SEARS HOLDINGS CORPORATION
ANNUAL INCENTIVE PLAN
1.1. Purpose . The Sears Holdings Corporation Annual Incentive Plan (“AIP”) is a performance-based incentive program.
The purpose of the AIP is to reward eligible employees of Sears Holdings Corporation (“Company”) and its participating
subsidiaries and affiliates (collectively referred to as “Employers”), for sustained Company fiscal performance. The AIP is
established under, and constitutes a part of, the Sears Holdings Corporation Umbrella Incentive Program (“UIP”), which UIP
was previously approved by shareholders. Both (a) Awards (as defined in Section 9) structured to satisfy the requirements for
“performance-based compensation” outlined in regulations issued under Section 162(m) of the Internal Revenue Code
(“Code”), and (b) Awards not so structured, may be issued hereunder. The effective date of the AIP is April 27, 2010, which is
the date the Compensation Committee (as defined in Section 9) adopted the AIP (“Effective Date”).
1.2. Operation, Administration and Definitions . The operation and administration of the AIP, including the Awards made
under the AIP with respect to any Performance Period (as defined under subsection 3.3), shall be subject to the provisions of
Section 7. Capitalized terms in the AIP shall be defined in the provision in which a term first appears or as set forth in Section 9.
1.3. Participating Employers . Each Employer whose eligible employee’s are covered by the AIP may be referred to herein
as a “Participating Employer”. Participating Employers are listed on Appendix A .
2.1. Eligible Employee . Except as provided herein, the term “Eligible Employee” means as to any Performance Period all:
(a) salaried employees and (b) “corporate hourly employees”, of any Employer, including the Company, which is a Participating
Employer. “Corporate hourly employees” refer to hourly employees employed at a Support Center (as defined in Section 9).
Subject to t