Document:

Exhibit

EXHIBIT 10.2

EXECUTION VERSION

AMENDMENT NO. 1
TO
CONSENT, WAIVER AND AMENDMENT
This AMENDMENT NO. 1 TO CONSENT, WAIVER AND AMENDMENT (the “Amendment”), dated as of June 29, 2017, is entered into by and among the undersigned in connection with that certain Consent, Waiver and Amendment, dated as of March 8, 2017 (as amended, supplemented or otherwise modified from time to time, the “Consent”), and that certain Pension Plan Protection and Forbearance Agreement, dated as of March 18, 2016 (as amended, supplemented or otherwise modified from time to time, the “PPPFA”), in each case by and among Sears Holdings Corporation, a Delaware corporation (the “Company”), certain Subsidiaries (as defined in the PPPFA) of the Company party thereto (together with the Company, the “Sears Parties”) and Pension Benefit Guaranty Corporation (“PBGC”). Capitalized terms used herein and not otherwise defined herein shall have the respective meanings ascribed to such terms in the Consent.
WHEREAS, the Consent provides, among other things, for either the sale and contribution to the Pension Plans of sale proceeds of, or assignment as an in-kind contribution to the Pension Plans of, an Installment Interest during the period on or after August 16 and on or before September 15 of each of 2017, 2018 and 2019, by the Escrow Agent at the direction of the Designated Financial Institution, with the value thereby credited toward certain contributions to either or both of the Pension Plans, also at the direction of the Designated Financial Institution; and
WHEREAS, subsequent to entry into the Consent, PBGC, the Company and a third-party purchaser (the “DPPP Purchaser”) entered into that certain Purchase and Assignment Agreement, dated as of the date hereof (the “DPPP Purchase Agreement”), a true and correct copy of which has been delivered by the Company to PBGC, pursuant to which the DPPP Purchaser shall purchase, concurrently with the effectiveness of this Amendment, all of PBGC’s right, title, and interest in the Deferred Purchase Price Payment and all of the Company’s right, title, and interest in the Deferred Purchase Price Payment (if any), in exchange for an immediate cash payment in the amount set forth therein (the “Assignment Payment”); and
WHEREAS, the DPPP Purchase Agreement contemplates the DPPP Purchaser making the Assignment Payment to a Specified Account (as defined in the DPPP Purchase Agreement); and
WHEREAS, PBGC and the Company desire to designate the Escrow Account (as defined herein) as the Specified Account, so that the DPPP Purchaser will make the Assignment Payment directly to the Escrow Account, and not to or through any intermediate party (including any Sears Party); and
WHEREAS, once the DPPP Purchaser makes the Assignment Payment to the Escrow Account, PBGC and the Company desire the Assignment Payment to be held by the Escrow Agent in such Escrow Account solely for the benefit of PBGC and to be contributed directly by the Escrow Agent to the Pension Plans in accordance with the terms of the Escrow Agreement; and

    

     

WHEREAS, in connection with, and to more perfectly implement, the above-described sale, the Company, the other Sears Parties and PBGC desire to amend the Consent as set forth herein;
NOW, THEREFORE, in consideration of the premises and mutual covenants and agreements herein contained, it is hereby agreed as follows:
1.        Amendment to Section 3(a)(ii).   Section 3(a)(ii) of the Consent is hereby deleted in its entirety, and replaced with the following:
“(ii)    The Escrow Account shall be governed by the escrow agreement attached hereto as Exhibit C (as amended, restated, supplemented or otherwise modified from time to time, the “Consent Escrow Agreement”).  The Escrow Account shall be under the sole dominion and control of the Escrow Agent.  The Company shall designate an independent third party investment bank or other financial institution with similar capabilities (the “Designated Financial Institution”) which shall, in its sole discretion, provide instructions to the Escrow Agent as to the allocation of the Escrow Property (as defined in the Consent Escrow Agreement and used herein) between the Pension Plans for the contributions described in Section 3(a)(iii).  All contributions made pursuant to Section 3(a)(iii) shall be allocated between the Pension Plans by the Designated Financial Institution in its sole discretion so as to preserve fully the ability of the Company under all applicable law to receive and make use of the credits towards statutorily required minimum funding obligations as set forth in this Consent.  The Company has designated M-III Advisory Partners, LP as the Designated Financial Institution; provided that the Company may, in its sole discretion, replace such investment bank or financial institution on 30 days’ prior written notice to PBGC.”
2.    Amendment to Section 3(a)(iii).  Section 3(a)(iii) of the Consent is hereby deleted in its entirety, and replaced with the following:
“(iii)      Notwithstanding any provisions of this Consent to the contrary, the Escrow Agent shall deposit the cash payment set forth in the DPPP Purchase Agreement (as defined below) from a third-party purchaser (the “DPPP Purchaser”) for the purchase of the Deferred Purchase Price Payment pursuant to that certain Purchase and Assignment Agreement, dated as of June 29, 2017 (the “DPPP Purchase Agreement”) by and among PBGC, the Company and the DPPP Purchaser into the Escrow Account.  The Escrow Agent shall thereafter: 
(A)       On a date that is on or after August 16th of 2017 and on or before September 15th of 2017 (such date the “2017 Contribution Date”), contribute cash in an amount equal to the value of 33-1/3% of the Escrow Property to either or both of the Pension Plans as set forth in instructions delivered by the Designated Financial Institution to the Escrow Agent in accordance with the Consent Escrow Agreement.  Such contribution(s) may be credited towards the required quarterly minimum funding obligations due September 15, 2017 and December 15, 2017 for the plan year beginning December 1, 2016;

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(B)       On a date that is on or after August 16th of 2018 and on or before September 15th of 2018 (such date the “2018 Contribution Date”), contribute cash in an amount equal to the value of 50% of the remaining Escrow Property to either or both of the Pension Plans as set forth in instructions delivered by the Designated Financial Institution to the Escrow Agent in accordance with the Consent Escrow Agreement.  Such contribution(s) may be credited towards the required quarterly minimum funding obligations due September 15, 2018 and December 15, 2018 for the plan year beginning December 1, 2017;
(C)       On a date that is on or after August 16th of 2019 and on or before September 15th of 2019 (such date the “2019 Contribution Date”), contribute cash in an amount equal to the value of all of the remaining Escrow Property to either or both of the Pension Plans as set forth in instructions delivered by the Designated Financial Institution to the Escrow Agent in accordance with the Consent Escrow Agreement.  Such contribution(s) may be credited towards the required quarterly minimum funding obligations due September 15, 2019 and December 15, 2019 for the plan year beginning December 1, 2018.
Notwithstanding subparagraphs (A), (B) and (C) above, if the Escrow Parties (as defined in the Consent Escrow Agreement) have agreed in writing to a contribution schedule different from the schedule provided in subparagraphs (A) – (C), above (an “Alternative Schedule”), the provisions of such Alternative Schedule shall apply in lieu of the foregoing.”
3.            Amendment to Section 3(a)(iv).  Section 3(a)(iv) of the Consent is hereby deleted in its entirety, and replaced with the following:
“(iv)       Furthermore, upon the occurrence of a Springing Lien Event, the Escrow Agent shall promptly and irrevocably liquidate to cash and distribute any and all remaining Escrow Property to the Pension Plans, so as to effect a pro rata allocation of the aggregate value of such remaining Escrow Property between the Pension Plans based on PBGC’s then current estimates of the relative underfunding of the Pension Plans on a termination basis (the “SLE Assignment,” and the total dollar amount of such SLE Assignment to the Pension Plans, the “SLE Assignment Amount”).  For the purposes of the Escrow Agreement only, the Escrow Agent shall rely on PBGC’s determination that a Springing Lien Event has occurred and shall act in accordance therewith without any duty of review or inquiry, and PBGC’s determination as to whether a Springing Lien Event has occurred shall be binding and conclusive on the Escrow Agent only; provided, however, that such determination shall not be binding on the Company, any other Sears Party or any other Person and all such Persons reserve all rights with respect to any such determination.  In the event that (A) it is subsequently determined in a Final and Non-Appealable Order that (x) the alleged Springing Lien Event set forth in PBGC’s instruction to the Escrow Agent did not in fact occur and (y) the Company incurred direct damages in an amount set forth in such Final and Non-Appealable Order, as a result of PBGC’s errant instruction to the Escrow Agent and the resulting SLE Assignment and (B) notwithstanding the Company’s use of best efforts to recover such direct damages from PBGC, the Company is unable to recover all or any portion of such direct damages from 

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PBGC within 30 days after such Final and Non-Appealable Order becomes a Final and Non-Appealable Order, then in full satisfaction of such direct damages that the Company is unable to recover and any and all other claims related thereto, PBGC shall promptly release the lien granted by the Company to PBGC on the Royalty Collateral pursuant to Section 3(b); provided, however, that (x) PBGC shall only be required to release such lien in the amount of such direct damages that the Company is otherwise unable to recover from PBGC in the time frame set forth above and (y) under no circumstances shall the amount of such lien release exceed the SLE Assignment Amount.  The Company hereby represents, warrants and covenants that, except for Schedule 3(b) Permitted Liens (as defined below), it has not Pledged and will not Pledge or otherwise hypothecate in any way the Deferred Purchase Price Payment or any Escrow Property to any other person or entity.” 
4.              Escrow Account Investment.  All funds in the Escrow Account shall be invested by the Escrow Agent as set forth in the Escrow Agreement.
5.              Condition Precedent to Amendment.  This Amendment shall become effective on the first date on which this Amendment shall have been executed and delivered by each of the Company, the other Sears Parties and PBGC.
6.         Miscellaneous.
(a)     This Amendment may be executed in any number of counterparts, which together shall constitute one instrument.  Delivery of an executed counterpart of a signature page of this Amendment by fax transmission or other electronic mail transmission (e.g., “pdf” or “tif”) shall be effective as delivery of a manually executed counterpart of this Amendment.
(b)      This Amendment shall be governed by and construed and enforced in accordance with the laws of the State of New York (excluding any conflicts-of-law rule or principle that might refer same to the laws of another jurisdiction).  The terms of Sections 11.02 and 11.04 of the PPPFA are incorporated herein by reference, with any necessary conforming change, and the parties hereto agree to such terms.
(c)                This Amendment shall not be altered, amended, changed or modified in any respect or particular unless each such alteration, amendment, change or modification is made in accordance with the terms and provisions of Section 11.06 of the PPPFA.  After giving effect to this Amendment, except as expressly set forth herein, each PPPFA Transaction Document as amended hereby shall be and remain in full force and effect in accordance with its terms and hereby is ratified and confirmed in all respects.  The execution, delivery, and performance of this Amendment shall not operate, except as expressly set forth herein, as a waiver of, consent to, or a modification or amendment of, any right, power, or remedy of PBGC under any PPPFA Transaction Document. 
(d)              This Amendment is a PPPFA Transaction Document.  The Company and each other Sears Party hereby expressly reaffirms that, except as expressly set forth herein, (i) it is bound by all terms of the PPPFA and the other PPPFA Transaction Documents (each as amended 

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hereby) applicable to it and (ii) it is responsible for the observance and full performance of its respective obligations thereunder.
(e)              It is expressly understood and agreed by the parties hereto that (a) this Amendment is executed and delivered by U.S. Bank Trust National Association, not individually or personally but solely as trustee of the SRC Trust, in the exercise of the powers and authority conferred and vested in it, (b) each of the representations, undertakings and agreements herein made on the part of the SRC Trust, SRC R.E. and SRC Holdings is made and intended not as personal representations, undertakings and agreements by U.S. Bank Trust National Association but is made and intended for the purpose of binding only the SRC Trust, SRC R.E. and SRC Holdings, (c) nothing herein contained shall be construed as creating any liability on U.S. Bank Trust National Association, individually or personally, to perform any covenant either expressed or implied contained herein, all such liability, if any, being expressly waived by the parties hereto, (d) U.S. Bank Trust National Association has made no investigation as to the accuracy or completeness of any representations and warranties made by the SRC Trust, SRC R.E. and SRC Holdings in this Amendment and (e) under no circumstances shall U.S. Bank Trust National Association be personally liable for the payment of any indebtedness or expenses of the SRC Trust, SRC R.E. or SRC Holdings or be liable for the breach or failure of any obligation, representation, warranty or covenant made or undertaken by the SRC Trust, SRC R.E. or SRC Holdings under this Amendment or any other related document.
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                            IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed and delivered by their duly authorized officers as of the day and year first above written.

SEARS HOLDINGS CORPORATION

By: /s/ Lawrence J. Meerschaert    
Name:  Lawrence J. Meerschaert
Title:    Vice President, Tax

SRC DEPOSITOR CORPORATION

By: /s/ Lawrence J. Meerschaert    
Name:  Lawrence J. Meerschaert
Title:    Vice President

SRC O.P. CORPORATION

By: /s/ Lawrence J. Meerschaert    
Name:  Lawrence J. Meerschaert
Title:    Vice President

SEARS, ROEBUCK & CO.

By: /s/ Lawrence J. Meerschaert    
Name:  Lawrence J. Meerschaert
		
	Title:
	Vice President Tax, Assistant Treasurer and Secretary

SEARS BRANDS, L.L.C.

By: /s/ Lawrence J. Meerschaert    
Name:  Lawrence J. Meerschaert
Title:    Vice President

     

KCD IP, LLC

By: /s/ Lawrence J. Meerschaert    
Name:  Lawrence J. Meerschaert
Title:    Vice President

SEARS ROEBUCK ACCEPTANCE CORP.

By: /s/ Lawrence J. Meerschaert    
Name:  Lawrence J. Meerschaert
Title:    Vice President

SRC FACILITIES STATUTORY TRUST No. 2003-A,
a Delaware statutory trust acting only with respect to the
applicable SUBI Portfolio

By:    U.S. BANK TRUST NATIONAL ASSOCIATION, 
a national banking association,
not in its individual capacity, but solely as SUBI Trustee

	
		
	By:
	/s/ Jose A. Galarza

	Name:
	Jose A. Galarza

	Title:
	Vice President

SRC REAL ESTATE (TX), LP,
a Delaware limited partnership

By:  SRC REAL ESTATE HOLDINGS (TX), LLC,
a Delaware limited liability company, its general partner

By:  SRC FACILITIES STATUTORY TRUST NO. 2003-A,
a Delaware statutory trust acting only with respect to the 
applicable SUBI Portfolio,
its sole member

By:  U.S. BANK TRUST NATIONAL ASSOCIATION,
a national banking association,
not in its individual capacity but solely as SUBI Trustee

	
		
	By:
	/s/ Jose A. Galarza

	Name:
	Jose A. Galarza

	Title:
	Vice President

SRC REAL ESTATE HOLDINGS (TX), LLC,
a Delaware limited liability company

By:  SRC FACILITIES STATUTORY TRUST NO. 2003-A,
a Delaware statutory trust acting only with respect to the 
applicable SUBI Portfolio,
its sole member

By:  U.S. BANK TRUST NATIONAL ASSOCIATION,
a national banking association,
not in its individual capacity but solely as SUBI Trustee

	
		
	By:
	/s/ Jose A. Galarza

	Name:
	Jose A. Galarza

	Title:
	Vice President

PENSION BENEFIT GUARANTY
CORPORATION

                        	
		
	By:
	/s/ Karen L. Morris

	Name:
	Karen L. Morris

	Title:
	Chief of Negotiations and RestructuringDocument

EXHIBIT 10.3

AMENDMENT TO AMENDED AND RESTATED  
LOAN AGREEMENT

This Amendment (this “Amendment”), dated as of July 3 and effective July 7, 2017, by and between JPP, LLC and JPP II, LLC, each a Delaware limited liability company (together “JPP”) and CASCADE INVESTMENT, L.L.C., a Washington limited liability company (“Cascade”, and together with JPP, the “Initial Lenders”), and SEARS, ROEBUCK AND CO., SEARS DEVELOPMENT CO., INNOVEL SOLUTIONS, INC. (“Innovel”), BIG BEAVER OF FLORIDA DEVELOPMENT, LLC (“BBOFD”) and KMART CORPORATION, collectively as borrower (individually or collectively, as the context may require, jointly and severally, together with their respective permitted successors and assigns, “Borrower”), amends that certain Amended Restated Loan Agreement, dated as of May 22, 2017 (the “Loan Agreement”; all capitalized terms used but not defined herein shall have the respective meanings ascribed to such terms in the Loan Agreement).
WHEREAS, on May 22, 2017, Lender and Borrower entered into the Loan Agreement;
WHEREAS, Lender and Borrower desire to amend the Loan Agreement.
NOW THEREFORE, in consideration of the mutual premises contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby represent, warrant, covenant and agree as follows:
Section 1.    Amendment of Loan Documents.  Lender and Borrower hereby agree to amend the terms of the Loan Agreement as follows:
(a)      The last sentence of Section 2.1(b) is hereby deleted in it is entirety and replaced with the following:
“Borrower and Lender agree that, on July 7, 2017, the amounts reserved with Lender pursuant to this Section 2.1(b) shall be applied as follows: to the extent of available funds, an amount equal to the 2017 Loan Principal Indebtedness shall be applied by Administrative Agent (i) first, to the repayment of the 2017 Loan Principal Indebtedness (and allocated amongst the Lenders in accordance with the terms of the Co-Lender Agreement), without the consent or further action of any Person, (ii) second, to all other amounts then due and payable under the Loan Documents (including, without limitation, all out-of-pocket costs and expenses incurred by any Lender (including the reasonable fees and expenses of legal counsel, all title fees and premiums and all recording costs) and (iii) finally, after making the payments set forth in clause (i) and clause (ii) of this Section 2.1(b), all other amounts reserved with Lender that remain shall be distributed to the Borrower and shall no longer constitute Collateral for the Indebtedness; provided, however, that if an Event of Default occurred on or prior to July 7, 2017, then all amounts reserved with the Lender pursuant to this Section 2.1(b) shall be applied to the Indebtedness by Lender pursuant to Section 6.3 hereof.”

	
			
	 
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Section 2.    Miscellaneous.  
(a)    All of the terms and conditions of the Loan Agreement are incorporated herein by reference with the same force and effect as if fully set forth herein.  Except as expressly amended hereby (or waived pursuant to Section 1 above), the Loan Agreement and each of the other Loan Documents remains in full force and effect in accordance with its terms.  
(b)    Borrower hereby represents and warrants that (i) Borrower has the power and authority to enter into this Amendment, to perform its obligations under the Loan Agreement as amended hereby, (ii) Borrower has by proper action duly authorized the execution and delivery of this Amendment by Borrower and (iii) this Amendment has been duly executed and delivered by Borrower and constitutes Borrower’s legal, valid and binding obligations, enforceable in accordance with its terms, subject to bankruptcy, insolvency and similar laws of general applicability relating to or affecting creditors’ rights and to general equity principles.  
(c)    This Amendment shall be governed by and construed and interpreted in accordance with the laws of the State of New York without regard to principles of conflicts of law.
(d)    Borrower hereby (1) unconditionally ratifies and confirms, renews and reaffirms all of its obligations under the Loan Agreement and each of the other Loan Documents, (2) acknowledges and agrees that such obligations remain in full force and effect, binding on and enforceable against it in accordance with the terms, covenants and conditions of the Loan Agreement as amended hereby and the other Loan Documents, in each case, without impairment, and (3) represents, warrants and covenants that it is not in default under the Loan Agreement or any of the other Loan Documents beyond any applicable notice and cure periods, and there are no defenses, offsets or counterclaims against the Indebtedness.
(e)    Sears Holdings Corporation hereby (1) unconditionally approves and consents to the execution by Borrower of this Amendment and the modifications to the Loan Documents effected thereby, (2) unconditionally ratifies, confirms, renews and reaffirms all of its obligations under the Guaranty and the Environmental Indemnity (collectively, the “Guarantor Documents”), (3) acknowledges and agrees that its obligations under the Guarantor Documents remain in full force and effect, and shall continue to remain in full force during each Extension Term, binding on and enforceable against it in accordance with the terms, covenants and conditions of such documents without impairment and reaffirms such obligations under the Guarantor Documents to guaranty the obligations of Borrower under the Loan Agreement and other Loan Documents, and (4)  represents, warrants and covenants that (i) it is not in default under the Guaranty beyond any applicable notice and cure periods, (ii) there are no defenses, offsets or counterclaims against its obligations under the Guaranty and (iii) it has the power and authority to enter into this Amendment and has by proper action duly authorized its execution and delivery of this Amendment.
(f)    This Amendment may be executed in any number of counterparts, each of which when so executed and delivered shall be an original, but all of which shall together constitute one and the same instrument.  Copies of originals, including copies delivered by 

	
			
	 
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facsimile, pdf or other electronic means, shall have the same import and effect as original counterparts and shall be valid, enforceable and binding for the purposes of this Amendment.

[Signatures appear on following page]

	
			
	 
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IN WITNESS WHEREOF, for good and valuable consideration, the sufficiency of which is hereby acknowledged and agreed, the parties hereto have executed and delivered this Amendment as of the date first hereinabove set forth.
	
		
	 
	LENDER:

JPP, LLC, 
a Delaware limited liability company 

   
By:  /s/ Edward S. Lampert
         Name: Edward S. Lampert   
         Title:    Authorized Signatory

JPP II, LLC, 
a Delaware limited liability company 

   
By:  /s/ Edward S. Lampert
         Name: Edward S. Lampert   
         Title:    Authorized Signatory

	 
	

CASCADE INVESTMENT, L.L.C., 
a Washington limited liability company 

   
By:  /s/ Michael Larson
         Name: Michael Larson   
         Title:    Business Manager

	
			
	Amendment to Loan Documents
	 
	 

BORROWER:
Sears, Roebuck and Co., a New York corporation
By:    /s/ Robert A. Riecker
Name:    Robert A. Riecker
Title:    Chief Financial Officer

Sears Development Co., a Delaware corporation
By:    /s/ Robert A. Riecker
Name:    Robert A. Riecker
Title:    Vice President

Innovel Solutions, Inc., a Delaware corporation
By:    /s/ Robert A. Riecker
Name:    Robert A. Riecker
Title:    Vice President

Big Beaver of Florida Development, LLC, a Florida limited liability company
By:    /s/ Robert A. Riecker
Name:    Robert A. Riecker
Title:    Vice President

Kmart Corporation, a Michigan corporation
By:    /s/ Robert A. Riecker
Name:    Robert A. Riecker
Title:    Controller and Head of Capital Market Activities

	
			
	Amendment to Loan Documents
	 
	 

Solely with respect to Section 3(e) hereof:
GUARANTOR:

Sears Holdings Corporation, a Delaware corporation
 

By: /s/ Robert A. Riecker
       Name:  Robert A. Riecker 
       Title:    Chief Financial Officer

	
			
	Amendment to Loan Documents

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