Sears Holdings (SHLD)

UMBRELLA INCENTIVE PROGRAM (UIP)

Pursuant to the authority reserved to the Board or the Committee under Section 8 of the Sears Holdings Corporation Umbrella Incentive Program (UIP), the UIP is hereby amended in the following respects, effective as of March 15, 2007:

1. Section 2.1 of the UIP is amended by adding a new sentence at the end thereof to read as follows:

“Notwithstanding the forgoing, with respect to any annual incentive plan established under the UIP, the term “Eligible Employee” shall mean those salaried and hourly employees of the Company or a Subsidiary who are designated as Eligible Employees under the terms of the annual incentive plan and thereby become “Participants” under such annual incentive plan.”

2. Section 2.2 of the UIP is amended by adding a new sentence at the end thereof to read as follows:

“Notwithstanding the forgoing, with respect to any annual incentive plan established under the UIP, the eligibility of newly hired employees shall be determined in accordance with the terms of the applicable annual incentive plan.”

3. The first sentence of Section 3.6(b) of the UIP is amended by:

(a) Inserting the following clause immediately after “(x) bankruptcy-related matters of the predecessor company,”:

“(xi) investment income or loss, and”; and

(b) Relettering item (xi) as “(xii)”.

4. Except as amended herein, the UIP is hereby confirmed in all other respects.

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UMBRELLA INCENTIVE PROGRAM (UIP)

Pursuant to the authority reserved to the Board or the Committee under Section 8 of the Sears Holdings Corporation Umbrella Incentive Program (UIP), the UIP is hereby amended in the following respects, effective as of February 23, 2007, contingent upon shareholder approval of this First Amendment to the UIP:

1.    Section 3.1 of the UIP is amended by deleting it in its entirety and inserting a new Section 3.1 in its place to read as follows:

“3.1    Awards.    An Award may be granted under the UIP in the form of a “Cash Incentive Award’ or a “Stock Award”.

The grant of an Award may also be subject to such other conditions, restrictions and contingencies as determined by the Committee. Except as otherwise provided in this Section 3, Awards are intended to be “performance-based compensation” as that term is used in regulations issued under Code Section 162(m), and shall comply with the requirements of this Section 3 to the extent such compliance is determined by the Committee to be required for the Awards to be treated as performance-based compensation. With respect to Awards that are intended to constitute “performance-based compensation” within the meaning of Code Section 162(m) and the regulations issued thereunder, any such Award shall be contingent upon shareholder approval of the UIP or any amendment to the UIP implicating Code Section 162(m) and the regulations issued thereunder, and no amount shall be paid under any such Award unless and until shareholder approval has been obtained in accordance with Code Section 162(m) and the regulations issued thereunder.”

2.    Section 3.2 of the UIP is amended by deleting it in its entirety and inserting a new Section 3.2 in its place to read as follows:

“3.2    Maximum Amount.    For Awards that are intended to be performance-based compensation under Code Section 162(m) and the regulations issued thereunder:

Awards that are not intended to constitute “performance-based compensation” under Code Section 162(m) and the regulations issued thereunder, are not subject to the foregoing limits. The Committee may establish overlapping performance periods; provided that, to the extent that the performance periods applicable to any individual overlap, the limit (and any required pro rata reduction) with respect to a subsequent performance period shall be reduced by the amount of the limit of a prior performance period attributable to the overlapping portion of any such prior performance period. At the end of any performance period for which there is a subsequent overlapping period, when the amount payable to an individual with respect to the former performance period is known, the Committee

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shall determine the amount attributable to each year within the performance period, by allocating the amount payable over the performance period on a straight-line basis.”

3.    Any reference to “Cash Incentive Award” following Section 3.2 that, based on the amendments above, should be construed to refer to Cash Incentive Award or Stock Award (as added by new subsection 3.1(b) of the UIP), shall be construed by the Board and Committee to refer also to a Stock Award as appropriate.

4.    Except as amended herein, the UIP is hereby confirmed in all other respects.

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