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Exhibit 4.3



Exhibit C




 

FIRST AMENDMENT

TO THE

SEARS 401(k) SAVINGS PLAN

(As Amended and Restated effective as of
January 1, 2000)

Pursuant to the authority reserved to the
Company in subsection 14.1 of the Plan, the Plan is hereby amended in the
following respects, effective as of the later of May 10, 2001, or the effective
date of the Investment Committee's initial appointment of the Named Fiduciary
(as described herein):


  1. Subsection 1.3 is hereby revised to read as
  follows:

  
    1.3 Plan Administration, Trust and
    Fiduciary Responsibility. The authority to control and manage the
    noninvestment operations of the Plan is vested in the Company, as more fully
    described in subsection 13.1. Except as otherwise expressly provided herein,
    the Company shall have the rights, duties and obligations of an
    "administrator" as that term is defined in Section 3(16)(A) of the
    Employee Retirement Income Security Act of 1974, as amended ("ERISA")
    and of a "Plan Administrator" as that term is defined in
    Section 414(g) of the Code. Except as otherwise provided herein or in the
    Trust, a committee comprised of one or more members appointed by the Company
    to oversee the investment of the Plan's assets (the "Investment
    Committee") has the authority and responsibility to appoint or
    select trustees, custodians, and the Named Fiduciary described in
    Section 13, to determine the number and type of investment options
    (including, without limitation, the investment style of each investment
    option, such as active or passive management style, growth or value
    investment orientation or large cap or small cap investment orientation)
    offered under the Plan and to exercise investment discretion with respect to
    the Company Stock Fund and the ESOP, to oversee any Participant-directed
    brokerage accounts, and to select mutual funds, or a window option of mutual
    funds ("window option"), pursuant to and in accordance with
    subsections 6.1 and 13.11 of the Plan. The Named Fiduciary has the authority
    and responsibility to select, subject to the authority of the Investment
    Committee set forth in the immediately preceding sentence, and subject to
    subsections 6.1 and 13.11, the investment options offered under the Plan
    (within the categories established by the Investment Committee), to appoint
    the investment manager for each option made available under the Plan (other
    than the ESOP, the Company Stock Fund, any Participant-directed brokerage
    account or any mutual fund or window option), to establish investment
    guidelines, proxy voting policies and securities trading and lending
    procedures for all Investment Funds for which it is responsible, and to
    monitor the performance of the Trustee and custodian, and of the Investment
    Managers retained by the Named Fiduciary, and of the Investment Funds (other
    than the Company Stock Fund, the ESOP, any Participant-directed brokerage
    account and any mutual fund or window option entirely chosen by the
    Investment Committee). A mutual fund or window option is treated as
    "entirely chosen" by the Investment Committee if the Investment
    Committee, rather than the Named Fiduciary, directs the Trustee to execute
    the subscription agreement and all other documentation related to the Plan's
    investment in such mutual fund or window option. The Company, the Investment
    Committee, the members thereof, and the Named Fiduciary shall be "named
    fiduciaries", as described in section 402 of ERISA, with respect to
    their authority under the Plan. All assets of the Plan will be held, managed
    and controlled by one or more trustees (the "Trustee")
    acting under a "Trust" established pursuant to a "Trust
    Agreement" which forms a part of the Plan. The Company may also
    appoint an outside recordkeeper ("Recordkeeper") to
    maintain the records of Participants' Accounts under the Plan and to
    handle other administrative matters.

  

  2. Subsection 6.1 is hereby revised to read as
  follows:

  
    6.1 Investment Funds. The Investment
    Committee shall determine the number and type of "Investment
    Funds" to be offered under the Plan, including the number of mutual
    funds, and the number that are not mutual funds, and the investment style of
    each option, including, without limitation, active or passive management
    style, growth or value investment orientation, composition of debt and
    equity securities and focus on domestic or international securities. After
    the Investment Committee has made the foregoing determinations, the Named
    Fiduciary shall select (A) the mutual funds offered; and (B) the Investment
    Managers for the options offered that are not mutual funds. (With regard to
    (A), however, the Investment Committee may select a specific mutual fund or
    a window option of mutual funds to be offered under the Plan, or may specify
    the sponsor of the mutual fund to be otherwise selected by the Named
    Fiduciary. The Committee may determine, or may direct that the Named
    Fiduciary determine, whether an investment option will be offered as a
    mutual fund, commingled fund or separate account.) The Named Fiduciary shall
    establish the investment guidelines and asset classes, to the extent not
    established by the Investment Committee, for each Investment Fund, other
    than the ESOP, the Company Stock Fund, any Participant-directed brokerage
    accounts and any mutual funds or commingled funds "entirely
    chosen" by the Committee (as defined at subsection 1.3). The Committee
    in its discretion may change the number of Investment Funds offered, and the
    Committee or the Named Fiduciary (as applicable) may, in its discretion,
    change the investment strategy or categories of permitted investments of any
    Investment Fund for which it is responsible without prior notice to
    Participants. One of the Investment Funds shall be a "Company Stock
    Fund" invested in Common Stock of the Company and cash or cash
    equivalents held for liquidity purposes.

  

  3. The second paragraph of subsection 6.3 is
  hereby revised to read as follows:

  
    The Plan is intended to satisfy the
    requirements of Section 404(c) of ERISA with respect to Participant
    investment elections. To the extent permitted by law, neither the Company,
    the Investment Committee, the Trustee, the Named Fiduciary or any other
    fiduciary of the Plan shall be liable for any loss resulting from a
    Participant's exercise of his right to direct the investment of his
    Accounts.

  

  4. Subsection 6.5 is hereby revised to read as
  follows:

  
    6.5 Liquidity. In order to
    accommodate investment changes and other elections by Participants in a
    timely manner, a certain portion of each of the Investment Funds may be held
    in cash or cash equivalents. The percentage of assets held in each
    Investment Fund in cash or cash equivalents may differ from Fund to Fund and
    from time to time, as considered appropriate by (i) the Investment Committee
    in the case of the ESOP or Company Stock Fund, and (ii) by the Named
    Fiduciary in the case of all other Investment Funds excluding mutual funds
    and commingled funds. The rate of return of each Investment Fund will be a
    combination of the short term earnings (or losses) on the cash portion of
    the Fund and the earnings (or losses) of the securities or other investments
    in which such Fund is primarily invested, determined in accordance with
    uniform rules established by the Named Fiduciary or the Investment Committee
    as the case may be.

  

  5. Subsection 13.8 is hereby revised to read
  as follows:

  
    13.8 Indemnification of Individuals
    Acting on Behalf of the Company. To the extent not reimbursed by any
    applicable insurance policy, any person acting on behalf of the Company with
    respect to the Plan (other than the Named Fiduciary and any Investment
    Manager appointed thereby) shall be indemnified by the Employers against any
    and all liabilities, losses, costs and expenses (including legal fees and
    expenses) of whatsoever kind and nature which may be imposed on, incurred by
    or asserted against any of them by reason of the performance of such
    function if the individual did not act dishonestly or in willful violation
    of the law or regulation under which such liability, loss, cost or expense
    arises.

  

  6. Subsection 13.10 is hereby revised to read
  as follows:

  
    13.10 Appointment of Investment Committee
    and Named Fiduciary. An "Investment Committee" shall be
    appointed by the Company and shall consist of not less than three
    individuals who shall be "named fiduciaries," as described in
    Section 402 of ERISA. The Company, acting through the Investment Committee,
    shall appoint an entity (referred to herein as the "Named
    Fiduciary") which entity (i) shall be an investment manager as defined
    in Section 3(38) of ERISA and a named fiduciary as described in Section 402
    of ERISA, and (ii) shall have all the powers, rights and duties described in
    subsection 13.11.

  

  7. Subsection 13.11 is hereby revised to read
  as follows:

  
    13.11 General Powers, Rights and Duties
    of the Named Fiduciary.

    
      (a) Subject to paragraph (e), below, the
      Named Fiduciary shall have the responsibility (which shall be sole and
      exclusive with respect to subparagraphs (ii) through (v)), except to the
      extent that the Committee exercises its rights described in the
      parenthetical at subsection 6.1, for:

      
        (i) the non-binding recommendation of
        the number and types of investment choices available to Participants,
        consistent with the Investment Committee's philosophy related to the
        Plan as communicated to the Named Fiduciary, provided that the
        Investment Committee may also obtain such recommendations from such
        other consultants, whether related or unrelated to the Named Fiduciary,
        as the Investment Committee determines in its discretion;

        (ii) subsequent to the determination by
        the Investment Committee of the number and types of investment options
        to be offered, (A) the selection of the mutual funds offered; and (B)
        the selection of the investment managers for the options offered that
        are not mutual funds, all in accordance with, and subject to the terms,
        conditions and limitations of subsection 6.1;

        (iii) the negotiation of the terms and
        conditions of the appointment of an investment manager, as defined in
        Section 3(38) of ERISA ("Investment Manager"), for any
        investment option (other than a mutual fund) offered under the Plan, the
        actual appointment of such Investment Manager and the preparation
        and execution of a written agreement with each such Investment Manager
        that conforms in all respects with ERISA and all other applicable law,
        and direction of the Trustee to execute any subscription agreements or
        related documentation necessary to effect the investment of the Plan
        assets in any mutual fund or commingled fund selected by the Named
        Fiduciary;

        (iv) the monitoring of the performance
        of Investment Managers and termination and replacement of such
        Investment Managers, and the monitoring of the performance of the mutual
        funds or commingled funds selected by the Named Fiduciary, and the
        replacement of such funds (subject to the exercise by the Committee of
        its right to select a mutual fund or the sponsor of the mutual fund as
        described in subsection 6.1 above), all as the Named Fiduciary
        determines is necessary and in the best interests of the Plan;

        (v) the establishment (or approval
        through the selection of a fund) of the investment guidelines and asset
        classes (to the extent not established by the Investment Committee) for
        each investment option (other than a mutual fund or window option
        entirely chosen by the Committee);

        (vi) the prudent monitoring of, and
        periodically advising the Company regarding, the performance by the
        trustee of the 401(k) Plan, and of all of its investment activities,
        including without limitation, custody, securities lending, short term
        investments and foreign exchange; and

        (vii) execution of, and direction to the
        trustee to execute, any agreements, representations and other documents
        with brokers, dealers, futures commission merchants and other
        counterparties necessary or appropriate to facilitate investment
        transactions for the Plan.

      

      (b) Subject to subparagraph (e), below,
      the Named Fiduciary shall be responsible for ensuring (i) the proper
      coordination and communication among Investment Managers, including, but
      not limited to, matters relating to the allocation of responsibility among
      Investment Managers, and (ii) the proper coordination between Investment
      Managers and the trustees of the Trusts, including with respect to
      investment directions, proxy voting, securities lending and the provision,
      by the Investment Managers to the trustees of the Trusts and the Company,
      of information necessary for the trustees of the Trusts (and the Company,
      if applicable) to prepare statements of account and other records, and for
      purposes of the performance of reporting responsibilities, including Forms
      5500, and Forms 990T, (and any successor forms thereto) if applicable, and
      all other reporting responsibilities under the Code, ERISA and the terms
      of the Trusts. The Company shall be responsible for ensuring the proper
      coordination and communication between the trustee and recordkeeper of the
      401(k) Plan.

      (c) The Named Fiduciary shall organize
      meetings with the Committee to discuss the performance of the appointed
      Investment Managers and to consult and coordinate with, the Committee
      regarding liquidity needs and changes in the design of the Plans that may
      affect the Named Fiduciary's duties.

      (d) The Named Fiduciary shall be
      responsible for the transition needed, if any, for investments existing at
      the time of the Named Fiduciary's appointment.

      (e) The Named Fiduciary shall not be
      responsible for the Company Stock Fund under the Plan, nor for any matters
      relating to the ESOP, nor for any Participant-directed brokerage accounts,
      or any mutual funds or window options entirely chosen by the Committee.

    

  

  8. Subsection 13.12 is hereby revised to read
  as follows:

  
    13.12 General Powers, Rights and Duties
    of the Investment Committee. Except as otherwise specifically provided
    and in addition to the powers, rights and duties specifically given to the
    Investment Committee elsewhere herein and in the Trust Agreement, the
    Investment Committee shall have the following rights, powers and duties:

    
      (a) To direct the Trustee to the extent
      required under the terms of any trust agreement, or to appoint an
      Investment Manager, including, but not limited to, Sears Investment
      Management Co. ("SIMCO") with the authority to so direct the
      Trustee, with respect to the acquisition, retention and disposition of
      Plan assets in the Company Stock Fund and with respect to the exercise of
      investment powers, authorities and discretions relating to such assets,
      and with respect to matters relating to the ESOP assigned to the
      Investment Committee under Supplement C, provided, however, that subject
      to the other provisions of the Plan (including Supplement C), the Trustee
      shall invest that portion of the assets of the Plan consisting of
      Employers' Contributions and earnings thereon in Common Stock to the end
      that, in the largest measure possible, Participants may share in the
      earnings of the Company and acquire a proprietary interest therein.

      (b) To furnish the Trustee, the Named
      Fiduciary and the Company with such information as may be required by them
      for any purpose related to the Plan.

      (c) To adopt such rules of procedure and
      regulations as in the Investment Committee's opinion may be necessary
      for the proper and efficient performance of the Committee's duties and
      responsibilities.

      (d) To appoint a Secretary, who may, but
      need not, be a member of the Investment Committee, and to employ such
      other agents, attorneys, accountants, investment advisors and other
      persons and to delegate to them and allocate among them, in writing, such
      powers, rights and duties as the Investment Committee may consider
      necessary or advisable to properly carry out the Investment Committee's
      responsibilities, and in the same manner to revoke such delegation and
      allocation; the acceptance of such written allocation or delegation shall
      also be in writing; any action of the delegate or person to whom
      responsibilities have been allocated shall have the same force and effect
      for all purposes hereunder as if such action had been taken by the
      Investment Committee; neither the Investment Committee nor any of its
      members shall be liable for the acts or omissions of such delegates or
      persons to whom responsibilities have been allocated except as required by
      law.

      (e) To appoint and terminate Trustees and
      custodians of the Plan, provided that the Investment Committee may, upon
      advance written notice to the Named Fiduciary and the Trustee or
      custodian, delegate to the Named Fiduciary the authority to appoint or
      terminate the Trustee or a custodian of the Plan, or to terminate the
      responsibility of the Trustee or a custodian for any investment function
      and to appoint a successor entity with respect thereto.

    

  

  9. Subsections 13.12 and 13.13 are hereby
  renumbered 13.13 and 13.14.

  10. New subsection 13.15 is hereby added to
  the Plan:

  
    13.15 Cooperation of Named Fiduciary.
    The Named Fiduciary and Investment Committee shall cooperate as necessary to
    ensure the proper operation of the Plan.