**EXHIBIT 10.2**

**SEARS HOLDINGS CORPORATION**

**2008 LONG-TERM INCENTIVE PROGRAM (LTIP)**

**SECTION 1**

**GENERAL**

1.1. **Purpose**. The Sears Holdings Corporation 2008 Long-Term Incentive Program (the “LTIP”) is aperformance-based program. The LTIP is designed to motivate the executive leadership of Sears Holdings Corporation (the “Company”) or Sears Holdings Management Corporation, Sears, Roebuck and Co., Kmart Holding Corporation and theirSubsidiaries (as defined in Section 8) (collectively referred to as “Subsidiaries”), to achieve significant, lasting change that successfully positions the Company for future growth. Performance goals under the LTIP alignParticipants’ financial incentives with the financial goals of the Company. Awards (as defined in Section 8) under the LTIP are designed to vary commensurately with achieved performance**.**Both (a) Awards structured to satisfythe requirements for “performance-based compensation” outlined in regulations issued under Section 162(m) of the Internal Revenue Code (“Code Section 162(m)”), and (b) Awards not so structured, may be issuedhereunder. The effective date of the LTIP is April 22, 2008, which is the date the Compensation Committee (as defined in Section 8) adopted the LTIP (the “Effective Date”). 

1.2. **Operation, Administration, and Definitions**. The operation and administration of the LTIP, including the Awards made under the LTIP,shall be subject to the provisions of Section 6 (relating to operation and administration). Capitalized terms in the LTIP shall be defined as set forth in the LTIP (including as defined in Section 8). The LTIP is established under, andconstitutes a part of, the Sears Holdings Corporation Umbrella Incentive Program (the “UIP”). 

**SECTION 2**

**PARTICIPATION**

2.1.**Eligible Employee**. The term “Eligible Employee” means those salaried employees of the Company or a Subsidiary who (a) hold a position of divisional vice president (or equivalent) or higher, as determined by the SeniorCorporate Compensation Executive (as defined in Section 8), and (b) are designated as Eligible Employees by the Senior Corporate Compensation Executive or the Compensation Committee, as applicable. Subject to the terms and conditions ofthe LTIP, the Senior Corporate Compensation Executive or the Compensation Committee, as applicable, shall determine and designate, from time to time, from among the Eligible Employees, those persons who shall be granted one or more Awards under theLTIP, and thereby become “Participants” in the LTIP. The Senior Corporate Compensation Executive shall make eligibility determinations under this Section 2 with respect to all Eligible Employees other than those who are executives forwhom compensation matters are under the purview of the Compensation Committee. 

***2008 LTIP***

 

2.2. **New Hires and Promotions to Eligible Employee Status**. The Senior Corporate Compensation Executive or theCompensation Committee, as applicable, may designate as Participants those employees whom the Senior Corporate Compensation Executive or the Compensation Committee, as applicable, determines have been newly hired or promoted into the group ofEligible Employees identified in subsection 2.1(a) above, after the Effective Date, provided that the terms and conditions of Awards to such individuals shall be subject to (a) a fraction, the numerator of which is the number of full daysremaining in the Performance Period (as described in subsection 3.2) after the Eligible Employee’s date of hire, or promotion, as applicable, and the denominator is the number of full days in the Performance Period, and (b) if Awards tosuch individuals are intended to meet the requirements of Code Section 162(m), such other adjustments as the Compensation Committee deems necessary or desirable to qualify such Awards as “performance-based compensation” for purposesof Code Section 162(m). The term “performance-based compensation”, as referred to herein, shall have the meaning ascribed to it under Code Section 162(m) and the regulations thereunder. 

2.3. **Demotions from Eligible Employee Status**. If a Participant is demoted below a position of divisional vice president, as of the date ofsuch demotion, the individual will no longer be a Participant, will be deemed to have forfeited any unvested portion of his or her Award, and will receive no LTIP distribution under Section 4. 

2.4 **Other Changes in Status**. If a Participant is promoted after the Effective Date, the Senior Corporate Compensation Executive or theCompensation Committee, as applicable, may make a second Target Cash Incentive Award (as defined in subsection 3.1) to such individual and the total amount payable to such individual shall be based on a pro-ration, whereby the Target Cash IncentiveAward for the new position will apply to the remainder of the Performance Period and the Target Cash Incentive Award for the immediately preceding incentive-eligible position will apply to the portion of the Performance Period immediately precedingthe effective date of the promotion. Notwithstanding the foregoing, in no event will positive discretion be applied to any Award that has been designated as intended to meet the requirements of Code Section 162(m) (and the regulations issuedthereunder) with respect to the Performance Period or as of the payment date (as defined in subsection 4.1). If a Participant is demoted, but is still an Eligible Employee, the Senior Corporate Compensation Executive or the Compensation Committee,as applicable, may make a second Target Cash Incentive Award to such individual and the total Award for such an individual shall be based on a pro-ration, whereby the Target Cash Incentive for the new position will apply only to the remainder of thePerformance Period and the Target Cash Incentive for the immediately preceding position will apply only to the portion of the Performance Period immediately preceding the effective date of the promotion, and in either case an Award will only be paidif the target for the full Performance Period is met. 

**SECTION 3**

**CASH INCENTIVE AWARDS**

3.1. **Target Cash Incentive Awards**.After the Effective Date, the Senior Corporate Compensation Executive or the Compensation Committee (at one or more meetings of the Compensation Committee), as applicable, may award “Target Cash Incentive Awards” (as defined in subsection3.1(a) below) to each Participant designated by the Senior Corporate Compensation Executive or the Compensation Committee (at such meeting), as applicable, in an amount determined by the applicable entity in its sole discretion. In connection withsuch Awards, the Senior Corporate Compensation Executive or the 

 

2 

***2008 LTIP***

 

Compensation Committee, as applicable, shall establish “Target LTIP EBITDA” and “Threshold LTIP EBITDA” (each as defined in subsection3.3 below), provided, however, that Threshold LTIP EBITDA shall be expressed as a percentage of Target LTIP EBITDA. The Senior Corporate Compensation Executive shall make the determinations referred to in this Section 3 with respect to allParticipants other than those who are executives for whom compensation matters are under the purview of the Compensation Committee. 

(a) A Target Cash Incentive Award shall, at the date of grant, consist of a commitment by the Company to distribute, at the time specified in, and in accordance with the provisions of, Section 4 below, as applicable, an amount equal tothe Participant’s Target Cash Incentive Award multiplied by the applicable Award Multiple set forth in subsection 3.4 below, subject to approval of the final award amount by the Senior Corporate Compensation Executive or Compensation Committee,as applicable, (the “Cash Incentive Award”) and to the provisions of subsection 6.4. 

(b) A Cash Incentive Awardshall generally be satisfied by a distribution in cash to the Participant, provided, however, that, at the discretion of the Compensation Committee, the Company may elect, by such deadline as specified under uniform and nondiscriminatory rulesestablished by the Compensation Committee, to satisfy such Cash Incentive Award by payment of shares of Company common stock (“Stock”) in lieu of cash, or a combination of cash and shares of Stock. The number of shares of Stock shall beequal to (i) the amount of the Award to be paid in stock in accordance with this paragraph (b), divided by (ii) the Fair Market Value of a share of Stock, on the principal securities exchange or market on which the shares are then listedor admitted, on the business day immediately preceding the date of distribution or, if the Stock is not traded on that date, on the next preceding date on which Stock was traded; provided that issuance of any shares of Stock in accordance with thissubsection 3.1(b) shall be contingent on the availability of shares of Stock under any shareholder-approved plan of the Company providing for the issuance of Stock in satisfaction of the Awards hereunder (which in no event shall be an employee stockpurchase plan). 

3.2. **Performance Period**. The “Performance Period” shall be the Company’s 2008, 2009 and 2010Fiscal Years; provided that, in the case of an employee who is newly hired or promoted into the group of Eligible Employees after the Effective Date, the Performance Period shall be such shorter period as established by the Senior CorporateCompensation Executive or the Compensation Committee, as applicable, subject to the requirements of Code Section 162(m), if applicable. The amount of the Cash Incentive Award shall be determined at the completion of the Performance Period inaccordance with subsection 3.1 above and subsection 4.1 below. 

3.3. “**LTIP EBITDA**.” 

(a) **LTIP EBITDA**. Subject to adjustment, if any, in accordance with subsection (d) of this subsection 3.3, “LTIPEBITDA” refers to earnings before interest, taxes, depreciation and amortization for the Performance Period computed as operating income appearing on the Company’s statement of operations for the applicable reporting period, other thanSears Canada (referred to as the “Domestic Company”), less depreciation and amortization 

 

3 

***2008 LTIP***

 

and gains/(losses) on sales of assets. In addition, it is adjusted to exclude significant litigation or claim judgments or settlements (defined as matterswhich are $1 million or more) including the costs related thereto; the effect of purchase accounting and changes in accounting methods; gains, losses and costs associated with acquisitions, divestitures and store closures; integration costs that aredisclosed as merger related; and restructuring activities. If after the Effective Date, the Domestic Company acquires assets or an entity that has associated EBITDA (measured using the same principles as those described in the preceding provisionsof this subsection 3.3(a)) in its last full fiscal year prior to the acquisition of greater than or equal to $100,000,000, any EBITDA associated with such assets or entity (after its acquisition) and during the Performance Period shall bedisregarded in determining LTIP EBITDA under this subsection 3.3(a). 

(b) **Target LTIP EBITDA**. Subject to adjustment,if any, in paragraph (d), “Target LTIP EBITDA” refers to the target level of LTIP EBITDA, established by the Compensation Committee in accordance with subsection 3.1 above, for the Performance Period. 

(c) **Threshold LTIP EBITDA**. Subject to adjustment, if any, in paragraph (d), “Threshold LTIP EBITDA” refers to a level ofLTIP EBITDA, for the Performance Period, established by the Compensation Committee, which shall be equal to ninety percent (90%) of Target LTIP EBITDA and, if exactly achieved, shall generate an Award Multiple (described in subsection 3.4below) of sixty percent (60%). 

(d) **Adjustments to Target LTIP EBITDA**. The LTIP EBITDA incentive target contemplatesthat the Domestic Company does not make any significant acquisitions or divestitures over the period of the LTIP. If after the Effective Date the Domestic Company divests itself of assets or an entity that has associated EBITDA (measured using thesame principles as those described in subsection 3.3(a)) in its last full fiscal year prior to the divestiture of greater than or equal to $100,000,000, Target LTIP EBITDA for the Company’s fiscal year in which the divestiture occurs will bedecreased by actual EBITDA of such assets or entity for the portion of such assets’ or entity’s last full fiscal year prior to the divestiture corresponding to the portion of the Company’s fiscal year (in which the divestiture occurs)remaining after the divestiture occurs; and Target LTIP EBITDA for each of the following fiscal years of the Company, if any, in the Performance Period will be decreased by the actual EBITDA of such assets or entity for such assets’ orentity’s last full fiscal year prior to the divestiture. 

3.4. “**Award Multiple**.” The Award Multiple shall beas outlined below: 

(a) if LTIP EBITDA is one hundred percent (100%) of Target LTIP EBITDA, the Award Multiple shall beone hundred percent (100%); 

(b) if LTIP EBITDA is equal to Threshold LTIP EBITDA, the Award Multiple shall be sixty percent(60%); 

 

4 

***2008 LTIP***

 

(c) if LTIP EBITDA is greater than Threshold LTIP EBITDA, but less than Target LTIP EBITDA, the AwardMultiple shall be a whole percentage between sixty percent (60%) and one hundred percent (100%), determined by interpolation on a straight line basis relative to such LTIP EBITDA, Threshold LTIP EBITDA and Target LTIP EBITDA amounts, androunded down to the nearest whole percentage; 

(d) if LTIP EBITDA is less than Threshold LTIP EBITDA, the Award Multipleshall be zero (0); and 

(e) if LTIP EBITDA is greater than Target LTIP EBITDA, the Award Multiple shall be a percentageequal to one hundred (100%) plus two percent (2%) for each one percent (1%) by which LTIP EBITDA exceeds Target LTIP EBITDA, and rounded down to the nearest whole percentage. 

3.5. **Limitation on Individual Awards**. Notwithstanding anything herein to the contrary, the total Cash Incentive Award paid to anyParticipant for the Performance Period pursuant to the LTIP shall in no event exceed $15 million. 

3.6. **AdditionalRequirements**. All Cash Incentive Awards awarded under the LTIP (and any Stock or cash otherwise distributable pursuant thereto) are subject to the provisions of Sections 4, 5 and 6. 

**SECTION 4**

**DISTRIBUTION**

4.1. **General**. Subject to Sections 5 and 6, the cash or shares of Stock, if any, thatresult from the payout formula described at Section 3 shall be distributed, in a single lump sum, as soon as practicable after the first Compensation Committee meeting occurring on or after the LTIP EBITDA results for the Company’s 2010Fiscal Year are available to the Compensation Committee, which shall in no event be later than the date that is two and one-half (2 1/2) months after the last day of the 2010 Fiscal Year. Notwithstanding anything herein to the contrary, no distribution shall be made hereunder until after the Compensation Committee has certified the attainment of the performance goalsand, with respect to Participants under its purview, approved the amount to be paid to each Participant. The Senior Corporate Compensation Executive shall be responsible for approving the amount payable to all other Participants. The date as ofwhich payment is made in accordance with this subsection 4.1 is referred to herein as the “payment date.” 

4.2.**Termination of Employment and Other Provisions**. All distributions are subject to the provisions of Sections 5 and 6 below. 

**SECTION 5**

**TERMINATION OF EMPLOYMENT**

The effect of termination of employment on a Participant’s right to receive a Cash Incentive Award (whether payable in cash or Stock) depends on thereason for the termination, as described below. 

 

5 

***2008 LTIP***

 

5.1 **Termination of Employment**. 

(a) **Voluntary Termination or Involuntary Termination**. In the event that a Participant (i) voluntarily terminates employment(for any reason other than due to permanent and total disability, as defined in the Company’s long-term disability program, regardless of whether the Participant is covered by such program) or (ii) is involuntarily terminated for anyreason (other than death) prior to the payment date (as defined in subsection 4.1 above) of his or her Award, such Participant shall forfeit all of his or her Award. 

(b) **Disability**. In the event that, prior to the payment date (as defined in subsection 4.1 above) of his or her Award, aParticipant suffers a permanent and total disability (as defined in the Company’s long term disability program, regardless of whether the Participant is covered by such program) while employed by the Company or a Subsidiary, resulting intermination or retirement, subject to Section 6 below, such individual shall be entitled to a distribution in an amount equal to the Cash Incentive Award, if any, that would otherwise be payable to the Participant under subsection 3.1 above,pro-rated through the date of termination in accordance with subsection 5.2 below; provided, however, that in no event shall a Participant receive any payment hereunder unless (i) LTIP EBITDA for the period from the inception of the PerformancePeriod through the last completed full month that occurs on or preceding the Participant’s date of termination is equal to or greater than Target LTIP EBITDA, pro-rated through the date of termination in accordance with subsection 5.2 below,(ii) LTIP EBITDA is equal to or greater than Target LTIP EBITDA for the Performance Period, and (iii) as of his date of termination, the Participant had been employed by one or more of the Company or a Subsidiary, for at least twelve(12) months of the Performance Period applicable to such individual. 

(c) **Death**. In the event that a Participantdies while employed by the Company or a Subsidiary and prior to the payment date for his or her Award, his or her Target Cash Incentive Award shall be pro-rated through the date of death, in accordance with subsection 5.2 below, and, subject toSection 6 below, his or her estate shall be entitled to receive a Cash Incentive Award, equal to his or her prorated Target Cash Incentive Award and payable in cash; provided, however, that in no event shall a payment be made with respect to adeceased Participant hereunder unless as of his date of death, (i) LTIP EBITDA for the period from the inception of the Performance Period through the last completed full month that occurs on or preceding the Participant’s date of death isequal to or greater than Target LTIP EBITDA, prorated through the date of death in accordance with subsection 5.2 below, (ii) LTIP EBITDA is equal to or greater than Target LTIP EBITDA for the Performance Period, and (iii) he had beenemployed by one or more of the Company or a Subsidiary, for at least twelve (12) months of the Performance Period applicable to such individual. 

5.2. **Pro-rations**. Any pro-ration of a Cash Incentive Award, Target Cash Incentive Award, or Target LTIP EBITDA, as applicable, under this Section 5 shall be based on a fraction, the numerator ofwhich is the number of full months during the Performance Period in which the Participant was a Participant in the LTIP, and the denominator of which is the full number of months in the Performance Period, as adjusted at subsections 2.2 and 2.4, ifapplicable. 

 

6 

***2008 LTIP***

 

**SECTION 6**

**OPERATION AND ADMINISTRATION**

6.1. **Compensation Committee and Senior Corporate Compensation Executive**.The authority to control and manage the operation and administration of the LTIP shall be vested in the Compensation Committee and the Senior Corporate Compensation Executive, as provided herein. 

(a) Compensation Committee. Notwithstanding paragraph (b) immediately below, the Compensation Committee: 

(i) Shall approve the Target Cash Incentive Award and the Awards for Participants under its purview; 

(ii) Notwithstanding paragraph (b) below, with respect to Participants under its purview, shall have the authority and discretion toestablish the terms, conditions, restrictions, and other provisions of such Awards, and (subject to the restrictions imposed by subsection 6.4 and Section 7) to amend, cancel, or suspend Awards; provided, however (and subject to therequirements of Code Section 162(m), if applicable) that to the extent the Compensation Committee determines that the restrictions imposed by the LTIP preclude the achievement of the material purposes of the Awards in jurisdictions outside theUnited States, the Compensation Committee shall have the authority and discretion to modify those restrictions as the Compensation Committee determines to be necessary or appropriate to conform to applicable requirements or practices ofjurisdictions outside of the United States; 

(iii) May make additional changes that it deems appropriate for the effectiveadministration of the LTIP, subject to subsection 6.4 and provided that these changes may not increase the benefits to which Participants may become entitled under the LTIP, nor change the pre-established measures or goals that have been approved;and 

(iv) Shall be responsible for all other duties and responsibilities allocated to the Compensation Committee under theterms and conditions of the LTIP. 

(b) Senior Corporate Compensation Executive. Except as provided in paragraph(a) immediately above, the Senior Corporate Compensation Executive: 

(i) Shall Determine the Target Cash IncentiveAward and the Awards for Participants that are not under the Compensation Committee’s purview; 

(ii) Notwithstandingparagraph (a) above, shall have the authority and discretion to establish the terms, conditions, restrictions, and other provisions of such Awards, and (subject to the restrictions imposed by subsection 6.4 and Section 7) to amend, cancel,or suspend Awards; 

 

7 

***2008 LTIP***

 

(iii) Shall have the authority to control and manage the operation and administration of the LTIP withrespect to Participants that are not under the Compensation Committee’s purview and except as otherwise provided in this LTIP; 

(iv) Shall be responsible for the day-to-day administration of the LTIP except as otherwise provided in this LTIP; and 

(v) Shall be responsible for all other duties and responsibilities allocated to the Senior Corporate Compensation Executive under the terms and conditions of the LTIP. 

(c) The Compensation Committee and the Senior Corporate Compensation Executive, as appropriate, shall have the authority and discretion tointerpret the LTIP, to establish, amend, and rescind any rules and regulations relating to the LTIP and to make all other determinations that may be necessary or advisable for the administration of the LTIP. 

(d) Any determinations by the Compensation Committee or the Senior Corporate Compensation Executive, as applicable, regarding this LTIPare binding on all Participants. 

6.2. **Source of Awards**. In the case of Awards under the LTIP that are settled in shares ofStock, such shares shall be distributed under a stock plan adopted by the Company and approved by the shareholders thereof that provides for the issuance of Stock in satisfaction of Awards hereunder, (which in no event shall be an employee stockpurchase plan.) In the event of any conflict between this document and such stock plan, the provisions of the stock plan shall govern. 

6.3. **Delegation by Compensation Committee**. Except to the extent prohibited by applicable law or the applicable rules of a securities exchange or similar entity, or would cause Awards designated as intended to constituteperformance-based compensation under Code Section 162(m) to not satisfy the requirements thereunder, the Compensation Committee may allocate all or any portion of its responsibilities and powers to any one or more of its members and maydelegate all or any part of its responsibilities and powers to any person or persons selected by it. The Compensation Committee may revoke any such allocation or delegation at any time. 

6.4. **Negative Discretion**. Notwithstanding anything in the LTIP to the contrary, prior to the settlement of any Cash Incentive Award, theCompensation Committee (or the Senior Corporate Compensation Executive with respect to Participants who are not under the purview of the Compensation Committee) may (a) reduce the amount of such Award, or the number of shares of Stock or amountof cash to be delivered in connection with such Award, and (b) with respect to Awards that are not designated as intended to meet the requirements of “performance based compensation” under Code Section 162(m) and the regulationsissued thereunder, may change the pre-established measures in goals that have been approved for such Award and increase the amount of such Award or the number of shares of stock or amount of cash to be delivered in connection with such Award.

 

8 

***2008 LTIP***

 

6.5. **General Restrictions**. Delivery of shares of Stock under the LTIP, in satisfaction of a Cash IncentiveAward, shall be subject to the following: 

(a) Notwithstanding any other provision of the LTIP, the Company shall have noobligation to deliver any shares of Stock or make any other distribution of benefits under the LTIP unless such delivery or distribution complies with all applicable laws (including, without limitation, the requirements of the Securities Act of1933), and the applicable requirements of any securities exchange or similar entity. 

(b) To the extent that the LTIPprovides for issuance of Stock certificates to reflect the issuance of shares of Stock, the issuance may be effected on a non-certificated basis, to the extent not prohibited by applicable law or the applicable rules of any exchange or similarentity. 

6.6. **Tax Withholding**. All distributions under the LTIP are subject to withholding of all applicable taxes, and theSenior Corporate Compensation Executive or the Compensation Committee, as applicable, may condition the delivery of any shares or other benefits under the LTIP on satisfaction of the applicable withholding obligations. To the extent permitted by theSenior Corporate Compensation Executive or the Compensation Committee, as applicable, such withholding obligations may be satisfied (a) through cash payment by the Participant; (b) through the surrender of shares of Stock which theParticipant already owns (provided, however, that to the extent shares described in this paragraph (b) are used to satisfy more than the minimum statutory withholding obligation, as described below, then, except as otherwise provided by theSenior Corporate Compensation Executive or the Compensation Committee, as applicable, payments made with shares of Stock in accordance with this paragraph (b) shall be limited to shares held by the Participant for not less than six months priorto the payment date (or such other period of time as the Company’s accountants may require)); or (c) through the surrender of shares of Stock to which the Participant is otherwise entitled under the LTIP, provided, however, that suchshares under this paragraph (c) may be used to satisfy not more than the Company’s minimum statutory withholding obligation (based on minimum statutory withholding rates for Federal and state tax purposes, including payroll taxes, that areapplicable to such supplemental taxable income). 

6.7. **Settlement of Awards**. The obligation to make payments anddistributions with respect to Awards may be satisfied through cash payments, the delivery of shares of Stock, or a combination thereof, as provided under subsections 3.1(b) and 4.1), subject, in the case of settlement in shares, to the terms of thestock plan under which the Stock is issued. Satisfaction of any such obligations under an Award, which is sometimes referred to as the “settlement” of the Award, may be subject to such conditions, restrictions and contingencies as theSenior Corporate Compensation Executive or the Compensation Committee, as applicable, shall determine. Each Subsidiary shall be liable for payment of an Award due under the LTIP with respect to any Participant to the extent that such benefits areattributable to the services rendered for that Subsidiary by the Participant. Any disputes relating to liability of a Subsidiary for payment of an Award shall be resolved by the Senior Corporate Compensation Executive or the Compensation Committee,as applicable. 

 

9 

***2008 LTIP***

 

6.8. **Transferability**. Except as otherwise provided by the Compensation Committee, Awards under the LTIP arenot transferable except as designated by the Participant by will or by the laws of descent and distribution (including Awards originally determined by the Senior Corporate Compensation Executive). 

6.9. **Form and Time of Elections**. Unless otherwise specified herein, each election required or permitted to be made by any Participant orother person entitled to benefits under the LTIP, and any permitted modification, or revocation thereof, shall be in writing filed with the Senior Corporate Compensation Executive or the Compensation Committee, as applicable, at such times, in suchform, and subject to such restrictions and limitations, not inconsistent with the terms of the LTIP, as the Senior Corporate Compensation Executive or the Compensation Committee, as applicable, shall require. 

6.10. **Agreement With Company**. Any Award under the LTIP shall be subject to such terms and conditions, not inconsistent with the LTIP, asthe Senior Corporate Compensation Executive or the Compensation Committee, as applicable, shall, in its sole discretion, prescribe. The terms and conditions of any Award to any Participant shall be reflected in such form of written (includingelectronic) document as is determined by the Compensation Committee. A copy of such document shall be provided to the Participant, and the Senior Corporate Compensation Executive or the Compensation Committee, as applicable, may, but need not,require that the Participant sign a copy of such document. Such document is referred to as an “Award Agreement” regardless of whether any Participant signature is required. 

6.11. **Action by Company or Subsidiary**. Any action required or permitted to be taken under the LTIP by the Company, Sears HoldingsManagement Corporation, Sears Roebuck and Co., Kmart Holding Corporation or any Subsidiary, if any, of the foregoing shall be by resolution of its board of directors, or by action of one or more members of the board of directors of such company(including a committee of the board) who are duly authorized to act for such board with respect to the applicable action, or (except to the extent prohibited by applicable law or applicable rules of any securities exchange or similar entity) by aduly authorized officer of such company. 

6.12. **Gender and Number**. Where the context admits, words in any gender shallinclude any other gender, words in the singular shall include the plural and the plural shall include the singular. 

6.13. **Limitationof Implied Rights**. 

(a) Neither a Participant nor any other person shall, by reason of participation in the LTIP,acquire any right in or title to any assets, funds or property of the Company or any Subsidiary whatsoever, including, without limitation, any specific funds, assets, or other property which the Company or any Subsidiary, in its sole discretion, mayset aside in anticipation of a liability under the LTIP. A Participant shall have only a contractual right to the cash or Stock, if any, payable under the LTIP, unsecured by any assets of the Company or any Subsidiary, and nothing contained in theLTIP shall constitute a guarantee that the assets of the Company or any Subsidiary shall be sufficient to pay any benefits to any person. 

 

10 

***2008 LTIP***

 

(b) The LTIP does not constitute a contract of employment, and selection as a Participant shall not give anyparticipating employee the right to be retained in the employ of the Company or any Subsidiary, nor any right or claim to any benefit under the LTIP, unless such right or claim has specifically accrued under the terms of the LTIP. Except asotherwise provided in the LTIP, no Award under the LTIP shall confer upon the holder thereof any rights as a shareholder of the Company prior to the date on which the individual fulfills all conditions for receipt of such rights. 

6.14. **Evidence**. Evidence required of anyone under the LTIP may be by certificate, affidavit, document or other information, which theperson charged with acting on such evidence considers pertinent and reliable, and which has been signed, made or presented by the proper party or parties. 

6.15. **Information to be Furnished to the Senior Corporate Compensation Executive or the Compensation Committee**. The Company and the Subsidiaries shall furnish the Senior Corporate Compensation Executiveor the Compensation Committee, as applicable, with such data and information as it determines may be required for it to discharge its duties. The records of the Company and the Subsidiaries, as to an employee’s or Participant’s employment,termination of employment, leave of absence, reemployment, and compensation shall be conclusive on all persons unless determined to be incorrect. Participants and other persons entitled to benefits under the LTIP must furnish the Senior CorporateCompensation Executive or the Compensation Committee, as applicable, such evidence, data or information as such entity considers desirable to carry out the terms of the LTIP, subject to any applicable privacy laws. 

6.16. **Corporate Transaction**. In the event of a corporate transaction involving the Company (including without limitation, any Stockdividend, Stock split, extraordinary cash dividend, recapitalization, reorganization, merger, consolidation, split-up, spin-off, sale of assets or subsidiaries, combination or exchange of shares), the Compensation Committee may adjust Awards topreserve but in no event increase the benefits or potential benefits of the Awards (including Awards originally determined by the Senior Corporate Compensation Executive)**;**provided, however, that no such adjustment may be made to the extentsuch adjustment would cause Awards that are designated as intended to constitute “performance-based compensation” under Code Section 162(m) and the regulations issued thereunder, to cease to qualify as “performance-basedcompensation” under Code Section 162(m). Actions permitted under the preceding sentence by the Compensation Committee may include any adjustments that the Compensation Committee determines to be equitable (which may include, withoutlimitation, (a) replacement of Awards with other Awards which the Compensation Committee determines have comparable value and which are based on stock of a company resulting from the transaction, and (b) cancellation of the Award in returnfor cash payment of the current value of the Award, determined as though the Award is fully vested at the time of the payment.) 

 

11 

***2008 LTIP***

 

**SECTION 7**

**AMENDMENT AND TERMINATION**

The Board or Compensation Committee may, at any time, amend or terminate the LTIP, or anyAward, provided that no amendment or termination may, in the absence of written consent to the change by the affected Participant (or, if the Participant is not then living, the affected beneficiary), adversely affect the rights of any Participantor beneficiary under any Award granted under the LTIP prior to the date such amendment is adopted by the Board (or the Compensation Committee, if applicable), and no amendment may be made, without the consent of the shareholders of the Company, thatwould cause any Awards designated as intended to meet the requirements of “performance based compensation” under Code 162(m) and the regulations thereunder, to cease to be deductible under Code Section 162(m). Notwithstanding anythingherein to the contrary, (i) no amendment shall be made that would cause the LTIP not to comply with the requirements of Code Section 409A or any other applicable law or rule of any applicable securities exchange or similar entity, and(ii) the LTIP and any Award thereunder may be amended without Participant consent to the extent that the Compensation Committee determines such amendment necessary to cause the LTIP or Award to comply with the requirements of CodeSection 409A or any other applicable law or rule of any applicable securities exchange or similar entity. 

**SECTION 8**

**DEFINED TERMS**

8.1. Inaddition to the other definitions contained herein, the following definitions shall apply: 

In addition to the other definitions containedherein, the following definitions shall apply: 

(a) Award. The term “Award” or “Awards” means anyCash Incentive Award(s), whether settled in cash or Stock. 

(b) Board. The term “Board” means the Board ofDirectors of the Company. 

(c) Code. The term “Code” means the Internal Revenue Code of 1986, as amended. Areference to any provision of the Code shall include reference to any successor provision of the Code. 

(d) CompensationCommittee. The term “Compensation Committee” refers to the Compensation Committee of the Board of Directors of Sears Holdings Corporation. 

(e) Fair Market Value. The term “Fair Market Value” shall mean the reported closing price of a share of Stock on the principal securities exchange or market on which the Stock is then listed oradmitted to trading. 

(f) Fiscal Year. The term “Fiscal Year” shall mean the twelve (12) month periodbeginning on February 3, 2008, and thereafter the twelve (12) month period beginning on the Saturday closest to January 31 of each of calendar year 2009 and 2010. 

 

12 

***2008 LTIP***

 

(g) Senior Corporate Compensation Executive. The term “Senior Corporate CompensationExecutive” refers to the Senior Vice President of Human Resources (i.e., the most senior human resources officer of the Company), or if he or she has explicitly delegated his or her duties with respect to the LTIP, as provided herein, then theSenior Corporate Compensation Executive shall refer to such authorized representative to whom the duties of administering the LTIP have been delegated. 

(h) Subsidiary. The term “Subsidiary” or “Subsidiaries” refers to any company during any period in which it is a “subsidiary corporation” (as that term is defined inSection 424(f) of the Code) with respect to the Company. 

**SECTION 9**

**EXPIRATION OF LTIP**

The LTIP shall expire, subject to earliertermination pursuant to Section 7, on the date on which all Cash Incentive Awards (if any) are paid in full in accordance with the provisions of the LTIP (or, if earlier, on the date that the Compensation Committee determines that the LTIPEBITDA is less than Threshold LTIP EBITDA.) 

[Remainder of page intentionally left blank.] 

 

13 

***2008 LTIP***

 

IN WITNESS WHEREOF**,**the Compensation Committee of the Board of Directors of Sears Holdings Corporation has causedthis LTIP to be executed effective as of the date first stated above, by the undersigned officer of Sears Holdings Corporation on this 5th day of May, 2008. 

 
**SEARS HOLDINGS CORPORATION**By:  /s/ William R. Harker William R. HarkerTitle:  SVP, HR, General Counsel