and is incorporated herein by reference.

(d)Exhibits

2

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 obtain the remaining
$300million of commitments contemplated by the LC 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.

3

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.

SEARS HOLDINGS CORPORATION (NASDAQ:SHLD) Recent Trading Information

SEARS HOLDINGS CORPORATION (NASDAQ:SHLD) closed its last trading session up +0.29 at 9.29 with 2,781,524 shares trading hands.